UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June~~March 30, ~~2022~~2023


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

For the transition period from __________ to __________

Commission File Number 1-12604


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


Wisconsin						39-1139844
(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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	MCS	New York Stock Exchange

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

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

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~~“emerging growth company” in Rule 12b-2 of the Exchange Act (Check One).


Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

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 ~~AUGUST~~MAY 1, ~~2022~~2023 – ~~24,395,412~~24,594,510

CLASS B COMMON STOCK OUTSTANDING AT ~~AUGUST~~MAY 1, ~~2022 –7,110,875~~2023 –7,078,410

Table of Contents

THE MARCUS CORPORATION

INDEX

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

THE MARCUS CORPORATION

Consolidated Balance Sheets

(in thousands, except share and per share data)


		June 30, 2022		December 30, 2021			March 30, 2023		December 29, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	57,741	$	17,658	Cash and cash equivalents	$	10,051	$	21,704
Restricted cash	Restricted cash	5,677		6,396		Restricted cash	2,765		2,802
Accounts receivable, net of reserves of $169 and $1,001, respectively		26,273		28,902
Government grants receivable		—		4,335
Refundable income taxes		—		22,435
Accounts receivable, net of reserves of $164 and $172, respectively						Accounts receivable, net of reserves of $164 and $172, respectively	19,580		21,455

Assets held for sale	Assets held for sale	521		4,856		Assets held for sale	458		460
Other current assets	Other current assets	19,683		15,364		Other current assets	20,001		17,474
Total current assets	Total current assets	109,895		99,946		Total current assets	52,855		63,895

Property and equipment:	Property and equipment:					Property and equipment:
Land and improvements	Land and improvements	129,802		129,642		Land and improvements	132,258		132,285
Buildings and improvements	Buildings and improvements	766,057		756,974		Buildings and improvements	730,541		729,177
Leasehold improvements	Leasehold improvements	167,316		166,060		Leasehold improvements	167,596		167,516
Furniture, fixtures and equipment	Furniture, fixtures and equipment	383,997		375,650		Furniture, fixtures and equipment	388,243		386,197
Finance lease right-of-use assets	Finance lease right-of-use assets	75,262		75,124		Finance lease right-of-use assets	29,885		29,885
Construction in progress	Construction in progress	3,652		6,000		Construction in progress	14,448		10,305
Total property and equipment	Total property and equipment	1,526,086		1,509,450		Total property and equipment	1,462,971		1,455,365
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	770,460		738,258		Less accumulated depreciation and amortization	755,068		739,600
Net property and equipment	Net property and equipment	755,626		771,192		Net property and equipment	707,903		715,765

Operating lease right-of-use assets	Operating lease right-of-use assets	209,264		217,072		Operating lease right-of-use assets	191,125		194,965

Other assets:	Other assets:					Other assets:
Investments in joint ventures	Investments in joint ventures	2,202		2,335		Investments in joint ventures	1,896		2,067
Goodwill	Goodwill	75,052		75,095		Goodwill	74,996		75,015
Deferred incomes taxes		10,198		10,032

Other	Other	12,398		12,689		Other	12,913		12,891
Total other assets	Total other assets	99,850		100,151		Total other assets	89,805		89,973
TOTAL ASSETS	TOTAL ASSETS	$	1,174,635	$	1,188,361	TOTAL ASSETS	$	1,041,688	$	1,064,598

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Balance Sheets

(in thousands, except share and per share data)


		June 30, 2022		December 30, 2021			March 30, 2023		December 29, 2022
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	38,335	$	35,781	Accounts payable	$	29,110	$	32,187
Income taxes	Income taxes	283		—		Income taxes	532		—
Taxes other than income taxes	Taxes other than income taxes	19,219		19,566		Taxes other than income taxes	16,283		17,948
Accrued compensation	Accrued compensation	18,879		20,474		Accrued compensation	12,644		22,512
Other accrued liabilities	Other accrued liabilities	59,334		59,678		Other accrued liabilities	54,208		56,275
Short-term borrowings		46,628		47,346
Current portion of finance lease obligations	Current portion of finance lease obligations	2,489		2,561		Current portion of finance lease obligations	2,509		2,488
Current portion of operating lease obligations	Current portion of operating lease obligations	16,291		16,795		Current portion of operating lease obligations	14,522		14,553
Current maturities of long-term debt	Current maturities of long-term debt	11,077		10,967		Current maturities of long-term debt	10,339		10,432
Total current liabilities	Total current liabilities	212,535		213,168		Total current liabilities	140,147		156,395

Finance lease obligations	Finance lease obligations	16,116		17,192		Finance lease obligations	14,437		15,014

Operating lease obligations	Operating lease obligations	207,713		216,064		Operating lease obligations	191,187		195,281

Long-term debt	Long-term debt	203,720		204,177		Long-term debt	178,918		170,005

Deferred income taxes	Deferred income taxes	25,125		26,183		Deferred income taxes	23,399		26,567

Other long-term obligations	Other long-term obligations	56,693		57,963		Other long-term obligations	45,193		44,415

Equity:	Equity:					Equity:
Shareholders’ equity attributable to The Marcus Corporation	Shareholders’ equity attributable to The Marcus Corporation					Shareholders’ equity attributable to The Marcus Corporation
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued	Preferred Stock, $1 par; authorized 1,000,000 shares; none issued	—		—		Preferred Stock, $1 par; authorized 1,000,000 shares; none issued	—		—
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,498,243 shares at June 30, 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 shares at June 30, 2022 and 7,130,125 shares at December 30, 2021		7,111		7,130
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,691,548 shares at March 30, 2023 and 24,498,243 shares at December 29, 2022						Common Stock, $1 par; authorized 50,000,000 shares; issued 24,691,548 shares at March 30, 2023 and 24,498,243 shares at December 29, 2022	24,692		24,498
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,078,410 shares at March 30, 2023 and 7,110,875 shares at December 29, 2022						Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,078,410 shares at March 30, 2023 and 7,110,875 shares at December 29, 2022	7,078		7,111
Capital in excess of par	Capital in excess of par	150,565		145,656		Capital in excess of par	157,000		153,794
Retained earnings	Retained earnings	283,364		289,306		Retained earnings	263,239		274,254
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(10,529)		(11,444)		Accumulated other comprehensive loss	(1,785)		(1,694)
		455,009		454,993			450,224		457,963
Less cost of Common Stock in treasury (112,282 shares at June 30, 2022 and 48,111 shares at December 30, 2021)		(2,276)		(1,379)
Less cost of Common Stock in treasury (97,220 shares at March 30, 2023 and 78,882 shares at December 29, 2022)						Less cost of Common Stock in treasury (97,220 shares at March 30, 2023 and 78,882 shares at December 29, 2022)	(2,091)		(1,866)
Total shareholders’ equity attributable to The Marcus Corporation	Total shareholders’ equity attributable to The Marcus Corporation	452,733		453,614		Total shareholders’ equity attributable to The Marcus Corporation	448,133		456,097
Noncontrolling interest	Noncontrolling interest	—		—		Noncontrolling interest	274		824
Total equity	Total equity	452,733		453,614		Total equity	448,407		456,921

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,174,635	$	1,188,361	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,041,688	$	1,064,598

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Earnings (Loss)

(in thousands, except per share data)


		13 Weeks Ended				26 Weeks Ended					13 Weeks Ended
		June 30, 2022		July 1, 2021		June 30, 2022		July 1, 2021			March 30, 2023		March 31, 2022
Revenues:	Revenues:									Revenues:
Theatre admissions	Theatre admissions	$	63,087	$	24,915	$	101,504	$	35,600	Theatre admissions	$	47,635	$	38,417
Rooms	Rooms	28,865		17,332		46,295		26,376		Rooms	17,857		17,430
Theatre concessions	Theatre concessions	58,147		23,061		93,611		32,980		Theatre concessions	42,375		35,464
Food and beverage	Food and beverage	19,014		9,591		33,525		15,503		Food and beverage	15,193		14,511
Other revenues	Other revenues	21,192		14,231		39,999		26,125		Other revenues	19,688		18,807
		190,305		89,130		314,934		136,584			142,748		124,629
Cost reimbursements	Cost reimbursements	8,250		3,417		15,863		6,750		Cost reimbursements	9,528		7,613
Total revenues	Total revenues	198,555		92,547		330,797		143,334		Total revenues	152,276		132,242

Costs and expenses:	Costs and expenses:									Costs and expenses:
Theatre operations	Theatre operations	61,737		28,877		106,165		47,147		Theatre operations	51,069		44,428
Rooms	Rooms	10,471		7,072		18,674		12,337		Rooms	9,278		8,203
Theatre concessions	Theatre concessions	22,993		10,037		38,186		14,533		Theatre concessions	15,730		15,193
Food and beverage	Food and beverage	15,035		7,806		27,175		13,176		Food and beverage	13,568		12,140
Advertising and marketing	Advertising and marketing	5,978		3,819		10,459		6,368		Advertising and marketing	5,065		4,481
Administrative	Administrative	17,627		15,963		36,708		29,279		Administrative	19,851		19,081
Depreciation and amortization	Depreciation and amortization	16,752		18,494		33,983		36,473		Depreciation and amortization	15,876		17,231
Rent	Rent	6,578		6,344		12,828		12,685		Rent	6,493		6,250
Property taxes	Property taxes	4,980		4,468		9,725		9,207		Property taxes	4,757		4,745
Other operating expenses	Other operating expenses	9,261		8,628		18,935		13,418		Other operating expenses	10,049		9,674
Impairment charges		—		3,732		—		3,732

Reimbursed costs	Reimbursed costs	8,250		3,417		15,863		6,750		Reimbursed costs	9,528		7,613
Total costs and expenses	Total costs and expenses	179,662		118,657		328,701		205,105		Total costs and expenses	161,264		149,039

Operating income (loss)		18,893		(26,110)		2,096		(61,771)
Operating loss										Operating loss	(8,988)		(16,797)

Other income (expense):	Other income (expense):									Other income (expense):
Investment income (loss)	Investment income (loss)	(459)		120		(727)		160		Investment income (loss)	260		(268)
Interest expense	Interest expense	(4,063)		(4,907)		(8,155)		(9,750)		Interest expense	(3,008)		(4,092)
Other expense	Other expense	(584)		(628)		(1,161)		(1,256)		Other expense	(401)		(153)
Gain (loss) on disposition of property, equipment and other assets		(69)		(164)		355		2,040
Equity earnings ( losses) from unconsolidated joint ventures		7		—		(134)		—
Equity losses from unconsolidated joint ventures										Equity losses from unconsolidated joint ventures	(171)		(141)
		(5,168)		(5,579)		(9,822)		(8,806)			(3,320)		(4,654)

Earnings (loss) before income taxes		13,725		(31,689)		(7,726)		(70,577)
Income tax expense ( benefit)		4,765		(8,323)		(1,784)		(19,081)
Net earnings (loss)		8,960		(23,366)		(5,942)		(51,496)
Loss before income taxes										Loss before income taxes	(12,308)		(21,451)
Income tax benefit										Income tax benefit	(2,842)		(6,549)
Net loss										Net loss	(9,466)		(14,902)
Net earnings (loss) attributable to noncontrolling interests	Net earnings (loss) attributable to noncontrolling interests	—		—		—		—		Net earnings (loss) attributable to noncontrolling interests	—		—
Net earnings (loss) attributable to The Marcus Corporation		$	8,960	(23,366)		$	(5,942)	$	(51,496)
Net loss attributable to The Marcus Corporation										Net loss attributable to The Marcus Corporation	$	(9,466)	$	(14,902)

Net earnings (loss) per share - basic:
Net loss per share - basic:										Net loss per share - basic:
Common Stock	Common Stock	$	0.29	$	(0.76)	$	(0.19)	$	(1.71)	Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	Class B Common Stock	$	0.26	$	(0.68)	$	(0.18)	$	(1.44)	Class B Common Stock	$	(0.28)	$	(0.44)

Net earnings (loss) per share - diluted:
Net loss per share - diluted:										Net loss per share - diluted:
Common Stock	Common Stock	$	0.24	$	(0.76)	$	(0.19)	$	(1.71)	Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	Class B Common Stock	$	0.23	$	(0.68)	$	(0.18)	$	(1.44)	Class B Common Stock	$	(0.28)	$	(0.44)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

13 Weeks Ended 26 Weeks Ended
June 30,
2022 July 1,
2021 June 30,
2022 July 1,
2021
Net earnings (loss) $ 8,960 $ (23,366) $ (5,942) $ (51,496)
Other comprehensive income (loss), net of tax:
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $67, $86, $134 and $172 , respectively 190 242 380 484
Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $37, $(2), $116 and $4, respectively 106 (7) 329 10
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect of $31, $43, $72 and $111, respectively 88 121 206 314
Other comprehensive income 384 356 915 808
Comprehensive income (loss) 9,344 (23,010) (5,027) (50,688)
Comprehensive earnings (loss) attributable to noncontrolling interests — — — —
Comprehensive income (loss) attributable to The Marcus Corporation $ 9,344 $ (23,010) $ (5,027) $ (50,688)


	13 Weeks Ended
	March 30, 2023		March 31, 2022

Net loss	$	(9,466)	$	(14,902)
Other comprehensive income (loss), net of tax:
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect (benefit) of $(5), and $67, respectively	(11)		190
Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $(8) and $79, respectively	(22)		223
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect (benefit) of $(20) and $41, respectively	(58)		118
Other comprehensive income (loss)	(91)		531
Comprehensive loss	(9,557)		(14,371)
Comprehensive earnings (loss) attributable to noncontrolling interests	—		—
Comprehensive loss attributable to The Marcus Corporation	$	(9,557)	$	(14,371)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Cash Flows

(in thousands)


		26 Weeks Ended					13 Weeks Ended
		June 30, 2022		July 1, 2021			March 30, 2023		March 31, 2022

OPERATING ACTIVITIES:	OPERATING ACTIVITIES:					OPERATING ACTIVITIES:
Net loss	Net loss	$	(5,942)	$	(51,496)	Net loss	$	(9,466)	$	(14,902)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:					Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Losses on investments in joint ventures	Losses on investments in joint ventures	134		—		Losses on investments in joint ventures	171		141
Gain on disposition of property, equipment and other assets		(355)		(2,040)
Impairment charges		—		3,732
(Gain) loss on disposition of property, equipment and other assets						(Gain) loss on disposition of property, equipment and other assets	398		(424)

Depreciation and amortization	Depreciation and amortization	33,983		36,473		Depreciation and amortization	15,876		17,231
Amortization of debt issuance costs	Amortization of debt issuance costs	826		1,244		Amortization of debt issuance costs	367		413
Share-based compensation	Share-based compensation	4,572		4,152		Share-based compensation	2,172		2,917
Deferred income taxes	Deferred income taxes	(1,505)		(19,181)		Deferred income taxes	(3,117)		(6,342)
Other long-term obligations	Other long-term obligations	(49)		1,180		Other long-term obligations	771		(460)
Contribution of the Company’s stock to savings and profit-sharing plan	Contribution of the Company’s stock to savings and profit-sharing plan	956		1,012		Contribution of the Company’s stock to savings and profit-sharing plan	1,259		956
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	2,629		(4,944)		Accounts receivable	1,910		7,495
Government grants receivable	Government grants receivable	4,335		4,913		Government grants receivable	—		4,335
Other assets	Other assets	(4,294)		(1,712)		Other assets	(2,130)		(1,841)
Operating leases	Operating leases	(1,047)		(2,484)		Operating leases	(285)		(1,161)
Accounts payable	Accounts payable	551		6,369		Accounts payable	(2,501)		(10,956)
Income taxes	Income taxes	22,720		6,003		Income taxes	265		22,704
Taxes other than income taxes	Taxes other than income taxes	(347)		(654)		Taxes other than income taxes	(1,665)		(3,908)
Accrued compensation	Accrued compensation	(1,595)		6,650		Accrued compensation	(9,891)		(6,563)
Other accrued liabilities	Other accrued liabilities	(344)		1,102		Other accrued liabilities	(1,868)		(3,164)
Total adjustments	Total adjustments	61,170		41,815		Total adjustments	1,732		21,373
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	55,228		(9,681)		Net cash provided by (used in) operating activities	(7,734)		6,471

