THE MARCUS CORPORATION

Consolidated Balance Sheets

April 1,

December 31,
(in thousands, except share and per share data)

2021

2020

LIABILITIES AND SHAREHOLDERS’ EQUITY




Current liabilities:




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


Finance lease obligations

19,166

19,744

Operating lease obligations

228,493

230,550

Long-term debt

227,770

193,036

Deferred income taxes

20,131

33,429

Other long-term obligations

61,847

61,304


Equity:


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)

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

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$
1,225,829

$
1,254,178

(in thousands, except share and per share data)


	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

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Earnings (Loss)

13 Weeks Ended


April 1,

March 26,
(in thousands, except per share data)

2021

2020

Revenues:


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

47,454

150,704
Cost reimbursements

3,333

8,756
Total revenues

50,787

159,460

Costs and expenses:

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

Operating loss

(35,661)

(22,200)

Other income (expense):

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)

(3,227)

(3,870)

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)

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)

(in thousands, except per share data)


	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)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Comprehensive Income (Loss)

13 Weeks Ended


April 1,

March 26,
(in thousands)

2020

2020

Net loss

$
(28,130)

$
(19,500)


Other comprehensive income (loss), net of tax:





Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $86 and $65, respectively

242

183

Fair market value adjustment of interest rate swaps, net of tax effect (benefit) of $6 and $(288), respectively

17

(814)




Reclassification adjustment on interest rate swaps included in interest expense, net of tax effect of $68 and $31, respectively

193

84

Other comprehensive income (loss)

452

(547)

Comprehensive loss

(27,678)

(20,047)

Comprehensive loss attributable to noncontrolling interests

—

(148)

Comprehensive loss attributable to The Marcus Corporation

$
(27,678)

$
(19,899)

(in thousands)


	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)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Cash Flows

13 Weeks Ended
(in thousands)

April 1, 2021

March 26, 2020

OPERATING ACTIVITIES:




Net loss

$
(28,130)

$
(19,500)
Adjustments to reconcile net loss to net cash used in operating activities:

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)

INVESTING ACTIVITIES:

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)

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)

(in thousands)


	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

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED ~~APRIL 1, 2021~~

MARCH 31, 2022

(in thousands, except share and per share data)

1. General

Basis of Presentation - The unaudited consolidated financial statements for the 13 weeks ended March 31, 2022 and April 1, 2021 ~~and March 26, 2020~~ have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at ~~April 1, 2021,~~March 31, 2022, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December ~~31, 2020.~~

30, 2021.

Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December ~~31, 2020,~~30, 2021, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.

~~During~~

Noncontrolling Interests - The Company has an ownership interest greater than 50% in one joint venture that is considered a Variable Interest Entity (VIE) that is included in the ~~13 weeks ended April 1, 2021, there were no significant changes made~~accounts of the Company. The Company is the primary beneficiary of the VIE and the Company’s interest is considered a majority voting interest. The equity interest of outside owners in consolidated entities is recorded as noncontrolling interests in the consolidated balance sheets, and their share of earning is recorded as net earnings (loss) attributable to noncontrolling interests in the consolidated statements of earnings (loss) in accordance with the partnership agreement. Due to the ~~Company’s significant accounting policies other than~~cumulative losses of the ~~changes attributable~~entity, the noncontrolling interest balance is $0 as of March 31, 2022 and December 30, 2021. The Company will not record earnings or losses from noncontrolling interests until the entity returns to ~~the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2020-06,~~ 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. The convertible debt policy updates are applied prospectively in the Company’s financial statements from January 1, 2021 forward. Reported financial information for the historical comparable period was not revised and continues to be reported under the accounting standards in effect during the historical period. See Note 4 for further discussion.

profitability.

Depreciation and Amortization - Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled ~~$17,958,000~~$17,223 and ~~$19,034,000~~$17,958 for the 13 weeks ended March 31, 2022, and April 1, 2021, ~~and March 26, 2020,~~ respectively.

Assets Held for Sale – Long-lived assets that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as assets held for sale and included within current assets on the consolidated balance sheet. Assets held for sale are measured at the lower of their carrying value or their fair value less costs to sell the asset. As of ~~April 1, 2021 and December~~March 31, ~~2020,~~2022, assets held for sale consists primarily of excess land.

Long-Lived Assets – The Company periodically considers whether indicators of impairment of long-lived assets held for use are present. This includes quantitative and qualitative factors, including evaluating the historical actual operating performance of the long-lived assets and assessing the potential impact of recent events and transactions impacting the long-lived assets. If such indicators are present, the Company determines if the long-lived assets are recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. If the long-lived assets are not recoverable, the Company recognizes any impairment losses based on the excess of the carrying amount of the assets over their fair value. 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 property and equipment and the value of its operating lease right-of-use assets and recorded an impairment charge as discussed in Note 3. There were no indicators of impairment identified during the 13 weeks ended March 31, 2022 or April 1, 2021.

Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the ~~last~~first day of ~~its~~the fiscal year. Goodwill is tested for impairment at a reporting unit level, determined to be at an operating segment level. When reviewing goodwill for impairment, the Company considers the amount of excess fair value over the carrying value of the reporting unit, the period of time since its last quantitative test, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. Examples of qualitative factors that the Company assesses include its share price, its financial performance, market and competitive factors in its industry, and other events specific to the reporting unit. If the Company concludes that it is more likely than not that the fair value of its reporting unit is less than it carrying value, the Company performs a quantitative impairment test by comparing the carrying value of the reporting unit to the estimated fair value.

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.

Earnings (Loss) Per Share - Net earnings (loss) per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options and convertible debt instruments using the ~~treasury~~if-converted method. Convertible Class B Common Stock isand convertible debt instruments are reflected on an if-converted basis when dilutive to Common Stock. The computation of the diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock in periods that

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

have net earnings since it would be dilutive to Common Stock earnings per share, while the diluted net earnings (loss) per share of Class B Common Stock does not assume the conversion of those shares.

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

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

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)

For the periods when the Company reports a net loss, common stock equivalents are excluded from the computation of diluted loss per share as their inclusion would have an antidilutive effect.

During the 13 weeks ended March 31, 2022 and April 1, 2021, approximately 81,076 and 119,611 common stock equivalents, respectively, were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 13 weeks ended March 31, 2022 and April 1, 2021, 9,084,924 shares related to the convertible notes were excluded from the computation of diluted loss per share as the effect would have been anti-dilutive.

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

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

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

The Company’s assets and liabilities measured at fair value are classified in one of the following categories:

Level 1 - Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At ~~April 1, 2021~~March 31, 2022 and December ~~31, 2020,~~30, 2021, respectively, the Company’s ~~$1,715,000~~$4,329 and ~~$1,415,000~~$4,617 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets.

Level 2 - Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At ~~April 1, 2021~~March 31, 2022 and December ~~31, 2020,~~30, 2021, respectively, the Company’s ~~$1,186,000~~$228 and ~~$1,470,000~~$689 liability related to the Company’s interest rate swap contracts was valued using Level 2 pricing inputs.

