x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)
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(Exact name of registrant as specified in its charter) |
Wisconsin | 39-1139844 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |||||||
| 53202-4125 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $1.00 par value | MCS | New York Stock Exchange |
Yes |
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Yes |
| No |
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Large accelerated filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐o
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24,498,243
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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S-1 |
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| | July 1, | | December 31, | ||
(in thousands, except share and per share data) |
| 2021 |
| 2020 | ||
| | | | | | |
ASSETS |
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Current assets: |
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Cash and cash equivalents | | $ | 8,667 | | $ | 6,745 |
Restricted cash | |
| 6,463 | |
| 7,343 |
Accounts receivable, net of reserves of $1,151 and $1,284, respectively | |
| 11,303 | |
| 6,359 |
Government grants receivable | | | — | | | 4,913 |
Refundable income taxes | |
| 24,874 | |
| 27,934 |
Assets held for sale | | | 10,444 | | | 4,117 |
Other current assets | |
| 14,024 | |
| 10,406 |
Total current assets | |
| 75,775 | |
| 67,817 |
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Property and equipment: | |
| | |
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Land and improvements | |
| 139,138 | |
| 145,671 |
Buildings and improvements | |
| 756,775 | |
| 759,421 |
Leasehold improvements | |
| 165,686 | |
| 163,879 |
Furniture, fixtures and equipment | |
| 376,590 | |
| 374,253 |
Finance lease right-of-use assets | |
| 74,912 | |
| 75,322 |
Construction in progress | |
| 2,847 | |
| 3,360 |
Total property and equipment | |
| 1,515,948 | | | 1,521,906 |
Less accumulated depreciation and amortization | |
| 707,600 | | | 673,578 |
Net property and equipment | |
| 808,348 | | | 848,328 |
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Operating lease right-of-use assets | | | 224,026 | |
| 229,660 |
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Other assets: | |
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Investments in joint ventures | |
| — | |
| 2,084 |
Goodwill | |
| 75,141 | |
| 75,188 |
Deferred income taxes | | | 10,113 | | | — |
Other | |
| 30,650 | |
| 31,101 |
Total other assets | |
| 115,904 | |
| 108,373 |
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TOTAL ASSETS | | $ | 1,224,053 | | $ | 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 |
3
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| July 1, |
| December 31, | ||
(in thousands, except share and per share data) |
| 2021 |
| 2020 | ||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable | | $ | 19,927 | | $ | 13,158 |
Taxes other than income taxes | |
| 17,654 | |
| 18,308 |
Accrued compensation | |
| 14,283 | |
| 7,633 |
Other accrued liabilities | |
| 59,224 | |
| 58,154 |
Short-term borrowings | | | 33,695 | | | 87,194 |
Current portion of finance lease obligations | |
| 2,697 | |
| 2,783 |
Current portion of operating lease obligations | |
| 18,078 | |
| 19,614 |
Current maturities of long-term debt | |
| 11,171 | |
| 10,548 |
Total current liabilities | |
| 176,729 | |
| 217,392 |
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Finance lease obligations | |
| 18,501 | |
| 19,744 |
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Operating lease obligations | |
| 224,071 | |
| 230,550 |
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Long-term debt | |
| 283,893 | |
| 193,036 |
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Deferred income taxes | |
| 21,960 | |
| 33,429 |
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Other long-term obligations | | | 61,371 | | | 61,304 |
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Equity: | |
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Shareholders’ equity attributable to The Marcus Corporation | | | | | | |
Preferred Stock, $1 par; authorized 1,000,000 shares; NaN issued | |
| — | |
| — |
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,342,040 shares at July 1, 2021 and 23,264,259 shares at December 31, 2020 | |
| 24,342 | |
| 23,264 |
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,130,125 shares at July 1, 2021 and 7,925,254 shares at December 31, 2020 | |
| 7,131 | |
| 7,926 |
Capital in excess of par | |
| 140,916 | |
| 153,529 |
Retained earnings | |
| 281,102 | |
| 331,897 |
Accumulated other comprehensive loss | |
| (14,125) | |
| (14,933) |
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| 439,366 | |
| 501,683 |
Less cost of Common Stock in treasury (59,476 shares at July 1, 2021 and 124,758 shares at December 31, 2020) | |
| (1,838) | |
| (2,960) |
Total shareholders’ equity attributable to The Marcus Corporation | |
| 437,528 | |
| 498,723 |
Noncontrolling interest | |
| — | |
| — |
Total equity | |
| 437,528 | |
| 498,723 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,224,053 | | $ | 1,254,178 |
Sheets
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 |
| | | | | | | | | | | | |
| | July 1, 2021 | | June 25, 2020 | ||||||||
(in thousands, except per share data) |
| 13 Weeks |
| 26 Weeks |
| 13 Weeks |
| 26 Weeks | ||||
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Revenues: |
