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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x
xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 26, 2019

29, 2022
¨
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number1-12604

THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)

Wisconsin39-1139844
Wisconsin39-1139844
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
100 East Wisconsin Avenue, Suite 1900
Milwaukee, Wisconsin
53202-4125
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:  (414) 905-1000

Registrant’s telephone number, including area code: (414) 905-1000
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common stock, $1.00 par value		Trading Symbol(s)
MCS		Name of Each Exchange on Which
Registered
Common stock, $1.00 par valueMCSNew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes     xNo      ¨

    Yes o     No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes     ¨No      x

    Yes o     Nox

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes     xNo      ¨

    YesxNoo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes     xNo      ¨

                YesxNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerxoAccelerated filer¨x
Non-accelerated filer¨oSmaller reporting company¨o
Emerging growth company¨o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     ¨No      x

    Yes o     Nox

The aggregate market value of the registrant’s common equity held by non-affiliates as of June 27, 201930, 2022 was approximately $703,219,990.$290,623,850. This value includes all shares of the registrant’s common stock, except for treasury shares and shares beneficially owned by the registrant’s directors and executive officers listed in Part I below.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock outstanding at February 17, 202028, 2023 – 23,023,221

24,445,596

Class B common stock outstanding at February 17, 202028, 2023 – 7,925,504

7,085,118

Portions of the registrant’s definitive Proxy Statement for its 20202023 annual meeting of shareholders, which will be filed with the Commission under Regulation 14A within 120 days after the end of our fiscal year, will be incorporated by reference into Part III to the extent indicated therein upon such filing.


Table of Contents
TABLE OF CONTENTS
Page
1
Special Note Regarding Forward-Looking Statements
1
Item 1. Business.
1
Item 1A. Risk Factors.
11
Item 1B. Unresolved Staff Comments.
19
Item 2. Properties.
20
Item 3. Legal Proceedings.
20
Item 4. Mine Safety Disclosures
20
Information about Our Executive Officers
21
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Item 5. Market for the Company’s Common Equity, Related Shareholder Matters and Issuer Repurchases of Equity Securities.
22
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
52
Item 8. Financial Statements and Supplementary Data
53
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
90
Item 9A. Controls and Procedures.
90
91
Item 10. Directors, Executive Officers and Corporate Governance.
91
Item 11. Executive Compensation.
91
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
91
Item 13. Certain Relationships and Related Transactions, and Director Independence.
91
Item 14. Principal Accounting Fees and Services.
91
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Item 15. Exhibits and Financial Statement Schedules.
92
Item 16. Form 10-K Summary.
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Table of Contents
PART I

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Annual Report on Form 10-K and the accompanying annual report to shareholders, particularly in the Shareholders’ Letter and Management’s Discussion and Analysis, 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 adverse effects the COVID-19 pandemic, or future pandemics, may have on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division as well as other(particularly following the COVID-19 pandemic, during which the release dates for certain motion pictures have been postponed); (3) the effects of theatre 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)(4) the effects of adverse economic conditions in our markets, particularly with respectmarkets; (5) the effects of adverse economic conditions on our ability to our hotelsobtain financing on reasonable and resorts division; (3)acceptable terms, if at all; (6) the effects on our occupancy and room rates ofcaused by the relative industry supply of available rooms at comparable lodging facilities in our markets; (4)(7) the effects of competitive conditions in our markets; (5)(8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (6)(9) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our businesses; (7)business; (10) the effects of changes in the availability of and cost of labor and other supplies essential to the operation of our business; (11) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (8)(12) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (9)(13) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, or other incidents of violence in public venues such as hotels and movie theatres; (10)theatres or epidemics; and (14) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders; (11)shareholders. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our abilitycontrol and difficult to timelypredict and successfully integratecould cause actual results to differ materially from those expressed or forecasted in the Movie Tavern operations intoforward-looking statements. Our forward-looking statements are based upon our own circuit; and (12) our ability to achieve the additional revenues and operating income that we anticipate from our additional week of operations in fiscal 2020 and certain extraordinary events that will take place in or near Milwaukee during fiscal 2020, such as the Democratic National Convention and The Ryder Cup.assumptions, which are based upon currently available information. 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 Form 10-K and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Item 1.Business.

General

Item 1.    Business.
General
We are engaged primarily in two business segments: movie theatres and hotels and resorts.

As of December 26, 2019,29, 2022, our theatre operations included 9185 movie theatres with 1,1061,064 screens throughout 17 states (Wisconsin, Illinois, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia), including one movie theatre with 6 screens in Wisconsin owned by a third party and managed by us.. We also operate a family entertainment center, Funset Boulevard, that is adjacent to one of our theatres in Appleton, Wisconsin, and own the Ronnie’s Plaza retail outlet in St. Louis, Missouri, an 84,000 square foot retail center featuring 21 shops and other businesses to which we lease retail space.Wisconsin. As of the date of this Annual Report, we are the 4th largest theatre circuit in the United States.

As of December 26, 2019,29, 2022, our hotels and resorts operations included eightseven wholly-owned or majority-owned and operated hotels and resorts in Wisconsin, Illinois, Nebraska and Oklahoma.Nebraska. We also managed 12manage nine hotels, resorts and other properties for third parties in Wisconsin, California, Minnesota, Nevada, Nebraska, Illinois, Iowa, and Texas.Pennsylvania. As of December 26, 2019,29, 2022, we owned or managed approximately 5,4004,900 hotel and resort rooms.

Both of these business segments are discussed in detail below. For information regarding the revenues, operating income or loss, assets and certain other financial information of these segments for the last three full fiscal years, please see our Consolidated Financial Statementsconsolidated financial statements and the accompanying Note 14 in Part II below.

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Table of Contents
Strategic Plans

Please see our discussion under “Current Plans” in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Theatre Operations

At the end of fiscal 2019,2022, we owned or operated 9185 movie theatre locations with a total of 1,1061,064 screens in Wisconsin, Illinois, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia. We averaged 12.212.5 screens per location at the end of fiscal 2019, compared to 13.12022 and fiscal 2021 and 12.3 screens per location at the end of fiscal 2018, compared to 13.0 screens at the end of fiscal 2017. Included in the fiscal 2019 and fiscal 2018 totals is one theatre with six screens that we manage for a third party and included in the fiscal 2017 total are two theatres with 11 screens that we managed for third parties.2020. Our 9085 company-owned facilities include 4950 megaplex theatres (12 or more screens), representing approximately 67%70% of our total screens, 4034 multiplex theatres (two to 11 screens) and one single-screen theatre. At the end of fiscal 2019, we operated 1,077 first-run screens, 6 of which we operated under management contracts, and 29 budget-oriented screens.

We invested over $350approximately $391 million, excluding acquisitions, to further enhance the movie-going experience and amenities in new and existing theatres over the last six and one-half calendar years, with more investments planned for fiscal 2020.nine-plus years. These investments include:

New theatres. In April 2017, we opened our new 10-screen Southbridge Crossing Cinema in Shakopee, Minnesota. This state-of-the-art theatre includes DreamLoungerSM recliner seating in all auditoriums, twoUltraScreen DLX® auditoriums, as well as aTake FiveSMLoungeandZaffiro’s®Express outlet. In June 2017, we opened our first stand-alone all in-theatre dining location, branded BistroPlex® located in Greendale, Wisconsin. This theatre features eight in-theatre dining auditoriums with DreamLounger recliners, including twoSuperScreen DLX® auditoriums, plus a separate full-serviceTake Five Lounge. In October 2019, we opened our newthe eight-screen Movie Tavern® by Marcus theatre in Brookfield, Wisconsin. This new theatre became the first Movie Tavern by Marcus in Wisconsin. It includes eight auditoriums, each with laser projection and comfortable DreamLoungerSM recliner seating, a full-service bar and food and drink center, and a new delivery-to-seat service model that also allows guests to order food and beverage via our mobile phone application or in-theatre kiosk. Another new nine-screen theatre is currently under construction in Tacoma, Washington, with an expected opening date during our fiscal 2020 fourth quarter. In addition, weWe will consider additional sites for potential new theatre locations in both new and existing markets.

markets in the future.

Theatre acquisitions. In addition to building new theatres, we believe acquisitions of existing theatres or theatre circuits ishas also been a viable growth strategy for us. On February 1,In 2019, we acquired the assets of Movie Tavern®, a New Orleans-based industry leading circuit known for its in-theatre dining concept featuring chef-driven menus, premium quality food and drink and luxury seating. Now branded Movie Tavern by Marcus, the acquired circuit consisted of 208 screens at 22 locations in nine states – Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia. The purchase price consisted of $30 million in cash subject to certain adjustments, and 2,450,000 shares of our common stock, (157,056 of which have been placed in escrow to secure certain post-closing indemnification obligations of the seller under the asset purchase agreement), for a total purchase price of approximately $139.3 million, based upon our closing share price on January 31, 2019.million. The acquisition of the Movie Tavern circuit increased our total number of screens at that time by an additional 23%.
The COVID-19 pandemic had a significant impact on the theatre exhibition industry. Following the pandemic, theatre operators continue to face on-going challenges including supply chain disruptions impacting movie production and a post-production backlog that has resulted in delays of movie releases and a reduced number of films available for theatrical release. A number of theatre operators have filed for bankruptcy relief and many others continue to face difficult financial circumstances. Although we will prioritize our own finances, we will continue to consider potential acquisitions as well as consider management agreements which may possibly lead to opportunities to own. The movie theatre industry is very fragmented, with approximately 50% of United States screens owned by the three largest theatre circuits and the other 50% owned by an estimated 800 smaller operators, making it very difficult to predict when acquisition opportunities may arise. We do not believe that we are geographically constrained, and we believe that we may be able to add value to certain theatres through our various proprietary amenities and operating expertise.

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DreamLounger recliner additions. These luxurious, state-of-the-art recliners allow guests to go from upright to a full-recline position in seconds. These seat changes require full auditorium remodels to accommodate the necessary 84 inches of legroom, resulting in the loss of approximately 50% of the existing traditional seats in an average auditorium. To date, the addition of DreamLoungers has increased attendance at each of our applicable theatres, outperforming nearby competitive theatres and growing the overall market attendance in most cases. Initially, 12 of the 22From fiscal 2019 through fiscal 2021, we added DreamLounger seating at eight acquired Movie Tavern theatres had recliner seating. We added DreamLounger recliner seats to four additional existing Movie Tavern theatres during fiscal 2019, as well as oneor Marcus Wehrenberg®theatre theatres and one newly built Movie Tavern by Marcus theatre. As of December 26, 2019,29, 2022, we offered all DreamLounger recliner seating in 6366 theatres, representing approximately 72%78% of our company-owned, first-run theatres. Including our premium, large format (PLF) auditoriums with recliner seating, as of December 26, 2019,29, 2022, we offered our DreamLounger recliner seating in approximately 77%81% of our company-owned, first-run screens, a percentage we believe to be the highest among the largest theatre chains in the nation. We completed the addition

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Table of DreamLounger recliner seats to another Movie Tavern location during the first quarter of fiscal 2020,Contents
UltraScreen DLX® and we are currently evaluating opportunities to add our DreamLounger premium seating to several additional theatres during the second half of fiscal 2020.

UltraSuperScreen DLX andSuperScreen DLX® (DreamLounger eXperience) conversions.conversions. We introduced one of the first PLF presentations to the industry when we rolled out our proprietaryUltraScreen® concept approximatelyover 20 years ago. We later introduced ourUltraScreen DLX concept by combining our premium, large-format presentation with DreamLounger recliner seating and Dolby® Atmos™ immersive sound to elevate the movie-going experience for our guests. More recently, we began including heated DreamLounger recliner seating in our DLX auditoriums. During fiscal 2019, we opened one newUltraScreen DLX at an existing Marcus Wehrenberg theatre and converted one existing screen into anUltraScreen DLX auditorium at a Movie Tavern by Marcus theatre. During fiscal 2019, we also converted 26 existing screens at 13 Movie Tavern by Marcus theatres and two existing screens at one Marcus Wehrenberg theatre toSuperScreen DLX auditoriums and opened one newSuperScreen DLX auditorium at a newly built Movie Tavern by Marcus theatre. Most of our PLF screens now include the added feature of heated DreamLounger recliner seats. From fiscal 2019 through fiscal 2022, we converted one existing screen at an acquired theatre to UltraScreen DLX, opened one new UltraScreen DLX at an acquired theatre, converted 35 existing screens at acquired theatres to SuperScreen DLX, and opened one new SuperScreen DLX auditorium at a newly built Movie Tavern by Marcus theatre. As of December 26, 2019,29, 2022, we had 31UltraScreen DLX auditoriums, one traditionalUltraScreen auditorium, 8089 SuperScreen DLX auditoriums (a slightly smaller screen than anUltraScreen but with the same DreamLounger seating and Dolby Atmos sound) and three IMAX® PLF screens at 6366 of our theatre locations. As of December 26, 2019,29, 2022, we offered at least one PLF screen in approximately 72%78% of our first-run, company-owned theatres – once again a percentage we believe to be the highest percentage among the largest theatre chains in the nation. Our PLF screens generally have higher per-screen revenues and draw customers from a larger geographic region compared to our standard screens, and we charge a premium price to our guests for this experience. We are currently evaluatingDuring fiscal 2022, we converted four existing screens to SuperScreen DLX, and we continue to evaluate opportunities to convert several additional existing screens toSuperScreen DLX auditoriums in fiscal 2020. In addition, our new theatre under construction in Tacoma, Washington will include one PLF auditorium.

auditoriums.

Signature cocktail and dining concepts. We have continued to further enhance our food and beverage offerings within our existing theatres. We believe our 50-plus years of food and beverage experience in the hotel and restaurant businesses provides us with a unique advantage and expertise that we can leverage to further grow revenues in our theatres. The concepts we are expanding include:

iTake Five Lounge, Take Five ExpressandThe Tavern– these full-service bars offer an inviting atmosphere and a chef-inspired dining menu, along with a complete selection of cocktails, locally-brewed beers and wines. We also offer full liquor service through the concession stand at two theatres. We acquired 22 new bars, known asThe Tavern, in conjunction with our Movie Tavern acquisition and opened a newTavern at our new Brookfield, Wisconsin Movie Tavern by Marcus theatre in fiscal 2019. As of December 26, 2019, we offered bars at 51 theatres, representing approximately 59% of our company-owned, first-run theatres. We are currently evaluating opportunities to add bar service to up to three additional theatres during fiscal 2020, including our new theatre in Tacoma, Washington.

iZaffiro’s Express – these outlets offer lobby dining that includes appetizers, sandwiches, salads, desserts and our signatureZaffiro’sTHINCREDIBLE® handmade thin-crust pizza. In select locations without aTake Five Lounge outlet, we offer beer and wine at theZaffiro’s Express outlet. We opened one newZaffiro’s Express outlet during fiscal 2019 at our new Movie Tavern by Marcus location in Brookfield, Wisconsin, increasing our number of theatres with this concept to 29 as of December 26, 2019, representing approximately 45% of our company-owned, first-run theatres (excluding our in-theatre dining Movie Tavern theatres). We also operate threeZaffiro’s Pizzeria and Bar full-service restaurants.

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•Take Five® Lounge, Take Five Express and The Tavern – These full-service bars offer an inviting atmosphere and a chef-inspired dining menu, along with a complete selection of cocktails, locally-brewed beers and wines. We also offer full liquor service through the concession stand at two theatres. We acquired 22 new bars, known as The Tavern,in conjunction with our Movie Tavern acquisition and opened an additional Tavern at our Brookfield, Wisconsin Movie Tavern by Marcus theatre in fiscal 2019. We closed three Movie Tavern by Marcus theatres in fiscal 2020 and fiscal 2021. We added one Take Five Lounge outlet in fiscal 2021 to a Marcus Wehrenberg theatre that underwent a complete renovation. As of December 29, 2022, we offered bars/full liquor service at 49 theatres, representing approximately 58% of our theatres. We are currently evaluating opportunities to add bar service to additional locations.

iReel Sizzle® – this signature dining concept serves menu items inspired by classic Hollywood and the iconic diners of the 1950s. We offer Americana fare like burgers and chicken sandwiches prepared on a griddle behind the counter, along with chicken tenders, crinkle-cut fries, ice cream and signature shakes. Our new Movie Tavern by Marcus in Brookfield, Wisconsin includes aReal Sizzle. As of December 26, 2019, we operated eightReel Sizzle outlets, and we expect to add oneReel Sizzle outlet to the new theatre currently under construction in Tacoma, Washington.

iOther in-lobby dining – We also operate oneHollywood Café at an existing theatre, and four of the Marcus Wehrenberg theatres offer in-lobby dining concepts, operating under names such asFred’s Drive-InorFive Star. In addition, we are currently testing a Mexican food concept at one theatre, and we are considering expanding this new concept during fiscal 2020. Including these additional concepts, as of December 26, 2019, we offered one or more in-lobby dining concepts in 40 theatres, representing approximately 62% of our company-owned, first-run theatres (excluding our in-theatre dining Movie Tavern theatres).

iIn-theatre dining – As of December 26, 2019, we offered full-service, in-theatre dining with a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 32 theatres and a total of 248 auditoriums, operating under the namesBig Screen BistroSM,Big Screen Bistro ExpressSM, BistroPlexandMovie Tavern by Marcus, representing approximately 37% of our company-owned, first-run theatres.

•Zaffiro’s® Express – These outlets offer lobby dining that includes appetizers, sandwiches, salads, desserts and our signature Zaffiro’s THINCREDIBLE® handmade thin-crust pizza. In select locations without a Take Five Lounge outlet, we offer beer and wine at the Zaffiro’s Express outlet. We opened one new Zaffiro’s Express outlet during fiscal 2019 at our Movie Tavern by Marcus location in Brookfield, Wisconsin, and our number of theatres with this concept totaled 29 as of December 29, 2022, representing approximately 45% of our theatres (excluding our in-theatre dining Movie Tavern theatres). We also operate three Zaffiro’s® Pizzeria and Bar full-service restaurants.
•Reel Sizzle® – This signature dining concept serves menu items inspired by classic Hollywood and the iconic diners of the 1950s. We offer Americana fare like burgers and chicken sandwiches prepared on a griddle behind the counter, along with chicken tenders, crinkle-cut fries, ice cream and signature shakes. Our Movie Tavern by Marcus in Brookfield, Wisconsin includes a Real Sizzle. We added one Reel Sizzle outlet in fiscal 2021 to a Marcus Wehrenberg theatre that underwent a complete renovation. As of December 29, 2022, we operated nine Reel Sizzle outlets.
•Other in-lobby dining – We also operate one Hollywood Café at an existing theatre, and three of the Marcus Wehrenberg theatres offer in-lobby dining concepts sold through the concession stand. Including these additional concepts, as of December 29, 2022, we offered one or more in-lobby dining concepts in 39 theatres, representing approximately 60% of our theatres (excluding our in-theatre dining Movie Tavern theatres).
•In-theatre dining – As of December 29, 2022, we offered in-theatre dining with a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 29 theatres and a total of 229 auditoriums, operating under the names Big Screen BistroSM, Big Screen Bistro ExpressSM, BistroPlex® and Movie Tavern by Marcus, representing approximately 34% of our theatres.
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We offer a “$5“Value Tuesday” promotion at every theatre in our circuit that includes a free complimentary-size popcorndiscounted admission, concessions, food and non-alcoholic beverage to our loyalty program members. We have seen our Tuesday attendance increase dramatically since the introduction of the $5 Tuesday promotion. We believe this promotion has increased movie-going frequency and reached a customer who may have stopped going to the movies because of price, creating another “weekend” day for us without adversely impacting the movie-going habits of our regular weekend customers.price. We introduced our $5 Tuesday promotion with the free popcornpromotions for loyalty members at our Marcus Wehrenberg theatres immediately upon acquisition in December 2016 and did the same thing in February 2019 with our newly acquired Movie Tavern theatres. We experienced an increase in Tuesday performance at the Marcus Wehrenberg theatres and have seen a similar response from customers at our Movie Tavern theatres.theatres after adding this promotion. We also offer a “$6 Student“Student Thursday” promotion at all of our locations that has been well received by that particular customer segment. In addition, we offer a $6 “Young-at-Heart” program for seniors on Friday afternoons that was also introduced to our Movie Tavern locations during our fiscal 2019 first quarter.

In response to the COVID-19 pandemic, we introduced Marcus Private Cinema (“MPC”) in the fourth quarter of fiscal 2020. Under this program, a guest may purchase an entire auditorium for a fixed charge, ranging from $99 to $275 (depending upon the film and number of weeks it has been in theatres). Early on, sales attributable to our MPC program exceeded expectations, offsetting reduced traditional attendance at that time. As new film content became available and as vaccines were rolled out and theatre comfort level improved, the demand for these dedicated shows has slowed. At its peak during the majority of the weeks during our fiscal 2021 first quarter, we averaged over 1,500 MPC events per week, accounting for approximately 21% of our admission revenues during those weeks. While we have continued to offer the MPC program as a strategy to supplement non-peak business periods, as the pandemic has subsided it is no longer significant to our admission revenues.
We offer what we believe to be a best-in-class customer loyalty program called Magical Movie RewardsSM. We currently have approximately 3.85.1 million members enrolled in the program. Approximately 42%45% of all box office transactions and 40% of total transactions in our theatres during fiscal 20192022 were completed by registered members of the loyalty program. The program allows members to earn points for each dollar spent and access special offers available only to members. The rewards are redeemable at the box office, concession stand or at the many Marcus Theatres® food and beverage venues. In addition, we have partnered with Movio, a global leader in data analysis for the cinema industry, to allow more targeted communication with our loyalty members. The software provides us with insight into customer preferences, attendance habits and general demographics, which we believe will help us deliver customized communication to our members. In turn, members of this program can enjoy and plan for a more personalized movie-going experience. The program also gives us the ability to cost effectively promote non-traditional programming and special events, particularly during non-peak time periods. We believe that this will result in increased movie-going frequency, more frequent visits to the concession stand, increased loyalty to Marcus Theatres and ultimately, improved operating results. The acquired Wehrenberg theatres offered a loyalty program
We continue to their customers that had approximately 200,000 members. We converted these members to our Magical Movie Rewards program during fiscal 2017. The acquired Movie Tavern theatres did not offer a loyalty program to their customers. We introduced our Magical Movie Rewards program to these theatres during the second quarter of fiscal 2019 after all necessary technology requirements were completed.

We have recently enhancedenhance our mobile ticketing capabilities, our downloadable Marcus Theatres mobile application, and ourmarcustheatres.comwebsite. We also recently added food and beverage ordering capabilities to our mobile application at selectall of our theatres including our recently opened Movie Tavern location in Brookfield, Wisconsin.fiscal 2020. We will continuehave continued to install additional theatre-level technology, such as new ticketing kiosks, digital menu boards and concession advertising monitors. Each of these enhancements is designed to improve customer interactions, both at the theatre and through mobile platforms and other electronic devices.

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The addition of digital technology throughout our circuit (we offer digital cinema projection on 100% of our first-run screens) has provided us with additional opportunities to obtain non-motion picture alternative content programming from other new and existing content providers, including live and pre-recorded performances of the Metropolitan Opera, as well as sports, musicconcerts and other events, at many of our locations. We offer weekday and weekend alternatealternative content programming at many of our theatres across our circuit. TheThis special programming includes classic movies, live performances, comedy shows and children’s performances. We believe this type of programming is more impactful when presented on the big screen and provides an opportunity to continue to expand our audience base beyond traditional moviegoers.

Revenues for the theatre business, and the motion picture industry in general, are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns, factors over which we have no control. Consistent with prior periods in which blockbustersBlockbusters have historically accounted for a significant portion of our total admission revenues – in the years before the COVID-19 pandemic, our top 15 performing films accounted for 48% of our fiscal 2019 total admission revenues and 42% of our fiscal 2018 total admission revenues. The following five fiscal 2019With fewer films released in recent years due to the pandemic, our top 15 films accounted for nearly 26%55% and 63% of our fiscal 2021 and 2022 total admission revenues, for our circuit:Avengers: Endgame, The Lion King, Frozen 2, Toy Story respectively.
4 andCaptain Marvel.

We obtain our films from several national motion picture production and distribution companies, and we are not dependent on any single motion picture supplier. Our booking, advertising, concession purchases and promotional activities are handled centrally by our administrative staff.

We strive to provide our movie patrons with high-quality picture and sound presentation in clean, comfortable, safe, attractive and contemporary theatre environments. All of our movie theatre complexes feature digital cinema technology; either digital sound, Dolby Atmos or other stereo sound systems; acoustical ceilings; side wall insulation; engineered drapery folds to eliminate sound imbalance, reverberation and distortion; tiled floors; cup-holder chair-arms; and computer-controlled heating, air conditioning and ventilation. We offer stadium seating, a tiered seating system that permits unobstructed viewing, at substantially all of our first-run screens. Computerized box offices permit all of our movie theatres to sell tickets in advance and all of our theatres offer reserved seating. Our theatres are accessible to persons with disabilities and provide wireless headphones for hearing-impaired moviegoers. Other amenities at certain theatres include touch-screen, computerized, self-service ticket kiosks, which simplify advance ticket purchases. We have an agreement to allow moviegoers to buy tickets on Fandango, the largest online ticket-seller.

We have a master license agreement with a subsidiary of Cinedigm Digital Cinema Corp. to deploy digital cinema systems in the majority ofticket-seller, or directly through our company-owned theatre locations. Under the terms of the agreement, Cinedigm’s subsidiary purchased the digital projection systems and licensed them to us under a long-term arrangement. The costs to deploy this new technology are being covered primarily through the payment of virtual print fees from studios to our selected implementation company, Cinedigm. website or app.

Our goals from digital cinema included delivering an improved film presentation to our guests, increasing scheduling flexibility, providing a platform for additional 3D presentations as needed, as well as maximizing the opportunities for alternate programming that may be available with this technology. As of December 26, 2019,29, 2022, we had the ability to offer digital 3D presentations in 386,360, or approximately 36%34%, of our first-run screens, including the vast majority of ourUltraScreens. We have the ability to increase the number of digital 3D capable screens we offer to our guests in the future as needed, based on the number of digital 3D films anticipated to be released during future periods and our customers’ response to these 3D releases.

We sell food and beverage concessions in all of our movie theatres. We believe that a wide variety of food and beverage items, properly merchandised, increases concession revenue per patron. Although popcorn and soda remain the traditional favorites with moviegoers, we continue to upgrade our available concessions by offering varied choices. For example, some of our theatres offer hot dogs, pizza, ice cream, pretzel bites, frozen yogurt, coffee, mineral water and juices. We have also added self-serve soft drink dispensers and grab-and-go candy, frozen treat and bottled drink kiosks to many of our theatres. In recent years, we have added signature cocktail and dining concepts as described above. The response to our new food and beverage offerings has been very positive, and we have plans to continue to expand these food and beverage concepts at additional locations in the future.

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We have a variety of ancillary revenue sources in our theatres, with the largest related to the sale of pre-show and lobby advertising (through our current advertising providers, Screenvision and National CineMedia). We also obtain ancillary revenues from corporate and group meeting sales, sponsorships, internet surcharge fees and alternate auditorium uses. We continue to pursue additional strategies to increase our ancillary revenue sources.

sources, including the addition of a post transaction click-through advertising agreement with Rokt during fiscal 2021.

We also own a family entertainment center,Funset Boulevard, adjacent to our 14-screen movie theatre in Appleton, Wisconsin.Funset Boulevard features a 40,000 square foot Hollywood-themed indoor amusement facility that includes a restaurant, party room, laser tag center, virtual reality games, arcade, outdoor miniature golf course and batting cages.

We also own and operate theRonnie’s Plaza retail outlet in St. Louis, Missouri, an 84,000 square foot retail center featuring 21 shops and other businesses to which we lease retail space.

Hotels and Resorts Operations

Owned and Operated Hotels and Resorts

The Pfister® Hotel

We own and operate The Pfister Hotel, which is located in downtown Milwaukee, Wisconsin. The Pfister Hotel is a full-service luxury hotel and has 307 guest rooms (including 71 luxury suites), the exclusivePfister VIP Club Lounge, two restaurants (including our signature restaurant,Mason Street Grill), three cocktail lounges, a state-of-the-art WELL Spa® + Salon, a high-tech executive boardroom, high-end retail space leased to tenants and a 275-car parking ramp. The Pfister also has 25,000 square feet of banquet and convention facilities, including one of the largest ballrooms in the Milwaukee metropolitan area. In 2018, we celebrated The Pfister Hotel’s 125th anniversary. In 2019,2022, The Pfister Hotel earned its 43rd46th consecutive AAA Four Diamond Award from the American Automobile Association, which represents every year the award has been in existence. Also in 2019,2022, The Pfister was recognized for the fourth year in a row as a top hotel in the Midwest inCondé Nast Traveler’s Readers’ Choice Awards and was featured as the number one downtown Milwaukee hotel byU.S. News & World Report. The Pfister
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currently holds the TripAdvisor® Certificate of Excellence Travelers’ Choice distinction and is a member of Preferred Hotels and Resorts, an organization of independent luxury hotels and resorts, and Historic Hotels of America.

In fiscal 2023 we plan to begin a renovation of the lobby, meeting space and historic building guest rooms at The Pfister Hotel.

The Hilton Milwaukee City Center

We own and operate the 729-room Hilton Milwaukee City Center. The hotel has two cocktail lounges, three restaurants (including our firstMiller Time® Pub & Grilland the award-winning Milwaukee ChopHouse), a cocktail lounge, a Starbucks® outlet and an 870-car parking ramp. Directly connected to the Wisconsin Center convention facility by skywalk, the hotel offers more than 30,000 square feet of meeting and event spaces with state-of-the-art technologies. In 2019,2022, the Hilton Milwaukee City Center earned its eighth consecutive AAA Four Diamond Award from the American Automobile Association and was recognized byMeetings Todayas the Best of MidAmerica winner.

a top hotel in Milwaukee by U.S. News & World Report.

Hilton Madison Monona Terrace

We own and operate the 240-room Hilton Madison Monona Terrace in Madison, Wisconsin. The Hilton Madison Monona Terrace is connected by skywalk to the Platinum LEEDS and GBAC certified Monona Terrace Community and Convention Center andoffering over 250,000 square feet of meeting space. The hotel has fivesix meeting rooms totaling 4,200approximately 6,000 square feet, an indoor swimming pool and a fitness center, a loungecenter. Audrey Kitchen + Bar offers all day dining and a restaurant.the lobby bar also offers food service daily. The Hilton Madison Monona Terrace currently holds the TripAdvisor® Certificatewas awarded American Automobile Association’s Best of Excellence distinction.Housekeeping Award in 2022. A major renovation of this hotel was completed in 2019, including common areas and guestrooms.

The Grand Geneva® Resort & Spa

We own and operate the Grand Geneva Resort & Spa in Lake Geneva, Wisconsin. This destination resort is located on 1,300 acres and includes 355356 guest rooms, 29 newstudio, one, two and three bedroom villas, the exclusiveGeneva Club Lounge, over 60,000 square feet of banquet, meeting and exhibit space, overincluding 13,000 square feet of ballroom space, three specialty restaurants, two cocktail lounges, two championship golf courses, a ski hill, indoor and outdoor tennis courts, three swimming pools, a state-of-the-art WELL Spa® + Salon and fitness complex, horse stables and an on-site airport. In 2019, the2022, Grand Geneva Resort & Spa earned its 21st25th consecutive AAA Four Diamond Award from the American Automobile Association. The resort was also recognized as one of the top five resorts in the Midwest inCondé Nast Traveler’s Readers’ Choice Awards, named as one of Travel & Leisure’s World’s Best in the Midwest and named among the top two Best Resorts in Wisconsin byU.S. News & World Reportfor 2019. The resort currently holds the TripAdvisor®Certificate of Excellence Travelers’ Choice distinction and was named to the TripAdvisor® Award of Excellence Hall of Fame.

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The Skirvin Hilton

We are the principal equity partner and operator of The Skirvin Hilton hotel in Oklahoma City, Oklahoma, the oldest hotel in Oklahoma. This historic hotel has 225 rooms, including 20 one-bedroom suites and one Presidential Suite. The Skirvin Hilton has a restaurant, lounge, fitness center, indoor swimming pool, business center and approximately 18,500 square feet of meeting space. In 2019, The Skirvin Hilton earned its 12th consecutive AAA Four Diamond Award from the American Automobile Association and was named among the top three Best Hotels in Oklahoma City byU.S. News & World Report. The hotel currently holds the TripAdvisor®Certificate of Excellence distinction. In 2016, we completed a A major renovation project at The Skirvin Hilton Hotel, which included renovations of all guestroomsthe reception and lobby bar areas was completed in 2021, and a renovation of the lobbyguest rooms and bar areas. Our equity interestmeeting spaces is underway and is expected to be completed in this hotel was 60% as of December 26, 2019.

2023.

AC Hotel Chicago Downtown

Pursuant to a long-term lease, we operate the AC Hotel Chicago Downtown, a 226-room hotel in Chicago, Illinois. Located in the heart of Chicago’s Magnificent Mile district for shopping, dining and entertainment, district, the AC Hotel by Marriott lifestyle brand targets the millennial traveler searching for a design-led hotel in a vibrant location with high-quality service. The AC Hotel Chicago Downtown features urban, simplistic and clean designs with European aesthetics and elegance, the latest technology and communal function spaces. Amenities include the AC Lounge, a bar area with cocktails, craft beers, wine and tapas, and the AC Kitchen, serving a European-inspired breakfast menu. The AC Hotel Chicago Downtown also features an indoor swimming pool, fitness room, 3,000 square feet of meeting space and an on-site parking facility. The hotel currently holds the TripAdvisorOur SafeHouse® Certificate of Excellence distinction. OurSafeHouse® Chicago is in space connected to this hotel and the hotel has additional retail or restaurant space leasedavailable to an area restaurant.

lease.

The Lincoln Marriott Cornhusker Hotel

We own and operate The Lincoln Marriott Cornhusker Hotel in downtown Lincoln, Nebraska. The Lincoln Marriott Cornhusker Hotel is a 297-room, full-service300 room, full service hotel with 45,600 square feet of meeting space and aMiller Time Pub & Grill.Grill. We also own the Cornhusker Office Plaza, which is a seven-storyseven story building with a total of 85,592 square feet of net leasable office space connected to the hotel by a three-storythree story atrium that is used for local events and exhibits.

The hotel was named #7 of the Top 15 Hotels in the Midwest by Condé Nast Traveler’s Readers’ Choice Awards in 2022.

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Saint Kate®–The Arts Hotel

In January 2019, we closed for renovation one of our owned hotels, the InterContinental Milwaukee hotel,

We own and reopened it in June 2019 asoperate Saint Kate–Kate– The Arts Hotel. LocatedHotel, located in the heart of Milwaukee’s theatre and entertainment district, the 219-room hoteldistrict. Saint Kate– The Arts Hotel features 219 art-inspired guestrooms, 13,000 square feet of flexible meeting space, 11 event rooms and three restaurants, as well as two bars and lounge areas. The hotel also includes a theatre with programming that features plays, lectures classesand theatrical and musical and dance performances, a world-classsix unique gallery space, and other event spaces that host rotating exhibitions, screenings, workshops and more. In 2022, Saint Kate–Kate – The Arts Hotel earned the AAA Four Diamond Award from the American Automobile Association, was namedrecognized as a Best New Hotel of 2019top hotel in theUSA Today 10Best Midwest in Condé Nast Traveler’s Readers’ Choice Awards.

Awards and was highlighted as a top three hotel in Milwaukee by U.S. News & World Report.

The Skirvin Hilton
From 2006 through fiscal 2022 we were the 60% principal equity partner and operator of The Skirvin Hilton hotel in Oklahoma City, Oklahoma, a 225 room historic hotel. On December 16, 2022, we sold The Skirvin Hilton for $36.75 million. See Note 5 in the financial footnotes to the accompanying consolidated financial statements for further discussion of the sale transaction.
Managed Hotels, Resorts and Other Properties

We also manage hotels, resorts and other properties for third parties, typically under long-term management agreements. Revenues from these management contracts may include both base management fees, often in the form of a fixed percentage of defined revenues, and incentive management fees, typically calculated based upon defined profit performance. We may also earn fees for technical and preopening services before a property opens, as well asfor renovation project management and for ongoing accounting and technology services.

In April 2019, we assumed management of

We manage the Hyatt Regency Schaumburg in Schaumburg, Illinois. The newlyIllinois, which was renovated in 2019. Hyatt Regency Schaumburg is conveniently located approximately 15 miles from Chicago O’Hare International Airport and 30 miles from downtown Chicago and is near some of Chicagoland’s most popular attractions and energetic business hubs. This 468-room hotel has more than 30,000 square feet of indoor and outdoor meeting and event space and versatile venues such as a 3,100 square foot terrace. The hotel and its event venues feature the latest audiovisual and state-of-the-art technology, innovative on-site catering and complimentary parking for guests.

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We manage the Murieta Inn and Spa in Rancho Murieta, California. Located near wine country and within the development containing the renowned Murieta Equestrian Center, the largest equestrian facility in California, the 83-room hotel features The Gate, a one-of-a-kind restaurant and bar that offers fresh, seasonal menus using ingredients from the hotel’s five-acre farm and state-of-the-art greenhouse. The hotel has a resort-style outdoor pool and a luxury salon and day spa. The Murieta Inn and Spa also offers up to 15,000 square feet of indoor and outdoor meeting and event space with the latest audio visual and state-of the-art technology. The hotel currently holds the TripAdvisor® Certificate of Excellence distinction.

We manage the DoubleTree by Hilton El Paso Downtown in El Paso, Texas. Situated in El Paso’s Museum District, near the city’s prominent convention and performing arts center, the 200-room DoubleTree by Hilton El Paso Downtown features a rooftop pool and sun deck, along with 8,500 square feet of meeting space.

We manage the Courtyard by Marriott El Paso Downtown/Convention Center, which opened in August 2018. TheCourtyard by Marriott El Paso Downtown/Convention Center has 151 guest rooms, two meeting rooms and an outdoor terrace-top pool.

We manage the Crowne Plaza-Northstar Hotel in Minneapolis, Minnesota. The Crowne Plaza-Northstar Hotel is located in downtown Minneapolis and has 222 guest rooms, 10,000 square feet of meeting space, an outdoor Skygarden for group events, a restaurant, a cocktail lounge and an exercise facility.

We manage The Garland hotel in North Hollywood, California. The Garland hotel hasfeatures 257 recently renovated guest rooms including 12and suites, over 23,000 square feet of meeting and event space - including an amphitheater,a 130-seat theater, a ballroom, and an outdoor event venue ideal for weddings and social events, a restaurant, well-equipped fitness center, and an outdoor swimming pool with two hot tubs.tubs, and a successful on-site restaurant, The Front Yard. The mission-style hotel is located on seven acres near Universal Studios Hollywood. TheHollywood and serves as a preferred hotel currently holdsfor the TripAdvisor® Certificate of Excellence distinction. In 2019,theme park. The Garland was recognized as a top hotel in Los Angeles inCondé Nast Traveler’s Readers’has held the TripAdvisor® Travelers’ Choice AwardsAward for the fifth year in a row. Additionally,eight consecutive years. In 2022, The Garland was recognized as a Top Hotel in Los Angeles in the Condé Nast Traveler’s Readers’ Choice Awards for the eighth year since rebranding, as well as a Top 10 hotelHotel in greaterGreater Los Angeles as ranked by the 20192022 Travel + Leisure World’s Best Awards.

We manage The Front Yard has received national recognition as one of OpenTable’s Top 100 Restaurants for Outdoor Dining in the Hilton Garden Inn Houston NW/WillowbrookUSA in Houston, Texas. The Hilton Garden Inn Houston NW/Willowbrook has 171 guest rooms, a ballroom, a restaurant, a fitness center, a convenience mart and a swimming pool.2022 as well as the recognition in the TripAdvisor® Travelers’ Choice Awards for three consecutive years. The hotel currently holdsand restaurant were both recognized by the TripAdvisor® Certificate of Excellence distinction.

Muse Hotel Awards with Platinum recognition in the World-Class Classic Boutique Hotel and Hotel F&B categories, respectively.

We manage the Hilton Minneapolis/Bloomington in Bloomington, Minnesota. ThisThe hotel offers 257 rooms, 9,200 square feet of meeting space, an indoor swimming pool and a fitness center. TheThis hotel currently holdshas a contemporary feel and has been a service leader within the TripAdvisor® Certificateindustry with recent awards including Hilton’s 2022 Quarterly Brighter Together Blue Energy Award, Wine Spectator’s 2022 Award of Excellence, distinction.

Sun Current Newspaper’s 2022 Best Happy Hour Award, and Hilton’s 2021 Hilton Strong Award.

We manage and own a 10% minority equity interest in the Omaha Marriott Downtown at The Capitol District hotel. The 333-room, 12-story full service hotel serves as an anchor for the Capitol District, an upscale urban destination dining and entertainment community in downtown Omaha, Nebraska. The development also includes 218 luxury residential apartments, office space, a parking garage and retail space for restaurants, shops and entertainment. It also features a plaza for events and concerts. The hotel currently holds the TripAdvisor®Certificate Travelers’ Choice distinction and is ranked the #1 hotel in Omaha by TripAdvisor® and was a top finalist for Best of Excellence distinction.

We formerly managed the Heidel House Resort & Spa in Green Lake, Wisconsin. On May 20, 2019, the owners of this resort closedOmaha. Marriott International recognized this property permanently.

We formerly managedas Hotel of the Sheraton Chapel HillYear, Classic Premium for the 2019 year. In 2021, The Omaha Marriott Downtown was awarded the prestigious Omaha Metropolitan Area Tourism Award for “Best Hotel” by Visit Omaha, as well as The Reader’s Choice for “Best Hotel.” The hotel was the 2022 Gold Winner for World Class City Hotel presented by the Muse Hotel

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Awards. The Omaha Marriott Downtown was also awarded first place in the 2023 Best of B2B recognition for Best Hotel in Chapel Hill, North Carolina. Omaha.
In August 2019,2021, we assumed management of the owners soldnewly transitioned Hyatt Regency Coralville Hotel & Conference Center in Coralville, Iowa. The 286-room hotel is the anchor for the thriving Iowa River Landing District, which is home to many local shops, restaurants and upscale residential condos as well as the Xtream Arena and Green State Fieldhouse. Iowa River Landing is located just a few miles from the University of Iowa and brings in activity for college athletics, as well as events. The hotel’s refreshed conference center includes approximately 70,000 square feet of event space including two ballrooms, two outdoor terraces, expansive pre-function space, an exhibit hall, and breakout meeting rooms to accommodate many types of events. A comprehensive renovation of the hotel’s guestrooms, restaurant and fitness room is underway and is anticipated to be completed in the third quarter of 2023.
In December 2021, we assumed management of the 248-room Kimpton Hotel Monaco Pittsburgh. This hotel is our first full-service hotel in Pennsylvania and asthe first Kimpton in the Hotel and Resorts Division’s portfolio. The hotel also includes approximately 11,300 square feet of meeting space, The Commoner full-service restaurant and a result our contract to manageseasonal rooftop beer garden. We own a 10% minority equity interest in this hotel.
During fiscal 2021, we managed The DoubleTree by Hilton El Paso Downtown and the hotel was terminated.

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Courtyard by Marriott El Paso Downtown/Convention Center. We ceased management of both hotels effective February 28, 2022.

We also provide hospitality management services, including check-in, housekeeping and maintenance, for a vacation ownership development adjacent to the Grand Geneva Resort & Spa branded as the Holiday Inn Club Vacations at Lake Geneva Resort. The development includes 68 two-room timeshare units (136 rooms) and a timeshare sales center.

We also manage two condominium hotels under long-term management contracts. Revenues from these management contracts are larger than typical management contracts because, under an agreed-upon rental pool arrangement, room revenues are shared at a defined percentage with individual condominium owners. In addition, we own all of the common areas of these facilities, including all restaurants, lounges, spas and gift shops, and retain all of the revenues from these outlets.

We manage the Timber Ridge Lodge & Waterpark, an indoor/outdoor water parkwaterpark and condominium hotel complex in Lake Geneva, Wisconsin. The Timber Ridge Lodge & Waterpark is a 225-unit condominium hotel on the same campus as the Grand Geneva Resort & Spa. The Timber Ridge Lodge & Waterpark has meeting rooms totaling 3,6403,500 square feet, a general store, a restaurant-cafe,restaurant, a snack bar and lounge, a fitness center and an entertainment arcade. The hotel currently holds the TripAdvisor® Certificate of Excellence distinction.

We manage the Platinum Hotel & Spa, a condominium hotel in Las Vegas, Nevada just off the Las Vegas Strip, and own the hotel’s public space. The Platinum Hotel & Spa has 255 one and two-bedroom suites. This non-gaming, non-smoking hotel also has a lounge, an on-site restaurant, lounge, a WELL Spa® + Salonindoor-outdoor heated pool and 14,897 square feet of meeting space, including 6,336 square feet of outdoor space. The hotel currently holds the TripAdvisor® Certificate of Excellence distinction. We own 16 previously unsold condominium units at the Platinum Hotel & Spa.

We own a 0.49% minority interest in The Hotel Zamora and Castile Restaurant in St. Pete Beach, Florida. We have agreed to sell this interest to the majority owner during the next several years.

We own thetwo SafeHouse restaurants in Milwaukee, Wisconsin after purchasing it in 2015. Theand Chicago, Illinois. SafeHouse is an iconic, spy-themed restaurant and bar that has operated in Milwaukee for over 5056 years and has been owned by us for approximately seven years. We opened a newThe SafeHouse location in Chicago, Illinois was opened in 2017 and also opened theEscapeHouse Chicago, a complimentary business capitalizing on the popularity of cooperative team escape games.

2017.

Our Wisconsin Hospitality Linen Service (WHLS) business unit provides commercial laundry services for our hotel and resort properties in Wisconsin and for other unaffiliated hotels in the Midwest. WHLS currently processesprocessed nearly 16 million pounds of linen each year.year prior to the COVID-19 pandemic and over 14 million pounds of linen in 2022. WHLS has been a leader in commercial laundry services for the hospitality industry in the Midwest for over 2025 years.

We have taken our highly-regarded web development team and created a new business unit managed by the hotels and resorts division called Graydient Creative. Graydient focuses on website design and development, branding and print design, social media management and new software and application development for both our own properties and third party clients.

We operate many award winningaward-winning restaurants and lounges within our hotel portfolio that have earned distinctions such as the TripAdvisor® Certificate of Excellence Travelers’ Choice and theWine Spectator Award of Excellence.

In 2017, we were awarded the Service Excellence Award by Governor Scott Walker at the Wisconsin Governor’s Conference on Tourism. The Service Excellence Award honors a Wisconsin business that has achieved significant success and growth by providing exceptional service to its customers and a strong charitable involvement in its community. Marcus®  Hotels & Resorts received the award for its ongoing commitment to supporting Wisconsin charities and tourism-driven initiatives. In 2019, we were one of ten nationwide recipients of the Americans for the Arts’ Arts and Business Partnership Award, which recognizes businesses for their exceptional involvement with the arts that enriches the workplace, enhances education and transforms communities.

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Competition

Competition
Both of our businesses experience intense competition from national, regional and local chain and franchise operations, some of which have substantially greater financial and marketing resources than we have. Most of our facilities are located in close proximity to competing facilities.

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Our movie theatres compete with large national movie theatre operators, such as AMC Entertainment, Cinemark and Regal Cinemas, as well as with a wide array of smaller first-run exhibitors. Movie exhibitors also face competition from a number of other movie exhibition delivery systems, such as streaming services, premium video-on-demand (PVOD), digital downloads, video-on-demand, pay-per-view television, DVDs and network and syndicated television. We also face competition from other forms of entertainment competing for the public’s leisure time and disposable income.

income including, but not limited to, sporting events, live performance arts, and concerts.

Our hotels and resorts compete with the hotels and resorts operated and/or franchised by Hyatt Corporation, Marriott Corporation, Hilton Worldwide and others, along with other regional and local hotels and resorts. Increasingly, we also face competition from new channels of distribution in the travel industry, such as peer-to-peer inventory sources that allow travelers to book stays on websites that facilitate short-term rental of homes and apartments from owners, thereby providing an alternative to hotel rooms, such as Airbnb, Vrbo and HomeAway. We compete for hotel management agreements with a wide variety of national, regional and local management companies based upon many factors, including the value and quality of our management services, our reputation, our ability and willingness to invest our capital in joint venture projects, the level of our management fees and our relationships with property owners and investors.

We believe that the principal factors of competition in both of our businesses, in varying degrees, are the price and quality of the product, quality and location of our facilities and customer service. We believe that we are well positioned to compete on the basis of these factors.

Seasonality

Our

Seasonality
Excluding the impact of the COVID-19 pandemic, our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. Our second and third fiscal quarters often produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December has an impact on the results of our fiscal first and fourth quarters in that division, particularly when we have a 53-week year.

Environmental Regulation

Federal, state and local environmental legislation has not had a material effect on our capital expenditures, earnings or competitive position. However, our activities in acquiring and selling real estate for business development purposes have been complicated by the continued emphasis that our personnel must place on properly analyzing real estate sites for potential environmental problems. This circumstance has resulted in, and is expected to continue to result in, greater time and increased costs involved in acquiring and selling properties associated with our various businesses.

Employees

Additionally, in connection with our ownership, management, and development of properties, we are subject to various federal, state, and local laws, ordinances, and regulations relating to environmental protection. Under some of these laws, a current or former owner or operator of real property may be held liable for the costs of investigating or remediating hazardous or toxic substances or wastes on, under, or in such real property, as well as third-party sites where the owner or operator sent wastes for disposal. Such laws may impose liability without regard to whether the owner or operator knew, or was at fault in connection with, the presence or release of such hazardous substances or wastes. Although we are not aware of any current material obligations for investigating or remediating hazardous substances or wastes at our owned properties, the future discovery of substances or wastes at any of our owned properties, or the failure to remediate such contaminated property properly, could adversely affect our ability to develop or sell such real estate, or to borrow using such real estate as collateral. In addition, the costs of investigating or remediating contamination at our properties or at properties where we sent substances or wastes for disposal, may be substantial.
We are also subject to various requirements, including those contained in environmental permits required for our operations, governing air emissions, effluent discharges, the use, management, and disposal of hazardous substances and wastes, and health and safety. From time to time, we may be required to manage, abate, or remove mold, lead, or asbestos-containing materials at our properties. We believe our properties and operations are in compliance, in all material respects, with all federal, state, and local environmental laws and ordinances. However, additional operating costs and capital expenditures could be incurred if additional or more stringent requirements are enacted in the future.

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Human Capital and Corporate Responsibility
Our focus on “People Pleasing People” is at the heart of how we care for our guests, customers and employees. We recognize that our success is dependent on our employees’ commitment to delivering quality service to our guests and customers. Therefore, our strategic priorities include continuing to develop a committed team dedicated to service and fostering a diverse and inclusive culture that prioritizes wellbeing and emphasizes development and growth for all employees.
Employees
As of December 26, 2019,29, 2022, we had approximately 10,5008,050 employees, approximately 67%61% of whom were employed on a variable or part-time basis. A number of our (1) hotel employees at the Crowne Plaza Northstar in Minneapolis, Minnesota are covered by a collective bargaining agreement that expires on October 31, 2020; (2) operating engineers at The Pfister Hotel and the Hilton Milwaukee City Center are covered by collective bargaining agreements thatwhich will expire on AprilJune 30, 2020 and2024, February 15, 2025, December 31, 2019, respectively; (3) hotel2025 and May 31, 2028. A number of our employees at the Hilton Milwaukee City Center and The PfisterAC Chicago Hotel are covered by a collective bargaining agreement thatwhich expires on February 14, 2022; (4) painters in the Hilton Milwaukee City Center and The Pfister Hotel are covered by a collective bargaining agreement that expires on May 31, 2022; and (5) operating engineers at the Hyatt Regency Schaumburg are covered by a collective bargaining agreement that expires on February 29, 2020.

December 23, 2024. As of the end of fiscal 2019,2022, approximately 6%5% of our employees were covered by a collective bargaining agreement,agreements, none of which approximately 16% were covered by an agreement that will expire within one year.

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before December 28, 2023.

Employee Wellbeing and Retention

We believe our employees are among our most important resources and are critical to our continued success. We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues. We pay our employees competitively and offer a broad range of company-paid benefits, which we believe are competitive with others in our industry. Both of our operating divisions are experiencing challenges related to a labor shortage that has arisen as the country emerges from the pandemic. Difficulties in hiring new associates has impacted our ability to service our increasing customer counts in both theatres and hotels and increased labor costs.
Diversity and Inclusion
We are committed to hiring, developing and supporting a diverse and inclusive workplace. Our management teams and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination.
Website Information and Other Access to Corporate Documents

Our corporate website iswww.marcuscorp.com. All of our Form 10-Ks, Form 10-Qs and Form 8-Ks, and amendments thereto, are available free of charge on this website as soon as practicable after they have been filed with the SEC. We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report. In addition, our corporate governance guidelines and the charters for our Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are available free of charge on our website. If you would like us to mail you a copy of our corporate governance guidelines or a committee charter, please contact Thomas F. Kissinger, Senior Executive Vice President, General Counsel and Secretary, The Marcus Corporation, 100 East Wisconsin Avenue, Suite 1900, Milwaukee, Wisconsin 53202-4125.

Item 1A.Risk Factors.