INVESTING ACTIVITIES:	INVESTING ACTIVITIES:					INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(16,341)		(6,195)		Capital expenditures	(8,921)		(6,562)
Proceeds from disposals of property, equipment and other assets	Proceeds from disposals of property, equipment and other assets	4,821		4,297		Proceeds from disposals of property, equipment and other assets	—		3,438

Proceeds from sale of trading securities						Proceeds from sale of trading securities	9		1
Purchase of trading securities	Purchase of trading securities	—		(1,906)		Purchase of trading securities	(514)		—

Other investing activities	Other investing activities	45		59		Other investing activities	(105)		20
Net cash used in investing activities	Net cash used in investing activities	(11,475)		(3,745)		Net cash used in investing activities	(9,531)		(3,103)

FINANCING ACTIVITIES:	FINANCING ACTIVITIES:					FINANCING ACTIVITIES:
Debt transactions:	Debt transactions:					Debt transactions:
Proceeds from borrowings on revolving credit facility	Proceeds from borrowings on revolving credit facility	22,000		66,500		Proceeds from borrowings on revolving credit facility	29,000		22,000
Repayment of borrowings on revolving credit facility	Repayment of borrowings on revolving credit facility	(22,000)		(46,500)		Repayment of borrowings on revolving credit facility	(20,000)		(22,000)

Repayments on short-term borrowings	Repayments on short-term borrowings	(820)		(4,150)		Repayments on short-term borrowings	—		(820)
Principal payments on long-term debt	Principal payments on long-term debt	(851)		(187)		Principal payments on long-term debt	(431)		(427)

Debt issuance costs	Debt issuance costs	—		(4)		Debt issuance costs	(50)		—
Principal payments on finance lease obligations	Principal payments on finance lease obligations	(1,336)		(1,329)		Principal payments on finance lease obligations	(556)		(584)
Equity transactions:	Equity transactions:					Equity transactions:
Treasury stock transactions, except for stock options	Treasury stock transactions, except for stock options	(1,461)		(1,236)		Treasury stock transactions, except for stock options	(292)		(1,364)
Exercise of stock options	Exercise of stock options	79		1,374		Exercise of stock options	2		26

Net cash (used in) provided by financing activities		(4,389)		14,468
Net increase in cash, cash equivalents and restricted cash		39,364		1,042
Dividends paid						Dividends paid	(1,548)		—
Distributions to noncontrolling interest						Distributions to noncontrolling interest	(550)		—
Net cash provided by ( used in) financing activities						Net cash provided by ( used in) financing activities	5,575		(3,169)
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	(11,690)		199
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	24,054		14,088		Cash, cash equivalents and restricted cash at beginning of period	24,506		24,054
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	63,418	$	15,130	Cash, cash equivalents and restricted cash at end of period	$	12,816	$	24,253

Supplemental Information:	Supplemental Information:					Supplemental Information:
Interest paid, net of amounts capitalized	Interest paid, net of amounts capitalized	$	7,054	$	7,719	Interest paid, net of amounts capitalized	$	4,356	$	5,904
Income taxes refunded, including interest earned		22,998		5,910
Income taxes refunded (paid), including interest earned						Income taxes refunded (paid), including interest earned	(11)		22,911
Change in accounts payable for additions to property, equipment and other assets	Change in accounts payable for additions to property, equipment and other assets	2,003		400		Change in accounts payable for additions to property, equipment and other assets	(588)		(1,041)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 ~~AND 26~~ WEEKS ENDED ~~JUNE~~MARCH 30, ~~2022~~2023

(in thousands, except share and per share data)

1. General

Basis of Presentation - The unaudited consolidated financial statements for the 13 ~~and 26~~ weeks ended ~~June~~March 30, ~~2022~~2023 and ~~July 1, 2021~~March 31, 2022 have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at ~~June~~March 30, ~~2022,~~2023, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December ~~30, 2021.~~29, 2022.

Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December ~~30, 2021,~~29, 2022, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.

Noncontrolling ~~Interests~~Interest - The Company has an ownership interest greater than 50% in one joint venture that is considered a Variable Interest Entity (VIE) that is 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. The equity interest of outside owners in consolidated entities is recorded as noncontrolling ~~interests~~interest in the consolidated balance ~~sheets, and their share~~sheets. The remaining noncontrolling interest as of ~~earnings is recorded as net earnings (loss) attributable to noncontrolling interests~~March 30, 2023, represents undistributed cash in the consolidated statements of earnings (loss) in accordance with the partnership agreement. Due to the cumulative losses of the entity, the noncontrolling interest balance is $0 as of June 30, 2022 and December 30, 2021. The Company will not record earnings or losses from noncontrolling interest until the entity returns to profitability.joint venture.

Depreciation and Amortization - Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled ~~$16,744~~$15,868 and ~~$33,967~~$17,223 for the 13 ~~and 26~~ weeks ended ~~June~~March 30, ~~2022, respectively,~~2023 and ~~$18,475 and $36,433 for the 13 and 26 weeks ended July 1, 2021,~~March 31, 2022, respectively.

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 ~~June~~March 30, ~~2022,~~2023, assets held for sale consists ~~primarily~~ of excess land.

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. There were no indicators of impairment identified during the 2613 weeks ended ~~June~~March 30, 2023 or March 31, 2022.

Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the first day of the fiscal fourth quarter. There were no indicators of impairment identified during the 2613 weeks ended ~~June~~March 30, ~~2022~~2023 or ~~July 1, 2021.~~March 31, 2022.

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 options and convertible debt instruments using the if-converted method. Convertible Class B Common Stock and convertible debt instruments are reflected on an if-converted 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.

Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of Class B Common Stock. As such, the undistributed earnings (losses) for each period are allocated based on the proportionate share of entitled cash dividends.

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


		13 Weeks Ended				26 Weeks Ended					13 Weeks Ended
		June 30, 2022		July 1, 2021		June 30, 2022		July 1, 2021			March 30, 2023		March 31, 2022

Numerator:	Numerator:									Numerator:
Net earnings (loss) attributable to The Marcus Corporation		$	8,960	$	(23,366)	$	(5,942)	$	(51,496)
Denominator:
Net loss attributable to The Marcus Corporation										Net loss attributable to The Marcus Corporation	$	(9,466)	$	(14,902)
Denominator (in thousands):										Denominator (in thousands):
Denominator for basic EPS	Denominator for basic EPS	31,492		31,404		31,469		31,300		Denominator for basic EPS	31,572		31,445
Effect of dilutive employee stock options	Effect of dilutive employee stock options	40		—		—		—		Effect of dilutive employee stock options	—		—
Effect of convertible notes	Effect of convertible notes	9,085		—		—		—		Effect of convertible notes	—		—
Denominator for diluted EPS	Denominator for diluted EPS	40,617		31,404		31,469		31,300		Denominator for diluted EPS	31,572		31,445
Net earnings (loss) per share - basic:
Net loss per share - basic:										Net loss per share - basic:
Common Stock	Common Stock	$	0.29	$	(0.76)	$	(0.19)	$	(1.71)	Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	Class B Common Stock	$	0.26	$	(0.68)	$	(0.18)	$	(1.44)	Class B Common Stock	$	(0.28)	$	(0.44)
Net earnings (loss) per share - diluted:
Net loss per share - diluted:										Net loss per share - diluted:
Common Stock	Common Stock	$	0.24	$	(0.76)	$	(0.19)	$	(1.71)	Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	Class B Common Stock	$	0.23	$	(0.68)	$	(0.18)	$	(1.44)	Class B Common Stock	$	(0.28)	$	(0.44)

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. During the 2613 weeks ended ~~June~~March 30, 2023 and March 31, 2022, respectively, approximately 41,869 and ~~the 13 and 26 weeks ended July 1, 2021, approximately 61,791, 165,439 and 142,746~~81,076 common stock equivalents ~~respectively,~~ were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 2613 weeks ended ~~June~~March 30, 2023, and March 31, 2022, respectively, 9,170,800 and ~~the 13 and 26 weeks ended July 1, 2021,~~ 9,084,924 shares related to the convertible notes were excluded from the computation of diluted loss per share as the effect would have been anti-dilutive.

Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interest for the 13 ~~and 26~~ weeks ended ~~June~~March 30, ~~2022~~2023 and ~~July 1, 2021~~March 31, 2022 was as follows:


		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 Interest		Total Equity			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 Interest		Total Equity
BALANCES AT DECEMBER 30, 2021		$	24,345	$	7,130	$	145,656	$	289,306	$	(11,444)	$	(1,379)	$	453,614	$	—	$	453,614
BALANCES AT DECEMBER 29, 2022																				BALANCES AT DECEMBER 29, 2022	$	24,498	$	7,111	$	153,794	$	274,254	$	(1,694)	$	(1,866)	$	456,097	$	824	$	456,921
Cash dividends:																				Cash dividends:
$0.045 per share Class B Common Stock																				$0.045 per share Class B Common Stock	—		—		—		(319)		—		—		(319)		—		(319)
$0.05 per share Common Stock																				$0.05 per share Common Stock	—		—		—		(1,229)		—		—		(1,229)		—		(1,229)
Exercise of stock options	Exercise of stock options	—		—		(5)		—		—		31		26		—		26		Exercise of stock options	—		—		(1)		—		—		3		2		—		2
Purchase of treasury stock	Purchase of treasury stock	—		—		—		—		—		(1,373)		(1,373)		—		(1,373)		Purchase of treasury stock	—		—		—		—		—		(313)		(313)		—		(313)
Savings and profit-sharing contribution	Savings and profit-sharing contribution	56		—		900		—		—		—		956		—		956		Savings and profit-sharing contribution	79		—		1,180		—		—		—		1,259		—		1,259
Reissuance of treasury stock	Reissuance of treasury stock	—		—		1		—		—		8		9		—		9		Reissuance of treasury stock	—		—		(3)		—		—		24		21		—		21
Issuance of non-vested stock	Issuance of non-vested stock	78		—		(236)		—		—		158		—		—		—		Issuance of non-vested stock	82		—		(143)		—		—		61		—		—		—
Shared-based compensation	Shared-based compensation	—		—		2,917		—		—		—		2,917		—		2,917		Shared-based compensation	—		—		2,172		—		—		—		2,172		—		2,172
Other	Other	—		—		1		(1)		—		—		—		—		—		Other	—		—		1		(1)		—		—		—		—		—
Conversions of Class B Common Stock	Conversions of Class B Common Stock	19		(19)		—		—		—		—		—		—		—		Conversions of Class B Common Stock	33		(33)		—		—		—		—		—		—		—
Distribution to noncontrolling interest																				Distribution to noncontrolling interest	—		—		—		—		—		—		—		(550)		(550)
Comprehensive income (loss)	Comprehensive income (loss)	—		—		—		(14,902)		531		—		(14,371)		—		(14,371)		Comprehensive income (loss)	—		—		—		(9,466)		(91)		—		(9,557)		—		(9,557)
BALANCES AT MARCH 31, 2022		$	24,498	$	7,111	$	149,234	$	274,403	$	(10,913)	$	(2,555)	$	441,778	$	—	$	441,778
Exercise of stock options		—		—		(16)		—		—		69		53		—		53
Purchase of treasury stock		—		—		—		—		—		(104)		(104)		—		(104)
Reissuance of treasury stock		—		—		(2)		—		—		9		7		—		7
Issuance of non-vested stock		—		—		(305)		—		—		305		—		—		—
Shared-based compensation		—		—		1,655		—		—		—		1,655		—		1,655
Other		—		—		(1)		1		—		—		—		—		—
Comprehensive income		—		—		—		8,960		384		—		9,344		—		9,344
BALANCES AT MARCH 30, 2023																				BALANCES AT MARCH 30, 2023	$	24,692	$	7,078	$	157,000	$	263,239	$	(1,785)	$	(2,091)	$	448,133	$	274	$	448,407

BALANCES AT JUNE 30, 2022		$	24,498	$	7,111	$	150,565	$	283,364	$	(10,529)	$	(2,276)	$	452,733	$	—	$	452,733


		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 Interest		Total Equity			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 Interest		Total Equity
BALANCES AT DECEMBER 31, 2020		$	23,264	$	7,926	$	153,529	$	331,897	$	(14,933)	$	(2,960)	$	498,723	$	—	$	498,723
Adoption of ASU No. 2020-06		—		—		(16,511)		702		—		—		(15,809)		—		(15,809)
BALANCES AT DECEMBER 30, 2021																				BALANCES AT DECEMBER 30, 2021	$	24,345	$	7,130	$	145,656	$	289,306	$	(11,444)	$	(1,379)	$	453,614	$	—	$	453,614
Exercise of stock options	Exercise of stock options	—		—		(659)		—		—		1,951		1,292		—		1,292		Exercise of stock options	—		—		(5)		—		—		31		26		—		26
Purchase of treasury stock	Purchase of treasury stock	—		—		—		—		—		(1,181)		(1,181)		—		(1,181)		Purchase of treasury stock	—		—		—		—		—		(1,373)		(1,373)		—		(1,373)
Savings and profit-sharing contribution	Savings and profit-sharing contribution	44		—		968		—		—		—		1,012		—		1,012		Savings and profit-sharing contribution	56		—		900		—		—		—		956		—		956
Reissuance of treasury stock	Reissuance of treasury stock	—		—		2		—		—		10		12		—		12		Reissuance of treasury stock	—		—		1		—		—		8		9		—		9
Issuance of non-vested stock	Issuance of non-vested stock	221		—		(367)		—		—		146		—		—		—		Issuance of non-vested stock	78		—		(236)		—		—		158		—		—		—
Shared-based compensation	Shared-based compensation	—		—		1,484		—		—		—		1,484		—		1,484		Shared-based compensation	—		—		2,917		—		—		—		2,917		—		2,917
Other	Other	—		—		—		(1)		—		1		—		—		—		Other	—		—		1		(1)		—		—		—		—		—
Conversions of Class B Common Stock	Conversions of Class B Common Stock	520		(520)		—		—		—		—		—		—		—		Conversions of Class B Common Stock	19		(19)		—		—		—		—		—		—		—
Comprehensive income (loss)	Comprehensive income (loss)	—		—		—		(28,130)		452		—		(27,678)		—		(27,678)		Comprehensive income (loss)	—		—		—		(14,902)		531		—		(14,371)		—		(14,371)
BALANCES AT APRIL 1, 2021		$	24,049	$	7,406	$	138,446	$	304,468	$	(14,481)	$	(2,033)	$	457,855	$	—	$	457,855
Exercise of stock options		—		—		(40)		—		—		122		82		—		82
Purchase of treasury stock		—		—		—		—		—		(73)		(73)		—		(73)
Reissuance of treasury stock		—		—		(1)		—		—		7		6		—		6
Issuance of non-vested stock		18		—		(157)		—		—		139		—		—		—
Shared-based compensation		—		—		2,668		—		—		—		2,668		—		2,668
Conversions of Class B Common Stock		275		(275)		—		—		—		—		—		—		—
Comprehensive income (loss)		—		—		—		(23,366)		356		—		(23,010)		—		(23,010)
BALANCES AT JULY 1, 2021		$	24,342	$	7,131	$	140,916	$	281,102	$	(14,125)	$	(1,838)	$	437,528	$	—	$	437,528
BALANCES AT MARCH 31, 2022																				BALANCES AT MARCH 31, 2022	$	24,498	$	7,111	$	149,234	$	274,403	$	(10,913)	$	(2,555)	$	441,778	$	—	$	441,778

Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:


		June 30, 2022		December 30, 2021			March 30, 2023		December 29, 2022

Unrecognized gain (loss) on interest rate swap agreements		$	26	$	(509)
Unrecognized gain on interest rate swap agreements						Unrecognized gain on interest rate swap agreements	$	—	$	80
Net unrecognized actuarial loss for pension obligation	Net unrecognized actuarial loss for pension obligation	(10,555)		$	(10,935)	Net unrecognized actuarial loss for pension obligation	(1,785)		$	(1,774)
		$	(10,529)	$	(11,444)		$	(1,785)	$	(1,694)

Fair Value Measurements - Certain financial assets and liabilities are recorded at fair value in the consolidated 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.

