x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)
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(Exact name of registrant as specified in its charter) |
Wisconsin | 39-1139844 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |||||||
| 53202-4125 | |||||||
(Address of principal executive offices) | (Zip Code) |
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 |
Yes |
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Yes |
| No |
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Large accelerated filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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Emerging growth company |
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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
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24,498,243
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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S-1 |
| | | | | | |
| | April 1, | | December 31, | ||
(in thousands, except share and per share data) |
| 2021 |
| 2020 | ||
| | | | | | |
ASSETS |
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Current assets: |
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Cash and cash equivalents | | $ | 6,013 | | $ | 6,745 |
Restricted cash | |
| 6,890 | |
| 7,343 |
Accounts receivable, net of reserves of $1,196 and $1,284, respectively | |
| 6,572 | |
| 6,359 |
Government grants receivable | | | — | | | 4,913 |
Refundable income taxes | |
| 24,867 | |
| 27,934 |
Assets held for sale | | | 8,658 | | | 4,117 |
Other current assets | |
| 10,654 | |
| 10,406 |
Total current assets | |
| 63,654 | |
| 67,817 |
| | | | | | |
Property and equipment: | |
| | |
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Land and improvements | |
| 140,302 | |
| 145,671 |
Buildings and improvements | |
| 759,852 | |
| 759,421 |
Leasehold improvements | |
| 164,000 | |
| 163,879 |
Furniture, fixtures and equipment | |
| 374,734 | |
| 374,253 |
Finance lease right-of-use assets | |
| 75,338 | |
| 75,322 |
Construction in progress | |
| 5,460 | |
| 3,360 |
Total property and equipment | |
| 1,519,686 | | | 1,521,906 |
Less accumulated depreciation and amortization | |
| 691,446 | | | 673,578 |
Net property and equipment | |
| 828,240 | | | 848,328 |
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Operating lease right-of-use assets | | | 227,899 | |
| 229,660 |
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Other assets: | |
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Investments in joint ventures | |
| — | |
| 2,084 |
Goodwill | |
| 75,165 | |
| 75,188 |
Other | |
| 30,871 | |
| 31,101 |
Total other assets | |
| 106,036 | |
| 108,373 |
TOTAL ASSETS | | $ | 1,225,829 | | $ | 1,254,178 |
March 31, 2022 | December 30, 2021 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 19,431 | $ | 17,658 | |||||||
Restricted cash | 4,822 | 6,396 | |||||||||
Accounts receivable, net of reserves of $876 and $1,001, respectively | 21,407 | 28,902 | |||||||||
Government grants receivable | — | 4,335 | |||||||||
Refundable income taxes | — | 22,435 | |||||||||
Assets held for sale | 1,875 | 4,856 | |||||||||
Other current assets | 17,204 | 15,364 | |||||||||
Total current assets | 64,739 | 99,946 | |||||||||
Property and equipment: | |||||||||||
Land and improvements | 129,682 | 129,642 | |||||||||
Buildings and improvements | 757,585 | 756,974 | |||||||||
Leasehold improvements | 167,195 | 166,060 | |||||||||
Furniture, fixtures and equipment | 376,936 | 375,650 | |||||||||
Finance lease right-of-use assets | 75,195 | 75,124 | |||||||||
Construction in progress | 8,144 | 6,000 | |||||||||
Total property and equipment | 1,514,737 | 1,509,450 | |||||||||
Less accumulated depreciation and amortization | 755,208 | 738,258 | |||||||||
Net property and equipment | 759,529 | 771,192 | |||||||||
Operating lease right-of-use assets | 213,042 | 217,072 | |||||||||
Other assets: | |||||||||||
Investments in joint ventures | 2,194 | 2,335 | |||||||||
Goodwill | 75,071 | 75,095 | |||||||||
Deferred incomes taxes | 12,131 | 10,032 | |||||||||
Other | 12,542 | 12,689 | |||||||||
Total other assets | 101,938 | 100,151 | |||||||||
TOTAL ASSETS | $ | 1,139,248 | $ | 1,188,361 |
THE MARCUS CORPORATION
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| April 1, |
| December 31, | ||
(in thousands, except share and per share data) |
| 2021 |
| 2020 | ||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable | | $ | 13,277 | | $ | 13,158 |
Taxes other than income taxes | |
| 16,765 | |
| 18,308 |
Accrued compensation | |
| 7,916 | |
| 7,633 |
Other accrued liabilities | |
| 56,344 | |
| 58,154 |
Short-term borrowings | | | 83,259 | | | 87,194 |
Current portion of finance lease obligations | |
| 2,731 | |
| 2,783 |
Current portion of operating lease obligations | |
| 18,914 | |
| 19,614 |
Current maturities of long-term debt | |
| 11,361 | |
| 10,548 |
Total current liabilities | |
| 210,567 | |
| 217,392 |
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Finance lease obligations | |
| 19,166 | |
| 19,744 |
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Operating lease obligations | |
| 228,493 | |
| 230,550 |
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Long-term debt | |
| 227,770 | |
| 193,036 |
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Deferred income taxes | |
| 20,131 | |
| 33,429 |
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Other long-term obligations | | | 61,847 | | | 61,304 |
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Equity: | |
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Shareholders’ equity attributable to The Marcus Corporation | | | | | | |
Preferred Stock, $1 par; authorized 1,000,000 shares; NaN issued | |
| — | |
| — |
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,048,531 shares at April 1, 2021 and 23,264,259 shares at December 31, 2020 | |
| 24,049 | |
| 23,264 |
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,405,639 shares at April 1, 2021 and 7,925,254 shares at December 31, 2020 | |
| 7,406 | |
| 7,926 |
Capital in excess of par | |
| 138,446 | |
| 153,529 |
Retained earnings | |
| 304,468 | |
| 331,897 |
Accumulated other comprehensive loss | |
| (14,481) | |
| (14,933) |
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| 459,888 | |
| 501,683 |
Less cost of Common Stock in treasury (63,087 shares at April 1, 2021 and 124,758 shares at December 31, 2020) | |
| (2,033) | |
| (2,960) |
Total shareholders’ equity attributable to The Marcus Corporation | |
| 457,855 | |
| 498,723 |
Noncontrolling interest | |
| — | |
| — |
Total equity | |
| 457,855 | |
| 498,723 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,225,829 | | $ | 1,254,178 |
March 31, 2022 | December 30, 2021 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 23,784 | $ | 35,781 | |||||||
Income taxes | 269 | — | |||||||||
Taxes other than income taxes | 15,658 | 19,566 | |||||||||
Accrued compensation | 13,911 | 20,474 | |||||||||
Other accrued liabilities | 56,742 | 59,678 | |||||||||
Short-term borrowings | 46,577 | 47,346 | |||||||||
Current portion of finance lease obligations | 2,538 | 2,561 | |||||||||
Current portion of operating lease obligations | 15,827 | 16,795 | |||||||||
Current maturities of long-term debt | 11,064 | 10,967 | |||||||||
Total current liabilities | 186,370 | 213,168 | |||||||||
Finance lease obligations | 16,703 | 17,192 | |||||||||
Operating lease obligations | 211,841 | 216,064 | |||||||||
Long-term debt | 203,905 | 204,177 | |||||||||
Deferred income taxes | 22,103 | 26,183 | |||||||||
Other long-term obligations | 56,548 | 57,963 | |||||||||
Equity: | |||||||||||
Shareholders’ equity attributable to The Marcus Corporation | |||||||||||
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 March 31, 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 March 31, 2022 and 7,130,125 shares at December 30, 2021 | 7,111 | 7,130 | |||||||||
Capital in excess of par | 149,234 | 145,656 | |||||||||
Retained earnings | 274,403 | 289,306 | |||||||||
Accumulated other comprehensive loss | (10,913) | (11,444) | |||||||||
444,333 | 454,993 | ||||||||||
Less cost of Common Stock in treasury (122,204 shares at March 31, 2022 and 48,111 shares at December 30, 2021) | (2,555) | (1,379) | |||||||||
Total shareholders’ equity attributable to The Marcus Corporation | 441,778 | 453,614 | |||||||||
Noncontrolling interest | — | — | |||||||||
Total equity | 441,778 | 453,614 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,139,248 | $ | 1,188,361 |
| | | | | | |
| | 13 Weeks Ended | ||||
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| April 1, |
| March 26, | ||
(in thousands, except per share data) |
| 2021 |
| 2020 | ||
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Revenues: | | | |
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Theatre admissions | | $ | 10,685 | | $ | 55,395 |
Rooms | |
| 9,044 | |
| 16,989 |
Theatre concessions | |
| 9,919 | |
| 45,930 |
Food and beverage | |
| 5,912 | |
| 13,614 |
Other revenues | |
| 11,894 | |
| 18,776 |
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| 47,454 | |
| 150,704 |
Cost reimbursements | |
| 3,333 | |
| 8,756 |
Total revenues | |
| 50,787 | |
| 159,460 |
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Costs and expenses: | |
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Theatre operations | |
| 18,270 | |
| 54,016 |
Rooms | |
| 5,265 | |
| 9,655 |
Theatre concessions | |
| 4,496 | |
| 22,211 |
Food and beverage | |
| 5,370 | |
| 14,465 |
Advertising and marketing | |
| 2,549 | |
| 5,390 |
Administrative | |
| 13,316 | |
| 17,732 |
Depreciation and amortization | |
| 17,979 | |
| 19,033 |
Rent | |
| 6,341 | |
| 6,954 |
Property taxes | |
| 4,739 | |
| 6,029 |
Other operating expenses | |
| 4,790 | |
| 8,707 |
Impairment charges | | | — | | | 8,712 |
Reimbursed costs | |
| 3,333 | |
| 8,756 |
Total costs and expenses | |
| 86,448 | | | 181,660 |
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Operating loss | |
| (35,661) | |
| (22,200) |
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Other income (expense): | |
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Investment income (loss) | |
| 40 | |
| (695) |
Interest expense | |
| (4,843) | |
| (2,516) |
Other expense | |
| (628) | |
| (590) |
Gain (loss) on disposition of property, equipment and other assets | |
| 2,204 | |
| (12) |
Equity losses from unconsolidated joint ventures, net | |
| — | |
| (57) |
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| (3,227) | |
| (3,870) |
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Net loss before income taxes | |
| (38,888) | |
| (26,070) |
Income tax benefit | |
| (10,758) | |
| (6,570) |
Net loss | |
| (28,130) | |
| (19,500) |
Net loss attributable to noncontrolling interests | |
| — | |
| (148) |
Net loss attributable to The Marcus Corporation | | $ | (28,130) | | $ | (19,352) |
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Net loss per share - basic: | |
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Common Stock | | $ | (0.93) | | $ | (0.64) |
Class B Common Stock | | $ | (0.80) | | $ | (0.58) |