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Item 1A.    Risk Factors.
The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition, operating results, and cash flows could be materially adversely affected.

Operational Risks
The LackCOVID-19 pandemic had material adverse effects on our theatre and hotels and resorts businesses, results of Bothoperations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness and the QuantityCOVID-19 pandemic, or future pandemics, may have similar material adverse effects in the future.
The COVID-19 pandemic had an unprecedented impact on both of our business segments. As an operator of movie theatres, hotels and Audience Appealresorts, restaurants and bars, each of Motion Pictures May Adversely Affectwhich consists of spaces where customers and guests gather in close proximity, our businesses were significantly impacted by protective actions that federal, state and local governments took to control the spread of the pandemic. These actions included, among other things, declaring national and state emergencies, encouraging social distancing, restricting freedom of movement and congregation, mandating non-essential business closures and/or capacity restrictions, issuing shelter-in-place, quarantine and stay-at-home orders, and issuing masking and/or vaccination mandates.
Although we do not believe it will be necessary to reclose or again reduce operating levels at our theatres and hotels, we cannot predict when the effects of the COVID-19 pandemic will fully subside, the effect of any variants on government guidance or consumer behavior, if a similar or different pandemic may occur again in the future or when our theatres business will return to normal levels. The longer and more severe the pandemic, including repeat or cyclical outbreaks or future pandemics, the more severe the adverse effects will be on our businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness.
Even when the COVID-19 pandemic fully subsides, we cannot guarantee that we will recover as rapidly as other industries. While we have resumed normal operations at our theatres and hotels and resorts, there is continued uncertainty as to the pace of reaching full capacity and our financial performance. Because we operate in several different jurisdictions, government directives related to customer behavior and our operations may vary within our theatres and hotels and resorts. Fears and concerns regarding the COVID-19 pandemic or future pandemics could cause our customers to avoid assembling in public spaces for some time despite the relaxation or removal of government directives that had been in place. We would have no control over and cannot predict the length of any future required closure of or restrictions on our theatres and hotels and resorts due to the COVID-19 pandemic or future pandemics. If we are unable to generate revenues due to a future prolonged period of closure or do not experience significant increases in our businesses volumes at our reopened theatres and hotels and resorts, this would negatively impact our ability to remain in compliance with our debt covenants, meet our payment obligations and fund capital projects. In such an event, we would either seek covenant waivers or attempt to amend our debt covenants, though there is no certainty that we would be successful in such efforts. If we are not successful in such efforts, our lenders could declare a default and require immediate repayment of amounts owing under our Credit Agreement and senior notes, which could have a material adverse effect on our ability to operate our business. Additionally, we could seek additional liquidity through the issuance of new debt or equity. Our Financial Results.

ability to obtain additional financing and the terms of any such additional financing would depend in part on factors outside of our control, and we may be unable to obtain such additional financing on acceptable terms or at all.

The lack of both the quantity and audience appeal of motion pictures may adversely affect our financial results.
The financial results of our movie theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns, factors over which we have no control. The relative success of our movie theatre business will continue to be largely dependent upon the quantity and audience appeal of films made available by the movie studios and other producers. Poor performance of films, a disruption in the production of films due to events such as a strike by actors, writers or directors, or a reduction in the marketing efforts of the film distributors to promote their films could have an adverse impact on our business and results of operations. During fiscal 2020, fiscal 2021 and fiscal 2022 our industry experienced a significant reduction in the quantity of films available to exhibit in theatres. We expect the quantity of new film releases
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available for theatrical exhibition to continue to be lower than historical levels during fiscal 2023 as the industry continues to rebound from disruptions in movie production during the COVID-19 pandemic. Studios may also determine that certain types of films will not be released for theatrical exhibition and will go straight to streaming services, further impacting the quantity of films available. Also, our quarterly results of operations are significantly dependent on the quantity and audience appeal of films that we exhibit during each quarter. As a result, our quarterly results may be unpredictable and somewhat volatile.

Our Financial Results Mayfinancial results may be Adversely Impactedadversely impacted by Unique Factors Affectingunique factors affecting the Theatre Exhibition Industry, Suchtheatre exhibition industry, such as the Shrinking Video Release Window,shrinking video release window, the Increasing Piracyincreasing piracy of Feature Filmsfeature films and the Increasing Useincreasing use of Alternative Film Distribution Channelsalternative film distribution channels and Other Competing Formsother competing forms of Entertainment.

entertainment.

Over the last decade, the average video release window, which represents the time that elapses from the date of a film’s theatrical release to the date a film is released to other channels, including streaming services, video on-demand (VOD)(“VOD”) and DVD, has decreased from approximately six months to approximately 45 days and in some cases, less than three months.more limited instances, films have been immediately released to such alternative channels without any theatrical release. In the past, more than one studio has discussed their interest in creating a new, shorter premium VOD window. We(“PVOD”) window and in one case, an agreement was reached between a studio and several large exhibitors, including ourselves, that includes a 17-day PVOD window for certain films and a 31-day PVOD window for certain more successful films. In addition, some studios have released certain films theatrically and on their proprietary streaming services on the same day and date. Although other studios have not taken this approach and several have reaffirmed their commitment to an exclusive theatrical distribution window for film releases, we can provide no assurance that these release windows, which are determined by the film studios and are subject to negotiation and acceptance by exhibitors, will not shrink further, which could have an adverse impact on our movie theatre business and results of operations.

Piracy of motion pictures is prevalent in many parts of the world. Technological advances allowing the unauthorized dissemination of motion pictures increase the threat of piracy by making it easier to create, transmit and distribute high quality unauthorized copies of such motion pictures. The day and date release of films to studios' proprietary streaming services has shortened the timing for availability of high quality unauthorized copies of such motion pictures. The proliferation of unauthorized copies and piracy of motion pictures may have an adverse effect on our movie theatre business and results of operations.

We face competition for movie theatre patrons from a number of alternative motion picture distribution channels, such as DVD, network, cable and satellite television, video on-demand, pay-per-view television, digital downloads and streaming services. The number of streaming services has been increasing and, in some cases, streaming services are producing theatrical-quality original content that is bypassing the theatrical release window entirely. Periodically, internet ticketing intermediaries introduce services and products with the stated intention of increasing movie-going frequency. The actual impact these services and products may have on our relationship with the customer and our results of operations is unknown at this time. We also compete with other forms of entertainment competing for our patrons’ leisure time and disposable income such as concerts, amusement parks, sporting events, home entertainment systems, video games and portable entertainment devices such as MP3 players,including tablet computers and smart phones. An increase in popularity of these alternative film distribution channels and competing forms of entertainment may have an adverse effect on our movie theatre business and results of operations.

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A Deteriorationdeterioration in Relationshipsrelationships with Film Distributors Could Adversely Affect Our Abilityfilm distributors could adversely affect our ability to Obtain Commercially Successful Filmsobtain commercially successful films or Increase Our Costsincrease our costs to Obtain Such Films.

obtain such films.

We rely on the film distributors for the motion pictures shown in our theatres. Our business depends to a significant degree on maintaining good relationships with these distributors. Deterioration in our relationships with any of the major film distributors could adversely affect our access to commercially successful films or increase our costs to obtain such films and adversely affect our business and results of operations. Because the distribution of motion pictures is in large part regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases and consent decrees, we cannot ensure a supply of motion pictures by entering into long-term arrangements with major distributors. Rather, we must compete for licenses on a film-by-film and theatre-by-theatre basis and are required to negotiate licenses for each film and for each theatre individually. We are periodically subject to audits on behalf of the film distributors to ensure that we are complying with the applicable license agreements.

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The Relative Industry Supplyrelative industry supply of Available Roomsavailable rooms at Comparable Lodging Facilities May Adversely Affect Our Financial Results.

comparable lodging facilities may adversely affect our financial results.

Historically, a material increase in the supply of new hotel rooms in a market can destabilize that market and cause existing hotels to experience decreasing occupancy, room rates and profitability. If such over-supply occurs in one or more of our major markets, we may experience an adverse effect on our hotels and resorts business and results of operations.

Adverse Economic Conditions in Our Markets May Adversely Affect Our Financial Results.

Downturns or adverse economic conditions affecting the United States economy generally, and particularly downturns or adverse economic conditions in the Midwest and in our other markets, adversely affect our results of operations, particularly with respect to our hotels and resorts division. Poor economic conditions can significantly adversely affect the business and group travel customers, which are the largest customer segments for our hotels and resorts division. Specific economic conditions that may directly impact travel, including financial instability of air carriers and increases in gas and other fuel prices, may adversely affect our results of operations. Additionally, although our theatre business has historically performed well during economic downturns as consumers seek less expensive forms of out-of-home entertainment, a significant reduction in consumer confidence or disposable income in general may temporarily affect the demand for motion pictures or severely impact the motion picture production industry, which, in turn, may adversely affect our results of operations.

If the Amount of Sales Made Through Third-Party Internet Travel Intermediaries Increases Significantly, Consumer Loyalty to Our Hotels Could Decrease and Our Revenues Could Fall.

We expect to derive most

Each of our business from traditional channels of distribution. However, consumers now use internet travel intermediaries regularly. Some of these intermediaries are attempting to increase the importance of pricesegments and general indicators of quality (such as “four-star downtown hotel”) at the expense of brand/hotel identification. These agencies hope that consumers will eventually develop brand loyalties to their reservation system rather than to our hotels. If the amount of sales made through internet travel intermediaries increases significantly and consumers develop stronger loyalties to these intermediaries rather than to our hotels, we mayproperties experience an adverse effect on our hotels and resorts business and results of operations.

Each of Our Business Segments and Properties Experience Ongoing Intense Competition.

ongoing intense competition.

In each of our businesses, we experience intense competition from national, regional and local chain and franchise operations, some of which have substantially greater financial and marketing resources than we have. Most of our facilities are located in close proximity to other facilities which compete directly with ours. The motion picture exhibition industry is fragmented and highly competitive with no significant barriers to entry. Theatres operated by national and regional circuits and by small independent exhibitors compete with our theatres, particularly with respect to film licensing, attracting patrons and developing new theatre sites. Moviegoers are generally not brand conscious and often choose a theatre based on its location, its selection of films and its amenities. With respect to our hotels and resorts division, our ability to remain competitive and to attract and retain business and leisure travelers depends on our success in distinguishing the quality, value and efficiency of our lodging products and services from those offered by others. If we are unable to compete successfully in either of our divisions, this could adversely affect our results of operations.

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Changes in the availability of and the cost of labor could adversely affect our business.

Our business could be adversely impacted by increases in labor costs, including wages and benefits (which are two of our most significant costs) including those increases triggered by regulatory actions regarding wages, scheduling and benefits; increased health care and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high quality employees with the right skill sets and increased wages, benefits and costs related to the COVID-19 pandemic. A constrained labor market may result in increasing levels of employee turnover, making it increasingly difficult to locate and hire sufficient numbers of employees and to train employees to deliver a consistently high-quality customer experience, which could materially harm our business and results of operations. Furthermore, we have experienced, and could continue to experience, a shortage of labor for theatres and hotels and resorts positions, which could decrease the pool of available qualified talent for key functions. Labor shortages may also result in an increased use of contractors to perform certain operations and may result in higher costs.
Supply chain disruptions may negatively impact our operating results.
We May Not Achieverely on a limited number of suppliers for certain products, supplies and services. Shortages, delays, or interruptions in the Expected Benefitsavailability of food and Performancebeverage items and other supplies to our theatres and restaurants may be caused by adverse weather conditions; natural disasters; governmental regulation; recalls; commodity availability; seasonality; public health crises or pandemics; labor issues or other operational disruptions; the inability of our suppliers to manage adverse business conditions, obtain credit or remain solvent; or other conditions beyond our control. Such shortages, delays or interruptions could adversely affect the availability, quality, and cost of the items we buy and the operations of our business. Supply chain risk could increase our costs and limit the availability of products that are critical to our operations.
During the recovery from the impacts of the COVID-19 pandemic, we have, with regard to certain items, experienced difficulties in maintaining a consistent supply, seen delays in production and deliveries, been required to identify alternative suppliers, and suspended sales regionally or entirely. These issues may continue to occur, and we plan to minimize the impact by focusing on the supply of those items with the greatest impact on our sales and operations.
Adverse weather conditions, particularly during the winter in the Midwest and in our other markets, may adversely affect our financial results.
Poor weather conditions adversely affect business and leisure travel plans, which directly impacts our hotels and resorts division. In addition, theatre attendance on any given day may be negatively impacted by adverse weather conditions. In particular, adverse weather during peak movie-going weekends or holiday periods may negatively affect our results of operations. Adverse winter weather conditions may also increase our snow removal and other maintenance costs in both of our divisions.
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Our results are seasonal, resulting in unpredictable and varied quarterly results.
Our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. Our second and third fiscal quarters often produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December has an impact on the results of our fiscal first and fourth quarters in that division, particularly when we have a 53-week year.
Our properties are subject to risks relating to acts of God, terrorist activity and war and any such event may adversely affect our financial results.
Acts of God, natural disasters, war (including the potential for war), terrorist activity (including threats of terrorist activity), incidents of violence in public venues such as hotels and movie theatres, pandemics and epidemics (such as COVID-19, SARS, bird flu and swine flu), travel-related accidents, as well as political unrest and other forms of civil strife and geopolitical uncertainty may adversely affect the lodging and movie exhibition industries and our results of operations. Terrorism or other similar incidents may significantly impact business and leisure travel or consumer choices regarding out-of-home entertainment options and consequently demand for hotel rooms or movie theatre attendance may suffer. In addition, inadequate preparedness, contingency planning, insurance coverage or recovery capability in relation to a major incident or crisis may prevent operational continuity and consequently impact the reputation of our businesses.
If the amount of sales made through third-party internet travel intermediaries increases significantly, consumer loyalty to our hotels could decrease and our revenues could fall.
We expect to derive most of our business from traditional channels of distribution. However, consumers now use internet travel intermediaries regularly. Some of these intermediaries are attempting to increase the importance of price and general indicators of quality (such as “four-star downtown hotel”) at the expense of brand/hotel identification. These agencies hope that consumers will eventually develop brand loyalties to their reservation system rather than to our hotels. If the amount of sales made through internet travel intermediaries increases significantly and consumers develop stronger loyalties to these intermediaries rather than to our hotels, we may experience an adverse effect on our hotels and resorts business and results of operations.
Financial Risks
Adverse economic conditions in our markets may adversely affect our financial results.
Downturns or adverse economic conditions affecting the United States economy generally, and particularly downturns or adverse economic conditions in the Midwest and in our other markets, adversely affect our results of operations, particularly with respect to our hotels and resorts division. Poor economic conditions, including those resulting from the COVID-19 pandemic, can significantly adversely affect the demand of business and group travel customers, which have historically been among the largest customer segments for our hotels and resorts division. Specific economic conditions that may directly impact travel, including financial instability of air carriers and increases in gas and other fuel prices, may adversely affect our results of operations. Additionally, although our theatre business has historically performed well during economic downturns as consumers seek less expensive forms of out-of-home entertainment, a significant reduction in consumer confidence or disposable income in general may temporarily affect the demand for motion pictures or severely impact the motion picture production industry, which, in turn, may adversely affect our results of operations.
Our businesses are heavily capital intensive and preopening and start-up costs, increasing depreciation expenses and impairment charges may adversely affect our financial results.
Both our movie theatre and hotels and resorts businesses are heavily capital intensive. Purchasing properties and buildings, constructing buildings, renovating and remodeling buildings and investing in joint venture projects all require substantial upfront cash investments before these properties, facilities and joint ventures can generate sufficient revenues to pay for the upfront costs and positively contribute to our profitability. In addition, many growth opportunities, particularly for our hotels and resorts division, require lengthy development periods during which significant capital is committed and preopening costs and early start-up losses are incurred. We expense these preopening and start-up costs as incurred. As a
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result, our results of operations may be adversely affected by our significant levels of capital investments. Additionally, to the extent we capitalize our capital expenditures, our depreciation expenses may increase, thereby adversely affecting our results of operations. Several of our hotels are scheduled for significant reinvestment in the next one to two years.
We periodically consider whether indicators of impairment of long-lived assets held for use are present. Demographic changes, economic conditions and competitive pressures may cause some of our properties to become unprofitable. Deterioration in the performance of our properties could require us to recognize impairment losses, thereby adversely affecting our results of operations.
Adverse economic conditions, including disruptions in the financial markets, may adversely affect our ability to obtain financing on reasonable and acceptable terms, if at all, and impact our ability to achieve certain of our growth objectives.
We expect that we will require additional financing over time, the amount of which will depend upon a number of factors, including the number of theatres and hotels and resorts we acquire and/or develop, the amount of capital required to refurbish and improve existing properties, the amount of existing indebtedness that requires repayment in a given year and the cash flow generated by our businesses. Downturns or adverse economic conditions affecting the United States economy generally, and the United States equity and credit markets specifically, may adversely impact our ability to obtain additional short-term and long-term financing on reasonable terms or at all, which would negatively impact our liquidity and financial condition. As a result, a prolonged downturn in the equity or credit markets would also limit our ability to achieve our growth objectives.
We may not be able to obtain capital when desired on favorable terms, if at all, and we may not be able to obtain capital or complete acquisitions through the use of equity or without dilution to our shareholders.
We may need additional financing to execute on our current or future business strategies, including to develop new or enhance existing products and services, acquire businesses and technologies, or otherwise to respond to competitive pressures.
If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our shareholders could be significantly diluted, and newly-issued securities may have rights, preferences or privileges senior to those of existing shareholders. If we accumulate additional funds through debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for our business activities. We cannot provide assurances that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, when we desire them, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our products and services, or otherwise respond to competitive pressures would be significantly limited. Any of these factors could harm our results of operations.
Our ability to pay dividends may be limited or otherwise restricted.
For certain periods during fiscal 2020, all of fiscal 2021 and certain periods during fiscal 2022, we suspended the payment of dividends on shares of our common stock. We resumed paying a quarterly dividend in September 2022. Our ability to pay dividends is currently limited by the terms of our debt agreements, which contain restrictions on the ability of our board of directors to declare or pay dividends on shares of our common stock. Under our debt agreements, we may pay a cash dividend up to a specified amount, provided we have satisfied certain financial covenants in, and are not in default under, the debt agreements. Ultimately, the declaration of future dividends on our common stock will be at the discretion of our board of directors and will depend upon many factors, including our results of operations, financial condition, earnings, capital requirements, limitations in our debt agreements and legal requirements.
Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to repay our debt.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our Convertible Senior Notes due 2025 (“Convertible Notes”), depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our businesses may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or
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delaying investments or capital expenditures, selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations and have an adverse effect on our business and results of operations.
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes upon a fundamental change, and our current and future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes.
If we settle the Convertible Notes by cash, or a combination of cash and shares of our common stock upon the occurrence of a fundamental change as described in the indenture governing the Convertible Notes, we will be required to make cash payments in respect of the Convertible Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Convertible Notes being surrendered or converted. In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversions of the Convertible Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the indenture governing the Convertible Notes or to pay any cash payable on future conversions of the Convertible Notes as required by such indenture would constitute a default under such indenture. A default under the indenture governing the Convertible Notes or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or make cash payments upon conversions of the Convertible Notes.
The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the Convertible Notes is triggered, holders of Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
Conversion of the Convertible Notes would dilute the ownership interest of existing stockholders, or may otherwise depress the price of our common stock.
The conversion of some or all of the Convertible Notes would dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Convertible Notes. The Convertible Notes may from time to time in the future be convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. The conversion rate is subject to adjustment for certain events, including distributions and dividends paid to holders of common stock, which results in increased dilution to common stockholders to the extent we deliver shares of our common stock upon conversion of any of the Convertible Notes. In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.
We are subject to counterparty risk with respect to the Convertible Notes Capped Call Transactions.
The Capped Call Counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that one or more of such Capped Call Counterparties may default under the Capped Call Transactions. Our exposure to the credit risk of the Capped Call Counterparties will not be secured by any collateral. If any Capped Call Counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that counterparty. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in our common stock market price and
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in the volatility of the market price of our common stock. In addition, upon a default by the Capped Call Counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurance as to the financial stability or viability of any Capped Call Counterparty.
Strategic InitiativesRisks
We may not achieve the expected benefits and Acquisitions.

performance of our strategic initiatives and acquisitions.

Our key strategic initiatives in our theatre and hotels and resorts divisions often require significant capital expenditures to implement. We expect to benefit from revenue enhancements and/or cost savings as a result of these initiatives. However, there can be no assurance that we will be able to generate sufficient cash flow from these initiatives to provide the return on investment we anticipated from the required capital expenditures.

There also can be no assurance that we will be able to generate sufficient cash flow to realize anticipated benefits from any strategic acquisitions that we may enter into, including our acquisition of the Movie Tavern business.into. Although we have a history of successfully integrating acquisitions into our existing theatre and hotels and resorts businesses, any acquisition may involve operating risks, such as (1) the difficulty of assimilating and integrating the acquired operations and personnel into our current business; (2) the potential disruption of our ongoing business; (3) the diversion of management’s attention and other resources; (4) the possible inability of management to maintain uniform standards, controls, policies and procedures; (5) the risks of entering markets in which we have little or no expertise; (6) the potential impairment of relationships with employees; (7) the possibility that any liabilities we may incur or assume may prove to be more burdensome than anticipated; and (8) the possibility the acquired property or properties do not perform as expected.

Our Businesses are Heavily Capital Intensiveability to identify suitable properties to acquire, develop and Preopening and Start-Up Costs, Increasing Depreciation Expenses and Impairment Charges May Adversely Affect Our Financial Results.

Bothmanage will directly impact our movie theatre and hotels and resorts businesses are heavily capital intensive. Purchasing properties and buildings, constructing buildings, renovating and remodeling buildings and investing in joint venture projects all require substantial upfront cash investments before these properties, facilities and joint ventures can generate sufficient revenuesability to pay for the upfront costs and positively contribute to our profitability. In addition, many growth opportunities, particularly for our hotels and resorts division, require lengthy development periods during which significant capital is committed and preopening costs and early start-up losses are incurred. We expense these preopening and start-up costs currently. As a result, our results of operations may be adversely affected by our significant levels of capital investments. Additionally, to the extent we capitalize our capital expenditures, our depreciation expenses may increase, thereby adversely affecting our results of operations.

We periodically consider whether indicators of impairment of long-lived assets held for use are present. Demographic changes, economic conditions and competitive pressures may cause someachieve certain of our properties to become unprofitable. Deterioration in the performance of our properties could require us to recognize impairment losses, thereby adversely affecting our results of operations.

Our Ability to Identify Suitable Properties to Acquire, Develop and Manage Will Directly Impact Our Ability to Achieve Certain of Our Growth Objectives.

growth objectives.

A portion of our ability to successfully achieve our growth objectives in both our theatre and hotels and resorts divisions is dependent upon our ability to successfully identify suitable properties to acquire, develop and manage. Failure to successfully identify, acquire and develop suitable and successful locations for new lodging properties and theatres will substantially limit our ability to achieve these important growth objectives.

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Our Abilityability to Identify Suitable Joint Venture Partnersidentify suitable joint venture partners or Raise Equity Fundsraise investment funds to Acquire, Developacquire, develop and Manage Hotelsmanage hotels and Resorts Will Directly Impact Our Abilityresorts will directly impact our ability to Achieve Certainachieve certain of Our Growth Objectives.

our growth objectives.

In addition to acquiring or developing hotels and resorts or entering into management contracts to operate hotels and resorts for other owners, we have from time to time invested, and expect to continue to invest, in such projects as a joint venture partner. We have also indicated that we may act as an investment fund sponsor in order to acquire additional hotel properties. A portion of our ability to successfully achieve our growth objectives in our hotels and resorts division is dependent upon our ability to successfully identify suitable joint venture partners or raise equityinvestments funds to acquire, develop and manage hotels and resorts. Failure to successfully identify suitable joint venture partners or raise equity for an investment fund will substantially limit our ability to achieve these important growth objectives.

Adverse Economic Conditions, Including Disruptions in the Financial Markets, May Adversely Affect Our Ability to Obtain Financing on Reasonable and Acceptable Terms, if at All, and Impact Our Ability to Achieve Certain of Our Growth Objectives.

We expect that we will require additional financing over time, the amount of which will depend upon a number of factors, including the number of theatres and hotels and resorts we acquire and/

Investing through partnerships or develop, the amount of capital required to refurbish and improve existing properties, the amount of existing indebtedness that requires repayment in a given year and the cash flow generated by our businesses. Downturns or adverse economic conditions affecting the United States economy generally, and the United States stock and credit markets specifically, may adversely impactjoint ventures decreases our ability to obtain additional short-term and long-term financing on reasonable terms or at all, which would negatively impact our liquidity and financial condition. As a result, a prolonged downturn in the stock or credit markets would also limit our ability to achieve our growth objectives.

Investing Through Partnerships or Joint Ventures Decreases Our Ability to Manage Risk.

manage risk.

Joint venture partners may have shared control or disproportionate control over the operation of our joint venture assets. Therefore, our joint venture investments may involve risks such as the possibility that our joint venture partner in an investment might become bankrupt or not have the financial resources to meet its obligations, or have economic or business interests or goals that are inconsistent with our business interests or goals, or be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. Consequently, actions by our joint venture partners might subject hotels and resorts owned by the joint venture to additional risk. Further, we may be unable to take action without the approval of our joint venture partners. Alternatively, our joint venture partners could take actions binding on the joint venture without our consent.

Our Properties are Subject to

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Legal, Regulatory and Compliance Risks Relating to Acts
Recalls of God, Terrorist Activityfood products and War and Any Such Event May Adversely Affect Our Financial Results.

Acts of God, natural disasters, war (including the potential for war), terrorist activity (including threats of terrorist activity), incidents of violence in public venues such as hotels and movie theatres, epidemics (such as SARs, bird flu and swine flu), travel-related accidents, as well as political unrest and other forms of civil strife and geopolitical uncertainty mayassociated costs could adversely affect the lodging and movie exhibition industries and our results of operations. Terrorism or other similar incidents may significantly impact business and leisure travel or consumer choices regarding out-of-home entertainment options and consequently demand for hotel rooms or movie theatre attendance may suffer. In addition, inadequate preparedness, contingency planning, insurance coverage or recovery capability in relation to a major incident or crisis may prevent operational continuity and consequently impact the reputation of our businesses.

We Rely on Our Information Systems to Conduct Our Business, and Any Failure to Protect Our Information Systems and Other Confidential Information Against Cyber Attacks or Other Information Security Breaches or Any Failure or Interruption to the Availability of Our Information Systems Could Have a Material Adverse Effect on Our Business.

The operation of our business depends on the efficient and uninterrupted operation of our information technology systems. Our information technology systems may become unavailable or may fail to perform as anticipated, for any reason, including cyber attacks, loss of power, or human error. Information security risks have generally increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber attacks. Any significant interruption in or failure of our information systems or any breach of our information systems or other confidential information could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation expose us to litigation, increase our costs or cause losses. As cyber and other information security threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures or to investigate and remediate any information security vulnerabilities.

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financial condition.

Recalls of Food Products and Associated Costs Could Adversely Affect Our Reputation and Financial Condition.

We may be found liable if the consumption of any of the food products we sell in our theatres or hotels causes illness or injury. We are also subject to recallrecalls by product manufacturers or if the food products become contaminated. Recalls could result in losses due to the cost of the recall, the destruction of the product and lost sales due to the unavailability of the product for a period of time.

We are Subjectsubject to Substantial Government Regulation, Which Could Entail Significant Cost.

substantial government regulation, which could entail significant cost.

We are subject to various federal, state and local laws, regulations and administrative practices affecting our business, and we must comply with provisions regulating health and sanitation standards, equal employment, environmental, and licensing for the sale of food and alcoholic beverages. Our properties must also comply with Title III of the Americans with Disabilities Act of 1990 or ADA.(the “ADA”). Compliance with the ADA requires that public accommodations “reasonably accommodate” individuals with disabilities and that new construction or alterations made to “commercial facilities” conform to accessibility guidelines unless “structurally impracticable” for new construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines or an award of damages to private litigants or additional capital expenditures to remedy such noncompliance. Changes in existing laws or implementation of new laws, regulations and practices could also have a significant impact on our business. For example, a significant portion of our staff level employees are part timepart-time workers who are paid at or near the applicable minimum wage in the relevant jurisdiction. Increases in the minimum wage and implementation of reforms requiring the provision of additional benefits would increase our labor costs.

We are Subjectsubject to Complex Taxationcomplex taxation and Couldcould be Subjectsubject to Changeschanges in Our Tax Rates,our tax rates, the Adoptionadoption of New Tax Legislationnew tax legislation or Exposureexposure to Additional Tax Liabilities.

additional tax liabilities.

We are subject to different forms of taxation atin the federal, state and local jurisdictions where we operate. Current economic and political conditions make tax rates in any jurisdiction subject to significant change. A recent example includes the U.S. Tax Cuts and Jobs Act signed into law in December 2017. Our future effective tax rate could be affected by changes in the mix of earnings in jurisdictions with differing tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. In addition, the tax authorities may not agree with the determinations we have made and such disagreements could result in lengthy legal disputes and, ultimately, in the payment of additional amounts for tax, interest and penalties. If our effective tax rate were to increase, or if the ultimate determination of our taxes owed in the U.S. or any of our jurisdictions is for an amount in excess of amounts previously accrued, our operating results, cash flows and financial condition could be adversely affected.

General Risks
Our Businessbusiness and Operations Couldoperations could be Negatively Affectednegatively affected if We Become Subjectwe become subject to Any Securities Litigationany securities litigation or Shareholder Activism, Which Could Cause Usshareholder activism, which could cause us to Incur Significant Expense, Hinder Executionincur significant expense, hinder execution of Investment Strategyour business strategy and Impact Our Stock Price.

impact our stock price.

While we are currently not subject to any securities litigation or shareholder activism, due to the potential volatility of our stock price and for a variety of other reasons, we may in the future become the target of securities litigation or shareholder activism. Securities litigation and shareholder activism, including potential proxy contests, could result in substantial costs and divert the attention of our management and board of directors and resources from our business.
Additionally, such securities litigation and shareholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securities litigation or activist shareholder matters. Further, our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation or shareholder activism.

16

Our stock price may be volatile, which could result in securities class action litigation against us.

Adverse Weather Conditions, Particularly During

The market price of our common stock could be subject to wide fluctuations in response to, among other things, the Winterrisk factors described in this report, and other factors beyond our control, such as fluctuations in the Midwestvaluation of companies perceived by investors to be comparable to us and research analyst coverage about our business.
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Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions, such as recessions, interest rate changes or international currency fluctuations, have and may continue to affect the market price of our common stock.
In the past, many companies that have experienced volatility in Our Other Markets, May Adversely Affect Our Financial Results.

Poor weather conditions adversely affectthe market price of their stock have been subject to securities class action litigation. We may become the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. See “Risks related to our business and leisure travel plans,industry—Our business and operations could be negatively affected if we become subject to any securities litigation or shareholder activism, which directly impactscould cause us to incur significant expense, hinder execution of business strategy and impact our hotelsstock price.”

Certain provisions of our articles of incorporation and resorts division. In addition, theatre attendancebylaws and of Wisconsin law could prevent a takeover that shareholders consider favorable and could also reduce the market price of our stock.
Our articles of incorporation and our bylaws contain provisions that could delay or prevent a merger, acquisition or other change in control that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. These provisions may also prevent or delay attempts by shareholders to replace or remove our current management or members of our board of directors.
We rely on our information systems to conduct our business, and any given dayfailure to protect our information systems and other confidential information against cyber attacks or other information security breaches or any failure or interruption to the availability of our information systems could have a material adverse effect on our business.
The operation of our business depends on the efficient and uninterrupted operation of our and our service providers’ information technology systems. Our information technology systems, and those of our service providers, may become unavailable or may fail to perform as anticipated, for any reason, including cyber attacks, loss of power, or human error. Information security risks have generally increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber attacks. Our and our service providers’ information technology systems have experienced, and may experience in the future, cyber attacks and other security incidents, and any significant interruption in or failure of our information systems, or those of our service providers, or any breach of our or their information systems or other confidential information could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, expose us to litigation, increase our costs or cause losses. As cyber and other information security threats continue to evolve, we may be negatively impacted byrequired to expend additional resources to continue to enhance our information security measures or to investigate and remediate any information security vulnerabilities.
Additionally, the legal and regulatory environment surrounding information security and privacy in the United States is constantly evolving. Violation or non-compliance with any of these laws or regulations, contractual requirements relating to data security and privacy, or with our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries could have a material adverse weather conditions. In particular, adverse weather during peak movie-going weekends or holiday periods may negatively affecteffect on our brands, reputation, business, financial condition and results of operations. Adverse winter weather conditions may also increase our snow removaloperations, as well as subject us to significant fines, litigation, losses, third-party damages and other maintenance costs in bothliabilities.
Item 1B.    Unresolved Staff Comments.
None.
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Table of our divisions.

Our Results May be Seasonal, Resulting in Unpredictable and Varied Quarterly Results.

Our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. Our second and third fiscal quarters often produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December has an impact on the results of our fiscal first and fourth quarters in that division, particularly when we have a 53-week year.

Item 1B.Unresolved Staff Comments.

None.

Item 2.Properties.

Contents

Item 2.    Properties.
We own the real estate of a substantial portion of our facilities, including, as of December 26, 2019,29, 2022, The Pfister Hotel, the Hilton Milwaukee City Center, the Hilton Madison at Monona Terrace, the Grand Geneva Resort & Spa, Saint Kate–Kate – The Arts Hotel, The Lincoln Marriott Cornhusker Hotel, The Skirvin Hilton (majority ownership), and the majority of our theatres. We lease the remainder of our facilities. As of December 26, 2019,29, 2022, we also managed one hotel for a joint venture in which we have a minority interest and 128 hotels, resorts and other properties and one theatre that isare owned by a third party. Additionally, we own properties acquired for the future constructionsurplus land and operation of new facilities.several former operating properties. All of our properties are suitably maintained and adequately utilized to cover the respective business segment served.

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Our owned, leased and managed properties are summarized, as of December 26, 2019,29, 2022, in the following table:

Business Segment Total
Number of
Facilities in
Operation		  Owned(1)  

Leased
from
Unrelated
Parties(2)

  

Managed
for
Related
Parties

  

Managed
for
Unrelated

Parties(2)

 
Theatres:                    
Movie Theatres  91   50   40   0   1 
Family Entertainment Center  1   1   0   0   0 
Other Properties(3)  1   1   0   0   0 
Hotels and Resorts:                    
Hotels  18   6   1   1   10 
Resorts  1   1   0   0   0 
Other Properties(4)  3   0   2   0   1 
Total  115   59   43   1   12 

(1)Four of the movie theatres are on land leased from unrelated parties. One of the hotels is owned by a joint venture in which we are the principal equity partner (60% as of December 26, 2019).

(2)The 40 theatres leased from unrelated parties have a total of 423 screens, and the one theatre managed for an unrelated party has a total of six screens. OneUltraScreen adjacent to an owned theatre is leased from an unrelated party.

(3)Includes an 84,000 square foot retail center managed by our theatre division.

(4)Includes a vacation ownership development adjacent to the Grand Geneva Resort & Spa owned by Orange Lake Resort & Country Club of Orlando, Florida for which we provide hospitality management services and twoSafeHouse restaurants located in Milwaukee, Wisconsin and Chicago, Illinois, both of which we lease from an unrelated party and which are managed by our hotels and resorts division.

Business SegmentTotal
Number of
Facilities in
Operation
Owned(1)
Leased
from
Unrelated
Parties(2)
Managed
for
Related
Parties		Managed
for
Unrelated
 Parties
Theatres:
Movie Theatres85 48 37 — — 
Family Entertainment Center1 1 — — — 
Hotels and Resorts:
Hotels14 5 1 1 7 
Resorts1 1 — — — 
Other Properties(3)
3 — 2 — 1 
Total104 55 40 1 8 
(1)Four of the movie theatres are on land leased from unrelated parties.
(2)The 37 theatres leased from unrelated parties have a total of 400 screens. One UltraScreen adjacent to an owned theatre is leased from an unrelated party.
(3)Includes a vacation ownership development adjacent to the Grand Geneva Resort & Spa owned by Orange Lake Resort & Country Club of Orlando, Florida, for which we provide hospitality management services and two SafeHouse restaurants located in Milwaukee, Wisconsin and Chicago, Illinois, both of which we lease from an unrelated party and which are managed by our hotels and resorts division.
Certain of the individual properties or facilities identified above are subject to purchase money or construction mortgages or commercial lease financing arrangements, but we do not consider these encumbrances, individually or in the aggregate, to be material.

All of our operating property leases expire on various dates after the end of fiscal 20202023 (assuming we exercise all of our renewal and extension options), except for one operating movie theatre.
Item 3.

All 22 Movie Tavern theatres acquired in February 2019 are leased from unrelated parties.

Item 3.Legal Proceedings.

Legal Proceedings.

None.

Item 4.Mine Safety Disclosures.

Item 4.    Mine Safety Disclosures.
Not applicable.

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Each of our executive officers is identified below together with information about each officer’s age, position and employment history for at least the past five years:

NamePositionAge
NamePositionAge
Stephen H. MarcusChairman of the Board8487
Gregory S. MarcusPresident and Chief Executive Officer5558
Thomas F. KissingerSenior Executive Vice President, General Counsel and Secretary5962
Douglas A. NeisChad M. ParisExecutive Vice President, Chief Financial Officer and Treasurer61
Rolando B. RodriguezExecutive Vice President of The Marcus Corporation and Chairman, President and Chief Executive Officer of Marcus Theatres Corporation6041

Stephen H. Marcus has been our Chairman of the Board since December 1991. He served as our Chief Executive Officer from December 1988 to January 2009 and as our President from December 1988 until January 2008. Mr. Marcus has worked at our company for 5861 years.

Gregory S. Marcus joined our company in March 1992 as Director of Property Management/Corporate Development. He was promoted in 1999 to our Senior Vice President – Corporate Development and became an executive officer in July 2005. He has served as our President since January 2008 and was elected our Chief Executive Officer in January 2009. He was elected to serve on our Board of Directors in October 2005. He is the son of Stephen H. Marcus, our Chairman of the Board.

Thomas F. Kissinger joined our company in August 1993 as our Secretary and Director of Legal Affairs. In August 1995, he was promoted to our General Counsel and Secretary and in October 2004, he was promoted to Vice President, General Counsel and Secretary. In August 2013, he was promoted to Senior Executive Vice President, General Counsel and Secretary. He also formerly served as interim President of Marcus Hotels & Resorts. Prior to August 1993, Mr. Kissinger was an associate with the law firm of Foley & Lardner LLP for five years.

Douglas A. Neis

Chad M. Paris joined our company in February 1986October 2021 as Corporate Controller of the Marcus Theatres division and in November 1987, he was promoted to Controller of Marcus Restaurants. In July 1991,Treasurer. Mr. Neis was appointed Vice President of Planning and Administration for Marcus Restaurants. In September 1994, Mr. Neis was also named as our Director of Technology and in September 1995 he was elected as our Corporate Controller. In September 1996, Mr. NeisParis was promoted to Chief Financial Officer and Treasurer. In August 2018, Mr. Neis was promotedTreasurer effective May 15, 2022, following the retirement of Douglas A. Neis. Prior to Executivejoining The Marcus Corporation, he served as Senior Vice President and Chief Financial Officer and Treasurer.

Rolando B. Rodriguez joined ourat Jason Group, Inc., formerly Jason Industries, Inc. (“Jason Group”), a Milwaukee-based global manufacturing company, infrom August 2013 as our Executive Vice President and President and Chief Executive Officer of Marcus Theatres Corporation. Mr. Rodriguez served as Chief Executive Officer and President and as a board member of Rave Cinemas in Dallas, Texas for two years until its sale in May 2013.2017 to April 2021. Prior to May 2011, he servedjoining Jason Group in various positions with Wal-Mart for five years. He beganJune 2014, Mr. Paris was an Audit Senior Manager at the accounting firm of Deloitte & Touche LLP, beginning his career in 1975 at AMC Theatres, serving for 30 yearsfinance with the firm in various positions including senior vice president of North American field operations, senior vice president food & beverage group and executive vice president, North America operations service. In January 2017, Mr. Rodriguez was named Chairman of Marcus Theatres Corporation.

August 2005.

Our executive officers are generally elected annually by our Board of Directors after the annual meeting of shareholders. Each executive officer holds office until his successor has been duly qualified and elected or until his earlier death, resignation or removal.

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PART II

Item 5.Market for the Company’s Common Equity, Related Shareholder Matters and Issuer Repurchases of Equity Securities.

Item 5.    Market for the Company’s Common Equity, Related Shareholder Matters and Issuer Repurchases of Equity Securities.
(a)Stock Performance Graph

The following information in this Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities and Exchange Act of 1934 and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into such a filing.

Set forth below is a graph comparing the annual percentage change during our last five full fiscal years and the transition period beginning on May 29, 2015 and ended December 31, 2015 in our cumulative total shareholder return (stock price appreciation on a dividend reinvested basis) of our Common Shares to the cumulative total return of: (1) a composite peer group index selected by us, that we have used historically (the “old” composite peer group index),and (2) the composite peer group index selected by us that we intend to use going forward (the “new” composite peer group index) and (3) companies included in the Russell 2000 Index. The old composite peer group index is comprised of the Dow Jones U.S. Hotels Index (weighted 35%) and a theatre index that we selected that includes Regal Entertainment Group and Cinemark Holdings, Inc. (weighted 65%). The results shown reflect the fact that Regal Entertainment Group ceased trading on February 28, 2018. The new composite index is comprised of the Dow Jones U.S. Hotels Index (weighted 35%) and a theatre index that we selected that includes Cinemark Holdings, Inc. and AMC Entertainment Holdings, Inc. (weighted 65%).

The indices within theeach composite peer group index are weighted to approximate the relative annual revenue contributions of each of our business segments to our total annual revenues over the past several fiscal years. The shareholder returns of the companies included in the Dow Jones U.S. Hotels Index and the theatre index that we selected are weighted based on each company’s relative market capitalization as of the beginning of the presented periods.

From May 29, 2014December 28, 2017 to December 26, 2019

 

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29, 2022

  5/29/14  5/28/15  12/31/15  12/29/16  12/28/17  12/27/18  12/26/19 
The Marcus Corporation $100.00  $119.34  $116.45  $197.61  $173.36  $249.78  $215.31 
                             
Russell 2000 Index  100.00   111.36   101.84   124.09   142.86   124.39   158.98 
                             
Composite New Peer Group Index(1)  100.00   129.30   108.43   139.61   141.04   133.33   147.12 
                             
Composite Old Peer Group Index(2)  100.00   125.02   107.30   129.46   155.98   149.24   172.44 

(1)Weighted 35% for the Dow Jones U.S. Hotels Index and 65% for the old Company-selected Theatre Index.
(2)Weighted 35% for the Dow Jones U.S. Hotels Index and 65% for the new Company-selected Theatre Index.

21
mcs-20221229_g1.jpg

12/28/1712/27/1812/26/1912/31/2012/30/2112/29/22
The Marcus Corporation$100.00 $144.08 $124.20 $51.68 $68.82 $54.96 
Russell 2000 Index100.00 87.07 111.28 132.85 152.76 121.70 
Composite Peer Group Index(1)
100.00 97.29 112.40 75.33 80.94 51.40 

(b)Market Information

_____________________
(1)Weighted 35% for the Dow Jones U.S. Hotels Index and 65% for the Company-selected Theatre Index.
(b)Market Information
Our Common Stock, $1 par value, is listed and traded on the New York Stock Exchange under the ticker symbol “MCS.” Our Class B Common Stock, $1 par value, is neither listed nor traded on any exchange.

22
On February 17, 2020,March 1, 2023, there were 1,1521,266 shareholders of record of our Common Stock and 3736 shareholders of record of our Class B Common Stock.

(c)Stock Repurchases

(c)Stock Repurchases
The following table sets forth information with respect to purchases made by us or on our behalf of our Common Stock during the period indicated.

Period Total Number of
Shares
Purchased		  Average Price
Paid per Share		  Total Number of
Shares
Purchased as
Part of Publicly
Announced
Programs(1)		  Maximum
Number of
Shares that May
Yet be Purchased
Under the Plans
or Programs(1)		 
September 27 – October 31  –   –   –   2,756,561 
November 1 – November 28  –   –   –   2,756,561 
November 29 – December 26  –   –   –   2,756,561 
Total  –   –   –   2,756,561 

(1)Through
PeriodTotal Number of
Shares
Purchased		Average Price
Paid per Share
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Programs(1)
Maximum
Number of
Shares that May
Yet be
Purchased
Under the Plans
or Programs(1)
September 30 – November 3— $— — 2,522,646 
November 4 – December 26, 2019, our Board of Directors had authorized the repurchase of up to 11.7 million shares of our outstanding Common Stock. Under these authorizations, we may repurchase shares of our Common Stock from time to time in the open market, pursuant to privately negotiated transactions or otherwise. As of 1— — — 2,522,646 
December 26, 2019, we had repurchased approximately 8.9 million shares of our Common Stock under these authorizations. The repurchased shares are held in our treasury pending potential future issuance in connection with employee benefit, option or stock ownership plans or other general corporate purposes. These authorizations do not have an expiration date.2 – December 29— — — 2,522,646 

Total22— $— — 2,522,646 

Item 6.Selected Financial Data.

Five-Year Financial Summary

  F2019(1)  F2018(2)  F2017(3)  F2016  31 Weeks
Ended
December
31, 2015(4)		  F2015(5) 

Operating Results(in thousands)

                        
Revenues $820,863   707,120   653,552   574,324   341,664   517,832 
Net earnings attributable to The Marcus Corporation $42,017   53,391   64,996   37,902   23,565   23,995 
Common Stock Data(6)                        
Net earnings per common share $1.35   1.86   2.29   1.36   .84   .87 
Cash dividends per common share $.64   .60   .50   .45   .21   .39 
Weighted-average shares outstanding (in thousands)  31,152   28,713   28,403   27,957   27,917   27,687 
Book value per share $20.08   17.28   15.98   14.10   13.13   12.48 

Financial Position(in thousands)

                        
Total assets $1,359,186   989,331   1,017,797   911,266   804,701   805,472 
Long-term debt $206,432   228,863   289,813   271,343   207,376   229,096 
Shareholders’ equity attributable to The Marcus Corporation $621,435   490,009   445,024   390,112   363,352   343,779 
Capital expenditures and acquisitions $94,167   58,660   114,804   147,372   44,452   74,988 
Financial Ratios                        
Current ratio  .45   .46   .48   .28   .35   .34 
Debt/capitalization ratio  .26   .33   .40   .42   .38   .42 
Return on average shareholders’ equity  7.6%  11.4%  15.6%  10.1%  6.7%  7.2%

(1)Fiscal 2019 operating results were negatively impacted by preopening and acquisition expenses related to the Movie Tavern acquisition ($2,475, or $0.06 per diluted common share), preopening expenses and initial startup losses related to the closing of the InterContinental Milwaukee hotel for approximately five months and its subsequent reopening as an independent, arts-themed hotel, Saint Kate–The Arts Hotel ($6,830, or $0.16 per diluted common share) and an impairment charge ($1,874, or $0.04 per diluted common share).

(2)

Fiscal 2018 operating results were favorably impacted by a nonrecurring reduction in deferred income taxes related to a tax accounting method change ($1,947, or $0.07 per diluted common share) and unfavorably impacted by preopening and acquisition expenses related to the Movie Tavern acquisition ($1,674, or $0.04 per diluted common share) and preopening expenses and nonrecurring accelerated depreciation expense related to the closing of the InterContinental Milwaukee hotel for conversion into Saint Kate–The Arts Hotel ($4,259, or $0.11 per diluted common share).

(3)Fiscal 2017 net earnings includes a one-time reduction in deferred income taxes of $21,240, or $0.75 per diluted common share, related to the Tax Cuts and Jobs Acts of 2017.

(4)In October 2015, we changed our fiscal year end from the last Thursday in May to the last Thursday in December. This 31-week period represents the transition period from May 29, 2015 to December 31, 2015.

(5)Fiscal 2015 refers to the period beginning on May 30, 2014 and ended on May 28, 2015.

(6)All per share and shares outstanding data is on a diluted basis. Earnings per share data is calculated on our Common Stock using the two class method.

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(1)Through December 29, 2022, our Board of Directors had authorized the repurchase of up to 11.7 million shares of our outstanding Common Stock. Under these authorizations, we may repurchase shares of our Common Stock from time to time in the open market, pursuant to privately negotiated transactions or otherwise. As of December 29, 2022, we had repurchased approximately 9.2 million shares of our Common Stock under these authorizations. The repurchased shares are held in our treasury pending potential future issuance in connection with employee benefit, option or stock ownership plans or other general corporate purposes. These authorizations do not have an expiration date.

Item 7.
Item 6.    Reserved.
Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

General

.

General
We report our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December. We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Our primary operations are reported in two business segments: theatres, and hotels and resorts.

Fiscal 20172020 was a 53-week year, beginning on December 27, 2019 and ending on December 31, 2020. Fiscal 2021 was a 52-week year, beginning on January 1, 2021 and ending on December 30, 2021. Fiscal 2022 was a 52-week year, beginning on December 30, 201631, 2021 and ending on December 28, 2017. Fiscal 2018 was a 52-week year, beginning on December 29, 2017 and ending on December 27, 2018. Fiscal 2019 was a 52-week year, beginning on December 28, 2018 and ending on December 26, 2019.

2022.

Fiscal 2020, will be a 53-week year,fiscal 2021 and fiscal 2022 results by quarter were significantly impacted by the COVID-19 pandemic, which began on December 27, 2019late in our fiscal 2020 first quarter and will end on December 31, 2020. We anticipate thatimpacted our reported results for the remainder of fiscal 2020, will benefit fromthroughout fiscal 2021, and during the additional weekfirst half of reported operations. In particular, the additional week of operations will most benefitfiscal 2022. Under normal conditions, our theatre division, as it includes the traditionally strong movie-going week between Christmas and New Year’s Day. The last time we had an additional week of operations was during our 31-week transition period ending on December 31, 2015 (the “Transition Period”). Our additional 31st week of operations that year benefited both of our operating divisions (particularly our theatre division due to a newStar Wars film) and contributed approximately $17.4 million in additional revenues and $6.2 million in additional operating income to our final five-week period and Transition Period results. After interest expense and income taxes, we estimate that the extra week of operations contributed approximately $3.6 million to our Transition Period net earnings, or approximately $0.13 per diluted common share. Although there can be no assurance that we will realize similar benefits in fiscal 2020, it is important to note that our theatre operations in 2015 did not include our two most recent acquisitions and we had a higher effective income tax rate.

Our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. The quality of film product in any given quarter typically impacts the operating results in our theatre division. Our second and third fiscal quarters generally produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December impacts the results of our fiscal first and fourth quarters in that division, particularly when we have a 53-week year.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally discusses fiscal 20192022 and fiscal 20182021 items and year-to-year comparisons between fiscal 20192022 and fiscal 2018.2021. Discussions of fiscal 20172020 items and year-to-year comparisons between fiscal 20182021 and fiscal 20172020 that are not included in this MD&A can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2018.

Implementation30, 2021. Within this MD&A amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.

23
Impact of the COVID-19 Pandemic
The COVID-19 pandemic had an unprecedented impact on the world and both of our business segments. As an operator of movie theatres, hotels and resorts, restaurants and bars, each of which consists of spaces where customers and guests gather in close proximity, our businesses were significantly impacted by protective actions that federal, state and local governments took to control the spread of the pandemic, and our customers’ reactions or responses to such actions. The extent of these protective actions and their impact on our businesses dissipated throughout fiscal 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02,Leases (Topic 842), intended2022.
We began fiscal 2022 with all of our theatres open with normal operating days and hours. While still below pre-COVID-19 levels, attendance has continued to gradually improve financial reporting relatedas the number of vaccinated individuals increased, more films are released, and customers indicate increasing willingness to leasing transactions. ASU No. 2016-02 requires a lesseereturn to recognize a right-of-use (“ROU”) asset and a lease liability for most leases. The new guidance requires disclosures to help investors and other financial statement users better understandmovie theatres. We remain optimistic that the amount, timing and uncertainty of cash flows arising from the leases. Leases are now classified as finance or operating, with classification affecting the pattern and classification of expense recognitiontheatre industry is in the consolidated statementsprocess of net earnings. ASU No. 2018-11,Leases (Topic 842): Targeted Improvements,amended ASU No. 2016-02rebounding and allows entities the optionwill continue to initially apply Topic 842 at the adoption date and recognizebenefit from a cumulative-effect adjustmentreturn to the opening balance of retained earningsnormalcy.
We still expect a return to “normalcy” in theatres to be driven by an increase in the periodquality and quantity of adoption. We adoptednew films released in theatres and the new accounting standard asreturn of consumer comfort with public gatherings. The appearance of variants of the first dayvirus has resulted in changing government guidance on indoor activities in some communities, which impacted consumer comfort early in fiscal 2022. Industry customer surveys indicate that consumer comfort increased throughout 2022, reaching a post-pandemic high comfort level in January 2023. Total theatre division revenues, expressed as a percentage of fiscal 2019 usingpre-pandemic revenues were 47% in fiscal 2021, and improved to 71% in fiscal 2022. We believe the modified retrospective approach, which resultscontinued revenue shortfall in fiscal 2022 compared to 2019 was driven primarily by a reduced quantity of wide-release films available for theatrical release.
We began fiscal 2022 with all eight of our company-owned and managed hotels open. All of our restaurants and bars in our hotels and resorts were open during a majority of fiscal 2022, operating in some cases with reduced operating hours. The majority of our hotels and restaurants are now generating revenues at or above pre-pandemic levels, while at certain hotels that primarily serve group business, revenues remain below pre-pandemic levels with improving occupancy and business travel activity increasing. The future economic environment will also have a significant impact on the cumulative effectpace of adoption recognized atour return to “normal” hotel operations.
During fiscal 2020 and fiscal 2021, we received $31.5 million and $5.9 million, respectively, of tax refunds from our fiscal 2019 tax return. During the datefirst quarter of application, rather than asfiscal 2021, we filed income tax refund claims of $24.2 million related to our fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. We received approximately $1.8 million of this refund in July 2021, and the remaining $22.3 million refund, plus interest, was received in February 2022. We also generated additional income tax loss carryforwards during fiscal 2021 that will benefit future years.
During the fourth quarter of fiscal 2020 and continuing into fiscal 2021, a number of states elected to provide grants to certain businesses most impacted by the COVID-19 pandemic, utilizing funds received by the applicable state under provisions of the earliest period presented. AsCoronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) or subsequent federal relief programs. We received $4.9 million of these prior year grants in January 2021. We were awarded and received an additional $1.3 million in theatre grants during the first quarter of fiscal 2021 and an additional $1.9 million in hotel grants during the third quarter of fiscal 2021. We were also awarded an additional $4.5 million in theatre grants during the fourth quarter of fiscal 2021, the majority of which was not received until January 2022. All of these grants further contributed to our current strong liquidity position.
Maintaining and protecting a result, no adjustment was made to prior periodstrong balance sheet has always been a core philosophy of The Marcus Corporation during our 87-year history, and, despite the COVID-19 pandemic, our financial information and disclosures.  