Level 3 - Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At ~~April 1, 2021~~March 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.~~

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

13 Weeks

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

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

Revenue Recognition – The disaggregation of revenues by business segment for the 13 weeks ended March 31, 2022 is as follows:


	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

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

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

The disaggregation of revenues by business segment for the 13 weeks ended April 1, 2021 ~~and March 26, 2020~~ is as ~~follows (in thousands):~~

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

(1)

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

~~(1)~~

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

The Company had deferred revenue from contracts with customers of ~~$38,773,000~~$38,310 and ~~$37,307,000~~$39,144 as of ~~April 1, 2021~~March 31, 2022 and December ~~31, 2020,~~30, 2021, respectively. The Company had 0no contract assets as of ~~April 1, 2021~~March 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.

~~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.

Upon conversion, the Convertible Notes may be settled, at the ~~Company’s~~company’s election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate is 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $11.01 per share of Common Stock), representing an initial conversion premium of approximately 22.5% to the $8.99 last reported sale price of the Common Stock on The New York Stock Exchange on September 17, 2020. If the Company undergoes certain fundamental changes, holders of Convertible Notes may require the Company to repurchase for cash all or part of their Convertible Notes for a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change occurs prior to the maturity date, the Company will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. The Company may not redeem the Convertible Notes before maturity and no “sinking fund” is provided for the Convertible Notes. The Indenture includes covenants customary for securities similar to the Convertible Notes, sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company and certain of its subsidiaries after which the Convertible Notes become automatically due and payable.

~~As of April 2, 2021, the first day of~~

During the Company’s fiscal 2021 second, ~~quarter, a conversion feature on~~third and fourth quarters, and the ~~Convertible Notes had been met, and thus~~Company’s fiscal 2022 first quarter, the Company’s Convertible Notes ~~are now~~were eligible for ~~conversion.~~conversion at the option of the holders as the last reported sale price of the Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days during the last 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. The Company has the ability to settle the conversion in Company stock. As such, the Convertible Notes will continue to be classified as long-term. Future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s ~~common stock~~Common Stock during the prescribed measurement period. No Convertible Notes have been converted to date and the Company does not expect any to be converted within the next 12 months.

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

Derivatives

~~Derivatives~~

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

The Company entered into two interest rate swap agreements on March 1, 2018 covering ~~$50,000,000~~$50,000 of floating rate debt. The first agreement ~~has~~had a notional amount of ~~$25,000,000,~~$25,000, expired March 1, 2021 and required the Company to pay interest at a defined rate of 2.559% while receiving interest at a defined variable rate of one-month LIBOR. The second agreement has a notional amount of ~~$25,000,000,~~$25,000, expires March 1, 2023 and requires the Company to pay interest at a defined rate of 2.687% while receiving interest at a defined variable rate of one-month LIBOR ~~(0.125%~~(0.250% at ~~April 1, 2021)~~March 31, 2022). The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The Company’s interest rate swap ~~agreements are~~agreement is considered effective and ~~qualify~~qualifies as a cash flow ~~hedges.~~hedge. The Company assesses, both at the inception of each hedge and on an on-going basis, whether the derivatives that are used in its hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. As of ~~April 1, 2021,~~March 31, 2022, the remaining interest rate swap was considered highly effective. The fair value of the interest rate swap on ~~April 1, 2021~~March 31, 2022 was a liability of ~~$1,186,000,~~$228, which is included in other ~~long-term obligations~~accrued liabilities in the consolidated balance sheet. The fair value of the interest rate ~~swaps~~swap on December ~~31, 2020,~~30, 2021, was a liability of ~~$1,470,000, of~~$689, which ~~$100,000 was included in other accrued liabilities and $1,370,000~~ was included in other long-term obligations in the consolidated balance sheet. The Company does not expect the interest rate swap to have a material effect on earnings within the next 12 months.

4. Leases

~~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.

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

Total lease cost consists of the following:

13 Weeks

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


		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

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

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

Remaining lease terms and discount rates are as follows:

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

Operating leases

13 years

Weighted-average discount rates:

Finance leases

4.57

4.58

Operating leases

4.51

4.48

Deferred rent payments of approximately ~~$6,021,000~~$1,856 for the Company’s operating leases have been included in the total operating lease obligations as of ~~April 1, 2021,~~March 31, 2022, of which approximately ~~$1,570,000~~$735 is included in long-term operating lease obligations.

6.5. Income Taxes

The Company’s effective income tax rate ~~adjusted for losses from noncontrolling interests,~~ for the 13 weeks ended March 31, 2022 and April 1, 2021 was 30.5% and ~~March 26, 2020 was~~ 27.7% ~~and 25.3%~~, respectively. The Company’s effective income tax rate during the first quarter of fiscal 2021 benefitted from nonrecurring adjustments specific to the first quarter. The Company does not include the income tax expense or benefit related to the net earnings or loss attributable to noncontrolling interest in its income tax expense or benefit as the entity is considered a pass-through entity and, as such, the income tax expense or benefit is attributable to its owner.

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, ~~with~~of which $1,828 was received in fiscal 2021, and $22,323 was received during the ~~primary benefit derived from net operating loss carrybacks. Additional~~13 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 ~~surrendered~~received the remaining $5,900 of requested tax refunds from its ~~ownership interest~~ fiscal 2019 tax return.

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in ~~this equity method investment. Also during~~thousands, except share and per share data)

6. Joint Venture Transactions

During the 13 weeks ended April 1, 2021, the Company sold its interest in an equity investment without a readily determinable fair value for ~~$4,150,000~~$4,150 and recorded a gain of ~~$2,079,000,~~$2,079, which is included in gain ~~(loss)~~ on disposition of property, equipment and other assets in the consolidated statement of earnings (loss).

7. Business Segment Information

The Company’s primary operations are reported in the following business segments: Theatres and Hotels/Resorts. Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.

Following is a summary of business segment information for the 13 weeks March 31, 2022 and April 1, ~~2021 and March 26, 2020 (in thousands):~~

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

2021:


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

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THE MARCUS CORPORATION

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

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and elsewhere in this Form 10-Q are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the adverse effects of the COVID-19 pandemic on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the duration of the COVID-19 pandemic and related government restrictions and ~~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.

RESULTS OF OPERATIONS

General

We report our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December. Fiscal ~~2021~~2022 is a 52-week year beginning on ~~January 1,~~December 31, 2021 and ending on December ~~30, 2021.~~29, 2022. Fiscal ~~2020~~2021 was a ~~53-week~~52-week year that began on ~~December 27, 2019~~January 1, 2021 and ended on December ~~31, 2020.~~

30, 2021.

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 quarter~~Our primary

Table of ~~fiscal 2020 consisted of the 13-week period beginning December 27, 2019 and ended on March 26, 2020. Our primary~~ Contents

operations are reported in the following two business segments: movie theatres and hotels and resorts.

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

For discussion regarding the impact of COVID-19 and related economic conditions on ~~the Company’s~~our results for the year ended December ~~31, 2020,~~30, 2021, see “Part II-Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ~~the Company’s 2020~~our 2021 Annual Report. For further discussion regarding the impacts of COVID-19 and related economic conditions on ~~the Company’s~~our results for the first quarter ~~ended April 1, 2021~~of fiscal 2022 and potential future impacts, see immediately below, and also refer to the discussion of ~~the Company’s~~our operational risks and financial risks found in “Part I-Item 1A-Risk Factors” in ~~the Company’s 2020~~our 2021 Annual Report.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic has had an unprecedented impact on the world and both of our business segments. ~~The situation continues to be volatile and the social and economic effects are widespread.~~ As an operator of movie theatres, hotels and resorts, restaurants and bars, each of which consists of spaces where customers and guests gather in close proximity, our businesses ~~are~~were significantly impacted by protective actions that federal, state and local governments have taken to control the spread of the pandemic, and our customers’ reactions or responses to such actions. ~~These~~The extent of these protective actions ~~have included, among other things, declaring national~~ and state emergencies, encouraging social distancing, restricting freedom of movement and congregation, mandating non-essential business closures, issuing curfews, limiting business capacity, mandating mask-wearing and issuing shelter-in-place, quarantine and stay-at-home orders.