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Theatre admissions | | $ | 24,915 | | $ | 35,600 | | $ | 154 | | $ | 55,549 |
Rooms | |
| 17,332 | |
| 26,376 | |
| 857 | |
| 17,846 |
Theatre concessions | |
| 23,061 | |
| 32,980 | |
| 1,104 | |
| 47,034 |
Food and beverage | |
| 9,591 | |
| 15,503 | |
| 586 | |
| 14,200 |
Other revenues | |
| 14,231 | |
| 26,125 | |
| 3,297 | |
| 22,073 |
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| 89,130 | |
| 136,584 | |
| 5,998 | |
| 156,702 |
Cost reimbursements | |
| 3,417 | |
| 6,750 | |
| 1,935 | |
| 10,691 |
Total revenues | |
| 92,547 | |
| 143,334 | |
| 7,933 | |
| 167,393 |
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Costs and expenses: | |
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Theatre operations | |
| 28,877 | |
| 47,147 | |
| 8,640 | |
| 62,656 |
Rooms | |
| 7,072 | |
| 12,337 | |
| 1,866 | |
| 11,521 |
Theatre concessions | |
| 10,037 | |
| 14,533 | |
| 831 | |
| 23,042 |
Food and beverage | |
| 7,806 | |
| 13,176 | |
| 1,151 | |
| 15,616 |
Advertising and marketing | |
| 3,819 | |
| 6,368 | |
| 1,075 | |
| 6,465 |
Administrative | |
| 15,963 | |
| 29,279 | |
| 11,178 | |
| 28,910 |
Depreciation and amortization | |
| 18,494 | |
| 36,473 | |
| 18,845 | |
| 37,878 |
Rent | |
| 6,344 | |
| 12,685 | |
| 6,328 | |
| 13,282 |
Property taxes | |
| 4,468 | |
| 9,207 | |
| 6,025 | |
| 12,054 |
Other operating expenses | |
| 8,628 | |
| 13,418 | |
| 3,121 | |
| 11,828 |
Impairment charges | | | 3,732 | | | 3,732 | | | — | | | 8,712 |
Reimbursed costs | |
| 3,417 | |
| 6,750 | |
| 1,935 | |
| 10,691 |
Total costs and expenses | |
| 118,657 | |
| 205,105 | |
| 60,995 | | | 242,655 |
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Operating loss | |
| (26,110) | |
| (61,771) | |
| (53,062) | |
| (75,262) |
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Other income (expense): | |
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Investment income | |
| 120 | |
| 160 | |
| 836 | |
| 141 |
Interest expense | |
| (4,907) | |
| (9,750) | |
| (3,529) | |
| (6,045) |
Other expense | |
| (628) | |
| (1,256) | |
| (591) | |
| (1,181) |
Gain (loss) on disposition of property, equipment and other assets | |
| (164) | |
| 2,040 | |
| (36) | |
| (48) |
Equity losses from unconsolidated joint ventures, net | |
| — | |
| — | |
| (428) | |
| (485) |
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| (5,579) | |
| (8,806) | |
| (3,748) | |
| (7,618) |
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Loss before income taxes | |
| (31,689) | |
| (70,577) | |
| (56,810) | |
| (82,880) |
Income tax benefit | |
| (8,323) | |
| (19,081) | |
| (29,906) | |
| (36,476) |
Net loss | |
| (23,366) | |
| (51,496) | |
| (26,904) | |
| (46,404) |
Net earnings (loss) attributable to noncontrolling interests | |
| — | |
| — | |
| 125 | |
| (23) |
Net loss attributable to The Marcus Corporation | | $ | (23,366) | | $ | (51,496) | | $ | (27,029) | | $ | (46,381) |
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Net loss per share - basic: | |
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Common Stock | | $ | (0.76) | | $ | (1.71) | | $ | (0.89) | | $ | (1.53) |
Class B Common Stock | | $ | (0.68) | | $ | (1.44) | | $ | (0.81) | | $ | (1.39) |
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Net loss per share - diluted: | |
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Common Stock | | $ | (0.76) | | $ | (1.71) | | $ | (0.89) | | $ | (1.53) |
Class B Common Stock | | $ | (0.68) | | $ | (1.44) | | $ | (0.81) | | $ | (1.39) |
13 Weeks Ended | |||||||||||||||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Theatre admissions | $ | 38,417 | $ | 10,685 | |||||||||||||||||||
Rooms | 17,430 | 9,044 | |||||||||||||||||||||
Theatre concessions | 35,464 | 9,919 | |||||||||||||||||||||
Food and beverage | 14,511 | 5,912 | |||||||||||||||||||||
Other revenues | 18,807 | 11,894 | |||||||||||||||||||||
124,629 | 47,454 | ||||||||||||||||||||||
Cost reimbursements | 7,613 | 3,333 | |||||||||||||||||||||
Total revenues | 132,242 | 50,787 | |||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Theatre operations | 44,428 | 18,270 | |||||||||||||||||||||
Rooms | 8,203 | 5,265 | |||||||||||||||||||||
Theatre concessions | 15,193 | 4,496 | |||||||||||||||||||||
Food and beverage | 12,140 | 5,370 | |||||||||||||||||||||
Advertising and marketing | 4,481 | 2,549 | |||||||||||||||||||||
Administrative | 19,081 | 13,316 | |||||||||||||||||||||
Depreciation and amortization | 17,231 | 17,979 | |||||||||||||||||||||
Rent | 6,250 | 6,341 | |||||||||||||||||||||
Property taxes | 4,745 | 4,739 | |||||||||||||||||||||
Other operating expenses | 9,674 | 4,790 | |||||||||||||||||||||
Reimbursed costs | 7,613 | 3,333 | |||||||||||||||||||||
Total costs and expenses | 149,039 | 86,448 | |||||||||||||||||||||
Operating loss | (16,797) | (35,661) | |||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Investment income (loss) | (268) | 40 | |||||||||||||||||||||
Interest expense | (4,092) | (4,843) | |||||||||||||||||||||
Other expense | (577) | (628) | |||||||||||||||||||||
Gain on disposition of property, equipment and other assets | 424 | 2,204 | |||||||||||||||||||||
Equity losses from unconsolidated joint ventures | (141) | — | |||||||||||||||||||||
(4,654) | (3,227) | ||||||||||||||||||||||
Loss before income taxes | (21,451) | (38,888) | |||||||||||||||||||||
Income tax benefit | (6,549) | (10,758) | |||||||||||||||||||||
Net loss | (14,902) | (28,130) | |||||||||||||||||||||