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Net loss per share - diluted: | |
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Common Stock | | $ | (0.93) | | $ | (0.64) |
Class B Common Stock | | $ | (0.80) | | $ | (0.58) |
13 Weeks Ended | |||||||||||||||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Theatre admissions | $ | 38,417 | $ | 10,685 | |||||||||||||||||||
Rooms | 17,430 | 9,044 | |||||||||||||||||||||
Theatre concessions | 35,464 | 9,919 | |||||||||||||||||||||
Food and beverage | 14,511 | 5,912 | |||||||||||||||||||||
Other revenues | 18,807 | 11,894 | |||||||||||||||||||||
124,629 | 47,454 | ||||||||||||||||||||||
Cost reimbursements | 7,613 | 3,333 | |||||||||||||||||||||
Total revenues | 132,242 | 50,787 | |||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Theatre operations | 44,428 | 18,270 | |||||||||||||||||||||
Rooms | 8,203 | 5,265 | |||||||||||||||||||||
Theatre concessions | 15,193 | 4,496 | |||||||||||||||||||||
Food and beverage | 12,140 | 5,370 | |||||||||||||||||||||
Advertising and marketing | 4,481 | 2,549 | |||||||||||||||||||||
Administrative | 19,081 | 13,316 | |||||||||||||||||||||
Depreciation and amortization | 17,231 | 17,979 | |||||||||||||||||||||
Rent | 6,250 | 6,341 | |||||||||||||||||||||
Property taxes | 4,745 | 4,739 | |||||||||||||||||||||
Other operating expenses | 9,674 | 4,790 | |||||||||||||||||||||
Reimbursed costs | 7,613 | 3,333 | |||||||||||||||||||||
Total costs and expenses | 149,039 | 86,448 | |||||||||||||||||||||
Operating loss | (16,797) | (35,661) | |||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Investment income (loss) | (268) | 40 | |||||||||||||||||||||
Interest expense | (4,092) | (4,843) | |||||||||||||||||||||
Other expense | (577) | (628) | |||||||||||||||||||||
Gain on disposition of property, equipment and other assets | 424 | 2,204 | |||||||||||||||||||||
Equity losses from unconsolidated joint ventures | (141) | — | |||||||||||||||||||||
(4,654) | (3,227) | ||||||||||||||||||||||
Loss before income taxes | (21,451) | (38,888) | |||||||||||||||||||||
Income tax benefit | (6,549) | (10,758) | |||||||||||||||||||||
Net loss | (14,902) | (28,130) | |||||||||||||||||||||
Net earnings (loss) attributable to noncontrolling interests | — | — | |||||||||||||||||||||
Net loss attributable to The Marcus Corporation | $ | (14,902) | (28,130) | ||||||||||||||||||||
Net loss per share - basic: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) | |||||||||||||||||||
Net loss per share - diluted: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) |
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| | 13 Weeks Ended | ||||
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| April 1, |
| March 26, | ||
(in thousands) |
| 2020 |
| 2020 | ||
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Net loss | | $ | (28,130) | | $ | (19,500) |
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Other comprehensive income (loss), net of tax: | |
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Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $86 and $65, respectively | |
| 242 | |
| 183 |
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Fair market value adjustment of interest rate swaps, net of tax effect (benefit) of $6 and $(288), respectively | |
| 17 | |
| (814) |
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Reclassification adjustment on interest rate swaps included in interest expense, net of tax effect of $68 and $31, respectively | |
| 193 | |
| 84 |
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Other comprehensive income (loss) | |
| 452 | |
| (547) |
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Comprehensive loss | |
| (27,678) | |
| (20,047) |
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Comprehensive loss attributable to noncontrolling interests | |
| — | |
| (148) |
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Comprehensive loss attributable to The Marcus Corporation | | $ | (27,678) | | $ | (19,899) |
13 Weeks Ended | |||||||||||||||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||
Net loss | $ | (14,902) | $ | (28,130) | |||||||||||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||||||
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $67 and $86, respectively | 190 | 242 | |||||||||||||||||||||
Fair market value adjustment of interest rate swaps, net of tax effect of $79 and $6, respectively | 223 | 17 | |||||||||||||||||||||
Reclassification adjustment on interest rate swaps included in interest expense, net of tax effect of $41, and $68, respectively | 118 | 193 | |||||||||||||||||||||
Other comprehensive income | 531 | 452 | |||||||||||||||||||||
Comprehensive loss | (14,371) | (27,678) | |||||||||||||||||||||
Comprehensive earnings (loss) attributable to noncontrolling interests | — | — | |||||||||||||||||||||
Comprehensive loss attributable to The Marcus Corporation | $ | (14,371) | $ | (27,678) |
| | | | | | |
| | 13 Weeks Ended | ||||
(in thousands) | | April 1, 2021 |
| March 26, 2020 | ||
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OPERATING ACTIVITIES: |
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Net loss | | $ | (28,130) | | $ | (19,500) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
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Losses on investments in joint ventures | |
| — | |
| 57 |
(Gain) loss on disposition of property, equipment and other assets | |
| (2,204) | |
| 12 |
Impairment charges | |
| — | |
| 8,712 |
Depreciation and amortization | |
| 17,979 | |
| 19,033 |
Amortization of debt issuance costs | |
| 623 | |
| 49 |
Share-based compensation | | | 1,484 | | | 988 |
Deferred income taxes | |
| (10,794) | |
| (2,275) |
Other long-term liabilities | |
| 1,164 | |
| (348) |
Contribution of the Company’s stock to savings and profit-sharing plan | | | 1,012 | |
| 1,315 |
Changes in operating assets and liabilities: | |
| | | | |
Accounts receivable | |
| (213) | | | 14,700 |
Government grant receivable | |
| 4,913 | |
| — |
Other assets | | | 23 | |
| 1,408 |
Operating leases | |
| (996) | | | 2,342 |
Accounts payable | |
| (800) | |
| (22,047) |
Income taxes | |
| 6,010 | |
| (4,522) |
Taxes other than income taxes | |
| (1,543) | |
| (4,769) |
Accrued compensation | |
| 283 | |
| (957) |
Other accrued liabilities | | | (1,794) | |
| (10,816) |
Total adjustments | |
| 15,147 | |
| 2,882 |
Net cash used in operating activities | |
| (12,983) | |
| (16,618) |
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INVESTING ACTIVITIES: | |
| | |
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Capital expenditures | |
| (1,525) | |
| (9,978) |
Proceeds from disposals of property, equipment and other assets | |
| 4,308 | |
| 3 |
Other investing activities | |
| (231) | |
| (206) |
Net cash provided by (used in) investing activities | |
| 2,552 | |
| (10,181) |
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FINANCING ACTIVITIES: | |
| | | | |
Debt transactions: | | | | | | |
Proceeds from borrowings on revolving credit facility | |
| 36,000 | |
| 188,000 |
Repayment of borrowings on revolving credit facility | | | (22,000) | |
| (49,000) |
Repayment on short-term borrowings | | | (4,150) | | | — |
Principal payments on long-term debt | | | (93) | | | (177) |
Debt issuance costs | |
| (4) | |
| (414) |
Principal payments on finance lease obligations | |
| (630) | |
| (635) |
Equity transactions: | |
| | | | |
Treasury stock transactions, except for stock options | |
| (1,169) | |
| (226) |
Exercise of stock options | |
| 1,292 | |
| 45 |
Dividends paid | |
| — | |
| (5,145) |
Net cash provided by financing activities | | | 9,246 | |
| 132,448 |
| | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | (1,185) | | | 105,649 |
Cash, cash equivalents and restricted cash at beginning of period | |
| 14,088 | |
| 25,618 |
Cash, cash equivalents and restricted cash at end of period | | $ | 12,903 | | $ | 131,267 |
| | | | | | |
Supplemental Information: | | | | | | |
Interest paid, net of amounts capitalized | | $ | 5,952 | | $ | 2,970 |
Income taxes (paid) refunded | | | 5,974 | | | (226) |
Change in accounts payable for additions to property, equipment and other assets | | | 919 | | | (145) |
13 Weeks Ended | |||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||
OPERATING ACTIVITIES: | |||||||||||
Net loss | $ | (14,902) | $ | (28,130) | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Losses on investments in joint ventures | 141 | — | |||||||||
Gain on disposition of property, equipment and other assets | (424) | (2,204) | |||||||||
Depreciation and amortization | 17,231 | 17,979 | |||||||||
Amortization of debt issuance costs and discount on convertible notes | 413 | 623 | |||||||||
Share-based compensation | 2,917 | 1,484 | |||||||||
Deferred income taxes | (6,342) | (10,794) | |||||||||
Other long-term obligations | (460) | 1,164 | |||||||||
Contribution of the Company’s stock to savings and profit-sharing plan | 956 | 1,012 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 7,495 | (213) | |||||||||
Government grants receivable | 4,335 | 4,913 | |||||||||
Other assets | (1,841) | 23 | |||||||||
Operating leases | (1,161) | (996) | |||||||||
Accounts payable | (10,956) | (800) | |||||||||
Income taxes | 22,704 | 6,010 | |||||||||
Taxes other than income taxes | (3,908) | (1,543) | |||||||||
Accrued compensation | (6,563) | 283 | |||||||||
Other accrued liabilities | (3,164) | (1,794) | |||||||||
Total adjustments | 21,373 | 15,147 | |||||||||
Net cash provided by (used in) operating activities | 6,471 | (12,983) | |||||||||
INVESTING ACTIVITIES: | |||||||||||
Capital expenditures | (6,562) | (1,525) | |||||||||
Proceeds from disposals of property, equipment and other assets | 3,438 | 4,308 | |||||||||
Other investing activities | 21 | (231) | |||||||||
Net cash provided by (used in) investing activities | (3,103) | 2,552 | |||||||||
FINANCING ACTIVITIES: | |||||||||||
Debt transactions: | |||||||||||
Proceeds from borrowings on revolving credit facility | 22,000 | 36,000 | |||||||||
Repayment of borrowings on revolving credit facility | (22,000) | (22,000) | |||||||||
Repayments on short-term borrowings | (820) | (4,150) | |||||||||
Principal payments on long-term debt | (427) | (93) | |||||||||
Debt issuance costs | — | (4) | |||||||||
Principal payments on finance lease obligations | (584) | (630) | |||||||||
Equity transactions: | |||||||||||
Treasury stock transactions, except for stock options | (1,364) | (1,169) | |||||||||
Exercise of stock options | 26 | 1,292 | |||||||||
Net cash provided by (used in) financing activities | (3,169) | 9,246 | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 199 | (1,185) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 24,054 | 14,088 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 24,253 | $ | 12,903 | |||||||
Supplemental Information: | |||||||||||
Interest paid, net of amounts capitalized | $ | 5,904 | $ | 5,952 | |||||||
Income taxes refunded, including interest earned | 22,911 | 5,974 | |||||||||
Change in accounts payable for additions to property, equipment and other assets | (1,041) | 919 |
30, 2021.