~~We began~~their impact on our businesses has continued to dissipate during the first quarter of fiscal ~~2021~~2022.

We began fiscal 2022 with ~~approximately 52%~~all of our theatres ~~open. As~~open with normal operating days and hours. While still below pre-COVID-19 levels, attendance has continued to gradually improve as the number of vaccinated individuals increased, more films are released, and customers indicate increasing willingness to return to movie theatres. We remain optimistic that the theatre industry is in the process of rebounding and will continue to benefit from pent-up social demand now that a greater percentage of the population is vaccinated, the majority of state and local restrictions ~~were eased~~have been lifted, and people seek togetherness with a return to normalcy.

We still expect a return to “normalcy” to span multiple months driven by an increase in ~~several~~the quality and quantity of ~~our markets and several~~ new films released in theatres and a gradual ramp-up of consumer comfort with public gatherings. The appearance of first, the Delta variant and subsequently the Omicron variant of the disease has resulted in changing government guidance on indoor activities in some communities, which impacted consumer comfort early in fiscal 2022. Industry customer surveys indicate that consumer comfort is once again increasing, reaching a post-pandemic high comfort level in April 2022. We believe the approval of vaccines for children ages 5-11 has contributed to parents feeling more comfortable to visit a movie theatre, which should bolster the market for films aimed at children and families, a genre in which we have historically performed very well.

We were ~~released~~very encouraged by ~~movie studios, we gradually reopened theatres~~the performance of multiple films released during the second half of fiscal 2021 and over the holiday season into fiscal 2022. Sony’s Spider-Man: No Way Home, which was released in mid-December and continued its strong performance during the first quarter of fiscal 2022, became the best performing film since the onset of the pandemic and has generated the 3rd highest U.S. admission revenues of all time. Total theatre division revenues, expressed as a percentage of fiscal 2019 revenues, increased every quarter of fiscal 2021, increasing from 20% in the first quarter to 32% in the second quarter, 59% in the third quarter and ~~ended~~82% in the ~~fiscal 2021~~fourth quarter. Total theatre division revenues in the first quarter ~~with approximately 74%~~ of ~~our theatres open. The majority~~fiscal 2022 expressed as a percentage of ~~our reopened theatres continued to operate with reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) and reduced operating hours during the~~ fiscal 2021 first quarter. All of our 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 and2019 revenues was 69%. There was a ~~reduction in the~~limited number of new films released during the first quarter of fiscal ~~2021. As of~~2022 as studios waited for the ~~date of this report, we had reopened several additional theatres, bringing our number of open theatres~~Omicron variant to approximately 89% of our total theatres. We also have recently increased the number of operating days and operating hours at many of our reopened theatres. We currently expect to open the majority of our remaining closed theatres and return the majority of our theatres to standard operating days and hours by the end of May 2021 as more anticipated new films are released and demand returns.

subside.

We began ~~the first quarter of~~ fiscal ~~2021~~2022 with all eight of our company-owned ~~hotels~~ and ~~all but one of our~~ managed hotels open. ~~Our two~~ ~~SafeHouse~~^® ~~restaurants and bars remain temporarily closed, but the~~The majority of our restaurants and bars in our hotels and resorts ~~are~~were open during the first quarter of fiscal 2022, operating ~~under applicable state and local restrictions and guidelines, and~~ in some cases with reduced operating hours. The majority of our hotels and restaurants are generating ~~significantly~~ reduced revenues as compared to pre-COVID-19 pandemic years, although hotel occupancy continues to improve as the travel activity increases. The primary customer for hotels during the first quarter of fiscal 2022 continued to come from the leisure travel market. While business travel remained limited during the first quarter of fiscal 2022, we continued to see an increase in travel from this customer segment, particularly from small and mid-size group activity. As of the date of this report, our group room revenue bookings for fiscal 2022—commonly referred to in the hotels and resorts industry as “group pace”—is running behind where we would typically be at this same time in prior ~~years.~~

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

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to 57% in second quarter, 88% in the third quarter, 82% in the fourth quarter and 96% in the first quarter of fiscal 2022. The future economic environment will also have a significant impact on the pace of our return to “normal” hotel operations.

Maintaining and protecting a strong balance sheet has always been a core philosophy of The Marcus Corporation during our ~~85-year~~87-year history, and, despite the COVID-19 pandemic, our financial position remains strong. As of ~~April 1, 2021,~~March 31, 2022, we had a cash balance of approximately $6$19.4 million, ~~$207~~$221.4 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio (including short-term borrowings) was ~~0.41.~~0.37. With ~~this significant~~our strong liquidity position, combined with ~~the expected receipt of income tax refunds~~cash generated from operations and proceeds from the sale of surplus real estate (discussed below), we believe we are positioned to meet our obligations as they come due and continue to sustain our operations throughout fiscal ~~2021~~2022 and ~~into fiscal 2022,~~2023, even if our properties continue to generate ~~significantly~~ reduced revenues ~~throughout fiscal 2021. We will continue to work to preserve cash and ensure sufficient liquidity to endure the impacts of the global pandemic, even if prolonged.~~

~~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.

During the first quarter of fiscal ~~2021,~~2022 we ~~filed~~received a $23.0 million federal income tax refund ~~claims~~(including $0.7 million of ~~$24.2 million~~interest) related to our fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. ~~Additional income tax loss carryforwards are expected to be generated~~We also received $4.3 million in state theatre grants during the first quarter of fiscal ~~2021~~2022 that ~~will benefit future years.~~

~~During~~were awarded and accrued during the fourth quarter of fiscal ~~2020, a number of states elected to provide grants to certain businesses most impacted by~~2021. Both the ~~COVID-19 pandemic, utilizing funds received by the applicable state under provisions~~receipt 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 also continue to pursue sales of surplus real estate and other non-core real estate to further enhance our liquidity. During the first quarter of fiscal ~~2021,~~2022, we sold ~~an equity interest in a joint venture,~~two land parcels, generating ~~total~~net proceeds of approximately ~~$4.2~~$3.4 million. ~~As of April 1, 2021, we had letters of intent or contracts to sell several pieces of real estate with a total carrying value of $8.7 million and we~~We believe we may receive ~~total~~additional sales proceeds from real estate sales during the ~~next 12-18 months~~remainder of fiscal 2022 totaling approximately ~~$10-$40~~$5 - $15 million, depending upon demand for the real estate in question.

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.

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

Overall Results

The following table sets forth revenues, operating ~~loss,~~income (loss), other income (expense), net ~~loss~~earnings (loss) and net ~~loss~~earnings (loss) per diluted common share for the first quarter of fiscal ~~2021~~2022 and fiscal ~~2020~~2021 (in millions, except for per share and variance percentage data):

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)
%


	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 ~~decreased~~increased and operating ~~loss,~~income (loss), net ~~loss~~earnings (loss) attributable to The Marcus Corporation and net ~~loss~~earnings (loss) per diluted common share ~~increased~~improved significantly during the first quarter of fiscal ~~2021~~2022 compared to the first quarter of fiscal ~~2020 due to decreased~~2021. Increased revenues and reduced operating losses from both our theatre division and hotels and resorts division ~~as a result~~contributed to the improvement during fiscal 2022 compared to fiscal 2021, during which some of our theatres were closed for portions of the ~~continuing~~first 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.