Net earnings (loss) attributable to noncontrolling interests | — | — | |||||||||||||||||||||
Net loss attributable to The Marcus Corporation | $ | (14,902) | (28,130) | ||||||||||||||||||||
Net loss per share - basic: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) | |||||||||||||||||||
Net loss per share - diluted: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) |
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| | July 1, 2021 | | June 25, 2020 | ||||||||
(in thousands) |
| 13 Weeks |
| 26 Weeks |
| 13 Weeks |
| 26 Weeks | ||||
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Net loss | | $ | (23,366) | | $ | (51,496) | | $ | (26,904) | | $ | (46,404) |
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Other comprehensive income (loss), net of tax: | |
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Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $86, $172, $65 and $130, respectively | |
| 242 | |
| 484 | |
| 182 | |
| 365 |
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Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $(2), $4, $(60) and $(348), respectively | |
| (7) | |
| 10 | |
| (171) | |
| (985) |
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Reclassification adjustment on interest rate swap included in interest expense, net of tax effect of $43, $111, $65 and $96, respectively | |
| 121 | |
| 314 | |
| 189 | |
| 273 |
| | | | | | | | | | | | |
Other comprehensive income (loss) | |
| 356 | |
| 808 | |
| 200 | |
| (347) |
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Comprehensive loss | |
| (23,010) | |
| (50,688) | |
| (26,704) | |
| (46,751) |
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Comprehensive income (loss) attributable to noncontrolling interests | |
| — | |
| — | |
| 125 | |
| (23) |
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Comprehensive loss attributable to The Marcus Corporation | | $ | (23,010) | | $ | (50,688) | | $ | (26,829) | | $ | (46,728) |
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) |
| | | | | | |
| | 26 Weeks Ended | ||||
(in thousands) | | July 1, 2021 |
| June 25, 2020 | ||
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OPERATING ACTIVITIES: |
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Net loss | | $ | (51,496) | | $ | (46,404) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
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Losses on investments in joint ventures | |
| — | |
| 485 |
(Gain) loss on disposition of property, equipment and other assets | |
| (2,040) | |
| 48 |
Impairment charges | |
| 3,732 | |
| 8,712 |
Depreciation and amortization | |
| 36,473 | |
| 37,878 |
Amortization of debt issuance costs | |
| 1,244 | |
| 156 |
Share-based compensation | | | 4,152 | | | 2,178 |
Deferred income taxes | |
| (19,181) | |
| 9,016 |
Other long-term obligations | |
| 1,180 | |
| 2,327 |
Contribution of the Company’s stock to savings and profit-sharing plan | | | 1,012 | |
| 1,315 |
Changes in operating assets and liabilities: | |
| | | | |
Accounts receivable | |
| (4,944) | | | 22,153 |
Government grant receivable | |
| 4,913 | |
| — |
Other assets | | | (1,712) | |
| 1,964 |
Operating leases | |
| (2,484) | | | 6,886 |
Accounts payable | |
| 6,369 | |
| (35,281) |
Income taxes | |
| 6,003 | |
| (45,664) |
Taxes other than income taxes | |
| (654) | |
| (3,749) |
Accrued compensation | |
| 6,650 | |
| (9,218) |
Other accrued liabilities | | | 1,102 | |
| (7,818) |
Total adjustments | |
| 41,815 | |
| (8,612) |
Net cash used in operating activities | |
| (9,681) | |
| (55,016) |
| |
| | |
| |
INVESTING ACTIVITIES: | |
| | |
| |
Capital expenditures | |
| (6,195) | |
| (15,885) |
Proceeds from disposals of property, equipment and other assets | |
| 4,297 | |
| 1,477 |
Capital contribution in joint venture | | | — | | | (28) |
Proceeds from sale of trading securities | | | — | | | 5,184 |
Purchase of trading securities | | | (1,906) | | | — |
Other investing activities | |
| 59 | |
| 113 |
Net cash used in investing activities | |
| (3,745) | |
| (9,139) |
| |
| | | | |
FINANCING ACTIVITIES: | |
| | | | |
Debt transactions: | | | | | | |
Proceeds from borrowings on revolving credit facility | |
| 66,500 | |
| 188,000 |
Repayment of borrowings on revolving credit facility | | | (46,500) | |
| (138,600) |
Proceeds from short-term borrowings | | | — | | | 90,800 |
Repayments on short-term borrowings | | | (4,150) | | | — |
Principal payments on long-term debt | | | (187) | | | (9,266) |
Proceeds received from PPP loans expected to be repaid | | | — | | | 3,213 |
Debt issuance costs | |
| (4) | |
| (1,604) |
Principal payments on finance lease obligations | |
| (1,329) | |
| (805) |
Equity transactions: | |
| | | | |
Treasury stock transactions, except for stock options | |
| (1,236) | |
| (131) |
Exercise of stock options | |
| 1,374 | |
| 56 |
Dividends paid | |
| — | |
| (5,145) |
Net cash provided by financing activities | | | 14,468 | |
| 126,518 |
| | | | | | |
Net increase in cash, cash equivalents and restricted cash | | | 1,042 | | | 62,363 |
Cash, cash equivalents and restricted cash at beginning of period | |
| 14,088 | |
| 25,618 |
Cash, cash equivalents and restricted cash at end of period | | $ | 15,130 | | $ | 87,981 |
| | | | | | |
Supplemental Information: | | | | | | |
Interest paid, net of amounts capitalized | | $ | 7,719 | | $ | 4,719 |
Income taxes paid (refunded) | | | (5,910) | | | 172 |
Change in accounts payable for additions to property, equipment and other assets | | | 400 | | | (2,764) |