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 ~~June~~March 30, ~~2022~~2023 and December ~~30, 2021,~~29, 2022, respectively, the Company’s ~~$3,789~~$4,544 and ~~$4,617~~$3,932 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets. At ~~June 30,~~December 29, 2022, ~~and December 30, 2021, respectively,~~ the Company’s ~~$44,990 and $5,000~~$6,000 of investments in money market ~~accounts~~funds were valued using Level 1 pricing inputs and were included in cash and cash equivalents. The Company had no investments in money market funds at March 30, 2023.

Level 2 - Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At ~~June 30,~~December 29, 2022, ~~and December 30, 2021, respectively,~~ the Company’s ~~$34~~$108 asset ~~and $689 liability~~ related to the Company’s interest rate swap contract was valued using Level 2 pricing inputs. This contracted terminated on March 1, 2023.

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 ~~June~~March 30, ~~2022~~2023 and December ~~30, 2021,~~29, 2022, 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~~

The carrying value of the Company’s financial instruments (including cash and ~~liabilities that were measured~~cash equivalents, restricted cash, accounts receivable and accounts payable) approximates fair value. The fair value of the Company’s $80,000 of senior notes, valued using Level 2 pricing inputs, is approximately $72,554 at March 30, 2023, 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 $157,576 at March 30, 2023, determined based on ~~a non-recurring basis are discussed in Note 3.~~market rates and the closing trading price of the convertible senior notes as of March 30, 2023. 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.

Defined Benefit Plan - The components of the net periodic pension cost of the Company’s unfunded nonqualified, defined-benefit plan are as follows:


		13 Weeks Ended				26 Weeks Ended					13 Weeks Ended
		June 30, 2022		July 1, 2021		June 30, 2022		July 1, 2021			March 30, 2023		March 31, 2022

Service cost	Service cost	$	264	$	280	$	528	$	561	Service cost	$	122	$	264
Interest cost	Interest cost	335		301		670		601		Interest cost	453		335
Net amortization of prior service cost and actuarial loss	Net amortization of prior service cost and actuarial loss	257		327		514		655		Net amortization of prior service cost and actuarial loss	(16)		257
Net periodic pension cost	Net periodic pension cost	$	856	$	908	$	1,712	$	1,817	Net periodic pension cost	$	559	$	856

Service cost is included in Administrative expense while all other components are recorded within Other expense outside of operating income in the consolidated statements of earnings.

Revenue Recognition – The disaggregation of revenues by business segment for the 13 ~~and 26~~ weeks ended ~~June~~March 30, ~~2022~~2023 is as follows:


		13 Weeks Ended June 30, 2022									13 Weeks Ended March 30, 2023
		Theatres		Hotels/Resorts		Corporate		Total			Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	Theatre admissions	$	63,087	$	—	$	—	$	63,087	Theatre admissions	$	47,635	$	—	$	—	$	47,635
Rooms	Rooms	—		28,865		—		28,865		Rooms	—		17,857		—		17,857
Theatre concessions	Theatre concessions	58,147		—		—		58,147		Theatre concessions	42,375		—		—		42,375
Food and beverage	Food and beverage	—		19,014		—		19,014		Food and beverage	—		15,193		—		15,193
Other revenues(1)	Other revenues(1)	8,203		12,872		117		21,192		Other revenues(1)	6,366		13,233		89		19,688
Cost reimbursements	Cost reimbursements	—		8,250		—		8,250		Cost reimbursements	—		9,528		—		9,528
Total revenues	Total revenues	$	129,437	$	69,001	$	117	$	198,555	Total revenues	$	96,376	$	55,811	$	89	$	152,276

		26 Weeks Ended June 30, 2022
		Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions		$	101,504	$	—	$	—	$	101,504
Rooms		—		46,295		—		46,295
Theatre concessions		93,611		—		—		93,611
Food and beverage		—		33,525		—		33,525
Other revenues(1)		13,813		25,975		211		39,999
Cost reimbursements		—		15,863		—		15,863
Total revenues		$	208,928	$	121,658	$	211	$	330,797

(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.

The disaggregation of revenues by business segment for the 13 ~~and 26~~ weeks ended ~~July 1, 2021~~March 31, 2022 is as follows:


		13 Weeks Ended July 1, 2021									13 Weeks Ended March 31, 2022
		Theatres		Hotels/Resorts		Corporate		Total			Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	Theatre admissions	$	24,915	$	—	$	—	$	24,915	Theatre admissions	$	38,417	$	—	$	—	$	38,417
Rooms	Rooms	—		17,332		—		17,332		Rooms	—		17,430		—		17,430
Theatre concessions	Theatre concessions	23,061		—		—		23,061		Theatre concessions	35,464		—		—		35,464
Food and beverage	Food and beverage	—		9,591		—		9,591		Food and beverage	—		14,511		—		14,511
Other revenues(1)	Other revenues(1)	4,281		9,855		95		14,231		Other revenues(1)	5,610		13,103		94		18,807
Cost reimbursements	Cost reimbursements	44		3,373		—		3,417		Cost reimbursements	—		7,613		—		7,613
Total revenues	Total revenues	$	52,301	$	40,151	$	95	$	92,547	Total revenues	$	79,491	$	52,657	$	94	$	132,242

		26 Weeks Ended July 1, 2021
		Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions		$	35,600	$	—	$	—	$	35,600
Rooms		—		26,376		—		26,376
Theatre concessions		32,980		—		—		32,980
Food and beverage		—		15,503		—		15,503
Other revenues(1)		6,196		19,734		195		26,125
Cost reimbursements		87		6,663		—		6,750
Total revenues		$	74,863	$	68,276	$	195	$	143,334

(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.

The Company had deferred revenue from contracts with customers of ~~$39,355~~$37,561 and ~~$39,144~~$37,046 as of ~~June~~March 30, ~~2022~~2023 and December ~~30, 2021,~~29, 2022, respectively. The Company had no contract assets as of ~~June~~March 30, ~~2022~~2023 and December ~~30, 2021.~~29, 2022. During the 2613 weeks ended ~~June~~March 30, 2023, the Company recognized revenue of $6,276 that was included in deferred revenues as of December 29, 2022. During the 13 weeks ended March 31, 2022, the Company recognized revenue of ~~$9,448~~$5,383 that was included in deferred revenues as of December 30, 2021. ~~During the 26 weeks ended July 1, 2021, the Company recognized revenue of $4,115 that was included in deferred revenues as of December 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 ~~June~~March 30, ~~2022,~~2023, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was ~~$3,228~~$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 March 30, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $17,535

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 ~~June~~March 30, ~~2022,~~2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was ~~$3,559~~$3,862 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. 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.

~~New Accounting Pronouncements~~ ~~– During the first quarter of fiscal 2022, the Company adopted Accounting Standards Update (ASU) No. 2021-10,~~ ~~Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance~~. The amendments in this update provide increased transparency of government assistance including the 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 did not have a material effect on the Company’s consolidated financial statements.

~~In March 2020, the Financial Accounting Standards Board 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, 2022. The Company will evaluate the effect the new standard will have on its consolidated financial statements when a replacement rate is chosen.

2. ~~Impact of COVID-19 Pandemic~~

The COVID-19 pandemic has 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 have taken to control the spread of the pandemic, and the customers’ reactions or responses to such actions. The extent of these protective actions and their impact on the Company’s businesses has continued to dissipate during the first half of 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 8 of its company-owned and managed hotels open. The majority of the Company’s restaurants and bars in its hotels and resorts were open during the first quarters of fiscal 2022, operating under applicable state and local restrictions and guidelines, and in some cases reduced operating hours. The majority of the Company’s hotels and restaurants are generating reduced revenues as compared to pre-COVID-19 pandemic years, although hotel occupancy continues to improve as the travel activity increases.

Since the COVID-19 pandemic began, the Company has been working proactively to preserve cash and enhance liquidity. As of June 30, 2022, the Company had cash and cash equivalents of approximately $57,741 and $221,809 of availability under its $225,000 revolving credit facility. With this strong liquidity position, combined with cash generated from operations and proceeds from the sale of surplus real estate, the Company believes it is positioned to meet its obligations as they come due and continue to sustain its operations throughout fiscal 2022 and 2023, even if the properties continue to generate reduced revenues during these periods.

~~Table of Contents~~

~~THE MARCUS CORPORATION~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~FOR THE 13 AND 26 WEEKS ENDED JUNE 30, 2022~~

~~(in thousands, except share and per share data)~~

During the first quarter of fiscal 2022, the Company received a $22,959 federal income tax refund (including $636 of interest) related to its fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. The Company also received $4,335 in state theatre grants during the first quarter of fiscal 2022 that were awarded during the fourth quarter of fiscal 2021.

The Company believes that the actions that have been taken will allow it to have sufficient liquidity to meet its obligations as they come due and to comply with its debt covenants for at least 12 months from the issuance date of these unaudited consolidated financial statements. However, future compliance with the Company’s debt covenants are dependent upon the timing of new movie releases and the protective actions that federal, state and local governments have taken which impact consumer confidence and the speed of recovery of the Company’s theatres and hotels and resorts businesses. The Company’s estimates and assumptions related to future forecasted results of the Company are subject to inherent risk and uncertainty due to the ongoing impact of the COVID-19 pandemic, and actual results could differ materially from estimated amounts and impact the Company’s ability to comply with its debt covenants.

~~3. Impairment Charges~~

During the 13 weeks ended July 1, 2021, the Company determined that indicators of impairment were evident 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 these assets was less than their carrying amount. The Company evaluated the fair value of these assets, consisting primarily of 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 asset, including estimated sales proceeds) was less than their carrying values and recorded a $3,732 impairment loss, reducing certain property and equipment and certain operating lease right-of-use assets. The remaining net book value of the impaired assets was $10,200 as of July 1, 2021, excluding any applicable remaining lease obligations. There were no indicators of impairment identified during the 26 weeks ended June 30, 2022.

4. Long-Term Debt ~~and Short-Term Borrowings~~

Long-term debt ~~and short-term borrowings are~~is summarized as follows:

June 30, 2022 December 30, 2021
Mortgage notes $ 24,203 $ 24,388
Senior notes 90,000 90,000
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75% 1,158 1,356
Convertible senior notes 100,050 100,050
Payroll Protection Program loans 2,712 3,181
Revolving credit agreement — —
Debt issuance costs (3,326) (3,831)
Total debt, net of debt issuance costs 214,797 215,144
Less current maturities, net of issuance costs 11,077 10,967
Long-term debt $ 203,720 204,177
Short-term borrowings 46,628 47,346
Total debt and short-term borrowings, net of issuance costs $ 261,425 $ 262,490

~~Table of Contents~~

~~THE MARCUS CORPORATION~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~FOR THE 13 AND 26 WEEKS ENDED JUNE 30, 2022~~

~~(in thousands, except share and per share data)~~


	March 30, 2023		December 29, 2022


Senior notes	$	80,000	$	80,000
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75%	850		954
Convertible senior notes	100,050		100,050
Payroll Protection Program loans	1,914		2,240
Revolving credit agreement	9,000		—
Debt issuance costs	(2,557)		(2,807)
Total debt, net of debt issuance costs	189,257		180,437
Less current maturities, net of issuance costs	10,339		10,432
Long-term debt	$	178,918	$	170,005

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, ~~and~~ 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 ~~Third~~Fifth Amendment, hereinafter referred to as the “Credit Agreement”).

The Credit Agreement provides for a revolving credit facility that matures on January 9, 2025 with an initial maximum aggregate amount of availability of $225,000. At ~~June~~March 30, ~~2022,~~2023, there were borrowings of $0$9,000 outstanding on the revolving credit facility, which when borrowed, bear interest at ~~LIBOR~~the secured overnight financing rate (“SOFR”) plus a margin, effectively ~~6.10%~~9.35% at ~~June~~March 30, ~~2022.~~2023. Availability under the line at ~~June~~March 30, ~~2022,~~2023, was ~~$221,809,~~$212,773, after taking into consideration outstanding letters of credit that reduce revolver availability. ~~In conjunction~~

Effective with the ~~First~~Fifth Amendment on February 10, 2023, the ~~Company added an initial $90,800 term loan facility that~~variable rate LIBOR benchmark in the Credit Agreement was ~~scheduled to mature on September 22, 2021. In conjunction~~replaced with the Third Amendment, the term loan facility was reduced to $50,000 and the maturity date was extended to September 22, 2022. As of June 30, 2022, the balance of the term loan was $46,628, which is included in short-term borrowings on the consolidated balance sheet.

SOFR. Borrowings under the Credit Agreement now generally bear interest at a variable rate equal to: (i) ~~LIBOR,~~SOFR plus a credit spread adjustment of 0.10%, subject to a 1%0% floor, plus a specified margin based upon ~~the Company’s~~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)~~SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon ~~the Company’s~~our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

generally requires the Company to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on ~~its~~our consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment, the Second Amendment and the ~~Second~~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 ~~LIBOR~~SOFR 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~~SOFR borrowings and 1.75% for ABR borrowings, in each case, at all times.