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In conjunction with the adoption of the new standard, companies were able to elect several practical expedients to aid in the transition to Topic 842. We elected the package of practical expedients which permits us to forego reassessmentposition remains strong. A detailed description of our prior conclusions related to lease identification, lease classification and initial direct costs. Topic 842 also provides practical expedients for an entity’s ongoing accounting. We elected the practical expedient to not separate lease and non-lease components for all of our leases. We also made a policy election not to apply the lease recognition requirements for short-term leases. As a result, we did not recognize ROU assets or lease liabilities for short-term leases that qualify for the policy election (those with an initial term of 12 months or less which do not include a purchase or renewal option which is reasonably certain to be exercised), but instead will recognize these lease payments as lease costs on a straight-line basis over the lease term.

Adoption of this new standard resulted in a material impact related to the recognition of ROU assets and lease liabilities on the consolidated balance sheet for assets currently subject to operating leases. We recognized lease liabilities representing the present value of the remaining future minimum lease payments for all of our operating leasesliquidity as of December 28, 201829, 2022 is described below in the “Liquidity” section of $81.5 million.this MD&A. We recognized ROU assets for all assets subject to operating leases in an amount equal tocannot assure that the operating lease liabilities, adjusted for the balances of long-term prepaid rent, favorable lease intangible assets, deferred lease expense, unfavorable lease liabilities and deferred lease incentive liabilities as of December 28, 2018.

The adoptionimpact of the new standard did notCOVID-19 pandemic will cease to have a material adverse effect on our consolidated statements of net earnings.

During fiscal 2018, we adopted ASU No. 2014-09,Revenue from Contracts with Customers (ASU No. 2014-09), a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. We selected the modified retrospective method for adoption of ASU No. 2014-09 and its related ASU amendments. Under this method, we recognized the cumulative effect of the changes in retained earnings at the date of adoption and did not restate prior periods.

The adoption of the new standard primarily impacted our accounting for our loyalty programs and internet ticket fee revenue. Adopting this new standard during fiscal 2018 had the following impact on our financial statements:

·In accordance with the new guidance, the portion of theatre admission revenues, theatre concession revenues and food and beverage revenues attributable to loyalty points earned by customers is deferred as a reduction of these revenues until reward redemption. Through December 28, 2017, we recorded the estimated incremental cost of redeeming loyalty points at the time they were earned in advertising and marketing expense. Our adoption of the standard resulted in an immaterial reduction of theatre admission revenues and a corresponding immaterial increase in theatre concession revenues with an offsetting increase in other long-term liabilities based upon historical customer reward redemption patterns.

·Prior to the adoption of the new standard, we recorded internet ticket fee revenues net of third-party commission or service fees. In accordance with ASU No. 2014-09, we believe that we are the principal (as opposed to agent) in the arrangement with third-party internet ticketing companies in regards to sale of internet tickets to customers, and therefore, we will now recognize ticket fee revenue based on a gross transaction price. This change had the effect of increasing other revenues and other operating expense but had no impact on net earnings or cash flows from operations.

We recorded a one-time cumulative effect reduction to retained earnings, net of income taxes, of approximately $2.6 million during fiscal 2018 related to the adoption of ASU No. 2014-09.

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Consolidated Financial Comparisons

The following table sets forth revenues, operating income, other income (expense), net earnings and net earnings per common share for the past three fiscal years (in millions, except for per share and percentage change data) :

        Change F19 v. F18     Change F18 v. F17 
  F2019  F2018  Amt.  Pct.  F2017  Amt.  Pct. 
Revenues $820.9  $707.1  $113.8   16.1% $653.6  $53.5   8.2%
Operating income  68.2   83.2   (15.0)  -18.0%  77.3   5.9   7.6%
Other income (expense)  (13.8)  (16.6)  2.8   17.1%  (9.2)  (7.4)  -80.5%
Net earnings (loss) attributable to noncontrolling interests  0.1   0.1   -     -%  (0.5)  0.6   114.5%
Net earnings attributable to The Marcus Corporation $42.0  $53.4  $(11.4)  -21.3% $65.0  $(11.6)  -17.9%
Net earnings per common share - diluted $1.35  $1.86  $(0.51)  -27.4% $2.29  $(0.43)  -18.8%

Fiscal 2019 versus Fiscal 2018

Our revenues increased during fiscal 2019 compared to fiscal 2018 due primarily to increased revenues fromboth our theatre division. Our operating income (earnings before other income/expense and income taxes) decreased during fiscal 2019 compared to fiscal 2018 due to a decrease in both theatre division and hotels and resorts division operating income and a small increase in corporate operating losses. Both of our operating divisions were negatively impacted by nonrecurring expenses during fiscal 2019. Net earnings attributable to The Marcus Corporation for fiscal 2019 decreased compared to fiscal 2018 due to decreased operating income, partially offset by increased investment income and decreased interest expense and income taxes.

On February 1, 2019, we acquired the assets of Movie Tavern®consisting of 22 dine-in theatres with 208 screens located in nine states. A detailed description of this acquisition is included below in the “Current Plans” section of this MD&A. The acquisition increased our total number of screens by 23%, resulting in increased revenues from our theatre division during fiscal 2019 compared to fiscal 2018. Excluding acquisition and preopening expenses, the acquisition did not have a material impact on operating income during fiscal 2019.Operating income from our theatre division during fiscal 2019 was unfavorably impacted by reduced attendance at our comparable theatres due to a weaker slate of movies during fiscal 2019 compared to fiscal 2018, partially offset by increased concession sales per person due to our expanded food and beverage offerings as well as an increase in our average ticket price and other revenues. Acquisition and preopening expenses related to the Movie Tavern acquisition and the opening of a newly built Movie Tavern theatre in Brookfield, Wisconsin negatively impacted our operating income by approximately $2.5 million, or $0.06 per diluted common share, during fiscal 2019 and by approximately $1.7 million, or $0.04 per diluted common share, during fiscal 2018. An impairment charge related to a specific theatre location negatively impacted our fiscal 2019 operating income by approximately $1.9 million, or $0.04 per diluted common share.

We closed the InterContinental Milwaukee hotel (the “InterContinental Milwaukee”) in early January 2019 and began a substantial renovation project that converted this hotel into an experiential arts hotel named Saint Kate®–The Arts Hotel (the “Saint Kate”). The newly renovated hotel reopened during the first week of June 2019 (although a portion of the rooms and food and beverage outlets didn’t fully open until later in the month). Revenues from our hotels and resorts division during fiscal 2019 compared to fiscal 2018 were unfavorably impacted by the closing of the hotel for nearly six months for renovation, the negative impact of comparing a newly opened independent hotel (i.e. the Saint Kate) to a stabilized branded hotel (i.e. the InterContinental Milwaukee) and the impact of a major renovation at our Hilton Madison hotel during the first half of fiscal 2019, offset by increased room revenues and food and beverage revenues from our other six owned hotels and increased cost reimbursements from managed hotels during fiscal 2019 compared to fiscal 2018. Decreased operating income from our hotels and resorts division during fiscal 2019 compared to fiscal 2018 was primarily due to preopening expenses and initial start-up losses related to the InterContinental Milwaukee closure and conversion to the Saint Kate. These costs totaled approximately $6.8 million, or $0.16 per diluted common share during fiscal 2019. Operating income from our hotels and resorts division during fiscal 2018 was unfavorably impacted by preopening expenses of approximately $500,000 and accelerated depreciation of approximately $3.7 million related to the fiscal 2019 conversion of the former InterContinental Milwaukee hotel into the Saint Kate. These non-recurring items negatively impacted our fiscal 2018 net earnings by approximately $0.11 per diluted common share.

Operating losses from our corporate items, which include amounts not allocable to the business segments, increased during fiscal 2019 compared to fiscal 2018 due in part to increased long-term incentive compensation expenses. In addition, our fiscal 2019 operating loss from our corporate items was negatively impacted by non-recurring items totaling approximately $550,000 related to a depreciation adjustment and a payroll tax audit settlement.

We recognized investment income of $1.4 million during fiscal 2019 compared to investment income of $208,000 during fiscal 2018. Investment income includes interest earned on cash and cash equivalents, as well as increases/decreases in the value of marketable securities and increases in the cash surrender value of a life insurance policy. Investment income increased during fiscal 2019 due to increases in the value of marketable securities. Investment income during fiscal 2020 may vary compared to fiscal 2019, primarily dependent upon changes in the value of marketable securities.

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Interest expense totaled $11.8 million during fiscal 2019, a decrease of $1.3 million, or 9.8%, compared to interest expense of $13.1 million during fiscal 2018. The decrease in interest expense during fiscal 2019 was due to reduced borrowing levels compared to fiscal 2018. We currently do not expect a material change in interest expense during fiscal 2020. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof), share repurchases and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.

We incurred other expense of $1.9 million during fiscal 2019, a decrease of approximately $100,000, or 3.2%, compared to other expense of $2.0 million during fiscal 2018. Other expense consists of the non-service cost components of our periodic pension costs. Based upon information from an actuarial report for our pension plans, we expect other expense to increase by approximately $400,000 during fiscal 2020 compared to fiscal 2019.

We reported net losses on disposition of property, equipment and other assets of $1.1 million during fiscal 2019, compared to net losses on disposition of property, equipment and other assets of $1.3 million during fiscal 2018. The net losses during fiscal 2019 and fiscal 2018 were due primarily to losses related to old theatre seats and other items disposed of in conjunction with theatre renovations. The timing of our periodic sales and disposals of property, equipment and other assets results in variations each year in the gains or losses that we report on dispositions of property, equipment and other assets. We anticipate the potential for additional disposition losses resulting from theatre renovations, as well as disposition gains or losses from periodic sales of property, equipment and other assets, during fiscal 2020 and beyond. As discussed in more detail in the “Current Plans” section of this MD&A, we may report gains in future years from the potential sale of existing hotel assets.

We reported a net equity loss from an unconsolidated joint venture of $274,000 and $399,000, respectively, during fiscal 2019 and fiscal 2018. The net equity losses during both fiscal years consisted of our pro-rata share of losses from the Omaha Marriott Downtown at The Capitol District hotel in Omaha, Nebraska (the “Omaha Marriott”) – a hotel we manage and in which we have a 10% minority ownership interest. The Omaha Marriott is actually performing well from an operational perspective, but is experiencing overall losses due to depreciation and interest expense. We currently do not expect significant variations in net equity losses from unconsolidated joint ventures during fiscal 2020 compared to fiscal 2019, unless we significantly increase the number of joint ventures in which we participate during fiscal 2020.

The operatingbusinesses, results of one majority-owned hotel, The Skirvin Hilton, are included in the hotelsoperations, cash flows, financial condition, access to credit markets and resorts division revenueability to service our existing and operating income during fiscal 2019 and fiscal 2018, and the after-tax net earnings or loss attributable to noncontrolling interests is deducted from or added to net earnings on the consolidated statements of earnings. We reported net earnings attributable to noncontrolling interest of $98,000 and $74,000, respectively, during fiscal 2019 and fiscal 2018.

We reported income tax expense during fiscal 2019 of $12.3 million, a decrease of approximately $800,000, or 6.1%, compared to income tax expense of $13.1 million during fiscal 2018. The decrease in income tax expense during fiscal 2019 was the result of the reduced earnings before income taxes, partially offset by an increased effective income tax rate. Our fiscal 2018 income tax expense and effective income tax rate were favorably impacted by a reduction in deferred tax liabilities of approximately $1.9 million related to tax accounting method changes we made subsequent to the signing of the Tax Cut and Jobs Act of 2017. Our fiscal 2019 effective income tax rate, after adjusting for earnings from noncontrolling interests that are not tax-effected because the entity involved is a tax pass-through entity, was 22.7% compared to our fiscal 2018 effective income tax rate of 19.7%, which benefited from the reduction in deferred income tax liabilities described above. Excluding the favorable adjustment to income tax expense for the reduction in deferred tax liabilities, our effective income tax rate during fiscal 2018 was also 22.7%. We currently anticipate that our fiscal 2020 effective income tax rate may increase to the 24-26% range, depending upon the amount of excess tax benefits on share-based compensation that we recognize and excluding any potential further changes in federal or state income tax rates or other one-time tax benefits.

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future indebtedness.

Weighted-average shares outstanding were 31.2 million during fiscal 2019 and 28.7 million during fiscal 2018. All per share data in this MD&A is presented on a fully diluted basis.

Current Plans

Our aggregate cash capital expenditures, acquisitions and purchases of interests in, and contributions to, joint ventures were approximately $94$36.8 million during fiscal 2019, including approximately $30 million in cash consideration paid in conjunction with the Movie Tavern acquisition described below,2022, compared to $59$19.5 million during fiscal 20182021 and $115$21.4 million during fiscal 2017.2020. We currently anticipateestimate that our fiscal 2020 cash capital expenditures will be inincrease during fiscal 2023 to the $65-$85$60 - $75 million range, excluding any presently unidentified acquisitions that may arise during the year.
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range. We will, however, continue to monitor our operating results and economic and industry conditions so that we may adjust our plans accordingly.

Our current strategic plans include the following goals and strategies:

Theatres

iOur current plans for growth in our theatre division include several opportunities for new theatres and screens. In October 2019, we opened our new eight-screen Movie Tavern® by Marcus theatre in Brookfield, Wisconsin. This new theatre became the first Movie Tavern by Marcus in Wisconsin. It includes eight auditoriums, each with laser projection and DreamLoungerSM recliner seating, a full-service bar and food and drink center, and a new delivery-to-seat service model that also allows guests to order food and beverage via our mobile phone application or in-theatre kiosk. Another new nine-screen theatre is currently under construction in Tacoma, Washington, with an expected opening date during our fiscal 2020 fourth quarter. In addition, we will consider additional sites for potential new theatre locations in both new and existing markets.

iIn addition to building new theatres, we believe acquisitions of existing theatres or theatre circuits is also a viable growth strategy for us. On February 1, 2019, we acquired the assets of Movie Tavern, a New Orleans-based industry leading circuit known for its in-theatre dining concept featuring chef-driven menus, premium quality food and drink and luxury seating. Now branded Movie Tavern by Marcus, the acquired circuit consists of 208 screens at 22 locations in nine states – Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia. The purchase price consisted of $30 million in cash, subject to certain adjustments, and 2,450,000 shares of our common stock (157,056 of which have been placed in escrow to secure certain post-closing indemnification obligations of the seller under the asset purchase agreement), for a total purchase price of approximately $139.3 million, based upon our closing share price on January 31, 2019. The acquisition of the Movie Tavern circuit increased our total number of screens by an additional 23%.

•Maximize and leverage our current assets in a post-pandemic world. We have invested approximately $391 million to further enhance the movie-going experience and amenities in new and existing theatres over the last nine-plus years. These investments have included:
◦DreamLoungerSM recliner seating additions. As of December 29, 2022, we offered all DreamLounger recliner seating in 66 theatres, representing approximately 78% of our theatres. Including our premium, large format (PLF) auditoriums with recliner seating, as of December 29, 2022, we offered our DreamLounger recliner seating in approximately 81% of our screens, a percentage we believe to be the highest among the largest theatre chains in the nation.
◦UltraScreen DLX®and SuperScreen DLX®(DreamLounger eXperience) conversions. As of December 29, 2022, we had a total of 124 premium large format (“PLF”) screens at 66 of our theatre locations (31 UltraScreen DLX auditoriums, one traditional UltraScreen® auditorium, 89 SuperScreen DLX auditoriums - a slightly smaller screen than an UltraScreen but with the same DreamLounger seating and Dolby Atmos sound - and three IMAX® PLF screens). As of December 29, 2022, we offered at least one PLF screen in approximately 78% of our theatres – once again a percentage we believe to be the highest percentage among the largest theatre chains in the nation. Our PLF screens generally have higher per-screen revenues and draw customers from a larger geographic region compared to our standard screens, and we charge a premium price to our guests for this experience.
◦Signature cocktail and dining concepts. We have continued to further enhance our food and beverage offerings within our existing theatres. We believe our 50-plus years of food and beverage experience in the hotel and restaurant businesses provides us with a unique advantage and expertise that we can leverage to further grow revenues in our theatres. As of December 29, 2022, we offered bars/full liquor service under the concepts Take Five® Lounge, Take Five Express and The Tavern at 49 theatres, representing approximately 58% of our theatres. As of December 29, 2022, we also offered one or more in-lobby dining concepts, including the pizza concept Zaffiro’s® Express and hamburger and other Americana fare concept Reel Sizzle®, in 39 theatres, representing approximately 60% of our theatres (excluding our in-theatre dining theatres). In select locations without a Take Five Lounge outlet, we offer beer and wine at the Zaffiro’s Express outlet. We also operate three Zaffiro’s®Pizzeria and Bar full-service restaurants.
◦In-theatre dining concepts. As of December 29, 2022, we offered in-theatre dining with a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 29 theatres and a total of 229 auditoriums, operating under the names Big Screen BistroSM, Big Screen Bistro ExpressSM, BistroPlex® and Movie Tavern by Marcus, representing approximately 34% of our theatres.
During fiscal 2023 and beyond, we expect to execute on a number of strategies to further maximize and leverage our existing assets in a post-pandemic world. These strategies are expected to include:
◦Opportunistically expanding the number of our PLF formats described above to meet consumer demand. Our guests have shown a strong preference for viewing blockbuster films on the largest screen available. Our goal is to have multiple PLF auditoriums in as many theatres as physically and financially viable in order to provide PLF formats to our guests for more than one blockbuster film at a time.
◦Expanding and evolving our food and beverage operations described above. We will continue to test new concepts and enhance our existing concepts in order to provide further options to our guests and increase
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our average concession/food and beverage revenues per person. Strategies may also include expanded sports programming, live bingo and other entertainment options in our signature bars.
◦Evolving and reenergizing what we believe to be our best-in-class customer loyalty program called Magical Movie RewardsSM (“MMR”). We currently have approximately 5.1 million members enrolled in the program. Approximately 45% of all box office transactions and 40% of total transactions in our theatres during fiscal 2022 were completed by registered members of the loyalty program. We believe that this program contributes to increased movie-going frequency, more frequent visits to the concession stand, increased loyalty to Marcus Theatres and, ultimately, improved operating results.
◦Modernizing pricing strategies based upon consumer demand. We currently offer a number of very successful pricing promotions, including “Value Tuesday,” “Student Thursday” and “Young-at-Heart” program for seniors on Friday afternoons. We believe these promotions have increased movie going frequency and reached a customer who may have stopped going to the movies because of price, without adversely impacting the movie-going habits of our regular weekend customers. During fiscal 2021, we introduced Marcus Private Cinema (“MPC”), a program that allows guests the opportunity to purchase an entire auditorium for up to 20 of his or her friends and family for a fixed charge. Conversely, we charge a higher ticket price for PLF screens and have implemented higher pricing on Friday and Saturday evenings during certain peak moviegoing times of the year. We expect to continue to optimize revenue management and implement additional pricing strategies based upon consumer demand.
◦Expanding the use of technology in all facets of our business. We continue to enhance our mobile ticketing capabilities, our downloadable Marcus Theatres mobile application and our marcustheatres.com website. We added food and beverage ordering capabilities to our mobile application at all of our theatres in fiscal 2020. We have continued to install additional theatre-level technology, such as new ticketing kiosks, digital menu boards and concession advertising monitors. Each of these enhancements is designed to improve customer interactions, both at the theatre and through mobile platforms and other electronic devices, while enhancing add-on food and beverage sales opportunities through promotion and on-screen offers. We also believe that maximizing the use of these technology enhancements will reduce the impact of labor shortages that we and others are currently facing.
◦Exploring new lobby monetization initiatives. Lobby innovations may include, but not be limited to, unique experiential displays, video and redemption games and other interactive options for our guests.
◦Executing multiple strategies designed to further increase revenues and improve the profitability of our existing theatres. These strategies include various cost control efforts, as well as plans to expand ancillary theatre revenues, such as pre-show advertising, lobby advertising, post transaction click-through advertising, additional corporate and group sales and sponsorships.
◦Continually evaluating the financial viability of our existing assets. During fiscal 2021, we made the decision to not reopen three theatres that had previously closed due to the COVID-19 pandemic, consisting of one former budget-oriented theatre and two Movie Tavern theatres with leases that were expiring within the next year. During the first quarter of fiscal 2023, we closed one owned theatre in Minnesota. In evaluating the viability of our theatres we consider financial performance, lease terms (if applicable), future maintenance capital requirements, strategic importance and opportunities to consolidate our operations within local markets, among other factors.
◦Regularly upgrading and remodeling our theatres to keep them fresh. To maintain our existing theatres and accomplish the strategies noted above and below, we currently anticipate that our fiscal 2023 capital expenditures in this division will total approximately $15 - $20 million.
•Re-invent and modernize the out-of-home entertainment experience. Our goal continues to be to introduce and create entertainment destinations that further define and enhance the customer value proposition for movie-going and the overall out-of-home entertainment experience. Strategies to achieve this goal are expected to include:
◦Launching a subscription program that encourages more frequent movie-going, particularly for non-blockbuster films. In January 2022, we introduced two such programs, branded MovieFlexSM and
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MovieFlexSM+, in three separate markets as part of our initial test of this strategy. We expect to expand our subscription programs to additional markets in fiscal 2023.
◦Introducing electronic passports with packaged film series. In January 2023, we launched Marcus Passport, a program that allows customers to purchase a passport ticket with access to every movie that is playing as part of a Marcus Theatres film series, priced at a discount to purchasing tickets for each movie individually. The program launched with a Best Picture Passport featuring the ten Academy Awards Best Picture nominees and a Kids Passport featuring twelve family films.
◦Testing and subsequently implementing additional entertainment options within theatre auditoriums. Examples of initiatives may include sports bars for viewing live sports (possibly with online gambling where available), sports gaming, and interactive live bingo auditoriums. In March 2022, we introduced a sports viewing auditorium, branded The WallSM, in our theatre in Gurnee, Illinois as part of our initial test of this strategy. The Wall combines multi-screen sports viewing with our complete in-theatre dining food and beverage menu, providing customers a premium sports bar experience. We continue to evaluate potential expansion of similar sports viewing auditoriums in additional theatres and markets.
◦Further socializing the overall experience for our guests. This strategy will include targeting future movie-goers with relevant and desired experiences through new and creative marketing approaches, including the use of technology to tailor communications to individual guest preferences. For example, we have partnered with Movio, a global leader in data analysis for the cinema industry, to allow more targeted communication with our loyalty members. The software provides us with insight into customer preferences, attendance habits and general demographics, which we believe will help us deliver customized communication to our members. In turn, members of this program can enjoy and plan for a more personalized movie-going experience.
◦Exploring new viewing experiences for our guests. For example, we currently offer a 4DX auditorium at one of our theatres. 4DX delivers an immersive multi-sensory cinematic experience, including synchronized motion seats and environmental effects such as water, wind, fog, scent and more, to enhance the action on screen. In the first quarter of 2023, we plan to convert one of our existing auditoriums to a ScreenX auditorium. ScreenX is a panoramic film format that presents films with expanded, dual-sided, 270-degree screens projected on the walls in a theatre. We will consider additional experiential offerings in the future.
◦Exploring new content sources and deliveries to supplement existing mainstream movie content. The addition of digital technology throughout our circuit (we offer digital cinema projection on 100% of our screens) has provided us with additional opportunities to obtain non-motion picture programming from other new and existing content providers, including live and pre-recorded performances of the Metropolitan Opera, as well as sports, concerts and other events, at many of our locations. We offer weekday and weekend alternate programming at many of our theatres across our circuit. The special programming includes classic movies, faith-based content, live performances, comedy shows and children’s performances. We believe this type of programming is more impactful when presented on the big screen and provides an opportunity to continue to expand our audience base beyond traditional moviegoers. Our MMR program also gives us the ability to cost effectively promote non-traditional programming and special events, particularly during non-peak time periods.
•Strategic growth. Our long-term plans for growth in our theatre division may include evaluating opportunities for new theatres and screens. Growth opportunities that we may explore in the future include:
◦New builds. In October 2019, we opened the eight-screen Movie Tavern® by Marcus theatre in Brookfield, Wisconsin. This theatre became the first Movie Tavern by Marcus in Wisconsin. It includes eight auditoriums, each with laser projection and comfortable DreamLounger recliner seating, a full-service bar and food and drink center, and a new delivery-to-seat service model that also allows guests to order food and beverage via our mobile phone application or in-theatre kiosk. We will consider additional sites for potential new theatre locations in both new and existing markets in the future.
◦Management contracts and/or taking over existing theatre leases. The COVID-19 pandemic has been challenging for all theatre operators. In some cases, existing theatres have been returned to landlords. We
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will consider either managing theatres for existing owners/landlords or entering into new, financially viable lease arrangements if such opportunities arise.
◦Acquisitions. Acquisitions of existing theatres or theatre circuits has also been a viable growth strategy for us. In February 2019, we acquired the assets of Movie Tavern®, a New Orleans-based industry leading circuit known for its in-theatre dining concept featuring chef-driven menus, premium quality food and drink and luxury seating. The acquired circuit consisted of 208 screens at 22 locations in nine states. The purchase price consisted primarily of shares of our common stock. The acquisition of the Movie Tavern circuit increased our total number of screens at that time by an additional 23%.
Now branded Movie Tavern by Marcus, we have begun introducingsubsequently introduced new amenities to select Movie Tavern theatres, including our proprietary premium large format (PLF)PLF screens and DreamLounger recliner seating, signature programming, such as $5 movies on TuesdaysValue Tuesday with a free complimentary-size popcorndiscounted concessions, food and non-alcoholic beverages for loyalty members, and proven marketing, loyalty and pricing programs that will continue to benefit Movie Tavern guests in the future.

We believe selective, disciplined

As noted above, the COVID-19 pandemic has been challenging for all theatre operators. A number of theatre operators have filed for bankruptcy relief and many others are facing difficult financial circumstances. Although we will prioritize our own finances, we will continue to consider potential acquisitions create a compelling opportunity to expand into new growth markets and leverage our proven success.in the future. The movie theatre industry is very fragmented, with approximately 50% of United States screens owned by the three largest theatre circuits and the other 50% owned by an estimated 800 smaller operators, making it very difficult to predict when acquisition opportunities may arise. We do not believe that we are geographically constrained, and we believe that we may be able to add value to certain theatres through our various proprietary amenities and operating expertise.
Hotels and Resorts
•Operational excellence and financial discipline. We have always been, and will continue to be, focused on improving the quality of the guest experience, our portfolio of assets, and our associate working environment, with a long-term view of financial success and profitability. During fiscal 2023 and beyond, we expect to execute on a number of strategies to further maximize and leverage our existing assets in a post-pandemic world. These strategies are expected to include:
◦Multiple strategies that are intended to further grow the division’s revenues and profits. Our focus on accelerating excellence will continue in fiscal 2023, with guest experience at the forefront. Strategies will include leveraging our food and beverage expertise to further distinguish us from our competition. In addition to rebuilding our banquet and catering business as group demand improves, we will leverage hotel food and beverage concepts developed by using sharesour Marcus Restaurant Group, featuring premier brands such as Mason Street Grill, ChopHouse®, Miller Time®Pub & Grill and SafeHouse®restaurants.
◦Sales, marketing and revenue management strategies designed to further increase our profitability. The priority will be to focus on capitalizing on strong leisure and improving group demand trends, driving average daily rate, optimizing event space and growing ancillary revenues.
◦Human resource and technology strategies designed to achieve operational excellence and improve the associate work environment, while adapting to a changing labor market. We will continue to focus on
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developing our customer service delivery and technology enhancements to improve customer interactions through mobile platforms and other customer touch points.
◦A continued focus on financial discipline in an inflationary environment through operating efficiency and cost management without sacrificing our commitment to operational excellence.
•Portfolio management. We have invested approximately $177 million to further enhance our hotels and resorts portfolio over the last 9 years. These investments have included:
◦Hotel renovations. We regularly renovate and update our hotels and resorts. For example, in fiscal 2021 at the Grand Geneva Resort & Spa, we renovated the lobby and in fiscal 2022 we began a guest room and meeting space renovation project that is expected to be completed in fiscal 2023.
◦Hotel branding changes. We closed the InterContinental Milwaukee in early January 2019 and undertook a substantial renovation project that converted this hotel into the unbranded experiential arts hotel, Saint Kate - The Arts Hotel. The newly renovated hotel reopened during June 2019.
Our future plans for our hotels and resorts division also include continued reinvestment in our existing properties to maintain and enhance their value. We anticipate additional reinvestments during fiscal 2023 and fiscal 2024 at the Grand Geneva Resort & Spa, The Pfister Hotel and the Hilton Milwaukee City Center. To maintain our existing hotels and resorts, we currently anticipate that our fiscal 2023 capital expenditures in this division will total approximately $45 - $55 million.
We have been very opportunistic in our past hotel investments as we have, on many occasions, acquired assets at favorable terms and then improved the properties and operations to create value. Unlike our theatre assets where the majority of our common stock asreturn on investment comes from the annual cash flow generated by operations, a significant componentportion of the purchase considerationreturn on our hotel investments is derived from effective portfolio management, which includes determining the proper branding strategy for a given asset, the proper level of investment and upgrades and identifying an effective divestiture strategy for the Movie Tavern acquisition,asset when appropriate. As a result, we may periodically explore opportunities to monetize all or a portion of one or more owned hotels. In December 2022, we sold The Skirvin Hilton for $36.75 million. We will redeploy the sale proceeds, net of mortgage debt and land lease retirement, into other investment opportunities in our hotel business that we believe will provide more attractive investment returns.
We will consider many factors as we actively review opportunities to execute this strategy, including income tax considerations, the ability to retain management, pricing and individual market considerations. We evaluate strategies for our balance sheet remains positionedhotels on an asset-by-asset basis. We have not set a specific goal for the number of hotels that may be considered for this strategy, nor have we set a specific timetable. It is possible that we may sell a particular hotel or hotels during fiscal 2023 or beyond if we determine that such action is in the best interest of our shareholders.
•Strategic growth. Transactional activity in the hotel industry has been limited during the last three years due to consider additional acquisitionsthe pandemic and its lingering effects and the rising cost of debt capital for financing hotel acquisitions. Although we will prioritize our own finances, our hotels and resorts division expects to continue to seek opportunities to invest in new hotels and increase the number of rooms under management in the future.

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iWe have invested over $350 million to further enhance the movie-going experience and amenities in new and existing theatres over the last six and one-half calendar years, with more investments planned for fiscal 2020. These investments include:

DreamLounger recliner additions. These luxurious, state-of-the-art recliners allow guests to go from upright to a full-recline position in seconds. These seat changes require full auditorium remodels to accommodate the necessary 84 inches of legroom, resulting Growth opportunities that we may explore in the lossfuture include:

◦Seeking opportunities where we may act as an investment fund sponsor or joint venture partner in acquiring additional hotel properties. We continue to believe that opportunities to acquire high-quality hotels at reasonable valuations will be present in the future for well-capitalized companies, and we believe that there are partners available to work with us when the appropriate hotel assets are identified. Advantages of approximately 50%this growth strategy include the ability to accelerate our growth through smaller investments in an increased number of properties, while earning management fees and potentially receiving a promoted interest in the hotel investments.
In December 2021, we formed a joint venture with funds managed by Searchlight Capital Partners (“Searchlight”), a leading global private investment firm, to co-invest in lifestyle hotels, resorts and high-quality full-service properties. Through this joint venture, we acquired the Kimpton Hotel Monaco
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Pittsburgh in December 2021, which we manage. We hope to acquire additional hotels using this strategy in fiscal 2023 and beyond.
◦Pursuing additional management contracts for other owners, some of which may include small equity investments similar to the investments we have made in the past with strategic equity partners. Although total revenues from an individual hotel management contract are significantly less than from an owned hotel, the operating margins are generally significantly higher due to the fact that all direct costs of operating the property are typically borne by the owner of the existing traditional seats inproperty. Management contracts provide us with an average auditorium. To date,opportunity to increase our total number of managed rooms without a significant investment, thereby increasing our returns on equity. We may also pursue the additionacquisition of DreamLoungers has increased attendance at each ofother hotel management companies that would provide our applicable theatres, outperforming nearby competitive theatresmanagement portfolio with additional scale and growing the overall market attendance in most cases. Initially, 12capabilities to accelerate our growth.
In August 2021, we assumed management of the 22 acquired Movie Tavern theatres had recliner seating. We added DreamLounger recliner seats to four additional acquired Movie Tavern theatres during fiscal 2019,Coralville Hotel & Conference Center in Coralville, Iowa. Owned by the City of Coralville, this 286-room hotel was recently rebranded under the Hyatt Regency brand as well as one Marcus Wehrenberg® theatreHyatt Regency Coralville Hotel & Conference Center. A comprehensive renovation of the hotel’s guestrooms, restaurant and one newly built Movie Tavern. As of December 26, 2019, we offered all DreamLounger recliner seating in 63 theatres, representing approximately 72% of our company-owned, first-run theatres. Including our PLF auditoriums with recliner seating, as of December 26, 2019, we offered our DreamLounger recliner seating in approximately 77% of our company-owned, first-run screens, a percentage we believefitness room is underway and is anticipated to be the highest among the largest theatre chainscompleted in the nation. third quarter of fiscal 2023. Conversely, we will occasionally lose management contracts due to various circumstances.
Corporate
•We completedperiodically review opportunities to make investments in long-term growth opportunities that may not be entirely related to our two primary businesses (but typically have some connection to entertainment, food and beverage, hospitality, real estate, etc.). We expect to continue to review such opportunities in the future.
•In addition of DreamLounger recliner seats to another Movie Tavern locationoperational and growth strategies in our operating divisions, we will continue to seek additional opportunities to enhance shareholder value, including strategies related to our dividend policy and share repurchases. We increased our regular quarterly common stock cash dividend rate by 6.3% during the first quarter of fiscal 2020, and we are currently evaluating opportunitiesprior to add our DreamLounger seating to several additional theatres during the second half of fiscal 2020.

UltraScreen DLX® andSuperScreen DLX® (DreamLounger eXperience) conversions. We introduced one of the first PLF presentationstemporarily suspending dividend payments in response to the industry whenCOVID-19 pandemic.

The Credit Agreement currently allows us, if we rolled out our proprietaryUltraScreen® concept approximately 20 years ago. We later introduced ourUltraScreen DLX concept by combining our premium large-format presentation with DreamLounger recliner seating and Dolby® Atmos™ immersive sound to elevatebelieve it is in the movie-going experience for our guests. More recently, we began including heated DreamLounger recliner seating in our DLX auditoriums. During fiscal 2019, we opened one newUltraScreen DLX at an existing Marcus Wehrenberg theatre and converted one existing screen into anUltraScreen DLX auditorium at a Movie Tavern by Marcus theatre. During fiscal 2019, we also converted 26 existing screens at 13 Movie Tavern by Marcus theatres and two existing screens at one Marcus Wehrenberg theatre toSuperScreen DLX auditoriums (a slightly smaller screen than anUltraScreen but with the same DreamLounger seating and Dolby Atmos sound) and opened one newSuperScreen DLX auditorium at a newly built Movie Tavern by Marcus theatre. Mostbest interest of our PLF screens now includeshareholders, to return capital to shareholders through dividends or share repurchases, up to a maximum of $1.55 million per quarter (approximately $0.05/share/quarter if a dividend). During the added feature of heated DreamLounger recliner seats. As of December 26, 2019, we had 31UltraScreen DLX auditoriums, one traditionalUltraScreen auditorium, 80SuperScreen DLX auditoriums and three IMAX® PLF screens at 63 of our theatre locations. As of December 26, 2019, we offered at least one PLF screen in approximately 72% of our first-run, company-owned theatres – a percentage we believe to be the highest percentage among the largest theatre chains in the nation.

Our PLF screens generally have higher per-screen revenues and draw customers from a larger geographic region compared to our standard screens, and we charge a premium price to our guests for this experience. We are currently evaluating opportunities to convert several additional existing screens toSuperScreen DLX auditoriums during fiscal 2020. In addition, our new theatre currently under construction in Tacoma, Washington will include one PLF auditorium.

Signature cocktail and dining concepts. We have continued to further enhance our food and beverage offerings within our existing theatres. We believe our 50-plus years of food and beverage experience in the hotel and restaurant businesses provides us with a unique advantage and expertise that we can leverage to further grow revenues in our theatres. The concepts we are expanding include:

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·Take FiveSMLounge,Take Five Express andThe Tavern – these full-service bars offer an inviting atmosphere and a chef-inspired dining menu, along with a complete selection of cocktails, locally-brewed beers and wines. We also offer full liquor service through the concession stand at two theatres. We acquired 22 new bars, known asThe Tavern, in conjunction with our Movie Tavern acquisition and opened a newTavern at our new Brookfield, Wisconsin Movie Tavern by Marcus theatre in fiscal 2019. As of December 26, 2019, we offered bars/full liquor service at 51 theatres, representing approximately 59% of our company-owned, first-run theatres. We are currently evaluating opportunities to add bar service to up to three additional theatres during fiscal 2020, including our new theatre under construction in Tacoma, Washington.

·Zaffiro’s®Express – these outlets offer lobby dining that includes appetizers, sandwiches, salads, desserts and our signatureZaffiro’s THINCREDIBLE®handmade thin-crust pizza. In select locations without aTake Five Lounge outlet, we offer beer and wine at theZaffiro’s Express outlet. We opened one newZaffiro’s Express outlet during fiscal 2019 at our new Movie Tavern by Marcus location in Brookfield, Wisconsin, increasing our number of theatres with this concept to 29 as of December 26, 2019, representing approximately 45% of our company-owned, first-run theatres (excluding our acquired in-theatre dining Movie Tavern theatres). We also operate threeZaffiro’s®Pizzeria and Bar full-service restaurants.

·Reel Sizzle® – this signature dining concept serves menu items inspired by classic Hollywood and the iconic diners of the 1950s. We offer Americana fare like burgers and chicken sandwiches prepared on a griddle behind the counter, along with chicken tenders, crinkle-cut fries, ice cream and signature shakes. Our new Movie Tavern by Marcus in Brookfield, Wisconsin includes aReal Sizzle. As of December 26, 2019, we operated eightReel Sizzle outlets, and we expect to add oneReel Sizzle outlet to the new theatre currently under construction in Tacoma, Washington.

·Other in-lobby dining – We also operate oneHollywood Café at an existing theatre, and four of the Marcus Wehrenberg theatres offer in-lobby dining concepts, operating under names such asFred’s Drive-In orFive Star. In addition, we are currently testing a Mexican food concept at one theatre, and we are considering expanding this new concept during fiscal 2020. Including these additional concepts, as of December 26, 2019, we offered one or more in-lobby dining concepts in 40 theatres, representing approximately 62% of our company-owned, first-run theatres (excluding our in-theatre dining Movie Tavern theatres).

·In-theatre dining – As of December 26, 2019, we offered full-service, in-theatre dining with a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 32 theatres and a total of 248 auditoriums, operating under the namesBig Screen BistroSM,Big Screen Bistro ExpressSM, BistroPlex®andMovie Tavern by Marcus, representing approximately 37% of our company-owned, first-run theatres.

iWith each of these strategies, our goal continues to be to introduce and create entertainment destinations that further define and enhance the customer value proposition for movie-going. We also expect to continue to maintain and enhance the value of our existing theatre assets by regularly upgrading and remodeling our theatres to keep them fresh. To accomplish the strategies noted above, we currently anticipate that our fiscal 2020 capital expenditures in this division will total approximately $45-$60 million.

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iIn addition to the growth strategies described above, our theatre division continues to focus on multiple strategies designed to further increase revenues and improve the profitability of our existing theatres. These strategies include various cost control efforts, as well as plans to expand ancillary theatre revenues, such as pre-show advertising, lobby advertising, additional corporate and group sales, sponsorships, special film series and alternate auditorium uses.

iWe also have several customer-focused strategies designed to elevate our consumer knowledge, expectation and connection, and provide us with a competitive advantage and the ability to deliver improved financial performance. These strategies include the following:

Marketing initiatives. We offer a “$5 Tuesday” promotion at every theatre in our circuit that includes a free complimentary-size popcorn to our loyalty program members. We have seen our Tuesday attendance increase dramatically since the introduction of the $5 Tuesday promotion. We believe this promotion has increased movie going frequency and reached a customer who may have stopped going to the movies because of price, creating another “weekend” day for us without adversely impacting the movie-going habits of our regular weekend customers. We introduced our $5 Tuesday promotion with the free popcorn for loyalty members at our Marcus Wehrenberg theatres immediately upon acquisition in December 2016 and did the same thing in February 2019 with our newly acquired Movie Tavern theatres. We experienced an increase in Tuesday performance at the Marcus Wehrenberg theatres and have seen a similar response from customers at our Movie Tavern theatres. We also offer a “$6 Student Thursday” promotion at all of our locations that has been well received by that particular customer segment. In addition, we offer a $6 “Young-at-Heart” program for seniors on Friday afternoons that was also introduced to our Movie Tavern locations during our fiscal 2019 first quarter.

Loyalty program. We offer what we believe to be a best-in-class customer loyalty program called Magical Movie RewardsSM. We currently have approximately 4.0 million members enrolled in the program. Approximately 42% of all transactions in our theatres during fiscal 2019 were completed by registered members of the loyalty program. The program allows members to earn points for each dollar spent and access special offers available only to members. The rewards are redeemable at the box office, concession stand or at the many Marcus Theatres® food and beverage venues. In addition, we have partnered with Movio, a global leader in data analysis for the cinema industry, to allow more targeted communication with our loyalty members. The software provides us with insight into customer preferences, attendance habits and general demographics, which we believe will help us deliver customized communication to our members. In turn, members of this program can enjoy and plan for a more personalized movie-going experience. The program also gives us the ability to cost effectively promote non-traditional programming and special events, particularly during non-peak time periods. We believe that this will result in increased movie-going frequency, more frequent visits to the concession stand, increased loyalty to Marcus Theatres and, ultimately, improved operating results. The acquired Wehrenberg theatres offered a loyalty program to their customers that had approximately 200,000 members. We converted these members to our Magical Movie Rewards program during fiscal 2017 and program membership at our Marcus Wehrenberg theatres has subsequently increased. The acquired Movie Tavern theatres did not offer a loyalty program to their customers. We introduced our Magical Movie Rewards program to these theatres during the secondthird quarter of fiscal 2019 after all necessary technology requirements were completed.

Technology enhancements. We2022, our Board of Directors elected to reinstate our quarterly dividend, declaring a quarterly cash dividend of $0.05 per share of common stock and $0.045 per share of Class B common stock, which was paid in the third and fourth quarters of fiscal 2022. The current restriction on dividends and share repurchases will remain in place until the first quarter of fiscal 2023 and we have recently enhanced our mobile ticketing capabilities, our downloadable Marcus Theatres mobile application, and ourmarcustheatres.comwebsite. We also recently added food and beverage ordering capabilitiesreturned to our mobile application at select theatres, includingfinancial covenants in place prior to the restriction. In prior years, we have periodically paid special dividends and repurchased shares of our recently opened Movie Tavern location in Brookfield, Wisconsin. common stock under our existing Board of Directors stock repurchase authorizations.

•We will also continue to install additional theatre-level technology, such as new ticketing kiosks, digital menu boardsevaluate opportunities to sell real estate when appropriate, allowing us to benefit from the underlying value of our real estate assets. When possible, we will attempt to avail ourselves of the provisions of Internal Revenue Code §1031 related to tax-deferred like-kind exchange transactions. We are actively marketing a number of pieces of surplus real estate and concession advertising monitors. Eachother non-core real estate. During the fourth quarter of these enhancements is designed to improve customer interactions, both at thefiscal 2020, we sold two land parcels and a former budget theatre, generating total proceeds of approximately $3.0 million. During fiscal 2021, we sold an equity interest in a joint venture, several land parcels, another former budget theatre and through mobile platforms and other electronic devices.

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an operating retail center, generating total proceeds of $22.1 million. During fiscal 2022, we sold surplus land parcels generating total proceeds of $4.9 million. We believe we may receive total sales proceeds from real estate sales during the next fiscal year totaling approximately $5 - $10 million, depending upon demand for the real estate in question.

iThe addition of digital technology throughout our circuit (we offer digital cinema projection on 100% of our first-run screens) has provided us with additional opportunities to obtain non-motion picture programming from other new and existing content providers, including live and pre-recorded performances of the Metropolitan Opera, as well as sports, music and other events, at many of our locations. We offer weekday and weekend alternate programming at many of our theatres across our circuit. The special programming includes classic movies, live performances, comedy shows and children’s performances. We believe this type of programming is more impactful when presented on the big screen and provides an opportunity to continue to expand our audience base beyond traditional moviegoers.

iIn addition, digital 3D presentation of films has continued to positively contribute to our box office receipts during the periods presented in this Annual Report on Form 10-K. As of December 26, 2019, we had the ability to offer digital 3D presentations in 386, or approximately 36%, of our first-run screens, including the vast majority of ourUltraScreens. We have the ability to increase the number of digital 3D capable screens we offer to our guests in the future and will do so based on the number of digital 3D films released during future periods and our customers’ response to these 3D releases.

Hotels and Resorts

iOur hotels and resorts division is actively seeking opportunities to invest in new hotels and increase the number of rooms under management. The goal of our hotel investment business, MCS Capital, is to seek opportunities where we may act as an investment fund sponsor, joint venture partner or sole investor in acquiring additional hotel properties. We continue to believe that opportunities to acquire high-quality hotels at reasonable valuations will be present in the future for well-capitalized companies, and we believe that there are partners available to work with us when the appropriate hotel assets are identified. We have a number of potential growth opportunities that we are evaluating.

iWe also continue to pursue additional management contracts for other owners, some of which may include small equity investments similar to the investments we have made in the past with strategic equity partners. Although total revenues from an individual hotel management contract are significantly less than from an owned hotel, the operating margins are generally significantly higher due to the fact that all direct costs of operating the property are typically borne by the owner of the property. Management contracts provide us with an opportunity to increase our total number of managed rooms without a significant investment, thereby increasing our returns on equity. In April 2019, we assumed management of the Hyatt Regency Schaumburg hotel in Schaumburg, Illinois. This 468-room hotel recently completed a $15 million renovation and offers upscale accommodations, robust amenities and more than 30,000 square feet of indoor and outdoor meeting and event space, including a 3,100 square foot starlit terrace. This is our first Hyatt-branded hotel under management. Conversely, in May 2019, we ceased managing the Heidel House Resort & Spa in Green Lake, Wisconsin, after the owners of this resort decided to close this property permanently. Early in our fiscal 2019 third quarter, the owners of the Sheraton Chapel Hill Hotel in Chapel Hill, North Carolina sold the hotel, and as a result, our contract to manage this hotel was terminated.

iUnlike our theatre assets where the majority of our return on investment comes from the annual cash flow generated by operations, a portion of the return on our hotel investments is derived from effective portfolio management, which includes determining the proper branding strategy for a given asset along with the proper level of investment and upgrades, as well as identifying an effective divestiture strategy for the asset when appropriate. We closed the InterContinental Milwaukee in early January 2019 and undertook a substantial renovation project that converted this hotel into the unbranded experiential arts hotel, the Saint Kate. The newly renovated hotel reopened during the first week of June 2019 (although a portion of the rooms and food and beverage outlets didn’t fully open until later in the month).

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iWe have been very opportunistic in our past hotel investments as we have, on many occasions, acquired assets at favorable terms and then improved the properties and operations to create value. We also will continue to periodically explore opportunities to monetize one or more owned hotels. We will consider many factors as we actively review opportunities to execute this strategy, including income tax considerations, the ability to retain management, pricing and individual market considerations. We evaluate strategies for our hotels on an asset-by-asset basis. We have not set a specific goal for the number of hotels that may be considered for this strategy, nor have we set a specific timetable. It is possible that we may sell a particular hotel or hotels during fiscal 2020 or beyond if we determine that such action is in the best interest of our shareholders.

iOur fiscal 2020 plans for our hotels and resorts division also include continued reinvestment in our existing properties to maintain and enhance their value. Late in fiscal 2018 and carrying over into the first half of fiscal 2019, we made additional reinvestments in the Hilton Madison Monona Terrace. Late in fiscal 2020 and carrying over into fiscal 2021, we currently expect to make additional reinvestments in The Pfister® Hotel and Grand Geneva® Resort & Spa. Including possible growth opportunities currently being evaluated, we believe our total fiscal 2020 hotels and resorts capital expenditures will total approximately $20-$25 million, excluding any presently unidentified acquisitions.

iIn addition to the growth strategies described above, our hotels and resorts division continues to focus on several strategies that are intended to further grow the division’s revenues and profits. These include leveraging our food and beverage expertise for growth opportunities and growing our catering and events revenues.This also includes hotel food and beverage concepts developed by our Marcus Restaurant Group, featuring premier brands such as Mason Street Grill,ChopHouse®,Miller Time® Pub & Grill and SafeHouse®restaurants.Our current focus is on maximizing the contribution of our newest restaurant,SafeHouse Chicago, but we will consider exploring additional opportunities to expand this concept in the future.

iWe have also invested in sales, revenue management and internet marketing strategies in an effort to further increase our profitability, as well as human resource and cost improvement strategies designed to achieve operational excellence and improved operating margins. We are focused on developing our customer service delivery and technology enhancements to improve customer interactions through mobile platforms and other customer touch points.

Corporate

iWe periodically review opportunities to make investments in long-term growth opportunities that may not be entirely related to our two primary businesses (but typically have some connection to entertainment, food and beverage, hospitality, real estate, etc.). We are currently reviewing several such opportunities and we may incur capital expenditures during fiscal 2020 related to this strategy.

iIn addition to operational and growth strategies in our operating divisions, we continue to seek additional opportunities to enhance shareholder value, including strategies related to our dividend policy, share repurchases and asset divestitures. We increased our regular quarterly common stock cash dividend rate by 20.0% during the first quarter of fiscal 2018, 6.7% during the first quarter of fiscal 2019 and 6.3% during the first quarter of fiscal 2020. In prior years, we have periodically paid special dividends and repurchased shares of our common stock under our existing Board of Directors stock repurchase authorizations. We will also continue to evaluate opportunities to sell real estate when appropriate, allowing us to benefit from the underlying value of our real estate assets. When possible, we will attempt to avail ourselves of the provisions of Internal Revenue Code §1031 related to tax-deferred like-kind exchange transactions.

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The actual number, mix and timing of our potential future new facilities and expansions and/or divestitures will depend, in large part, on industry and economic conditions, our financial performance and available capital, the competitive environment, evolving customer needs and trends, and the availability of attractive acquisition and investment opportunities. It is likely that our growth goals and strategies will continue to evolve and change in response to these and other factors, and there can be no assurance that we will achieve our current goals. Each of our goals and strategies are subject to the various risk factors discussed above in this Annual Report on Form 10-K.