Operating losses from our corporate items, which include amounts not allocable to the business segments, increased ~~slightly~~ during the fiscal 2022 first quarter ~~of fiscal 2021~~ compared to the fiscal 2021 first quarter ~~of fiscal 2020~~ due primarily to increased non-cash long-term incentive compensation expenses. Net ~~loss~~earnings (loss) attributable to The Marcus Corporation during the first quarter of fiscal ~~2021~~2022 was ~~negatively~~favorably impacted by ~~increased~~decreased interest expense compared to the first quarter of fiscal ~~2020 and benefited from a gain~~2021, offset by lower gains on disposition of property, equipment and other assets during the fiscal 2022 first quarter as compared to the first quarter of fiscal 2021.

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

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Our ~~operating loss during~~interest expense totaled $4.1 million for the first quarter of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $5.5 million, or approximately $0.13 per diluted common share, related to expenses incurred (primarily payroll continuation payments to employees temporarily laid off) due to the closing of all of our movie theatres and the majority of our hotels and resorts during the last two weeks of such quarter. In addition, impairment charges related to intangible assets and several theatre locations negatively impacted our fiscal 2020 first quarter operating income by approximately $8.7 million, or approximately $0.21 per diluted common share.

~~We recognized investment income of $40,000 during the first quarter of fiscal 2021~~2022 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 increase~~a decrease of approximately ~~$2.3~~$0.8 million, or ~~92.5%~~15.5%. The ~~increase~~decrease in interest expense during the first quarter of fiscal ~~2021~~2022 was primarily due ~~in part~~ to ~~increased~~decreased borrowings and ~~an increase~~a 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 noncash~~non-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.

We did not have any significant variations in investment income or other expenses ~~or equity losses from unconsolidated joint ventures~~ during the first quarter of fiscal ~~2021~~2022 compared to the first quarter of fiscal ~~2020.~~2021. We reported anet gains on disposition of property, equipment and other assets of $0.4 million during the first quarter of fiscal 2022, compared to net gains on disposition of property, equipment and other assets of $2.2 million during the first quarter of fiscal 2021. The net gain on disposition of property, equipment and other assets ~~of approximately $2.2 million~~ during the first quarter of fiscal ~~2021, compared~~2022 was due primarily to ~~net losses on disposition~~the sale of ~~property, equipment and other assets of $12,000 during the first quarter of fiscal 2020.~~surplus land. The net gain on disposition of property, equipment and other assets during the first quarter of fiscal 2021 ~~was due primarily to~~included the sale of an equity investment in a joint venture. The timing of periodic sales and disposals of our property, equipment and other assets varies from quarter to quarter, resulting in variations in our reported gains or losses on disposition of property, equipment and other assets. We anticipate ~~the potential for~~ additional disposition gains or losses from periodic sales of property, equipment and other assets during fiscal ~~2021~~2022 and beyond.

We reported an income tax ~~benefits~~benefit for the first quarter of fiscal 2022 of $6.5 million compared to an income tax benefit of $10.8 million ~~and $6.6 million, respectively,~~ during the first ~~quarters~~quarter of fiscal 2021. The larger income tax benefit during the fiscal 2021 ~~and~~period was primarily the result of the significant losses before income taxes incurred as a result of the reduction in our operating performance due to the impact of the COVID-19 pandemic as described above. Our fiscal ~~2020.~~2022 first quarter effective income tax rate was 30.5%. Our fiscal 2021 first quarter effective income tax rate was 27.7%~~, compared to our fiscal 2020 first quarter effective income tax rate of 25.3%~~. ~~Our effective income tax rate during the first quarter of fiscal 2021 benefitted from nonrecurring adjustments specific to the first quarter.~~ We anticipate that our effective income tax rate for the remaining quarters of fiscal ~~2021~~2022 may be in the ~~24-26%~~24-28% range, excluding any potential changes in federal or state income tax rates or other one-time tax benefits. Our actual fiscal ~~2021~~2022 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

Theatres

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 ~~2021~~2022 and fiscal ~~2020~~2021 (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)		%

Our theatre division revenues ~~decreased~~increased and operating loss ~~increased~~decreased significantly during the first quarter of fiscal ~~2021~~2022 with all of our theatres open and new films released by movie studios, compared to the first quarter of fiscal ~~2020 due entirely~~2021 in which a significant number of our theatres were temporarily closed in response to ~~decreased attendance.~~the COVID-19 pandemic and new film releases were limited. We began the first quarter of fiscal 2021 with approximately 52% of our theatres open. As state and local restrictions were eased in several of our markets and several new films were released by movie studios, we gradually reopened theatres, ~~during the quarter and ended~~ending the fiscal 2021 first quarter with approximately 74% of our theatres open. ~~All~~The majority of our reopened theatres operated ~~at significantly~~with reduced ~~attendance levels compared to prior years due to customer concerns related to the COVID-19 pandemic~~operating days (Fridays, Saturdays, Sundays and ~~a reduction in the number of new films released~~Tuesdays) and reduced operating hours during the fiscal 2021 first quarter. AOur theatres were open with normal operating days and hours at all of our theatres during the first quarter of fiscal 2022. Our fiscal 2021 first quarter operating loss would have been even larger if not for a nonrecurring state government grant of approximately $1.3 million that favorably impacted our theatre division operating ~~loss during the first quarter~~loss.

Table of ~~fiscal 2021.~~

Our theatres were open for all but nine days during the first quarter of fiscal 2020 (we closed all of our theatres on March 17, 2020 in response to the COVID-19 pandemic). In addition to the impact of reduced attendance due to the theatre closings, our theatre division operating loss during the first quarter of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $2.8 million related to expenses incurred (primarily payroll continuation payments to employees temporarily laid off) due to the closing of all of our movie theatres during such quarter. Impairment charges related to intangible assets and several theatre locations also negatively impacted our theatre division fiscal 2020 first quarter operating loss by approximately $8.7 million.

Contents

The following table provides a further breakdown of the components of revenues for the theatre division for the first quarter of fiscal ~~2021~~2022 and fiscal ~~2020~~2021 (in millions, except for variance percentage):

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)
%


	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	%

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


	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.

According to data received from Comscore (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal ~~2021~~2022 first quarter, ~~results, United States~~U.S. box office receipts decreased ~~89.7%~~44.1% during our fiscal ~~2021~~2022 first quarter compared to the same comparable weeks in fiscal 2019, indicating that our pro forma decrease in admission revenues during the first quarter of fiscal ~~2021~~2022 of ~~80.7%~~39.4% outperformed the industry by ~~9.0~~4.7 percentage points. Based upon this metric, we believe we were once again one of the top performing theatre ~~circuit~~circuits during the first quarter of fiscal ~~2021~~2022 compared to the top 10 circuits in the U.S. Additional data received and compiled by us from Comscore indicates our admission revenues during the first quarter of fiscal ~~2021~~2022 represented approximately ~~4.8%~~3.4% of the total admission revenues in the U.S. during the period (commonly referred to as market share in our industry). This represents ~~an approximately 55%~~a notable increase over our reported market share of approximately 3.1% during the ~~first quarter of~~comparable fiscal 2019 period, prior to the pandemic. ~~Closed theatres in other markets in the U.S. contributed to our outperformance in both of these metrics and we expect our outperformance to lessen in future periods as more theatres open.~~ Our goal is to continue our past pattern of outperforming the industry, but with the majority of our renovations now completed, our ability to do so in any given quarter will likely be partially dependent upon film mix, weather and the competitive landscape in our markets.