The Credit Agreement contains various restrictions and covenants. 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 ~~3.0~~2.5 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, and (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~~securities. Beginning with the Company’s consolidated EBITDA not to be less than or equal to (i) $10,000 as of December 30, 2021 for the two consecutive fiscal quarters then ending, (ii) $25,000 as of March 31, 2022 for the three consecutive fiscal quarters then ending, (iii) $50,000 as of June 30, 2022 for the four consecutive fiscal quarters then ending, (iv) $65,000 as of September 29, 2022 for the four consecutive fiscal quarters then ending, or (v) $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 (i) $100,000 as of September 30, 2021, (ii) $100,000 as of December 30, 2021, (iii) $100,000 as of March 31, 2022, (iv) $100,000 as of June 30, 2022, or (v) $50,000 as of the end of any fiscal quarter thereafter until and including the fiscal quarter ending December 29, 2022; however, each such required minimum amount of consolidated liquidity would be reduced to $50,000 for each such testing date if the initial term loans are paid in full as of such date, 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 the Company’s 2022 fiscal year in excess of $50,000 plus certain adjustments. See Note 9 for further discussion of an amendment to the Credit Agreement covenants subsequent to the end of the secondfirst quarter of fiscal ~~2022.~~

~~Table of Contents~~

~~THE MARCUS CORPORATION~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~FOR THE 13 AND 26 WEEKS ENDED JUNE 30, 2022~~

~~(in thousands, except share and per share data)~~

~~Pursuant to the Credit Agreement,~~2023, the Company ~~is required~~has returned to apply net cash proceeds received from certain events, including certain asset disposition, casualty losses, condemnations, equity issuances, capital contributions, and the incurrence of certain debt, to prepay outstanding term loans. During the 26 weeks ended June 30, 2022, approximately $820 in asset sale proceeds were applied to the term loan balance. In addition, if, at any time during the specified period, the Company’s unrestricted cash on hand exceeds $75,000, the Company is required to prepay revolving loanscompliance with prior financial covenants under the Credit Agreement bythat were temporarily waived (specifically, the consolidated fixed charge coverage ratio), removing any limitations on the total amount of ~~such excess, without a corresponding reduction in the revolving commitments under~~quarterly dividends or share repurchases. During fiscal 2022 the Credit ~~Agreement.~~Agreement limited the total amount of quarterly dividend payments or share repurchases to no more than $1,550 per quarter.

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

At ~~June~~March 30, ~~2022~~2023 and December ~~30, 2021,~~29, 2022, the Company’s ~~$90,000~~$80,000 of senior notes consist of 2two Purchase Agreements maturing in 2025 through 2027, require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 4.32%.

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 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 the Company’s failure to comply with its reporting obligations under the Indenture or if the Convertible Notes are not freely tradeable 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

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

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 the Company’s election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate iswas 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 March 30, 2023, the applicable conversion rate is 91.6622 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an applicable conversion price of approximately $10.91 per share of Common Stock). If the Company undergoes certain fundamental changes,

~~Table of Contents~~

~~THE MARCUS CORPORATION~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~FOR THE 13 AND 26 WEEKS ENDED JUNE 30, 2022~~

~~(in thousands, except share and per share data)~~

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 bankruptcy or insolvency events of default involving the Company and certain of its subsidiaries after which the Convertible Notes become automatically due and payable.

~~During~~Since the Company’s fiscal 2021 second ~~third and fourth quarters, and~~quarter through the Company’s fiscal ~~2022 first,~~2023 second ~~and third quarters,~~quarter, the Company’s 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. 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 each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s Common Stock during the 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.

~~Derivatives~~

~~The Company utilizes derivatives principally~~In connection with the pricing of the Convertible Notes on September 17, 2020, and in connection with the exercise by the Initial Purchasers (as defined in the Convertible Notes purchase agreement) of their option 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~~purchase additional Convertible Notes on September 18, 2020, the Company entered into ~~2 interest rate swap agreements on March 1, 2018 covering $50,000~~privately negotiated Capped Call Transactions (the “Capped Call Transactions”) with certain of ~~floating rate debt.~~the Initial Purchasers and/or their respective affiliates and/or other financial institutions (the “Capped Call Counterparties”). The ~~first agreement had a notional~~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 ~~$25,000, expired~~such converted Convertible Notes, as the case may be, in the event that the market price per share of the Company’s common stock, as measured under the terms of the Capped 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

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

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 March ~~1, 2021 and required~~30, 2023, the adjusted cap price is approximately $17.81 per share. The Capped Call Transactions are separate transactions entered into by the Company to pay interest at a defined rate of 2.559% while receiving interest at a defined variable rate of one-month LIBOR. The second agreement has a notional amount of $25,000, expires March 1, 2023 and requireswith the Company to pay interest at a defined rate of 2.687% while receiving interest at a defined variable rate of one-month LIBOR (1.063% at June 30, 2022). The Company’s interest rate swap agreement is considered effective and qualifies as a cash flow hedge. The Company assesses, both at the inception of each hedge and on an on-going basis, whether the derivatives thatCapped Call Counterparties, are ~~used in its hedging transactions are highly effective in offsetting changes in cash flows~~not part of the ~~hedged items. As of June 30, 2022, the remaining interest rate swap was considered highly effective. The fair value~~terms of the ~~interest rate swap on June 30, 2022 was an asset~~Convertible Notes and will not change the rights of ~~$34, which is included in other current assets in the consolidated balance sheet. The fair value~~holders of the ~~interest rate swap on December 30, 2021, was a liability of $689, which was included in other long-term obligations in~~Convertible Notes under the ~~consolidated balance sheet. The Company does not expect~~Convertible Notes and the ~~interest rate swap to have a material effect on earnings over its remaining term.~~Indenture.

5.3. 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). 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 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. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Total lease cost consists of the following:


		13 Weeks Ended
Lease Cost	Classification	March 30, 2023		March 31, 2022

Finance lease costs:
Amortization of finance lease assets	Depreciation and amortization	$	691	$	705
Interest on lease liabilities	Interest expense	198		221
		$	889	$	926
Operating lease costs:
Operating lease costs	Rent expense	$	6,044	$	6,377
Variable lease cost	Rent expense	416		(163)
Short-term lease cost	Rent expense	33		36
		$	6,493	$	6,250

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 ~~AND 26~~ WEEKS ENDED ~~JUNE~~MARCH 30, ~~2022~~2023

(in thousands, except share and per share data)

~~Total lease cost consists of the following:~~

13 Weeks Ended 26 Weeks Ended
Lease Cost Classification June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021
Finance lease costs:
Amortization of finance lease assets Depreciation and amortization $ 696 $ 668 $ 1,401 $ 1,380
Interest on lease liabilities Interest expense 216 240 437 490
$ 912 $ 908 $ 1,838 $ 1,870
Operating lease costs:
Operating lease costs Rent expense $ 6,364 $ 6,465 $ 12,741 $ 12,786
Variable lease cost Rent expense 178 (158) 15 (173)
Short-term lease cost Rent expense 36 37 72 72
$ 6,578 $ 6,344 $ 12,828 $ 12,685

Additional information related to leases is as follows:


		13 Weeks Ended				26 Weeks Ended					13 Weeks Ended
Other Information	Other Information	June 30, 2022		July 1, 2021		June 30, 2022		July 1, 2021		Other Information	March 30, 2023		March 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:									Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	Financing cash flows from finance leases	$	752	$	699	$	1,336	$	1,329	Financing cash flows from finance leases	$	556	$	584
Operating cash flows from finance leases	Operating cash flows from finance leases	216		240		437		490		Operating cash flows from finance leases	198		221
Operating cash flows from operating leases	Operating cash flows from operating leases	7,012		7,899		14,136		$	15,292	Operating cash flows from operating leases	6,430		7,124

Right of use assets obtained in exchange for new lease obligations:	Right of use assets obtained in exchange for new lease obligations:									Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities	Finance lease liabilities	116		—		188		—		Finance lease liabilities	—		72
Operating lease liabilities	Operating lease liabilities	—		—		183		1,575		Operating lease liabilities	—		183


		June 30, 2022		December 30, 2021			March 30, 2023		December 29, 2022

Finance leases:	Finance leases:					Finance leases:
Property and equipment – gross	Property and equipment – gross	$	75,262	$	75,124	Property and equipment – gross	$	29,885	$	29,885
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(59,552)		(58,197)		Accumulated depreciation and amortization	(16,022)		(15,332)
Property and equipment - net	Property and equipment - net	$	15,710	$	16,927	Property and equipment - net	$	13,863	$	14,553

Remaining lease terms and discount rates are as follows:

Lease Term and Discount Rate

March 30, 2023

December 29, 2022

Weighted-average remaining lease terms:

Finance leases

7 years

Operating leases

12 years

Weighted-average discount rates:

Finance leases

4.59

Operating leases

4.51

Deferred rent payments of approximately $790 for the Company’s operating leases have been included in the total operating lease obligations as of March 30, 2023, of which approximately $587 is included in long-term operating lease obligations.

4. Income Taxes

The Company’s effective income tax rate for the 13 weeks ended March 30, 2023 and March 31, 2022 was 23.1% and 30.5%, respectively. During the 13 weeks ended March 31, 2022, the Company received $22,959 of income tax refunds related to its fiscal 2020 tax return, including $636 of interest which is included within income tax benefit in the consolidated statement of earnings (loss).

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 ~~AND 26~~ WEEKS ENDED ~~JUNE~~MARCH 30, ~~2022~~2023

(in thousands, except share and per share data)

~~Remaining lease terms and discount rates are as follows:~~

Lease Term and Discount Rate June 30, 2022 December 30, 2021
Weighted-average remaining lease terms:
Finance leases 8 years 8 years
Operating leases 13 years 13 years
Weighted-average discount rates:
Finance leases 4.58 % 4.58 %
Operating leases 4.60 % 4.48 %

Deferred rent payments of approximately $1,442 for the Company’s operating leases have been included in the total operating lease obligations as of June 30, 2022, of which approximately $698 is included in long-term operating lease obligations.

~~6. Income Taxes~~

The Company’s effective income tax rate for the 13 and 26 weeks ended June 30, 2022 was 34.7% and 23.1%, respectively, and was 26.3% and 27.0% for the 13 and 26 weeks ended and July 1, 2021, respectively. The effective tax rate for the 13 weeks ended June 30, 2022 includes discrete tax expense related to various matters. During the 26 weeks ended July 1, 2021, the Company filed income tax refund claims of $24,151 related to its fiscal 2020 tax return, of which $1,828 was received in fiscal 2021, and $22,323 was received during the 26 weeks ended June 30, 2022. An additional $636 of interest was received during the 26 weeks ended June 30, 2022 and is included within income tax benefit in the consolidated statement of earnings (loss). During the 26 weeks ended July 1, 2021, the Company received the remaining $5,900 of requested tax refunds from its fiscal 2019 tax return.

~~7. Joint Venture Transactions~~

During the 26 weeks ended July 1, 2021, the Company sold its interest in an equity investment without a readily determinable fair value for $4,150 and recorded a gain of $2,079, which is included in gain (loss) on disposition of property, equipment and other assets in the consolidated statement of earnings (loss).

8.5. Business Segment Information

The Company’s primary operations are reported in the following business segments: Theatres and Hotels/Resorts. 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.

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~~THE MARCUS CORPORATION~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~FOR THE 13 AND 26 WEEKS ENDED JUNE 30, 2022~~

~~(in thousands, except share and per share data)~~

Following is a summary of business segment information for the 13 ~~and 26~~ weeks ended ~~June 30, 2022 and July 1, 2021:~~

13 Weeks Ended Theatres Hotels/
Resorts Corporate
Items Total
June 30, 2022
Revenues $ 129,437 $ 69,001 $ 117 $ 198,555
Operating income (loss) 16,430 6,817 (4,354) 18,893
Depreciation and amortization 11,863 4,801 88 16,752
13 Weeks Ended Theatres Hotels/
Resorts Corporate
Items Total
July 1, 2021
Revenues $ 52,301 $ 40,151 $ 95 $ 92,547
Operating loss $ (18,215) $ (2,239) $ (5,656) $ (26,110)
Depreciation and amortization $ 13,385 $ 5,047 $ 62 $ 18,494
26 Weeks Ended Theatres Hotels/
Resorts Corporate
Items Total
June 30, 2022
Revenues $ 208,928 $ 121,658 $ 211 $ 330,797
Operating income (loss) 8,410 3,843 (10,157) 2,096
Depreciation and amortization 24,054 9,751 178 33,983
26 Weeks Ended Theatres Hotels/
Resorts Corporate
Items Total
July 1, 2021
Revenues $ 74,863 $ 68,276 $ 195 $ 143,334
Operating loss (43,854) (7,947) (9,970) (61,771)
Depreciation and amortization 26,171 10,174 128 36,473

~~9. Subsequent Events~~

Subsequent to the end of the second quarter of fiscal 2022, on July 29, 2022 the Company repaid $46,628 of short-term borrowings, repaying in full and retiring the term loan facility maturing on September 22, 2022. In connection with the repayment of the term loan, the Company amended the Credit Agreement by entering into the Fourth Amendment which 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 starting as of the end of the fiscal quarter ending March 30, 2023 and ~~continuing for each fiscal quarter thereafter.~~March 31, 2022:

Subsequent to the end of the second quarter of fiscal 2022, on July 29, 2022, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share of common stock. The dividend will be paid September 15, 2022, to shareholders of record on August 25, 2022. The Board of Directors also declared a dividend of $0.045 per share on the Class B common stock. The dividend on the Class B commons stock, which is not publicly traded, will also be paid September 15, 2022, to shareholders of record on August 25, 2022.


13 Weeks Ended	Theatres		Hotels/ Resorts		Corporate Items		Total
March 30, 2023
Revenues	$	96,376	$	55,811	$	89	$	152,276
Operating income (loss)	1,519		(5,032)		(5,475)		(8,988)
Depreciation and amortization	11,488		4,301		87		15,876

13 Weeks Ended	Theatres		Hotels/ Resorts		Corporate Items		Total
March 31, 2022
Revenues	$	79,491	$	52,657	$	94	$	132,242
Operating loss	(8,020)		(2,974)		(5,803)		(16,797)
Depreciation and amortization	12,191		4,950		90		17,231

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THE MARCUS CORPORATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and elsewhere in this Form 10-Q 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 of 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 duration of the COVID-19 pandemic and related government restrictions and the level of customer demand following the relaxation of such requirements; (3)~~ the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (particularly following the COVID-19 pandemic, during which the release dates for certain motion pictures have been postponed)~~, as well as other~~; (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; (4) the effects of adverse economic conditions in our ~~markets, including but not limited to, those caused by the COVID-19 pandemic;~~markets; (5) the effects of adverse economic conditions ~~including but not limited to, those caused by the COVID-19 pandemic,~~ on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) ~~the effects on our occupancy and room rates caused by the COVID-19 pandemic and~~ the effects on our occupancy and room rates caused by the relative industry supply of available rooms at comparable lodging facilities in our markets; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (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 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; (12) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (13) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, other incidents of violence in public venues such as hotels and movie theatres or ~~epidemics (such as the COVID-19 pandemic);~~epidemics; and (14) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, ~~including developments related to the COVID-19 pandemic,~~ some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Our forward-looking statements are based upon our assumptions, which are based upon currently available information, including assumptions about our ability to manage difficulties associated with or related to the COVID-19 pandemic; the assumption that our theatre closures, hotel closures and restaurant closures are not expected to be permanent or to re-occur; the continued availability of our workforce; and the temporary and long-term effects of the COVID-19 pandemic on our business.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-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS

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. Fiscal ~~2022~~2023 is a 52-week year beginning on December ~~31, 2021~~30, 2022 and ending on December ~~29, 2022.~~28, 2023. Fiscal ~~2021~~2022 was a 52-week year that began on ~~January 1,~~December 31, 2021 and ended on December ~~30, 2021.~~29, 2022.

We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The ~~second~~first quarter of fiscal 2023 consisted of the 13-week period beginning on December 30, 2022 and ended on March 30, 2023. The first quarter of fiscal 2022 consisted of the 13-week period beginning ~~on April 1, 2022 and ended on June 30, 2022. The second quarter of fiscal 2021 consisted of the 13-week period beginning April 2, 2021 and ended on July 1, 2021. The first half of fiscal~~

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~~2022 consisted of the 26-week period beginning on~~ December 31, 2021 and ended on ~~June 30,~~March 31, 2022. ~~The first half of fiscal 2021 consisted of the 26-week period beginning January 1, 2021 and ended on July 1, 2021.~~ Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts. 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.