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Results of Operations
Consolidated Financial Comparisons
The following table sets forth revenues, operating income (loss), other income (expense), net earnings (loss) and net earnings (loss) per diluted common share for the past three fiscal years (in millions, except for per share and percentage change data) :
F22 v. F21F21 v. F20
F2022F2021Amt.Pct.F2020Amt.Pct.
Revenues$677.4 $458.2 $219.2 47.8 %$237.7 $220.6 92.8 %
Operating income (loss)8.3 (41.5)49.8 120.0 %(178.4)137.0 76.8 %
Other income (expense), net(10.3)(17.5)7.3 41.7 %(17.4)(0.2)(0.9)%
Net earnings attributable to noncontrolling interests2.9 — 2.9 — — — 100.0 %
Net loss attributable to The Marcus Corporation$(12.0)$(43.3)$31.3 72.3 %$(124.9)$81.6 65.3 %
Net loss per common share - diluted$(0.39)$(1.42)$1.03 72.5 %$(4.13)$2.71 65.6 %
Fiscal 2022 versus Fiscal 2021
Revenues, operating income (loss), net loss attributable to The Marcus Corporation and net loss per diluted common share improved significantly during fiscal 2022 compared to fiscal 2021. Increased revenues from both our theatre division and hotels and resorts division contributed to the improvement during fiscal 2022 compared to fiscal 2021, as customers continued to return to both our theatres and hotels and resorts as the impact of the COVID-19 pandemic subsided during fiscal 2022. Net loss attributable to The Marcus Corporation during fiscal 2022 was positively impacted by a decrease in interest expense compared to fiscal 2021 and a gain on the sale of The Skirvin Hilton during fiscal 2022, partially offset by decreased gains on disposition of property, equipment and other assets. Net loss attributable to The Marcus Corporation and net loss per diluted common share during fiscal 2022 were negatively impacted by an increase in income tax expense as described below.
Our operating loss during fiscal 2022 was negatively impacted by impairment charges of approximately $1.5 million, or approximately $0.04 per diluted common share, related to two operating theatres. Our operating loss during fiscal 2021 was favorably impacted by nonrecurring state government grants and federal tax credits of approximately $10.7 million, or approximately $0.25 per diluted common share, and was negatively impacted by impairment charges of approximately $5.8 million, or approximately $0.14 per diluted common share, primarily related to two operating theatres, three permanently closed theatres and surplus real estate that we intend to sell.
Operating losses from our corporate items, which include amounts not allocable to the business segments, decreased during fiscal 2022 compared to fiscal 2021 due primarily to reduced long-term incentive compensation expenses.
Investment loss was insignificant during fiscal 2022 compared to investment income of $0.6 million during fiscal 2021. Investment income (loss) includes interest earned on cash and cash equivalents, as well as increases/decreases in the value of marketable securities and increases in the cash surrender value of a life insurance policy. Investment income (loss) during fiscal 2023 may vary compared to fiscal 2022, primarily dependent upon changes in the value of marketable securities.
Interest expense totaled $15.3 million during fiscal 2022, a decrease of $3.4 million, or 18.2%, compared to interest expense of $18.7 million during fiscal 2021. The decrease in interest expense during fiscal 2022 was due primarily to lower borrowings, partially offset by an increase in our average interest rate, as discussed in the Liquidity section of this MD&A below. Interest expense during fiscal 2022 included approximately $1.6 million in noncash amortization of debt issuance costs. During fiscal 2023, we estimate that noncash amortization of debt issuance costs will be approximately $1.5 million, excluding the impact of any new debt issuance costs. We currently expect our total interest expense to decrease during fiscal 2023 due to decreased borrowings. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact,
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either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.
We incurred other expense of $2.1 million during fiscal 2022, a decrease of approximately $0.4 million, or 15.1%, compared to other expense of $2.5 million during fiscal 2021. Other expense consists primarily of the non-service cost components of our periodic pension costs. Based upon information from an actuarial report for our pension plans, we expect other expense to be approximately $2.2 million during fiscal 2023.
We reported net gains on disposition of property, equipment and other assets of approximately $1.1 million and $3.2 million, respectively, during fiscal 2022 and fiscal 2021. The net gains on disposition of property, equipment and other assets during fiscal 2022 included the sale of surplus land, partially offset by losses on items disposed of during the year by both divisions. The net gains on disposition of property, equipment and other assets during fiscal 2021 included the sale of surplus land, the sale of an equity investment in a joint venture, the sale of a former budget movie theatre and the sale of a retail center, partially offset by losses on items disposed of during the year by both divisions. The timing of our periodic sales and disposals of property, equipment and other assets results in variations each year in the gains or losses that we report on dispositions of property, equipment and other assets. We anticipate the potential for additional disposition gains or losses from periodic sales of property, equipment and other assets, during fiscal 2023 and beyond, as discussed in more detail in the “Current Plans” section of this MD&A.
We reported a gain on sale of hotel of $6.3 million during fiscal 2022 resulting from the sale of The Skirvin Hilton on December 16, 2022. See Note 5 in the accompanying consolidated financial statements for further discussion of the sale transaction.
We reported equity losses from an unconsolidated joint venture of approximately $0.1 million and $0.1 million, respectively, during fiscal 2022 and fiscal 2021. The equity losses in both years consist of our pro-rata share of losses from the Kimpton Hotel Monaco Pittsburgh in Pittsburgh, Pennsylvania, acquired in mid-December 2021 and in which we have a 10% minority ownership interest.
The operating results of one majority-owned hotel, The Skirvin Hilton, are included in the hotels and resorts division revenue and operating income (loss) during fiscal 2020, fiscal 2021 and fiscal 2022 through the date of its sale, and the after-tax net earnings or loss attributable to noncontrolling interests is deducted from or added to net earnings (loss) on the consolidated statements of earnings (loss). As a result of the noncontrolling interest balance reaching zero during the second quarter of fiscal 2020, we did not report additional net losses attributable to noncontrolling interests during the remainder of fiscal 2020 and fiscal 2021. In fiscal 2022, we reported net earnings attributable to noncontrolling interests of $2.9 million, which result from the gain on the sale of The Skirvin Hilton attributable to noncontrolling interests.
We reported income tax expense during fiscal 2022 of $7.1 million compared to an income tax benefit of $15.7 million in fiscal 2021. Our fiscal 2022 income tax expense was negatively impacted by $7.4 million of valuation allowances related to deferred tax assets for state net operating loss carryforwards for which the ultimate realization is uncertain (net of federal benefit), and by $0.8 million of impact primarily from excess compensation subject to deduction limitations. Our fiscal 2022 effective income tax rate, after adjusting for earnings (losses) from noncontrolling interests that are not tax-effected because the entity involved is a tax pass-through entity, was (147.6)%. Excluding the negative impact of the valuation allowance adjustment (net of federal benefit) and the excess compensation deduction limitations, our effective income tax rate during fiscal 2022 was 20.2%. Our fiscal 2021 effective income tax rate was 26.6%. We currently anticipate that our fiscal 2023 effective income tax rate may be in the 24-26% range, excluding any potential further changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits.
Weighted-average diluted shares outstanding were 31.5 million during fiscal 2022 and 31.4 million during fiscal 2021. All per share data in this MD&A is presented on a fully diluted basis, however, for periods when we report a net loss, common stock equivalents are excluded from the computation of diluted loss per share as their inclusion would have an anti-dilutive effect. In future periods, weighted-average diluted shares will include shares from the conversion of convertible notes to the extent conversion is dilutive in such periods.
Theatres

Our oldest and historically most profitable division is our theatre division. The theatre division contributed 67.9%60.2% of our consolidated revenues and 88.4%30.2% of our consolidated operating income (loss), excluding corporate items, during fiscal 2019,2022, compared to 63.2%59.2% and 87.7%127.0%, respectively, during fiscal 20182021 and 61.7%55.8% and 86.2%73.5%, respectively, during
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fiscal 2017.2020. As of December 26, 2019,29, 2022, the theatre division operated motion picture theatres in Wisconsin, Illinois, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia, a family entertainment center in Wisconsin and a retail center in Missouri.Wisconsin. The following tables set forth revenues, operating income (loss), operating margin, screens and theatre locations for the last three fiscal years:

     Change F19 v. F18     Change F18 v. F17 
  F2019  F2018  Amt.  Pct.  F2017  Amt.  Pct. 
  (in millions, except percentages) 
Revenues $557.1  $446.8  $110.3   24.7% $403.4  $43.4   10.8%
Operating income $76.9  $88.8  $(11.9)  -13.4% $80.4  $8.4   10.4%
Operating margin  13.8%  19.9%          19.9%        

Number of screens and locations at period-end(1)(2) F2019  F2018  F2017 
Theatre screens  1,106   889   885 
Theatre locations  91   68   69 
Average screens per location  12.2   13.1   13.0 

(1)Includes 6 screens at one location managed for another owner at the end of fiscal 2019 and fiscal 2018 and 11 screens at two locations managed for other owners at the end of fiscal 2017.
(2)Includes 29 budget screens at three locations at the end of fiscal 2019, fiscal 2018 and fiscal 2017. Compared to first-run theatres, budget theatres generally have lower box office revenues and associated film costs, but higher concession sales as a percentage of box office revenues.

F22 v. F21F21 v. F20
F2022F2021Amt.Pct.F2020Amt.Pct.
(in millions, except percentages)
Revenues$407.7 $271.2 $136.5 50.3 %$132.6 $138.6 104.5 %
Operating income (loss)$8.1 $(27.6)$35.7 129.3 %$(121.4)$93.9 77.3 %
Operating margin2.0 %(10.2)%  (91.6)%  

Number of screens and locations at period-end (1)(2)
F2022F2021F2020
Theatre screens1,0641,0641,097
Theatre locations858589
Average screens per location12.512.512.3

(1)Includes 6 screens at one location managed for another owner at the end of fiscal 2020.
(2)Includes 22 budget screens at two locations at the end of fiscal 2020. Compared to first-run theatres, budget theatres generally have lower box office revenues and associated film costs, but higher concession sales as a percentage of box office revenues.
The following table provides a further breakdown of the components of revenues for the theatre division for the last three fiscal years:

     Change F19 v. F18     Change F18 v. F17 
  F2019  F2018  Amt.  Pct.  F2017  Amt.  Pct. 
  (in millions, except percentages) 
Admission revenues $284.2  $246.4  $37.8   15.3% $227.1  $19.3   8.5%
Concession revenues  231.2   166.6   64.6   38.8%  149.0   17.6   11.8%
Other revenues  40.8   32.5   8.3   25.4%  25.2   7.3   29.2%
   556.2   445.5   110.7   24.8%  401.3   44.2   11.0%
Cost reimbursements  0.9   1.3   (0.4)  -32.1%  2.1   (0.8)  -39.6%
Total revenues $557.1  $446.8  $110.3   24.7% $403.4  $43.4   10.8%

As described above in the “Current Plans” section of this MD&A, on February 1, 2019, we acquired the assets of Movie Tavern, a New Orleans-based industry leading circuit known for its in-theatre dining concept featuring chef-driven menus, premium quality food and drink and luxury seating. The acquired circuit consists of 208 screens at 22 locations in nine states – Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia. The purchase price consisted of $30 million in cash, subject to certain adjustments, and 2,450,000 shares of our common stock, for a total purchase price of approximately $139.3 million, based upon our closing share price on January 31, 2019. The acquisition of the Movie Tavern circuit increased our total number of screens by an additional 23%. The impact that the Movie Tavern acquisition has had on our key financial measures and metrics is described further in the discussion below.

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years:

F22 v. F21F21 v. F20
F2022F2021Amt.Pct.F2020Amt.Pct.
(in millions, except percentages)
Admission revenues$198.5 $130.7 $67.7 51.8 %$64.8 $65.9 101.7 %
Concession revenues180.2 118.7 61.5 51.8 %56.7 62.0 109.2 %
Other revenues29.1 21.8 7.3 33.7 %10.8 11.0 102.1 %
Total revenues before cost reimbursements407.7 271.2 136.6 50.4 %132.3 138.9 105.0 %
Cost reimbursements— 0.1 (0.1)(100.0)%0.3 (0.2)(72.8)%
Total revenues$407.7 $271.2 $136.5 50.3 %$132.6 $138.6 104.5 %

Fiscal 20192022 versus Fiscal 2018

2021

Our theatre division revenues and operating income increased significantly during fiscal 2019 revenues increased by 24.7%2022 compared to fiscal 2018 due2021 as customers continued to the newly acquired Movie Tavernreturn to our theatres increased other revenues and increases in our average ticket price and average concession revenues per person at our comparable theatres, partially offset byas the impact of decreased attendance at comparable theatres due to a weaker film slatethe COVID-19 pandemic subsided during fiscal 2019.2022. Attendance grew significantly during fiscal 2022 compared to fiscal 2021 as an increased number of films were released to movie theatres during fiscal 2022. Despite the favorable comparisons to fiscal 2021, all of our theatres continued to operate with significantly reduced attendance during fiscal 2022 compared to pre-pandemic levels.
Our theatres were open with normal operating days and hours at all of our theatres throughout fiscal 2022, compared to fiscal 2021 during portions of which a significant number of our theatres were temporarily closed and releases of new films were limited. We began the first quarter of fiscal 2021 with approximately 52% of our theatres open. As state and local restrictions were eased in several of our markets and several new films were released by movie studios, we gradually reopened theatres, ending the fiscal 2021 first quarter with approximately 74% of our theatres open, ending the fiscal 2021 second quarter with approximately 95% of our theatres open and ending the fiscal 2021 third and fourth quarters with all of our current theatres open. The 22 acquired Movie Tavernmajority of our reopened theatres contributedoperated with reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) and reduced operating hours during the fiscal 2021 first quarter. By the end of
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May 2021, we had returned the vast majority of our theatres to normal operating days (seven days per week) and operating hours.
Our operating income during fiscal 2022 was negatively impacted by impairment charges of $1.5 million related to two operating theatre locations, compared to impairment charges of $5.8 million during fiscal 2021 related to two operating theatres, three permanently closed theatres and surplus theatre real estate. Conversely, nonrecurring state government grants from five states and federal tax credits totaling approximately $125.8$7.2 million tofor COVID-19 relief favorably impacted our theatre division revenues during the 47 weeks that we owned these theatresoperating loss during fiscal 2019. We also opened a new eight-screen Movie Tavern by Marcus theatre in Brookfield, Wisconsin early in2021.
In order to evaluate our fiscal 2019 fourth quarter that favorably impacted2022 theatre operating results, we believe it is also beneficial to compare our admission revenues and concession revenues in fiscal 2019 compared to fiscal 2018.

Total theatre attendance increased 8.8% and total admission revenues increased 15.3% during fiscal 2019 compared to fiscal 2018. Excluding Movie Tavern and the newly opened theatre, fiscal 2019 attendance and admission revenues at our comparable theatres decreased approximately 8.6% and 5.5%, respectively, compared to the prior year.pre-pandemic levels. The following table sets forth our percentage change in comparablecompares the components of revenues for the theatre attendance during eachdivision for fiscal 2022 to fiscal 2019:

F22 v. F19
F2022F2019Amt.Pct.
(in millions, except percentages)
Admission revenues$198.5 $284.1 $(85.7)(30.1)%
Concession revenues180.2 231.2 (51.1)(22.1)%
Other revenues29.1 40.8 (11.7)(28.8)%
Total revenues before cost reimbursements407.7 556.2 (148.5)(26.7)%
Cost reimbursements— 0.9 (0.9)(100.0)%
Total revenues$407.7 $557.1 $(149.3)(26.8)%
In order to better understand the current pace of the interim periods of fiscal 2019 comparedtheatre industry recovery and our ability to outperform the same periods during fiscal 2018. In addition,industry, the following table compares the percentage change in our fiscal 2019 comparable theatre admission2022 admissions revenues to the corresponding percentage change in the United States box office revenues (excluding new builds for the top 10 theatre circuits) during the same periods (as compiled by us from data received from Comscore, a national box office reporting service for the theatre industry):

  Change F19 v. F18 
  1st Qtr.  2nd Qtr.  3rd Qtr.  4th Qtr.  Total 
Pct. change in Marcus theatre attendance  -16.6%  -7.2%  +0.2%  -9.9%  -8.6%
                     
Pct. change in Marcus admission revenues  -17.8%  -3.7%  +6.3%  -5.1%  -5.5%
Pct. change in U.S. box office revenues  -16.5%  -4.5%  +3.0%  -5.5%  -6.0%
Marcus performance vs. U.S.  -1.3pts  +0.8pts  +3.3pts  +0.4pts  +0.5pts

Our comparable during each quarter of fiscal 2022 compared to the same quarter during fiscal 2019:

F22 v. F19
1st Qtr.(1)
2nd Qtr.
3rd Qtr.
4th Qtr.
Total(1)
Pct. change in Marcus admission revenues-39.4 %-24.0 %-29.1 %-34.3 %-31.2 %
Pct. change in U.S. box office revenues-44.1 %-26.6 %-32.1 %-35.7 %-34.0 %
Marcus performance vs. U.S.+4.7 pts+2.6 pts+3.0 pts+1.4 pts+2.8 pts
(1)We acquired Movie Tavern theatres on February 1, 2019. The percentage change in Marcus admission revenues for the fiscal first quarter and fiscal year reflects the Movie Tavern acquisition on a pro forma basis for the acquisition as of the first day of fiscal 2019.
According to the data received from Comscore, our theatres outperformed the industry during fiscal 2022 compared to fiscal 2019 by 0.52.8 percentage points, andpoints. Based upon this metric, we believe we have outperformed the industry during 19been one of the last 24 quarters. In general, wetop performing theatre circuits during fiscal 2022 of the top 10 circuits in the U.S. Additional data received and compiled by us from Comscore indicates our admission revenues during fiscal 2022 represented approximately 3.2% of the total admission revenues in the U.S. during the period (commonly referred to as market share in our industry). We believe our overall outperformance of the industry has been attributable to the investments we have made in new features and amenities in selectour theatres and our implementation of innovative operating, pricing and marketing strategies that have increased attendance includingrelative to our $5 Tuesday promotion andpeers, particularly at our customer loyalty program (all of which are described in the “Current Plans” section of this MD&A).acquired Movie Tavern locations. Our goal is to continue our past pattern of outperforming the industry, but with the financial impact of the majority of our completed renovations for our legacy circuit now reflected in our current results,completed, our ability to do so in any given quarter will likely be partially dependent upon film mix, weather and the competitive landscape in our marketsmarkets.
Total theatre attendance increased 47.2% during fiscal 2022 compared to fiscal 2021, when our theatres were closed for portions of the year and the number of new films released to movie theatres was more limited, resulting in increases in both admission revenues and concession revenues. Conversely, lingering customer concerns regarding visiting indoor businesses in early fiscal 2022 and a decrease in the number of new films negatively impacted attendance during fiscal 2022 as compared to fiscal 2019.
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Our highest grossing films during fiscal 2022 included Top Gun: Maverick, Black Panther: Wakanda Forever, Doctor Strange in the Multiverse of Madness, Jurassic World: Dominion, and Minions: The Rise of Gru. All of these five films debuted with an exclusive theatrical run prior to release on streaming services. This compares with four of the top five films in fiscal 2021 that debuted with an exclusive theatrical run and one film that was released “day-and-date” on streaming services. We believe such “day-and-date” releases negatively impact theatrical revenues, particularly in week two and beyond of a films’ release. We also believe “day-and-date” releases increase piracy, further impacting potential revenues. Due to the impact of four particularly strong blockbusters (generally defined as films grossing more than $100 million nationally) released during fiscal 2022 (Top Gun: Maverick, Black Panther: Wakanda Forever, Doctor Strange in the Multiverse of Madness, Jurassic World: Dominion), compared with only one extremely strong blockbuster released during fiscal 2021 (Spider-Man: No Way Home) the film slate during fiscal 2022 was generally weighted more towards our top movies compared to fiscal 2021, as evidenced by the fact that our top ten films during fiscal 2022 accounted for 53% of our total box office results, compared to 43% and 41% for the top ten films during fiscal 2021 and 2019, respectively, expressed as a percentage of the total admission revenues for the period. An increased reliance on just a few blockbuster films often has the effect of increasing our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. As a result of a more concentrated film slate our overall film rental cost increased during fiscal 2022 compared to the prior year.
In total, we played 408 films and 336 alternate content attractions at our theatres during fiscal 2022 compared to 318 films and 200 alternate content attractions during fiscal 2021. Prior to the pandemic, we played a total of 285 films and 190 alternate content attractions at our theatres during fiscal 2019. The increase in films played in fiscal 2022 compared to fiscal 2021 and fiscal 2019 is due to an increase in limited-release films, partially offset by a decrease in wide-release films. We have increased the number of limited-release films and alternative content that we play, including independent films, retro series, faith-based content and live events, in response to the slower recovery in the quantity of wide-release films and to promote moviegoing. A film is generally considered “wide release” if it is shown on over 600 screens nationally, and these films generally have the greatest impact on box office receipts. The quantity of wide-release films shown in our theatres and number of wide-release films provided by the six major studios increased during fiscal 2022 compared to fiscal 2021, but remained significantly below pre-pandemic levels. We played 85 wide-release films at our theatres during fiscal 2022 compared to 79 wide-release films during fiscal 2021. Prior to the pandemic, we played 117 wide-release films at our theatres during fiscal 2019. The slower recovery in the quantity of wide-release films available for theatrical exhibition following the pandemic is the primary driver of the prolonged recovery in attendance. The quantity of films available for theatrical exhibition, including wide-release films, has been impacted during fiscal 2022 by COVID-19 related disruptions, production delays resulting from supply chain disruptions and a post-production backlog. While lead times for movie production to theatrical release are lengthy, based upon projected film and alternate content availability, we currently estimate that we may once again show an increased number of films and alternate content events on our screens during fiscal 2023 compared to fiscal 2022, but we expect the number of wide-release films shown during fiscal 2023 to remain below pre-pandemic levels.
Our average ticket price increased 3.1% during fiscal 2022 compared to fiscal 2021 and increased by 14.2% compared to fiscal 2019. A larger proportion of admission revenues from our proprietary premium large format screens and 3D films (both with higher ticket prices) contributed to the increase in our average ticket price during fiscal 2022, as did inflationary price increases implemented during the second quarter of fiscal 2022, which was partially offset by $3.00 promotional ticket pricing on National Cinema Day and a lower proportion of admission revenues from evening showings. During the fourth quarter of fiscal 2022, in select cities we market tested several different pricing changes to our Value Tuesday promotion, which has historically offered $5 admission and free complementary-size popcorn to our loyalty program members. We expect to implement pricing changes to Value Tuesday across our theatre circuit in fiscal 2023. We currently expect our average ticket price to increase during fiscal 2023, but film mix and the impact of local sporting events.

We did not include the performance of our Movie Tavern theatres, which we acquired in February 2019, in the comparison to the industry because we did not own Movie Tavern during fiscal 2018. Based upon data available to us from the previous owner, however, we believe that our Movie Tavern theatres outperformed the industry by approximately seven percentage points during the 11 months that we owned them during fiscal 2019. We believe that this outperformance was once again attributable to investments we have made in new features and amenities in select theatres (all of which are describedpricing strategies discussed in the “Current Plans” section of this MD&A) andabove will likely impact our implementation of innovative operating and marketing strategies that havefinal result.

Our average concession revenues per person increased attendance, including our $5 Tuesday promotion and our customer loyalty program.

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Theatre attendance and corresponding box office revenues vary significantly from quarterby 3.3% during fiscal 2022 compared to quarterfiscal 2021, which was primarily due to inflationary increases in concession prices in response to increases in food and labor costs. Our average concession revenues per person increased by 27.5% during fiscal 2022 compared to fiscal 2019. As customers have returned to “normal” activities such as going to the movie theatre, they have demonstrated a varietypropensity to spend at a higher rate than before the pandemic closures. In addition, a portion of factors. The third quarter ofthe increase in our average concession revenues per person compared to fiscal 2019 was a particularly good quarter for the industry and included strong performances from two ofmay be attributed to shorter lines at our top four films for fiscal 2019,The Lion King andToy Story 4, as well as a strong horror film,It Chapter Two, which was released during the historically slower movie-going month of September. We believe that a favorable film mix during the third quarter of fiscal 2019 compared to the third quarter of fiscal 2018 may also have had a positive impact on our comparative performance versus the overall industry. We believe our theatres outperformed our normal share of the total box office on the films noted above, as family-oriented films and horror films represent genres that have historically performed very well in our legacy Midwestern markets.

Conversely, the first quarter of fiscal 2019 was a particularly weak quarter for the industry compared to the prior year. The first quarter of fiscal 2018 benefited from several strong 2017 holdover films, such asStar Wars: The Last Jedi,Jumanji: Welcome to the Jungle andThe Greatest Showman. We did not have as many strong holdovers from 2018 to benefit the first quarter of fiscal 2019. The reductions in fiscal 2019 first quarter attendance and admission revenues were alsoconcession stand due to reduced attendance (during periods of high attendance, some customers do not purchase concessions because the fact that our highest grossing film of fiscal 2018,Black Panther, was released during February 2018, and February 2019 film product could not match those results.line is too long). We also believe that snowier and colder Midwestern weather and a less favorable film mixan increased percentage of customers buying their concessions in the fiscal 2019 first quarter compared to last year may also have had a slight negative impact onadvance using our comparative performance versus the overall industry. We believewebsite, kiosk or our Midwestern circuit outperformed our normal share of the total box office on all three of the above referenced 2017 holdover films last year, negatively impacting our relative performance to the U.S. box office during the first quarter of fiscal 2019.

Finally, while our fiscal 2019 second quarter and fourth quarter comparable theatre admission revenues decreased compared to the prior year, we once again outperformed the industry during these periods. Favorable weather conditions and a film mix that included films such asAvengers: Endgame,Frozen 2 andStar Wars: The Rise of Skywalker (film franchises which historically have performed very well in our legacy Midwestern markets)mobile app likely contributed to higher average concession revenues per person, as our secondexperience has shown that customers are more likely to purchase more items when they order and fourthpay electronically. We expect to continue to report increased average

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concession revenues per person in future periods, but whether our customers will continue to spend at these current significantly higher levels in future periods is currently unknown.
Other revenues, which include management fees, pre-show advertising income, family entertainment center revenues, surcharge revenues, mobile app revenues, rental income and gift card breakage income, increased by $7.3 million during fiscal 2022 compared to fiscal 2021. The fluctuations in other revenue were primarily due to the impact of changes in attendance on internet surcharge ticketing fees and preshow advertising income. We currently expect other revenues (particularly pre-show advertising and surcharge revenues), to increase in fiscal 2023 if attendance increases as we anticipate.
The film product release schedule for fiscal 2023 has solidified in recent months. Several films that have contributed to our early fiscal 2023 first quarter outperformance.

results include Avatar: The Way of Water, Puss in Boots: The Last Wish,M3GAN, A Man Called Otto, and Ant-Man & the Wasp: Quantumania. Although it is possible that schedule changes may occur, new films scheduled to be released during the remainder of fiscal 2023 that have potential to perform very well include Creed III, Scream VI, Shazam! Fury of the Gods, John Wick: Chapter 4, Dungeons & Dragons: Honor Among Thieves, The Super Mario Bros. Movie, Guardians of the Galaxy Vol. 3, Fast X, The Little Mermaid, Spider-Man: Across the Spiderverse, Transformers: Rise of the Beasts, Elemental, The Flash, Indiana Jones & The Dial of Destiny, The Marvels, Mission: Impossible - Dead Reckoning Part One, Barbie, Oppenheimer, The Haunted Mansion, Gran Turismo, Teenage Mutant Ninja Turtles: Mutant Mayhem, The Meg 2, Trolls 3, Hunger Games: The Ballad of Songbirds and Snakes, Wish, Dune: Part Two, Wonka, The Ghostbusters Sequel and Aquaman and the Lost Kingdom.

Revenues for the theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of a reasonably lengthy “window”appropriate “windows” between the date a film is released in theatres and the date a filmmotion picture is released to other channels, including premium video-on-demand (“PVOD”), video on-demand (VOD)(“VOD”), streaming services and DVD. These are factors over which we have no control. Many current films are now released to ancillary markets within 75-90 days, and more than one studio has periodically discussed its interest in creating a new, shorter window. We have expressed our concerns to the studios regarding the impact that a shortened release window may have on future box office receipts. We have also indicated that we would not play films that did not respect the current theatrical exclusivity window and would seek adjustmentscontrol (see additional detail in the current financial arrangements“Impact of COVID-19 Pandemic” section above). We currently believe that “day-and-date” film release experiments such as those tested during the pandemic will not become the norm. Throughout fiscal 2022 we have with film studiossaw a reduction in the event that the film studios implement shorter release windows.

We believe that the most significant factor contributing to variations in theatre attendance during fiscal 2019, as in other periods, was the quantity and qualitynumber of films released during the respective periods compared to the films released during the same periods of the prior year. Blockbusters (generally defined as films grossing more than $100 million nationally) accounted for an increased percentage of our total admission revenues during fiscal 2019 compared to fiscal 2018 - our top 15 performing films accounted for 48% of our total admission revenues during fiscal 2019 compared to 42% during fiscal 2018. The following five top performing fiscal 2019 films, all distributed by Disney, accounted for nearly 26% of the total admission revenues for our circuit:Avengers: Endgame,The Lion King,Frozen 2,Toy Story 4day-and-date andCaptain Marvel. The top five performing films during fiscal 2018 accounted for approximately 23% of our total admission revenues.

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The quantity of wide-release films shown in our theatres and number of wide-release films provided by the six major studios decreased during fiscal 2019 compared to fiscal 2018. A film is generally considered “wide release” if it is shown on over 600 screens nationally, and these films generally have the greatest impact on box office receipts. We played 117 wide-release films (including 29 digital 3D films) at our theatres during fiscal 2019 compared to 132 wide-release films (including 24 digital 3D films) during fiscal 2018. In total, we played 285 films and 190 alternate content attractions at our theatres during fiscal 2019 compared to 344 films and 216 alternate content attractions during fiscal 2018. Based upon projected film and alternate content availability, we currently estimate that we may show an increased number of films and alternate content events on our screens during fiscal 2020 compared to fiscal 2019.

Our average ticket price increased 8.0% during fiscal 2019 compared to fiscal 2018, due in part to the addition of Movie Tavern theatres in certain markets where competitive pricing is slightly higher than in our legacy Midwestern markets. Excluding Movie Tavern theatres, our average ticket price at comparable theatres increased 3.4% during fiscal 2019 compared to fiscal 2018. At the beginning of the second quarter of fiscal 2019, we implemented selected ticket price increases at certain locations in order to reflect the competitive market in which those theatres operate. In addition, we enacted a modest price increase for our proprietary PLF screens and converted our admission ticket pricing to a sales tax additive (or “tax-on-top”) model, consistent with the majority of our competitors. These modest ticket price increases likely had a favorable impact on our average ticket price during fiscal 2019. The fact that our top performing films during the fiscal 2019 performed particularly well in our PLF screens (with a corresponding price premium), and that we have more PLF screens this year than we did the prior year, also contributed to our increased average ticket price during fiscal 2019 compared to the prior year. Conversely, a strong line-up of Disney family-oriented films released during fiscal 2019, such asDumbo,Aladdin,Toy Story 4,The Lion King andFrozen 2, likely had an unfavorable impact on our average ticket price during fiscal 2019, as films that generally appeal to a younger audience result in a higher percentage of lower-priced children’s tickets sold. The increase in our average ticket price contributed approximately $7.6 million to our comparable theatres admission revenues during fiscal 2019, partially offsetting the impact of reduced attendance on our overall decreased comparable theatre admission revenues during fiscal 2019 compared to fiscal 2018. We currently expect that our average ticket price may increase again at our comparable theatres during fiscal 2020, but film mix will likely once again impact our final result.

Total concession revenues increased 38.8% during fiscal 2019 compared to fiscal 2018. Excluding Movie Tavern theatres, concession revenues at our comparable theatres decreased approximately 2.4% compared to the prior year. Our average concession sales per person increased 27.6% during fiscal 2019 compared to fiscal 2018. Our Movie Tavern theatres had a significant favorable impact on our overall average concession sales per person, as the average concession sales per person at these dine-in theatres are on average more than double the average concession sales per person we generally achieve at our average theatre without a dine-in option. Excluding Movie Tavern, our average concession revenues per person at comparable theatres increased 6.9% during fiscal 2019 compared to fiscal 2018. The increase in our concession sales per person contributed approximately $10.6 million to our comparable theatres concession revenues during fiscal 2019, partially offsetting the impact of reduced attendance on our overall decreased comparable theatre concession revenues during fiscal 2019 compared to fiscal 2018. Pricing, concession/food and beverage product mix and film product mix are the three primary factors that impact our concession sales per person. A change in concession product mix, including increased sales of higher priced non-traditional food and beverage items from our increasing number ofTake Five Lounges,Zaffiro’s Express,Reel Sizzle and in-theatre dining outlets, was the primary reason for our increased average concession sales per person during fiscal 2019. Conversely, we believe that the above-described change in film product mix during fiscal 2019 may have slightly reduced the growth of our overall average concession sales per person, as family-oriented and animated films such as the Disney films identified above tend not to contribute to sales of non-traditional food and beverage items as much as adult-oriented films. We currently expect to report an increase in our average concession sales per person at our comparable theatres during fiscal 2020 compared to fiscal 2019 due to our increased number of non-traditional food and beverage outlets, although as noted above, several factors may impact our actual results in this key metric.

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Other revenues, which include management fees, pre-show advertising income, family entertainment center revenues, surcharge revenues, rental income and gift card breakage income, increased by $8.3 million during fiscal 2019 compared to fiscal 2018. This increase was primarily due to internet surcharge ticketing fees and preshow advertising income from our new Movie Tavern locations. We currently expect other revenues to continue to increase in fiscal 2020.

Our theatre division operating income and operating margin decreased during fiscal 2019 compared to fiscal 2018 due primarily to reduced attendance and revenues at comparable theatres as described above. Due to the significant investments we have made in our theatres over the last five years, we have higher fixed costs, such as rent, depreciation and amortization, and higher labor expenses, attributable in part to our increased number of new food and beverage outlets in our theatres. As a result, it is more difficult to remove costs when attendance declines as it did in several quarters during fiscal 2019, and operating margins are more likely to decline when that happens. Conversely, during periods with a strong film slate, operating margins potentially increase, as that same “leverage” should benefit our theatre division. Our fiscal 2019 operating margin was also negatively impacted by higher film costs, expressed as a percentage of admission revenues, compared to the prior year. Film cost percentage increased during fiscal 2019 primarily due to the increased percentage of our admission revenues that were derived from our top five blockbuster films during fiscal 2019 compared to fiscal 2018 (discussed above). Film costs, expressed as a percentage of admission revenues, are generally greater for the significant blockbuster films.

Due to the weaker 2019 film slate and anticipated ramp-up costs as we integrated the 22 acquired Movie Tavern theatres into our operating and marketing systems and programs, the Movie Tavern theatres, excluding acquisition and preopening expenses, did not have a significant impact on our theatre division operating income during fiscal 2019. Our theatre division operating margin also declined during fiscal 2019 compared to fiscal 2018 due to the impact of the Movie Tavern theatres. Our Movie Tavern theatres have a lower operating margin than our legacy theatres because all 22 acquired theatres are leased rather than owned (rent expense is generally significantly higher than depreciation expense). In addition, the fact that a larger portion of Movie Tavern revenues are derived from the sale of in-theatre food and beverage also results in lower operating margins, as food and labor costs are generally higher for those items compared to traditional concession items. Our operating income and operating margin were also negatively impacted during fiscal 2019 by approximately $2.5 million of acquisition and preopening expenses related to the Movie Tavern acquisition and the opening of a newly built Movie Tavern theatre in Brookfield, Wisconsin. Our operating income and operating margin were negatively impacted during fiscal 2018 by approximately $1.7 million of acquisition and preopening expenses related to the Movie Tavern acquisition.

In addition to the screens added due to the Movie Tavern acquisition, we opened one newUltraScreen DLX at an existing Marcus Wehrenberg theatre during the first quarter of fiscal 2019. We also opened a new eight-screen Movie Tavern by Marcus theatre in Brookfield, Wisconsin early in our fiscal 2019 fourth quarter and added four new screens to an existing Movie Tavern theatre during the first quarter of fiscal 2020. We did not add any new screens to existing theatres or open any new theatres during fiscal 2018. We ceased managing one five-screen theatre during the second quarter of fiscal 2018, and we lost one screen at a Marcus Wehrenberg theatre during the second quarter of fiscal 2018 in conjunction with a renovation that expanded the size of two adjacent auditoriums.

Admission revenues at comparable theatres during the first quarter of fiscal 2020 through the date of this report have increased compared to the prior year comparable period due primarily to a strong week between December 27 and New Year’s Day, and a stronger January and February film slate compared to the prior year. Snow and extreme cold in the Midwest during the first quarter of fiscal 2019 likely also had a negative impact on admission revenues last year. In addition to December holdover films such asStar Wars: The Rise of Skywalker andJumanji: The Next Level, films such as1917,Bad Boys For Life,DolittleandSonic the Hedgehog have contributed positively to our early fiscal 2020 results. Comparisons for the remainder of the quarter may be negatively impacted by the strong performance fromCaptain Marvelduring March 2019.

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The film slate for the remainder of fiscal 2020 is expected to include a higher quantity of films and will likely be less dependent on major blockbusters. Whether a more diverse slate of films from multiple studios, without anAvengers orStar Wars movie, can match the box office performance of the Disney-centric franchise film line-up we experienced in fiscal 2019 is yet to be determined. Films that have potential to perform very well during the remainder of fiscal 2020 includeOnward,A Quiet Place Part II,Mulan,Peter Rabbit 2: The Runaway,No Time to Die,Black Widow, Trolls: World Tour,Scoob!,The Spongebob Movie: Sponge On The Run,Fast & Furious 9, Wonder Woman 1984,Soul,Top Gun Maverick,In The Heights,Minions: The Rise Of Gru,Free Guy,Ghostbusters: Afterlife,Tenet,Jungle Cruise,Morbius, Bill & Ted Face The Music,The King’s Man,Venom 2,Death On The Nile,The Eternals,Raya and The Last Dragon,Godzilla vs. Kong,Dune,Coming To Americasequel,The Croods 2and West Side Story. Generally, an increase in the quantitynumber of films released, particularly from the six major studios, increases the potential for more blockbusters in any given year. Our goal iswith exclusive theatrical windows.

During fiscal 2022 we converted four existing screens to continueSuperScreen DLX to outperform the industry, but with the majorityadd additional premium large format screens at four of our renovations now completed for our circuit, our ability to do so in any given quarter will likely be partially dependent upon film mix, weather, the competitive landscapetheatres. Early in our markets andfiscal 2023 first quarter we made the impactdecision to close one of local sporting events.

As noted above, fiscal 2020 will be a 53-week year, which began on December 27, 2019 and will end on December 31, 2020. We anticipate that our reported results for fiscal 2020 will benefit from the additional week of reported operations. In particular, the additional week of operations will most benefit our theatre division, as it includes the traditionally strong movie-going week between Christmas and New Year’s Day. The last time we had an additional week of operations was during the Transition Period. Our additional 31st week of operations that year, which included a newStar Wars film, contributed approximately $14.4 million in additional revenues and $5.7 million in additional operating income to our final five-week period and Transition Period results for our theatre division. Although there can be no assurance that we will realize similar benefits in fiscal 2020, it is important to note that our theatre operations in 2015 did not include our two recent acquisitions.

owned theatres.

Hotels and Resorts

The hotels and resorts division contributed 32.1%39.8% of our consolidated revenues during fiscal 2022, compared to 40.7% and 11.6%44.0%, respectively, during fiscal 2021 and fiscal 2020. The hotels and resorts division contributed 69.8% and 26.5%, respectively, of our consolidated operating income (loss), excluding corporate items, during fiscal 2019,2022 and fiscal 2020. During fiscal 2021 the hotels and resorts division contributed operating income compared to 36.8% and 12.3%, respectively, during fiscal 2018 and 38.2% and 13.8%, respectively, during fiscal 2017.with a consolidated operating loss, excluding corporate items. As of December 26, 2019,29, 2022, the hotels and resorts division owned and operated three full-service hotels in downtown Milwaukee, Wisconsin, a full-service destination resort in Lake Geneva, Wisconsin and full-service hotels in Madison, Wisconsin, Chicago, Illinois, and Lincoln, Nebraska andNebraska. On December 16, 2022 we completed the sale of The Skirvin Hilton in Oklahoma City, Oklahoma (we haveheld a majority-ownership position in this hotel prior to its sale). The results of The Skirvin Hilton are included in our divisional and consolidated results of operations during fiscal 2022 through the Oklahoma City, Oklahoma hotel).date of the sale. In addition, the hotels and resorts division managed 12nine hotels, resorts and other properties for other owners. Included in the 12nine managed properties is one hotel owned by a joint venture in which we have a minority interest and two condominium hotels in which we own some or all of the public space. The following
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tables set forth revenues, operating income (loss), operating margin and rooms data for the hotels and resorts division for the past three fiscal years:

     Change F19 v. F18     Change F18 v. F17 
  F2019  F2018  Amt.  Pct.  F2017  Amt.  Pct. 
  (in millions, except percentages) 
Revenues $263.4  $259.9  $3.5   1.3% $249.6  $10.3   4.1%
Operating income $10.1  $12.5  $(2.4)  -19.5% $12.9  $(0.4)  -3.2%
Operating margin  3.8%  4.8%          5.2%        

Available rooms at period-end F2019  F2018  F2017 
Company-owned  2,627   2,629   2,629 
Management contracts with joint ventures  333   333   333 
Management contracts with condominium hotels  480   480   480 
Management contracts with other owners  1,945   1,833   1,399 
Total available rooms  5,385   5,275   4,841 

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F22 v. F21F21 v. F20
F2022F2021Amt.Pct.F2020Amt.Pct.
(in millions, except percentages)
Revenues$269.3 $186.6 $82.6 44.3 %$104.6 $82.0 78.4 %
Operating income (loss)$18.7 $5.9 $12.8 216.9 %$(43.9)$49.8 113.4 %
Operating margin6.9 %3.1 %  (41.9)%  

Available rooms at period-endF2022F2021F2020
Company-owned2,4062,6282,628
Management contracts with joint ventures248248333
Management contracts with condominium hotels480480480
Management contracts with other owners1,7372,0881,691
Total available rooms4,8715,4445,132
The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the last three fiscal years:

     Change F19 v. F18     Change F18 v. F17 
  F2019  F2018  Amt.  Pct.  F2017  Amt.  Pct. 
  (in millions, except percentages) 
Room revenues $105.9  $108.8  $(2.9)  -2.7% $106.9  $1.9   1.8%
Food/beverage revenues  74.7   72.8   1.9   2.6%  70.6   2.2   3.0%
Other revenues  46.5   45.3   1.2   2.7%  43.4   1.9   4.6%
   227.1   226.9   0.2   0.1%  220.9   6.0   2.7%
Cost reimbursements  36.3   33.0   3.3   10.0%  28.7   4.3   15.0%
Total revenues $263.4  $259.9  $3.5   1.3% $249.6  $10.3   4.1%

F22 v. F21F21 v. F20
F2022F2021Amt.Pct.F2020Amt.Pct.
(in millions, except percentages)
Room revenues$107.7 $77.7 $30.0 38.7 %$35.4 $42.3 119.4 %
Food/beverage revenues74.8 47.1 27.8 58.9 %24.8 22.3 89.7 %
Other revenues53.1 43.2 9.9 22.9 %27.6 15.7 56.9 %
Total revenues before cost reimbursements235.7 168.0 67.7 40.3 %87.8 80.2 91.4 %
Cost reimbursements33.6 18.7 15.0 80.0 %16.9 1.8 10.7 %
Total revenues$269.3 $186.6 $82.6 44.3 %$104.6 $82.0 78.4 %
Fiscal 20192022 versus Fiscal 2018

2021

Our hotels and resorts division revenues and operating income increased 1.3%significantly during fiscal 20192022 compared to fiscal 2018 due primarily2021 as travel demand continued to increase as the COVID-19 pandemic subsided throughout fiscal 2022. All of our company-owned hotels and resorts contributed to the improved operating results during fiscal 2022. Strong leisure travel demand continued in fiscal 2022, and the return of group business in fiscal 2022 resulted in increased revenues compared to fiscal 2021. The increase in group revenues during fiscal 2022 has consequently led to an increase in cost reimbursements, partially offset by the fact that the InterContinental Milwaukee was closed during the majority of the first six months of fiscal 2019 as it underwent a major renovation that converted this hotel into the Saint Kate. The newly renovated hotel reopened during the first week of June 2019 (although a portion of the roomsbanquet and food and beverage outlets did not fully open until later in the month). Excluding this hotel and cost reimbursements from managed properties, totalcatering revenues, during fiscal 2019 increased by 2.6% compared to fiscal 2018, due primarily to increased room revenues andpositively impacting our food and beverage revenues at our seven other owned hotels and resorts, as well as increased other revenues.

Room revenues decreased during fiscal 2019 compared to fiscal 2018 due entirely to the closing of the InterContinental Milwaukee2021. In fiscal 2021, operating income benefited from nonrecurring state government grants and its reopening as the Saint Kate, partially offset by increased revenue per available room, or RevPAR, at our remaining seven company-owned hotels. Excluding the Saint Kate, roomfederal tax credits totaling approximately $3.4 million.

Other revenues during fiscal 2019 increased by 1.1% compared to2022 and fiscal 2018, despite the fact that2021 included ski, spa and golf revenues at our Hilton Madison hotel was undergoing a major renovation during the first half of fiscal 2019 that negatively impacted our overall room revenues. Food and beverageGrand Geneva Resort & Spa, management fees, laundry revenues, increased during fiscal 2019 compared to fiscal 2018 despite having a closed hotel for most of the first half of fiscal 2019. Excluding the Saint Kate, food and beverage revenues during fiscal 2019 increased by 3.8% compared to fiscal 2018, due primarily to increased banquet and cateringparking revenues and despite the negative impact from our Hilton Madison hotel while it was under renovation.rental revenues. Other revenues increased during fiscal 20192022 compared to fiscal 20182021 due in part to increased management feesoccupancies at our owned and revenues from our company-owned laundry facility.managed hotels and resorts. Cost reimbursements also increased during fiscal 20192022 compared to fiscal 2018 due2021 as occupancy and revenue at managed hotels increased.
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As a result of the significantly reduced revenues during fiscal 2021, we believe it is also beneficial to an increase incompare our revenues to pre-pandemic levels. The following table compares the numbercomponents of management contracts in this division.

Hotelsrevenues for the hotels and resorts division operating incomefor fiscal 2022 to fiscal 2019:

F22 v. F19
F2022F2019Amt.Pct.
(in millions, except percentages)
Room revenues$107.7 $105.9 $1.8 1.7 %
Food/beverage revenues74.8 74.7 0.2 0.2 %
Other revenues53.1 46.5 6.6 14.1 %
Total revenues before cost reimbursements235.7 227.1 8.6 3.8 %
Cost reimbursements33.6 36.3 (2.6)(7.3)%
Total revenues$269.3 $263.4 $5.9 2.3 %

Strong leisure travel demand more than offset lower transient and operating margin decreased by 19.5% and 1.0 percentage points (from 4.8% to 3.8%), respectively,group business during fiscal 20192022 compared to fiscal 2018 due entirely to approximately $6.8 million of preopening expenses and initial startup losses related to2019, resulting in the closing and conversion of the InterContinental Milwaukee into the Saint Kate. We also had approximately $1.1 million of additional depreciation and amortization attributable to this hoteldivision exceeding pre-pandemic revenue levels in fiscal 2022. Other revenues increased during fiscal 2019 due2022 compared to the new investment made at this property. Our operating income during fiscal 2018 was negatively impacted by preopening expenses of approximately $500,000 and accelerated depreciation expense of approximately $3.7 million also related to the Saint Kate conversion. Excluding this hotel from both years, our fiscal 2019, operating income would have improved by approximately $1.2 million, or 7.6% ($17.4 million in fiscal 2019 compared to $16.2 million in fiscal 2018). Again excluding this hotel, our operating margin was 6.8% during fiscal 2019 compared to 6.5% during fiscal 2018. This same-hotel improvement can be attributedprimarily due to increased revenues from one of our condominium hotels and a continued focus on cost controlsincreased ski and operating efficiency and was achieved despite the fact that the renovationgolf revenues at the Hilton Madison hotel negatively impacted our operating resultsGrand Geneva Resort & Spa, partially offset by decreased management fees. Cost reimbursements decreased during fiscal 2019.

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Initial guest and community reaction2022 compared to the new Saint Kate hotel has been very favorable. As an independent hotel, we expected that it would take a period of time for this hotel to ramp up, particularly with group business, and as a result our fiscal 2019 second half comparisons of Saint Kateprimarily due to a stabilized branded hotel during the prior year were unfavorable. The Saint Kate is achieving a higher average daily room rate than the hotel it replaced and its food and beverage revenues are exceeding the previous hotel as well. We believe that over time, the new hotel will ultimately outperform the previous hotel.

managing three fewer hotels.

The following table sets forth certain operating statistics, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate (“ADR”), and our total revenue per available room (“RevPAR”), for company-owned properties:

        Change F19 v. F18 
Operating Statistics(1) F2019  F2018  Amt.  Pct. 
Occupancy percentage  73.6%  74.0%  -0.4pts  -0.5%
ADR $154.42  $151.98  $2.44   1.6%
RevPAR $113.65  $112.51  $1.14   1.0%

(1)These operating statistics represent averages of our comparable seven distinct company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort. The statistics exclude the former InterContinental Milwaukee hotel (now the Saint Kate)
F22 v. F21
Operating Statistics(1)
F2022F2021Amt.Pct.
Occupancy percentage61.8 %48.1 %13.7  pts28.5 %
ADR$178.41 $163.64 $14.77 9.0 %
RevPAR$110.33 $78.78 $31.55 40.0 %
(1)These operating statistics represent averages of our comparable eight distinct company-owned hotels and resorts (including The Skirvin Hilton through its date of sale), branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort.
RevPAR increased at all eight of our company-owned properties during fiscal 2022 compared to fiscal 2021. The leisure travel customer continued to provide strong weekend business at the majority of our properties and growth in group business and transient business travel during weekdays resulted in occupancy increasing approximately 14 percentage points in fiscal 2022 compared to fiscal 2021. During fiscal 2022, our group business represented approximately 36% of our total rooms revenue, compared to approximately 29% during fiscal 2021, and 40% during fiscal 2019 prior to the pandemic – an indication that group business is recovering but remains below pre-pandemic levels. Non-group retail pricing remained very strong in the majority of our markets and significant leisure demand at Grand Geneva contributed to increased occupancy percentages and ADR.
As a result of the significantly reduced revenues during 2021, we believe it is also beneficial to compare our operating statistics to pre-pandemic levels. The following table sets forth certain operating statistics for fiscal 2021 and fiscal 2019, including our average occupancy percentage, our ADR, and our RevPAR, for company-owned properties:
F22 v. F19
Operating Statistics(1)
F2022F2019Amt.Pct.
Occupancy percentage62.3 %73.6 %(11.3) pts(15.4)%
ADR$176.10 $154.42 $21.68 14.0 %
RevPAR$109.63 $113.65 $(4.02)(3.5)%
(1)These operating statistics represent averages of our comparable seven distinct company-owned hotels and resorts (including The Skirvin Hilton through its date of sale), branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort. The statistics exclude the Saint Kate, as this hotel was closed for the majority of the first half of fiscal 2019 and was not comparable to the prior year stabilized branded hotel during the second half of fiscal 2019.

RevPAR increased at five of our seven comparable company-owned properties during fiscal 2019 compared to fiscal 2018. As noted above, our Hilton Madison hotel underwent a major renovation during the first half of fiscal 2019, negatively impacting our overall operating statistics. Excluding the Hilton Madison, our remaining six comparable company-owned hotels experienced a RevPAR increase2019.

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According to data received from Smith Travel Research and compiled by us in order to analyze our fiscal 20192022 results, comparable “upper upscale” hotels throughout the United States experienced a decrease in RevPAR of 2.0% during fiscal 2022 compared to fiscal 2019. Thus, we believe we underperformed the industry during fiscal 2022 by approximately 1.5 percentage points. We believe this underperformance results from the customer mix shift described above with an increase in the percentage of group business at lower daily rates and a decrease in the percentage of leisure customers at higher daily rates. While this shift is unfavorable to RevPAR, the higher mix of 1.0%group business results in a corresponding increase in food and beverage revenues. We also believe our underperformance was impacted by two of our hotels that depend on citywide convention business that did not yet return in fiscal 2022, resulting in lower occupancy at these properties. In addition, we believe during fiscal 2019. 2022 leisure travel was stronger in other U.S. markets as travelers returned to flying and taking longer trips, particularly warm weather “fly-to” destinations in which we do not have a presence, which contributed to our underperformance.
Data received from Smith Travel Research for our various “competitive sets” – hotels identified in our specific markets that we deem to be competitors to our hotels – indicates that these hotels experienced an increasea decrease in RevPAR of 2.7%7.8% during fiscal 2022 compared to fiscal 2019. As a result, excluding the Hilton Madison,Thus, we believe we outperformed our RevPAR performancecompetitive sets during fiscal 2019 exceeded2022 by approximately 4.3 percentage points.
In order to better understand the national averages and was in-line with our competitive sets.