13 Weeks Ended | |||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||
OPERATING ACTIVITIES: | |||||||||||
Net loss | $ | (14,902) | $ | (28,130) | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Losses on investments in joint ventures | 141 | — | |||||||||
Gain on disposition of property, equipment and other assets | (424) | (2,204) | |||||||||
Depreciation and amortization | 17,231 | 17,979 | |||||||||
Amortization of debt issuance costs and discount on convertible notes | 413 | 623 | |||||||||
Share-based compensation | 2,917 | 1,484 | |||||||||
Deferred income taxes | (6,342) | (10,794) | |||||||||
Other long-term obligations | (460) | 1,164 | |||||||||
Contribution of the Company’s stock to savings and profit-sharing plan | 956 | 1,012 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 7,495 | (213) | |||||||||
Government grants receivable | 4,335 | 4,913 | |||||||||
Other assets | (1,841) | 23 | |||||||||
Operating leases | (1,161) | (996) | |||||||||
Accounts payable | (10,956) | (800) | |||||||||
Income taxes | 22,704 | 6,010 | |||||||||
Taxes other than income taxes | (3,908) | (1,543) | |||||||||
Accrued compensation | (6,563) | 283 | |||||||||
Other accrued liabilities | (3,164) | (1,794) | |||||||||
Total adjustments | 21,373 | 15,147 | |||||||||
Net cash provided by (used in) operating activities | 6,471 | (12,983) | |||||||||
INVESTING ACTIVITIES: | |||||||||||
Capital expenditures | (6,562) | (1,525) | |||||||||
Proceeds from disposals of property, equipment and other assets | 3,438 | 4,308 | |||||||||
Other investing activities | 21 | (231) | |||||||||
Net cash provided by (used in) investing activities | (3,103) | 2,552 | |||||||||
FINANCING ACTIVITIES: | |||||||||||
Debt transactions: | |||||||||||
Proceeds from borrowings on revolving credit facility | 22,000 | 36,000 | |||||||||
Repayment of borrowings on revolving credit facility | (22,000) | (22,000) | |||||||||
Repayments on short-term borrowings | (820) | (4,150) | |||||||||
Principal payments on long-term debt | (427) | (93) | |||||||||
Debt issuance costs | — | (4) | |||||||||
Principal payments on finance lease obligations | (584) | (630) | |||||||||
Equity transactions: | |||||||||||
Treasury stock transactions, except for stock options | (1,364) | (1,169) | |||||||||
Exercise of stock options | 26 | 1,292 | |||||||||
Net cash provided by (used in) financing activities | (3,169) | 9,246 | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 199 | (1,185) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 24,054 | 14,088 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 24,253 | $ | 12,903 | |||||||
Supplemental Information: | |||||||||||
Interest paid, net of amounts capitalized | $ | 5,904 | $ | 5,952 | |||||||
Income taxes refunded, including interest earned | 22,911 | 5,974 | |||||||||
Change in accounts payable for additions to property, equipment and other assets | (1,041) | 919 |
30, 2021.
During
profitability.
8
Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the lastfirst day of itsthe 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 its carrying value, the Company performs a quantitative impairment test by comparing the carrying value of the reporting unit to the estimated fair value.fourth quarter. There were no indicators of impairment identified during the 2613 weeks ended JulyMarch 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 fully recoverable. During the 26 weeks ended June 25, 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 discussion). There were no indicators of impairment identified during the 26 weeks ended July 1, 2021.
| | | | | | | | | | | | |
| | 13 Weeks | | 13 Weeks | | 26 Weeks | | 26 Weeks | ||||
| | Ended | | Ended | | Ended | | Ended | ||||
|
| July 1, 2021 |
| June 25, 2020 |
| July 1, 2021 |
| June 25, 2020 | ||||
| | (in thousands, except per share data) | ||||||||||
Numerator: |
| |
|
| |
|
| |
|
| |
|
Net loss attributable to The Marcus Corporation | | $ | (23,366) | | $ | (27,029) | | $ | (51,496) | | $ | (46,381) |
Denominator: | | | | | | | | | | | | |
Denominator for basic EPS | |
| 31,404 | |
| 31,061 | |
| 31,300 | |
| 31,018 |
Effect of dilutive employee stock options | |
| — | |
| — | |
| — | |
| — |
Denominator for diluted EPS | |
| 31,404 | |
| 31,061 | |
| 31,300 | |
| 31,018 |
Net loss per share - basic: | | | | | | | | | | | | |
Common Stock | | $ | (0.76) | | $ | (0.89) | | $ | (1.71) | | $ | (1.53) |
Class B Common Stock | | $ | (0.68) | | $ | (0.81) | | $ | (1.44) | | $ | (1.39) |
Net loss per share - diluted: | |
| | |
| | |
| | |
| |
Common Stock | | $ | (0.76) | | $ | (0.89) | | $ | (1.71) | | $ | (1.53) |
Class B Common Stock | | $ | (0.68) | | $ | (0.81) | | $ | (1.44) | | $ | (1.39) |
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) |
9
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 |
Exercise of stock options | | | — | | | — | | | (40) | | | — | | | — | | | 122 | | | 82 | | | — | | | 82 |
Purchase of treasury stock | | | — | | | — | | | — | | | — | | | — | | | (73) | | | (73) | | | — | | | (73) |
Reissuance of treasury stock | | | — | | | — | | | (1) | | | — | | | — | | | 7 | | | 6 | | | — | | | 6 |
Issuance of non-vested stock | | | 18 | | | — | | | (157) | | | — | | | — | | | 139 | | | — | | | — | | | — |
Shared-based compensation | | | — | | | — | | | 2,668 | | | — | | | — | | | — | | | 2,668 | | | — | | | 2,668 |