COVID-19 did not materially impact our results for the first quarter of fiscal 2023. For discussion regarding the impact of COVID-19 and related economic conditions on our results for the year ended December ~~30, 2021,~~29, 2022, see “Part II-Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2021~~2022 Annual Report. For ~~further~~

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discussion regarding ~~the~~potential impacts of ~~COVID-19 and related economic conditions on our results for the first half of fiscal 2022 and potential~~ future ~~impacts, see immediately below, and also~~pandemics refer to the discussion of our operational risks and financial risks found in “Part I-Item 1A-Risk Factors” in our ~~2021~~2022 Annual Report.

~~Impact of the COVID-19 Pandemic~~

The COVID-19 pandemic has 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 have taken 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 has continued to dissipate during the first half of fiscal 2022.

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 as the number of vaccinated individuals increased, more films are released, and customers indicate increasing willingness to return to movie theatres. We remain optimistic that the theatre industry is in the process of rebounding and will continue to benefit from pent-up social demand now that a greater percentage of the population is vaccinated, the majority of state and local restrictions have been lifted and people seek togetherness with a return to normalcy.

We still expect a return to “normalcy” to span multiple months driven by an increase in the quality and quantity of new films released in theatres and a gradual ramp-up of consumer comfort with public gatherings. The appearance of first, the Delta variant, and subsequently the Omicron variant, of the disease 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 is once again increasing, reaching a post-pandemic high comfort level in June 2022. We believe the approval of vaccines for children ages 5-11 has contributed to parents feeling more comfortable to visit a movie theatre, which should bolster the market for films aimed at children and families, a genre in which we have historically performed very well.

Total theatre division revenues, expressed as a percentage of fiscal 2019 revenues, increased every quarter of fiscal 2021, increasing from 20% in the first quarter to 32% in the second quarter, 59% in the third quarter and 82% in the fourth quarter. We were very encouraged by the performance of multiple films released during the first half of fiscal 2022, including ~~Top Gun: Maverick~~, ~~Doctor Strange in the Multiverse of Madness~~, ~~The Batman, and~~ ~~Jurassic World: Dominion. Total theatre division revenues in the first and second quarters of fiscal 2022 expressed as a percentage of fiscal 2019 revenues were 69% and 80%, respectively.~~

We began fiscal 2022 with all eight of our company-owned and managed hotels open. Substantially all of our restaurants and bars in our hotels and resorts were open during the second quarter 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 primary customer for hotels during the second quarter of fiscal 2022 continued to come from the leisure travel market. While business travel remained below pre-pandemic levels during the second quarter of fiscal 2022, we continued to see an increase in travel from this customer segment, particularly from small and mid-size group activity. As of the date of this report, our group room revenue bookings for fiscal 2022—commonly referred to in the hotels and resorts industry as “group pace”—is running behind where we would typically be at this same time in prior years (pre-pandemic), but group pace has improved from earlier in the fiscal year and we have experienced increased booking activity in recent months for fiscal 2022 and 2023 and beyond. With companies implementing return to office plans, we remain optimistic that business travel will continue to increase during fiscal 2022 and beyond. Total hotel division revenues, expressed as a percentage of fiscal 2019 revenues, increased throughout fiscal 2021, including an

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increase during fiscal 2021 from 51% in the first quarter to 57% in second quarter, 88% in the third quarter and 82% in the fourth quarter. Total hotel division revenues, expressed as a percentage of fiscal 2019 revenues, continued to increase during fiscal 2022 from 96% in the first quarter to 99% in the second quarter. The future economic environment will also have a significant impact on the pace of our return to “normal” hotel operations.

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 June 30, 2022, we had a cash balance of approximately $57.7 million, $221.8 million of availability under our $225 million revolving credit facility and our debt-to-capitalization ratio (including short-term borrowings) was 0.37. Subsequent to the end of the second quarter of fiscal 2022, on July 29, 2022 we repaid $46.6 million of short-term borrowings, repaying in full and terminating the term loan facility maturing on September 22, 2022 and reducing our overall indebtedness. With our strong liquidity position, combined with cash generated from operations and proceeds from the sale of surplus real estate (discussed below), we believe we are positioned to meet our obligations as they come due and continue to sustain our operations throughout fiscal 2022 and 2023, even if our properties continue to generate reduced revenues during these periods.

During the first half of fiscal 2022 we received a $23.0 million federal income tax refund (including $0.7 million of interest) related to our fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. We also received $4.3 million in state theatre grants during the first half of fiscal 2022 that were awarded and accrued during the fourth quarter of fiscal 2021. Both the receipt of the income tax refund and grant funds contributed to our current strong liquidity position.

We continue to pursue sales of surplus real estate and other non-core real estate to further enhance our liquidity. During the first half of fiscal 2022, we sold three land parcels, generating net proceeds of approximately $4.8 million. We believe we may receive additional sales proceeds from real estate sales during the remainder of fiscal 2022 totaling approximately $1 - $5 million, depending upon demand for the real estate in question.

We cannot assure that the impact of the COVID-19 pandemic will not continue to have a material adverse effect on both our theatre and hotels and resorts businesses, results of operations, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness.

Overall Results

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 ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 and fiscal ~~2021~~2022 (in millions, except for per share and variance percentage data):

Second Quarter First Half
Variance Variance
F2022 F2021 Amt. Pct. F2022 F2021 Amt. Pct.
Revenues $ 198.6 $ 92.5 $ 106.0 114.5 % $ 330.8 $ 143.3 $ 187.5 130.8 %
Operating income (loss) 18.9 (26.1) 45.0 172.4 % 2.1 (61.8) 63.9 103.4 %
Other income (expense) (5.2) (5.6) 0.4 7.4 % (9.8) (8.8) (1.0) (11.4) %
Net earnings (loss) attributable to The Marcus Corp. $ 9.0 $ (23.4) $ 32.3 138.3 % $ (5.9) $ (51.5) $ 45.6 88.5 %
Net earnings (loss) per common share - diluted: $ 0.24 $ (0.76) $ 1.00 131.6 % $ (0.19) $ (1.71) $ 1.52 88.9 %


	First Quarter
					Variance
	F2023		F2022		Amt.		Pct.
Revenues	$	152.3	$	132.2	$	20.1	15.1	%
Operating loss	(9.0)		(16.8)		7.8		46.5	%
Other income (expense)	(3.3)		(4.7)		1.3		28.7	%
Net loss attributable to The Marcus Corp.	$	(9.5)	$	(14.9)	$	5.4	36.5	%
Net loss per common share - diluted	$	(0.31)	$	(0.48)	$	0.17	35.4	%

Revenues increased and operating ~~income (loss),~~loss, net ~~earnings (loss)~~loss attributable to The Marcus Corporation and net ~~earnings (loss)~~loss per diluted common share improved significantly during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 compared to the first quarter of fiscal ~~2021 periods.~~2022. Increased revenues ~~and operating income~~ from both our theatre division and hotels and resorts division and a reduced operating loss from our theatre division contributed to the improvement during the first ~~half~~quarter of fiscal ~~2022~~2023 compared to the first ~~half~~quarter of fiscal ~~2021, during portions of which some~~2022. Our first quarter is typically the seasonally weakest quarter of our ~~theatres were closed,~~fiscal year due to the traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned hotels. The first quarter of fiscal 2022 was also negatively impacted due to the fact that releases of new films were limited and travel was ~~significantly~~ reduced due to the ~~impact~~lingering impacts of the COVID-19 ~~pandemic.~~

~~Our operating loss during the second quarter~~pandemic and ~~first half of fiscal 2021 was negatively impacted by impairment charges of $3.7 million, or approximately $0.09 per diluted common share, primarily related to surplus real estate that was held for~~

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~~sale. Our operating loss during the first half of fiscal 2021 was favorably impacted by state government grants of approximately $1.3 million, or approximately $0.03 per diluted common share.~~subsequent variants.

Net ~~earnings (loss)~~loss attributable to The Marcus Corporation during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 was favorably impacted by decreased interest expense compared to the first quarter of fiscal ~~2021 periods, partially offset by~~2022 and investment ~~losses~~income during the first quarter of fiscal ~~2022 periods~~2023 compared to investment ~~gains~~losses in the ~~fiscal 2021 periods, and lower gains on disposition of property, equipment and other assets during the~~ first ~~half~~quarter of fiscal ~~2022 as compared to the first half of fiscal 2021.~~2022.

We recognized investment ~~losses~~income of ~~$0.5 million and $0.7~~$0.3 million during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022, respectively,~~2023 compared to investment ~~income~~losses of ~~$0.1~~$0.3 million ~~and $0.2 million for~~in the ~~respective~~first quarter of fiscal ~~2021 periods.~~2022. Variations in investment income were due to changes in the value of marketable securities.

Our interest expense totaled ~~$4.1 million and $8.2~~$3.0 million for the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022, respectively,~~2023 compared to ~~$4.9 million and $9.8~~$4.1 million for the ~~respective~~first quarter of fiscal ~~2021 periods.~~2022. The decrease in interest expense ~~for both periods~~ in fiscal ~~2022~~2023 was primarily due to decreased borrowings and a decrease in non-cash amortization of deferred financing costs. 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, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.

We reported net gains on disposition of property, equipment and other assets of $0.4 million during the first half of fiscal 2022, compared to net gains on disposition of property, equipment and other assets of $2.0 million during the first half of fiscal 2021. The net gain on disposition of property, equipment and other assets during the first half of fiscal 2022 was due primarily to the sale of surplus land. The net gain on disposition of property, equipment and other assets during the first half of fiscal 2021 included the sale of an equity investment in a joint venture. The timing of periodic sales and disposals of our property, equipment and other assets varies from quarter to quarter, resulting in variations in our reported gains or losses on disposition of property, equipment and other assets. We anticipate additional disposition gains or losses from periodic sales of property, equipment and other assets during fiscal 2022 and beyond.

~~We reported income tax expense for the second quarter of fiscal 2022 of $4.8 million compared to an income tax benefit of $8.3 million during the second quarter of fiscal 2021.~~ We reported an income tax benefit for the first ~~half~~quarter of fiscal ~~2022~~2023 of ~~$1.8~~$2.8 million compared to an income tax benefit of ~~$19.1~~$6.5 million during the first ~~half~~quarter of fiscal 2021. The income tax benefit during the fiscal 2021 periods was primarily the result of the significant losses before income taxes incurred as a result of the reduction in our operating performance due to the impact of the COVID-19 pandemic as described above.2022. Our fiscal ~~2022~~2023 first ~~half~~quarter effective income tax rate was 23.1%., and was favorably impacted by a decrease in valuation allowances on certain state income tax net operating loss carryforwards expected to be utilized in the current year. Our fiscal ~~2021~~2022 first ~~half~~quarter effective income tax rate was ~~27.0%~~30.5%. We anticipate that our effective income tax rate for ~~the remaining quarters of~~ fiscal ~~2022~~2023 may be in the 24-28% range, excluding any potential further changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits. Our actual fiscal ~~2022~~2023 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

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Theatres

The following table sets forth revenues, operating income (loss) and operating margin for our theatre division for the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 and fiscal ~~2021~~2022 (in millions, except for variance percentage and operating margin):


		Second Quarter										First Half											First Quarter
								Variance										Variance											Variance
		F2022			F2021			Amt.		Pct.		F2022			F2021			Amt.		Pct.			F2023			F2022			Amt.		Pct.
Revenues	Revenues	$	129.4		$	52.3		$	77.1	147.5	%	$	208.9		$	74.9		$	134.1	179.1	%	Revenues	$	96.4		$	79.5		$	16.9	21.2	%
Operating income (loss)	Operating income (loss)	16.4			(18.2)			34.6		190.1	%	8.4			(43.9)			52.3		119.1	%	Operating income (loss)	1.5			(8.0)			9.5		118.8	%
Operating margin (% of revenues)	Operating margin (% of revenues)	12.7		%	(34.8)		%					4.0		%	(58.6)		%					Operating margin (% of revenues)	1.6		%	(10.1)		%

Our theatre division revenues and operating income increased ~~significantly~~ during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023, with ~~all of our theatres open and~~ an increase in the number of new films released by movie studios resulting in higher attendance compared to ~~the fiscal 2021 periods 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~~

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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 and second quarters with approximately 74% and 95% of our theatres open, respectively. The majority of our reopened theatres operated with reduced2022. Our operating ~~days (Fridays, Saturdays, Sundays and Tuesdays) and reduced operating hours~~income during the ~~fiscal 2021~~ first quarter and by the end of May 2021 we had returned the vast majority of our theatres to normal operating days (seven days per week) and operating hours. Our theatres were open with normal operating days and hours at all of our theatres throughout the first half of fiscal ~~2022.~~

~~Although~~2023 significantly improved compared to the ~~prior year, our~~ operating ~~income during~~loss in the ~~second~~first quarter ~~and first half~~ of fiscal 2022 ~~was negatively impacted by increased film costs (discussed below) and increased labor and supply costs~~ as a result of ~~the current~~higher overall revenues and greater labor shortage and inflationary environment. Our operating income during the second quarter and first half of fiscal 2022 was favorably impacted by inflationary price increases taken later in the second quarter of fiscal 2022 in response to the increased labor and supply costs. Our operating loss during the second quarter and first half of fiscal 2021 was negatively impacted by impairment charges of $3.7 million primarily related to surplus real estate that was held for sale. Our fiscal 2021 first half operating loss would have been even larger if not for a nonrecurring state government grant of approximately $1.3 million that favorably impacted our theatre division operating loss.productivity.