Thecurrent pace of the hotel industry recovery, the following table sets forth the change in our average occupancy percentage, ADR and RevPAR for each quarterly period of fiscal 20192022 compared to the same quarters during fiscal 20182019 (excluding the InterContinental Milwaukee, which is now the Saint Kate):

  Change F19 v. F18 
  1st Qtr.  2nd Qtr.  3rd Qtr.  4th Qtr. 
Occupancy percentage  -1.3pts  0.4pts  -0.5pts  -0.3pts
ADR  0.1%  2.9%  1.2%  1.7%
RevPAR  -1.9%  3.4%  0.6%  1.3%

F22 v. F19
1st Qtr.
2nd Qtr.
3rd Qtr.
4th Qtr.
Occupancy percentage(15.7) pts(11.1) pts(8.0) pts(10.8) pts
ADR11.5 %9.3 %16.6 %15.3 %
RevPAR(15.6)%(6.3)%5.3 %(2.8)%
As indicated innoted above, the table above, our RevPAR performance varied from quarter to quarter, driven primarily by variations inleisure travel customer and returning group business provided the most demand during each quarter. If the Hilton Madison hotel is excluded from thefiscal 2022. Leisure travel historically peaks in our fiscal third quarter and decreases during our fiscal first twoand fourth quarters dueas students go back to school and we experience colder weather in our predominantly Midwestern hotels. Transient business travel subsequent to the renovation underway during those periods, our first quarter and second quarter RevPAR for our remaining six comparable company-owned hotels increased 2.6% and 5.4%, respectively during those periods compared toonset of the prior year same periods.COVID-19 pandemic has remained significantly below fiscal 2019 levels. Our company-owned hotels, and in particular our largest hotels, derivehave historically derived a significant portion of their revenues from group business, and as a result, we are more susceptible to variations in RevPAR from quarter to quarter depending upon the strength of the group business market during that particular quarter. Group business also tends to have an impact on our food and beverage revenues because groups are more likely to use our banquet and catering services during their stay. As indicated inby the quarterly results above, reduced group business negatively impacted several of our hotels during the first quarter of fiscal 2019 and increased group business favorably impacted several of our hotels during the second, third and fourth quarters of fiscal 2019 compared to the same periods in fiscal 2018. According to data received from Smith Travel Research and compiled by us in order to analyze our fiscal 2019 quarterly results, we outperformed our competitive sets during the second and fourth quarters of fiscal 2019 and underperformed our competitive sets during the first and third quarters of fiscal 2019.

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Our comparable hotel RevPAR growth of 1.0% during fiscal 2019 compared to fiscal 2018 was entirely the result of an increase in our comparable ADR. We experienced increases in our ADR during all four fiscal 2019 quarters and five of our seven comparable company-owned hotels (including the Hilton Madison, but excluding the Saint Kate) reported increased ADR during fiscal 2019 compared to fiscal 2018. Group business also has an impact on our ADR. Typically, when we have substantial blocks of rooms committed to group business, we are able to raise rates with non-group business. Our largest increase in ADR during fiscal 2022 compared to fiscal 2019, –non-group retail pricing held relatively strong throughout the second quarter – coincidedyear, with our largest increasesmost of any periodic fluctuations in ADR being due to reductions in market pricing resulting from the lack of transient business and group business duringtravel midweek.

Looking to future periods, overall occupancy in the year. Conversely, leisure customers tendU.S. continues to be very loyal to online travel agencies, which is oneslowly increase, in recent months reaching its highest level since the start of the reasons whypandemic. In the near term, we expect most demand will continue to experience some rate and margin pressure. While we have been selective in choosingcome from the online portals to which we grant access to our inventory, such portals are part of the booking landscape today, and our goal is to use them in the most efficient way possible.

Nationally, the pace of RevPAR growth has been declining over the past several years and many published reports by those who closely follow the hotel industry suggest that the United States lodging industry will experience very limited overall growth in RevPAR in calendar 2020, with some markets possibly experiencing small declines. Whether the relatively positive trends in the lodging industry over the last several years will continue depends in large part on the economic environment, as hotel revenues have historically tracked very closely with traditional macroeconomic statistics such as the gross domestic product. We also continue to monitor hotel supplyleisure travel segment. Leisure travel in our markets has a seasonal component, peaking in the summer months and slowing down as increased supply without a corresponding increase in demand may have a negative impact on our results.

We generally expect our future revenue trendschildren return to trackschool and the overall industry trends, particularly in our respective markets.weather turns colder. We are encouraged byexperiencing increases in business travel as corporate training events, meetings, and conferences return and downtown offices reopen. Our company-owned hotels have experienced a decrease in group bookings compared to pre-pandemic periods and the fact that, asadvance booking period for events has gotten shorter. As of the date of this Annual Report on Form 10-K,report, our group room revenue bookings for future periods in fiscal 2020 – something2023 - commonly referred to in the hotels and resorts industry as “group pace” – are ahead- is running approximately in-line with where we were at the same time of our groupthe year pre-pandemic. Group room revenue bookings for future periods asfiscal 2024 is running approximately 24% ahead of where we were at the same time in early fiscal 2022 for fiscal 2023, but behind where we were at the same time of the same date last year.year pre-pandemic. Banquet and catering revenue pace for fiscal 20202023 and fiscal 2024 is also currently ahead ofsimilarly running behind where we were last yearwould typically be at this same time. Conversely, severaltime of our markets, including Oklahoma City, Oklahoma, Chicago, Illinois and Milwaukee, Wisconsin, have experienced an increase in room supply over the past several years that may be an impediment to any substantial increases in ADR in the near term. Milwaukee will be hosting the Democratic National Convention in the summer of 2020,year pre-pandemic, which we believe is partially due to a shortening of the advance period for group bookings. We are encouraged by continuing positive trends in group bookings for fiscal 2023 and beyond.

Forecasting what future RevPAR growth or decline will not only favorably impactbe during the next 18 to 24 months is very difficult at this time. The non-group booking window remains very short, with most bookings occurring within seven days of arrival, making even short-term forecasts of future RevPAR growth difficult. Hotel revenues have historically tracked very closely
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with traditional macroeconomic statistics such as the Gross Domestic Product, so we will be monitoring the economic environment very closely. After past shocks to the system, such as the terrorist attacks on September 11, 2001 and the 2008 financial crisis, hotel demand took longer to recover than other components of the economy. Conversely, we now anticipate that hotel supply growth will be limited for the foreseeable future, which can be beneficial for our existing hotels. We are encouraged by the return of group business during fiscal 2020 results (group pace is up significantly2022, which exceeded both our own and industry expectations. Most industry experts believe the recovery in transient business travel will continue slowly over the next several years. We will continue to focus on reaching the drive-to leisure market through aggressive campaigns promoting creative packages for 2020), but has the potentialour guests. Overall, we generally expect our revenue trends to have a positive long-term impact ontrack or exceed the overall market. We also expectindustry trends for our Milwaukee hotels to benefit in September 2020 from the fact that a major golf tournament, The Ryder Cup, will be held one hour northsegment of the cityindustry, particularly in Kohler, Wisconsin.

As discussed inour respective markets.

During the “Current Plans” sectionfirst quarter of this MD&A,fiscal 2022 we currently anticipate beginning major renovations atceased management of The Pfister Hotel and Grand Geneva Resort & Spa late in fiscal 2020, with the majority of the work likely to be performed during fiscal 2021. We do not currently expect these renovations to have any significant impact on fiscal 2020 operating results. We do expect favorable comparisons during fiscal 2020 (compared to fiscal 2019 results) at the Hilton Madison, now that renovations are complete, and the Saint Kate, as it will be open all year and should experience operating improvements as market awareness of this new hotel continues to increase. Additionally, as noted above, fiscal 2020 will be a 53-week year. The last time we had an additional week of operations was during our Transition Period. Our additional 31st week of operations that year contributed approximately $3.0 million in additional revenues and $700,000 in additional operating income to our final five-week period and Transition Period results for our hotels and resorts division. There can be no assurance that we will realize similar benefits in fiscal 2020.

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Our hotels and resorts division operating results during fiscal 2019 benefited from three management contracts added during fiscal 2018 – the Murieta Inn and Spa in Rancho Murieta, California (added January 2018), along with the DoubleTree by Hilton Hotel El Paso Downtown (added April 2018) and the Courtyard by Marriott El Paso Downtown/Convention Center(added August 2018), both in El Paso, Texas. In addition, on April 1, 2019, we assumed management of the Hyatt Regency Schaumburg hotel in Schaumburg, Illinois. Conversely, in May 2019, we ceased managing the Heidel House Resort & Spa in Green Lake, Wisconsin, after the owners of this resort decided to close this property permanently. Early in our fiscal 2019 third quarter, the owners of the Sheraton Chapel Hill Hotel in Chapel Hill, North Carolina sold the hotel, and as a result our contract to manage this hotel was terminated. The loss of these management contracts has partially offset the benefits of the new management contracts described above.Center. As of the date of this filing, our current portfolio of hotels and resorts includes 2016 owned and managed properties across the country.

As discussed in the “Current Plans” section of this MD&A, although we are consideringwill prioritize our own finances, we will consider a number of potential growth opportunities that may impact fiscal 20202023 and future period operating results. In addition, if we were to sell one or more hotels during fiscal 2020,2023, our fiscal 20202023 operating results could be significantly impacted. The extent of any such impact will likely depend upon the timing and nature of the growth opportunity (pure management contract, management contract with equity, joint venture investment, or other opportunity) or divestiture (management retained, equity interest retained, etc.).

During our fiscal 2020 first quarter, Michael R. Evans joined us as the new president of Marcus Hotels & Resorts. Mr. Evans

Adjusted EBITDA
Adjusted EBITDA is a proven lodging industry executive with more than 20 yearsmeasure used by management and our board of experience in the hospitality industry with companies such as Marriott International, Inc.directors to assess our financial performance and MGM Resorts International.enterprise value. We believe that Mr. Evan’s proven development,Adjusted EBITDA is a useful supplemental measure for us and investors, as it eliminates certain expenses that are not indicative of our core operating performance and leadership experiencefacilitates a comparison of our core operating performance on a consistent basis from period to period. We also use Adjusted EBITDA as a basis to determine certain annual cash bonuses and strong rootslong-term incentive awards, to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Adjusted EBITDA is also used by analysts, investors and other interested parties as a performance measure to evaluate industry competitors.
Adjusted EBITDA is a non-GAAP measure of our financial performance and should not be considered as an alternative to net earnings (loss) as a measure of financial performance, or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of liquidity or free cash flow for management’s discretionary use. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
We define Adjusted EBITDA as net earnings (loss) attributable to The Marcus Corporation before investment income or loss, interest expense, other expense, gain or loss on disposition of property, equipment and other assets, equity earnings or losses from unconsolidated joint ventures, net earnings or losses attributable to noncontrolling interests, income taxes and depreciation and amortization, adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the hospitality industry make him extremely qualifiedfuture we will incur expenses that are the same as or similar to build onsome of the items eliminated in the adjustments made to determine Adjusted EBITDA, such as acquisition expenses, preopening expenses, accelerated depreciation, impairment charges and other adjustments. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Definitions and calculations of Adjusted EBITDA differ among companies in our industries, and therefore Adjusted EBITDA disclosed by us may not be comparable to the measures disclosed by other companies.



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The following table sets forth Adjusted EBITDA by reportable operating segment for the last three fiscal years (in millions, except for variance percentage):
F22 v. F21F21 v. F20
F2022F2021Amt.Pct.F2020Amt.Pct.
(in millions, except percentages)
Theatres$60.0 $24.9 $35.0 140.6 %$(42.2)$67.1 (159.1)%
Hotels and resorts38.9 24.4 14.5 59.4 %(17.6)42.0 (239.0)%
Corporate items(13.8)(14.3)0.5 (3.3)%(11.8)(2.4)20.5 %
Adjusted EBITDA$85.1 $35.1 50.0 142.5 %$(71.6)106.7 (149.0)%
Our theatre division Adjusted EBITDA improved significantly during fiscal 2022 due to increased attendance, an increasing number of films released to movie theatres, increased revenues per person, and continuing cost controls, as described in the Theatres section above. Our hotels and resorts division’s long historydivision Adjusted EBITDA improved significantly during fiscal 2022 due to improved occupancy percentages and ADR, and continuing cost controls, as described in the Hotels and Resorts section above.
The following table sets forth our reconciliation of success. PriorAdjusted EBITDA (in millions):
F2022F2021F2020
Net loss attributable to The Marcus Corporation$(12.0)$(43.3)$(124.8)
Add (deduct):
  Investment income— (0.6)(0.6)
  Interest expense15.3 18.7 16.3 
  Other expense (income)2.1 2.5 1.0 
  Gain on disposition of property, equipment and other assets(1.1)(3.2)(0.9)
  Gain on sale of hotel(6.3)— — 
  Equity losses from unconsolidated joint ventures, net0.1 0.1 1.5 
  Net earnings attributable to noncontrolling interests2.9 — — 
  Income tax expense (benefit)7.1 (15.7)(70.9)
  Depreciation and amortization67.1 72.1 75.1 
  Share-based compensation expenses (1)
8.2 9.3 4.4 
  Property closure/reopening expenses (2)(3)
— — 11.5 
  Impairment charges (4)
1.5 5.8 24.7 
  Government grants and federal tax credits (5)
— (10.7)(7.0)
  Insurance proceeds (6)
— — (1.8)
Total Adjusted EBITDA$85.1 $35.1 $(71.6)





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The following tables sets forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):
F2022F2021
TheatresHotels & ResortsCorp. ItemsTotalTheatresHotels & ResortsCorp. ItemsTotal
Operating income (loss)$8.1 $18.7  $(18.5)$8.3 $(27.6)$5.9 $(19.8)$(41.5)
Depreciation and amortization47.6 19.2 0.4 67.1 51.7 20.2 0.3 72.1 
Share-based compensation (1)
2.8 1.0 4.4 8.2 2.3 1.7 5.3 9.3 
Impairment charges (4)
1.5 — — 1.5 5.8 — — 5.8 
Government grants and federal tax credits (5)
— — — — (7.2)(3.4)(0.1)(10.7)
Adjusted EBITDA$60.0 $38.9 $(13.8)$85.1 $24.9 $24.4 $(14.3)$35.1 
F2020
TheatresHotels & ResortsCorp. ItemsTotal
Operating loss$(121.4)$(43.9)$(13.1)$(178.4)
Depreciation and amortization53.5 21.1 0.5 75.1 
Share-based compensation (1)
1.1 0.7 2.6 4.4 
Property closure/reopening expenses (2) (3)
5.8 5.7 — 11.5 
Impairment charges (4)
24.7 — — 24.7 
Government grants and federal tax credits (5)
(5.8)(1.2)— (7.0)
Insurance proceeds (6)
— — (1.8)(1.8)
Adjusted EBITDA$(42.2)$(17.6)$(11.8)$(71.6)
(1)Non-cash expense related to Mr. Evans joining us, Greg Marcus,share-based compensation programs.
(2)Reflects nonrecurring costs related to the required closure of all of our president and chief executive officer, had assumed operational oversight of this division and served as acting-presidentmovie theatres due to the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening theatres.
(3)Reflects nonrecurring costs related to the closure of our hotels and resorts division duringdue to reduced occupancy as a result of the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening hotels.
(4)Non-cash impairment charges related to two operating theatres in fiscal 2019, supported by a strong2022, two operating theatres, three permanently closed theatres and experienced senior leadership team.

surplus theatre real estate for the fiscal 2021 periods and intangible assets (trade name) and several theatre locations for the fiscal 2020.

(5)Reflects nonrecurring state government grants and federal tax credits awarded to our theatres and hotels for COVID-19 pandemic relief.
(6)Reflects nonrecurring net insurance proceeds received for COVID-19 related insurance claims.

Liquidity and Capital Resources

Liquidity

Our movie theatre and hotels and resorts divisionsbusinesses, when open and operating normally, each generate significant and relatively consistent daily amounts of cash, subject to previously-noted seasonality, described above, because each segment’s revenue is derived predominantly from consumer cash purchases. WeUnder normal circumstances, we believe that these relatively consistent and predictable cash sources, as well as the availability of $139 million of unused credit lines, at the end of fiscal 2019, arewould be adequate to support the ongoing operational liquidity needs of our businessesbusinesses.
Maintaining and protecting a strong balance sheet has always been a core philosophy of The Marcus Corporation during our 87-year history, and, despite the COVID-19 pandemic, our financial position remains strong. As of December 29, 2022, we had a cash balance of $21.7 million, $221.8 million of availability under our $225.0 million
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revolving credit facility, and our debt-to-capitalization ratio was 0.28. With our strong liquidity position, combined with cash generated from operations and proceeds from the sale of surplus real estate (discussed above under “Current Plans”), we believe we are positioned to meet our obligations as they come due and continue to sustain our operations throughout fiscal 2020.

2023 and beyond, as well as our longer-term capital requirements, even if our properties continue to generate reduced revenues during these periods. In recognition of our significantly improved financial condition and improving operating results, during the third quarter of fiscal 2022 we elected to pay off our remaining short-term borrowings of $46.6 million early (initially borrowed at the onset of the pandemic) and reinstate our quarterly dividend.

Credit Agreement
On January 9, 2020, we replaced our then existing $225 million credit agreement by enteringentered into a new five-year credit agreement among us andCredit Agreement with several banks, including JPMorgan Chase Bank, N.A., as Administrative Agent, and U.S. Bank National Association, as Syndication AgentAgent. On April 29, 2020, we entered into the First Amendment, on September 15, 2020, we entered into the Second Amendment, on July 13, 2021, we entered into the Third Amendment, on July 29, 2022, we entered into the Fourth Amendment, and on February 10, 2023, we entered into the Fifth Amendment (the Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, and the Fifth Amendment, hereinafter referred to as the “Credit Agreement”), and we intend to use borrowings under the Credit Agreement for general corporate purposes. .
The Credit Agreement provides for a revolving credit facility that matures on January 9, 2025 with an initial maximum aggregate amount of availability of $225 million. We may request toan increase in the aggregate amount of availability under the Credit Agreement by an aggregate amount of up to $125 million by increasing the revolving credit facility or adding one or more tranches of term loans,loans. Our ability to increase availability under the Credit Agreement is subject to certain conditions, which include,including, among other things, the absence of any default or event of default or material adverse effect under the Credit Agreement.

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In conjunction with the First Amendment, we also added an initial $90.8 million term loan facility that was scheduled to mature on September 22, 2021. In conjunction with the Third Amendment entered into early in our fiscal 2021 third quarter, the term loan facility was reduced to $50.0 million and the maturity date was extended to September 22, 2022. During the third quarter of fiscal 2022, on July 29, 2022 we repaid $46.6 million of short-term borrowings, repaying in full and retiring the term loan facility.

UnderDuring fiscal 2022 and prior to the Fifth Amendment, borrowings under the Credit Agreement we have agreedgenerally bear interest at a variable rate equal to: (i) LIBOR, subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires us to pay a facility fee payable quarterly, equal to 0.125% to 0.250%0.25% of the total revolving commitment, depending on our consolidated debt to capitalization ratio, as defined in the Credit Agreement. Certain borrowings, such as ABR borrowings, underHowever, pursuant to the First Amendment and the Second Amendment: (A) in respect of revolving loans, (1) we are charged a facility fee equal to 0.40% of the total revolving credit facility bear interest, payable no less frequently than quarterly, at acommitment and (2) the specified margin is 2.35% for LIBOR borrowings and 1.35% for ABR borrowings, which facility fee rate equal toand specified margins will remain in effect until the alternate base rate, as definedend of the first fiscal quarter ending after the end of any period in which any portion of the term loan facility remains outstanding or the testing of any financial covenant in the Credit Agreement is suspended (the “specified period”); and (B) in respect of term loans, the specified margin is 2.75% for LIBOR borrowings and 1.75% for ABR borrowings, in each case, at all times.

Effective with the Fifth Amendment on February 10, 2023, the variable rate LIBOR benchmark in the Credit Agreement was replaced with the secured overnight financing rate (“SOFR”). Borrowings under the Credit Agreement now generally bear interest at a variable rate equal to: (i) SOFR plus a credit spread adjustment of 0.10%, subject to a 0% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the applicablemost recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires us to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our consolidated debt to capitalization ratio, as defined in the Credit Agreement. Other borrowings, such as Eurodollar borrowings, underHowever, pursuant to the First Amendment, the Second Amendment and the Fifth Amendment: (A) in respect of revolving loans, (1) we are charged a facility fee equal to 0.40% of the total revolving credit facility bear interest at acommitment and (2) the specified margin is 2.35% for SOFR borrowings and 1.35% for ABR borrowings, which facility fee rate equal toand specified margins will remain in effect until the adjusted LIBO rate forend of the interestfirst fiscal quarter ending after the end of any period as definedin which the testing
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of any financial covenant in the Credit Agreement plusis suspended (the “specified period”); and (B) in respect of term loans, the applicable rate.

specified margin is 2.75% for SOFR borrowings and 1.75% for ABR borrowings, in each case, at all times.

The Credit Agreement contains various restrictions and covenants applicable to The Marcus Corporationus and certain of our subsidiaries. Among other requirements, the Credit Agreement (a) limits the amount of priority debt as(as defined in the Credit Agreement,Agreement) held by our restricted subsidiaries to no more than 20% of our consolidated total capitalization as(as defined in the Credit Agreement,Agreement), (b) limits our permissible consolidated debt to total capitalization ratio to a maximum of 0.55 to 1.0, and(c) requires us to maintain a minimumconsolidated fixed charge coverage ratio (consolidated adjusted cash flow to consolidated interest and rental expense) of 3.0at least 2.5 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, (d) restricts our ability and certain of our subsidiaries’ ability to incur additional indebtedness, pay dividends and other distributions (the restriction on dividends and other distributions does not apply to subsidiaries), and make voluntary prepayments on or defeasance of our 4.02% Senior Notes due August 2025, 4.32% Senior Notes due February 2027, the notes or certain other convertible securities, (e) requires our consolidated EBITDA not to be less than or equal to $70 million as of December 29, 2022 for the four consecutive fiscal quarters then ending, (f) requires our consolidated liquidity not to be less than or equal to $50 million as of the end of the fiscal quarter ending December 29, 2022, and (g) prohibits us and certain of our subsidiaries from incurring or making capital expenditures, in the aggregate for us and such subsidiaries, (i) during fiscal 2021 in excess of the sum of $40.0 million plus certain adjustments, or (ii) during fiscal 2022 in excess of $50 million plus certain adjustments.
Pursuant to the Credit Agreement, if, at any time during the specified period, we and certain of our subsidiaries’ aggregate unrestricted cash on hand exceeds $75 million, the Credit Agreement requires us to prepay revolving loans under the Credit Agreement by the amount of such excess, without a corresponding reduction in the revolving commitments under the Credit Agreement.
In connection with the Credit Agreement: (i) we and certain of our subsidiaries have pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of their respective personal property assets and (b) certain of their respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of our subsidiaries have guaranteed our obligations under the Credit Agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the Credit Agreement.

Agreement).

The majorityCredit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
4.02% Senior Notes and 4.32% Senior Notes
On June 27, 2013, we entered into a Note Purchase Agreement (the “4.02% Senior Notes Agreement”) with the several purchasers party to the 4.02% Senior Notes Agreement, pursuant to which we issued and sold $50 million in aggregate principal amount of our 4.02% Senior Notes due August 14, 2025 (the “4.02% Notes”) in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). We used the net proceeds from the issuance and sale of the 4.02% Notes to reduce existing borrowings under our revolving credit facility and for general corporate purposes. On December 21, 2016, we entered into a Note Purchase Agreement (the “4.32% Senior Notes Agreement”) with the several purchasers party to the 4.32% Senior Notes Agreement, pursuant to which we issued and sold $50 million in aggregate principal amount of our 4.32% Senior Notes due February 22, 2027 (the “4.32% Notes” and the 4.02% Notes, are together referred to hereafter as the “Notes”) in a private placement exempt from the registration requirements of the Securities Act. We used the net proceeds of the sale of the 4.32% Notes to repay outstanding indebtedness and for general corporate purposes.
On February 10, 2023, we entered into an amendment to the 4.02% Senior Notes Agreement (the “4.02% Fifth Amendment”). The 4.02% Senior Notes Agreement, as previously amended and as amended by the 4.02% Fifth Amendment, is hereafter referred to as the “Amended 4.02% Senior Notes Agreement.” On February 10, 2023 we entered into an amendment to the 4.32% Senior Notes Agreement (the “4.32% Fifth Amendment”). The 4.32% Senior Notes Agreement, as previously amended and as amended by the 4.32% Fifth Amendment, is hereafter referred to as the “Amended 4.32% Senior Notes Agreement”. The Amended 4.02% Senior Notes Agreement and the Amended 4.32% Senior Notes Agreement are together referred to hereafter as the “Amended Senior Notes Agreements.”
Interest on the 4.02% Notes is payable semi-annually in arrears on the 14th day of February and August in each year and at maturity. Interest on the 4.32% Notes is payable semi-annually in arrears on the 22nd day of February and August in each year and at maturity. Beginning on August 14, 2021 and on the 14th day of August each year thereafter to
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and including August 14, 2024, we will be required to prepay $10 million of the principal amount of the 4.02% Notes. Additionally, we may make optional prepayments at any time upon prior notice of all or part of the Notes, subject to the payment of a make-whole amount (as defined in the Amended Senior Notes Agreements, as applicable). Furthermore, until the last day of the first fiscal quarter ending after the Collateral Release Date (as defined in the Amended Senior Notes Agreements, as applicable), we are required to pay a fee to each Note holder in an amount equal to 0.975% of the aggregate principal amount of Notes held by such holder. Such fee is payable quarterly (0.24375% of the aggregate principal amount of the Notes per quarter). The entire outstanding principal balance of the 4.32% Notes will be due and payable on February 22, 2027. The entire unpaid principal balance of the 4.02% Notes will be due and payable on August 14, 2025. The Notes rank pari passu in right of payment with all of our other long-term debt consists of senior notesunsecured debt.
The Amended Senior Notes Agreements contain various restrictions and mortgages with annual maturities of $9.9 million and $11.0 million in fiscal 2020 and 2021, respectively.

The Credit Agreement and the senior notes impose various financial covenants applicable to The Marcus Corporationus and certain of our subsidiaries. AsAmong other requirements, the Amended Senior Notes Agreements (a) limit the amount of priority debt held by us or by our restricted subsidiaries to 20% of our consolidated total capitalization, (b) limit our permissible consolidated debt to 65% of our consolidated total capitalization, (c) require us to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 as of the dateend of this filing,the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, (d) require our consolidated EBITDA not to be less than or equal to $70 million as of December 29, 2022 for the four consecutive fiscal quarters then ending, (e) require our consolidated liquidity not to be less than or equal to $50 million as of the end of any fiscal quarter thereafter until and including the fiscal quarter ending December 29, 2022, and (f) prohibit us and certain of our subsidiaries from incurring or making capital expenditures, in the aggregate for us and such subsidiaries, (i) during fiscal 2021 in excess of the sum of $40.0 million plus certain adjustments, or (ii) during our 2022 fiscal year in excess of $50 million plus certain adjustments.

In connection with the Amended Senior Notes Agreements: (i) we areand certain of our subsidiaries have pledged, subject to certain exceptions, security interests and liens in compliance withand on (a) substantially all of their respective personal property assets and (b) certain of their respective real property assets, in each case, to secure the financial covenants imposedNotes and related obligations; and (ii) certain subsidiaries of ours have guaranteed our obligations under the Amended Senior Notes Agreements and the Notes. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date.
The Amended Senior Notes Agreements also contain customary events of default. If an event of default under the Amended Senior Notes Agreements occurs and is continuing, then, among other things, the purchasers may declare any outstanding obligations under the Amended Senior Notes Agreements and the Notes to be immediately due and payable and the Note holders may exercise their rights and remedies against the pledged collateral.
ConvertibleNotes
On September 17, 2020, we entered into a purchase agreement (the “Purchase Agreement”) with J.P. Morgan Securities LLC, as representative of the several initial purchasers (the “Initial Purchasers”), to issue and sell $100.05 million aggregate principal amount of our 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes”) of which an aggregate principal amount of $13.05 million of Notes was issued pursuant to the exercise by the CreditInitial Purchasers of their option to purchase additional Convertible Notes. We offered and sold the Convertible Notes to the Initial Purchasers in reliance on the exemption from registration provided by Section 4(a) (2) of the Securities Act, and for resale by the Initial Purchasers to persons reasonably believed to be qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. We relied on these exemptions from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement. The shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”), issuable upon conversion of the Convertible Notes, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. To the extent that any shares of the Common Stock are issued upon conversion of the Convertible Notes, they will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof because no commission or other remuneration is expected to be paid in connection with conversion of the Convertible Notes and any resulting issuance of shares of the Common Stock. The Purchase Agreement includes customary representations, warranties and covenants by us and customary closing conditions. Under the terms of the Purchase Agreement, we agreed to indemnify the Initial Purchasers against certain liabilities.
The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between our company and U.S. Bank National Association, as trustee. The net proceeds from the sale of the Convertible Notes were approximately $78.6 million (after deducting the Initial Purchasers’ fees and our estimated fees and expenses related to the offering and the senior notes, and we expectcost of the capped call transactions). We used approximately $16.9 million of net proceeds from the offering to be able to meet such financial covenants duringpay the cost of the Capped Call Transactions (as defined below). We used the remainder of the net proceeds
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from the offering to repay borrowings under our revolving credit facility and for general corporate purposes. The Convertible Notes are senior unsecured obligations and rank (i) senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Convertible Notes; (ii) equal in right of payment to any of our unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00% per year. Interest will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021. The Convertible Notes may bear additional interest under specified circumstances relating to our failure to comply with our reporting obligations under the Indenture or if the Convertible Notes are not freely tradable as required by the Indenture. The Convertible Notes will mature on September 15, 2025, unless earlier repurchased or converted. Prior to March 15, 2025, the Convertible Notes will be convertible at the option of the holders only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending on December 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period immediately after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
Upon conversion, the Convertible Notes may be settled, at our election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate was 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $11.01 per share of Common Stock), representing an initial conversion premium of approximately 22.5% to the $8.99 last reported sale price of the Common Stock on The New York Stock Exchange on September 17, 2020.

The conversion rate is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At December 29, 2022, the adjusted conversion rate is 91.3657 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $10.95 per share of Common Stock). If we undergo certain fundamental changes, holders of Convertible Notes may require us to repurchase for cash all or part of their Convertible Notes for a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change occurs prior to the maturity date, we will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. We may not redeem the Convertible Notes before maturity and no “sinking fund” is provided for the Convertible Notes. The Indenture includes covenants customary for securities similar to the Convertible Notes, sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving our company and certain of our subsidiaries after which the Convertible Notes become automatically due and payable.

During our fiscal 2021 second, third and fourth quarters, all quarters during fiscal 2022, and our fiscal 2023 first quarter, the Convertible Notes were (are) eligible for conversion at the option of the holders as the last reported sale price of the Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days during the last 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. We have the ability to settle the conversion in Common Stock.
Capped Call Transactions
In connection with the pricing of the Convertible Notes on September 17, 2020, and in connection with the exercise by the Initial Purchasers of their option to purchase additional Convertible Notes on September 18, 2020, we entered into privately negotiated Capped Call Transactions (the “Capped Call Transactions”) with certain of the Initial Purchasers and/or their respective affiliates and/or other financial institutions (the “Capped Call Counterparties”). The Capped Call Transactions are expected generally to reduce potential dilution of our common stock upon any conversion of the Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, in the event that the market price per share or our common stock, as measured under the terms of the Capped Call Transactions, is greater than the strike price of the Capped Call Transactions,
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which initially corresponds to the conversion price of the Convertible Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes. If, however, the market price per share of our common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution to the extent that such market price exceeds the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions was initially $17.98 per share (in no event shall the cap price be less than the strike price of $11.0128), which represents a premium of 100% over the last reported sale price of the Common Stock of $8.99 per share on The New York Stock Exchange on September 17, 2020. Under the terms of the Capped Call Transactions, the cap price is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At December 29, 2022, the adjusted cap price is approximately $17.87 per share. The Capped Call Transactions are separate transactions entered into by us with the Capped Call Counterparties, are not part of the terms of the Convertible Notes and will not change the rights of holders of the Convertible Notes under the Convertible Notes and the Indenture.
Summary
Our long-term debt has scheduled annual principal payments, net of amortization of debt issuance costs, of $10.4 million in fiscal 2023 and fiscal 2024. We believe that the actions we have taken will allow us to have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements. However, future compliance with our debt covenants could be impacted if we are unable to return to closer-to-normal operations as currently expected, which could be impacted by matters that are not entirely in our control, such as the return of protective actions that federal, state and local governments took during the pandemic, the impact of any new variants of COVID-19 on customer behavior and the timing of new movie releases (as described in the Impact of the COVID-19 Pandemic section of this MD&A), or by changes in macroeconomic conditions. Future compliance with our debt covenants could also be impacted if the speed of recovery of our theatres and hotels and resorts businesses is slower than currently expected. For example, our current expectations are that our theatre division will continue to improve during fiscal 2023 (but still report results below comparable periods in fiscal 2019). Our current expectations for our hotels and resorts division are that we will continue to show improvement in fiscal 2023 compared to the prior year. We do not expect to return to pre-COVID-19 occupancy levels during fiscal 2023 due to an expected lag in business travel. It is possible that the impact of COVID-19 may be greater than currently expected across one or both of our divisions such that we may be unable to comply with our debt covenants in future periods. In such an event, we would either seek covenant waivers or attempt to amend our covenants, though there is no certainty that we would be successful in such efforts.
Financial Condition

Fiscal 20192022 versus Fiscal 2018

2021

Net cash provided by operating activities totaled $141.5$93.2 million during fiscal 20192022, compared to $137.4net cash provided by operating activities of $46.3 million during fiscal 2018,2021, an increase of $4.1 million, or 3.0%.$47.0 million. The increase in net cash provided by operating activities in fiscal 2022 was due primarily to increased depreciation and amortization and deferred income taxes and the favorable timing in the payment of accounts payable in fiscal 2019, partially offset bya reduced net earningsloss and the unfavorablefavorable timing in the collection of accounts receivable and government grant receivables and receipt of refundable income taxes of $22.7 million, partially offset by unfavorable timing in the payment of income taxes inaccrued compensation, accounts payable, and other accrued liabilities as compared to fiscal 2019.

2021.

Net cash used in investing activities during fiscal 20192022 totaled $93.9$0.3 million, compared to $59.3 millionnet cash provided by investing activities during fiscal 2018,2021 of $10.9 million, an increase of $34.6 million, or 58.5%.$11.2 million. The increase in net cash used inby investing activities was primarily the result of the $30.1 million cash consideration in the Movie Tavern acquisition and an increase in capital expenditures. We did not incur any acquisition-related capital expenditures, the receipt of $4.9 million in proceeds from disposals of property, equipment and other assets during fiscal 2018.

2022 (compared to $22.1 million of similar proceeds in fiscal 2021), and the nonrecurring receipt of $11.4 million in conjunction with collection of a split dollar life insurance policy receivable in fiscal 2021, partially offset by the fact we received $31.1 million in net proceeds from the sale of The Skirvin Hilton during fiscal 2022.

Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $64.1$36.8 million during fiscal 20192022 compared to $58.7$17.1 million during fiscal 2018,2021, an increase of $5.4$19.8 million, or 9.2%115.7%. We incurred capital expenditures of approximately $3.3$12.1 million and $600,000, respectively, during fiscal 2019 and fiscal 2018 related to development costs of one new theatre that opened during fiscal 2019. We did not incur any capital expenditures related to developing new hotels during either period. We incurred approximately $31.5 million and $43.6 million, respectively, of capital expenditures during fiscal 2019 and fiscal 2018 in our theatre division including the aforementioned costs associated with constructing a new theatre, as well as costs associated with the addition of DreamLounger recliner seating, ourTake Five Lounge andZaffiro’s Express and food and beverage concepts, andUltraScreen DLX andSuperScreen DLX premium large format screens at selected theatres, each as described in the “Current Plans” section of this MD&A. We also incurred capital expenditures in our hotels and resorts division during fiscal 2019 of approximately $31.8 million, consisting primarily of2022, including costs associated with the conversion of the InterContinental Milwaukee into the Saint Katefour auditoriums to SuperScreen DLX® auditoriums and renovation of the Hilton Madison Monona Terrace, as well as normal maintenance capital projects at our other properties.projects. We incurred approximately $14.9$10.3 million of capital expenditures during fiscal 2021 in our theatre division, including costs associated with the renovation of a theatre and normal maintenance capital projects. We incurred
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approximately $24.5 million of capital expenditures in our hotels and resorts division during fiscal 2018,2022, including costs associated withrelated to the first phase of a rooms renovation ofat the Hilton MadisonGrand Geneva and the conversion of the InterContinental Milwaukee into the Saint Kate, as well as othernormal maintenance capital projects at our company-owned hotels and resorts. We incurred capital expenditures in our hotels and resorts division during fiscal 2021 of approximately $6.8 million, including costs related to a lobby renovation at the Grand Geneva and normal maintenance capital projects. Our current estimated fiscal 20202023 cash capital expenditures, which we anticipate may be in the $65-$85$60 - $75 million range, are described in greater detail in the “Current Plans” section of this MD&A.

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Net cash used in financing activities during fiscal 20192022 totaled $43.8$92.4 million, compared to $76.9 million during fiscal 2018. The decrease in net cash used in financing activities of $33.1 million, or 43.0%, was due to a smaller reduction in our long term debt during fiscal 2019 compared2021 of $47.2 million. During fiscal 2022, we increased our borrowings under our revolving credit facility as needed to fiscal 2018, which primarily was the result of the use offund our cash for the Movie Tavern acquisition described above.

Weneeds and used excess cash during fiscal 2019 and fiscal 2018 to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added $335.0$100.0 million of new short-term revolving credit facility borrowings, and we made $333.0$100.0 million of repayments on short-term revolving credit facility borrowings during fiscal 2019 (net increase in2022. We ended fiscal 2022 with no outstanding borrowings onunder our revolving credit facility of $2.0 million) compared to $203.0 million of new short-term borrowings and $254.0 million of repayments on short-term borrowings made during fiscal 2018 (net decrease in net borrowings on our credit facility of $51.0 million), accounting for the decrease in netfacility. Net cash used in financingprovided by operating activities during fiscal 2019.

2022 was used to repay $47.5 million of short-term borrowings, including the early repayment and retirement of our term loan facility, as described above. We did not issue any new long-term debt during fiscal 2019 or2022.

During fiscal 2018. 2021, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As a result, we added $178.5 million of new short-term revolving credit facility borrowings, and we made $178.5 million of repayments on short-term revolving credit facility borrowings during fiscal 2021. We ended fiscal 2021 with no outstanding borrowings under our revolving credit facility. Net cash provided by operating activities during fiscal 2021 was used to repay $40.3 million of short-term borrowings. We did not issue any new long-term debt during fiscal 2021. We received $6.7 million in proceeds from borrowings against the cash surrender value of a life insurance policy during fiscal 2021.
Principal payments on long-term debt were $24.6approximately $35.7 million during fiscal 20192022, including a $10.0 million installment payment on senior notes and includeda $24.1 million payment to retire mortgage notes in connection with the repaymentsale of a $14.6 million mortgage note on a hotel,The Skirvin Hilton, compared to payments of $12.2$10.7 million during fiscal 2018.

2021, which included a $10.0 million installment payment on senior notes. Distributions to noncontrolling interests resulting from the sale of The Skirvin Hilton were $2.0 million in fiscal 2022.

Our debt-to-capitalization ratio (excluding(including short-term borrowings but excluding our finance and operating lease obligations) was 0.260.28 at December 26, 201929, 2022, compared to 0.330.37 at December 27, 2018.30, 2021. Based upon our current expectations for our fiscal 20202023 operating results and capital expenditures, and barring any currently unidentified acquisitions, we anticipate that our total long-term debt and debt-to-capitalization ratio will remain at our current relatively low levelsmay modestly decrease during fiscal 2020.2023. Our actual total long-term debt and debt-to-capitalization ratio at the end of fiscal 20202023 are dependent upon, among other things, our actual operating results, capital expenditures, potential acquisitions, asset sales proceeds and potential equity transactions during the year.

We repurchased approximately 30,000

During fiscal 2022 and fiscal 2021 we did not repurchase any shares of our common stock for approximately $1.1 million and 83,000 shares of our common stock for approximately $2.9 million, respectively, during fiscal 2019 and fiscal 2018 in conjunction with the exercise of stock options.open market. As of December 26, 2019,29, 2022, approximately 2.82.5 million shares of our common stock remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions.

In conjunction with

Beginning in the Movie Tavern acquisition, we issued 2,450,000third quarter of fiscal 2022, the Board of Directors elected to reinstate our quarterly dividend that had been suspended as a result of the COVID-19 pandemic, declaring a quarterly cash dividend of $0.05 per share of common stock and $0.045 per share on the Class B common stock. Quarterly dividends were paid in September and December 2022, totaling $3.1 million in fiscal 2022. We did not make any dividend payments during fiscal 2021.
Our Credit Agreement, as amended, required us to temporarily suspend our quarterly dividend payments and prohibited us from repurchasing shares of our common stock toin the seller duringopen market through the end of fiscal 2021. Beginning with the first quarter of fiscal 2019 (157,0562022, the Credit Agreement limited the total amount of whichquarterly dividend payments or share repurchases during the four subsequent quarters to no more than $1.55 million per quarter, until we have been placed in escrowreturned to secure certain post-closing indemnification obligations of the sellercompliance with prior financial covenants under the asset purchase agreement). This non-cash transaction reduced treasury stockCredit Agreement (specifically, the consolidated fixed charge coverage ratio) as tested starting with the fiscal quarter ending March 30, 2023 and increased capital in excess of par byeach fiscal quarter thereafter, at which point we have the value of the shares at closing of approximately $109.2 million.

We paid regularability to declare quarterly dividends totaling $19.3 million and $16.4 million, respectively, during fiscal 2019 and fiscal 2018. The increase in dividend payments was the resultand/or repurchase shares of an increased number of outstanding shares and a 6.7% increase in our regular quarterly dividend payment rate initiated in March 2019. During the first quarter of fiscal 2020, we increased our regular quarterly common stock cash dividend by an additional 6.3% to $0.17 per common share.

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in the open market as we deem appropriate.

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Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements

Future Uses of Cash

The following schedule details our contractual obligations at December 26, 201929, 2022 (in thousands):

     Payments Due by Period 
  Total  Less Than
1 Year		  1-3 Years  4-5 Years  After
5 Years		 
Long-term debt $216,342  $9,910  $21,976  $22,185  $162,271 
Interest on fixed-rate long term debt(1)  34,775   7,357   11,854   8,165   7,399 
Pension obligations  43,824   1,400   3,247   3,323   35,854 
Operating lease obligations  339,814   24,369   52,043   49,342   214,060 
Capital lease obligations  29,345   3,606   5,947   5,699   14,093 
Construction commitments  2,243   2,243   -   -   - 
Total contractual obligations $666,343  $48,885  $95,067  $88,714  $433,677 

(1)Interest on variable-rate debt obligations is excluded due to significant variations that may occur in each year related to the amount of variable-rate debt and the accompanying interest rate.

Payments Due by Period
TotalLess Than
1 Year		1-3 Years4-5 YearsAfter
5 Years
Long-term debt$180,437 $10,432 $120,049 $49,956 $— 
Interest on fixed-rate long term debt(1)
26,172 8,437 15,257 2,478 — 
Pension obligations36,324 1,938 4,221 4,706 25,459 
Operating lease obligations276,564 23,610 50,297 47,976 154,681 
Finance lease obligations20,786 3,243 6,119 4,798 6,626 
Construction commitments5,387 5,387 — — — 
Total contractual obligations$545,670 $53,047 $195,943 $109,914 $186,766 
________________
(1)Interest on variable-rate debt obligations is excluded due to significant variations that may occur in each year related to the amount of variable-rate debt and the accompanying interest rate. As of December 29, 2022 we had zero variable interest rate debt outstanding.
Additional detail describing our long-term debt is included in Note 7 to our consolidated financial statements.

As of December 26, 2019,29, 2022, we had no additional material purchase obligations other than those created in the ordinary course of business related to property and equipment, which generally have terms of less than 90 days. We had long-term obligations related to our employee benefit plans, which are discussed in detail in Note 10 to our consolidated financial statements. We have not included uncertain tax obligations in the table of contractual obligations set forth above due to uncertainty as to the timing of any potential payments.

As of December 26, 2019, we had approximately eleven months remaining on our office lease.

As of December 26, 2019,29, 2022, we had no debt or lease guarantee obligations.

In connection with the mortgage loan obtained by the Kimpton Hotel Monaco Pittsburgh (“Monaco”) joint venture, we provided an environmental indemnity and a “bad boy” guaranty that provides that the lender can recover losses from us for certain bad acts of the Monaco joint venture, such as but not limited to fraud, intentional misrepresentation, voluntary incurrence of prohibited debt, prohibited transfers of the collateral, and voluntary bankruptcy of the Monaco joint venture. Under the terms of the Monaco joint venture operating agreement, Searchlight has agreed to fully indemnify us under the “bad boy” guarantees for any losses other than those attributable to our own bad acts and has agreed to indemnify us to its proportionate liability under the environmental liability. Additional detail describing the Monaco joint venture is included in Note 13 to our consolidated financial statements.
Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk related to changes in interest rates, and we manage our exposure to this market risk by monitoring available financing alternatives.

Variable interest rate debt outstanding as

As of December 26, 2019 totaled $81.0 million, carried an average interest rate of 2.7% and represented 37.4% of our total debt portfolio. After adjusting for outstanding swap agreements described below,29, 2022 we had zero variable interest rate debt outstanding. Our revolving credit facility, which has no outstanding borrowings as of December 26, 2019 totaled $31.0 million, carried an average29, 2022, is our only existing credit facility that bears interest rate of 2.7% and represented 14.3% of our total debt portfolio.based on a variable rate. Our earnings aremay be affected by changes in short-term interest rates as a result of our borrowings under our revolving credit facility. Based uponfacility to the interest rates in effect on our variable rate debt outstanding as of December 26, 2019, a 100 basis point increase in market interest rates would increase our annual interest expense by approximately $310,000, taking our outstanding swap agreements into consideration.

extent we have any such borrowings.

Fixed interest rate debt totaled $135.7$183.6 million as of December 26, 2019,29, 2022, carried an average interest rate of 4.4%5.03% and represented 62.6% of our total debt portfolio. After adjusting for outstanding swap agreements described below, fixed interest rate debt totaled $185.7 million as of December 26, 2019, carried an average interest rate of 4.2% and represented 85.7%100.0% of our total debt portfolio. Fixed interest rate debt included the following: senior notes bearing interest semiannually at fixed rates ranging from 4.02% to 6.55%4.32% (plus a specified period fee of 0.975% described above), maturing in fiscal 20202023 through 2027; and fixed rate mortgagesconvertible senior notes bearing interest of 5.0%, maturing in fiscal 2025 and other debt instruments bearing interest from 3.00% toat 5.75%, maturing in fiscal 2025, and 2042.PPP loans bearing interest at 1.0%, maturing in fiscal 2025. The fair value of our fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of our fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. As of December 26, 2019, 29, 2022,
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the fair value of our $109.0$80.0 million of senior notes was approximately $111.0$71.3 million. Based uponAs of December 29, 2022, the respective rate and prepayment provisionsfair value of our remaining fixed interest rate mortgage and unsecured term note at December 26, 2019, the carrying amounts$100.1 million of such debt approximated fair value as of such date.

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convertible senior notes was approximately $145.4 million.

The variable interest rate debt and fixed interest rate debt outstanding as of December 26, 201929, 2022 matures as follows (in thousands):

  F2020  F2021  F2022  F2023  F2024  Thereafter  Total 
Variable interest rate $-  $-  $-  $-  $-  $81,000  $81,000 
Fixed interest rate  9,965   11,015   11,065   11,118   11,171   81,330   135,664 
Debt issuance costs  (55)  (52)  (52)  (52)  (52)  (59)  (322)
 Total debt $9,910  $10,963  $11,013  $11,066  $11,119  $162,271  $216,342 

F2023F2024F2025F2026F2027ThereafterTotal
Variable interest rate$— $— $— $— $— $— $— 
Fixed interest rate11,434 11,368 110,443 — 50,000 — 183,245 
Debt issuance costs(1,002)(1,003)(759)— (44)— (2,808)
Total debt$10,432 $10,365 $109,684 $— $49,956 $— $180,437 
We periodically enter into interest rate swap agreements to manage our exposure to interest rate changes. These swaps involve the exchange of fixed and variable interest rate payments. Payments or receipts on the agreements are recorded as adjustments to interest expense. We had one outstanding interest rate swap agreement at December 28, 2017 covering $25.0 million that expired on January 22, 2018. Under this swap agreement, we paid a defined fixed rate while receiving a defined variable rate based on LIBOR, effectively converting $25.0 million of our borrowing under our prior credit agreement to a fixed rate. The swap agreement did not materially impact our fiscal 2018 or fiscal 2017 earnings.

On March 1, 2018, we entered into two interest rate swap agreements covering $50.0 million of floating rate debt which require us to pay interest at a defined fixed rate while receiving interest at a defined variable rate of one-month LIBOR. The first swap hashad a notional amount of $25.0 million, expiresexpired on March 1, 2021 and hashad a fixed rate of 2.559%. The second swap hashad a notional amount of $25.0 million, expiresexpired on March 1, 2023 and hashad a fixed rate of 2.687%. The interest rate swaps arewere considered effective for accounting purposes and qualifyqualified as cash flow hedges. These swap agreements did not materially impact our fiscal 20192022 earnings and we do not expect the interest rate swapsswap that expired on March 1, 2023 to materially impact our fiscal 20202023 earnings.

Critical Accounting Policies and Estimates

This MD&A is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates associated with critical accounting policies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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We believe the following critical accounting policies affect the most significant judgments and estimates used in the preparation of our consolidated financial statements.

i
•Long-lived & Other Intangible Assets: We review long-lived assets, including property and equipment, and operating lease right-of-use assets and our trade name intangible asset, for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. Such review is primarily done at the individual theatre or hotel property level, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other asset groups. We use judgment to determine whether indicators of impairment exist. The determination of the occurrence of a triggering event is based upon our knowledge of the theatre and hospitality industries, historical experience such as recent operating results, location of the property, market conditions, recent events or transactions, and property-specific information available at the time of the assessment. When a triggering event occurs, judgment is also required in determining the assumptions and estimates to use within the recoverability analysis and when calculating the fair value of the asset if it is determined that the long-lived asset is not recoverable. In performing these analyses, we must make assumptions regarding the estimated future cash flows and other factors that a market participant would make to determine the fair value of the respective assets. The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance and anticipated sales prices. Our estimates of cash flows are sensitive to assumed revenue growth rates and may differ from actual cash flows due to factors such as economic conditions, changes to our business model or whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. Such review is primarily done at the individual theatre or hotel property level, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other asset groups. We use judgment to determine whether indicators of impairment exist. The determination of the occurrence of a triggering event is based upon our knowledge of the theatre and hospitality industries, historical experience such as recent operating results, location of the property, market conditions, recent events or transactions, and property-specific information available at the time of the assessment. When a triggering event occurs, judgment is also required in determining the assumptions and estimates to use within the recoverability analysis and when calculating the fair value of the asset if it is determined that the long-lived asset is not recoverable. In performing these analyses, we must make assumptions regarding the estimated future cash flows and other factors that a market participant would make to determine the fair value of the respective assets. The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance and anticipated sales prices. Our estimates of cash flows are sensitive to assumed revenue growth rates and may differ from actual cash flows due to factors such as economic conditions, the continuing impact of the COVID-19 pandemic, changes to our business model or
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changes in our operating performance and anticipated sales prices. For long-lived assets other than goodwill, if the sum of the undiscounted estimated cash flows is less than the current carrying value, we then prepare a fair value analysis of the asset. If the carrying value of the asset exceeds the fair value of the asset, we recognize an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset. During fiscal 2019, we recorded a before-tax impairment charge of $1.9 million related to a specific theatre location. We did not record any impairment losses during fiscal 2018 or fiscal 2017.

iPeriodically, we make acquisitions that may have a material impact on our consolidated financial position. Assets acquired and liabilities assumed in acquisitions are recorded at fair value as of the acquisition date. We use judgment to allocate the purchase price of the businesses acquired to the identifiable tangible and intangible assets acquired and liabilities assumed. In some cases, we may use an independent valuation firm to assist with our valuation, and our assumptions and estimates are based upon comparable market data and information obtained from our management and the management of the acquired businesses using acceptable valuation techniques. Generally, tangible assets acquired include property and equipment, finance lease right-of-use assets and operating lease right-of-use assets. Intangible assets acquired may include tradename intangibles, non-compete agreements or goodwill in a business combination. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year following the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. During fiscal 2019, we acquired the assets of Movie Tavern for a total purchase price of approximately $139.3 million.

iGoodwill is tested for impairment at a reporting unit level, determined to be at an operating segment level. When reviewing goodwill for impairment, we consider the amount of excess fair value over the carrying value of the reporting unit, the period of time since the last quantitative test, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, we assess numerous factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying value. Examples of qualitative factors that we assess include our share price, our financial performance, market and competitive factors in our industry, and other events specific to the reporting unit. If we conclude that it is more likely than not that the fair value of our reporting unit is less than its carrying value, we perform a two-step quantitative test by comparing the carrying value of the reporting unit to the estimated fair value. Primarily all of our goodwill relates to our theatre segment. The fair value of our theatre reporting unit exceeded our carrying value for fiscal 2019, fiscal 2018 and fiscal 2017 by a substantial amount.

iDepreciation expense is based on the estimated useful life of our assets. The life of the assets is based on a number of assumptions, including cost and timing of capital expenditures to maintain and refurbish the asset, as well as specific market and economic conditions. While management believes its estimates are reasonable, a change in the estimated lives could affect depreciation expense and net earnings or the gain or loss on the sale of any of the assets. During fiscal 2018, we changed the estimated lives of certain assets at our InterContinental Milwaukee due to our decision to convert this hotel into a new, art-themed hotel, the Saint Kate. As a result, we reported additional depreciation of approximately $3.7 million during fiscal 2018.