During
profitability.
8
During the 13 weeks ended March 26, 2020 the Company determined that indicators of impairment were present and performed a quantitative test. In order to determine fair value, the Company used assumptions based on information available to it as of the date of the quantitative test, including both market data and forecasted future cash flows (Level 3 pricing inputs). The Company then used this information to determine fair value. During the 13 weeks ended March 26, 2020, the Company determined that the fair value of its goodwill was greater than it carrying value and no impairment was required.fourth quarter. There were no indicators of impairment identified during the 13 weeks ended March 31, 2022 or April 1, 2021.
Trade Name Intangible Asset – The Company recorded a trade name intangible asset in conjunction with the Movie Tavern acquisition that was determined to have an indefinite life. The Company reviews its trade name intangible asset for impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were present. As such, the Company evaluated the value of its trade name intangible asset and recorded an impairment charge of $2,200,000 (see Note 3 for further review). There were no indicators of impairment identified during the 13 weeks ended April 1, 2021.
| | | | | | |
| | 13 Weeks Ended | ||||
|
| April 1, 2021 |
| March 26, 2020 | ||
| | (in thousands, except per share data) | ||||
Numerator: |
| |
|
| |
|
Net loss attributable to The Marcus Corporation | | $ | (28,130) | | $ | (19,352) |
Denominator: | | | | | | |
Denominator for basic EPS | |
| 31,196 | |
| 30,975 |
Effect of dilutive employee stock options | |
| — | |
| — |
Denominator for diluted EPS | |
| 31,196 | |
| 30,975 |
Net loss per share - basic: | | | | | | |
Common Stock | | $ | (0.93) | | $ | (0.64) |
Class B Common Stock | | $ | (0.80) | | $ | (0.58) |
Net loss per share - diluted: | |
| | |
| |
Common Stock | | $ | (0.93) | | $ | (0.64) |
Class B Common Stock | | $ | (0.80) | | $ | (0.58) |
13 Weeks Ended | |||||||||||||||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss attributable to The Marcus Corporation | $ | (14,902) | $ | (28,130) | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Denominator for basic EPS | 31,445 | 31,196 | |||||||||||||||||||||
Effect of dilutive employee stock options | — | — | |||||||||||||||||||||
Effect of convertible notes | — | — | |||||||||||||||||||||
Denominator for diluted EPS | 31,445 | 31,196 | |||||||||||||||||||||
Net loss per share - basic: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) | |||||||||||||||||||
Net loss per share - diluted: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) |
Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 13 weeks ended March 31, 2022 and April 1, 2021 and March 26, 2020 was as follows (in thousands, except per share data):
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 Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
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 | — | — | (5) | — | — | 31 | 26 | — | 26 | ||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | (1,373) | (1,373) | — | (1,373) | ||||||||||||||||||||||||||||||||||||||||||||
Savings and profit-sharing contribution | 56 | — | 900 | — | — | — | 956 | — | 956 | ||||||||||||||||||||||||||||||||||||||||||||
Reissuance of treasury stock | — | — | 1 | — | — | 8 | 9 | — | 9 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of non-vested stock | 78 | — | (236) | — | — | 158 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Shared-based compensation | — | — | 2,917 | — | — | — | 2,917 | — | 2,917 | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | 1 | (1) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Conversions of Class B Common Stock | 19 | (19) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (14,902) | 531 | — | (14,371) | — | (14,371) | ||||||||||||||||||||||||||||||||||||||||||||
BALANCES AT MARCH 31, 2022 | $ | 24,498 | $ | 7,111 | $ | 149,234 | $ | 274,403 | $ | (10,913) | $ | (2,555) | $ | 441,778 | $ | — | $ | 441,778 | |||||||||||||||||||||||||||||||||||
Common Stock | Class B Common Stock | Capital in Excess of Par | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Shareholders’ Equity Attributable to The Marcus Corporation | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
BALANCES AT DECEMBER 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) | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | (659) | — | — | 1,951 | 1,292 | — | 1,292 | ||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | (1,181) | (1,181) | — | (1,181) | ||||||||||||||||||||||||||||||||||||||||||||
Savings and profit-sharing contribution | 44 | — | 968 | — | — | — | 1,012 | — | 1,012 | ||||||||||||||||||||||||||||||||||||||||||||
Reissuance of treasury stock | — | — | 2 | — | — | 10 | 12 | — | 12 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of non-vested stock | 221 | — | (367) | — | — | 146 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Shared-based compensation | — | — | 1,484 | — | — | — | 1,484 | — | 1,484 | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | (1) | — | 1 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Conversions of Class B Common Stock | 520 | (520) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (28,130) | 452 | — | (27,678) | — | (27,678) | ||||||||||||||||||||||||||||||||||||||||||||
BALANCES AT APRIL 1, 2021 | $ | 24,049 | $ | 7,406 | $ | 138,446 | $ | 304,468 | $ | (14,481) | $ | (2,033) | $ | 457,855 | $ | — | $ | 457,855 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| Shareholders’ |
| | |
| | | |
| | | | | | | | | | | | | | | | | | | | Equity | | | | | | | |
| | | | | | | | | | | | | | Accumulated | | | | | Attributable | | | | | | | ||
| | | | | Class B | | Capital | | | | | Other | | | | | to The | | Non- | | | | |||||
| | Common | | Common | | in Excess | | Retained | | Comprehensive | | Treasury | | Marcus | | controlling | | Total | |||||||||
| | Stock | | Stock | | of Par | | Earnings | | Loss | | Stock | | Corporation | | Interests | | Equity | |||||||||
BALANCES AT DECEMBER 31, 2020 | | $ | 23,264 | | $ | 7,926 | | $ | 153,529 | | $ | 331,897 | | $ | (14,933) | | $ | (2,960) | | $ | 498,723 | | $ | 0 | | $ | 498,723 |
Adoption of ASU No. 2020-06 (see Note 4) | | | — | | | — | | | (16,511) | | | 702 | | | — | | | — | | | (15,809) | | | — | | | (15,809) |
Exercise of stock options | |
| — | |
| — | |
| (659) | |
| — | |
| — | |
| 1,951 | |
| 1,292 | |
| — | |
| 1,292 |
Purchase of treasury stock | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (1,181) | |
| (1,181) | |
| — | |
| (1,181) |
Savings and profit-sharing contribution | |
| 44 | |
| — | |
| 968 | |
| — | |
| — | |
| — | |
| 1,012 | |
| — | |
| 1,012 |
Reissuance of treasury stock | |
| — | |
| — | |
| 2 | |
| — | |
| — | |
| 10 | |
| 12 | |
| — | |
| 12 |
Issuance of non-vested stock | |
| 221 | |
| — | |
| (367) | |
| — | |
| — | |
| 146 | |
| — | |
| — | |
| — |
Shared-based compensation | |
| — | |
| — | |
| 1,484 | |
| — | |
| — | |
| — | |
| 1,484 | |
| — | |
| 1,484 |
Other | |
| — | |
| — | |
| — | |
| (1) | |
| — | |
| 1 | |
| — | |
| — | |
| — |
Conversions of Class B Common Stock | |
| 520 | |
| (520) | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Comprehensive income (loss) | |
| — | |
| — | |
| — | |
| (28,130) | |
| 452 | |
| — | |
| (27,678) | |
| — | |
| (27,678) |
BALANCES AT APRIL 1, 2021 | | $ | 24,049 | | $ | 7,406 | | $ | 138,446 | | $ | 304,468 | | $ | (14,481) | | $ | (2,033) | | $ | 457,855 | | $ | 0 | | $ | 457,855 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| Shareholders’ |
| | |
| | | |
| | | | | | | | | | | | | | | | | | | | Equity | | | | | | | |
| | | | | | | | | | | | | | Accumulated | | | | | Attributable | | | | | | | ||
| | | | | Class B | | Capital | | | | | Other | | | | | to The | | Non- | | | | |||||
| | Common | | Common | | in Excess | | Retained | | Comprehensive | | Treasury | | Marcus | | controlling | | Total | |||||||||
| | Stock | | Stock | | of Par | | Earnings | | Loss | | Stock | | Corporation | | Interests | | Equity | |||||||||
BALANCES AT DECEMBER 26, 2019 | | $ | 23,254 | | $ | 7,936 | | $ | 145,549 | | $ | 461,884 | | $ | (12,648) | | $ | (4,540) | | $ | 621,435 | | $ | 23 | | $ | 621,458 |
Cash Dividends: | |
|
| |
|
| |
|
| |
|
| |
| | |
|
| |
|
| |
|
| |
|
|
$.15 Class B Common Stock | |
| — | |
| — | |
| — | |
| (1,224) | |
| — | |
| — | |
| (1,224) | |
| — | |
| (1,224) |
$.16 Common Stock | |
| — | |
| — | |
| — | |
| (3,921) | |
| — | |
| — | |
| (3,921) | |
| — | |
| (3,921) |
Exercise of stock options | |
| — | |
| — | |
| 5 | |
| — | |
| — | |
| 40 | |
| 45 | |
| — | |
| 45 |
Purchase of treasury stock | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (274) | |
| (274) | |
| — | |
| (274) |
Savings and profit-sharing contribution | |
| — | |
| — | |
| 299 | |
| — | |
| — | |
| 1,016 | |
| 1,315 | |
| — | |
| 1,315 |
Reissuance of treasury stock | |
| — | |
| — | |
| 2 | |
| — | |
| — | |
| 46 | |
| 48 | |
| — | |
| 48 |
Issuance of non-vested stock | |
| — | |
| — | |
| (149) | |
| — | |
| — | |
| 149 | |
| — | |
| — | |
| — |
Shared-based compensation | |
| — | |
| — | |
| 988 | |
| — | |
| — | |
| — | |
| 988 | |
| — | |
| 988 |
Conversions of Class B Common Stock | |
| 10 | |
| (10) | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Comprehensive loss | |
| — | |
| — | |
| — | |
| (19,352) | |
| (547) | |
| — | |
| (19,899) | |
| (148) | |
| (20,047) |
BALANCES AT MARCH 26, 2020 | | $ | 23,264 | | $ | 7,926 | | $ | 146,694 | | $ | 437,387 | | $ | (13,195) | | $ | (3,563) | | $ | 598,513 | | $ | (125) | | $ | 598,388 |
Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:
March 31, 2022 | December 30, 2021 | ||||||||||
Unrecognized loss on interest rate swap agreements | $ | (168) | $ | (509) | |||||||
Net unrecognized actuarial loss for pension obligation | (10,745) | $ | (10,935) | ||||||||
$ | (10,913) | $ | (11,444) |
| | | | | | |
|
| April 1, |
| December 31, | ||
| | 2021 | | 2020 | ||
| | (in thousands) | ||||
Unrecognized loss on interest rate swap agreements | | $ | (876) | | $ | (1,086) |
Net unrecognized actuarial loss for pension obligation | |
| (13,605) | |
| (13,847) |
| | $ | (14,481) | | $ | (14,933) |
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
10
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 April 1, 2021March 31, 2022 and December 31, 2020,30, 2021, none of the Company’s recorded assets or liabilities that are measured on a recurring basis at fair market value were valued using Level 3 pricing inputs. Assets and liabilities that are measured on a non-recurring basis are discussed in Note 3.