Conversions of Class B Common Stock | | | 275 | | | (275) | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Comprehensive income (loss) | | | — | | | — | | | — | | | (23,366) | | | 356 | | | — | | | (23,010) | | | — | | | (23,010) |
BALANCES AT JULY 1, 2021 | | $ | 24,342 | | $ | 7,131 | | $ | 140,916 | | $ | 281,102 | | $ | (14,125) | | $ | (1,838) | | $ | 437,528 | | $ | — | | $ | 437,528 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| 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 income (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 |
Exercise of stock options | | | — | | | — | | | (4) | | | — | | | — | | | 15 | | | 11 | | | — | | | 11 |
Reissuance of treasury stock | | | — | | | — | | | (17) | | | — | | | — | | | 112 | | | 95 | | | — | | | 95 |
Issuance of non-vested stock | | | — | | | — | | | (172) | | | — | | | — | | | 172 | | | — | | | — | | | — |
Shared-based compensation | | | — | | | — | | | 1,190 | | | — | | | — | | | — | | | 1,190 | | | — | | | 1,190 |
Other | | | — | | | — | | | (1) | | | 1 | | | — | | | — | | | — | | | — | | | — |
Comprehensive income (loss) | | | — | | | — | | | — | | | (27,029) | | | 200 | | | — | | | (26,829) | | | 125 | | | (26,704) |
BALANCES AT JUNE 25, 2020 | | $ | 23,264 | | $ | 7,926 | | $ | 147,690 | | $ | 410,359 | | $ | (12,995) | | $ | (3,264) | | $ | 572,980 | | $ | — | | $ | 572,980 |
Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:
| | | | | | |
|
| July 1, |
| December 31, | ||
| | 2021 | | 2020 | ||
| | (in thousands) | ||||
Unrecognized loss on interest rate swap agreements | | $ | (762) | | $ | (1,086) |
Net unrecognized actuarial loss for pension obligation | |
| (13,363) | |
| (13,847) |
| | $ | (14,125) | | $ | (14,933) |
10
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) |
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
| | | | | | | | | | | | |
| | 13 Weeks | | 13 Weeks | | 26 Weeks | | 26 Weeks | ||||
| | Ended | | Ended | | Ended | | Ended | ||||
|
| July 1, 2021 |
| June 25, 2020 |
| July 1, 2021 |
| June 25, 2020 | ||||
| | (in thousands) | ||||||||||
Service cost | | $ | 280 | | $ | 273 | | $ | 561 | | $ | 547 |
Interest cost | |
| 301 | |
| 344 | |
| 601 | |
| 686 |
Net amortization of prior service cost and actuarial loss | |
| 327 | |
| 247 | |
| 655 | |
| 495 |
Net periodic pension cost | | $ | 908 | | $ | 864 | | $ | 1,817 | | $ | 1,728 |
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 |
11
Revenue Recognition – The disaggregation of revenues by business segment for the 13 and 26 weeks ended July 1, 2021March 31, 2022 is as follows (in thousands):
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 | |||||||||||||||
| | | | | | | | | | | | |
| | 13 Weeks Ended July 1, 2021 | ||||||||||
|
| Reportable Segment | | | | |||||||
| | Theatres |
| Hotels/Resorts |
| Corporate |
| Total | ||||
Theatre admissions | | $ | 24,915 | | $ | — | | $ | — | | $ | 24,915 |
Rooms | |
| — | |
| 17,332 | |
| — | |
| 17,332 |
Theatre concessions | |
| 23,061 | |
| — | |
| — | |
| 23,061 |
Food and beverage | |
| — | |
| 9,591 | |
| — | |
| 9,591 |
Other revenues(1) | |
| 4,281 | |
| 9,855 | |
| 95 | |
| 14,231 |
Cost reimbursements | |
| 44 | |
| 3,373 | |
| — | |
| 3,417 |
Total revenues | | $ | 52,301 | | $ | 40,151 | | $ | 95 | | $ | 92,547 |
| | | | | | | | | | | | |
| | 26 Weeks Ended July 1, 2021 | ||||||||||
| | Reportable Segment | | | | |||||||
|
| Theatres |
| Hotels/Resorts |
| Corporate |
| Total | ||||
Theatre admissions | | $ | 35,600 | | $ | — | | $ | — | | $ | 35,600 |
Rooms | |
| — | |
| 26,376 | |
| — | |
| 26,376 |
Theatre concessions | |
| 32,980 | |
| — | |
| — | |
| 32,980 |
Food and beverage | |
| — | |
| 15,503 | |
| — | |
| 15,503 |
Other revenues(1) | |
| 6,196 | |
| 19,734 | |
| 195 | |
| 26,125 |
Cost reimbursements | |
| 87 | |
| 6,663 | |
| — | |
| 6,750 |
Total revenues | | $ | 74,863 | | $ | 68,276 | | $ | 195 | | $ | 143,334 |
The disaggregation of revenues by business segment for the 13 and 26 weeks ended June 25, 2020April 1, 2021 is as follows (in thousands):
| | | | | | | | | | | | |
| | 13 Weeks Ended June 25, 2020 | ||||||||||
|
| Reportable Segment | | | | |||||||
| | Theatres |
| Hotels/Resorts |
| Corporate |
| Total | ||||
Theatre admissions | | $ | 154 | | $ | — | | $ | — | | $ | 154 |
Rooms | |
| — | |
| 857 | |
| — | |
| 857 |
Theatre concessions | |
| 1,104 | |
| — | |
| — | |
| 1,104 |
Food and beverage | |
| — | |
| 586 | |
| — | |
| 586 |
Other revenues(1) | |
| 557 | |
| 2,571 | |
| 169 | |
| 3,297 |
Cost reimbursements | |
| 34 | |
| 1,901 | |
| — | |
| 1,935 |
Total revenues | | $ | 1,849 | | $ | 5,915 | | $ | 169 | | $ | 7,933 |
| | | | | | | | | | | | |
| | 26 Weeks Ended June 25, 2020 | ||||||||||
|
| Reportable Segment | | | | |||||||
| | Theatres |
| Hotels/Resorts |
| Corporate |
| Total | ||||
Theatre admissions |
| $ | 55,549 |
| $ | — |
| $ | — |
| $ | 55,549 |
Rooms | |
| — | |
| 17,846 | |
| — | |
| 17,846 |
Theatre concessions | |
| 47,034 | |
| — | |
| — | |
| 47,034 |
Food and beverage | |
| — | |
| 14,200 | |
| — | |
| 14,200 |
Other revenues(1) | |
| 8,260 | |
| 13,555 | |
| 258 | |
| 22,073 |
Cost reimbursements | |
| 217 | |
| 10,474 | |
| — | |
| 10,691 |
Total revenues |
| $ | 111,060 |
| $ | 56,075 |
| $ | 258 |
| $ | 167,393 |
12
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 | |||||||||||||||