Sales attributable to our Marcus Private Cinema (“MPC”) program ~~have exceeded expectations, partially offsetting reduced traditional attendance and contributing~~contributed significantly to our ~~industry outperformance~~admissions revenues during the first quarter of fiscal 2021. ~~Under this program, a guest may purchase an entire auditorium for up to 20~~At its peak during the majority of ~~his or her friends and family for a fixed charge, ranging from $99 to $179 (depending upon~~ the ~~film and number of~~ weeks ~~it has been in theatres). During the last 11 weeks of the~~during our fiscal 2021 first quarter, we averaged over 1,500 MPC events per week, accounting for approximately 21% of our admission revenues during those weeks.

~~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 ~~2021~~2022.

Total theatre attendance increased significantly during the first quarter of fiscal 2022 compared to the first quarter of fiscal ~~2020,~~2021, when a significant portion of our theatres were temporarily closed. Total theatre attendance increased 238.3% during

Table of Contents

the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021, resulting in ~~decreases~~increases in both admission revenues and concession revenues. ~~A significant~~Conversely, a decrease in the number of new films ~~the lack of awareness of theatres being open (due in part to limited new film advertising), ongoing state~~ and ~~local capacity restrictions and~~lingering customer concerns regarding visiting indoor businesses ~~all contributed to the reductions in~~negatively impacted attendance during the first quarter of fiscal ~~2021. As described above, attendance from MPC events (estimated~~2022 as compared to ~~average 13 guests per event) partially offset~~ the ~~reduction~~same period in ~~traditional movie going attendance.~~

fiscal 2019.

Our highest grossing films during the fiscal ~~2021~~2022 first quarter included ~~Raya~~The Batman, Spider-Man: No Way Home, Uncharted, Sing 2 and Scream. All of these five films debuted with an exclusive theatrical run prior to release on streaming services. This compares with four of the top five films in the first quarter of fiscal 2021 that were released “day-and-date” on streaming services. We believe such “day-and-date” releases negatively impact theatrical revenues, particularly in week two and ~~the Last Dragon~~, ~~Tom and Jerry~~, ~~The Croods: A New Age~~, ~~Wonder Woman 1984~~ ~~and~~ ~~The Little Things~~.beyond of a films’ release. We also believe “day-and-date” releases increase piracy, further impacting potential revenues. We believe our theatre circuit outperformed its ~~typical market share~~competition on ~~four~~two of our top five revenue producing films during the first quarter of fiscal ~~2021.~~2022. In addition, we believe our overall admission revenue outperformed the industry due in part to the fact that we believe our theatre circuit outperformed its competition on the next tier of films. Due to ~~less films being~~the impact of two particularly strong blockbusters released or showing during the first quarter of fiscal ~~2021,~~2022 (The Batman, Spider-Man: No Way Home), the film slate during ~~such~~the first quarter of fiscal 2022 was weighted more towards our top movies compared to the ~~prior year,~~first quarter of fiscal 2021 and fiscal 2019, as evidenced by the fact that our top five films during our fiscal ~~2021~~2022 first quarter accounted for ~~59%~~66% of our total box office results, compared to ~~47%~~59% and 39% for the top five films during the first quarter of fiscal ~~2020,~~2021 and fiscal 2019 (prior to the pandemic), respectively, both expressed as a percentage of the total admission revenues for the period. ~~In prior years, an~~An increased reliance on ~~fewer~~just a few blockbuster films during a given quarter often has ~~had~~ the effect of ~~slightly~~ increasing our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. ~~This was not the case~~As a result of a more concentrated film slate our overall film rental cost increased during the first quarter of fiscal ~~2021, however, due to reduced overall admission revenues reported for each film. As a result, our overall film rental cost decreased during the fiscal 2021 first quarter~~2022 compared to the same period ~~last~~in the prior year.

Our average ticket price increased ~~3.7%~~6.4% during the first quarter of fiscal ~~2021~~2022 compared to the first quarter of fiscal ~~2020.~~2021 and increased by 18.0% compared to the first quarter of fiscal 2019. A larger proportion of admission revenues from our proprietary premium large format ~~(“PLF”)~~ screens (with a higher ticket price) and ~~the increase in MPC events~~a lower mix of films targeted at children and family audiences contributed to ~~our~~the increase in our average ticket price during the first quarter of fiscal 2022. During portions of the first quarter of fiscal 2021 ~~period, partially offset by the fact that~~ we ~~continued to offer~~also offered older “library” film product for only $5.00 per ticket ~~during~~when there was limited availability of new films resulting in a lower average ticket price in the ~~first quarter of fiscal 2021.~~

same period in the prior year.

Our average concession revenues per person increased by ~~16.0%~~5.7% during the first quarter of fiscal ~~2021~~2022 compared to the first quarter of fiscal ~~2020. Our top three films during~~2021 and increased by 36.1% compared to the first quarter of fiscal ~~2021 were animated films that generally appeal~~2019. In addition, as customers have returned to “normal” activities such as going to the movie theatre, they have demonstrated a ~~younger audience and we~~propensity to spend at a higher rate than before the pandemic closures. We also believe ~~that resulted in an increase in sales of traditional concession items like popcorn, soda and candy, contributing to our increased average concession sales per person. In addition,~~ a portion of the increase in our average concession revenues per person during the first quarter of fiscal ~~2021~~2022 may be attributed to shorter lines at our concession stand due to reduced attendance (during periods of high attendance, some customers do not purchase concessions because the line is too long). ~~We also~~A small portion of the increase in our average concession revenues per person is attributable to inflationary increases in concessions prices in response to increases in food and labor costs. Finally, we believe that an increased percentage of customers buying their concessions in advance using our website, kiosk or our mobile app likely ~~also~~ contributed to higher average concession revenues per person, as our experience has shown that customers are more likely to purchase more items when they order and pay electronically.

We expect to continue to report increased average concession revenues per person in future periods, but whether our customers will continue to spend at these current significantly higher levels in future periods is currently unknown.

Other revenues ~~decreased~~increased by approximately ~~$5.8~~$3.7 million during the first quarter of fiscal ~~2021~~2022 compared to the first quarter of fiscal ~~2020.~~2021. This ~~decrease~~increase was primarily due to the impact of ~~reduced~~increased attendance on internet surcharge ticketing fees and preshow and in-app advertising income.