| | | | | | |
| | 13 Weeks | | 13 Weeks | ||
| | Ended | | Ended | ||
|
| April 1, 2021 |
| March 26, 2020 | ||
| | (in thousands) | ||||
Service cost | | $ | 281 | | $ | 274 |
Interest cost | |
| 300 | |
| 342 |
Net amortization of prior service cost and actuarial loss | |
| 328 | |
| 248 |
Net periodic pension cost | | $ | 909 | | $ | 864 |
13 Weeks Ended | |||||||||||||||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||
Service cost | $ | 264 | $ | 281 | |||||||||||||||||||
Interest cost | 335 | $ | 300 | ||||||||||||||||||||
Net amortization of prior service cost and actuarial loss | 257 | $ | 328 | ||||||||||||||||||||
Net periodic pension cost | $ | 856 | $ | 909 |
13 Weeks Ended March 31, 2022 | |||||||||||||||||||||||
Reportable Segment | |||||||||||||||||||||||
Theatres | Hotels/Resorts | Corporate | Total | ||||||||||||||||||||
Theatre admissions | $ | 38,417 | $ | — | $ | — | $ | 38,417 | |||||||||||||||
Rooms | — | 17,430 | — | 17,430 | |||||||||||||||||||
Theatre concessions | 35,464 | — | — | 35,464 | |||||||||||||||||||
Food and beverage | — | 14,511 | — | 14,511 | |||||||||||||||||||
Other revenues(1) | 5,610 | 13,103 | 94 | 18,807 | |||||||||||||||||||
Cost reimbursements | — | 7,613 | — | 7,613 | |||||||||||||||||||
Total revenues | $ | 79,491 | $ | 52,657 | $ | 94 | $ | 132,242 | |||||||||||||||
follows:
13 Weeks Ended April 1, 2021 | |||||||||||||||||||||||
Reportable Segment | |||||||||||||||||||||||
Theatres | Hotels/Resorts | Corporate | Total | ||||||||||||||||||||
Theatre admissions | $ | 10,685 | $ | — | $ | — | $ | 10,685 | |||||||||||||||
Rooms | — | 9,044 | — | 9,044 | |||||||||||||||||||
Theatre concessions | 9,919 | — | — | 9,919 | |||||||||||||||||||
Food and beverage | — | 5,912 | — | 5,912 | |||||||||||||||||||
Other revenues(1) | 1,915 | 9,879 | 100 | 11,894 | |||||||||||||||||||
Cost reimbursements | 43 | 3,290 | — | 3,333 | |||||||||||||||||||
Total revenues | $ | 22,562 | $ | 28,125 | $ | 100 | $ | 50,787 | |||||||||||||||
| | | | | | | | | | | | |
| | 13 Weeks Ended April 1, 2021 | ||||||||||
|
| Reportable Segment | ||||||||||
| | Theatres |
| Hotels/Resorts |
| Corporate |
| Total | ||||
Theatre admissions | | $ | 10,685 | | $ | — | | $ | — | | $ | 10,685 |
Rooms | |
| — | |
| 9,044 | |
| — | |
| 9,044 |
Theatre concessions | |
| 9,919 | |
| — | |
| — | |
| 9,919 |
Food and beverage | |
| — | |
| 5,912 | |
| — | |
| 5,912 |
Other revenues(1) | |
| 1,915 | |
| 9,879 | |
| 100 | |
| 11,894 |
Cost reimbursements | |
| 43 | |
| 3,290 | |
| — | |
| 3,333 |
Total revenues | | $ | 22,562 | | $ | 28,125 | | $ | 100 | | $ | 50,787 |
Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.
| | | | | | | | | | | | |
| | 13 Weeks Ended March 26, 2020 | ||||||||||
| | Reportable Segment | ||||||||||
|
| Theatres |
| Hotels/Resorts |
| Corporate |
| Total | ||||
Theatre admissions | | $ | 55,395 | | $ | — | | $ | — | | $ | 55,395 |
Rooms | |
| — | |
| 16,989 | |
| — | |
| 16,989 |
Theatre concessions | |
| 45,930 | |
| — | |
| — | |
| 45,930 |
Food and beverage | |
| — | |
| 13,614 | |
| — | |
| 13,614 |
Other revenues(1) | |
| 7,703 | |
| 10,984 | |
| 89 | |
| 18,776 |
Cost reimbursements | |
| 183 | |
| 8,573 | |
| — | |
| 8,756 |
Total revenues | | $ | 109,211 | | $ | 50,160 | | $ | 89 | | $ | 159,460 |
The Company had deferred revenue from contracts with customers of $38,773,000$38,310 and $37,307,000$39,144 as of April 1, 2021March 31, 2022 and December 31, 2020,30, 2021, respectively. The Company had 0no contract assets as of April 1, 2021March 31, 2022 and December 30, 2021. During the 13 weeks ended March 31, 2020.2022, the Company recognized revenue of $5,383 that was included in deferred revenues as of December 30, 2021. During the 13 weeks ended April 1, 2021, the Company recognized revenue of $2,240,000 that was included in deferred revenue as of December 31, 2020. During the 13 weeks ended March 26, 2020, the Company recognized revenue of $11,240,000$2,240 that was included in deferred revenues as of December 26, 2019.31, 2020. The majority of the Company’s deferred revenue relates to non-redeemed gift cards, advanced ticket sales and the Company’s loyalty program.
11
As of April 1, 2021,March 31, 2022, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $4,579,000$3,448 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. The Company recognizes revenue as the tickets are redeemed, which is expected to occur within the next two years.
On January 1, 2021, the Company early adopted ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Subtopic 470-20 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Refer to Note 4 for further discussion.
The Company began the first quarter of fiscal 2021 with approximately 52% of its theatres open. As state and local restrictions were eased in several of its markets and several new films were released by movie studios, the Company gradually reopened theatres during the 13 weeks ended April 1, 2021 and ended the fiscal 2021 first quarter with approximately 74% of its theatres open. The majority oftheir impact on the Company’s reopened theatresbusinesses has continued to operate with reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) and reduced operating hours during the fiscal 2021 first quarter. All of the reopened theatres operated at significantly reduced attendance levels compared to prior pre-COVID-19 pandemic years due to customer concerns related to the COVID-19 pandemic and a reduction in the number of new films releaseddissipate during the first quarter of fiscal 2021.
12
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 first quarternumber of vaccinated individuals increased, more films are released, and customers indicate increasing willingness to return to movie theatres.
pre-COVID-19 pandemic years, although hotel occupancy continues to improve as the travel activity increases.
periods.
The COVID-19 pandemic andwere awarded during the resulting impact on the Company’s operating performance has affected, and may continue to affect, the estimates and assumptions made by management. Such estimates and assumptions include, among other things, the Company’s goodwill and long-lived asset valuations and the measurementfourth quarter of compensation costs for annual and long-term incentive plans. Events and changes in circumstances arising after April 1, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.
fiscal 2021.
3. Impairment Charges
During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were evident at all asset groups. For certain theatre asset groups, 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 sale proceeds) was less than their carrying values and recorded a $6,512,000 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 $13,686,000 as of March 26, 2020, excluding any applicable remaining lease obligations.