The following table provides a further breakdown of the components of revenues for the theatre division for the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 and fiscal ~~2021~~2022 (in millions, except for variance percentage):

Second Quarter First Half
Variance Variance
F2022 F2021 Amt. Pct. F2022 F2021 Amt. Pct.
Admission revenues $ 63.1 $ 24.9 $ 38.2 153.2 % $ 101.5 $ 35.6 $ 65.9 185.1 %
Concession revenues 58.1 23.1 35.1 152.1 % 93.6 33.0 60.6 183.6 %
Other revenues 8.2 4.3 3.9 91.6 % 13.8 6.2 7.6 122.6 %
129.4 52.3 77.2 147.7 % 208.9 74.8 134.2 179.4 %
Cost reimbursements — — — (100.0) % — 0.1 (0.1) (100.0) %
Total revenues $ 129.4 $ 52.3 $ 77.1 147.5 % $ 208.9 $ 74.9 $ 134.1 179.1 %

As described above, revenues were significantly reduced during the second quarter and first half of fiscal 2021 due to a limited number of films and the temporary closures and reduced operating days and hours at our theatres in response to the COVID-19 pandemic. As a result, we believe it is also beneficial to compare our revenues to pre-pandemic levels. The following table compares the components of revenues for the theatre division for the second quarter and first half of fiscal 2022 to the second quarter and first half of fiscal 2019 (in millions, except for variance percentage):

Second Quarter First Half
Variance Variance
F2022 F2019 Amt. Pct. F2022 F2019 Amt. Pct.
Admission revenues(1)
$ 63.1 $ 83.1 $ (20.0) (24.0) % $ 101.5 $ 142.0 $ (40.5) (28.5) %
Concession revenues 58.1 67.9 (9.8) (14.4) % 93.6 115.1 (21.5) (18.7) %
Other revenues 8.2 11.2 (3.0) (26.6) % 13.8 19.7 (5.9) (29.9) %
129.4 162.2 (32.7) (20.2) % 208.9 276.8 (67.9) (24.5) %
Cost reimbursements — 0.2 (0.2) (100.0) % — 0.4 (0.4) (100.0) %
Total revenues $ 129.4 $ 162.4 $ (33.0) (20.3) % $ 208.9 $ 277.3 $ (68.3) (24.6) %

~~(1)We acquired Movie Tavern theatres on February 1, 2019. Admission revenues for the first half of fiscal 2022 decreased 30.7% on a pro forma basis for the acquisition as of the first day of fiscal 2019.~~


	First Quarter
					Variance
	F2023		F2022		Amt.		Pct.
Admission revenues	$	47.6	$	38.4	$	9.2	24.0	%
Concession revenues	42.4		35.5		6.9		19.5	%
Other revenues	6.4		5.6		0.8		14.3	%
Total revenues	96.4		79.5		16.9		21.2	%

According to data received from Comscore (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal ~~2022 second~~2023 first quarter ~~and first half~~ results, U.S. box office receipts ~~decreased 26.6%~~increased 26.3% during our fiscal ~~2022 second~~2023 first quarter ~~and 34.2% during our fiscal 2022 first half~~ compared to the same comparable weeks in fiscal ~~2019,~~2022, indicating that our ~~decrease in admission revenues during the second quarter of fiscal 2022 of 24.0% outperformed the industry by 2.6 percentage points. Our pro forma decrease~~increase in admission revenues during the first ~~half~~quarter of fiscal 2023 of 24.0% underperformed the industry by 2.3 percentage points. We believe our underperformance is attributable to the more significant impact of the Omicron variant of COVID-19 in other regions of the country than in our primarily Midwestern markets during the first quarter of fiscal 2022, ~~of 30.7% outperformed the industry by 3.5 percentage points. Based upon this metric, we believe we were once again one of~~

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~~the top performing theatre circuits during fiscal 2022 compared to the top 10 circuits~~representing a higher opportunity for growth in ~~the U.S.~~2023 nationally than in our markets. Additional data received and compiled by us from Comscore indicates our admission revenues during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 represented approximately ~~3.3%~~3.2% of the total admission revenues in the U.S. during the periods (commonly referred to as market share in our industry). This represents a ~~notable increase~~decrease over our reported market share of approximately ~~3.1%~~3.4% during the ~~comparable~~first quarter of fiscal ~~2019 periods, prior~~2022, which we believe is also attributable to the ~~pandemic.~~Omicron variant more significantly impacting other regions of the country during the first quarter of fiscal 2022. Our goal is to continue our past pattern of outperforming the industry, but ~~with the majority of our renovations now 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 markets.

Total theatre attendance increased significantly during the ~~second~~first quarter ~~and~~of fiscal 2023 compared to the first ~~half~~quarter of fiscal 2022, ~~compared to the second quarter and first half of fiscal 2021, when a significant portion of our theatres were temporarily closed and~~resulting primarily from an increase in the number of ~~new~~wide-release films. During the first quarter of fiscal 2023 there were 21 wide-release films, ~~was more limited.~~compared to 12 wide-release films during the first quarter of fiscal 2022. Total theatre attendance increased ~~145.4% and 174.2%~~13.9% during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022, respectively,~~2023 compared to the ~~second~~first quarter ~~and first half~~ of fiscal ~~2021,~~2022, resulting in increases in both admission revenues and concession revenues. Conversely, a decrease in the number of new films and lingering customer concerns regarding visiting indoor businesses negatively impacted attendance during the second quarter and first half of fiscal 2022 as compared to the same periods in fiscal 2019.

Our highest grossing films during the fiscal ~~2022 second~~2023 first quarter included ~~Top Gun: Maverick, Doctor Strange~~Avatar: The Way of Water, Ant-Man and the Wasp: Quantumania, Creed III, Puss in ~~the Multiverse of Madness, Jurassic World: Dominion, Sonic the Hedgehog 2~~Boots: The Last Wish and ~~The Bad Guys~~M3GAN. All of these five films debuted with an exclusive theatrical run prior to release on streaming services. This compares with three of the top five films in the second quarter of fiscal 2021 that were 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. We believe our theatre circuit outperformed its competition on two of our top five revenue producing films during the second quarter of fiscal 2022. In addition, we believe our overall admission revenue outperformed the industry due in part to the fact that we believe our theatre circuit outperformed its competition on the next tier of films. Due to the impact of three particularly strong blockbusters released during the second quarter of fiscal 2022 (~~Top Gun: Maverick,Doctor Strange in the Multiverse of Madness~~ ~~and~~ ~~Jurassic World: Dominion), the film slate during the second quarter of fiscal 2022 was weighted more towards our top movies compared to the second quarter of fiscal 2021 and fiscal 2019, as evidenced by the fact that our~~Our top five films during our fiscal ~~2022 second~~2023 first quarter accounted for ~~68%~~51% of our total box office results, compared to ~~56% and 52%~~66% for the top five films during the ~~second~~first quarter of fiscal ~~2021 and fiscal 2019 (prior to the pandemic), respectively,~~2022, both expressed as a percentage of the total admission revenues for the period. ~~An increased reliance on just a few~~A decreased concentration of blockbuster films during a given quarter often has the effect of ~~increasing~~lowering 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~~While the first quarter of ~~a more~~fiscal 2023 was less concentrated ~~film slate~~on blockbuster films compared to the first quarter of

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fiscal 2022, due to the impact of one particularly strong blockbuster showing during the quarter (Avatar: The Way of Water), our overall film rental cost ~~increased significantly during the second quarter~~as a percentage of ~~fiscal 2022~~admission revenues remained flat compared to ~~the same period in~~ the prior year.

Our average ticket price increased ~~3.3%~~8.8% during the ~~second~~first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. The increase in our average ticket price during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 ~~compared to the second~~was favorably impacted by a higher percentage of 3D films in our fiscal 2023 first quarter, ~~of fiscal 2021~~ and increased by 9.3% compared to the second quarter of fiscal 2019. Our average ticket price increased 4.0% during the first half of fiscal 2022 compared to the first half of fiscal 2021 and increased by 12.9% compared to the first half of fiscal 2019. In addition to inflationary price increases ~~taken~~that we implemented during the second quarter of fiscal 2022 in response to increases in labor and supply costs, which were partially offset by a ~~larger~~lower proportion of admission revenues from ~~our proprietary~~ premium large format screens (with a higher ticket price) ~~contributed~~due to the mix of films. The increase in ~~our~~ average ticket price favorably impacted our admission revenues of our comparable theatres by $3.9 million during the first ~~half~~quarter of fiscal 2023 compared to the first quarter of fiscal 2022. During ~~portions~~the last week of the first ~~half~~quarter of fiscal ~~2021~~2023, we ~~also~~implemented several pricing changes to our Value Tuesday promotion across our theatre circuit, which has historically offered ~~older “library” film product~~$5 admission and free complementary-size popcorn to our loyalty program members. Our new Value Tuesday promotion features $6 admission for ~~only $5.00 per ticket when there was limited availability~~members of ~~new films resulting in~~our free Magical Movie Rewards (MMR) loyalty program, $7 admission for non-MMR customers, and replaces free complementary-size popcorn with a ~~lower average ticket price in the same period in the prior year.~~20% discount on all concessions, food and non-alcoholic beverages for MMR members.

Our average concession revenues per person increased by ~~2.9%~~5.0% during the ~~second~~first quarter of fiscal 2022 compared to the second quarter of fiscal 2021 and increased by 23.0% compared to the second quarter of fiscal 2019. Our average concession revenues per person increased by 3.7% during the first half of fiscal 20222023 compared to the first ~~half~~quarter of fiscal 2021 and increased by 28.5% compared to the first half of fiscal 2019. In addition, as customers have returned to “normal” activities such as going to the movie theatre, they have demonstrated a propensity to spend at a higher rate than before the pandemic closures. We also believe a portion of the2022. The increase in our average concession revenues per person during the first ~~half~~quarter of fiscal 2023 compared to the first quarter of fiscal 2022 ~~may be attributed to shorter lines at our concession stand~~was due to reduced attendance (during periods of high attendance, some customers do not purchase concessions because the line is too long). A small portion of the increase in our average concession revenues per person is attributable to inflationary increases in concessions prices in response to increases in food and labor costs. We also believe average concession revenues per person was positively impacted by a new food and beverage menu introduced in the fourth quarter of fiscal 2022. Finally, we believe that an increased percentage of customers buying their concessions in advance using our website, kiosk or our mobile app likely contributed to higher average concession revenues per person, as our experience has shown that customers are more likely to purchase more items when they order and pay electronically.

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~~We expect to continue to report increased~~ The increase in average concession revenues per person ~~in future periods, but whether~~favorably impacted our ~~customers will continue~~concession revenues of our comparable theatres by $2.0 million during the first quarter of fiscal 2023 compared to ~~spend at these current significantly higher levels in future periods is currently unknown.~~the first quarter of fiscal 2022.

Other revenues increased by approximately ~~$3.9 million during the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021. Other revenues increased by approximately $7.6~~$0.8 million during the first ~~half~~quarter of fiscal ~~2022~~2023 compared to the first ~~half~~quarter of fiscal ~~2021.~~2022. The ~~increases were~~increase was primarily due to the impact of increased attendance on internet surcharge ticketing fees and preshow and in-app advertising income.

Several films have performed well in the early weeks of our fiscal ~~2022 third~~2023 second quarter, including ~~Thor: Love and Thunder~~, ~~Minions 2~~ ~~and~~ ~~Nope~~. Several films that were previously scheduled for release in the second half of fiscal 2022 have shifted release dates into fiscal 2023 due to production delays resulting from supply chain and COVID-19 related disruptions. We expect the lack of a significant number of blockbuster films, particularly during August, September and October, to negatively impact our operating results in the near-term, before the pace of new film releases is expected to increase once again. The current film product release schedule for the remainder of fiscal 2022 includes several new films that have potential to perform well, including ~~DC League of Super-Pets~~, ~~Bullet Train~~, ~~Halloween Ends~~, ~~Black Adam~~, ~~Black Panther: Wakanda Forever, Avatar: The Way of Water, Puss in Boots: The Last Wish,~~Creed III, Scream VI, Air, John Wick: Chapter 4, Dungeons & Dragons: Honor Among Thieves, Evil Dead Rise, and ~~Shazam! Fury~~The Super Mario Bros. Movie. While the quantity of films available for theatrical exhibition remains below pre-pandemic levels, we expect to see increases in the ~~Gods.~~ ~~We believe~~quantity of available films in 2023 and 2024. Although it is possible that ~~with a greater percentage of the population now vaccinated and consumer comfort now at post-pandemic highs, and assuming that concerns over any~~schedule changes may occur, new ~~variants of COVID-19 do not result in significant new restrictions, demand for out-of-home entertainment will continue to remain strong during the remainder of fiscal 2022. The early list of~~ films scheduled to be released during the remainder of fiscal 2023 ~~appears quite strong.~~that have potential to perform very well include 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, Killers of the Flower Moon, 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 number of films produced by studios and the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of appropriate “windows” between the date a film is released in theatres and the date a motion picture is released to other channels, including premium video-on-demand (“PVOD”), video on-demand (“VOD”), streaming services and DVD. These are factors over which we have no control. We currently believe that “day-and-date” film release experiments such as those tested by Warner Brothers and Disney during 2021 will not become the normal plan of distribution as the pandemic fully subsides. Warner Brothers has indicated that it is returning to an exclusive 45-day theatrical window with a significant number of its films during fiscal 2022. Disney announced in early 2022 that they will retain flexibility for future film distribution, particularly for family films, but has released several films exclusively to theatrical in fiscal 2022 including ~~Doctor Strange in the Multiverse of Madness~~, ~~Lightyear, and~~ ~~Thor: Love and Thunder~~ ~~and has committed to exclusive theatrical releases for several upcoming films including~~ ~~Black Panther: Wakanda Forever~~.

We ended the ~~second~~first quarter of fiscal ~~2022~~2023 with a total of 1,053 company-owned screens in 84 theatres, compared to 1,064 company-owned screens in 85 theatres ~~compared to 1,091 company-owned screens in 88 theatres and six managed screens in one theatre~~ at the end of the ~~second~~first quarter of fiscal ~~2021. As of~~2022. Early in our fiscal 2023 first quarter, we made the ~~end of the second quarter of fiscal 2022 and the date of this report, all~~decision to close one of our ~~company-owned theatres are operating. As~~owned theatres.

Table of ~~the end of the second quarter of fiscal 2021 approximately 95% of our theatres were open and operating.~~Contents

Hotels and Resorts

The following table sets forth revenues, operating income (loss) and operating margin for our hotels and resorts division for the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 and fiscal ~~2021~~2022 (in millions, except for variance percentage and operating margin):


		Second Quarter										First Half											First Quarter
								Variance										Variance											Variance
		F2022			F2021			Amt.		Pct.		F2022			F2021			Amt.		Pct.			F2023			F2022			Amt.		Pct.
Revenues	Revenues	$	69.0		$	40.2		$	28.9	71.9	%	$	121.7		$	68.3		$	53.4	78.2	%	Revenues	$	55.8		$	52.7		$	3.2	6.0	%
Operating income (loss)		6.8			(2.2)			9.1		404.5	%	3.8			(7.9)			11.8		149.4	%
Operating loss																						Operating loss	(5.0)			(3.0)			(2.1)		(69.2)	%
Operating margin (% of revenues)	Operating margin (% of revenues)	9.9		%	(5.6)		%					3.2		%	(11.6)		%					Operating margin (% of revenues)	(9.0)		%	(5.6)		%

On December 16, 2022 we completed the sale of The Skirvin Hilton in Oklahoma City, Oklahoma (we held 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 date of the sale.

Excluding The Skirvin Hilton from fiscal 2022 results, hotels and resorts revenues increased 13.6% during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Our hotels and resorts division operating ~~income~~loss during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 increased compared to ~~operating losses in~~ the ~~second quarter and~~ first ~~half of fiscal 2021, due to significantly increased revenues during the fiscal 2022 periods. All of our company-owned hotels and resorts contributed to the improved operating results during the second~~ quarter of fiscal 2022 ~~and all but~~due to the sale of The Skirvin Hilton (which had operating income during the first quarter of fiscal 2022), a decrease in certain other revenue at one of our ~~company-owned hotels~~condo hotel properties, and ~~resorts contributed~~increased labor costs during the fiscal 2023 period as we increased our staffing levels to enhance the customer experience compared to the ~~improved operating results during the~~ first ~~half~~quarter of fiscal 2022 ~~compared~~when various positions were unfilled due to ~~the fiscal 2021 periods.~~

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staffing shortages.