The Company had deferred revenue from contracts with customers of $40,412,000$38,310 and $37,307,000$39,144 as of July 1, 2021March 31, 2022 and December 31, 2020,30, 2021, respectively. The Company had 0no contract assets as of July 1, 2021March 31, 2022 and December 31, 2020.30, 2021. During the 2613 weeks ended JulyMarch 31, 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 $4,115,000$2,240 that was included in deferred revenues as of December 31, 2020. During the 26 weeks ended June 25, 2020, the Company recognized revenue of $11,482,000 that was included in deferred revenues as of December 26, 2019. 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. Subtopic 470-20 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Refer to Note 4 for further discussion.
13
The Company began fiscal 20212022 with approximately 52%all of its theatres open. As state and local restrictions were eased in several of its markets and several new films were released by movie studios, the Company gradually reopened theatres during the 26 weeks ended July 1, 2021 and ended the fiscal 2021 second quarteropen with approximately 95% of its theatres open. The majority of the Company’s reopened theatres operated with reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) and reduced operating hours during the fiscal 2021 first quarter. By the end of the second quarter, the vast majority of the theatres had returned to normal operating days (seven days per week) and operating hours. All of the reopened theatres operated at significantly reducedWhile still below pre-COVID-19 levels, attendance levels comparedhas continued to prior pre-COVID-19 pandemic years due to customer concerns related to the COVID-19 pandemic and a reduction ingradually improve as the number of newvaccinated individuals increased, more films are released, during the first half of fiscal 2021.
and customers indicate increasing willingness to return to movie theatres.
pre-COVID-19 pandemic years, although hotel occupancy continues to improve as the travel activity increases.
periods.
The COVID-19 pandemic and the resulting impact on the Company’s operating performance has affected, and may continue to affect, the estimates and assumptions made by management. Such estimates and assumptions include, among other things, the Company’s goodwill and long-lived asset valuations and the measurement of compensation costs for annual and long-term incentive plans. Events and changes in circumstances arising after July 1, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.
14
3. Impairment Charges
During theTHE MARCUS CORPORATION
During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were evident at all asset groups. For certain theatre asset groups, the sum of the estimated undiscounted future cash flows attributable to these assets was less than their carrying amount. The Company evaluated the fair value of these assets, consisting primarily of leasehold improvements, furniture, fixtures and equipment, and operating lease right-of-use assets less lease obligations, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary asset, including estimated sale proceeds) was less than their carrying values and recorded a $6,512,000 impairment loss, reducing certain property and equipment and certain operating lease right-of-use assets. The fair value of the impaired assets was $13,686,000 as of March 26, 2020, excluding any applicable remaining lease obligations. There were no indicators of impairment identified during the 13 weeks ended June 25, 2020.
During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were evident related to its trade name intangible asset. The Company estimated the fair value of its trade name intangible asset as of March 26, 2020 using an income approach, specifically the relief from royalty method, which uses certain assumptions that are Level 3 pricing inputs, including future revenues attributable to the trade name, a royalty rate (1.0% as of March 26, 2020) and a discount rate (17.0% as of March 26, 2020). The Company determined that the fair value of the asset was less than the carrying value and recorded a $2,200,000 impairment loss. There were no indicators of impairment identified during the 13 weeks ended June 25, 2020. The fair value of the trade name intangible asset was $7,300,000 as of June 25, 2020.
per share data)
| | | | | | |
|
| July 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% | |
| 1,548 | |
| 1,735 |
Convertible senior notes | | | 100,050 | | | 100,050 |
Payroll Protection Program loans | | | 3,424 | | | 3,424 |
Revolving credit agreement | |
| 20,000 | |
| — |
Term loan facility | | | 50,000 | | | — |
Debt issuance costs | |
| (4,440) | |
| (3,684) |
| |
| 295,064 | |
| 226,007 |
Less current maturities, net of issuance costs | |
| 11,171 | |
| 10,548 |
Less debt discount | | | — | | | 22,423 |
| | $ | 283,893 | | $ | 193,036 |
15
March 31, 2022 | December 30, 2021 | ||||||||||
Mortgage notes | $ | 24,294 | $ | 24,388 | |||||||
Senior notes | 90,000 | 90,000 | |||||||||
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75% | 1,257 | 1,356 | |||||||||
Convertible senior notes | 100,050 | 100,050 | |||||||||
Payroll Protection Program loans | 2,946 | 3,181 | |||||||||
Revolving credit agreement | — | — | |||||||||
Debt issuance costs | (3,578) | (3,831) | |||||||||
Total debt, net of debt issuance costs | 214,969 | 215,144 | |||||||||
Less current maturities, net of issuance costs | 11,064 | 10,967 | |||||||||
Long-term debt | $ | 203,905 | 204,177 | ||||||||
Short-term borrowings | 46,577 | 47,346 | |||||||||
Total debt and short-term borrowings, net of issuance costs | $ | 261,546 | $ | 262,490 |
Credit Agreement and Short-Term Borrowings
16
In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the Credit Agreement).