During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were evident related to its trade name intangible asset. The Company estimated the fair value of its trade name intangible asset as of March 26, 2020 using an income approach, specifically the relief from royalty method, which uses certain assumptions that are Level 3 pricing inputs, including future revenues attributable to the trade name, a royalty rate (1.0% as of March 26, 2020) and a discount rate (17.0% as of March 26, 2020). During the 13 weeks ended March 26, 2020, the Company determined that the fair value of the asset was less than the carrying value and recorded a $2,200,000 impairment loss. The fair value of the trade name intangible asset was $6,900,000 as of April 1, 2021.
| | | | | | |
|
| April 1,2021 |
| December 31, 2020 | ||
| | (in thousands, except payment data) | ||||
Mortgage notes | | $ | 24,482 | | $ | 24,482 |
Senior notes | |
| 100,000 | |
| 100,000 |
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75% | |
| 1,642 | |
| 1,735 |
Convertible senior notes | | | 100,050 | | | 100,050 |
Payroll Protection Program loans | | | 3,424 | | | 3,424 |
Revolving credit agreement | |
| 14,000 | |
| — |
Debt issuance costs | |
| (4,467) | |
| (3,684) |
| |
| 239,131 | |
| 226,007 |
Less current maturities, net of issuance costs | |
| 11,361 | |
| 10,548 |
Less debt discount | | | — | | | 22,423 |
| | $ | 227,770 | | $ | 193,036 |
March 31, 2022 | December 30, 2021 | ||||||||||
Mortgage notes | $ | 24,294 | $ | 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% | 1,257 | 1,356 | |||||||||
Convertible senior notes | 100,050 | 100,050 | |||||||||
Payroll Protection Program loans | 2,946 | 3,181 | |||||||||
Revolving credit agreement | — | — | |||||||||
Debt issuance costs | (3,578) | (3,831) | |||||||||
Total debt, net of debt issuance costs | 214,969 | 215,144 | |||||||||
Less current maturities, net of issuance costs | 11,064 | 10,967 | |||||||||
Long-term debt | $ | 203,905 | 204,177 | ||||||||
Short-term borrowings | 46,577 | 47,346 | |||||||||
Total debt and short-term borrowings, net of issuance costs | $ | 261,546 | $ | 262,490 |
At and Short-Term Borrowings
The credit agreement also provides for a Senior Term Loan A (the “Term Loan A”) In conjunction with the First Amendment, the Company added an initial $90,800 term loan facility that matureswas scheduled to mature on September 22, 2021. The $90,800,000 Term Loan A, net of amortized debt issuance costs of $436,000 and prepayments of $7,105,000 made inIn conjunction with certain asset dispositions,the Third Amendment, the term loan facility was reduced to $50,000 and the maturity date was extended to September 22, 2022. As of March 31, 2022, the balance of the term loan was $46,577, which is included in short-term borrowings on the consolidated balance sheetsheet.
any time during the specified period, the Company’s unrestricted cash on hand exceeds $75,000, the Company is required to prepay revolving loans under the Credit Agreement by the amount of such excess, without a corresponding reduction in the revolving commitments under the Credit Agreement.
During fiscal
Prior to fiscal 2021, the Company separated the Convertible Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Convertible Notes. The difference between the principal amount of the Convertible Notes and the liability component represented the debt discount, which was recorded as a direct deduction from the related debt liability in the consolidated balance sheet.
14
On January 1, 2021, the Company early adopted ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU No. 2020-06 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendments remove the separation models in ASC 470-20 for certain contracts. As a result, embedded conversion features would not be presented separately in equity, rather, the contract would be accounted for as a single liability measured at its amortized cost. Upon adoption, the Company recorded a one-time cumulative effect adjustment to the balance sheet on January 1, 2021 as follows:
| | | | | | | | | |
| | Balance at |
| | |
| | | |
| | December 31, | | Cumulative | | Balance at | |||
|
| 2020 |
| adjustment |
| January 1, 2021 | |||
| | (in thousands) | |||||||
Long-term debt | | $ | 193,036 | | $ | 21,393 | | $ | 214,429 |
Deferred income taxes | |
| 33,429 | |
| (5,584) | |
| 27,845 |
Capital in excess of par | |
| 153,529 | |
| (16,511) | |
| 137,018 |
Retained earnings | |
| 331,897 | |
| 702 | |
| 332,599 |
Additionally, upon adoption of ASU No. 2020-06, the Company uses the if-converted method when calculating diluted earnings (loss) per share for convertible instruments.
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 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.
As of April 2, 2021, the first day of
15
Derivatives
The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions.
5. 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.
| | | | | | | | | |
| | | | 13 Weeks | | 13 Weeks | | ||
| | | | Ended | | Ended | | ||
Lease Cost |
| Classification |
| April 1, 2021 |
| March 26, 2020 | | ||
| | | | (in thousands) | | ||||
Finance lease costs: |
|
|
| | |
| |
| |
Amortization of finance lease assets |
| Depreciation and amortization | | $ | 712 | | $ | 711 | |
Interest on lease liabilities |
| Interest expense | |
| 250 | |
| 269 | |
| | | | $ | 962 | | $ | 980 | |
Operating lease costs: | |
| | | | | | |
|
Operating lease costs | | Rent expense | | $ | 6,321 | | $ | 6,667 |
|
Variable lease cost | | Rent expense | | | (15) | |
| 227 |
|
Short-term lease cost | | Rent expense | | | 35 | |
| 60 | |
| | | | $ | 6,341 | | $ | 6,954 |
|
16
13 Weeks Ended | ||||||||||||||||||||||||||||||||
Lease Cost | Classification | March 31, 2022 | April 1, 2021 | |||||||||||||||||||||||||||||
Finance lease costs: | ||||||||||||||||||||||||||||||||
Amortization of finance lease assets | Depreciation and amortization | $ | 705 | $ | 712 | |||||||||||||||||||||||||||
Interest on lease liabilities | Interest expense | 221 | 250 | |||||||||||||||||||||||||||||
$ | 926 | $ | 962 | |||||||||||||||||||||||||||||
Operating lease costs: | ||||||||||||||||||||||||||||||||
Operating lease costs | Rent expense | $ | 6,377 | $ | 6,321 | |||||||||||||||||||||||||||
Variable lease cost | Rent expense | (163) | (15) | |||||||||||||||||||||||||||||
Short-term lease cost | Rent expense | 36 | 35 | |||||||||||||||||||||||||||||
$ | 6,250 | $ | 6,341 |
Additional information related to leases is as follows:
| | | | | | |
|
| 13 Weeks | | 13 Weeks | ||
| | Ended | | Ended | ||
Other Information |
| April 1, 2021 |
| March 26, 2020 | ||
| | (in thousands) | ||||
Cash paid for amounts included in the measurement of lease liabilities: |
| |
| | | |
Financing cash flows from finance leases | | $ | 630 | | $ | 635 |
Operating cash flows from finance leases | |
| 250 | | | 269 |
Operating cash flows from operating leases | |
| 7,393 | | | 4,644 |
| |
|
| | | |
Right of use assets obtained in exchange for new lease obligations: | |
|
| | | |
Finance lease liabilities | |
| — | | | 25 |
Operating lease liabilities | |
| 1,575 | | | 9,630 |
| | | | | | |
|
| April 1, 2021 | | December 31, 2020 | ||
|
| (in thousands) | ||||
Finance leases: | | | | | | |
Property and equipment – gross | | $ | 75,338 | | $ | 75,322 |
Accumulated depreciation and amortization | | | (56,286) | | | (55,547) |
Property and equipment - net | | $ | 19,502 | | $ | 19,775 |
13 Weeks Ended | ||||||||||||||||||||||||||
Other Information | March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||||||||
Financing cash flows from finance leases | $ | 584 | $ | 630 | ||||||||||||||||||||||
Operating cash flows from finance leases | 221 | 250 | ||||||||||||||||||||||||
Operating cash flows from operating leases | 7,124 | 7,393 | ||||||||||||||||||||||||
Right of use assets obtained in exchange for new lease obligations: | ||||||||||||||||||||||||||
Finance lease liabilities | 72 | — | ||||||||||||||||||||||||
Operating lease liabilities | 183 | 1,575 |
March 31, 2022 | December 30, 2021 | ||||||||||
Finance leases: | |||||||||||
Property and equipment – gross | $ | 75,195 | $ | 75,124 | |||||||
Accumulated depreciation and amortization | (58,901) | (58,197) | |||||||||
Property and equipment - net | $ | 16,294 | $ | 16,927 |
| | | | |
Lease Term and Discount Rate |
| April 1, 2021 | | December 31, 2020 |
Weighted-average remaining lease terms: |
|
| | |
Finance leases |
| 9 years | | 9 years |
Operating leases |
| 15 years | | 15 years |
| |
| |
|
Weighted-average discount rates: |
|
| |
|
Finance leases |
| 4.58% | | 4.62% |
Operating leases |
| 4.52% | | 4.53% |
Due to the COVID-19 pandemic, the Company temporarily closed all of its theatres on March 17, 2020 and had temporarily closed all of its company-owned hotels by April 8, 2020. At that time, the Company began actively working with landlords to discuss changes to the timing of lease payments and contract terms of leases due to the pandemic. The lease terms were negotiated on a lease-by-lease basis with individual landlords. In conjunction with these lease discussions, the Company obtained lease concessions for the majority of its leases. Substantially all of the lease concessions were for the deferral of lease payments into future periods. This resulted in the total payments required by the modified contract being substantially the same as or less than the total payments required by the original contract. The Company has made the policy election to account for these lease concessions as if they were made under the enforceable rights included in the original agreement and are thus outside of the modification framework. The Company has elected to account for these concessions as if no changes to the lease contract were made and has continued to recognize rent expense during the deferral period.