The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 and fiscal ~~2021~~2022 (in millions, except for variance percentage):


		Second Quarter								First Half									First Quarter
						Variance								Variance									Variance
		F2022		F2021		Amt.		Pct.		F2022		F2021		Amt.		Pct.			F2023		F2022		Amt.		Pct.
Room revenues	Room revenues	$	28.9	$	17.3	$	11.5	66.5	%	$	46.3	$	26.4	$	19.9	75.4	%	Room revenues	$	17.9	$	17.4	$	0.4	2.4	%
Food/beverage revenues	Food/beverage revenues	19.0		9.6		9.4		98.2	%	33.5		15.5		18.0		116.1	%	Food/beverage revenues	15.2		14.5		0.7		4.7	%
Other revenues	Other revenues	12.9		9.9		3.0		30.6	%	26.0		19.7		6.2		31.5	%	Other revenues	13.2		13.1		0.1		1.0	%
		60.8		36.8		24.0		65.2	%	105.8		61.6		44.2		71.8	%
Total revenues before cost reimbursements																		Total revenues before cost reimbursements	46.3		45.0		1.2		2.8	%
Cost reimbursements	Cost reimbursements	8.3		3.4		4.9		144.6	%	15.9		6.7		9.2		137.3	%	Cost reimbursements	9.5		7.6		1.9		25.2	%
Total revenues	Total revenues	$	69.0	$	40.2	$	28.9	71.9	%	$	121.7	$	68.3	$	53.4	78.2	%	Total revenues	$	55.8	$	52.7	$	3.2	6.0	%

~~Division revenues increased significantly during~~Our first quarter is typically the ~~second~~seasonally weakest quarter ~~and first half of fiscal 2022 compared to the second quarter and first half of fiscal 2021. While all eight~~ of our ~~company-owned hotels and all but one of~~fiscal year for our managed hotels were open during the second quarter and first half of fiscal 2021, the majority of these properties were generating significantly reduced revenues and operating under applicable state and local restrictions and guidelines, and, in some cases, reduced operating hours. In addition, we reopened our Milwaukee ~~SafeHouse~~ ~~restaurant and bar in June 2021 and reopened the Chicago~~ ~~SafeHouse~~ ~~in May 2022.~~

~~We believe it is also beneficial to compare our revenues to pre-pandemic levels. The following table compares the components of revenues for the~~ hotels and resorts division ~~for~~due to the ~~second~~traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned hotels. Division revenues before cost reimbursements increased during the first quarter ~~and first half~~ of fiscal ~~2022 to the second quarter and first half of fiscal 2019 (in millions, except for variance percentage):~~

Second Quarter First Half
Variance Variance
F2022 F2019 Amt. Pct. F2022 F2019 Amt. Pct.
Room revenues $ 28.9 $ 28.2 $ 0.7 2.4 % $ 46.3 $ 47.1 $ (0.8) (1.7) %
Food /beverage revenues 19.0 18.6 0.4 2.1 % 33.5 34.4 (0.9) (2.6) %
Other revenues 12.9 11.2 1.7 14.8 % 26.0 23.4 2.6 11.1 %
60.8 58.0 2.7 4.7 % 105.8 104.9 0.9 0.9 %
Cost reimbursements 8.3 11.9 (3.7) (30.9) % 15.9 20.1 (4.3) (21.4) %
Total revenues $ 69.0 $ 70.0 $ (1.0) (1.4) % $ 121.7 $ 125.0 $ (3.4) (2.7) %

Leisure travel continued to drive demand during the second quarter and first half of fiscal 2022, representing an increased percentage of total rooms revenues compared to the fiscal 2019 periods. The leisure travel increase offset lower transient and group business revenues during the second quarter and first half of fiscal 2022 compared to the same quarter and half of fiscal 2019. A decrease in group business subsequently led to a corresponding decrease in banquet and catering revenues, negatively impacting our reported food and beverage revenues in the first half of fiscal 20222023 compared to the first ~~half of fiscal 2019. Other revenues increased during the second~~ quarter ~~and first half~~ of fiscal 2022, ~~compared to~~despite the ~~second quarter and first half~~negative impact of ~~fiscal 2019, primarily~~the sale of the Skirvin Hilton, due to increased ~~revenues from one of our condominium hotels~~occupancy and ~~increased ski and spa revenues at the Grand Geneva~~® Resort & Spa (“Grand Geneva”), partially offset by decreased management fees. Cost reimbursements decreased during the second quarter and first half of fiscal 2022 compared to the second quarter and first half of fiscal 2019 due to a lower number of managed hotels and reduced revenues and subsequent operating costsaverage daily rate at our ~~managed~~seven remaining owned hotels.

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The following table sets forth certain operating statistics for the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for company-owned properties:

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Second Quarter First Half
Variance Variance
F2022 F2021 Amt. Pct. F2022 F2021 Amt. Pct.
Occupancy pct. 66.3 % 48.8 % 17.5 pts 35.9 % 57.2 % 37.9 % 19.3 pts 50.8 %
ADR $ 177.87 $ 143.37 $ 34.50 24.1 % $ 164.95 $ 139.73 $ 25.22 18.0 %
RevPAR $ 118.00 $ 69.99 $ 48.01 68.6 % $ 94.29 $ 52.93 $ 41.36 78.1 %

Note: These operating statistics represent averages of our eight distinct comparable 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 days during fiscal 2021 where individual hotels may have been closed.

RevPAR increased at all eight of our company-owned properties during the second quarter and first half of fiscal 2022 compared to the second quarter and first half of fiscal 2021. Leisure travel customers provided the most demand during the fiscal 2022 second quarter, with weekend business relatively strong at the majority of our properties. During the second quarter of fiscal 2022, our non-group business represented approximately 63% of our total rooms revenue, compared to approximately 57% during the second quarter of fiscal 2019 prior to the pandemic. Although group business continues to lag prior years, it has sequentially increased each quarter during fiscal 2022. Non-group retail pricing was very strong in the majority of our markets, with significant leisure demand contributing to increased occupancy percentages and ADR.

We believe it is also beneficial to compare our operating statistics to pre-pandemic levels. The following table sets forth certain operating statistics for the second quarter and first half of fiscal 2022 and fiscal 2019, including our average occupancy percentage, our ADR, and our RevPAR, for company-owned properties:


		Second Quarter										First Half											First Quarter
								Variance										Variance											Variance
		F2022			F2019			Amt.		Pct.		F2022			F2019			Amt.		Pct.			F2023			F2022			Amt.		Pct.
Occupancy pct.	Occupancy pct.	66.8		%	77.9		%	(11.2) pts		(14.3)	%	57.8		%	71.2		%	(13.4) pts		(18.8)	%	Occupancy pct.	50.8		%	46.1		%	4.7 pts		10.1	%
ADR	ADR	$	174.98		$	160.10		$	14.88	9.3	%	$	162.29		$	146.47		$	15.82	10.8	%	ADR	$	155.35		$	145.68		$	9.67	6.6	%
RevPAR	RevPAR	$	116.81		$	124.67		$	(7.86)	(6.3)	%	$	93.88		$	104.36		$	(10.48)	(10.0)	%	RevPAR	$	78.95		$	67.19		$	11.76	17.5	%

Note: These operating statistics represent averages of our seven distinct comparable 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 for both~~Skirvin Hilton is not included in the fiscal 2022 ~~and 2019 periods exclude~~statistics.

RevPAR increased at all seven of our comparable company-owned properties during the ~~Saint Kate, which was closed~~first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Leisure travel customers provided the most demand during the fiscal 2023 first quarter, with weekend business relatively strong at the majority of our properties. Leisure travel demand was negatively impacted during the first quarter of fiscal ~~2019 periods presented.~~2023 by a lack of snow, resulting in unfavorable ski conditions at our Grand Geneva Resort and Spa compared to the first quarter of the prior year. During the first quarter of fiscal 2023, our non-group business represented approximately 71% of our total rooms revenue, consistent with approximately 71% during the first quarter of fiscal 2022. Non-group retail pricing remained very strong in the majority of our markets during the first quarter of fiscal 2023, with leisure demand contributing to increased occupancy percentages and ADR.

According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal ~~2022 second~~2023 first quarter ~~and first half~~ results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced an increase in RevPAR of ~~0.8%~~28.3% during our fiscal ~~2022 second~~2023 first quarter ~~and a decrease in RevPAR of 7.7% during our fiscal 2022 first half~~ compared to the same ~~periods~~period during fiscal ~~2019,~~2022, leading us to believe we underperformed the industry during the fiscal ~~2022 second~~2023 first quarter ~~and first half~~ by approximately ~~7 and 2~~10.8 percentage points, respectively. 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 group business results in a corresponding increase in food and beverage revenues. We also believe leisure travel remains stronger in other U.S. markets and “fly-to” destinations in which we do not have a presence, which contributed to our underperformance.

points. 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 ~~a decrease~~an increase in RevPAR of ~~9.0% and 14.0%~~25.6% during our ~~second~~first quarter, ~~and first half of fiscal 2022,~~ again compared to the same ~~periods~~period in fiscal ~~2019.~~2022. Therefore, we believe we ~~outperformed~~underperformed our competitive sets during the ~~second~~first quarter ~~and first half~~ of fiscal ~~2022~~2023 by approximately 38.1 percentage points. To put this in context, we believe our underperformance to both the industry and ~~4 percentage points, respectively. Higher class segments~~our competitive sets occurred because occupancy at our hotels recovered earlier in fiscal 2022 than the industry and competitive hotels in our markets, which generally lagged our occupancy levels in fiscal 2022. This resulted in the industry and competitive hotels in our markets growing occupancy at a faster rate than our owned hotels during the first quarter of ~~the hotel industry, such as luxury and upper upscale (with an increased reliance on business travel), continue to experience lower occupancies~~fiscal 2023 compared to ~~lower class hotel segments such~~the prior year as ~~economy and midscale.~~lagging occupancy levels recovered.

Looking to future periods, overall occupancy in the U.S. ~~continues~~is expected to slowly increase given that, in recent months, ~~reaching~~occupancy reached its highest level since the start of the pandemic. In the near term, we expect most demand will continue to come from the leisure travel

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segment. Leisure travel in our markets has a seasonal component, peaking in the summer months and slowing down as children return to school and the weather turns colder. We are experiencing gradual 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.~~ As of the date of this report, our group room revenue bookings for fiscal ~~2022~~2023 - commonly referred to in the hotels and resorts industry as “group pace” - is running approximately 8%7% ahead of where we were at the same time last year. Group room revenue bookings for fiscal 2024 is running approximately 5% behind where we were at the same time in early fiscal 2019, but despite our reduced group pace as compared to the second quarter of fiscal 2019, our current group pace is an improvement from recent quarters and we are experiencing increased booking activity2022 for fiscal ~~2022 and 2023 and beyond.~~2023. Banquet and catering revenue pace for fiscal ~~2022~~2023 and fiscal 2024 is ~~also~~similarly running ~~behind~~ahead of where we were at ~~the~~this same time last year. We are encouraged by continuing positive trends in group bookings for fiscal ~~2019, but not as much as group pace, due in part to increases in corporate group, event~~2023 and ~~wedding bookings. Overall, we generally expect our revenue trends to track or exceed the overall industry trends for our segment of the industry, particularly in our respective markets.~~beyond.

Adjusted EBITDA

Adjusted EBITDA is a measure used by management and our board of directors to assess our financial performance and enterprise value. We believe that Adjusted EBITDA is a useful measure for us and investors, as it eliminates certain expenses that are not indicative of our core operating performance and facilitates 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 long-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

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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 future we will incur expenses that are the same as or similar to some 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.

~~Table~~The following table sets forth Adjusted EBITDA by reportable operating segment for the first quarter of ~~Contents~~fiscal 2023 and fiscal 2022 (in millions, except for variance percentage):


	First Quarter
					Variance
	F2023		F2022		Amt.		Pct.
Theatres	$	13.8	$	4.8	$	9.0	188.8	%
Hotels and resorts	(0.4)		2.4		(2.8)		(117.2)	%
Corporate items	(3.9)		(3.8)		(0.1)		(3.2)	%
Total Adjusted EBITDA	$	9.5	$	3.4	$	6.1	182.2	%

The following table sets forth our reconciliation of Adjusted EBITDA (in millions):


		Second Quarter				First Half					First Quarter
		F2022		F2021		F2022		F2021			F2023		F2022
Net earnings (loss) attributable to The Marcus Corporation		$	9.0	$	(23.4)	$	(5.9)	$	(51.5)
Net loss attributable to The Marcus Corporation										Net loss attributable to The Marcus Corporation	$	(9.5)	$	(14.9)
Add (deduct):	Add (deduct):									Add (deduct):
Investment (income) loss	Investment (income) loss	0.5		(0.1)		0.7		(0.2)		Investment (income) loss	(0.3)		0.3
Interest expense	Interest expense	4.1		4.9		8.2		9.8		Interest expense	3.0		4.1
Other expense	Other expense	0.6		0.6		1.2		1.3		Other expense	0.4		0.6
Loss (gain) on disposition of property, equipment and other assets	Loss (gain) on disposition of property, equipment and other assets	0.1		0.2		(0.4)		(2.0)		Loss (gain) on disposition of property, equipment and other assets	0.4		(0.4)
Equity (earnings) losses from unconsolidated joint ventures	Equity (earnings) losses from unconsolidated joint ventures	—		—		0.1		—		Equity (earnings) losses from unconsolidated joint ventures	0.2		0.1

Income tax expense (benefit)		4.8		(8.3)		(1.8)		(19.1)
Income tax benefit										Income tax benefit	(2.8)		(6.5)
Depreciation and amortization	Depreciation and amortization	16.8		18.5		34.0		36.5		Depreciation and amortization	15.9		17.2
Share-based compensation expenses (1)	Share-based compensation expenses (1)	1.7		2.7		4.6		4.2		Share-based compensation expenses (1)	2.2		2.9
Impairment charges (2)		—		3.7		—		3.7
Government grants (3)		—		—		—		(1.3)

Total Adjusted EBITDA	Total Adjusted EBITDA	$	37.3	$	(1.2)	$	40.7	$	(18.7)	Total Adjusted EBITDA	$	9.5	$	3.4

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The following tables sets forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):


		Second Quarter, F2022								First Half, F2022								First Quarter, F2023
		Theatres		Hotels & Resorts		Corp. Items		Total		Theatres		Hotels & Resorts		Corp. Items		Total		Theatres		Hotels & Resorts		Corp. Items		Total
Operating income (loss)	Operating income (loss)	$	16.4	$	6.8	$	(4.4)	$	18.9	$	8.4	$	3.8	$	(10.2)	2.1	Operating income (loss)	$	1.5	$	(5.0)	$	(5.5)	$	(9.0)
Depreciation and amortization	Depreciation and amortization	11.9		4.8		0.1		16.8		24.1		9.8		0.2		34.0	Depreciation and amortization	11.5		4.3		0.1		15.9
Loss (gain) on disposition of property, equipment and other assets																	Loss (gain) on disposition of property, equipment and other assets	0.3		0.1		—		0.4
Share-based compensation (1)	Share-based compensation (1)	0.5		0.2		1.0		1.7		1.1		0.6		2.9		4.6	Share-based compensation (1)	0.5		0.2		1.5		2.2

Total Adjusted EBITDA	Total Adjusted EBITDA	$	28.8	$	11.8	$	(3.3)	$	37.3	$	33.5	$	14.2	(7.1)		40.7	Total Adjusted EBITDA	$	13.8	$	(0.4)	$	(3.9)	$	9.5


		Second Quarter, F2021								First Half, F2021								First Quarter, F2022
		Theatres		Hotels & Resorts		Corp. Items		Total		Theatres		Hotels & Resorts		Corp. Items		Total		Theatres		Hotels & Resorts		Corp. Items		Total
Operating loss	Operating loss	$	(18.2)	$	(2.2)	$	(5.7)	$	(26.1)	$	(43.9)	$	(7.9)	$	(10.0)	(61.8)	Operating loss	$	(8.0)	$	(3.0)	$	(5.8)	$	(16.8)
Depreciation and amortization	Depreciation and amortization	13.4		5.0		0.1		18.5		26.2		10.2		0.1		36.5	Depreciation and amortization	12.2		5.0		0.1		17.2
Share-based compensation (1)	Share-based compensation (1)	0.7		0.5		1.5		2.7		1.1		0.8		2.3		4.2	Share-based compensation (1)	0.6		0.4		1.9		2.9
Impairment charges (2)		3.7		—		—		3.7		3.7		—		—		3.7
Government grants (3)		—		—		—		—		(1.3)		—		—		(1.3)
Total Adjusted EBITDA	Total Adjusted EBITDA	$	(0.4)	$	3.3	$	(4.1)	$	(1.2)	$	(14.2)	$	3.0	(7.6)		(18.7)	Total Adjusted EBITDA	$	4.8	$	2.4	$	(3.8)	$	3.4

(1)Non-cash expense related to share-based compensation programs.