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Accounting Changes

In January 2017, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) No. 2017-04,Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which eliminates Step 2 of the goodwill impairment test that had required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss, formeasured as the amount by which the carrying value exceeds the fair value of the asset. During fiscal 2022, we recorded before-tax impairment charges totaling $1.5 million related to two operating theatres. During fiscal 2021, we recorded before-tax impairment charges totaling $5.8 million related to two operating theatres, three permanently closed theatres and surplus real estate that we intend to sell. During fiscal 2020, we recorded a before-tax impairment charge of $24.7 million related to our trade name intangible asset and multiple theatre locations.

Depreciation expense is based on the estimated useful life of our assets. The life of the assets is based on a number of assumptions, including cost and timing of capital expenditures to maintain and refurbish the asset, as well as specific market and economic conditions. While management believes its estimates are reasonable, a change in the estimated lives could affect depreciation expense and net earnings or the gain or loss on the sale of any of the assets.
•Goodwill: We review goodwill for impairment annually or more frequently if certain indicators arise. We perform our annual impairment test on the first day of our fiscal fourth quarter. Goodwill is tested for impairment at a reporting unit’s carryingunit level, determined to be at an operating segment level. When reviewing goodwill for impairment, we consider the amount exceeds itsof excess fair value without exceedingover the total amountcarrying value of goodwill allocatedthe reporting unit, the period of time since the last quantitative test, and other factors to that reporting unit. Entities will continuedetermine whether or not to have the option tofirst perform a qualitative assessment fortest. When performing a qualitative test, we assess numerous factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying value. Examples of qualitative factors that we assess include our share price, our financial performance, market and competitive factors in our industry, and other events specific to the reporting unit. If we conclude that it is more likely than not that the fair value of our reporting unit is less than its carrying value, we perform a quantitative test by comparing the carrying value of the reporting unit to determine if the estimated fair value. Primarily all of our goodwill relates to our theatre segment.
During the first three quarters of fiscal 2022, we determined that there were no indicators of impairment that would require an additional quantitative analysis during these interim periods. We performed our annual goodwill impairment test as of September 30, 2022 and determined that a quantitative analysis would be appropriate. In order to determine fair value, we used assumptions based on information available to us as of September 30, 2022, including both market data and forecasted cash flows. We then used this information to determine fair value and determined that the fair value of our theatre reporting unit exceeded our carrying value and deemed that no impairment was indicated as of September 30, 2022. If we are unable to achieve our forecasted cash flow or if market conditions worsen, our goodwill could be impaired at a later date.
•Income Taxes:We are subject to U.S. federal and state income taxes in numerous state jurisdictions. Significant judgment is necessary.required in determining both our key assumptions utilized in the accounting for income taxes and the recording of the provision for income taxes and the related deferred tax assets and liabilities. We assess our income tax positions and record tax liabilities for all years subject to examination based upon management’s evaluation of the facts and circumstances and information available at the reporting dates. For those income tax positions where it is more-likely-than-not that a tax benefit will be sustained upon the conclusion of an examination, we have recorded the largest amount of tax benefit having a cumulatively greater than 50% likelihood of being realized upon ultimate settlement with the applicable taxing authority assuming that it has full knowledge of all relevant information. For those tax positions that do not meet the more-likely-than-not threshold regarding the ultimate realization of the related tax benefit, no tax benefit has been recorded in the financial statements. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating losses, tax credits and other carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based on historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As a result of this review, we have established valuation allowances against certain of our deferred tax assets relating to state net operating loss carryforwards. As of December 29, 2022, valuation allowances against our deferred tax assets were $12.4 million, and were $2.4 million as of December 30,
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2021. Future tax authority rulings and changes in tax laws, changes in projected levels of taxable income and future tax planning strategies could affect the actual effective tax rate and tax balances recorded.
Implementation of New Accounting Standards
During the first quarter of fiscal 2022, we adopted ASU No. 2017-04 is effective for us2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in fiscal 2020 and must be applied prospectively. We do not believethis update provide increased transparency of government assistance including the requirement of certain disclosures in a company’s notes to the consolidated financial statements about transactions with a government. The adoption of the new standard willdid not have a material effect on our consolidated financial statements.

In August 2018,March 2020, the FASB issued ASU No. 2018-14,Compensation—Retirement Benefits—Defined Benefit Plans—General2020-04, designedReference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions to add, removethe existing guidance on contract modifications and clarify disclosure requirements relatedhedge accounting to defined benefit pension andease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR), or other postretirement plans.interbank offered rates, to alternative reference rates such as the Secured Overnight Financing Rate (SOFR). ASU No. 2018-142020-14 is optional, effective for usimmediately, and may be elected over time as reference rate reform activities occur, generally through December 31, 2024. During the first quarter of fiscal 2023, in fiscal 2020 and early application is permitted.conjunction with the execution of the fifth amendment to our credit agreement (see Note 7 to the financial footnotes of the accompanying consolidated financial statements), we elected SOFR as our ongoing reference rate. We do not believebelieves that adoption of the new standard will not have a material effect on our consolidated financial statement disclosures.

In August 2018,statements.

Accounting Changes
For a description of recent accounting pronouncements, Sec Note 1 of the FASB issued ASU No. 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework – Changesnotes to the Disclosure Requirements for Fair Value Measurement. The purpose of ASU No. 2018-13 is to improve the disclosures related to fair value measurements in the financial statements. The improvements include the removal, modification and addition of certain disclosure requirements primarily related to Level 3 fair value measurements. ASU No. 2018-13 is effective for us in fiscal 2020. The amendments in ASU No. 2018-13 should be applied prospectively. We do not expect ASU No. 2018-13 to have a significant impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12,Income Taxes (Topic 740): Simplifying the Accounting for Income Taxesstatements included in Part II, Item 8 of this annual report on Form 10-K.

Item 7A.    The amendments in ASU No. 2019-12 are designed to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application ofQuantitative and simplify generally accepted accounting principles for other areas of Topic 740 by clarifying and amending existing guidance. ASU No. 2019-12 is effective for us in fiscal 2021 and early application is permitted. We are currently evaluating the effect the new standard will have on our consolidated financial statements.

On December 28, 2018, we adopted ASU No. 2016-02,Leases (Topic 842), which is intended to improve financial reporting related to leasing transactions. ASC 842 requires a lessee to recognize on the balance sheet assets and liabilities for rights and obligations created by leased assets with lease terms of more than 12 months. The new guidance also requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from the leases. See Note 8 for further discussionQualitative Disclosures About Market Risk.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk.

The information required by this item is set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative Disclosures About Market Risk” above.

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52

Item 8.Financial Statements and Supplementary Data.

Item 8.    Financial Statements and Supplementary Data.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework inInternal Control – Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework inInternal Control – Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 26, 2019.29, 2022. The Company’s auditors, Deloitte & Touche LLP, have issued an attestation report on our internal control over financial reporting. That attestation report is set forth in this Item 8.

Gregory S. Marcus
Chad M. Paris
President and Chief Executive OfficerDouglas A. Neis
Executive Vice President, Chief Financial Officer and Treasurer

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53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of The Marcus Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of The Marcus Corporation and subsidiaries (the "Company") as of December 26, 201929, 2022 and December 27, 2018, and30, 2021, the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders' equity and cash flows, for each of the three years in the period ended December 26, 2019,29, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 26, 201929, 2022 and December 27, 2018,30, 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 26, 2019,29, 2022, in conformity with accounting principles generally accepted in the United States of America.


We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 26, 2019,29, 2022, based on criteria established inInternal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2020,March 2, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 8 to the financial statements, the Company changed its method of accounting for leases in the year ended December 26, 2019 due to the adoption of Accounting Standards Update No. 2016-02,Leases (Topic 842), using the modified retrospective method. 

reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Matter

The critical audit mattersmatter communicated below are mattersis a matter arising from the current-period audit of the financial statements that werewas communicated or required to be communicated to the audit committee and that (1) relaterelates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.

51
it relates.

Long-Lived Assets – Assessment and Evaluation of Impairment – Refer to Note 1 and Note 4 to the financial statements

Movie Tavern Acquisition – Valuation of Assets Acquired – Refer to Note 1 and Note 4 to the financial statements

Critical Audit Matter Description

On February 1, 2019, the Company completed the acquisition of 22 dine-in Movie Tavern branded movie theatres (“Movie Tavern”). The purchase price for the Movie Tavern acquisition consisted of $30 million in cash and 2,450,000 shares of the Company’s Common Stock, for an aggregate purchase price of approximately $139 million. The Company accounted for the acquisition under the acquisition method of accounting for business combinations in which the assets acquired and liabilities assumed are recorded at fair value. The assets acquired and liabilities assumed primarily consisted of approximately $95 million of property and equipment, $161 million of operating lease right-of-use assets, $32 million of goodwill, $10 million of a trade name intangible asset, and operating lease obligations of $160 million.

In determining the fair value of the assets acquired and liabilities assumed, management used judgment and estimation to determine certain key valuation and business assumptions, specifically when determining the estimated replacement cost used in valuing the property and equipment acquired, when determining the rent expense-to-revenue ratio and operating cash flow margin assumptions used in valuing the favorable and unfavorable lease amounts acquired, and when selecting the royalty rate assumption used in valuing the trade name intangible asset acquired.

We identified the valuation of the assets acquired as a critical audit matter as auditing the estimated replacement cost used in valuing the property and equipment, the rent expense-to-revenue and operating cash flow margin assumptions used in valuing the favorable and unfavorable lease amounts, and the royalty rate assumption used in valuing the trade name intangible asset involved especially subjective judgment and an increased extent of effort, including the need to involve our fair value specialists.

Critical Audit Matter Description
As of December 29, 2022, the Company had $716 million of net property and equipment and $195 million of operating lease right-of-use assets. The Company assesses long-lived assets for impairment at the individual hotel, theatre or surplus real estate property level whenever events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable. During the year ended December 29, 2022, the Company recorded an impairment loss of $1.5 million.
In assessing long-lived assets for indicators of potential impairment, the Company considered quantitative and qualitative factors, including evaluating the historical actual operating performance of the properties and assessing the impact of recent economic and industry events impacting the properties, including the recovery from the COVID-19 pandemic. Evaluating
54
whether these quantitative and qualitative factors represented an indicator of potential impairment required significant judgment by management.

When indicators of impairment were present, the Company determined if the individual theatre, or surplus real estate properties were recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets was less than their carrying amounts. In instances where the estimated undiscounted future cash flows attributable to these assets were less than the carrying amounts, the Company determined the fair value of the individual theatre, or surplus real estate properties and recorded an impairment loss based on the excess of the carrying amount over the fair value. The most significant assumption inherent in these recoverability and impairment analyses was the forecasted future cash flows (primarily driven by revenue growth rates for theatre properties and estimated sales prices for surplus real estate properties).

We identified the assessment and evaluation of impairment of long-lived assets as a critical audit matter because of the subjectivity used by management when identifying and evaluating potential impairment indicators, and when estimating forecasted future cash flows in their recoverability and impairment analyses, which are impacted by the timing of recovery from the COVID-19 pandemic. A high degree of auditor judgment was required when performing audit procedures to evaluate whether management appropriately identified and evaluated potential impairment indicators, and when evaluating the reasonableness of management’s forecasted future cash flows that were used in their recoverability and impairment analyses.
How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of the property and equipment, favorable and unfavorable lease amounts, and the trade name intangible asset included the following, among others:

·We tested the effectiveness of internal controls over the fair value determinations, including the controls related to the review of the replacement cost estimates used in valuing the property and equipment, the rent expense-to-revenue and operating cash flow margin assumptions used in valuing the favorable and unfavorable lease amounts, and the royalty rate assumption used in valuing the trade name intangible asset.

·We read the purchase agreement and evaluated whether information in the purchase price allocation, including the identification of assets acquired and liabilities assumed, was consistent with the terms and conditions in the purchase agreement.

·With the assistance of our fair value specialists, we evaluated the reasonableness of (1) the Company’s valuation methodologies, (2) the estimated replacement costs used in valuing the property and equipment, (3) the rent-to-revenue and operating cash flow margin assumptions used in valuing the favorable and unfavorable lease amounts, and (4) the royalty rate assumption used in valuing the trade name, including testing the source information underlying the determination of these estimates and assumptions, testing the mathematical accuracy of the calculations, and developing a range of independent estimates and assumptions and comparing those to the estimates and assumptions used in management’s determination of fair values.

Long-Lived Assets – Assessment of Impairment Indicators – Refer to Note 1 and Note 3 to the financial statements

Critical Audit Matter Description

As of December 26, 2019, the Company had a significant amount of long-lived assets, including $923 million of net property and equipment, with the majority of this balance consisting of land, buildings and improvements at hotel and theatre properties, and $244 million of operating lease right-of-use assets, primarily related to hotel and theatre properties. The Company assesses long-lived assets for impairment at the individual hotel or theatre properties at least annually, or whenever events or changes in circumstances indicate the carrying amount of any such asset may not be recoverable.

52

In assessing long-lived assets at hotel and theatre properties for indicators of potential impairment, Company management considered quantitative and qualitative factors, including evaluating the historical actual operating performance of the properties and assessing the potential impact of recent events and transactions impacting the properties. Company management evaluated these factors to determine whether any events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable. Evaluating whether any of these quantitative and qualitative factors represented an indicator of potential impairment required significant judgment by management.

We identified the assessment of impairment indicators for long-lived assets as a critical audit matter because of the subjectivity used by management when determining whether events or changes in circumstances have occurred indicating that the carrying amounts of long-lived assets may not be recoverable. This required a high degree of auditor judgment when performing audit procedures to evaluate whether management appropriately identified impairment indicators, specifically in the evaluation of the appropriateness and completeness of the quantitative and qualitative factors used in management’s assessment of impairment indicators.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s assessment and evaluation of impairment indicators for long-lived assets included the following, among others:

·We tested the effectiveness of internal controls over management’s assessment of impairment indicators for long-lived assets.

·We evaluated management’s assessment of long-lived asset impairment indicators by performing procedures to test the completeness and accuracy of the assessment, including:

(1)We tested the accuracy of historical actual operating results used in management’s assessment for each hotel and theatre property.

(2)We developed an independent estimate of the expected future recovery period for each hotel and theatre property by dividing the net book value of the long-lived assets by the annual operating cash flows of the property for the most recent period. We assessed whether the estimated future recovery period exceeded a reasonable remaining economic life for that applicable type of property.

(3)We held discussions with management and read internal communications to management and the Board of Directors to consider consistency with information included in the assessment and to identify any recent events or transactions that may have a potential impact on the assessment of impairment indicators for the long-lived assets.

(4)We considered whether quantitative and qualitative information in the assessment was consistent with information included in Company press releases, analyst and industry reports relevant to the Company, and evidence obtained in other areas of the audit.


•We tested the effectiveness of internal controls over the Company’s assessment and evaluation of potential impairment for long-lived assets and over forecasted future cash flows that were used in their recoverability and impairment analyses.

•We evaluated the reasonableness of the information in the Company’s impairment indicators analyses, and the corresponding forecasted future cash flows used in their recoverability and impairment analyses, by comparing the forecasts to (1) historical actual information, (2) internal communications between management and the Board of Directors and (3) forecasted information included in analyst and industry reports for the Company.

•For surplus real estate properties, we evaluated the reasonableness of the Company’s forecasted cash flows resulting from planned sale of assets by (1) obtaining sales agreements executed after December 29, 2022, where applicable, (2) obtaining negotiated letters of intent to purchase, where applicable, and (3) comparing the Company’s estimates to relevant real estate market data.

•We evaluated the Company’s forecasted future cash flows for consistency with evidence obtained in other areas of the audit.
/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin

February 24, 2020

March 2, 2023
We have served as the Company's auditor since 2008.

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55

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of The Marcus Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of The Marcus Corporation and subsidiaries (the “Company”) as of December 26, 2019,29, 2022, based on criteria established inInternal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 26, 2019,29, 2022, based on criteria established inInternal Control — Integrated Framework (2013) issued by COSO.


We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 26, 2019,29, 2022, of the Company and our report dated February 24, 2020,March 2, 2023 expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.

statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin

February 24, 2020

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March 2, 2023

56
THE MARCUS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

  December 26, 2019  December 27, 2018 
Assets        
Current assets:        
Cash and cash equivalents(Note 1) $20,862  $17,114 
Restricted cash(Note 1)  4,756   4,813 
Accounts receivable, net of reserves(Note 6)  29,465   25,684 
Refundable income taxes  5,916   5,983 
Other current assets(Note 1)  18,265   15,355 
Total current assets  79,264   68,949 
         
Property and equipment,NET(Note 6)  923,254   840,043 
         
OPERATING LEASE RIGHT-OF-USE ASSETS(Note 8)  243,855   – 
         
Other assets:        
Investments in joint ventures(Note 13)  3,595   4,069 
Goodwill(Note 1)  75,282   43,170 
Other(Note 6)  33,936   33,100 
Total other assets  112,813   80,339 
Total assets $1,359,186  $989,331 
         
Liabilities and shareholders’ equity        
Current liabilities:        
Accounts payable $49,370  $37,452 
Taxes other than income taxes  20,613   18,743 
Accrued compensation  18,055   17,547 
Other accrued liabilities (Note 1)  61,134   59,645 
Current portion of finance lease obligations (Note 8)  2,571   5,912 
Current portion of operating lease obligations (Note 8)  13,335   – 
Current maturities of long-term debt (Note 7)  9,910   9,957 
Total current liabilities  174,988   149,256 
         
Finance LEASE OBLIGATIONS(Note 8)  20,802   22,208 
         
operating lease obligations(Note 8)  232,111   – 
         
Long-term debt(Note 7)  206,432   228,863 
         
Deferred income taxes(Note 11)  48,262   41,977 
         
Deferred compensation and other(Note 10)  55,133   56,908 
         
commitments AND license rights(Note 12)        
         
equity(Note 9):        
Shareholders’ equity attributable to The Marcus Corporation        
  Preferred Stock, $1 par; authorized 1,000,000 shares; none issued  –   – 
  Common Stock:        
Common Stock, $1 par; authorized 50,000,000 shares; issued 23,253,744 at December 26, 2019 and 22,843,096 shares at December 27, 2018  23,254   22,843 
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,935,769 at December 26, 2019 and 8,346,417 at December 27, 2018  7,936   8,347 
  Capital in excess of par  145,549   63,830 
  Retained earnings  461,884   439,178 
  Accumulated other comprehensive loss  (12,648)  (6,758)
   625,975   527,440 
 Less cost of Common Stock in treasury (242,853 shares at December 26, 2019 and 2,839,079 shares at December 27, 2018)  (4,540)  (37,431)
Total shareholders’ equity attributable to The Marcus Corporation  621,435   490,009 
   Noncontrolling interests  23   110 
Total equity  621,458   490,119 
Total liabilities and shareholders’ equity $1,359,186  $989,331 

December 29, 2022December 30, 2021
ASSETS  
CURRENT ASSETS:  
Cash and cash equivalents (Note 1)
$21,704 $17,658 
Restricted cash (Note 1)
2,802 6,396 
Accounts receivable, net of reserves (Note 6)
21,455 28,902 
Government grants receivable (Note 2)
— 4,335 
Refundable income taxes— 22,435 
Assets held for sale (Note 1)
460 4,856 
Other current assets (Note 1)
17,474 15,364 
Total current assets63,895 99,946 
PROPERTY AND EQUIPMENT, NET (Note 6)
715,765 771,192 
OPERATING LEASE RIGHT-OF-USE ASSETS (Note 8)
194,965 217,072 
OTHER ASSETS:
Investments in joint ventures (Note 13)
2,067 2,335 
Goodwill (Note 1)
75,015 75,095 
Deferred income taxes (Note 11)
— 10,032 
Other (Note 6)
12,891 12,689 
Total other assets89,973 100,151 
Total assets$1,064,598 $1,188,361 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$32,187 $35,781 
Taxes other than income taxes17,948 19,566 
Accrued compensation22,512 20,474 
Other accrued liabilities (Note 1)
56,275 59,678 
Short-term borrowings (Note 7)
— 47,346 
Current portion of finance lease obligations (Note 8)
2,488 2,561 
Current portion of operating lease obligations (Note 8)
14,553 16,795 
Current maturities of long-term debt (Note 7)
10,432 10,967 
Total current liabilities156,395 213,168 
FINANCE LEASE OBLIGATIONS (Note 8)
15,014 17,192 
OPERATING LEASE OBLIGATIONS (Note 8)
195,281 216,064 
LONG-TERM DEBT (Note 7)
170,005 204,177 
DEFERRED INCOME TAXES (Note 11)
26,567 26,183 
OTHER LONG- TERM OBLIGATIONS (Note 10)
44,415 57,963 
COMMITMENTS AND LICENSE RIGHTS (Note 12)
EQUITY (NOTE 9):
Shareholders’ equity attributable to The Marcus Corporation
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued— — 
Common Stock:
Common Stock, $1 par; authorized 50,000,000 shares;
issued 24,498,243 at December 29, 2022 and 24,345,356 shares at December 30, 2021
24,498 24,345 
Class B Common Stock, $1 par; authorized 33,000,000 shares;
issued and outstanding 7,110,875 at December 29, 2022 and 7,130,125 at December 30, 2021
7,111 7,130 
Capital in excess of par153,794 145,656 
Retained earnings274,254 289,306 
Accumulated other comprehensive loss(1,694)(11,444)
457,963 454,993 
Less cost of Common Stock in treasury (78,882 shares at December 29, 2022 and 48,111 shares at December 30, 2021)(1,866)(1,379)
Total shareholders’ equity attributable to The Marcus Corporation456,097 453,614 
Noncontrolling interests824 — 
Total equity456,921 453,614 
Total liabilities and shareholders’ equity$1,064,598 $1,188,361 
See accompanying notes.

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57

The Marcus Corporation

Consolidated Statements

THE MARCUS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS

(LOSS)

(in thousands, except per share data)

  Year Ended 
  December 26,  December 27,  December 28, 
  2019  2018  2017 
Revenues:            
Theatre admissions $284,141  $246,385  $227,091 
Rooms  105,857   108,786   106,876 
Theatre concessions  231,237   166,564   148,989 
Food and beverage  74,665  ��72,771   70,627 
Other revenues  87,805   78,329   69,131 
   783,705   672,835   622,714 
Cost reimbursements  37,158   34,285   30,838 
Total revenues  820,863   707,120   653,552 
             
Costs and expenses:            
Theatre operations  267,741   217,851   197,270 
Rooms  40,381   41,181   40,286 
Theatre concessions  85,289   47,522   43,634 
Food and beverage  60,812   58,662   59,375 
Advertising and marketing  24,583   23,775   23,960 
Administrative  73,522   72,116   66,954 
Depreciation and amortization  72,277   61,342   51,719 
Rent(Note 8)  26,099   11,267   11,869 
Property taxes  21,871   19,396   18,815 
Other operating expenses  41,065   36,534   31,525 
Impairment charge(Note 3)  1,874   –   – 
Reimbursed costs  37,158   34,285   30,838 
Total costs and expenses  752,672   623,931   576,245 
             
OPERATING INCOME  68,191   83,189   77,307 
             
OTHER INCOME (EXPENSE):            
Investment income  1,379   208   588 
Interest expense  (11,791)  (13,079)  (12,100)
Other expense  (1,921)  (1,985)  (1,712)
Gain (loss) on disposition of property, equipment and other assets  (1,149)  (1,342)  3,981 
Equity earnings (losses) from unconsolidated joint ventures, net(Note 13)  (274)  (399)  46 
   (13,756)  (16,597)  (9,197)
Earnings before income taxes  54,435   66,592   68,110 
Income taxes(Note 11)  12,320   13,127   3,625 
NET EARNINGS  42,115   53,465   64,485 
NET EARNINGS (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS  98   74   (511)
NET EARNINGS ATTRIBUTABLE TO THE MARCUS CORPORATION $42,017  $53,391  $64,996 
             
net earnings per share – BASIC:
            
Common Stock $1.44  $1.96  $2.42 
Class B Common Stock  1.25   1.75   2.17 
             
net earnings per share – DILUTED:
            
Common Stock $1.35  $1.86  $2.29 
Class B Common Stock  1.24   1.72   2.13 

Year Ended
December 29,
2022		December 30,
2021		December 31,
2020
REVENUES:
Theatre admissions$198,485 $130,740 $64,825 
Rooms107,699 77,650 35,386 
Theatre concessions180,180 118,666 56,711 
Food and beverage74,836 47,086 24,822 
Other revenues82,560 65,331 38,742 
643,760 439,473 220,486 
Cost reimbursements33,634 18,771 17,202 
Total revenues677,394 458,244 237,688 
COSTS AND EXPENSES:
Theatre operations212,410 140,821 92,232 
Rooms41,561 30,394 21,243 
Theatre concessions73,124 47,681 29,747 
Food and beverage59,272 36,833 26,124 
Advertising and marketing23,877 16,069 11,074 
Administrative74,755 63,350 51,046 
Depreciation and amortization67,073 72,127 75,052 
Rent (Note 8)
26,037 25,594 26,866 
Property taxes17,955 18,473 23,560 
Other operating expenses (Note 2)
37,865 23,817 17,288 
Impairment charges (Note 4)
1,525 5,766 24,676 
Reimbursed costs33,634 18,771 17,202 
Total costs and expenses669,088 499,696 416,110 
OPERATING INCOME (LOSS)8,306 (41,452)(178,422)
OTHER INCOME (EXPENSE):
Investment income (loss)(45)599 564 
Interest expense(15,299)(18,702)(16,275)
Other income (expense), net(2,131)(2,510)(986)
Gain on disposition of property, equipment and other assets1,071 3,163 856 
Gain on sale of hotel6,274 — — 
Equity losses from unconsolidated joint ventures, net (Note 13)
(143)(92)(1,539)
(10,273)(17,542)(17,380)
LOSS BEFORE INCOME TAXES(1,967)(58,994)(195,802)
INCOME TAX EXPENSE (BENEFIT) (Note 11)
7,137 (15,701)(70,936)
NET LOSS(9,104)(43,293)(124,866)
NET EARNINGS (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS2,868 — (23)
NET LOSS ATTRIBUTABLE TO THE MARCUS CORPORATION$(11,972)$(43,293)$(124,843)
NET LOSS PER SHARE – BASIC:
Common Stock$(0.39)$(1.42)$(4.13)
Class B Common Stock(0.35)(1.25)(3.74)
NET LOSS PER SHARE – DILUTED:
Common Stock$(0.39)$(1.42)$(4.13)
Class B Common Stock(0.35)(1.25)(3.74)
See accompanying notes.

56

58

The Marcus Corporation

Consolidated Statements

THE MARCUS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(LOSS)

(in thousands)

  

 Year Ended

 
  December 26,  December 27,  December 28, 
  2019  2018  2017 
NET EARNINGS $42,115  $53,465  $64,485 
OTHER COMPREHENSIVE INCOME (LOSS):            
Change in unrealized gain on available for sale investments, net of tax benefit of $0, $0 and $9, respectively  –   –   (14)
Pension gain (loss) arising during period, net of tax effect (benefit) of $(1,833), $708 and $(1,685), respectively  (5,484)  1,925   (2,559)
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $109, $167 and $142, respectively  327   454   214 
Fair market value adjustment of interest rate swap, net of tax benefit of $300, $115 and $0, respectively(Note 7)  (853)  (313)  – 
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect of $44, $59 and $0, respectively(Note 7)  120   164   – 
Other comprehensive income (loss)  (5,890)  2,230   (2,359)
COMPREHENSIVE INCOME  36,225   55,695   62,126 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS  98   74   (511)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE MARCUS CORPORATION $36,127  $55,621  $62,637 

Year Ended
December 29,
2022		December 30,
2021		December 31,
2020
NET LOSS$(9,104)$(43,293)$(124,866)
OTHER COMPREHENSIVE INCOME (LOSS):
Pension gain (loss) arising during the period, net of tax effect (benefit) of $2,967, $687 and $(993), respectively (Note 10)
8,401 1,943 (2,813)
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $269, $342 and $259, respectively (Note 10)
760 969 732 
Fair market value adjustment of interest rate swaps, net of tax effect (benefit) of $144, $9 and $(335), respectively (Note 7)
407 25 (949)
Reclassification adjustment on interest rate swaps included in interest expense, net of tax effect of $64, $195 and $263 respectively (Note 7)
182 552 745 
Other comprehensive income (loss)9,750 3,489 (2,285)
COMPREHENSIVE INCOME (LOSS)646 (39,804)(127,151)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS2,868 — (23)
COMPREHENSIVE LOSS ATTRIBUTABLE TO THE MARCUS CORPORATION$(2,222)$(39,804)$(127,128)
See accompanying notes.

57

59

THE MARCUS CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except per share data)

  Common
Stock		  Class B
Common
Stock		  

Capital
in Excess

of Par

  

Retained

Earnings

  Accumulated
Other
Comprehensive
Income (Loss)		  Treasury
Stock		  Shareholders’
Equity
Attributable
to The
Marcus
Corporation		  Non-
controlling
Interests		  Total
Equity		 
BALANCES AT DECEMBER 29, 2016 $22,490  $8,700  $58,584  $351,220  $(5,066) $(45,816) $390,112  $1,535  $391,647 
Cash dividends:                                    
$.45 per share Class B Common Stock  –   –   –   (3,929)  –   –   (3,929)  –   (3,929)
$.50 per share Common Stock  –   –   –   (9,575)  –   –   (9,575)  –   (9,575)
Exercise of stock options  –   –   105   –   –   2,166   2,271   –   2,271 
Purchase of treasury stock  –   –   –   –   –   (850)  (850)  –   (850)
Savings and profit-sharing contribution  –   –   600   –   –   424   1,024   –   1,024 
Reissuance of treasury stock  –   –   253   –   –   176   429   –   429 
Issuance of non-vested stock  –   –   (501)  –   –   501   –   –   – 
Share-based compensation  –   –   2,411   –   –   –   2,411   –   2,411 
Purchase of noncontrolling interest  –   –   –   494   –   –   494   (904)  (410)
Conversions of Class B Common Stock  166   (166)  –   –   –   –   –   –   – 
Distributions to noncontrolling interest  –   –   –   –   –   –   –   (20)  (20)
Comprehensive income (loss)  –   –   –   64,996   (2,359)  –   62,637   (511)  62,126 
BALANCES AT DECEMBER 28, 2017  22,656   8,534   61,452   403,206   (7,425)  (43,399)  445,024   100   445,124 
Amount reclassified to retained earnings on December 29, 2017 in connection with the adoption of ASU No. 2016-01  -   -   -   (11)  11   -   -   -   - 
Amount reclassified to retained earnings on December 29, 2017 in connection with the adoption of ASU No. 2018-02  -   -   -   1,574   (1,574)  -   -   -   - 
Amount reclassified to retained earnings on December 29, 2017 in connection with the adoption of ASU No. 2014-09  -   -   -   (2,568)  -   -   (2,568)  -   (2,568)
BALANCES AT DECEMBER 29, 2017  22,656   8,534   61,452   402,201   (8,988)  (43,399)  442,456   100   442,556 
Cash dividends:                                    
$.55 per share Class B Common Stock  -   -   -   (4,603)  -   -   (4,603)  -   (4,603)
$.60 per share Common Stock  -   -   -   (11,811)  -   -   (11,811)  -   (11,811)
Exercise of stock options  -   -   (736)  -   -   7,784   7,048   -   7,048 
Purchase of treasury stock  -   -   -   -   -   (2,898)  (2,898)  -   (2,898)
Savings and profit-sharing contribution  -   -   651   -   -   479   1,130   -   1,130 
Reissuance of treasury stock  -   -   231   -   -   144   375   -   375 
Issuance of non-vested stock  -   -   (459)  -   -   459   -   -   - 
Share-based compensation  -   -   2,691   -   -   -   2,691   -   2,691 
Conversions of Class B Common Stock  187   (187)  -   -   -   -   -   -   - 
Distributions to noncontrolling interest  -   -   -   -   -   -   -   (64)  (64)
Comprehensive income  -   -   -   53,391   2,230   -   55,621   74   55,695 
BALANCES AT DECEMBER 27, 2018  22,843   8,347   63,830   439,178   (6,758)  (37,431)  490,009   110   490,119 
Cash dividends:                                    
$.58 per share Class B Common Stock  -   -   -   (4,648)  -   -   (4,648)  -   (4,648)
$.64 per share Common Stock  -   -   -   (14,663)  -   -   (14,663)  -   (14,663)
Exercise of stock options  -   -   (205)  -   -   1,725   1,520   -   1,520 
Purchase of treasury stock  -   -   -   -   -   (1,119)  (1,119)  -   (1,119)
Savings and profit-sharing contribution  -   -   810   -   -   371   1,181   -   1,181 
Reissuance of treasury stock  -   -   267   -   -   150   417   -   417 
Issuance of non-vested stock  -   -   (527)  -   -   527   -   -   - 
Share-based compensation  -   -   3,523   -   -   -   3,523   -   3,523 
Reissuance of treasury stock - acquisition  -   -   77,960   -   -   31,237   109,197   -   109,197 
Other  -   -   (109)  -   -   -   (109)  -   (109)
Conversions of Class B Common Stock  411   (411)  -   -   -   -   -   -   - 
Distributions to noncontrolling interest  -   -   -   -   -   -   -   (185)  (185)
Comprehensive income (loss)  -   -   -   42,017   (5,890)  -   36,127   98   36,225 
BALANCES AT DECEMBER 26, 2019 $23,254  $7,936  $145,549  $461,884  $(12,648) $(4,540) $621,435  $23  $621,458 

Common
Stock		Class B
Common
Stock		Capital
in Excess
of Par		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Shareholders'
Equity
Attributable to The Marcus
Corporation		Non-Controlling
Interests		Total
Equity
BALANCES AT DECEMBER 26, 2019$23,254 $7,936 $145,549 $461,884 $(12,648)$(4,540)$621,435 $23 $621,458 
Cash dividends:
$0.15 per share Class B Common Stock— — — (1,224)— — (1,224)— (1,224)
$0.17 per share Common Stock— — — (3,921)— — (3,921)— (3,921)
Exercise of stock options— — (67)— — 446 379 — 379 
Purchase of treasury stock— — — — — (696)(696)— (696)
Savings and profit-sharing contribution— — 299 — — 1,016 1,315 — 1,315 
Reissuance of treasury stock— — (21)— — 183 162 — 162 
Issuance of non-vested stock— — (631)— — 631 — — — 
Share-based compensation— — 4,385 — — — 4,385 — 4,385 
Equity component of issuance of convertible notes, net of tax and issuance costs— — 16,511 — — — 16,511 — 16,511 
Capped call transactions, net of tax— — (12,495)— — — (12,495)— (12,495)
Other— — (1)1 — — — — — 
Conversions of Class B Common Stock10 (10)— — — — — — — 
Comprehensive loss— — — (124,843)(2,285)— (127,128)(23)(127,151)
BALANCES AT DECEMBER 31, 202023,264 7,926 153,529 331,897 (14,933)(2,960)498,723 — 498,723 
Cash dividends:
Adoption of ASU No. 2020-06 (Note 1)
— — (16,511)702 — — (15,809)— (15,809)
Exercise of stock options— — (749)— — 2,279 1,530 — 1,530 
Purchase of treasury stock— — — — — (1,391)(1,391)— (1,391)
Savings and profit-sharing contribution43 — 968 — — — 1,011 — 1,011 
Reissuance of treasury stock— — 6 — — 32 38 — 38 
Issuance of non-vested stock242 — (903)— — 661 — — — 
Share-based compensation— — 9,316 — — — 9,316 — 9,316 
Conversions of Class B Common Stock796 (796)— — — — — — — 
Comprehensive income (loss)— — — (43,293)3,489 — (39,804)— (39,804)
BALANCES AT DECEMBER 30, 202124,345 7,130 145,656 289,306 (11,444)(1,379)453,614 — 453,614 
Cash dividends:
$0.09 per share Class B Common Stock— — — (640)— — (640)— (640)
$0.10 per share Common Stock— — — (2,440)— — (2,440)— (2,440)
Exercise of stock options— — (196)— — 1,089 893 — 893 
Purchase of treasury stock— — — — — (2,286)(2,286)— (2,286)
Savings and profit-sharing contribution56 — 900 — — — 956 — 956 
Reissuance of treasury stock— — (5)— — 57 52 — 52 
Issuance of non-vested stock78 — (731)— — 653 — — — 
Share-based compensation— — 8,170 — — — 8,170 — 8,170 
Conversions of Class B Common Stock19 (19)— — — — — — — 
Distribution to noncontrolling interest— — — — — — — (2,044)(2,044)
Comprehensive income (loss)— — — (11,972)9,750 — (2,222)2,868 646 
BALANCES AT DECEMBER 29, 2022$24,498 $7,111 $153,794 $274,254 $(1,694)$(1,866)$456,097 $824 $456,921 
See accompanying notes.

58

60

The Marcus Corporation

Consolidated Statements

THE MARCUS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

  Year Ended 
  December 26,  December 27,  December 28, 
  2019  2018  2017 
Operating activities            
Net earnings $42,115  $53,465  $64,485 
Adjustments to reconcile net earnings to net cash provided by operating activities:            
Losses (earnings) on investments in joint ventures  274   399   (46)
Distributions from joint ventures  200   65   377 
Loss (gain) on disposition of property, equipment and other assets  1,149   1,342   (3,981)
Impairment change  1,874   –   – 
Amortization of favorable lease right  –   334   334 
Depreciation and amortization  72,277   61,342   51,719 
Amortization of debt issuance costs  285   287   308 
Share-based compensation  3,523   2,691   2,411 
Deferred income taxes  9,111   3,247   (6,438)
Deferred compensation and other  1,011   3,339   911 
Contribution of the Company’s stock to savings and profit-sharing plan  1,181   1,130   1,024 
Changes in operating assets and liabilities:            
Accounts receivable  (3,781)  1,546   (8,852)
Other assets  1,102   (1,946)  (2,268)
Operating leases  (3,355)  –   – 
Accounts payable  9,733   (4,232)  15,015 
Income taxes  67   10,297   (13,663)
Taxes other than income taxes  1,664   (895)  2,377 
Accrued compensation  508   1,920   (1,380)
Other accrued liabilities  2,541   3,058   6,703 
Total adjustments  99,364   83,924   44,551 
Net cash provided by operating activities  141,479   137,389   109,036 
             
Investing activities            
Capital expenditures  (64,086)  (58,660)  (114,804)
Purchase of theatres, net of cash acquired and working capital assumed  (30,081)  –   – 
Proceeds from disposals of property, equipment and other assets  22   116   4,524 
Other investing activities  199  (429)  911 
Capital contribution in joint venture  –   (294)  (111)
Contribution received from local government  –   –   1,545 
Proceeds from sale of interests in joint ventures  –   –   6,729 
Net cash used in investing activities  (93,946)  (59,267)  (101,206)
             
Financing activities            
Debt transactions:            
Proceeds from borrowings on revolving credit facility  335,000   203,000   322,000 
Repayment of borrowings on revolving credit facility  (333,000)  (254,000)  (332,000)
Proceeds from issuance of long-term debt  –   –   65,000 
Principal payments on long-term debt  (24,620)  (12,153)  (36,300)
Principal payments on finance lease obligations  (2,544)  (1,836)  (1,986)
Debt issuance costs  –   –   (418)
Equity transactions:            
Treasury stock transactions, except for stock options  (702)  (2,523)  (421)
Exercise of stock options  1,520   7,048   2,271 
Dividends paid  (19,311)  (16,414)  (13,504)
Distributions to noncontrolling interest  (185)  (64)  (20)
Purchase of noncontrolling interest  –   –   (410)
Net cash provided by (used in) financing activities  (43,842)  (76,942)  4,212 
Net increase in cash, cash equivalents and restricted cash  3,691  1,180   12,042 
Cash, cash equivalents and restricted cash at beginning of year  21,927   20,747   8,705 
Cash, cash equivalents and restricted cash at end of year $25,618  $21,927  $20,747 
             
Supplemental Information:            
Change in accounts payable for additions to property and equipment $2,185  $(9,857) $5,320 

Year Ended
December 29,
2022		December 30,
2021		December 31,
2020
OPERATING ACTIVITIES
Net loss$(9,104)$(43,293)$(124,866)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Losses on investments in joint ventures143 92 1,539 
Distributions from joint ventures125 — — 
Gain on disposition of property, equipment and other assets(1,071)(3,163)(856)
Gain on sale of hotel(6,274)— — 
Impairment charges1,525 5,766 24,676 
Depreciation and amortization67,073 72,127 75,052 
Amortization of debt issuance costs and debt discount1,614 2,198 2,235 
Share-based compensation8,170 9,316 4,385 
Deferred income taxes7,033 (15,843)(38,836)
Other long-term obligations(209)1,689 2,969 
Contribution of the Company’s stock to savings and profit-sharing plan956 1,011 1,315 
Changes in operating assets and liabilities:
Accounts receivable6,838 (22,055)23,106 
Government grants receivable4,335 578 (4,913)
Other assets(1,874)(2,255)3,476 
Operating leases(1,768)(5,325)9,185 
Accounts payable(3,262)21,501 (32,131)
Income taxes22,722 8,508 1,467 
Taxes other than income taxes(1,621)1,258 (2,305)
Accrued compensation2,038 12,841 (10,422)
Other accrued liabilities(4,180)1,300 (3,630)
Total adjustments102,313 89,544 56,312 
Net cash provided by (used in) operating activities93,209 46,251 (68,554)
INVESTING ACTIVITIES
Capital expenditures(36,843)(17,082)(21,363)
Proceeds from disposals of property, equipment and other assets4,850 22,145 4,485 
Net proceeds from sale of hotel31,101 — — 
Capital contribution in joint venture— (2,427)(28)
Proceeds from sale of trading securities141 377 5,184 
Purchase of trading securities(263)(3,080)(801)
Property insurance recoveries1,215 — — 
Life insurance premium reimbursement— 11,411 — 
Other investing activities(547)(461)450 
Net cash provided by (used in) investing activities(346)10,883 (12,073)
FINANCING ACTIVITIES
Debt transactions:
Proceeds from borrowings on revolving credit facility100,000 178,500 221,500 
Repayment of borrowings on revolving credit facility(100,000)(178,500)(302,500)
Proceeds from short-term borrowings— — 90,800 
Repayment on short-term borrowings(47,499)(40,346)(2,955)
Proceeds from convertible senior notes— — 100,050 
Principal payments on long-term debt(35,740)(10,717)(9,447)
Proceeds received from PPP loans expected to be repaid— — 3,424 
Proceeds received from borrowing on insurance policy— 6,700 — 
Principal payments on finance lease obligations(2,670)(2,774)(2,007)
Debt issuance costs(37)(208)(7,560)
Equity transactions:
Treasury stock transactions, except for stock options(1,467)(417)(534)
Exercise of stock options126 594 379 
Capped call transactions— — (16,908)
Dividends paid(3,080)— (5,145)
Distributions to noncontrolling interest(2,044)— — 
Net cash provided by (used in) financing activities(92,411)(47,168)69,097 
Net increase (decrease) in cash, cash equivalents and restricted cash452 9,966 (11,530)
Cash, cash equivalents and restricted cash at beginning of year24,054 14,088 25,618 
Cash, cash equivalents and restricted cash at end of year$24,506 $24,054 $14,088 
Supplemental Information:
Change in accounts payable for additions to property and equipment$(348)$1,122 $(4,081)
See accompanying notes.

59

61

The Marcus Corporation

Notes to Consolidated Financial Statements

Table of Contents
THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)

1. Description of Business and Summary of Significant Accounting Policies

Description of Business - The Marcus Corporation and its subsidiaries (the “Company”) operate principally in two business segments:

Theatres: Operates multiscreen motion picture theatres in Wisconsin, Illinois, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia and a family entertainment center in Wisconsin and a retail center in Missouri.

Wisconsin.

Hotels and Resorts: Owns and operates full service hotels and resorts in Wisconsin, Illinois Oklahoma and Nebraska and manages full service hotels, resorts and other properties in Wisconsin, Illinois, Minnesota, Texas,Iowa, Nevada, Pennsylvania, California and Nebraska.

Principles of Consolidation - The consolidated financial statements include the accounts of The Marcus Corporation and all of its subsidiaries, including a 50% owned joint venture entity in which the Company has a controlling financial interest.subsidiaries. The Company has ownership interests greater than 50% in one joint venture that is considered a Variable Interest Entity (VIE) that is also included in the accounts of the Company. The Company is the primary beneficiary of the VIE and the Company’s interest is considered a majority voting interest. The primary asset of this VIE, The Skirvin Hilton, was sold on December 16, 2022 as discussed in Note 5 - Asset Sale. The equity interest of outside owners in consolidated entities is recorded as noncontrolling interests in the consolidated balance sheets, and their share of earnings is recorded as net earnings (losses) attributable to noncontrolling interests in the consolidated statements of earnings (loss) in accordance with the partnership agreements. In fiscal 2017, the Company purchased the noncontrolling interest of a joint venture from its former partner.

Investments in affiliates which are 50% or less owned by the Company for which the Company exercises significant influence but does not have control are accounted for on the equity method. The Company has investments in equity investments without readily determinable fair values, which represents investments in entities where the Company does not have the ability to significantly influence the operations of the entities.

All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

60

The Marcus Corporation

Notes to Consolidated Financial Statements

1. Description of Business and Summary of Significant Accounting Policies (continued)

Change in Accounting Policies – The Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-02,Leases,(Topic 842), on the first day of fiscal 2019. These lease policy updates were applied prospectively in the Company’s financial statements from December 28, 2018 forward. Reported financial information for the historical comparable periods was not revised and continues to be reported under the accounting standards in effect during the historical periods. See Note 8 for further discussion.

The Company adopted ASU No. 2014-09,Revenue from Contracts with Customers, on the first day of fiscal 2018. These revenue recognition policy updates were applied prospectively in the Company’s financial statements from December 29, 2017 forward. Reported financial information for the historical comparable period was not revised and continues to be reported under the accounting standards in effect during the historical period. See Note 2 for further discussion.

Cash Equivalents - The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value.

Restricted Cash - Restricted cash consists of bank accounts related to capital expenditure reserve funds, sinking funds, operating reserves and replacement reserves and may include amounts held by a qualified intermediary agent to be used for tax-deferred, like-kind exchange transactions.

Restricted cash also includes funds held within the Company's captive insurance entity that are designated to pay expenses related specifically to the captive.

Fair Value Measurements - Certain financial assets and liabilities are recorded at fair value in the financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.


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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Description of Business and Summary of Significant Accounting Policies (continued)
The Company’s assets and liabilities measured at fair value are classified in one of the following categories:

Level 1 - Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At December 26, 201929, 2022 and December 27, 2018,30, 2021, respectively, the Company’s $5,825,000$3,932 and $5,302,000$4,617 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets.

At December 29, 2022 and December 30, 2021, the Company had investments in money market funds of $6,000 and $5,000, respectively, that were valued using Level 1 pricing inputs and were included in cash and cash equivalents.

Level 2 - Assets or liabilities for which fair value is based on valuation models for which pricing inputs were either directly or indirectly observable as of the reporting date. At December 26, 201929, 2022 and December 27, 2018,30, 2021, the Company’s $108 asset and $689 liability, respectively, the $1,194,000 and $205,000 liability related to the Company’s interest rate hedge contracts werecontract was valued using Level 2 pricing inputs.

Level 3 - Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At December 26, 201929, 2022 and December 27, 2018,30, 2021, none of the Company’s recorded assets or liabilities that are measured on a recurring basis at fair market value were valued using Level 3 pricing inputs. Assets and liabilities that are measured on a non-recurring basis are discussed in Note 34 and Note 4.

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7.

The Marcus Corporation

Notes to Consolidated Financial Statements

1. Description of Business and Summary of Significant Accounting Policies (continued)

The carrying value of the Company’s financial instruments (including cash and cash equivalents, restricted cash, accounts receivable and accounts payable) approximates fair value. The fair value of the Company’s $109,000,000$80,000 of senior notes, valued using Level 2 pricing inputs, is approximately $110,985,000$71,328 at December 26, 2019,29, 2022, determined based upon discounted cash flows using current market interest rates for financial instruments with a similar average remaining life. The fair value of the Company's $100,050 of convertible senior notes, valued using Level 2 pricing inputs, is approximately $145,389 at December 29, 2022, determined based on market rates and the closing trading price of the convertible senior notes as of December 29, 2022 (see Note 7 for further discussion on the Company’s senior notes and convertible senior notes). The carrying amounts of the Company’s remaining long-term debt approximate their fair values, determined using current rates for similar instruments, or Level 2 pricing inputs.

Accounts Receivable -The Company evaluates the collectibility of its accounts receivable based on a number of factors. For larger accounts, an allowance for doubtful accounts is recorded based on the applicable parties’ ability and likelihood to pay based on management’s review of the facts. For all other accounts, the Company recognizes an allowance based on length of time the receivable is past due based on historical experience and industry practice.

practice.

Inventory - Inventories, consisting of food and beverage and concession items, are stated at the lower of cost or market. Cost has been determined using the first-in, first-out method. Inventories of $5,673,000$5,662 and $4,138,000$4,913 as of December 26, 201929, 2022 and December 27, 2018,30, 2021, respectively, were included in other current assets.

Assets Held for Sale – Long-lived assets that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as assets held for sale and included within current assets on the consolidated balance sheet. Assets held for sale are measured at the lower of their carrying value or their fair value less costs to sell the asset. As of December 29, 2022, assets held for sale consists primarily of land.
Property and Equipment - The Company records property and equipment at cost. Major renewals and improvements are capitalized, while maintenance and repairs that do not improve or extend the lives of the respective assets are expensed currently. Included in property and equipment are assets related to finance leases. These assets are depreciated over the shorter of the estimated useful lives or related lease terms.

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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Description of Business and Summary of Significant Accounting Policies (continued)
Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the following estimated useful lives or any related lease terms:

Years
Years
Land improvements10 - 20
Buildings and improvements12 - 39
Leasehold improvements3 - 40
Furniture, fixtures and equipment32 - 20
Finance lease right-of-use assets4 - 15

Depreciation expense totaled $72,244,000, $61,470,000$67,041, $72,044 and $51,542,000$75,067 for fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively.

Long-Lived Assets - The Company periodically considers whether indicators of impairment of long-lived assets held for use are present. This includes quantitative and qualitative factors, including evaluating the historical actual operating performance of the long-lived assets and assessing the potential impact of recent events and transactions impacting the long-lived assets. If such indicators are present, the Company determines if the long-lived assets are recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. If the long-lived assets are not recoverable, the Company recognizes any impairment losses based on the excess of the carrying amount of the assets over their fair value. For the purpose of determining fair value, defined as the amount at which an asset or group of assets could be bought or sold in a current transaction between willing parties,During fiscal 2022 and fiscal 2021, the Company utilizes currently available market valuationsdetermined that indicators of similar assets in its respective industries, often expressed as a given multiple of operating cash flow. Theimpairment were present. As such, the Company evaluated the value of its property and equipment during fiscal 2019, fiscal 2018 and fiscal 2017 and the value of its operating lease right-of-use assets during fiscal 2019 and determined that there was no impact on the Company’s results of operations, other than therecorded impairment chargecharges in as discussed in Note 3.

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4.

The Marcus Corporation

Notes to Consolidated Financial Statements

1. Description of Business and Summary of Significant Accounting Policies (continued)

Acquisition - The Company recognizes identifiable assets acquired, liabilities assumed and noncontrolling interests assumed in an acquisition at their fair values at the acquisition date based upon all information available to it, including third-party appraisals. Acquisition-related costs, such as due diligence and legal fees, are expensed as incurred. The excess of the acquisition cost over the fair value of the identifiable net assets is reported as goodwill.

Goodwill - The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the lastfirst day of its fiscal year. The Company believes performing the test at the end of the fiscal year is preferable as the test is predicated on qualitative factors which are developed and finalized near fiscal year-end.fourth quarter. Goodwill is tested for impairment at a reporting unit level, determined to be at an operating segment level. When reviewing goodwill for impairment, the Company considers the amount of excess fair value over the carrying value of the reporting unit, the period of time since its last quantitative test, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. Examples of qualitative factors that the Company assesses include its share price, its financial performance, market and competitive factors in its industry, and other events specific to the reporting unit. If the Company concludes that it is more likely than not that the fair value of its reporting unit is less than itsit carrying value, the Company performs a two-step quantitative impairment test by comparing the carrying value of the reporting unit to the estimated fair value. No
During fiscal 2022 and fiscal 2021, the Company performed a quantitative analysis for its annual goodwill impairment test as of September 30, 2022 and October 1, 2021, respectively. In order to determine fair value, the Company used assumptions based on information available to it as the date of the quantitative test, including both market data and forecasted cash flows (Level 3 pricing inputs). The Company determined that the fair value of its goodwill was greater than its carrying value and deemed that no impairment was identified asindicated in either fiscal 2022 or fiscal 2021.
At December 29, 2022 and December 30, 2021, the Company’s goodwill balance was $75,015 and $75,095, respectively. The change in goodwill is due to a deferred tax adjustment related to the prior acquisition of December 26, 2019 or December 27, 2018. The Company has never recorded a goodwill impairment loss.