Lease Term and Discount Rate | March 31, 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 | 4.57 | % | 4.58 | % | ||||||||||
Operating leases | 4.51 | % | 4.48 | % |
17
6.5. Income Taxes
During the 13 weeks ended April 1, 2021, the Company received the remaining $5,900,000 of requested tax refunds from its fiscal 2019 tax return. Also during the 13 weeks ended April 1, 2021, the Company filed income tax refund claims of $24,200,000$24,151 related to its fiscal 2020 tax return, withof which $1,828 was received in fiscal 2021, and $22,323 was received during the primary benefit derived from net operating loss carrybacks. Additional13 weeks ended March 31, 2022. An additional $636 of interest was received during the 13 weeks ended March 31, 2022 and is included within income tax loss carryforwards are expected to be generated during fiscal 2021 that will benefit future years.
7. Joint Venture Transactions
in the consolidated statement of earnings (loss). During the 13 weeks ended April 1, 2021, pursuant to a recapitalization of a joint venture whose investment value was $0 as of December 31, 2020, the Company surrenderedreceived the remaining $5,900 of requested tax refunds from its ownership interest fiscal 2019 tax return.
8.
| | | | | | | | | | | | |
13 Weeks Ended |
| | |
| Hotels/ |
| Corporate |
| | | ||
April 1, 2021 | | Theatres | | Resorts | | Items | | Total | ||||
Revenues | | $ | 22,562 | | $ | 28,125 | | $ | 100 | | $ | 50,787 |
Operating loss | |
| (25,639) | |
| (5,708) | |
| (4,314) | |
| (35,661) |
Depreciation and amortization | |
| 12,786 | |
| 5,127 | |
| 66 | |
| 17,979 |
| | | | | | | | | | | | |
13 Weeks Ended |
| | |
| Hotels/ |
| Corporate |
| | | ||
March 26, 2020 | | Theatres | | Resorts | | Items | | Total | ||||
Revenues | | $ | 109,211 | | $ | 50,160 | | $ | 89 | | $ | 159,460 |
Operating loss | |
| (7,083) | |
| (10,853) | |
| (4,264) | |
| (22,200) |
Depreciation and amortization | |
| 13,510 | |
| 5,412 | |
| 111 | |
| 19,033 |
18
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 | ||||||||||||||||||||||
13 Weeks Ended | Theatres | Hotels/ Resorts | Corporate Items | Total | ||||||||||||||||||||||
April 1, 2021 | ||||||||||||||||||||||||||
Revenues | $ | 22,562 | $ | 28,125 | $ | 100 | $ | 50,787 | ||||||||||||||||||
Operating loss | $ | (25,639) | $ | (5,708) | $ | (4,314) | $ | (35,661) | ||||||||||||||||||
Depreciation and amortization | $ | 12,786 | $ | 5,127 | $ | 66 | $ | 17,979 | ||||||||||||||||||
social distancing requirements 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 production of new movie content temporarily ceased and release dates for certain motion pictures have been postponed), as well as other 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; (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 ofcaused by the relative industry supply of available rooms at comparable lodging facilities in our markets once hotels and resorts have more fully reopened;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; (11)(12) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (12)(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);and (13)(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. 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.20212022 is a 52-week year beginning on January 1,December 31, 2021 and ending on December 30, 2021.29, 2022. Fiscal 20202021 was a 53-week52-week year that began on December 27, 2019January 1, 2021 and ended on December 31, 2020.30, 2021.19
We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The first quarter of fiscal 2022 consisted of the 13-week period beginning on December 31, 2021 and ended on March 31, 2022. The first quarter of fiscal 2021 consisted of the 13-week period beginning on January 1, 2021 and ended on April 1, 2021. The first quarterOur primary
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.
We begantheir impact on our businesses has continued to dissipate during the first quarter of fiscal 20212022.
subside.
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 beyond. With companies beginning to implement return to office plans, we remain optimistic that business travel will continue to increase during fiscal 2022. Total hotel division revenues, expressed as a percentage of fiscal 2019 revenues, have also increased throughout fiscal 2021 and into fiscal 2022, including an increase during fiscal 2021 from 51% in the first quarter
Early in our first quarter of fiscal 2021, we received the remaining $5.9 million of requested tax refunds from our fiscal 2019 tax return. during these periods.
20
Duringwere awarded and accrued during the fourth quarter of fiscal 2020, a number of states elected to provide grants to certain businesses most impacted by2021. Both the COVID-19 pandemic, utilizing funds received by the applicable state under provisionsreceipt of the Coronavirus Aid, Relief,income tax refund and Economic Security Act of 2020 (the “CARES Act”). We received $4.9 million of these prior year grants in January 2021. Early in fiscal 2021, we were awarded and received an additional $1.3 million in theatre grants from another state, further contributinggrant funds contributed to our current strong liquidity position as of April 1, 2021.
position.
We remain optimistic that the theatre industry will rebound and benefit from pent-up social demand as a greater percentage of the population is vaccinated, home sheltering subsides and people seek togetherness with a return to normalcy. A return to “normalcy” may span multiple months driven by staggered theatre openings, reduced operating days and hours, lingering social distancing requirements, the progress of the vaccination rollout in each state and a gradual ramp-up of consumer comfort with public gatherings. We are very encouraged by the recent performance of Godzilla vs. Kong, Mortal Kombat and Demon Slayer, the best performing films since the pandemic began last year. The continued lessening of state and local restrictions in key markets such as New York and Los Angeles is also a very positive sign. As described further below in the Theatres section of this MD&A, a significant number of films originally scheduled to be released through March 2021 have been delayed until later in fiscal 2021 or fiscal 2022, further increasing the quality and quantity of films expected to be available during those future time periods.
As expected, the primary customer for hotels during the first quarter of fiscal 2021 has continued to come from the “drive-to leisure” market. Demand from this customer segment exceeded our expectations during the fiscal 2021 first quarter. Most organizations implemented travel bans at the onset of the pandemic and are currently only allowing essential travel, which will likely limit business travel in the near term. As of the date of this report, our group room revenue bookings for fiscal 2021 - commonly referred to in the hotels and resorts industry as “group pace” - is running significantly behind where we would historically be at this same time in prior years, but we are beginning to experience increased booking activity for later in fiscal 2021 and particularly for fiscal 2022 and beyond. Banquet and catering revenue pace for fiscal 2021 is also running behind where we would typically be at this same time in prior years, but not as much as group room revenues, due in part to increases in wedding bookings. The future economic environment will also have a significant impact on the pace of our return to “normal” hotel operations.
| | | | | | | | | | | | |
| | First Quarter | | |||||||||
| | | | | | | | | Variance | | ||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| |||
Revenues | | $ | 50.8 | | $ | 159.5 | | $ | (108.7) |
| (68.2) | % |
Operating loss | |
| (35.7) | |
| (22.2) | |
| (13.5) |
| (60.6) | % |
Other income (expense) | |
| (3.2) | |
| (3.9) | |
| 0.7 |
| 16.6 | % |
Net loss attributable to noncontrolling interests | |
| — | |
| (0.1) | |
| 0.1 |
| 100.0 | % |
Net loss attributable to The Marcus Corp. | | | (28.1) | | | (19.4) | | | (8.7) |
| (45.4) | % |
Net loss per common share - diluted | | $ | (0.93) | | $ | (0.64) | | $ | (0.29) |
| (45.3) | % |
21
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 132.2 | $ | 50.8 | $ | 81.5 | 160.4 | % | |||||||||||||||||||||||||||||||||||||||
Operating income (loss) | (16.8) | (35.7) | 18.9 | 52.9 | % | ||||||||||||||||||||||||||||||||||||||||||
Other income (expense) | (4.7) | (3.2) | (1.4) | (44.2) | % | ||||||||||||||||||||||||||||||||||||||||||
Net earnings (loss) attributable to The Marcus Corp. | $ | (14.9) | $ | (28.1) | $ | 13.2 | 47.0 | % | |||||||||||||||||||||||||||||||||||||||
Net earnings (loss) per common share - diluted: | $ | (0.48) | $ | (0.93) | $ | 0.45 | 48.4 | % |
Revenues decreasedincreased and operating loss,income (loss), net lossearnings (loss) attributable to The Marcus Corporation and net lossearnings (loss) per diluted common share increasedimproved significantly during the first quarter of fiscal 20212022 compared to the first quarter of fiscal 2020 due to decreased2021. Increased revenues and reduced operating losses from both our theatre division and hotels and resorts division as a resultcontributed to the improvement during fiscal 2022 compared to fiscal 2021, during which some of our theatres were closed for portions of the continuingfirst quarter and travel was significantly reduced due to the impact of the COVID-19 pandemic. Our theatre division benefited from a nonrecurring government grant during the fiscal 2021 first quarter and both of our operating divisions were negatively impacted by nonrecurring expenses during the fiscal 2020 first quarter.
Our operating loss during the first quarter of fiscal 2021 was favorably impacted by a state government grantgrants of approximately $1.3 million, or approximately $0.03 per diluted common share.
We recognized investment income of $40,000 during the first quarter of fiscal 20212022 compared to an investment loss of $695,000 during the first quarter of fiscal 2020. The investment loss during the fiscal 2020 first quarter was due to decreases in the value of marketable securities resulting from significant market declines arising from the COVID-19 pandemic and its impact on the U.S. economy.
Our interest expense totaled $4.8 million for the first quarter of fiscal 2021, compared to $2.5 million for the first quarter of fiscal 2020, an increasea decrease of approximately $2.3$0.8 million, or 92.5%15.5%. The increasedecrease in interest expense during the first quarter of fiscal 20212022 was primarily due in part to increaseddecreased borrowings and an increasea decrease in our average interest rate. In addition, interest expense increased during the first quarter of fiscal 2021 due to the fact that we incurred approximately $623,000 in noncashnon-cash amortization of debt issuance costs, compared to approximately $49,000 of such costs during the first quarter of fiscal 2020. On January 1, 2021, we elected to early adopt ASU No. 2020-06 (described in Note 1 of the condensed notes to our consolidated financial statements included in this report above), which resulted in the elimination of noncash discount on convertible notes beginning with the first quarter of fiscal 2021.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.