~~(2)Non-cash impairment charges related to surplus theatre real estate.~~

~~(3)Reflects a nonrecurring state government grant awarded to our theatres for COVID-19 pandemic relief.~~

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~~The following table sets forth Adjusted EBITDA by reportable operating segment for the second quarter and first half of fiscal 2022 and fiscal 2021 (in millions, except for variance percentage):~~

Second Quarter First Half
Variance Variance
F2022 F2021 Amt. Pct. F2022 F2021 Amt. Pct.
Theatres $ 28.8 $ (0.4) $ 29.2 6620.0 % $ 33.5 $ (14.2) $ 47.7 336.6 %
Hotels and resorts 11.8 3.3 8.5 255.0 % 14.2 3.0 11.2 368.0 %
Corporate items (3.3) (4.1) 0.8 20.0 % (7.1) (7.6) 0.5 6.0 %
Total Adjusted EBITDA $ 37.3 $ (1.2) $ 38.5 3167.4 % $ 40.7 $ (18.7) $ 59.3 317.6 %

During the second quarter of fiscal 2022, our theatre division reported its fourth straight quarter with positive Adjusted EBITDA since the start of the COVID-19 pandemic due to increased attendance and increased revenues per person, as described in the Theatres section above. During the second quarter of fiscal 2022, our hotels and resorts division reported its fifth straight quarter with positive Adjusted EBITDA due to improved occupancy percentages and ADR, and strong cost controls, as described in the Hotels and Resorts section above. Our second quarter of fiscal 2022 is our fourth straight quarter with consolidated positive Adjusted EBITDA since the start of the pandemic.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our movie theatre and hotels and resorts businesses, when open and operating normally, each generate significant and consistent daily amounts of cash, subject to previously-noted seasonality, because each segment’s revenue is derived predominantly from consumer cash purchases. Under normal circumstances, we believe that these relatively consistent and predictable cash sources, as well as the availability of unused credit lines, would be adequate to support the ongoing operational liquidity needs of our businesses.

Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our ~~87-year~~88-year history and ~~despite the COVID-19 pandemic,~~ our financial position remains strong. As of ~~June~~March 30, ~~2022,~~2023, we had a cash balance of approximately ~~$57.7~~$10.1 million, ~~$221.8~~$212.8 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio ~~(including short-term borrowings)~~ was ~~0.37.~~0.30. With our strong liquidity position combined with cash generated from operations, ~~and proceeds from the sale of surplus real estate (discussed above),~~ we believe we are positioned to meet our obligations as they come due and continue to sustain our operations throughout fiscal 2022 and fiscal 2023, even if our properties continue to generate reduced revenues during these periods. We will continue to work to preserve cash and maintain strong liquidity to endure the impacts of the global pandemic, even if it continues for a prolonged period of time.

~~We believe that the actions we have taken during the past two years 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.~~ statements, as well as our longer-term capital requirements.

However, future compliance with our debt covenants could be impacted if we are unable to continue operations as currently expected, which could be impacted by matters that are not entirely in our control, such as the ~~reinstatement of~~ protective actions ~~that federal, state and local governments have taken~~resulting from future pandemics and the timing of new movie ~~releases (as described in the Impact of the COVID-19 Pandemic section of this MD&A and in our Annual Report for the year ended December 30, 2021).~~releases. Future compliance with our debt covenants could also be impacted if the speed of recovery of our theatres ~~and hotels and resorts businesses~~business is slower than currently expected. For example, our current expectations are that our theatre division will continue to improve during ~~the~~ fiscal ~~2022 (but~~2023, but still report results below comparable periods in fiscal ~~2019), before beginning to progressively return to closer-to-normal performance in fiscal 2023. Our current expectations for our hotels and resorts division~~2019. In the event we are that we will continue to show improvement in each succeeding quarter compared to the prior year. We do not expect to return to pre-COVID-19 occupancy levels during fiscal 2022 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,~~periods, 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.

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Financial Condition

Net cash used in operating activities totaled $7.7 million during the first quarter of fiscal 2023, compared to net cash provided by operating activities ~~totaled $55.2~~of $6.5 million during the first ~~half~~quarter of fiscal ~~2022, compared to net cash used in operating activities of $9.7~~2022. The $14.2 million ~~during the first half of fiscal 2021. The $64.9 million increase~~decrease in net cash provided by operating activities was due primarily to the receipt of refundable income taxes of $22.7 million and government grants of $4.3 million during the first quarter of fiscal 2022 that did not recur in fiscal 2023, partially offset by a reduced net loss and the favorable timing in the ~~collection of accounts receivable and receipt of refundable income taxes of $22.7 million, partially offset by unfavorable timing in the~~ payment of accounts payable ~~accrued compensation~~ and other ~~accrued liabilities~~working capital payments during the first ~~half~~quarter of fiscal 2023 compared to the first quarter of fiscal 2022.

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Net cash used in investing activities during the first ~~half~~quarter of fiscal ~~2022~~2023 totaled ~~$11.5~~$9.5 million, compared to net cash used in investing activities of ~~$3.7~~$3.1 million during the first ~~half~~quarter of fiscal ~~2021.~~2022. The increase in net cash used in investing activities of ~~$7.7~~$6.4 million was the result of an increase of ~~$10.1~~$2.4 million in capital ~~expenditures.~~expenditures and the sale of non-core real estate assets of $3.4 million during the first quarter of fiscal 2022 that did not recur in fiscal 2023. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled ~~$16.3~~$8.9 million during the first ~~half~~quarter of fiscal ~~2022~~2023 compared to ~~$6.2~~$6.6 million during the first ~~half~~quarter of fiscal ~~2021.~~2022.

Fiscal ~~2022~~2023 first ~~half~~quarter cash capital expenditures included approximately ~~$5.0~~$4.2 million incurred in our theatre division, primarily related to normal maintenance capital projects. We also incurred capital expenditures in our hotels and resorts division during the first ~~half~~quarter of fiscal ~~2022~~2023 of approximately ~~$11.3~~$4.7 million, including costs related to guest rooms renovations at the Grand Geneva and normal maintenance capital projects.

Net cash ~~used in~~provided by financing activities during the first ~~half~~quarter of fiscal ~~2022~~2023 totaled ~~$4.4~~$5.6 million compared to net cash ~~provided by~~used in financing activities of ~~$14.5~~$3.2 million during the first ~~half~~quarter of fiscal ~~2021.~~2022. During the first ~~half~~quarter of fiscal ~~2022,~~2023, 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 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 ~~$22.0~~$29.0 million of new short-term revolving credit facility borrowings, and we made ~~$22.0~~$20.0 million of repayments on short-term revolving credit facility borrowings during the first ~~half~~quarter of fiscal ~~2022~~2023 (net ~~zero~~increase in borrowings on our credit ~~facility)~~facility of $9.0 million). We ended the ~~second~~first quarter of fiscal ~~2022~~2023 with no$9.0 million of outstanding borrowings under our revolving credit facility. During the first ~~half~~quarter of fiscal ~~2021,~~2022, 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 ~~$66.5~~$22.0 million of new short-term revolving credit facility borrowings, and we made ~~$46.5~~$22.0 million of repayments on short-term revolving credit facility borrowings during the first ~~half~~quarter of fiscal ~~2021 (net increase in borrowings on our credit facility of $20.0 million).~~2022.

~~During the first half of fiscal 2022 we repaid $0.8 million of short-term term loan borrowings, compared to $4.2 million of such repayments during the first half of fiscal 2021.~~ Principal payments on long-term debt were approximately ~~$0.9~~$0.4 million during the first ~~half~~quarter of fiscal ~~2022~~2023 compared to payments of ~~$0.2~~$0.4 million during the first ~~half~~quarter of fiscal ~~2021.~~2022. Our debt-to-capitalization ratio ~~(including short-term borrowings but excluding~~(excluding our finance and operating lease obligations) was ~~0.37~~0.30 at ~~June 30, 2022, compared to 0.37 at December 30, 2021.~~

Subsequent to the end of the second 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 maturing on September 22, 2022. In connection with the repayment of the term loan, the Company amended the Credit Agreement by entering into the Fourth Amendment which 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 30, 2023, ~~and continuing for each fiscal quarter thereafter.~~compared to 0.28 at December 29, 2022.

During the first ~~half~~quarter of fiscal ~~2022~~2023 and the first ~~half~~quarter of fiscal ~~2021~~2022, we did not repurchase any shares of our common stock in the open market. As of ~~June~~March 30, ~~2022,~~2023, approximately ~~2.6~~2.5 million shares 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.

We did not make any dividend payments during the first half of fiscal 2022 and the first half of 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 in the open market during fiscal 2021. The Credit Agreement also limits the total amount of quarterly dividend payments or share repurchases during the four subsequent quarters beginning withDuring the first quarter of fiscal 2022 to no more than $1.55 million per quarter, unless we are in compliance with prior financial covenants under the Credit Agreement (specifically, the consolidated fixed charge coverage ratio), at which point we have the ability

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~~to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.~~

~~Subsequent to the end of the second quarter of fiscal 2022, on July 29, 2022~~2023 the Board of Directors declared a regular quarterly ~~cash~~ dividend of $0.05 per share of common stock. The dividend ~~will be~~was paid ~~September 15, 2022~~on March 20, 2023 to shareholders of record on ~~August 25, 2022.~~March 13, 2023. The Board of Directors also declared a dividend of $0.045 per share on the Class B common stock. The dividend on the Class B common stock, which is not publicly traded, ~~will also be~~was paid ~~September 15, 2022~~on March 20, 2023 to shareholders of record on ~~August 25,~~March 13, 2023. Dividends paid during the first quarter of fiscal 2023 were $1.5 million. We did not make any dividend payments during the first quarter of fiscal 2022.

Our Credit Agreement, as amended, limited the total amount of quarterly dividend payments or share repurchases during fiscal 2022 to no more than $1.55 million per quarter. Beginning with the first quarter of fiscal 2023, we have returned to compliance with prior financial covenants under the Credit Agreement that were temporarily waived (specifically, the consolidated fixed charge coverage ratio), removing any limitations on the total amount of quarterly dividends or share repurchases. We have the ability to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.

During the first quarter of fiscal 2023, we amended the Credit Agreement by entering into the Fifth Amendment effective on February 10, 2023, which replaced the variable rate LIBOR benchmark 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 us to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our

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consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment, the Second Amendment and the Fifth Amendment: (1) we are 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 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”).

Critical Accounting Policies and Estimates

We have included a summary of our Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 29, 2022. There have been no material changes to the summary provided in that report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have not experienced any material changes in our market risk exposures since December ~~30, 2021.~~29, 2022.

Item 4. Controls and Procedures

a.Evaluation of disclosure controls and procedures

Based on their evaluations and the evaluation of management, as of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 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 submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

b.Changes in internal control over financial reporting

There were no significant changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15 of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2923

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PART II – OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December ~~30, 2021.~~29, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information with respect to purchases made by us or on our behalf of our Common Stock during the periods 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)
April 1 - April 28 — $ — — 2,581,495
April 29 - June 2 6,973 14.86 6,973 2,574,522
June 3 - June 30 55 14.91 55 2,574,467
Total 7,028 $ 14.86 7,028 2,574,467


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)
December 30 - February 3	—	$	—	—	2,522,646
February 4 - March 3	19,858	15.74		19,858	2,502,788
March 4 - March 30	—	—		—	2,502,788
Total	19,858	$	15.74	19,858	2,502,788

(1)Through ~~June~~March 30, ~~2022,~~2023, our Board of Directors had authorized the repurchase of up to approximately 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 ~~June~~March 30, ~~2022,~~2023, we had repurchased approximately ~~9.1~~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. The shares purchased during the ~~second~~first quarter of 2022 were purchased in ~~connection~~conjunction with the ~~vesting~~exercise of ~~grants of restricted~~ stock ~~in which we repurchased shares from~~options pursuant to the ~~stockholders whose restricted shares vested in order to cover such stockholders’ related withholding taxes.~~publicly announced repurchase authorization.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 6. Exhibits



4.1			Fifth Amendment to Credit Agreement, dated February 10, 2023, 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.] [Incorporate d by reference to Exhibit 4 .6 to our Annual Report on Form 10-K for the fis cal year ended December 2 9, 2022 .]

4.2			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.] [Incorporated by reference to Exhibit 4.12 to our Ann ual Report on Form 10-K for the fiscal year en ded Decem ber 29, 2022 .]

4.3			The Fifth Amendment to Note Purchase Agreement, dated December 21, 2016, 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.] [Incorporated by refer ence to Exhibit 4.18 to our Ann u al Report on Form 10-K for the fiscal year ended December 29, 2022.]

31.1			Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32			Written Statement of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350.

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101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page Interactive Data File (embedded within the Inline XBRL document).

3025

Table of Contents

SIGNATURES

Pursuant to the requirements 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

DATE: ~~August~~May 4, ~~2022~~2023	By:	/s/ Gregory S. Marcus
		Gregory S. Marcus
		President and Chief Executive Officer


DATE: ~~August~~May 4, ~~2022~~2023	By:	/s/ Chad M. Paris
		Chad M. Paris
		Chief Financial Officer and Treasurer

S-1


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Consolidated Financial ~~Statements:~~Statements (Unaudited):

	Consolidated Balance Sheets	3

	Consolidated Statements of Earnings (Loss)	5

	Consolidated Statements of Comprehensive Income (Loss)	6

	Consolidated Statements of Cash Flows	7

	Condensed Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1614

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2923

Item 4.	Controls and Procedures	2923

PART II – OTHER INFORMATION

Item 1A.	Risk Factors	3024

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3024

Item 4.	Mine Safety Disclosures	3024

Item 6.	Exhibits	3025

	Signatures	S-1


	June 30, 2022		December 30, 2021

Mortgage notes	$	24,203	$	24,388
Senior notes	90,000		90,000
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75%	1,158		1,356
Convertible senior notes	100,050		100,050
Payroll Protection Program loans	2,712		3,181
Revolving credit agreement	—		—
Debt issuance costs	(3,326)		(3,831)
Total debt, net of debt issuance costs	214,797		215,144
Less current maturities, net of issuance costs	11,077		10,967
Long-term debt	$	203,720	204,177

Short-term borrowings	46,628		47,346
Total debt and short-term borrowings, net of issuance costs	$	261,425	$	262,490