A summarybusiness. Substantially all of the Company’s goodwill activity is as follows:

  December 26,
2019		  December 27,
2018		  December 28,
2017		 
  (in thousands) 
Balance at beginning of period $43,170  $43,492  $43,735 
Acquisition  32,205   –   – 
Sale  –   –   (105)
Deferred tax adjustment  (93)  (322)  (138)
Balance at end of period $75,282  $43,170  $43,492 

relates to the theatre reporting unit.

Trade Name Intangible Asset –The Company acquiredrecorded a trade name intangible asset in conjunction with the Movie Tavern acquisition (see Note 4) that was determined to have an indefinite life. The Company will reviewreviews its trade name intangible asset for
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Description of Business and Summary of Significant Accounting Policies (continued)
impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. The Company will perform its annual impairment test on the last day of itsDuring fiscal year. Under ASC Topic 350,2020, the Company can elect to perform a qualitative or quantitativedetermined that indicators of impairment assessment forwere present. As such, the Company evaluated the value of its trade name intangible asset. The Company will first assess the qualitative factors to determine whether the existence of eventsasset and circumstances indicate that is it more likely than not that the fair value of the indefinite-lived asset is less than its carrying amountrecorded an impairment charge during fiscal 2020 as a basis for determining whether it is necessary to perform the quantitative impairment test. No impairment was identified as of December 26, 2019.

discussed in Note 4.

Capitalization of Interest - The Company capitalizes interest during construction periods by adding such interest to the cost of constructed assets. Interest of approximately $53,000, $65,000$18, $23 and $400,000$48 was capitalized in fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively.

Debt Issuance Costs - The Company records debt issuance costs on short-term borrowings and long-term debt as a direct deduction from the related debt liability. Debt issuance costs related to the Company’s revolving credit facility are included in other long-term assets. Debt issuance costs are deferred and amortized over the term of the related debt agreements. Amortization of debt issuance costs and amortization of debt discount totaled $285,000, $287,000$1,614, $2,198 and $308,000$2,235 for fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively, and were included in interest expense on the consolidated statements of earnings.

earnings (loss).

Leases – - The Company adopted ASUfollows Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-02,Leases, on the first day of fiscal 2019.(Accounting Standards Codification (ASC) 842), when accounting for leases. See Note 8 for further discussion.

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- Leases.

The Marcus Corporation

Notes to Consolidated Financial Statements

1. Description of Business and Summary of Significant Accounting Policies (continued)

Investments – The Company has investments in debt and equity securities. These securities are stated at fair value based on listed market prices, where available, with the change in fair value recorded as investment income or loss within the consolidated statements of earnings.earnings (loss). The cost of securities sold is based upon the specific identification method.

Revenue Recognition - The Company adopted ASU No. 2014-09,recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, on the first day of fiscal 2018.. See Note 2 for further discussion.

3 - Revenue Recognition.

Advertising and Marketing Costs - The Company expenses all advertising and marketing costs as incurred.

Insurance Reserves - The Company uses a combination of insurance and self insurance mechanisms, including participation in captive insurance entities, to provide for the potential liabilities for certain risks, including workers’ compensation, healthcare benefits, general liability, property insurance, director and officers’ liability insurance, cyber liability, employment practices liability and business interruption. Liabilities associated with the risks that are retained by the company are not discounted and are estimated, in part, by considering historical claims experience, demographic factors and severity factors.

Income Taxes -The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in the future tax returns for which the Company has already properly recorded the tax benefit in the income statement. The Company regularly assesses the probability that the deferred tax asset balance will be recovered against future taxable income, taking into account such factors as earnings history, carryback and carryforward periods, and tax strategies. When the indications are that recovery is not probable, a valuation allowance is established against the deferred tax asset, increasing income tax expense in the year that conclusion is made.

The Company assesses income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. See Note 11 - Income Taxes.

Earnings (Loss) Per Share- Net earnings (loss) per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Description of Business and Summary of Significant Accounting Policies (continued)
options and convertible debt instruments using the treasuryif-converted method. Convertible Class B Common Stock isand convertible debt instruments are reflected on an if-converted basis.basis when dilutive to Common Stock. The computation of the diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock in periods that have net earnings since it would be dilutive to Common Stock earnings per share, while the diluted net earnings (loss) per share of Class B Common Stock does not assume the conversion of those shares.

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The Marcus Corporation

Notes to Consolidated Financial Statements

1. Description of Business and Summary of Significant Accounting Policies (continued)

Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of the Class B Common Stock. As such, the undistributed earnings (losses) for each yearperiod are allocated based on the proportionate share of entitled cash dividends. The computation of diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock and, as such, the undistributed earnings are equal to net earnings for that computation.

The following table illustrates the computation of Common Stock and Class B Common Stock basic and diluted net earnings (loss) per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

  Year Ended 
  

December 26,
2019

  

December 27,
2018

  December 28,
2017		 
  (in thousands, except per share data) 
Numerator:            
Net earnings attributable to The Marcus Corporation $42,017  $53,391  $64,996 
             
Denominator:            
Denominator for basic EPS  30,656   28,105   27,789 
Effect of dilutive employee stock options  496   608   614 
Denominator for diluted EPS  31,152   28,713   28,403 
             
Net earnings per share – Basic:            
Common Stock $1.44  $1.96  $2.42 
Class B Common Stock $1.25  $1.75  $2.17 
Net earnings per share- Diluted:            
Common Stock $1.35  $1.86  $2.29 
Class B Common Stock $1.24  $1.72  $2.13 

Options

Year Ended
December 29,
2022		December 30,
2021		December 31,
2020
Numerator:
Net loss attributable to The Marcus Corporation$(11,972)$(43,293)$(124,843)
Denominator (in thousands):
Denominator for basic EPS31,488 31,360 31,042 
Effect of dilutive employee stock options— — — 
Effect of convertible notes— — — 
Denominator for diluted EPS31,488 31,360 31,042 
Net loss per share – Basic:
Common Stock$(0.39)$(1.42)$(4.13)
Class B Common Stock$(0.35)$(1.25)$(3.74)
Net loss per share- Diluted:
Common Stock$(0.39)$(1.42)$(4.13)
Class B Common Stock$(0.35)$(1.25)$(3.74)
For the periods when the Company reports a net loss, common stock equivalents are excluded from the computation of diluted loss per share as their inclusion would have an antidilutive effect.
At December 29, 2022, December 30, 2021 and December 31, 2020, respectively, approximately 75,000, 104,000 and 76,000 common stock equivalents were excluded from the computation of diluted net loss per share because of the Company’s net loss. At December 29, 2022, December 30, 2021 and December 31, 2020, approximately 9,141,140, 9,084,924 and 9,084,924 common stock equivalents underlying the conversion of the convertible senior notes were excluded from the computation of diluted net loss per share because of the Company’s net loss. Additionally, options to purchase 324,0002,547,000 shares, 16,0001,999,000 shares and 250,0001,706,000 shares of common stock at prices ranging from $38.51$16.32 to $41.90, $38.51$18.68 to $41.35$41.90 and $31.20$16.32 to $31.55$41.90 per share were outstanding at December 26, 2019,29, 2022, December 27, 201830, 2021 and December 28, 2017,31, 2020, respectively, but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares, and therefore, the effect would be antidilutive.

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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Description of Business and Summary of Significant Accounting Policies (continued)
Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:

  December 26, 2019  December 27, 2018 
  (in thousands) 
Unrecognized loss on interest rate swap agreements $(882)  (149)
Net unrecognized actuarial loss for pension obligation  (11,766)  (6,609)
  $(12,648) $(6,758)

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December 29, 2022December 30, 2021
Unrecognized gain (loss) on interest rate swap agreements$80 (509)
Net unrecognized actuarial loss for pension obligation(1,774)(10,935)
$(1,694)$(11,444)

The Marcus Corporation

Notes to Consolidated Financial Statements

1. Description of Business and Summary of Significant Accounting Policies (continued)

Concentration of Risk - As of December 26, 2019, 6% of the Company’s employees were covered by a collective bargaining agreement, of which 15% were covered by an agreement that will expire within one year. As of December 27, 2018, 7% of the Company’s employees were covered by a collective bargaining agreement, of which 96% were covered by an agreement that will expire within one year.

New Accounting Pronouncements – In January 2017, - During the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04,Intangibles - Goodwill and Other (Topic 350) - Simplifyingfirst quarter of fiscal 2022, the Test for Goodwill Impairment, which eliminates Step 2 of the goodwill impairment test that had required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.Company adopted ASU No. 2017-04 is effective for2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in this update provide increased transparency of government assistance including the Companyrequirement of certain disclosures in fiscal 2020 and must be applied prospectively.a company’s notes to the consolidated financial statements about transactions with a government. The Company does not believeadoption of the new standard did not have a material effect on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions to the existing guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR), or other interbank offered rates, to alternative reference rates such as the Secured Overnight Financing Rate (SOFR). ASU No. 2020-14 is optional, effective immediately, and may be elected over time as reference rate reform activities occur, generally through December 31, 2024. During the first quarter of fiscal 2023, in conjunction with the execution of the fifth amendment to the Company’s credit agreement (see Note 7), the Company elected SOFR as its ongoing reference rate. The Company believes that adoption of the new standard will not have a material effect on its consolidated financial statements.

In August 2018,

On January 1, 2021, the FASB issuedCompany adopted ASU No. 2018-14,Compensation—Retirement Benefits—Defined Benefit Plans—General, designed to add, remove2020-06, Debt - Debt with Conversion and clarify disclosure requirements related to defined benefit pensionOther Options (Subtopic 470-20) and other postretirement plans.Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. ASU No. 2018-142020-06 is effective for the Company in fiscal 2020 and early application is permitted. The Company does not believe the new standard will have a material effect on its consolidated financial statement disclosures.

In August 2018, the FASB issued ASU No. 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The purpose of ASU No. 2018-13 is to improve the disclosures related to fair value measurements in the financial statements. The improvements include the removal, modification and addition of certain disclosure requirements primarily related to Level 3 fair value measurements. ASU No. 2018-13 is effective for the Company in fiscal 2020. The amendments in ASU No. 2018-13 should be applied prospectively. The Company does not expect ASU No. 2018-13 to have a significant impact on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12,Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU No. 2019-12 are designed to simplify the accounting for income taxes by removing certain exceptionsfinancial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. The amendments remove the separation models in ASC 470-20 for certain contracts. As a result, embedded conversion features are not presented separately in equity, rather, the contract is accounted for as a single liability measured at its amortized cost.

The Company adopted ASU No. 2020-06 using a modified retrospective method of transition. As such, the Company recorded a one-time cumulative effect adjustment to the general principles in Topic 740. The amendments also improve consistent application ofbalance sheet and simplify generally accepted accounting principles for other areas of Topic 740 by clarifying and amending existing guidance. ASU No. 2019-12 is effectivethe reported financial information for the historical comparable periods will not be revised and will continue to be reported under the accounting standard in effect during the historical periods. The Company recorded a one-time cumulative effect adjustment to the balance sheet on January 1, 2021 as follows:
Balance atCumulativeBalance at
December 31, 2020adjustmentJanuary 1, 2021
Long-term debt$193,036 $21,393 $214,429 
Deferred income taxes33,429 (5,584)27,845 
Capital in excess of par153,529 (16,511)137,018 
Retained earnings331,897 702 332,599 

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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Impact of COVID-19 Pandemic
The COVID-19 pandemic had an unprecedented impact on the world and both of the Company’s business segments. As an operator of movie theatres, hotels and resorts, restaurants and bars, each of which consists of spaces where customers and guests gather in close proximity, the Company’s businesses were significantly impacted by protective actions that federal, state and local governments took to control the spread of the pandemic, and customers’ reactions or responses to such actions. The extent of these protective actions and their impact on the Company’s businesses dissipated throughout fiscal 2022.
The Company began fiscal 2022 with all of its theatres open with normal operating days and hours. While still below pre-COVID-19 levels, attendance has continued to gradually improve as the number of vaccinated individuals increased, more films are released, and customers indicate increasing willingness to return to movie theatres.
The Company began fiscal 2022 with all eight of its company-owned and managed hotels open. All of the Company’s restaurants and bars in its hotels and resorts were open during the majority of fiscal 2022, operating in some cases with reduced operating hours. The majority of the Company’s hotels and restaurants are now generating revenues at or above pre-pandemic levels, while at certain hotels that primarily serve group business, revenues remain below pre-pandemic levels with improving occupancy and business travel activity increasing.
During fiscal 2022 and fiscal 2021, the Company received $22,959 and $1,800, respectively, of federal income tax refunds (including $636 of interest) related to its fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. During fiscal 2020 and fiscal 2021, the Company received $31,500 and $5,900, respectively, of tax refunds from its fiscal 2019 tax return. The Company also generated additional income tax loss carryforwards during fiscal 2021 that will benefit future years.
During the fourth quarter of fiscal 2020 and continuing into fiscal 2021, a number of states elected to provide grants to certain businesses most impacted by the COVID-19 pandemic. The Company received $8,100 of these grants in fiscal 2021 and early application is permitted. The Company is currently evaluating$4,335 in state grants during fiscal 2022 that were awarded and accrued during the effect the new standard will have on its consolidated financial statements.

Onfourth quarter of fiscal 2021.

As of December 28, 2018,29, 2022, the Company adopted ASU No. 2016-02,Leases (Topic 842), which is intended to improve financial reporting related to leasing transactions. ASC 842 requires a lessee to recognize on the balance sheet assetshad cash and liabilities for rightscash equivalents of $21,704 and obligations created by leased assets$221,809 of availability under its $225,000 revolving credit facility. With this strong liquidity position, combined with lease terms of more than 12 months. The new guidance also requires disclosures to help investorscash generated from operations and other financial statement users better understand the amount, timing and uncertainty of cash flows arisingproceeds from the leases. See Note 8 for further discussion.

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sale of surplus real estate, the Company believes that it is positioned to meet its obligations as they come due and continue to sustain its operations throughout fiscal 2023 and beyond, even if its properties continue to generate reduced revenues during these periods.

The Marcus Corporation

Notes to Consolidated Financial Statements

2.

3. Revenue Recognition

Revenue Recognition Policy

Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance of obligations by transferring the promised services to the customer. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
3. Revenue Recognition (continued)
control over the promised service. The amount of revenue recognized reflects the consideration entitled to in exchange for those services.

Thedisaggregation of revenues by business segment for fiscal 20192022, fiscal 2021 and fiscal 20182020 is as follows (in thousands):

  Fiscal 2019 
  Reportable Segment 
  Theatres  

Hotels/
Resorts

  Corporate  Total 
Theatre admissions $284,141  $–  $–  $284,141 
Rooms  –   105,857   –   105,857 
Theatre concessions  231,237   –   –   231,237 
Food and beverage  –   74,665   –   74,665 
Other revenues(1)  40,825   46,547   433   87,805 
Cost reimbursements  877   36,281   –   37,158 
Total revenues $557,080  $263,350  $433  $820,863 

  Fiscal 2018 
  Reportable Segment 
  Theatres  Hotels/
Resorts		  Corporate  Total 
Theatre admissions $246,385  $–  $–  $246,385 
Rooms  –   108,786   –   108,786 
Theatre concessions  166,564   –   –   166,564 
Food and beverage  –   72,771   –   72,771 
Other revenues(1)  32,563   45,342   424   78,329 
Cost reimbursements  1,292   32,993   –   34,285 
Total revenues $446,804  $259,892  $424  $707,120 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered contract revenue from contracts with customers under ASC No. 2014-09.

follows:

Fiscal 2022
Reportable Segment
TheatresHotels/ResortsCorporateTotal
Theatre admissions$198,485 $— $— $198,485 
Rooms— 107,699 — 107,699 
Theatre concessions180,180 — — 180,180 
Food and beverage— 74,836 — 74,836 
Other revenues(1)
29,076 53,117 367 82,560 
Cost reimbursements— 33,634 — 33,634 
Total revenues$407,741 $269,286 $367 $677,394 
Fiscal 2021
Reportable Segment
TheatresHotels/ResortsCorporateTotal
Theatre admissions$130,740 $— $— $130,740 
Rooms— 77,650 — 77,650 
Theatre concessions118,666 — — 118,666 
Food and beverage— 47,086 — 47,086 
Other revenues(1)
21,754 43,219 358 65,331 
Cost reimbursements88 18,683 — 18,771 
Total revenues$271,248 $186,638 $358 $458,244 
Fiscal 2020
Reportable Segment
TheatresHotels/ResortsCorporateTotal
Theatre admissions$64,825 $— $— $64,825 
Rooms— 35,386 — 35,386 
Theatre concessions56,711 — — 56,711 
Food and beverage— 24,822 — 24,822 
Other revenues(1)
10,764 27,552 426 38,742 
Cost reimbursements324 16,878 — 17,202 
Total revenues$132,624 $104,638 $426 $237,688 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered contract revenue from contracts with customers under ASC 606.

The Company recognizes revenue from its rooms as earned on the close of business each day. Revenue from theatre admissions, theatre concessions and food and beverage sales are recognized at the time of sale.

Revenues from advanced ticket and gift card sales are recorded as deferred revenue and are recognized when tickets or gift cards are redeemed. Gift card breakage income is recognized based upon historical redemption patterns and represents the balance of gift cards for which the Company believes the likelihood of redemption by the customer is remote. Gift card breakage income is recorded in other revenues in the consolidated statements of earnings. The adoptionearnings (loss).
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Table of ASU No. 2014-09 did not have an effect on how revenue is recognized for these arrangements.

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Contents

THE MARCUS CORPORATION

The Marcus Corporation

Notes to Consolidated Financial Statements

2.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
3. Revenue Recognition (continued)

Other revenues include management fees for theatres and hotels under management agreements. The management fees are recognized as earned based on the terms of the agreements. The management fees include variable consideration that is recognized based on the Company’s right to invoice as the amount invoiced corresponds directly to the value transferred to the customer. Other revenues also include family entertainment center revenues and revenues from Hotels/Resorts outlets such as spa, ski, golf and parking, each of which are recognized at the time of sale. In addition, other revenues include pre-show advertising income in the Company’s theatres. Pre-show advertising revenue includes variable consideration, primarily based on attendance levels, that is allocated to distinct time periods that make up the overall performance obligation. The adoption of ASU No. 2014-09 did not have an effect on how revenue is recognized for these arrangements.

Cost reimbursements primarily consist of payroll and related expenses at managed properties where the Company is the employer and may include certain operational and administrative costs as provided for in the Company’s contracts with owners. These costs are reimbursed back to the Company. As these costs have no added markup, the revenue and related expense have no impact on operating income (loss) or net earnings. The adoption of ASU No. 2014-09 did not have an effect on how revenue is recognized for these arrangements.

earnings (loss).

The timing of the Company’s revenue recognition may differ from the timing of payment by customers. However, the Company typically receives payment within a very short period of time of when the revenue is recognized. The Company records a receivable when revenue is recognized prior to payment and it has an unconditional right to payment. Alternatively, when payment precedes the provision for the related services, deferred revenue is recorded until the performance obligation is satisfied.

Revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales tax.

The Company had deferred revenue from contracts with customers of $43,200,000, $37,048,000$37,046, $39,144 and $36,007,000$37,307 as of December 26, 2019,29, 2022, December 27, 201830, 2021 and December 28, 2017, respectively, which includes the one-time cumulative effect adjustment to the balance sheet on the first day of fiscal 2018.31, 2020, respectively. The Company had no contract assets as of December 26, 201929, 2022 and December 27, 2018.30, 2021. During fiscal 2019,2022, the Company recognized revenue of $22,266,000$15,863 that was included in deferred revenues as of December 27, 2018.30, 2021. During fiscal 2018,2021, the Company recognized revenue of $24,840,000$13,968 that was included in deferred revenues as of December 29, 2017.31, 2020. The majority of the Company’s deferred revenue relates to non-redeemed gift cards, advanced ticket sales and the Company’s loyalty program.

As of December 26, 2019,29, 2022, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $5,117,000$2,347 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. As of December 29, 2022, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $19,492 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the tickets and gift cards are redeemed, which is expected to occur within the next two years.

As of December 26, 2019,29, 2022, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was $2,929,000$3,851 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. The Company recognizes revenue as the gift cards are redeemed, which is expected to occur within the next two years.

The majority of the Company’s revenue is recognized in less than one year from the original contract.

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The Marcus Corporation

Notes to Consolidated Financial Statements

2. Revenue Recognition (continued)

Adoption of ASU No. 2014-09

Due to adoption of ASU No. 2014-09, on the first day of

4. Impairment Charges
During fiscal 2018, the Company recorded a one-time cumulative effect adjustment to the balance sheet as follows:

  Balance at December 28,
2017		  Cumulative
Adjustment		  Balance at December 29,
2017		 
  (in thousands) 
Refundable income taxes $15,335  $945  $16,280 
Other accrued liabilities  53,291   3,296   56,587 
Deferred compensation and other  56,662   217   56,879 
Retained earnings  403,206   (2,568)  400,638 

The one-time cumulative effect adjustment to the balance sheet is due to a change in accounting for the Company’s loyalty programs. The Company offers a customer loyalty program to its theatre customers called Magical Movie Rewards. The program allows members to earn points for each dollar spent and access special offers available only to members. Therewards are redeemable at any Marcus Theatre box office, concession stand or food and beverage venue. The Company also offers a customer loyalty program to its Hotels and Resorts customers which allows members to earn points for each dollar spent in its restaurants. The rewards are redeemable at any of the Company’s hotel outlets including spas, restaurants, and golf. Under ASU No. 2014-09, the portion of Theatre admission revenues, Theatre concession revenues and Food and beverage revenues attributable to loyalty points earned by customers are deferred as a reduction of these revenues until related reward redemption. Through December 28, 2017, the Company recorded the estimated incremental cost of redeeming loyalty points at the time they were earned in Advertising and marketing expense. The change had the effect of an immaterial reduction of theatre admission revenues and a corresponding immaterial increase in theatre concession revenues with an offsetting increase in other long-term liabilities based upon historical customer reward redemption patterns.

In accordance with ASU No. 2014-09, the Company has concluded that it is the principal (as opposed to agent) in the arrangement with third-party internet ticketing companies in regards to sale of internet tickets to customers, and therefore, recognizes ticket fee revenue based on a gross transaction price. As such, internet ticket fee revenue is deferred and recognized when the related film exhibition takes place on a gross transaction price basis. Through December 28, 2017, the Company recorded internet ticket fee revenues net of third-party commission or service fees. The change had the effect of increasing other revenues and other operating expense but had no impact on net earnings or cash flows from operations.

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The Marcus Corporation

Notes to Consolidated Financial Statements

2. Revenue Recognition (continued)

The adoption of ASU No. 2014-09 had the following effect on our fiscal 2018 consolidated statement of earnings (in thousands):

  As Reported  ASU No. 2014-09
Impact		  Adjusted(1) 
Revenues:            
Theatre admissions $246,385  $(1,805) $248,190 
Theatre concessions  166,564   2,526   164,038 
Food and beverage  72,771   19   72,752 
Other revenues  78,329   4,997   73,332 
Total revenues  707,120   5,737   701,383 
             
Costs and expenses:            
Theatre operations  217,851   669   217,182 
Theatre concessions  47,522   634   46,888 
Advertising and marketing  23,775   (1,076)  24,851 
Other operating expenses  36,534   4,878   31,656 
Total costs and expenses  623,931   5,105   618,826 
             
Operating income  83,189   632   82,557 
Income taxes  13,127   125   13,002 
Net earnings attributable to The Marcus Corporation  53,391   507   52,884 

(1)The amounts reflect each affected financial statement line item as they would have been reported under US GAAP prior to the adoption of ASU No. 2014-09.

The adoption of ASU No. 2014-09 had the following effect on our consolidated balance sheet as of December 27, 2018 (in thousands):

  As Reported  ASU No. 2014-09 Impact  Adjusted(1) 
Refundable income taxes $5,983  $820  $5,163 
Total current assets  68,949   820   68,129 
Total assets  989,331   820   988,511 
Other accrued liabilities  59,645   2,782   56,863 
Total current liabilities  149,256   2,782   146,474 
Deferred compensation and other  56,908   99   56,809 
Retained Earnings  439,178   (2,061)  441,239 
Shareholders’ equity attributable to The Marcus Corporation  490,009   (2,061)  492,070 
Total equity  490,119   (2,061)  492,180 
Total liabilities and shareholders’ equity  989,331   820   988,511 

(1)The amounts reflect each affected financial statement line item as they would have been reported under US GAAP prior to the adoption of ASU No. 2014-09.

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The Marcus Corporation

Notes to Consolidated Financial Statements

2. Revenue Recognition (continued)

As part of the Company’s adoption of ASU No. 2014-09, the Company elected to use the following practical expedients: (i) not to adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company’s transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (ii) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer; (iii) to expense costs as incurred for costs to obtain contracts when the amortization period would have been one year or less, which mainly includes internal sales and development compensation; (iv) not to disclose remaining performance obligations when the remaining performance obligations have original expected durations of one year or less; and (v) not to disclose remaining performance obligations when variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a service that forms a single performance obligation (which exists in the Company’s management fee contracts and its pre-show advertising contracts).

3. Impairment Charge

In fiscal 2019,2022, the Company determined that indicators of impairment were evidentpresent at a specificcertain theatre location and thatasset groups. For certain of the theatre asset groups evaluated for impairment, the sum of the estimated undiscounted future cash flows attributable to this assetcertain theatre assets was less than itstheir carrying amount. As such, theamounts. The Company evaluated the ongoingfair value of this assetthese assets, consisting primarily of land, building, leasehold improvements, furniture, fixtures and equipment, and operating lease right-of-use assets less lease obligations, and determined that the fair value, measured using Level 3 pricing inputs (estimated(using estimated discounted cash flows including estimated sales proceeds),over the life of the primary assets) was less than itstheir carrying value and recorded impairment losses of $1,525, reducing certain property and equipment and certain operating lease right-of-use assets. The

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Table of Contents
THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
4. Impairment Charges (continued)
remaining net book value of the impaired assets was $5,229 as of December 29, 2022, excluding any applicable remaining lease obligations.
During fiscal 2021, the Company determined that indicators of impairment were present at certain theatre asset groups. For certain of the theatre asset groups evaluated for impairment, the sum of the estimated undiscounted future cash flows attributable to certain theatre assets was less than their carrying amounts. The Company evaluated the fair value of these assets, consisting primarily of land, building, leasehold improvements, furniture, fixtures and equipment, and operating lease right-pf-use assets less lease obligations, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary assets, including estimated sale proceeds) was less than their carrying value and recorded impairment losses of $5,766, reducing certain property and equipment and certain operating lease right-of-use assets. The remaining net book value of the impaired assets was $11,689 as of December 30, 2021, excluding any applicable remaining lease obligations.
In fiscal 2020, the Company determined that indicators of impairment were evident at all asset groups. For certain theatre asset groups evaluated for impairment, the sum of the estimated undiscounted future cash flows attributable to these assets was less than their carrying amounts. The Company evaluated the fair value of these assets, consisting primarily of land, building, leasehold improvements, furniture, fixtures and equipment, and operating lease right-of-use assets less lease obligations, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary assets, including estimated sale proceeds) was less than their carrying value and recorded a $1,874,000$22,076 impairment loss.less, reducing certain property and equipment and certain operating lease right-of-use assets. The remaining net book value of the impaired assets was $33,313 as of December 31, 2020, excluding any applicable remaining lease obligations.
In fiscal 2020, the Company determined that indicators of impairment were evident related to its trade name intangible asset. The Company estimated the fair value of its trade name intangible asset using an income approach, specifically the relief from royalty method, which uses certain assumptions that are Level 3 pricing inputs, including future revenues attributable to the trade name, a royalty rate (1.0% as of December 31, 2020) and a discount rate (17.0% as of December 31, 2020). During fiscal 2020, the Company determined that the fair value of the impaired asset was $808,000 as of December 26, 2019.

4. Acquisition

On February 1, 2019,less than the Company acquired 22 dine-in theatres with 208 screens located in nine Southerncarrying value and Eastern states from VSS-Southern Theatres LLC (Movie Tavern) forrecorded a total purchase price of $139,310,000, consisting of $30,000,000 in cash, subject to certain adjustments, and 2,450,000 shares of the company’s Common Stock with a value of $109,197,000, based on the Company’s closing share price as of January 31, 2019.$2,600 impairment loss. The acquisition was treated as a purchase in accordance with ASC No. 805,Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. The Company obtained assistance from a third party valuation specialist in order to assist in the determination of fair value. The Company provided assumptions to the third party valuation firm based on information available to it at the acquisition date, including both quantitative and qualitative information about the specified assets or liabilities. The Company primarily utilized the third party to accumulate comparative data from multiple sources and assemble a report that summarized the information obtained. The Company then used the information to determine fair value. The third party valuation firm was supervised by Company personnel who are knowledgeable about valuations and fair values. The Company finalized the fair values for both tangible and intangible assets and the liabilities during the fourth quarter of fiscal 2019. The following is a summary of the allocation of the purchase price (in thousands):

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The Marcus Corporation

Notes to Consolidated Financial Statements

4. Acquisition (continued)

Other current assets $4,855 
Property and equipment(1)  95,021 
Operating lease right-of-use assets  160,567 
Deferred tax asset  753 
Other (long-term assets)(2)  9,710 
Goodwill(3)  32,205 
Taxes other than income taxes  (206)
Other accrued liabilities  (3,322)
Operating lease obligations  (160,273)
Total $139,310 

(1)Amounts recorded for property and equipment include land, building, leasehold improvements and equipment.

(2)Amounts recorded primarily relate to a trade name intangible asset of $9,500,000 which the Company has determined to have an indefinite life.

(3)Amounts recorded for goodwill are expected to be deductible for tax purposes.

The purchase price paid by the Company in the acquisition resulted in recognition of goodwill because it exceeded the estimated fair value of the assets acquired and liabilities assumed. The Company paid a price in excess of estimated fair value of the assets acquired and liabilities assumed because the acquisition of Movie Tavern created an opportunity for the Company to expand into new growth markets and leverage its proven success in the theatre industry. The Company also expects to realize synergy and cost savings related to the acquisition because of purchasing and procurement economies of scale.

The above fair values of assets acquired and liabilities assumed were determined using the income and cost approaches. In many cases, the determination of the fair values required estimates about discount rates, future estimated revenues and cash flows, and other assumptions that are judgmental. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy.

A summary of the significant valuation techniques and inputs used is as follows:

Property and equipment - When estimating the fair value of property and equipment, the cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation and less any economic obsolescence adjustments.

Operating lease right-of-use assets and lease liabilities – When estimating the fair value of these lease-related balances, the Company first determined such balances under the requirement of ASC 842 (see Note 8 for further detail on accounting for leases). The operating lease right-of-use assets were then assessed for favorable and unfavorable lease terms, which were determined by comparing the rent expense-to-revenue ratio and operating cash flow margin of each lease to market comparable data. To the extent it was determined that such lease was at favorable or unfavorable terms, the adjustment to record the operating lease right-of-use assets to fair market value was determined through a discounted cash flow model and the significant assumptions include a 14% discount rate.

Trade name intangible asset – When estimating the fair value of the trade name intangible asset was $6,900 as of December 31, 2020.

5. Asset Sale
On December 16, 2022, the Company, used an income approach, specificallytogether with its noncontrolling interest joint venture partner, Skirvin Partners in Development, sold The Skirvin Hilton hotel in Oklahoma City, Oklahoma for a total sale price of $36,750. The assets sold consisted primarily of land, building, equipment and other assets. Net proceeds from the relief from royalty method.sale were approximately $31,101, net of transaction costs of $609 and retirement of a ground lease obligation of $5,040. The significant assumptions used include the estimated annual revenue, the royalty rate (1%), and a discount rate (17%).

The acquired theatres contributed approximately $125,839,000 to revenue in fiscal 2019. Excluding the impact of acquisition costs, the acquired theatres did not have a material impact on the Company’s fiscal 2019 net earnings. Acquisition costs incurred as a resultretirement of the Movie Tavern acquisitionground lease obligation resulted in the Company owning the land, which was then conveyed to the buyer. Additionally, $24,111 in mortgage debt was retired. The transaction resulted in a gain on sale of $6,274. The Skirvin Hilton revenues for fiscal 2022 through the date of sale, fiscal 2021 and fiscal 2020 were approximately $1,283,000$15,979, $12,121 and $1,507,000$7,521, respectively. The Skirvin Hilton operating loss was $387, $104 and $1,800 for fiscal 2022, fiscal 2021 and fiscal 2020 respectively. Pursuant to the terms of the partnership agreement, $2,044 was distributed to noncontrolling interests during fiscal 20192022 representing the partner’s share of net sales proceeds and fiscal 2018, respectively,partnership liquidation proceeds. The remaining amount to be distributed to noncontrolling interests is $824 as of December 29, 2022 and were expensed as incurred andis included in administrative expensenoncontrolling interests in the consolidated statements of earnings.

Assuming the Movie Tavern acquisition occurred at the beginning of fiscal 2018, unaudited pro forma revenues for the Company during fiscal2018 were $845,662,000. The Movie Tavern theatres would not have had a material impact on the Company’s fiscal 2018 net earnings. Unaudited pro forma revenues for the Company during fiscal 2019 would have been $832,349,000. The additional five weeks of Movie Tavern theatres operations would not have had a material impact on the Company’s fiscal 2019 net earnings.

5. Asset Sale

On October 20, 2017, the Company sold its 11% minority interest in The Westin® Atlanta Perimeter North in Atlanta, Georgia, and recorded a gain of $4,875,000 during the fiscal 2017 fourth quarter, which is included in Gain (loss) on disposition of property, equipment and other assets in the consolidated statement of earnings.

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balance sheet.

The Marcus Corporation

Notes to Consolidated Financial Statements

6. Additional Balance Sheet Information

The composition of accounts receivable is as follows:

  December 26, 2019  December 27, 2018 
  (in thousands) 
Trade receivables, net of allowances of $762 and $361, respectively $9,327  $8,538 
Other receivables  20,138   17,146 
  $29,465  $25,684 

December 29, 2022December 30, 2021
Trade receivables, net of allowances of $172 and $1,001, respectively$6,707 $8,981 
Other receivables14,748 19,921 
$21,455 $28,902 
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
6. Additional Balance Sheet Information (continued)
The composition of property and equipment, which is stated at cost, is as follows:

  December 26, 2019  December 27, 2018 
  (in thousands) 
Land and improvements $152,434  $150,122 
Buildings and improvements  761,511   745,886 
Leasehold improvements  164,083   98,885 
Furniture, fixtures and equipment  377,404   314,875 
Finance lease right-of-use assets  74,357   72,631 
Construction in progress  4,043   12,513 
   1,533,832   1,394,912 
Less accumulated depreciation and amortization  610,578   554,869 
  $923,254  $840,043 

December 29, 2022December 30, 2021
Land and improvements$132,285 $129,642 
Buildings and improvements729,177 756,974 
Leasehold improvements167,516 166,060 
Furniture, fixtures and equipment386,197 375,650 
Finance lease right-of-use assets29,885 75,124 
Construction in progress10,305 6,000 
1,455,365 1,509,450 
Less accumulated depreciation and amortization739,600 738,258 
$715,765 $771,192 
The composition of other assets is as follows:

  December 26, 2019  December 27, 2018 
  (in thousands) 
Split dollar life insurance policies $11,411  $11,411 
Intangible assets  10,057   890 
Favorable lease right  –   8,818 
Other assets  12,468   11,981 
  $33,936  $33,100 

December 29, 2022December 30, 2021
Intangible assets6,945 6,987 
Other assets5,946 5,702 
$12,891 $12,689 
Included in intangible assets as of December 26, 2019 is a trade name valued at $9,500,000$6,900 as of December 29, 2022 and December 30, 2021 that has an indefinite life.

As of December 28, 2018, in conjunction with the adoption of Topic 842, the Company’s favorable lease right is included in Operating lease right-of-use assets in the consolidated balance sheet. (See Note 8 for further detail.)

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The Marcus Corporation

Notes to Consolidated Financial Statements

7. Long-Term Debt

and Short-Term Borrowings

Long-term debt is summarized as follows:

  December 26, 2019  December 27, 2018 
  (in thousands, except payment data) 
Mortgage notes $24,571  $39,852 
Senior notes  109,000   118,000 
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75%  2,093   2,432 
Revolving credit agreement  81,000   79,000 
Debt issuance costs  (322)  (464)
   216,342   238,820 
Less current maturities, net of issuance costs  9,910   9,957 
  $206,432  $228,863 

December 29, 2022 December 30, 2021
Mortgage notes$— $24,388 
Senior notes80,000 90,000 
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75%954 1,356 
Convertible senior notes100,050 100,050 
Payroll Protection Program loans2,240 3,181 
Revolving credit agreement— — 
Debt issuance costs(2,807)(3,831)
   Total debt, net of debt issuance costs180,437 215,144 
Less current maturities, net of issuance costs10,432 10,967 
Long-term debt170,005 204,177 
Short-term borrowings— 47,346 
   Total debt and short-term borrowings, net of issuance costs$180,437 $262,490 
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
7. Long-Term Debt and Short-Term Borrowings (continued)
On December 16, 2022, in conjunction with the sale of a hotel, the mortgage notes were retired. The mortgage notes bothbore fixed rate and adjustable, bear interest from 3.00% to 5.03%, have and had a weighted-average rateof 4.27% at December 26, 2019 and 4.66% at December 27, 2018, and mature in fiscal years 2025 through 2043.30, 2021. The mortgage notes arewere secured by the related land, buildings and equipment.

Credit Agreement and Short-Term Borrowings
On January 9, 2020, the Company replaced its then-existing credit agreement with several banks. On April 29, 2020, the Company entered into the First Amendment, on September 15, 2020, the Company entered into the Second Amendment, on July 13, 2021, the Company entered into the Third Amendment, on July 29, 2022, the Company entered into the Fourth Amendment and on February 10, 2023, the Company entered into the Fifth Amendment (the Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment, hereinafter referred to as the “Credit Agreement”).
The $109,000,000Credit Agreement provides for a revolving credit facility that matures on January 9, 2025 with an initial maximum aggregate amount of availability of $225,000. At December 29, 2022, there were no borrowings outstanding on the revolving credit facility, which when borrowed, bear interest at LIBOR plus a margin, effectively 6.75% at December 29, 2022. Availability under the $225,000 revolving credit facility was $221,809 as of December 29, 2022 after taking into consideration outstanding letters of credit that reduce revolver availability.
In conjunction with the First Amendment, the Company added an initial $90,800 term loan facility that was scheduled to mature on September 22, 2021. In conjunction with the Third Amendment, the term loan facility was reduced to $50,000 and the maturity date was extended to September 22, 2022. On July 29, 2022, in conjunction with the Fourth Amendment, the Company repaid $46,679 of short-term borrowings, repaying in full and retiring the term loan facility maturing on September 22, 2022. Additionally, the Fourth Amendment modified the consolidated fixed charge coverage covenant, reducing the requirement to maintain a consolidated fixed charge coverage ratio of at least 3.0 to 1.0 to at least 2.5 to 1.0 starting as of the end of the fiscal quarter ending March 20, 2023, and continuing for each fiscal quarter thereafter.
During fiscal 2022 and prior to the Fifth Amendment, borrowings under the Credit Agreement generally bear interest at a variable rate equal to (i) LIBOR, subject to a 1% floor, plus a specified margin based upon the Company's consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR), subject to a 1% floor, plus a specified margin based upon the Company's consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires the Company to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on its consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment and the Second Amendment: (A) in respect of revolving loans, (1) the Company is charged a facility fee equal to 0.40% of the total revolving credit facility commitment and (2) the specified margin is 2.35% for LIBOR borrowings and 1.35% for ABR borrowings, which facility fee rate and specified margins will remain in effect until the end of the first fiscal quarter ending after the end of any period in which any portion of the term loan facility remains outstanding or the testing of any financial covenant in the Credit Agreement is suspended (the “specified period”); and (B) in respect of term loans, the specified margin is 2.75% for LIBOR borrowings and 1.75% for ABR borrowings, in each case, at all times.
Effective with the Fifth Amendment on February 10, 2023, the variable rate LIBOR benchmark in the Credit Agreement was replaced with the secured overnight financing rate (“SOFR”). Borrowings under the Credit Agreement now generally bear interest at a variable rate equal to: (i) SOFR plus a credit spread adjustment of 0.10%, subject to a 0% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires the Company to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment, the Second Amendment and the Fifth Amendment: (A) in respect of revolving loans, (1) the Company is charged a facility fee equal to 0.40% of the total revolving credit facility commitment and (2) the specified margin is 2.35% for SOFR borrowings and 1.35% for ABR borrowings, which facility
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
7. Long-Term Debt and Short-Term Borrowings (continued)
fee rate and specified margins will remain in effect until the end of the first fiscal quarter ending after the end of any period in which the testing of any financial covenant in the Credit Agreement is suspended (the “specified period”); and (B) in respect of term loans, the specified margin is 2.75% for SOFR borrowings and 1.75% for ABR borrowings, in each case, at all times.
The Credit Agreement contains various restrictions and covenants applicable to the Company. Among other requirements, the Credit Agreement (a) limits the amount of priority debt (as defined in the Credit Agreement) held by the Company’s restricted subsidiaries to no more than 20% of the Company’s consolidated total capitalization (as defined in the Credit Agreement), (b) limits the Company’s permissible consolidated debt to capitalization ratio to a maximum of 0.55 to 1.0, (c) requires the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, (d) restricts the Company’s ability to incur additional indebtedness, pay dividends and other distributions (the restriction on dividends and other distributions does not apply to subsidiaries), and make voluntary prepayments on or defeasance of the Company’s 4.02% Senior Notes due August 2025, 4.32% Senior Notes due February 2027, the notes or certain other convertible securities, (e) requires the Company’s consolidated EBITDA not to be less than or equal to $70,000 as of December 29, 2022 for the four consecutive fiscal quarters then ending, (f) requires the Company’s consolidated liquidity not to be less than or equal to $50,000 as of the end of the fiscal quarter ending December 29, 2022, and (g) prohibits the Company from incurring or making capital expenditures, (i) during fiscal 2021 in excess of the sum of $40,000 plus certain adjustments, or (ii) during fiscal 2022 in excess of $50,000 plus certain adjustments.
Pursuant to the Credit Agreement, if, at any time during the specified period, the Company’s unrestricted cash on hand exceeds $75,000, the Credit Agreement requires the Company to prepay revolving loans under the Credit Agreement by the amount of such excess, without a corresponding reduction in the revolving commitments under the Credit Agreement.
In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the Credit Agreement).
The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
Note Purchase Agreements
The Company’s $80,000 of senior notes consist of two Purchase Agreements maturing in 20202025 through 2027, require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 6.55%4.32%, with a weighted-average fixed rate of 4.37%4.21% at December 26, 201929, 2022 and 4.53%4.17% at December 27, 2018.

At December 26, 2019,30, 2021.

On July 13, 2021, the Company hadand certain purchasers entered into amendments (the “Note Amendments”) to the Note Purchase Agreement, dated June 27, 2013, and the Note Purchase Agreement, dated December 21, 2016 (collectively, the “Note Purchase Agreements”). The Note Amendments amend certain covenants and other terms of the Note Purchase Agreements and are identical to the amended covenants that are referenced in the Credit Agreement section above. Additionally, from April 29, 2020 until the last day of the first fiscal quarter ending after the Collateral Release Date (as defined in the Note Amendments), the Company is required to pay a fee to each Note holder equal to 0.975% of the aggregate principal amount of Notes held by such holder and is payable quarterly (0.24375% of the aggregate principal amount of the Notes per quarter).
In connection with the Note Amendments: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of their respective personal property assets and (b) certain of their respective real property assets, in each case, to secure the Notes and related obligations; and (ii) certain subsidiaries of the Company have guaranteed the Company's obligations under the Note Purchase Agreements and the Notes. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date.
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
7. Long-Term Debt and Short-Term Borrowings (continued)
The Note Purchase Agreements contain customary events of default. If an event of default under the Note Purchase Agreements occurs and is continuing, then, among other things, all Notes then outstanding become immediately due and payable and the Note holders may exercise their rights and remedies against the pledged collateral.
Convertible Senior Notes
On September 17, 2020, the Company entered into a purchase agreement to issue and sell $100,050 aggregate principal amount of its 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes.”) The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between the Company and U.S. Bank National Association, as trustee. The net proceeds from the sale of the Convertible Notes were approximately $95,421 after deducting the Initial Purchasers’ fees and additional fees and expenses related to the offering. The Company used $16,908 of net proceeds from the offering to pay the cost of the Capped Call Transactions (as described below). The remainder of the net proceeds were used to repay borrowings under the Company’s revolving credit facility totaling $225,000,000and for general corporate purposes. The Convertible Notes are senior unsecured obligations and rank (i) senior in placeright of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Convertible Notes; (ii) equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00% per year. Interest will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021. The Convertible Notes may bear additional interest under an existing credit agreement that maturesspecified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the Convertible Notes are not freely tradable as required by the Indenture. The Convertible Notes will mature on September 15, 2025, unless earlier repurchased or converted. Prior to March 15, 2025, the Convertible Notes will be convertible at the option of the holders only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending on December 30, 2020 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period immediately after any five consecutive trading day period, or the measurement period, in June 2021. There were borrowingswhich the trading price per $1,000 principal amount of $81,000,000 outstandingthe Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the revolving credit facilitysecond scheduled trading day immediately preceding the maturity date.
Upon conversion, the Convertible Notes may be settled, at the company’s election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate is 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $11.01 per share of Common Stock), representing an initial conversion premium of approximately 22.5% to the $8.99 last reported sale price of the Common Stock on The New York Stock Exchange on September 17, 2020. The conversion rate is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At December 26, 2019, bearing29, 2022, the adjusted conversion rate is 91.3657 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $10.95 per share of Common Stock). If the Company undergoes certain fundamental changes, holders of Convertible Notes may require the Company to repurchase for cash all or part of their Convertible Notes for a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change occurs prior to the maturity date, the Company will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. The Company may not redeem the Convertible Notes before maturity and no “sinking fund” is provided for the Convertible Notes. The Indenture includes covenants customary for securities similar to the Convertible Notes, sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
7. Long-Term Debt and Short-Term Borrowings (continued)
bankruptcy or insolvency events of default involving the Company and certain of its subsidiaries after which the Convertible Notes become automatically due and payable.
Since the Company’s fiscal 2021 second quarter, the Company’s Convertible Notes have been eligible for conversion at LIBOR plus a margin which adjusts basedthe option of the holders as the last reported sale price of the Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days during the last 30 consecutive trading days ending on the Company’s borrowing levels, effectively 2.70%last trading day of the preceding fiscal quarter. The Company has the ability to settle the conversion in Company stock. As such, the Convertible Notes will continue to be classified as long-term. Future convertibility and resulting balance sheet classification of this liability will be monitored at December 26, 2019each quarterly reporting date and 3.46% at December 27, 2018. The revolving credit facility requires an annual facility feewill be analyzed dependent upon market prices of 0.15% to 0.25% on the total commitment, based on the Company’s borrowing levels. Availability underCommon Stock during the line at December 26, 2019 totaled $139,000,000.

On January 9,prescribed measurement period. No Convertible Notes have been converted to date and the Company does not expect any to be converted within the next 12 months.

Capped Call Transactions
In connection with the pricing of the Convertible Notes on September 17, 2020, and in connection with the exercise by the Initial Purchasers of their option to purchase additional Convertible Notes on September 18, 2020, the Company replaced its then-existing credit agreemententered into privately negotiated Capped Call Transactions (the “Capped Call Transactions”) with a new five-year $225,000,000 credit facilitycertain of the Initial Purchasers and/or their respective affiliates and/or other financial institutions (the “Capped Call Counterparties”). The Capped Call Transactions are expected generally to reduce potential dilution of the Company’s common stock upon any conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, in the event that expires in January 2025. Thethe market price per share of the Company’s common stock, as measured under the terms of the new credit agreement didCapped Call Transactions, is greater than the strike price of the Capped Call Transactions, which initially corresponds to the conversion price of the Convertible Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution to the extent that such market price exceeds the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions was initially $17.98 per share (in no event shall the cap price be less than the strike price of $11.0128), which represents a premium of 100% over the last reported sale price of the Common Stock of $8.99 per share on The New York Stock Exchange on September 17, 2020. Under the terms of the Capped Call Transactions, the cap price is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At December 29, 2022, the adjusted cap price is approximately $17.87 per share. The Capped Call Transactions are separate transactions entered into by the Company with the Capped Call Counterparties, are not part of the terms of the Convertible Notes and will not change materially.

the rights of holders of the Convertible Notes under the Convertible Notes and the Indenture.

Paycheck Protection Program Loans
During fiscal 2020, 11 of the Company’s subsidiaries received proceeds totaling $13,459 under the CARES Act’s Paycheck Protection Program (PPP). The PPP loans bear interest at a fixed interest rate of 1.0%, require principal and interest payments that began in April 2021, and mature in fiscal 2026. The PPP loans allow for a substantial amount of the principal to be forgiven. Under Section 1106 of the CARES Act, borrowers are eligible for forgiveness of principal and accrued interest on the loans to the extent that the proceeds are used to cover eligible payroll costs, mortgage interest costs, rent and utility costs (qualified expenses). The Company’s subsidiaries used a cumulative total of approximately $10,012 of the PPP loan agreements include, among other covenants, maintenanceproceeds to pay for qualified expenses. Of the cumulative proceeds used, approximately $9,094 of certain financial ratios, including a debt-to-capitalization ratiothe expenditures paid were used to cover eligible employee payroll costs which offset the payroll costs of employees rehired due to the CARES Act. The remaining approximately $918 of expenditures paid were used to offset rent expense, utility costs and a fixed charge coverage ratio.mortgage interest expense. The portion of the PPP loan proceeds used for qualified expenses were forgiven under the terms of the CARES Act program during fiscal 2021 and the Company is reduced its cumulative subsidiary loan balances by this amount.
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in compliance with all financial debt covenants at December 26, 2019.

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thousands, except share and per share data)

The Marcus Corporation

Notes to Consolidated Financial Statements

7. Long-Term Debt and Short-Term Borrowings (continued)

Scheduled annual principal payments on long-term debt, net of amortization of debt issuance costs, for the years subsequent to December 26, 2019, are:

Fiscal Year  (in thousands) 
2020  $9,910 
2021   10,963 
2022   11,013 
2023   11,066 
2024   11,119 
Thereafter   162,271 
   $216,342 

29, 2022, are as follows:

Fiscal Year 
2023$10,432 
202410,365 
2025109,684 
2026— 
202749,956 
Thereafter— 
$180,437 
Interest paid on short-term borrowings and long-term debt, net of amounts capitalized, for fiscal 2019,2022, fiscal 20182021 and fiscal 20172020 totaled $10,281,000, $11,434,000$13,442, $14,119 and $10,338,000,$10,885, respectively.

Derivatives
The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions.

The Company entered into two interest rate swap agreements on March 1, 2018 covering $50,000,000$50,000 of floating rate debt. The first agreement hashad a notional amount of $25,000,000, expires$25,000, expired March 1, 2021, and requiresrequired the Company to pay interest at a defined rate of 2.559% while receiving interest at a defined variable rate of one-month LIBOR (1.750% at December 26, 2019).LIBOR. The second agreement hashad a notional amount of $25,000,000, expires$25,000, expired March 1, 2023, and requiresrequired the Company to pay interest at a defined rate of 2.687% while receiving interest at a defined variable rate of one-month LIBOR (1.750%(4.125% at December 26, 2019)29, 2022). The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The Company’s interest rate swap agreements are considered effective and qualify as cash flow hedges. The Company assesses, both at the inception of each hedge and on an on-going basis, whether the derivatives that are used in its hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. As of December 26, 2019, the interest rate swaps were considered highly effective. The fair value of the interest rate swapsswap on December 26, 2019 and29, 2022 was an asset of $108 which is included in other current assets in the consolidated balance sheet. The fair value of the interest rate swap on December 27, 2018, respectively,30, 2021, was a liability of $1,194,000 and $205,000 and$689, which was included in deferred compensation and other long-term obligations in the consolidated balance sheets.sheet. The Company does not expect the interest rate swapsswap to have a material effect on earnings within the next 12 months.

The Company had an interest rate swap that expired in January 2018. The swap agreement covered $25,000,000 of floating rate debt that required the Company to pay interest at a defined fixed rate of 0.96% while receiving interest at a defined variable rate of one-month LIBOR. The Company’s interest rate swap agreement was considered effective and qualified as a cash flow hedge from inception through June 16, 2016, at which time the derivative was undesignated and the balance in accumulated other comprehensive loss was reclassified into interest expense. As of June 16, 2016, the swap was considered ineffective for accounting purposes and the change in fair value was recorded as an increase or decrease in interest expense. As such, the $13,000 decrease in fair value of the swap during fiscal 2018 was recorded to interest expense.

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over its remaining term.

The Marcus Corporation

Notes to Consolidated Financial Statements

8. Leases

The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASU No. 2016-02,Leases (Topic 842).ASC 842. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease. The exercise of lease renewal options is done at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term and related right-of-use asset and lease liability. The depreciable life of the asset is limited to the expected term. The Company’s lease agreements do not contain any residual value guarantees or any restrictions or covenants.