22
The operating results of one majority-owned hotel, The Skirvin Hilton, are included in the hotels and resorts division revenue and operating income during the first quarters of fiscal 2021 and fiscal 2020, and the after-tax net earnings or loss attributable to noncontrolling interests is deducted from or added to net earnings on the consolidated statements of earnings. We reported a net loss attributable to noncontrolling interests of $148,000 during the first quarter of fiscal 2020. As a result of the noncontrolling interest balance reaching zero during fiscal 2020, we do not expect to report additional net losses attributable to noncontrolling interests in future periods until the hotel returns to profitability.
Theatres
The following table sets forth revenues, operating loss and operating margin for our theatre division for the first quarter of fiscal 20212022 and fiscal 20202021 (in millions, except for variance percentage and operating margin):
| | | | | | | | | | | | |
| | First Quarter |
| |||||||||
| | | | | | | | Variance |
| |||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| |||
Revenues | | $ | 22.6 | | $ | 109.2 | | $ | (86.6) |
| (79.3) | % |
Operating loss | |
| (25.6) | |
| (7.1) | |
| (18.5) |
| (262.0) | % |
Operating margin (% of revenues) | |
| (113.6) | % |
| (6.5) | % |
| |
| | |
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 79.5 | $ | 22.6 | $ | 56.9 | 252.3 | % | |||||||||||||||||||||||||||||||||||||||
Operating income (loss) | (8.0) | (25.6) | 17.6 | 68.8 | % | ||||||||||||||||||||||||||||||||||||||||||
Operating margin (% of revenues) | (10.1) | % | (113.6) | % |
| | | | | | | | | | | | |
| | First Quarter |
| |||||||||
| | | | | | | | Variance |
| |||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| |||
Admission revenues | | $ | 10.7 | | $ | 55.4 |
| $ | (44.7) |
| (80.7) | % |
Concession revenues | |
| 9.9 | |
| 45.9 |
| | (36.0) |
| (78.4) | % |
Other revenues | |
| 1.9 | |
| 7.7 |
| | (5.8) |
| (75.1) | % |
| |
| 22.5 | |
| 109.0 |
| | (86.5) |
| (79.3) | % |
Cost reimbursements | |
| 0.1 | |
| 0.2 |
| | (0.1) |
| (76.5) | % |
Total revenues | | $ | 22.6 | | $ | 109.2 |
| $ | (86.6) |
| (79.3) | % |
23
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Admission revenues | $ | 38.4 | $ | 10.7 | $ | 27.7 | 259.5 | % | |||||||||||||||||||||||||||||||||||||||
Concession revenues | 35.5 | 9.9 | 25.5 | 257.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Other revenues | 5.6 | 1.9 | 3.7 | 193.0 | % | ||||||||||||||||||||||||||||||||||||||||||
79.5 | 22.5 | 57.0 | 253.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Cost reimbursements | — | — | — | (100.0) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 79.5 | $ | 22.6 | $ | 56.9 | 252.3 | % |
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2019 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Admission revenues(1) | $ | 38.4 | $ | 59.0 | $ | (20.6) | (34.9) | % | |||||||||||||||||||||||||||||||||||||||
Concession revenues | 35.5 | 47.2 | (11.7) | (24.8) | % | ||||||||||||||||||||||||||||||||||||||||||
Other revenues | 5.6 | 8.6 | (3.0) | (34.5) | % | ||||||||||||||||||||||||||||||||||||||||||
79.5 | 114.7 | (35.2) | (30.7) | % | |||||||||||||||||||||||||||||||||||||||||||
Cost reimbursements | — | 0.2 | (0.2) | (100.0) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 79.5 | $ | 114.9 | $ | (35.4) | (30.8) | % |
1.We acquired Movie Tavern theatres on February 1, 2019. Admission revenues decreased 39.4% on a pro forma basis for the acquisition as of the first day of fiscal 2019.
Total theatre As customers have continued to become more comfortable with traditional movie attendance decreased 81.4%and as an increasing number of new films have been released, the impact of this program lessened significantly during the first quarter of fiscal 20212022.
fiscal 2019.
same period in the prior year.
24
Other revenues decreasedincreased by approximately $5.8$3.7 million during the first quarter of fiscal 20212022 compared to the first quarter of fiscal 2020.2021. This decreaseincrease was primarily due to the impact of reducedincreased attendance on internet surcharge ticketing fees and preshow and in-app advertising income.
strong.
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 already indicated that it is returning to an exclusive 45-day theatrical window with a significant number of its films during fiscal 2022, beginning with the recently released film,
The Batman. Disney announced in early 2022 that they will retain flexibility for future film distribution, particularly for family films, which have been impacted more significantly by the pandemic, but has already committed to exclusive theatrical releases for its upcoming second quarter films, Doctor Strange in the Multiverse of Madness and Lightyear.operating.
| | | | | | | | | | | | |
| | First Quarter |
| |||||||||
| | | | | | | | Variance |
| |||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| |||
Revenues | | $ | 28.1 | | $ | 50.2 | | $ | (22.1) |
| (43.9) | % |
Operating loss | |
| (5.7) | |
| (10.9) | |
| 5.2 |
| 47.4 | % |
Operating margin (% of revenues) | |
| (20.3) | % |
| (21.6) | % |
| |
| | |
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 52.7 | $ | 28.1 | $ | 24.5 | 87.2 | % | |||||||||||||||||||||||||||||||||||||||
Operating income (loss) | (3.0) | (5.7) | 2.7 | 47.9 | % | ||||||||||||||||||||||||||||||||||||||||||
Operating margin (% of revenues) | (5.6) | % | (20.3) | % |
| | | | | | | | | | | | |
| | First Quarter |
| |||||||||
| | | | | | | | Variance |
| |||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| |||
Room revenues | | $ | 9.0 | | $ | 17.0 | | $ | (8.0) |
| (46.8) | % |
Food and beverage revenues | |
| 5.9 | |
| 13.6 | |
| (7.7) |
| (56.6) | % |
Other revenues | |
| 9.9 | |
| 11.0 | |
| (1.1) |
| (10.1) | % |
| |
| 24.8 | |
| 41.6 | |
| (16.8) |
| (40.3) | % |
Cost reimbursements | |
| 3.3 | |
| 8.6 | |
| (5.3) |
| (61.6) | % |
Total revenues | | $ | 28.1 | | $ | 50.2 | | $ | (22.1) |
| (43.9) | % |
25
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Room revenues | $ | 17.4 | $ | 9.0 | $ | 8.4 | 92.7 | % | |||||||||||||||||||||||||||||||||||||||
Food/beverage revenues | 14.5 | 5.9 | 8.6 | 145.4 | % | ||||||||||||||||||||||||||||||||||||||||||
Other revenues | 13.1 | 9.9 | 3.2 | 32.6 | % | ||||||||||||||||||||||||||||||||||||||||||
45.0 | 24.8 | 20.2 | 81.4 | % | |||||||||||||||||||||||||||||||||||||||||||
Cost reimbursements | 7.6 | 3.3 | 4.3 | 131.4 | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 52.7 | $ | 28.1 | $ | 24.5 | 87.2 | % |
Our first quarter is typically the weakest quarter of our fiscal year for our hotels and resorts division due to the traditionally reduced level of travel at our predominantly Midwestern portfolio of owned properties. Division revenues decreasedincreased significantly during the first quarter of fiscal 20212022 compared to the first quarter of fiscal 2020 due to the impact of the COVID-19 pandemic. All2021. While all eight of our company-owned hotels and all but one of our managed hotels were open during ourthe first quarter of fiscal 2021, but the majority of these properties were generating significantly reduced revenues as compared to prior years. Our two SafeHouse restaurants and bars remain temporarily closed, but the majority of our restaurants and bars in our hotels and resorts were open during the fiscal 2021 first quarter, operating under applicable state and local restrictions and guidelines, and, in some cases, reduced operating hours.
Other revenues decreased due primarily to reduced revenues from one In addition, our two SafeHouse
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2019 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Room revenues | $ | 17.4 | $ | 18.9 | $ | (1.5) | (8.0) | % | |||||||||||||||||||||||||||||||||||||||
Food /beverage revenues | 14.5 | 15.8 | (1.3) | (8.1) | % | ||||||||||||||||||||||||||||||||||||||||||
Other revenues | 13.1 | 12.2 | 0.9 | 7.7 | % | ||||||||||||||||||||||||||||||||||||||||||
45.0 | 46.9 | (1.8) | (3.9) | % | |||||||||||||||||||||||||||||||||||||||||||
Cost reimbursements | 7.6 | 8.2 | (0.6) | (6.9) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 52.7 | $ | 55.1 | $ | (2.4) | (4.4) | % |
Despite the decrease in revenues, our division operating loss improved significantly during the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020. Our hotels and resorts division operating loss during the first quarter of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $2.7 million related to expenses incurred (primarily payroll continuation payments to employees temporarily laid off) due to the closing of five of our eight company-owned hotels and resorts for the final two days of such quarter. In addition, our restaurants and bars were required to close during the last 10 days of the fiscal 2020 first quarter due to the COVID-19 pandemic. Improved operating performance at the Grand Geneva and strong cost controls at all of our properties also contributed to the improved fiscal 2021 first quarter operating loss.
| | | | | | | | | | | | |
| | First Quarter(1) |
| |||||||||
| | | | | | | | Variance |
| |||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| |||
Occupancy percentage |
| | 28.3 | % | | 54.2 | % | | (25.9) | pts | (47.8) | % |
ADR | | $ | 133.12 | | $ | 129.71 | | $ | 3.41 | | 2.6 | % |
RevPAR | | $ | 37.66 | | $ | 70.26 | | $ | (32.60) | | (46.4) | % |
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Occupancy pct. | 48.0 | % | 28.3 | % | 19.7 pts | 69.6 | % | ||||||||||||||||||||||||||||||||||||||||
ADR | $ | 147.10 | $ | 133.12 | $ | 13.98 | 10.5 | % | |||||||||||||||||||||||||||||||||||||||
RevPAR | $ | 70.59 | $ | 37.66 | $ | 32.93 | 87.4 | % |
RevPAR decreasedincreased at sevenall eight of our eight company-owned properties during the first quarter of fiscal 20212022 compared to the first quarter of fiscal 2020. The “drive-to leisure”2021. Leisure travel customercustomers provided the most demand during the fiscal 2022 first quarter, with weekend business relatively strong at the majority of our properties. During the first quarter of fiscal 2021,2022, our non-group business represented approximately 73% of our total rooms revenue, compared to approximately 70% during the first quarter of fiscal 2019 prior to the pandemic. Although group business continues to lag prior years, it has historically been a smaller component of our rooms revenue during the winter months. Non-group retail pricing was very strong in the majority of our markets, with significant leisure demand contributing to increased occupancy percentages and ADR.