Several films have performed well in the early weeks of our fiscal 2022 second quarter, including Sonic the Hedgehog 2,Fantastic Beasts: The Secrets of Dumbledore, and The Bad Guys. The film product release schedule for the remainder of fiscal 2021 has been changing in response to reduced near-term customer demand and changing state and local restrictions in various key markets in the U.S. and the world as a result of the ongoing COVID-19 pandemic. With restrictions in New York and California lessening, film studios have shown an increased willingness to begin releasing many of the new films that had previously been delayed. ~~Godzilla vs. Kong~~ was released on March 31, 2021 and has performed beyond expectations, becoming the best performing film released since the onset of the pandemic. Additional films that have contributed to our early fiscal 2021 second quarter results include ~~Mortal Kombat~~ ~~and~~ ~~Demon Slayer~~ ~~and~~2022 remains strong, with several new films scheduled to be released during the remainder of the fiscal 2022 second quarter ~~include~~ ~~Cruella~~that have potential to perform very well including Doctor Strange in the Multiverse of Madness, ~~Quiet Place Part II~~Downton Abbey: A New Era, ~~Conjuring:~~Top Gun: Maverick, Jurassic World: Dominion, Lightyear and The ~~Devil Made Me Do It~~, InBlack Phone. The film slate for the ~~Heights~~ ~~and~~ ~~Fast & Furious 9~~.second half of fiscal 2022 also appears very strong. We believe that aswith a greater percentage of the population ~~gets~~now vaccinated and consumer comfort now at post-pandemic highs, and assuming that concerns over the ~~pandemic continues to subside, there will be a large~~Delta, Omicron or any new variants of COVID-19 do not result in significant new restrictions, demand for out-of-home entertainment ~~and the studios~~ will ~~once again begin releasing a significant number~~continue to

Table of ~~films to theatres, particularly~~Contents

increase during the ~~second half~~remainder of fiscal ~~2021.~~2022. The early list of films scheduled to be released during ~~the second half of~~ fiscal ~~2021~~2023 also appears quite ~~strong, as does the list of films currently scheduled for release during fiscal 2022.~~

strong.

Revenues for the theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of ~~the current~~appropriate “windows” between the date a film is released in theatres and the date a motion picture is released to other channels, including premium video-on-demand (“PVOD”), video on-demand (“VOD”), streaming services and DVD. These are factors over which we have no control.

We currently believe that “day-and-date” film release experiments such as those tested by Warner Brothers and Disney during 2021 will not become the normal plan of distribution as the pandemic fully subsides. Warner Brothers has 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.

We ended the first quarter of fiscal ~~2021~~2022 with a total of 1,064 company-owned screens in 85 theatres, compared to 1,091 company-owned screens in 88 ~~theatres and six managed screens in one theatre, compared to 1,104 company-owned screens in 90~~ theatres and six managed screens in one theatre at the end of the first quarter of fiscal ~~2020.~~2021. As of the end of the first quarter of fiscal 2022 and the date of this report, ~~we had reopened several additional~~all of our company-owned theatres ~~since~~are operating. As of the end of the first quarter of fiscal 2021 ~~bringing our number of open theatres to~~ approximately ~~89%~~74% of our ~~total theatres. We currently expect to~~theatres were open the majority of our remaining closed theatres by the end of May 2021. One of the Marcus Wehrenberg theatres that we reopened in May 2021 recently completed a renovation that added DreamLounger recliner seating, as well as ~~Reel Sizzle~~^®and ~~Take Five~~^SM ~~Lounge~~ ~~outlets, to the theatre.~~

operating.

Hotels and Resorts

The following table sets forth revenues, operating ~~loss~~income (loss) and operating margin for our hotels and resorts division for the first quarter of fiscal ~~2021~~2022 and fiscal ~~2020~~2021 (in millions, except for variance percentage and operating margin):

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)		%

Our first quarter is typically the seasonally weakest quarter of our fiscal year for our hotels and resorts division due to the traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned properties. Our hotels and resorts division operating loss during the first quarter of fiscal 2022 decreased compared to the first quarter of fiscal 2021, due to significantly increased revenues during the fiscal 2022 first quarter. All of our company-owned hotels and resorts contributed to the improved operating results during the first quarter of fiscal 2022.

The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the first quarter of fiscal ~~2021~~2022 and fiscal ~~2020~~2021 (in millions, except for variance percentage):

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)
%


	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 ~~decreased~~increased significantly during the first quarter of fiscal ~~2021~~2022 compared to the first quarter of fiscal ~~2020 due to the impact of the COVID-19 pandemic. All~~2021. While all eight of our company-owned hotels and all but one of our managed hotels were open during ~~our~~the 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

Table of ~~our condo hotels~~Contents

restaurants and ~~decreased management fees, partially offset by significantly increased ski revenues at our Grand Geneva~~^® ~~Resort & Spa (“Grand Geneva”). Cost reimbursements decreased~~bars were temporarily closed during the first quarter of fiscal 2021 (one of our SafeHouse restaurants and bars has subsequently reopened).

We believe it is also beneficial to compare our revenues to pre-pandemic levels. The following table compares the components of revenues for the hotels and resorts division for the first quarter of fiscal 2022 to the first quarter of fiscal 2019 (in millions, except for variance percentage):


	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)	%

A decline in transient and group business contributed to our reduced revenues during the first quarter of fiscal 2022 compared to the same quarter of fiscal 2019. A decrease in group business subsequently led to a corresponding decrease in banquet and catering revenues, negatively impacting our reported food and beverage revenues compared to the same period in fiscal 2019. Other revenues increased during the first quarter of fiscal 2022 compared to the first quarter of fiscal ~~2020~~2019, primarily due to increased revenues from one of our condominium hotels and increased ski and spa revenues at the Grand Geneva® Resort & Spa (“Grand Geneva”), partially offset by decreased management fees. Cost reimbursements decreased slightly during the first quarter of fiscal 2022 compared to the first quarter of fiscal 2019 due to reduced revenues and subsequent operating costs at our managed hotels.

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.

The following table sets forth certain operating statistics for the first quarter of fiscal ~~2021~~2022 and fiscal ~~2020,~~2021, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for company-owned properties:

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)
%

~~(1)~~


	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	%

Note: These operating statistics represent averages of our eight distinct comparable company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort. The statistics exclude days during fiscal 2021 where individual hotels may have been closed.

RevPAR ~~decreased~~increased at ~~seven~~all eight of our ~~eight~~ company-owned properties during the first quarter of fiscal ~~2021~~2022 compared to the first quarter of fiscal ~~2020. The “drive-to leisure”~~2021. Leisure travel ~~customer~~customers 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.

Table of Contents

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


	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)	%

Note: These operating statistics represent averages of our seven distinct comparable company-owned hotels and resorts, branded and unbranded, in different geographic markets with a ~~managed condo~~wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort. The statistics for both the ~~Timber Ridge Lodge & Waterpark, experiencing~~2022 and 2019 periods exclude the ~~highest demand among our open hotels, particularly on weekends. A record ski season also contributed to an increase in RevPAR at~~Saint Kate, which was closed during the ~~Grand Geneva.~~ majority of the fiscal 2019 period presented.

According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal ~~2021~~2022 first quarter results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced a decrease in RevPAR of ~~54.5%~~17.7% during our fiscal ~~2021~~2022 first quarter compared to the same ~~weeks last year.~~period during fiscal 2019, leading us to believe we outperformed the industry during the fiscal 2022 first quarter by approximately 2 percentage points. Data received from Smith Travel Research for our various “competitive sets” – —hotels identified in our specific markets that we deem to be competitors to our ~~hotels –~~ hotels—indicates that these hotels experienced a decrease in RevPAR of ~~52.3%~~24.2% during our fiscal ~~2021~~2022 first ~~quarter. Thus,~~quarter, again compared to the same period in fiscal 2019. Therefore, we also believe we outperformed ~~the industry and~~ our competitive sets during the ~~fiscal 2021~~2022 first quarter by approximately ~~eight and six points, respectively.~~9 percentage points. Higher class segments of the hotel industry, such as luxury and upper upscale (with an increased reliance on business travel), continue to experience lower occupancies compared to lower class hotel segments such as economy and midscale.