Amendments to
The
On July
per share data)
During fiscal
Prior to fiscal 2021, the Company separated the Convertible Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Convertible Notes. The difference between the principal amount of the Convertible Notes and the liability component represented the debt discount, which was recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheet.
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 |
17
Additionally, upon adoption of ASU No. 2020-06, the Company will use 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$1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
As of April 2, 2021, the first day of
18
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 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 July 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 agreement is considered effective and qualifies as a cash flow hedge. The Company assesses, both at the inception of each hedge and on an on-going basis, whether the derivatives that are used in its hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. As of July 1, 2021,March 31, 2022, the remaining interest rate swap was considered highly effective. The fair value of the interest rate swap on July 1, 2021March 31, 2022 was a liability of $1,031,000,$228, which is included in other long-term obligationsaccrued liabilities in the consolidated balance sheet. The fair value of the interest rate swapsswap 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.
5. Leases
The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASU No. 2016-02, Leases (Topic 842). The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease.
| | | | | | | | | | | | | | | |
| | | | 13 Weeks | | 13 Weeks | | 26 Weeks | | 26 Weeks | | ||||
| | | | Ended | | Ended | | Ended | | Ended | | ||||
Lease Cost |
| Classification |
| July 1, 2021 |
| June 25, 2020 |
| July 1, 2021 |
| June 25, 2020 | | ||||
| | | | (in thousands) | | ||||||||||
Finance lease costs: |
|
|
| | |
| |
| | | |
| |
| |
Amortization of finance lease assets |
| Depreciation and amortization | | $ | 668 | | $ | 719 | | $ | 1,380 | | $ | 1,430 | |
Interest on lease liabilities |
| Interest expense | |
| 240 | |
| 262 | |
| 490 | |
| 531 | |
| | | | $ | 908 | | $ | 981 | | $ | 1,870 | | $ | 1,961 | |
Operating lease costs: | |
| | | | | | | | | | | | |
|
Operating lease costs | | Rent expense | | | 6,465 | | $ | 6,212 | | $ | 12,786 | | $ | 12,879 |
|
Variable lease cost | | Rent expense | | | (158) | |
| 20 | | | (173) | |
| 247 |
|
Short-term lease cost | | Rent expense | | | 37 | |
| 96 | | | 72 | |
| 156 | |
| | | | $ | 6,344 | | $ | 6,328 | | $ | 12,685 | | $ | 13,282 |
|
19
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 |
| | | | | | | | | | | | |
|
| 13 Weeks | | 13 Weeks |
| 26 Weeks | | 26 Weeks | ||||
| | Ended | | Ended | | Ended | | Ended | ||||
Other Information |
| July 1, 2021 |
| June 25, 2020 |
| July 1, 2021 |
| June 25, 2020 | ||||
| | (in thousands) | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: |
| |
| | | |
| |
| | | |
Financing cash flows from finance leases | | $ | 699 | | $ | 170 | | $ | 1,329 | | $ | 805 |
Operating cash flows from finance leases | |
| 240 | | | 262 | |
| 490 | | | 531 |
Operating cash flows from operating leases | |
| 7,899 | | | 1,769 | |
| 15,292 | | $ | 6,413 |
| |
| | | | | |
| | | | |
Right of use assets obtained in exchange for new lease obligations: | |
| | | | | |
| | | | |
Finance lease liabilities | |
| — | | | 139 | |
| — | | | 164 |
Operating lease liabilities | |
| 0 | | | 0 | |
| 1,575 | | | 9,630 |
| | | | | | |
|
| July 1, 2021 | | December 31, 2020 | ||
|
| (in thousands) | ||||
Finance leases: | | | | | | |
Property and equipment – gross | | $ | 74,912 | | $ | 75,322 |
Accumulated depreciation and amortization | | | (56,573) | | | (55,547) |
Property and equipment - net | | $ | 18,339 | | $ | 19,775 |
13 Weeks Ended | ||||||||||||||||||||||||||
Other Information | March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||||||||
Financing cash flows from finance leases | $ | 584 | $ | 630 | ||||||||||||||||||||||
Operating cash flows from finance leases | 221 | 250 | ||||||||||||||||||||||||
Operating cash flows from operating leases | 7,124 | 7,393 | ||||||||||||||||||||||||
Right of use assets obtained in exchange for new lease obligations: | ||||||||||||||||||||||||||
Finance lease liabilities | 72 | — | ||||||||||||||||||||||||
Operating lease liabilities | 183 | 1,575 |
March 31, 2022 | December 30, 2021 | ||||||||||
Finance leases: | |||||||||||
Property and equipment – gross | $ | 75,195 | $ | 75,124 | |||||||
Accumulated depreciation and amortization | (58,901) | (58,197) | |||||||||
Property and equipment - net | $ | 16,294 | $ | 16,927 |
| | | | |
Lease Term and Discount Rate |
| July 1, 2021 | | December 31, 2020 |
Weighted-average remaining lease terms: |
|
| | |
Finance leases |
| 8 years | | 9 years |
Operating leases |
| 14 years | | 15 years |
| | | | |
Weighted-average discount rates: |
| | | |
Finance leases |
| 4.57% | | 4.62% |
Operating leases |
| 4.53% | | 4.53% |
Due to the COVID-19 pandemic, the Company temporarily closed all of its theatres on March 17, 2020 and had temporarily closed all of its company-owned hotels by April 8, 2020. At that time, the Company began actively working with landlords to discuss changes to the timing of lease payments and contract terms of leases due to the pandemic. The lease terms were negotiated on a lease-by-lease basis with individual landlords. In conjunction with these lease discussions, the Company obtained lease concessions for the majority of its leases. Substantially all of the lease concessions were for the deferral of lease payments into future periods. This resulted in the total payments required by the modified contract being substantially the same as or less than the total payments required by the original contract. The Company has made the policy election to account for these lease concessions as if they were made under the enforceable rights included in the original agreement and are thus outside of the modification framework. The Company has elected to account for these concessions as if no changes to the lease contract were made and has continued to recognize rent expense during the deferral period.