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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
8. Leases (continued)
Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and labilitiesliabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. When readily determinable, the Company uses the implicit rate in the lease in determining the present value of lease payments. When the lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the fixed rate the Company could borrow for a similar amount, over a similar lease term with similar collateral. The Company recognizes right-of-use assets for all assets subject to operating leases in an amount equal to the operating lease liabilities, adjusted for the balances of long-term prepaid rent, favorable lease intangible assets, deferred lease expense, unfavorable lease liabilities and deferred lease incentive liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred.

The Company adopted ASC 842 on the first day of fiscal 2019 using the modified retrospective approach. Under this method, the Company was allowed to initially apply the new lease standard at the adoption date and recognize the assets and liabilities in the period of adoption. As such, upon adoption, no adjustments were made to prior period financial information or disclosures and the new lease standard did not result in a cumulative effect adjustment to retained earnings. Finance lease accounting remained substantially unchanged. The adoption of ASC 842 had the following effect on the Company’s financial statements (all relating to Lease expense for operating lease right-of-use assets and obligations):

  Balance at
December 27,
2018		  ASC 842
Adjustments		  Balance at
December 28,
2018		 
  (in thousands) 
Assets         
Other current assets $15,355  $(690) $14,665 
Operating lease right-of-use assets  -   76,178   76,178 
Other assets (long term)  33,100   (8,868)  24,232 
             
Liabilities            
Other accrued liabilities  59,645   (4,396)  55,249 
Current portion of operating lease obligations  -   5,909   5,909 
Operating lease obligations  -   75,608   75,608 
Deferred compensation and other  56,908   (10,501)  46,407 

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The Marcus Corporation

Notes to Consolidated Financial Statements

8. Leases (continued)

As part of the Company’s adoption of ASC 842, the Company elected the following practical expedients: i) to forego reassessment of its prior conclusion related to lease identification, lease classification and initial direct costs, ii) to not separate lease and non-lease components for all its leases, and iii) to make a policy election not to apply the lease recognition requirements for short-term leases. As a result, the Company does not recognize right-of use assets or lease liabilities for short-term leases that qualify for the policy election (those with an initial term of 12 months or less which do not include a purchase or renewal option whichpayments is reasonably certain to be exercised), but will recognize these lease payments as lease costsrecognized on a straight-line basis over the lease term.

Total lease cost consists of the following:

Lease Cost Classification Fiscal 2019 
     (in thousands) 
Finance lease costs:      
Amortization of finance lease assets Depreciation and amortization $3,507 
Interest on lease liabilities Interest expense  1,247 
    $4,754 
       
Operating lease costs:      
Operating lease costs Rent expense $24,302 
Variable lease cost Rent expense  1,560 
Short-term lease cost Rent expense  237 
    $26,099 

Lease CostClassificationFiscal 2022Fiscal 2021
Finance lease costs:
Amortization of finance lease assetsDepreciation and amortization$2,789 $2,732 
Interest on lease liabilitiesInterest expense850 951 
$3,639 $3,683 
Operating lease costs:
Operating lease costsRent expense$25,381 $25,489 
Variable lease costRent expense514 (30)
Short-term lease costRent expense142 135 
$26,037 $25,594 
Additional information related to leases is as follows:

Other Information Fiscal 2019 
  (in thousands) 
Cash paid for amounts included in the measurement of lease liabilities:     
Financing cash flows from finance leases $2,544  
Operating cash flows from finance leases  1,247  
Operating cash flows from operating leases  25,226  
Right of use assets obtained in exchange for new lease obligations:     
Finance lease liabilities  1,726  
Operating lease liabilities, including from acquisitions  180,103  
      
   December 26, 2019  
   (in thousands)  
Finance leases:     
Property and equipment – gross $74,357  
Accumulated depreciation and amortization  (52,869) 
Property and equipment - net $21,488  

In fiscal 2017, the Company had the following non-cash transactions related to leases: 1) obtained $6,173,000

Other InformationFiscal 2022Fiscal 2021
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases$2,670 $2,774 
Operating cash flows from finance leases850 951 
Operating cash flows from operating leases29,025 31,136 
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities419 — 
Operating lease liabilities, including from acquisitions275 2,663 
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Table of new capital leases,Contents
THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and 2) exercised $3,675,000 in capital lease extensions.

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per share data)

The Marcus Corporation

Notes to Consolidated Financial Statements

8. Leases (continued)

December 29, 2022December 30, 2021
Finance leases:
Property and equipment – gross$29,885 $75,124 
Accumulated depreciation and amortization(15,332)(58,197)
Property and equipment - net$14,553 $16,927 
Remaining lease terms and discount rates are as follows:

Lease Term and Discount RateDecember 26, 2019
Weighted-average remaining lease terms:
Finance leases10 years
Operating leases15 years
Weighted-average discount rates:
Finance leases4.67%
Operating leases4.56%

Lease Term and Discount RateDecember 29, 2022December 30, 2021
Weighted-average remaining lease terms:
Finance leases7 years8 years
Operating leases12 years13 years
Weighted-average discount rates:
Finance leases4.59%4.58%
Operating leases4.51%4.48%
Maturities of lease liabilities as of December 26, 201929, 2022 are as follows (in thousands):

Fiscal Year Operating
Leases		  Finance
Leases		 
2020 $24,369  $3,606 
2021  25,730   2,997 
2022  26,313   2,950 
2023  24,808   2,840 
2024  24,534   2,859 
Thereafter  214,060   14,093 
Total lease payments  339,814   29,345 
Less: amount representing interest  (94,368)  (5,972)
Total lease liabilities $245,446  $23,373 

Aggregate minimumfollows:

Fiscal YearOperating Leases Finance Leases
2023$23,610$3,243
202425,0723,139
202525,2252,980
202624,7952,863
202723,1811,935
Thereafter154,6816,626
Total lease payments276,56420,786
Less: amount representing interest(66,730)(3,284)
Total lease liabilities$209,834$17,502
Deferred rent payments of approximately $827 for the Company’s operating leases have been included in the total operating lease commitmentsobligations as of December 27, 2018 under Accounting Standard Codification Topic 840 are as follows (in thousands):

Fiscal Year Operating
Leases		  Capital
Leases		 
2019 $11,317  $3,073 
2020  10,169   2,978 
2021  9,670   2,679 
2022  9,910   2,718 
2023  9,038   2,718 
2024 and thereafter  80,523   16,940 
Total minimum lease payments $130,627   31,106 
Less: amount representing interest      (6,978)
Total present value of minimum capital lease payments     $24,128 

As29, 2022, of December 26, 2019, the Company had a build-to-suitwhich approximately $624 is included in long-term operating lease arrangement in which the Company is responsible for the construction of a new leased theatre and for paying construction costs during development. Construction costs will be reimbursed by the landlord up to an agreed upon amount. During construction, the Company is deemed to not have control of the assets or the leased premises and will record the development expenditures in other assets on the consolidated balance sheet. The lease commences when the Company has access to the right-of-use asset, which is expected to be upon project completion during fiscal 2020.

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obligations.

The Marcus Corporation

Notes to Consolidated Financial Statements

9. Shareholders’ Equity and Stock-BasedShare-Based Compensation

Shareholders may convert their shares of Class B Common Stock into shares of Common Stock at any time. Class B Common Stock shareholders are substantially restricted in their ability to transfer their Class B Common Stock. Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of the Class B Common Stock. Holders of Class B Common Stock are entitled to ten votes per share while holders of Common Stock are entitled to one vote per share on any matters brought before the shareholders of the Company. Liquidation rights are the same for both classes of stock.

Through December 26, 2019,29, 2022, the Company’s Board of Directors has approved the repurchase of up to 11,687,500 shares of Common Stock to be held in treasury. The Company intends to reissue these shares upon the exercise of stock options and for savings and profit-sharing plan contributions. The Company purchased 30,139, 82,722repurchased 134,694, 61,654 and 28,89837,567 shares pursuant
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
9. Shareholders’ Equity and Share-Based Compensation (continued)
to these authorizations during fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively. At December 26, 2019,29, 2022, there were 2,756,5612,522,646 shares available for repurchase under these authorizations.

The Company’s Board of Directors has authorized the issuance of up to 750,000 shares of Common Stock for The Marcus Corporation Dividend Reinvestment and Associate Stock Purchase Plan. At December 26, 2019,29, 2022, there were 430,582418,565 shares available under this authorization.

Shareholders have approved the issuance of up to 4,937,5007,437,500 shares of Common Stock under various equity incentive plans. Stock options granted under the plans to employees generally become exercisable either 40% after two years, 60% after three years, 80% after four years and 100% after five years of the date of grant, or 50% after two years, 75% after three years and 100% after four years of the date of grant, depending on the date of grant. The options generally expire ten years from the date of grant as long as the optionee is still employed with the Company.

Awarded shares of non-vested stock cumulatively vest either 25% after three years of the grant date, 50% after five years of the grant date, 75% after ten years of the grant date and 100% upon retirement, or 50% after three years of the grant date and 100% after five years of the grant date, or 50% after two years of the grant date and 100% after four years of the grant date, depending on the date of grant, or in the case of a special grant awarded in fiscal 2021, one year after the date of grant. The non-vested stock may not be sold, transferred, pledged or assigned, except as provided by the vesting schedule included in the Company’s equity incentive plan. During the period of restriction, the holder of the non-vested stock has voting rights and is entitled to receive all dividends and other distributions paid with respect to the stock. Non-vested stock awards and shares issued upon option exercises aremay be issued from previously acquired treasury shares. At December 26, 2019,29, 2022, there were 588,8341,486,777 shares available for grants of additional stock options, non-vested stock and other types of equity awards under the current plan.

Stock-based

Share-based compensation, including stock options and non-vested stock awards, is expensed over the vesting period of the awards based on the grant date fair value.

The Company estimated the fair value of stock options using the Black-Scholes option pricing model with the following assumptions used for awards granted during fiscal 2019,2022, fiscal 20182021 and fiscal 2017:

  

Year Ended

December 26, 2019

  

Year Ended

December 27, 2018

  

Year Ended

December 28, 2017

 
Risk-free interest rate  2.50 – 2.60%   2.70 – 2.80%   2.08 – 2.20% 
Dividend yield  1.70%   2.10%   2.10% 
Volatility  27 – 32%   28 – 33%   34 – 43% 
Expected life  6 – 8 years   6 – 8 years   7 – 8 years 

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2020:

Year Ended

December 29, 2022

December 30, 2021

December 31, 2020
Risk-free interest rate1.73 – 3.90%0.97 – 1.26%0.40 – 1.26%
Dividend yield1.50%1.50%1.70 – 1.90%
Volatility48 - 53%28 – 53%27 – 41%
Expected life6 – 8 years6 – 8 years6 – 8 years

The Marcus Corporation

Notes to Consolidated Financial Statements

9. Shareholders’ Equity and Stock-Based Compensation (continued)

Total pre-tax stock-basedshare-based compensation expense was $3,523,000, $2,691,000$8,170, $9,316 and $2,411,000$4,385 in fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively. The recognized tax benefit on stock-basedshare-based compensation was $1,127,000, $2,617,000$1,338, $1,997 and $1,227,000$771 in fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively. The increase
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in the recognized tax benefit during fiscal 2018 was primarily due to an increase in stock options exercised where the market price was significantly greater than the grant date fair value of the stock options.

thousands, except share and per share data)

9. Shareholders’ Equity and Share-Based Compensation (continued)
A summary of the Company’s stock option activity and related information follows:

  December 26, 2019  December 27, 2018  December 28, 2017 
     Weighted-     Weighted-     Weighted- 
     Average     Average     Average 
     Exercise     Exercise     Exercise 
  Options  Price  Options  Price  Options  Price 
  (options in thousands) 
Outstanding at beginning of period  1,450  $21.25   1,629  $18.08   1,563  $15.94 
Granted  329   41.67   336   27.59   273   31.08 
Exercised  (97)  15.60   (478)  14.74   (133)  17.04 
Forfeited  (41)  30.58   (37)  23.35   (74)  22.37 
Outstanding at end of period  1,641   25.46   1,450   21.25   1,629   18.08 
Exercisable at end of period  802  $18.22   699  $15.87   988  $14.69 
Weighted-average fair value of options granted during the period     $11.79      $7.87      $10.54 

follows (shares in thousands):

Year Ended
December 29, 2022December 30, 2021December 31, 2020
OptionsWeighted-
Average
Exercise
Price		OptionsWeighted-
Average
Exercise
Price		OptionsWeighted-
Average
Exercise
Price
Outstanding at beginning of period2,533 $24.84 2,234 $24.87 1,641 $25.46 
Granted501 16.99 531 21.74 728 23.47 
Exercised(68)13.15 (134)11.42 (31)12.21 
Forfeited(100)24.89 (98)26.60 (104)28.06 
Outstanding at end of period2,866 23.76 2,533 24.84 2,234 24.87 
Exercisable at end of period1,613 $25.70 1,119 $24.76 1,001 $20.38 
Weighted-average fair value of options granted during the period$7.71 $9.47 $5.96 
Exercise prices for options outstanding as of December 26, 201929, 2022 ranged from $10.00$12.71 to $41.90. The weighted-average remaining contractual life of those options is 6.46.3 years. The weighted-average remaining contractual life of options currently exercisable is 4.54.8 years. There were 1,587,0002,821,000 options outstanding, vested and expected to vest as of December 26, 2019,29, 2022, with a weighted-average exercise price of $25.13$23.83 and an intrinsic value of $14,567,000.$443. Additional information as of December 29, 2022 related to these options outstanding segregated by exercise price range is as follows:

  Exercise Price Range 
  

$10.00 to

$18.34

  

$18.35 to

$27.00

  

$27.01 to

$41.90

 
  (options in thousands) 
Options outstanding  464   610   567 
Weighted-average exercise price of options outstanding $14.03  $23.22  $37.22 
Weighted-average remaining contractual life of options outstanding  3.1   7.0   8.4 
Options exercisable  464   218   120 
Weighted-average exercise price of options exercisable $14.03  $19.80  $31.54 

follows (shares in thousands):

Exercise Price Range
$12.71 to
$20.25
$20.26 to
$27.00
$27.01 to
$41.90
Options outstanding1,067 895 904 
Weighted-average exercise price of options outstanding$16.15 $23.06 $33.41 
Weighted-average remaining contractual life of options outstanding6.56.36.2
Options exercisable480 473 660 
Weighted-average exercise price of options exercisable$15.93 $24.15 $33.90 
The intrinsic value of options outstanding at December 26, 201929, 2022 was $14,693,000$446 and the intrinsic value of options exercisable at December 26, 201929, 2022 was $11,579,000.$291. The intrinsic value of options exercised was $2,135,000, $10,373,000$164, $1,164 and $1,770,000$107 during fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively. As of December 26, 2019,29, 2022, total remaining unearned compensation cost related to stock options was $5,314,000,$4,897, which will be amortized to expense over the remaining weighted-average life of 2.72.4 years.

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The Marcus Corporation

Notes to Consolidated Financial Statements

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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
9. Shareholders’ Equity and Stock-BasedShare-Based Compensation (continued)

A summary of the Company’s non-vested stock activity and related information follows:

  December 26, 2019  December 27, 2018  December 28, 2017 
     Weighted-     Weighted-     Weighted- 
     Average     Average     Average 
     Fair     Fair     Fair 
  Shares  Value  Shares  Value  Shares  Value 
  (options in thousands) 
Outstanding at beginning of period  158  $18.98   137  $21.94   143  $19.30 
Granted  39   38.24   52   29.02   37   29.12 
Vested  (23)  18.60   (31)  16.41   (36)  18.78 
Forfeited  –   –   –   –   (7)  22.86 
Outstanding at end of period  174  $29.16   158  $18.98   137  $21.94 

follows (shares in thousands):

Year Ended
December 29, 2022December 30, 2021December 31, 2020
SharesWeighted-
Average
Fair
Value		SharesWeighted-
Average
Fair
Value		SharesWeighted-
Average
Fair
Value
Outstanding at beginning of period357 $23.32 147 $31.02 174 $29.16 
Granted100 17.63 251 19.63 42 31.43 
Vested(242)22.95 (32)30.69 (69)26.56 
Forfeited(3)22.93 (9)19.77 — — 
Outstanding at end of period212 $21.07 357 $23.32 147 $31.02 
The Company expenses awards of non-vested stock based on the fair value of the Company’s common stock at the date of grant. As of December 26, 2019,29, 2022, total remaining unearned compensation related to non-vested stock was $3,015,000,$1,731, which will be amortized over the weighted-average remaining service period of 2.82.7 years.

10. Employee Benefit Plans

The Company has a qualified profit-sharing retirement savings plan (401(k) plan) covering eligible employees. The 401(k) plan provides a matching contribution equal to 100% of the first 3% of compensation and 50% of the next 2% of compensation deposited by an employee into the 401(k) plan. Prior to fiscal 2017, the plan provided for a contribution of a minimum of 1% of defined compensation for all plan participants and matching of 25% of employee contributions up to 6% of defined compensation. In addition, the Company made additional discretionary contributions. During fiscal 20192022, fiscal 2021 and fiscal 2018,2020, the first 2% of the matching contribution was made with the Company’s common stock. DuringRetirement savings plan expense was $2,233, $1,696 and $1,718 for fiscal 2017, the 1%2022, fiscal 2021 and discretionary contributions were made with the Company’s common stock.

fiscal 2020, respectively.

The Company also sponsors unfunded, nonqualified, defined-benefit and deferred compensation plans. The Company’s unfunded, nonqualified retirement plan includes two components. The first component is a defined-benefit plan that applies to certain participants. The second component applies to all other participants and provides an account-based supplemental retirement benefit. Pension and profit-sharing expense for all plans was $5,065,000, $5,117,000 and $4,415,000 for fiscal 2019, fiscal 2018 and fiscal 2017, respectively.

The Company recognizes actuarial losses and prior service costs related to its defined benefit plan in the consolidated balance sheets and recognizes changes in these amounts in the year in which changes occur through comprehensive income.

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income.

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The Marcus Corporation

Notes to Consolidated Financial Statements

Table of Contents
THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
10. Employee Benefit Plans (continued)

The status of the Company’s unfunded nonqualified, defined-benefit and account-based retirement plan based on the respective December 26, 201929, 2022 and December 27, 201830, 2021 measurement dates is as follows:

  December 26,  December 27, 
  2019  2018 
  (in thousands) 
Change in benefit obligation:        
Benefit obligation at beginning of period $ 35,640  $37,639 
Service cost   833   926 
Interest cost  1,485   1,364 
Actuarial (gain) loss  7,317  (2,633)
Benefits paid  (1,451)  (1,656)
Benefit obligation at end of year $43,824  $35,640 
         
Amounts recognized in the statement of financial position consist of:        
Current accrued benefit liability (included in Other accrued liabilities) $(1,400) $(1,378)
Noncurrent accrued benefit liability (included in Deferred compensation and other)  (42,424)  (34,262)
Total $(43,824) $(35,640)
         
Amounts recognized in accumulated other comprehensive loss consist of:        
Net actuarial loss $16,373  $9,556 
Prior service credit  (451)  (515)
Total $15,922  $9,041 

  Year Ended 
  December 26,  December 27,  December 28, 
  2019  2018  2017 
  (in thousands) 
Net periodic pension cost:            
Service cost $833  $926  $765 
Interest cost  1,485   1,364   1,356 
Net amortization of prior service cost and actuarial loss  436   621   356 
  $2,754  $2,911  $2,477 

December 29,
2022		December 30,
2021
Change in benefit obligation:  
Benefit obligation at beginning of period$46,827 $48,604 
Service cost1,055 1,122 
Interest cost1,341 1,201 
Actuarial gain(11,368)(2,630)
Benefits paid(1,531)(1,470)
Benefit obligation at end of year$36,324 $46,827 
Amounts recognized in the statement of financial position consist of:
Current accrued benefit liability (included in Other accrued liabilities)$(1,890)$(1,674)
Noncurrent accrued benefit liability (included in Other long-term obligations)(34,434)(45,153)
Total$(36,324)$(46,827)
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss$2,660 $15,120 
Prior service credit(260)(323)
Total$2,400 $14,797 
Year Ended
December 29, 2022December 30, 2021December 31, 2020
Net periodic pension cost:   
Service cost$1,055 $1,122 $1,095 
Interest cost1,341 1,201 1,371 
Net amortization of prior service cost and actuarial loss1,028 1,311 990 
$3,424 $3,634 $3,456 
The $11,766,000$1,774 loss, net of tax, included in accumulated other comprehensive loss at December 26, 2019,29, 2022, consists of the $12,100,000$1,966 net actuarial loss, net of tax, and the $334,000$192 unrecognized prior service credit, net of tax, which have not yet been recognized in the net periodic benefit cost. The $6,609,000$10,935 loss, net of tax, included in accumulated other comprehensive loss at December 27, 2018,30, 2021, consists of the $6,985,000$11,174 net actuarial loss, net of tax, and the $376,000$239 unrecognized prior service credit, net of tax, which have not yet been recognized in the net periodic benefit cost.

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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
10. Employee Benefit Plans (continued)
The accumulated benefit obligation was $37,474,000$33,719 and $30,576,000$42,835 as of December 26, 201929, 2022 and December 27, 2018,30, 2021, respectively.

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The Marcus Corporation

Notes to Consolidated Financial Statements

10. Employee Benefit Plans (continued)

The pre-tax change in the benefit obligation recognized in other comprehensive loss was as follows:

  Year Ended 
  December 26, 2019  December 27, 2018 
  (in thousands) 
Net actuarial loss (gain) $7,317   (2,633)
Amortization of the net actuarial loss  (499)  (685)
Amortization of the prior year service credit  63   64 
Total $6,881   (3,254)

The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in fiscal 2020 is $990,000, of which $1,054,000 relates to the actuarial loss and $64,000 relates to the prior service credit.

Year Ended
December 29, 2022December 30, 2021
(in thousands)
Net actuarial (gain) loss$(11,368)(2,630)
Amortization of the net actuarial loss(1,092)(1,375)
Amortization of the prior year service credit6364
Total$(12,397)(3,941)
The weighted-average assumptions used to determine the benefit obligations as of the measurement dates were as follows:

  December 26, 2019  December 27, 2018 
Discount rate  3.10%  4.15%
Rate of compensation increase  4.00%  4.00%

December 29, 2022December 30, 2021
Discount rate5.05%2.85%
Rate of compensation increase4.00%4.00%
The weighted-average assumptions used to determine net periodic benefit cost were as follows:

  Year Ended 
  December 26, 2019  December 27, 2018  December 28, 2017 
Discount rate  4.15%  3.60%  4.15%
Rate of compensation increase  4.00%  4.00%  4.00%

Year Ended
December 29, 2022December 30, 2021December 31, 2020
Discount rate2.85%2.45%3.10%
Rate of compensation increase4.00%4.00%4.00%
Benefit payments expected to be paid subsequent to December 26, 2019, are:

Fiscal Year  (in thousands) 
2020  $1,400 
2021   1,709 
2022   1,538 
2023   1,532 
2024   1,791 
Years 2025 – 2029   12,402 

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29, 2022, are as follows:

Fiscal Year
2023$1,938 
20242,002 
20252,219 
20262,358 
20272,348 
Years 2028 – 203215,409 

The Marcus Corporation

Notes to Consolidated Financial Statements

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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
11. Income Taxes

The components of the net deferred tax liability are as follows:

  December 26, 2019  December 27, 2018 
  (in thousands) 
Accrued employee benefits $15,145  $13,381 
Depreciation and amortization  (69,100)  (59,296)
Operating lease assets  (62,339)  - 
Operating lease liabilities  62,750   - 
Other  5,282   3,938 
Net deferred tax liability $(48,262) $(41,977)

December 29, 2022December 30, 2021
Deferred tax assets
Accrued employee benefits$14,133 $17,669 
Operating lease liabilities54,767 59,622 
Gift card liabilities6,575 7,318 
Net operating loss, disallowed interest & tax credit carryforwards28,273 24,166 
Other3,791 6,876 
Total107,539 115,651 
Less valuation allowance(12,371)(2,415)
Deferred tax assets95,168 113,236 
Deferred tax liabilities
Depreciation and amortization(70,849)(73,898)
Operating lease assets(50,886)(55,489)
Deferred tax liabilities(121,735)(129,387)
Net deferred tax liability$(26,567)$(16,151)
Amounts recognized in the consolidated balance sheets consist of:
Deferred income taxes - other assets$— $10,032 
Deferred income taxes - liabilities(26,567)(26,183)
Net amount recognized$(26,567)$(16,151)
As of December 29, 2022, the Company has a federal net operating loss carryforward of $19,656 and federal tax credit carryforwards of $4,538. As of December 30, 2021, the Company had a federal net operating loss carryforward of $26,003 and federal tax credit carryforwards of $3,463. As of December 29, 2022, the Company has state net operating loss carryforwards of $238,682, which will expire primarily in the next 12 to 20 years. As of December 30, 2021, the Company had state net operating loss carryforwards of $237,019. In fiscal 2021, the Company established a valuation allowance of $2,415 for a portion of its state net operating loss carryforwards that are not more likely than not to be realized. In fiscal 2022, the Company increased the valuation allowance by $9,956 to $12,371. The amount of the state net operating loss carryforwards considered realizable could be adjusted if, among other factors, estimates of future taxable income during the carryforward periods are reduced or increased.
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
11. Income Taxes (continued)
Income tax expense (benefit) consists of the following:

   Year Ended 
   December 26,
2019		  December 27,
2018		  December 28,
2017		 
   (in thousands) 
Current:          
Federal  $1,187  $7,022  $8,707 
State   2,041   3,181   1,558 
Deferred:             
Federal   9,228   2,815   (7,155)
State   (136)  109   515 
   $12,320  $13,127  $3,625 

A tax benefit of $1,947,000 is included in the fiscal 2018 current federal income tax amount and a tax benefit of $21,240,000 is included in the fiscal 2017 deferred federal income tax amount, both of which relate to the Tax Cuts and Jobs Act of 2017.

Year Ended
December 29, 2022December 30, 2021December 31, 2020
Current:   
Federal$(452)$13 $(32,626)
State556 129 526 
Deferred:
Federal(3,222)(12,629)(24,751)
State10,255 (3,214)(14,085)
$7,137 $(15,701)$(70,936)
The Company’s effective income tax rate, adjusted for earnings (losses) from noncontrolling interests, was 22.7%(147.6)%, 19.7%26.6% and 5.3%36.2% for fiscal 2019,2022, fiscal 20182021 and fiscal 2017,2020, respectively. The Company's effective income tax rate during fiscal 2022 was negatively impacted by a $9,956 increase in the valuation allowance for state net operating loss carryforwards, partially offset by a corresponding increase in the federal benefit on the valuation allowance of $2,598. Excluding the negative impact of the valuation allowance adjustment, the Company’s effect income tax rate during fiscal 2022 was 4.6%. The Company’s effective income tax rate during fiscal 2020 benefited from several accounting method changes and the March 27, 2020 signing of the CARES Act, one of the provisions of which allows the Company's 2019 and 2020 taxable losses to be carried back to prior fiscal years during which the federal income tax rate was 35.0%, compared to the current statutory federal income tax rate of 21.0%. During fiscal 2018,2020, the Company recorded current tax benefits of $1,947,000 related to reductions in$11,976 and deferred tax liabilities related to tax accounting method changes that the Company made subsequent to the Tax Cuts and Jobs Actbenefits of 2017. During fiscal 2017, the Company recorded a deferred tax benefit of $21,240,000$8,095 related to the reduction of its net deferredCARES Act and tax liability resulting from the reduction in the corporate tax rate enacted in December 2017 under the Tax Cuts and Jobs Act of 2017.accounting changes. Excluding these favorable impacts, the Company’scompany’s effective income tax ratesrate for fiscal 2018 and fiscal 2017 were 22.7% and 36.2%, respectively. The Company also recorded significant current tax benefits in fiscal 2018 related to excess tax benefits on share-based compensation.2020 was 26.0%. The Company has not included the income tax expense or benefit related to the net earnings or loss attributable to noncontrolling interests in its income tax expense as the entities areentity is considered a pass-through entitiesentity and, as such, the income tax expense or benefit is attributable to its owners.

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The Marcus Corporation

NotesCompany evaluated the provisions of the CARES Act. Among other things, the CARES Act included provisions relating to Consolidated Financial Statements

refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. After reviewing these provisions, the Company filed income tax refund claims of approximately $37,400 in fiscal 2020 and $24,200 in fiscal 2021, with the primary benefit derived from several accounting method changes and new rules for qualified improvement property expenditures and net operating loss carrybacks. The Company received $31,500 of the tax refunds in fiscal 2020, $7,800 in fiscal 2021 and $22,300 in fiscal 2022.


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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
11. Income Taxes (continued)

A reconciliation of the statutory federal tax rate to the effective tax rate on earnings attributable to The Marcus Corporation follows:

  Year Ended 
  December 26,2019  December 27,2018  December 28,2017 
Statutory federal tax rate  21.0%  21.0%  35.0%
Tax benefit from Tax Cuts and Jobs Act of 2017  –   (2.9)  (30.9)
State income taxes, net of federal income tax benefit  5.5   6.1   4.8 
Tax credits, net of federal income tax benefit  (2.7)  (1.1)  (0.8)
Other  (1.1)  (3.4)  (2.8)
   22.7%  19.7%  5.3%

Year Ended
December 29, 2022December 30, 2021December 31, 2020
Statutory federal tax rate21.0 %21.0 %21.0 %
Tax benefit from CARES Act and accounting method changes— — 10.3 
State income taxes, net of federal income tax benefit4.3 6.7 5.0 
Tax credits, net of federal income tax benefit22.9 1.6 0.2 
Valuation allowance(205.9)(4.1)— 
Federal income tax benefit on state valuation allowance53.7 — — 
Excess tax benefits on share-based compensation(22.1)(0.6)(0.2)
Other compensation and benefits(15.6)(0.7)— 
Meals and entertainment(4.1)(0.4)— 
Other(1.8)3.1 (0.1)
(147.6)%26.6 %36.2 %
Net income taxes paid (refunded)refunded in fiscal 2019,2022, fiscal 20182021 and fiscal 20172020 were $3,062,000, $(218,000)$21,935, $8,316 and $23,691,000,$33,275, respectively.

During Net income taxes refunded in fiscal 2017,2022, fiscal 2021 and fiscal 2020 included $22,300, $7,800 and $31,500, respectively, related to federal net operating loss carrybacks to prior years, as allowed under the Company was able to make a reasonable estimateprovisions of the impact of the Tax Cuts and Jobs Act of 2017, including the reduction in the corporate tax rate and the provisions related to executive compensation and 100% bonus depreciation on qualifying property. Following the guidance of the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin No. 118, any adjustments to the Company’s estimates within a one-year measurement period were reported as a component of income tax expense in fiscal 2018. CARES Act.

The Company did not make any adjustments to the estimates recorded in fiscal 2017.

A reconciliation of the beginning and ending gross amounts ofhad no unrecognized tax benefit are as follows:

  Year Ended 
  

December 26,

2019

  

December 27,

2018

  

December 28,

2017

 
  (in thousands) 
Balance at beginning of year $–  $102  $414 
Increases due to:            
Tax positions taken in prior years  –   –   – 
Tax positions taken in current year  –   –   – 
Decreases due to:            
Tax positions taken in prior years  –   –   – 
Settlements with taxing authorities  –   (102)  – 
Lapse of applicable statute of limitations  –   –   (312)
Balance at end of year $–  $–  $102 

85

The Marcus Corporation

Notes to Consolidated Financial Statements

11. Income Taxes (continued)

During fiscal 2018, the Company settled a dispute with a state taxing authority and no longer carries an unrecognized tax benefitbenefits as of December 27, 2018. The Company’s total unrecognized tax benefit that, if recognized, would affect the Company’s effective tax rate was $67,000 as of29, 2022, December 28, 2017.30, 2021 and December 31, 2020. The Company had no accrued interest or penalties at December 26, 201929, 2022 or December 27, 2018.30, 2021. The Company classifies interest and penalties relating to income taxes as income tax expense. For the year ended December 26, 2019, $1,00029, 2022, $683 of interest income was recognized in the consolidated statement of earnings (loss), compared to $68,000$60 of interest income for the year ended December 27, 2018,30, 2021 and $50,000$296 of interest expenseincome for the year ended December 28, 2017.

During fiscal 2018,31, 2020.

In the fourth quarter of 2021, the Company settled, with no significant change, an examination by the Internal Revenue Service of its fiscal 2019 and 2020 income tax return forreturns. The examination included the 31 weeks ended December 31, 2015. The Company’s federal income tax returns are no longer subjectprevious five fiscal years, to examination priorthe extent that net operating losses were carried back to those fiscal 2016.years under the CARES Act. With certain exceptions, the Company’sCompany's state income tax returns are no longer subject to examination prior to fiscal 2016.2018. At this time, the Company does not expect the results from any income tax audit or appeal to have a significant impact on the Company’sCompany's financial statements.

The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

12. Commitments and License Rights

Commitments- The Company has commitments for the completion of construction at various properties totaling approximately $2,243,000$5,387 at December 26, 2019.

29, 2022.

License Rights– As of December 26, 2019,29, 2022, the Company had license rights to operate three hotels using the Hilton trademark and two hotels using the Marriott trademark. Under the terms of the licenses, the Company is obligated to pay fees based on defined gross sales.

13. Joint Venture Transactions

At December 26, 201929, 2022 and December 27, 2018,30, 2021, the Company held investments with aggregate carrying values of $3,593,000$2,067 and $4,069,000, respectively, in several$2,335, respectively. Investments at December 29, 2022 included one joint ventures, one of which isventure accounted for under the equity method. Investments at December 30, 2021 included two joint ventures accounted for under the equity method.
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THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
13. Joint Venture Transactions (continued)
In December 2021, the Company formed a joint venture with Searchlight Capital Partners (“Searchlight”) to acquire the Kimpton Hotel Monaco Pittsburgh (“Monaco”), a 248-room upper upscale hotel in downtown Pittsburgh, Pennsylvania. The Company invested $2,427 for a 10% equity interest in the Monaco joint venture and entered into a management agreement for the hotel. The Monaco joint venture entity, as the borrower, financed the acquisition of Monaco with a non-recourse mortgage loan. In connection with this mortgage loan, the Company provided an environmental indemnity and a “bad boy” guaranty that provides that the lender can recover losses from the Company for certain bad acts of the Monaco joint venture, such as but not limited to fraud, intentional misrepresentation, voluntary incurrence of prohibited debt, prohibited transfers of the collateral, and voluntary bankruptcy of the Monaco joint venture. Under the terms of the Monaco joint venture operating agreement, Searchlight has fully indemnified the Company under the “bad boy” guarantees for any losses other than those attributable to the Company’s own bad acts and has indemnified the Company to its proportionate liability under the environmental liability.
During fiscal 2020, the Company recorded an other-than-temporary impairment loss of approximately $811 in which it was determined that the fair value of its equity method and twoinvestment in a joint venture was less than its carrying value. The $811 impairment loss is included within equity losses from unconsolidated joint ventures in the consolidated statement of which are investmentsearnings (loss) as of December 31, 2020. Early in fiscal 2021, pursuant to a recapitalization of this joint venture, the Company surrendered its ownership interest in this entity.
The Company also sold its interest in an equity investmentsinvestment without a readily determinable fair values.

86
value in fiscal 2021 for $4,150 and recorded a gain of $2,079, which is included in gain on disposition of property, equipment and other assets in the consolidated statement of earnings (loss).

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The Marcus Corporation

Notes to Consolidated Financial Statements

Table of Contents
THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Business Segment Information

The Company evaluates performance and allocates resources based on the operating income (loss) of each segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

Following is a summary of business segment information for fiscal 2019,2022, fiscal 20182021 and fiscal 2017:

  

 

Theatres

  

Hotels/

Resorts

  

Corporate

Items

  

 

Total

 
  (in thousands) 
Fiscal 2019                
Revenues $557,080  $263,350  $433  $820,863 
Operating income (loss)  76,903   10,050   (18,762)  68,191 
Depreciation and amortization  51,202   20,430   645   72,277 
Assets  953,299   337,206   68,681   1,359,186 
Capital expenditures and acquisitions  61,604   31,783   780   94,167 
                 
Fiscal 2018                
Revenues $446,804  $259,892  $424  $707,120 
Operating income (loss)  88,790   12,480   (18,081)  83,189 
Depreciation and amortization  38,760   22,229   353   61,342 
Assets  624,512   306,162   58,657   989,331 
Capital expenditures and acquisitions  43,568   14,931   161   58,660 
                 
Fiscal 2017                
Revenues $403,431  $249,564  $557  $653,552 
Operating income (loss)  80,447   12,895   (16,035)  77,307 
Depreciation and amortization  33,448   17,912   359   51,719 
Assets  637,723   313,942   66,132   1,017,797 
Capital expenditures and acquisitions  93,676   20,604   524   114,804 

2020:

TheatresHotels/
Resorts		Corporate
Items		Total
Fiscal 2022 
Revenues$407,741 $269,286 $367 $677,394 
Operating income (loss)8,108 18,699 (18,501)8,306 
Depreciation and amortization47,560 19,160 353 67,073 
Assets750,941 277,990 35,667 1,064,598 
Capital expenditures and acquisitions12,087 24,515 241 36,843 
Fiscal 2021
Revenues$271,248 $186,638 $358 $458,244 
Operating income (loss)(27,559)5,865 (19,758)(41,452)
Depreciation and amortization51,654 20,192 281 72,127 
Assets820,547 305,928 61,886 1,188,361 
Capital expenditures and acquisitions10,299 6,783 — 17,082 
Fiscal 2020
Revenues$132,624 $104,638 $426 $237,688 
Operating loss(121,429)(43,885)(13,108)(178,422)
Depreciation and amortization53,460 21,096 496 75,052 
Assets871,655 309,320 73,203 1,254,178 
Capital expenditures and acquisitions15,828 4,669 866 21,363 
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. Corporate assets primarily include cash and cash equivalents, furniture, fixtures and equipment, investments and land held for development.

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89

The Marcus Corporation

Notes to Consolidated

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Statements

15. Unaudited Quarterly Financial Information(in thousands, except per share data)

  13 Weeks Ended 
Fiscal 2019 March 28,
2019		  

June 27,

2019

  September 26,
2019		  December 26,
2019		 
Revenues $170,039  $232,500  $211,462  $206,862 
Operating income  4,950   27,475   22,387   13,379 
Net earnings attributable to The Marcus Corporation  1,860   18,066   14,289   7,802 
Net earnings per common share – diluted $0.06  $0.58  $0.46  $0.25 

  13 Weeks Ended
Fiscal 2018  March 29,
2018		   

June 28,

2018

   September 27,
2018		   December 27,
2018		 
Revenues $168,191  $193,298  $170,599  $175,032 
Operating income  17,016   29,107   22,413   14,653 
Net earnings attributable to The Marcus Corporation  9,821   18,619   16,231   8,720 
Net earnings per common share – diluted $0.35  $0.65  $0.56  $0.30 

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Disclosure.

None.

Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A.Controls and Procedures.

Item 9A.    Controls and Procedures.
(a)Evaluation of disclosure controls and procedures.

Based on their evaluations, as of the end of the period covered by this Annual Report on Form 10-K, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or furnish under the Exchange Act is accumulated and communicated to our management and recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b)Management’s report on internal control over financial reporting.

The report of management required under this Item 9A is contained in the section titled “Item 8 – Financial Statements and Supplementary Data” under the heading “Management’s Report on Internal Control over Financial Reporting.”

(c)Attestation Report of Independent Registered Public Accounting Firm.

The attestation report required under this Item 9A is contained in the section titled “Item 8 – Financial Statements and Supplementary Data” under the heading “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting.”

(d)Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(b) of the Exchange Act during the fourth quarter of our fiscal 20192022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART III

Item 10.Directors, Executive Officers and Corporate Governance.

Item 10.    Directors, Executive Officers and Corporate Governance.
The information required by Item 10 is incorporated herein by reference to the relevant information set forth under the captions “Election of Directors,”Directors” and “Board of Directors and Corporate Governance” and “Delinquent Section 16(a) Reports” in the definitive Proxy Statement for our 20202023 Annual Meeting of Shareholders scheduled to be held on May 6, 202011, 2023 (our “Proxy Statement”). Information regarding our executive officers may be found in Part I of this Form 10-K under the caption “Executive Officers of the Company.” Except as otherwise specifically incorporated by reference, our Proxy Statement is not deemed to be filed as part of this Form 10-K.

Item 11.Executive Compensation.

Item 11.    Executive Compensation.
The information required by Item 11 is incorporated herein by reference to the relevant information set forth under the caption “Compensation Discussion and Analysis” in our Proxy Statement.

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Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
The following table lists certain information about our two stock option plans,our 1995 Equity Incentive Plan and our 2004 Equity and Incentive Awards Plan, all of which were approved by our shareholders. We do not have any equity-based compensation plans that have not been approved by our shareholders.

Number of securities to be
issued upon the exercise
of outstanding options,
warrants and rights		  Weighted-average
exercise price of
outstanding options,
warrants and rights		  Number of securities remaining available
for future issuance under current equity
compensation plan (excluding
securities reflected in the first column)		 
 1,641,000   $25.46   589,000 

Number of securities to be
issued upon the exercise
of outstanding options,
warrants and rights		Weighted-average
exercise price of
outstanding options,
warrants and rights		Number of securities remaining available
for future issuance under current equity
compensation plan (excluding
securities reflected in the first column)
2,866,000$23.76 1,486,777
The other information required by Item 12 is incorporated herein by reference to the relevant information set forth under the caption “Stock Ownership of Management and Others” in our Proxy Statement.

Item 13.Certain Relationships and Related Transactions, and Director Independence.

Item 13.    Certain Relationships and Related Transactions, and Director Independence.
The information required by Item 13, to the extent applicable, is incorporated herein by reference to the relevant information set forth under the caption “Policies and Procedures Governing Related Person Transactions” in our Proxy Statement.

Item 14.Principal Accounting Fees and Services.

Item 14.    Principal Accounting Fees and Services.
The information required by Item 14 is incorporated by reference herein to the relevant information set forth under the caption “Other Matters” in our Proxy Statement.

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PART IV

Item 15.
Item 15.   Exhibits and Financial Statement Schedules.

(a)(1) Financial Statements.

The information required by this item is set forth in “Item 8 – Financial Statements and Supplementary Data” above.

(a)(2) Financial Statement Schedules.

(a)(1)Financial Statements.
Unless otherwise indicated, references to “fiscal 2022” refer to the fiscal year ended December 29, 2022; references to “fiscal 2021” refer to the fiscal year ended December 30, 2021; and references to “fiscal 2020” refer to the fiscal year ended December 31, 2020. References to fiscal 2022 and fiscal 2021 year end refer to December 29, 2022 and December 30, 2021, respectively.
The following consolidated financial statements of The Marcus Corporation and the Report of Independent Registered Public Accounting Firm thereon, are filed as part of this report:
•Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
•Consolidated Balance Sheets as of fiscal 2022 and 2021 year end
•Consolidated Statements of Earnings (Loss) for the 2022, 2021, and 2020 fiscal years
•Consolidated Statements of Comprehensive Income (Loss) for the 2022, 2021, and 2020 fiscal years
•Consolidated Statements of Shareholders’ Equity for the 2022, 2021, and 2020 fiscal years
•Consolidated Statements of Cash Flows for the 2022, 2021, and 2020 fiscal years
•Notes to Consolidated Financial Statements
(a)(2)Financial Statement Schedules.

All schedules are omitted because they are inapplicable, not required under the instructions or the financial information is included in the consolidated financial statements or notes thereto.

(a)(3)Exhibits.

The exhibits filed herewith or incorporated by reference herein are set forth on the attached Exhibit Index. Exhibits to this Form 10-K will be furnished to shareholders upon advance payment of a fee of $0.25 per page, plus mailing expenses. Requests for copies should be addressed to Thomas F. Kissinger, Senior Executive Vice President, General Counsel and Secretary, The Marcus Corporation, 100 East Wisconsin Avenue, Suite 1900, Milwaukee, Wisconsin 53202-4125.



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EXHIBIT INDEX
90

EXHIBIT INDEX

2.1
Asset Purchase Agreement, dated as of November 1, 2018, by and among MMT Texnv, LLC, MMT Lapagava, LLC, The Marcus Corporation, Movie Tavern, Inc., Movie Tavern Theaters, LLC, TGS Beverage Company, LLC, and VSS-Southern Theatres LLC. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 2.1 to our Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2018].
3.1
Restated Articles of Incorporation. [Incorporated by reference to Exhibit 3.2 to our Quarterly Report on Form 10-Q for the quarterly period ended November 13, 1997.]
3.2
By-Laws of The Marcus Corporation, as amended. [Incorporated by reference to Exhibit 3.23.1 to our CurrentQuarterly Report on Form 8-K dated October 13, 2015.10-Q for the quarterly period ended September 24, 2020.]
4.1The Marcus Corporation Note Purchase Agreement dated April 17, 2008.  [Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated April 17, 2008.]
4.2
Credit Agreement, dated January 9, 2020, by and among The Marcus Corporation and the several banks party thereto, including JPMorgan Chase Bank, N.A., as Administrative Agent, and U.S. Bank National Association, as Syndication Agent. [Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated January 9, 2020.]
4.34.2
First Amendment to Credit Agreement, dated April 29, 2020, among The Marcus Corporation, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated April 30, 2020.]
4.3

4.4

4.5
4.6
4.7
The Marcus Corporation Note Purchase Agreement, dated June 27, 2013. [Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated June 27, 2013.]
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Table of Contents
4.44.8
The First Amendment to Note Purchase Agreement, dated June 27, 2013, dated April 29, 2020. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K dated April 30, 2020.]
4.9
4.10
4.11
4.12
The Fifth Amendment to Note Purchase Agreement, dated June 27, 2013, dated February 10, 2023. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.]
4.13
The Marcus Corporation Note Purchase Agreement, dated December 21, 2016. [Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated February 22, 2017.]
4.14
The First Amendment to Note Purchase Agreement, dated December 21, 2016, dated April 29, 2020. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K dated April 30, 2020.]
4.15
4.16
4.17
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Table of Contents
4.18
4.19
Indenture, dated September 22, 2020, between The Marcus Corporation and U.S. Bank, N.A., as trustee. [Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated September 22, 2020.]
Other than as set forth in Exhibits 4.1 4.2, 4.3 and 4.4,through 4.20, we have numerous instruments which define the rights of holders of long-term debt. These instruments, primarily promissory notes, have arisen from the purchase of operating properties in the ordinary course of business. These instruments are not being filed with this Annual Report on Form 10-K in reliance upon Item 601(b)(4)(iii) of Regulation S-K. Copies of these instruments will be furnished to the Securities and Exchange Commission upon request.
4.54.20
Description of the Registrant’s Securities.
10.1*The Marcus Corporation Non-Employee Director Compensation Plan. [Incorporated by reference to Exhibit 10.14.5 to our Annual Report on Form 10-K for the fiscal year ended December 28, 2017.26, 2019.]
10.2*10.1*
10.2*
The Marcus Corporation Variable Incentive Plan, as amended. [Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated July 7, 2009.]
10.3*
The Marcus Corporation Deferred Compensation Plan. [Incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K for the fiscal year ended May 25, 2006.]

10.4*
The Marcus Corporation Retirement Income and Supplemental Retirement Plan, as amended and restated. [Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period ended August 29, 2013.]

91
10.5

10.5
Administrative Services Agreement between Marcus Investments, LLC and The Marcus Corporation, as amended. [Incorporated by reference to Exhibit 99.1 to our Annual Report on Form 10-K for the fiscal year ended May 31, 2007.]
10.6*
The Marcus Corporation 1995 Equity Incentive Plan, as amended and restated. [Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K dated October 4, 2006.]
10.7*
Form of The Marcus Corporation 1995 Equity Incentive Plan Restricted Stock Agreement. [Incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K for the fiscal year ended May 26, 2005.]
10.8*
The Marcus Corporation 2004 Equity and Incentive Awards Plan. [Incorporated by reference to Attachment A to the Company’s definitive proxy statement filed with the Securities and Exchange Commission on Schedule 14A on September 2, 2011.]
10.9*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement. [Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated August 15, 2006.]
10.10*
Form of Cover Letter to The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement. [Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K dated August 15, 2006.]
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Table of Contents
10.11*Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Stock Option Award (Employees).  [Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K dated July 8, 2008.]
10.12*Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Stock Option Award (Non-Employee Directors).  [Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K dated July 8, 2008.]
10.13*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Stock Option Award Agreement for awards granted after October 11, 2011 (Employees). [Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form S-8 dated October 28, 2011.]
10.14*10.12*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement for awards granted after October 11, 2011 (Employees). [Incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K for the fiscal year ended May 31, 2012.]
10.15*10.13*
Form of Cover Letter to The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement for awards granted after October 11, 2011 (Employees). [Incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K for the fiscal year ended May 31, 2012.]
10.16*10.14*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Stock Option Award Agreement for awards granted after January 8, 2013 (Employees). [Incorporated by reference to Exhibit 10 to our Quarterly Report on Form 10-Q for the quarterly period ended November 28, 2013.]
10.17*10.15*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Stock Option Award for awards granted after October 11, 2011 (Non-Employee Directors). [Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period ended February 23, 2012.]

92
10.16*

10.18*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement for awards granted after October 11, 2011 (Non-Employee Directors). [Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended February 23, 2012.]
10.19*10.17*
The Marcus Corporation Long-Term Incentive Plan Terms. [Incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K for the fiscal year ended May 28, 2009.]
10.20*10.18*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement (Non-Employee Directors) for awards granted after February 22, 2018. [Incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K for the fiscal year ended December 28, 2017.]
10.21*10.19*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement for awards granted after February 22, 2018 (Employees). [Incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K for the fiscal year ended December 28, 2017.]
10.22*10.20*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Restricted Stock Agreement for awards granted after August 1, 2018 (Employees). [Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 28, 2018.]
10.2310.21*
Shareholders’Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Stock Option Award Agreement for awards granted after May 6, 2020 (Employees). [Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended September 24, 2020.]
10.22*
Form of The Marcus Corporation 2004 Equity and Incentive Awards Plan Stock Option Award Agreement for awards granted after February 23, 2022 (Employees). [Incorporated by reference to Exhibit 10.22 to our Annual Report on Form 10-K for the fiscal year ended December 30, 2021.]
10.23
Purchase Agreement, dated as of February 1, 2019, by andSeptember 17, 2020, between The Marcus Corporation and Southern Margin Loan SPV LLC.J.P. Morgan Securities LLC, as representative of the Initial Purchasers. [Incorporated by reference to Exhibit 10.1 to our Registration StatementCurrent Report on Form S-3ASR filed with the Securities and Exchange Commission on February 1, 2019.8-K dated September 22, 2020.]
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10.24
Underwriting Agreement, dated asForm of February 4, 2019, by and among The Marcus Corporation, Goldman Sachs & Co. LLC, as the Underwriter and Southern Margin Loan SPV LLC, as the Selling Shareholder.Capped Call Transaction Confirmation. [Incorporated by reference to Exhibit 1.110.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2019.dated September 22, 2020.]
14.1
The Marcus Corporation Code Of Conduct, as amended February 3, 2016.  18, 2020. [Incorporated by reference to Exhibit 14.1 to our CurrentAnnual Report on Form 8-K dated February 3, 2016.10-K for the fiscal year ended December 31, 2020.]
21
Our subsidiaries as of December 26, 2019.29, 2022.
2322
23
Consent of Deloitte & Touche LLP.
31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
Written Statement of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350.
99Proxy Statement for the 20202023 Annual Meeting of Shareholders. (The Proxy Statement for the 20202023 Annual Meeting of Shareholders will be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after the end of our fiscal year.)

93
101The following materials from The Marcus Corporation’s Annual Report on Form 10-K for the fiscal year ended December 29, 2022 are filed herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.
104Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101).

_____________________

*This exhibit is a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.

Item 16.Form 10-K Summary.

None.

94

Item 16.    Form 10-K Summary.
None.
97
SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE MARCUS CORPORATION

THE MARCUS CORPORATION
Date: February 24, 2020March 2, 2023By:/s/ Gregory S. Marcus
Gregory S. Marcus,
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of us and in the capacities as of the date indicated above.

By:
By:/s/ Gregory S. MarcusBy:By:/s/ Diane Marcus Gershowitz
Gregory S. Marcus, President and Chief Executive Officer (Principal Executive Officer) and DirectorDiane Marcus Gershowitz, Director
By:/s/ Douglas A. NeisChad M. ParisBy:By:/s/ Timothy E. Hoeksema

Douglas A. Neis, Executive Vice President,Chad M Paris, Chief Financial Officer and Treasurer (Principal Financial Officer and Accounting

Officer)

Timothy E. Hoeksema, Director

By:/s/ Stephen H. MarcusBy:By:/s/ Allan H. Selig
Stephen H. Marcus, Chairman and DirectorAllan H. Selig, Director
By:/s/ Philip L. MilsteinBy:By:/s/ Brian J. Stark
Philip L. Milstein, DirectorBrian J. Stark, Director
By:/s/ Bruce J. OlsonBy:By:/s/ DavidAustin M. BaumRamirez
Bruce J. Olson, DirectorDavidAustin M. Baum,Ramirez, Director
By:/s/ Katherine M. Gehl
Katherine M. Gehl, Director

S-1

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