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.

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 implemented~~Leisure travel in our markets has a seasonal component, peaking in the summer months and slowing down as children return to school and the weather turns colder. We are beginning to experience increases in business travel as corporate travel bans ~~at the onset of the pandemic~~are 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 ~~2021~~2022 - commonly referred to in the hotels and resorts industry as “group pace” - is running ~~significantly~~approximately 12% behind where we ~~would historically be~~were at ~~this~~the 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 experience~~experiencing increased booking activity for ~~later in 2021 and particularly for~~fiscal 2022 and beyond. Banquet and catering revenue pace for fiscal ~~2021~~2022 is also running behind where we ~~would typically be~~were at ~~this~~the 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.

During the first quarter of fiscal 2022, we ceased management of The DoubleTree by Hilton El Paso Downtown and the Courtyard by Marriott El Paso Downtown/Convention Center effective February 28, 2022. Conversely, the first quarter of fiscal 2022 was our first full quarter of operating the Kimpton Hotel Monaco Pittsburgh, a hotel acquired in mid-December 2021 in which we have a minority equity interest.

Adjusted EBITDA

Adjusted EBITDA is a measure used by management and our board of directors to assess our financial performance and enterprise value. We believe that Adjusted EBITDA is a useful measure for us and investors, as it eliminates certain expenses that are not indicative of our core operating performance and facilitates a comparison of our core operating performance on a consistent basis from period to period. We also use Adjusted EBITDA as a basis to determine certain annual cash bonuses and long-term incentive awards, to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Adjusted EBITDA is also used by analysts, investors and other interested parties as a performance measure to evaluate industry competitors.

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Adjusted EBITDA is a non-GAAP measure of our financial performance and should not be considered as an alternative to net earnings (loss) as a measure of financial performance, or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of liquidity or free cash flow for management’s discretionary use. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

We define Adjusted EBITDA as net earnings (loss) attributable to The Marcus Corporation before investment income or loss, interest expense, other expense, gain or loss on disposition of property, equipment and other assets, equity earnings or losses from unconsolidated joint ventures, net earnings or losses attributable to noncontrolling interests, income taxes and depreciation and amortization, adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine Adjusted EBITDA, such as acquisition expenses, preopening expenses, accelerated depreciation, impairment charges and other adjustments. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Definitions and calculations of Adjusted EBITDA differ among companies in our industries, and therefore Adjusted EBITDA disclosed by us may not be comparable to the measures disclosed by other companies.

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


	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)

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


	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

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	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)

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

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

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


	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	%

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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

Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our 87-year history, and, despite the COVID-19 pandemic, our financial position remains strong. As of March 31, 2022, we had a cash balance of approximately $19.4 million, $221.4 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio (including short-term borrowings) was 0.37. With our strong liquidity ~~situation~~position, combined with cash generated from operations and proceeds from the sale of surplus real estate (discussed above), we believe we are positioned to meet our obligations as ~~of April 1, 2021 is described in detail above in~~they come due and continue to sustain our operations throughout fiscal 2022 and fiscal 2023, even if our properties continue to generate reduced revenues during these periods. We will continue to work to preserve cash and maintain strong liquidity to endure the ~~“Impact~~impacts of the ~~COVID-19 Pandemic” section~~global pandemic, even if it continues for a prolonged period of ~~this MD&A.~~

time.

We believe that the actions we have taken ~~over~~during the past ~~year~~two years will allow us to have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements. However, future compliance with our debt covenants could be impacted if we are unable to ~~resume~~continue operations as currently expected, which could be impacted by matters that are not entirely in our control, such as the ~~continuation~~reinstatement of protective actions that federal, state and local governments have taken and the timing of new movie

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releases (as described in the Impact of the COVID-19 Pandemic section of this MD&A and in our Annual Report for the year ended December ~~31, 2020)~~30, 2021). Future compliance with our debt covenants could also be impacted if the speed of recovery of our theatres and hotels and resorts businesses is slower than currently expected. For example, our current expectations are that our theatre division will continue to improve during the fiscal ~~2021 second quarter~~2022 (but still report results ~~materially~~ below comparable periods in fiscal 2019), before beginning to progressively return to closer-to-normal performance ~~during the second half of~~in fiscal ~~2021 and first quarter of fiscal 2022.~~2023. Our current expectations for our hotels and resorts division are that we will continue to show improvement in each succeeding quarter compared to ~~our current state,~~the prior year, but continue to underperform compared to ~~prior~~pre-COVID-19 pandemic years. We do not expect to return to pre-COVID-19 occupancy levels during fiscal ~~2021. Even if one or both of our divisions progressively return~~2022 due to ~~closer-to-normal performance and operations~~an expected lag in ~~the second half of fiscal 2021, it~~business travel. It is possible that the impact of COVID-19 may be greater than currently expected across one or both of our divisions such that we may be unable to comply with our debt ~~covenants.~~covenants in future periods. In such an event, we would either seek covenant waivers or attempt to amend our covenants, though there is no certainty that we would be successful in such efforts.

Financial Condition

Net cash provided by operating activities totaled $6.5 million during the first quarter of fiscal 2022, compared to net cash used in operating activities ~~totaled~~of $13.0 million during the first quarter of fiscal ~~2021, compared to $16.6~~2021. The $19.5 million ~~during the first quarter of fiscal 2020. The $3.6 million decrease~~increase in net cash ~~used in~~provided by operating activities was due primarily to a reduced net loss and the favorable timing in the collection of ~~government grant receivables~~accounts receivable and receipt of refundable income taxes ~~and~~of $22.7 million, partially offset by unfavorable timing in the payment of accounts payable, accrued compensation, taxes other than income taxes and other accrued liabilities ~~partially offset by increased net loss and deferred income taxes~~ during the first quarter of fiscal 2021.

Net cash ~~provided by~~used in investing activities during the first quarter of fiscal ~~2021~~2022 totaled $3.1 million, compared to net cash provided by investing activities of $2.6 million ~~compared~~during the first quarter of fiscal 2021. The increase in net cash used in investing activities of ~~$10.2 million during the first quarter of fiscal 2020. The increase in net cash provided by investing activities of $12.8~~$5.7 million was primarily the result of ~~a decrease~~an increase of $5.0 million in capital expenditures, ~~and the receipt of $4.3 million in~~partially offset by lower proceeds from disposals of property, equipment and other assets during the first quarter of fiscal ~~2021.~~2022. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $6.6 million during the first quarter of fiscal 2022 compared to $1.5 million during the first quarter of fiscal ~~2021 compared to $10.0 million during the first quarter of fiscal 2020.~~

2021.