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2019 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Occupancy pct. | 48.9 | % | 64.6 | % | (15.7) pts | (24.3) | % | ||||||||||||||||||||||||||||||||||||||||
ADR | $ | 144.99 | $ | 130.05 | $ | 14.94 | 11.5 | % | |||||||||||||||||||||||||||||||||||||||
RevPAR | $ | 70.95 | $ | 84.05 | $ | (13.10) | (15.6) | % |
A decline in transient and group business contributed significantly to our reduced revenues during the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020. A decrease in group business subsequently led to a corresponding decrease in banquet and catering revenues, negatively impacting our reported food and beverage revenues. Conversely, our ADR increased during the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020 due primarily to increased ADR at the Grand Geneva. It is generally more difficult to increase ADR during our slower winter season, as overall occupancy is at its lowest.
26
Looking to future periods, overall occupancy in the U.S. has slowly increased since the initial onset of the COVID-19 pandemic in March 2020.2020, reaching its highest level since the start of the pandemic in recent months. In the near term, we expect most current demand will continue to come from the drive-to leisure travel segment. Most organizations implementedLeisure 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 beginning to experience increases in business travel as corporate travel bans at the onset of the pandemicare beginning to be lifted and downtown offices are currently only allowing essential travel, which will likely limit business travel in the near term.reopening. Our company-owned hotels have experienced a significant decrease in group bookings compared to the same period in prior years.pre-pandemic periods. As of the date of this report, our group room revenue bookings for fiscal 20212022 - commonly referred to in the hotels and resorts industry as “group pace” - is running significantlyapproximately 12% behind where we would historically bewere at thisthe same time in prior years,fiscal 2019, but despite our reduced group pace as compared to the first quarter of fiscal 2019, our current group pace is an improvement from recent quarters and we are beginning to experienceexperiencing increased booking activity for later in 2021 and particularly forfiscal 2022 and beyond. Banquet and catering revenue pace for fiscal 20212022 is also running behind where we would typically bewere at thisthe same time in prior years,fiscal 2019, but not as much as group room revenues,pace, due in part to increases in event and wedding bookings. Many of our cancelled group bookings due to COVID-19 are re-booking for future dates, excluding one-time events that could not rebook for future dates.
Forecasting what future RevPAR growth or decline will be during the next 18 to 24 months is very difficult at this time. The non-group booking window is very short, with most bookings occurring within three days of arrival, making even short-term forecasts of future RevPAR growth very difficult. Hotel revenues have historically tracked very closely with traditional macroeconomic statistics such as the Gross Domestic Product, so we will be monitoring the economic environment closely. After past shocks to the system, such as the terrorist attacks on September 11, 2001 and the 2008 financial crisis, hotel demand took longer to recover than other components of the economy. Conversely, we now anticipate that hotel supply growth will be limited for the foreseeable future, which can be beneficial for our existing hotels. Most industry experts believe the pace of recovery will be steady, but relatively slow. We are encouraged by the demand from drive-to leisure customers during the first quarter of fiscal 2021, which exceeded our expectations. We will continue to focus on reaching the drive-to leisure market through aggressive campaigns promoting creative packages for our guests. 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.
First Quarter | |||||||||||||||||||||||
F2022 | F2021 | ||||||||||||||||||||||
Net earnings (loss) attributable to The Marcus Corporation | $ | (14.9) | $ | (28.1) | |||||||||||||||||||
Add (deduct): | |||||||||||||||||||||||
Investment income | 0.3 | — | |||||||||||||||||||||
Interest expense | 4.1 | 4.8 | |||||||||||||||||||||
Other expense | 0.6 | 0.6 | |||||||||||||||||||||
Loss (gain) on disposition of property, equipment and other assets | (0.4) | (2.2) | |||||||||||||||||||||
Equity losses from unconsolidated joint ventures, net | 0.1 | — | |||||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interests | — | — | |||||||||||||||||||||
Income tax expense (benefit) | (6.5) | (10.8) | |||||||||||||||||||||
Depreciation and amortization | 17.2 | 18.0 | |||||||||||||||||||||
Share-based compensation expenses (1) | 2.9 | 1.5 | |||||||||||||||||||||
Government grants (2) | — | (1.3) | |||||||||||||||||||||
Total Adjusted EBITDA | $ | 3.4 | $ | (17.5) |
First Quarter, F2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Theatres | Hotels & Resorts | Corp. Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
Operating loss | $ | (8.0) | $ | (3.0) | $ | (5.8) | $ | (16.8) | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 12.2 | 5.0 | 0.1 | 17.2 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation (1) | 0.6 | 0.4 | 1.9 | 2.9 | |||||||||||||||||||||||||||||||||||||||||||
Government grants (2) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | 4.8 | $ | 2.4 | $ | (3.8) | $ | 3.4 |
First Quarter, F2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Theatres | Hotels & Resorts | Corp. Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
Operating loss | $ | (25.6) | $ | (5.7) | $ | (4.3) | $ | (35.7) | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 12.8 | 5.1 | 0.1 | 18.0 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation (1) | 0.4 | 0.3 | 0.8 | 1.5 | |||||||||||||||||||||||||||||||||||||||||||
Government grants (2) | (1.3) | — | — | (1.3) | |||||||||||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | (13.7) | $ | (0.3) | $ | (3.4) | $ | (17.5) |
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Theatres | $ | 4.8 | $ | (13.7) | $ | 18.5 | 134.8 | % | |||||||||||||||||||||||||||||||||||||||
Hotels and resorts | 2.4 | (0.3) | 2.7 | 908.1 | % | ||||||||||||||||||||||||||||||||||||||||||
Corporate items | (3.8) | (3.4) | (0.4) | (10.7) | % | ||||||||||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | 3.4 | $ | (17.5) | $ | 20.8 | 119.2 | % |
time.
27
Financial Condition
2021.
We did not issue any new long-term debt during the first quarters of fiscal 2021 and fiscal 2020.2021. Principal payments on long-term debt were $93,000approximately $0.4 million during the first quarter of fiscal 20212022 compared to payments of $177,000$0.1 million during the first quarter of fiscal 2020.2021. Our debt-to-capitalization ratio (excluding(including short-term borrowings but excluding our finance and operating lease obligations) was 0.410.37 at April 1, 2021,March 31, 2022, compared to 0.37 at December 31, 2020. A change in30, 2021.
We repurchased approximately 54,000 shares of our common stock for approximately $1.2 million in conjunction with the exercise of stock optionsfiscal 2022 and the payment of income taxes on vested restricted stock during the first quarter of fiscal 2021 compared to approximately 8,600we did not repurchase any shares of our common stock for approximately $274,000 in conjunction with the payment of income taxes on vested restricted stock during the first quarter of fiscal 2020.open market. As of April 1, 2021,March 31, 2022, approximately 2.72.6 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common
28
Dividend payments during the first quarter of fiscal 2020 totaled $5.1 million. We did not make any dividend payments during the first quarter of fiscal 2022 and the first quarter of fiscal 2021. Our credit agreement,Credit Agreement, as amended, requiresrequired us to temporarily suspend our quarterly dividend payments forand prohibited us from repurchasing shares of our common stock in the first two quarters ofopen market during fiscal 2021. The credit agreementCredit Agreement also limits the total amount of quarterly dividend payments or share repurchases during the four subsequent quarters beginning with the thirdfirst quarter of fiscal 2021,2022 to no more than $1.55 million per quarter, unless the Term Loan A is repaid and we are in compliance with prior financial covenants under the credit agreement,Credit Agreement (specifically, the consolidated fixed charge coverage ratio), at which point 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.
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Total Number of Maximum Shares Number of Purchased as Shares that May Total Number of Part of Publicly Yet be Purchased Shares Average Price Announced Under the Plans Period Purchased Paid per Share Programs (1) or Programs (1) January 1- January 31 — $ — — 2,718,994 February 1- February 28 15,819 17.72 15,819 2,703,175 March 1- April 1 38,620 23.32 38,620 2,664,555 Total 54,439 $ 21.69 54,439 2,664,555 AllPeriod Total Number of
Shares
PurchasedAverage Price
Paid per ShareTotal 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 31 – February 3 171 $ 17.95 171 2,657,169 February 4 – March 3 75,674 18.10 75,674 2,581,495 March 4 – March 31 — — — 2,581,495 Total 75,845 $ 18.10 75,845 2,581,495 repurchasesauthorizations, 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 March 31, 2022, we had repurchased approximately 9.1 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 first quarter of 2022 were madepurchased in conjunctionconnection with the paymentvesting of income taxes on vestedgrants of restricted stock, pursuantin which we repurchased shares from the stockholders whose restricted shares vested in order to the publicly announced repurchase authorization described below.cover such stockholders’ related withholding taxes.(1)Through April 1, 2021, 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 April 1, 2021, we had repurchased approximately 9.0 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.
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31.2 32 101.INS The instance document does not appear in the interactive data file because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 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). By: Gregory S. Marcus President and Chief Executive Officer DATE: May By: Douglas A. Neis Executive Vice President and Chief Financial Officer31.131.1 31THE MARCUS CORPORATIONTHE MARCUS CORPORATION DATE: May 11, 20215, 2022/s/ /s/ Gregory S. Marcus11, 2021/s/ /s/ Douglas A. Neis and Treasurer