Fiscal ~~2021~~2022 first quarter cash capital expenditures included approximately ~~$800,000~~$2.8 million incurred in our theatre division, ~~including costs associated with the renovation of a theatre.~~primarily related to normal maintenance capital projects. We also incurred capital expenditures in our hotels and resorts division during the first quarter of fiscal ~~2021~~2022 of approximately ~~$700,000,~~$3.8 million, including costs related to ~~a lobby renovation~~rooms renovations at the Grand Geneva. Fiscal 2020 first quarter cash capital expenditures included approximately $7.2 million incurred in our theatre division, including costs associated with the addition of four new screens, DreamLounger recliner seatingGeneva Resort and a ~~Super~~~~Screen DLX auditorium at an existing Movie Tavern theatre. Also during the first quarter of fiscal 2020, we began projects to add DreamLounger recliner seating, as well as~~ ~~Reel Sizzle~~Spa and~~Take Five Lounge~~ outlets, to an existing Marcus Wehrenberg theatre and DreamLounger recliner seating to an existing Movie Tavern theatre. We also incurred capital expenditures in our hotels and resorts division during the first quarter of fiscal 2020 of approximately $2.4 million, consisting primarily of normal maintenance capital projects.

Net cash ~~provided by~~used in financing activities during the first quarter of fiscal ~~2021~~2022 totaled ~~$9.2~~$3.2 million compared to ~~$132.4~~net cash provided by financing activities of $9.2 million during the first quarter of fiscal ~~2020.~~2021. During the first quarter of fiscal ~~2021,~~2022, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added $22.0 million of new short-term revolving credit facility borrowings, and we made $22.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2022 (net zero borrowings on our credit facility). We ended the first quarter of fiscal 2022 with no outstanding borrowings under our revolving credit facility. During the first quarter of fiscal 2021, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As a result, we added $36.0 million of new short-term revolving credit facility borrowings, and we made $22.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2021 (net increase in borrowings on our credit facility of $14.0 million).

During the first quarter of fiscal ~~2020, at the onset of the pandemic,~~2022 we drew down on the full amount available under our revolving credit facility (after taking into consideration outstanding letters of credit that reduce revolver availability). As a result, we added $188.0repaid $0.8 million of ~~new~~ short-term ~~revolving credit facility~~term loan borrowings, ~~and we made $49.0~~compared to $4.2 million of such repayments ~~on short-term revolving credit facility borrowings~~ during the first quarter of fiscal ~~2020 (net increase in borrowings on our credit facility of $139.0 million).~~

~~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 ~~$93,000~~approximately $0.4 million during the first quarter of fiscal ~~2021~~2022 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 ~~0.41~~0.37 at ~~April 1, 2021,~~March 31, 2022, compared to 0.37 at December ~~31, 2020. A change in~~30, 2021.

During the ~~accounting for our convertible senior notes (described in Note 1~~first quarter of ~~the condensed notes to our consolidated financial statements included in this quarterly report on Form 10Q above) contributed to the increase in our debt-to-capitalization ratio.~~

~~We repurchased approximately 54,000 shares of our common stock for approximately $1.2 million in conjunction with the exercise of stock options~~fiscal 2022 and ~~the payment of income taxes on vested restricted stock during~~ the first quarter of fiscal 2021 ~~compared to approximately 8,600~~we 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 ~~2.7~~2.6 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common

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stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions. Our credit agreement, as amended, currently restricts our ability to repurchase shares in the open market until such time as we have paid off the Term Loan A and returned to compliance with our prior covenants under the credit agreement.

~~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, ~~requires~~required us to temporarily suspend our quarterly dividend payments ~~for~~and prohibited us from repurchasing shares of our common stock in the ~~first two quarters of~~open market during fiscal 2021. The ~~credit agreement~~Credit Agreement also limits the total amount of quarterly dividend payments or share repurchases during the four subsequent quarters beginning with the ~~third~~first 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have not experienced any material changes in our market risk exposures since December ~~31, 2020.~~

30, 2021.

Item 4. Controls and Procedures

a.Evaluation of disclosure controls and procedures

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

b.Changes in internal control over financial reporting

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

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PART II – OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December ~~31, 2020.~~

30, 2021.

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

The following table sets forth information with respect to purchases made by us or on our behalf of our Common Stock during the periods indicated. ~~All~~


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
December 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

(1)Through March 31, 2022, our Board of Directors had authorized the repurchase of up to approximately 11.7 million shares of our outstanding Common Stock. Under these ~~repurchases~~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 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 ~~made~~purchased in ~~conjunction~~connection with the ~~payment~~vesting of ~~income taxes on vested~~grants of restricted stock, ~~pursuant~~in 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.

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

~~(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.

Item 4. Mine Safety Disclosures

Not applicable.

Item 6. Exhibits

~~31.1~~

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

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

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

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SIGNATURES

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

~~THE MARCUS CORPORATION~~


THE MARCUS CORPORATION

DATE: May ~~11, 2021~~ 5, 2022	By:	~~/s/~~ /s/ Gregory S. Marcus
		Gregory S. Marcus
		President and Chief Executive Officer


DATE: May ~~11, 2021~~ 5, 2022	By:	~~/s/~~ /s/ Douglas A. Neis
		Douglas A. Neis
		Executive Vice President and Chief Financial Officer ~~and Treasurer~~

S-1


Wisconsin						39-1139844
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

100 East Wisconsin Avenue, Suite 1900 Milwaukee ~~Wisconsin~~ ,Wisconsin						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


	April 1,		December 31,
(in thousands, except share and per share data)	2021		2020

ASSETS
Current assets:
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:
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

Operating lease right-of-use assets		227,899		229,660

Other assets:
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


	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


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


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


~~Wisconsin~~				~~39-1139844~~ THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)


				Page			~~Page~~
PART I – FINANCIAL INFORMATION


Item 1.			Consolidated Financial Statements:

				Consolidated Balance Sheets (April 1, 2021 and December 31, 2020)			3

		Consolidated Balance Sheets		3

		Consolidated Statements of Earnings (Loss) ~~(13 weeks ended April 1, 2021 and March 26, 2020)~~		5		5


		Consolidated Statements of Comprehensive Income (Loss) ~~(13 weeks ended April 1, 2021 and March 26, 2020)~~		6		6


		Consolidated Statements of Cash Flows ~~(13 weeks ended April 1, 2021 and March 26, 2020)~~		7		7


		Condensed Notes to Consolidated Financial Statements		8		8

Item 2.				Management’s Discussion and Analysis of Financial Condition and Results of Operations	20		19

Item 3.				Quantitative and Qualitative Disclosures About Market Risk	32		29

Item 4.				Controls and Procedures	32		29

PART II – OTHER INFORMATION

Item 1A.				Risk Factors	33		30

Item 2.				Unregistered Sales of Equity Securities and Use of Proceeds	33		30

~~Item 4.~~	~~Mine Safety Disclosures~~		30

~~Item 6.~~	~~Exhibits~~		31


~~Signatures~~Item 4.		Mine Safety Disclosures		~~S-1~~ 33

Item 6.		Exhibits		33

		Signatures		S-1


	13 Weeks Ended
	April 1,			March 26,
(in thousands, except per share data)	2021			2020

Revenues:
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
		47,454			150,704
Cost reimbursements		3,333			8,756
Total revenues		50,787			159,460

Costs and expenses:
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

Operating loss		(35,661)			(22,200)

Other income (expense):
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)
		(3,227)			(3,870)

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)

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
(in thousands)	April 1, 2021		March 26, 2020

OPERATING ACTIVITIES:
Net loss	$	(28,130)	$	(19,500)
Adjustments to reconcile net loss to net cash used in operating activities:
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)

INVESTING ACTIVITIES:
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)

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)


													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


	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 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 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


	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


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%


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


	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)	%


	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)	%


				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