Lease Term and Discount Rate | March 31, 2022 | December 30, 2021 | ||||||||||||
Weighted-average remaining lease terms: | ||||||||||||||
Finance leases | 8 years | 8 years | ||||||||||||
Operating leases | 13 years | 13 years | ||||||||||||
Weighted-average discount rates: | ||||||||||||||
Finance leases | 4.57 | % | 4.58 | % | ||||||||||
Operating leases | 4.51 | % | 4.48 | % |
6.
20
During the 2613 weeks ended JulyApril 1, 2021, the Company received the remaining $5,900,000$5,900 of requested tax refunds from its fiscal 2019 tax return. Also during
7. Joint Venture Transactions
During the 26 weeks ended July 1, 2021, pursuant to a recapitalization of a joint venture whose investment value was $0 as of December 31, 2020, the Company surrendered its ownership interest in this equity method investment. Also during the 26 weeks ended JulyApril 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).
8.
| | | | | | | | | | | | |
13 Weeks Ended |
| | |
| Hotels/ |
| Corporate |
| | | ||
July 1, 2021 | | Theatres | | Resorts | | Items | | Total | ||||
Revenues | | $ | 52,301 | | $ | 40,151 | | $ | 95 | | $ | 92,547 |
Operating loss | |
| (18,215) | |
| (2,239) | |
| (5,656) | |
| (26,110) |
Depreciation and amortization | |
| 13,385 | |
| 5,047 | |
| 62 | |
| 18,494 |
| | | | | | | | | | | | |
13 Weeks Ended |
| | |
| Hotels/ |
| Corporate |
| | | ||
June 25, 2020 | | Theatres | | Resorts | | Items | | Total | ||||
Revenues | | $ | 1,849 | | $ | 5,915 | | $ | 169 | | $ | 7,933 |
Operating loss | |
| (34,531) | |
| (14,681) | |
| (3,850) | |
| (53,062) |
Depreciation and amortization | |
| 13,382 | |
| 5,333 | |
| 130 | |
| 18,845 |
| | | | | | | | | | | | |
26 Weeks Ended |
| | |
| Hotels/ |
| Corporate |
| | | ||
July 1, 2021 | | Theatres | | Resorts | | Items | | Total | ||||
Revenues | | $ | 74,863 | | $ | 68,276 | | $ | 195 | | $ | 143,334 |
Operating loss | |
| (43,854) | |
| (7,947) | |
| (9,970) | |
| (61,771) |
Depreciation and amortization | |
| 26,171 | |
| 10,174 | |
| 128 | |
| 36,473 |
| | | | | | | | | | | | |
26 Weeks Ended |
| | |
| Hotels/ |
| Corporate |
| | | ||
June 25, 2020 | | Theatres | | Resorts | | Items | | Total | ||||
Revenues | | $ | 111,060 | | $ | 56,075 | | $ | 258 | | $ | 167,393 |
Operating loss | |
| (41,614) | |
| (25,534) | |
| (8,114) | |
| (75,262) |
Depreciation and amortization | |
| 26,892 | |
| 10,745 | |
| 241 | |
| 37,878 |
21
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 | ||||||||||||||||||
22
We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The secondfirst 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 April 2, 2021 and ended on July 1, 2021. The second quarter of fiscal 2020 consisted of the 13-week period beginning March 27, 2020 and ended on June 25, 2020. The first half of fiscal 2021 consisted of the 26-week period beginning on January 1, 2021 and ended on JulyApril 1, 2021. The first halfOur primary
Within this MD&A amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.
fiscal 2022.
We began fiscal 2021 with all eight of our company-owned hotels and all but one of our managed hotels open. The majority of our restaurants and bars in our hotels and resorts were open during the first half of fiscal 2021, operating under applicable state and local restrictions and guidelines, and in some cases, reduced operating hours. The majority of our hotels and restaurants are generating significantly reduced revenues as compared to prior pre-COVID pandemic years. We reopened one of our two SafeHouse® restaurants and bars in June 2021, with plans to reopen the Chicago location during our fiscal 2021 third quarter.
Maintaining and protecting a strong balance sheet has always been a core philosophy of The Marcus Corporation during our 85-year history, and, despite the COVID-19 pandemic, our financial position remains strong. As of July 1, 2021, we had a cash balance of approximately $9 million, $201 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio (including short-term borrowings) was 0.43. With our strong liquidity position, combined with the expected receipt of income tax refunds 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 and fiscal 2022, even if our properties continue to generate significantly reduced revenues throughout the remainder of fiscal 2021. We will continue to work to preserve cash and maintain strong liquidity to endure the impacts of the global pandemic, even if it continues for a prolonged period of time.
Early in the third quarter of fiscal 2021, in conjunction with an amendment to our revolving credit agreement (described in detail in the Liquidity section below), we paid down a portion of our term loan facility using borrowings from our revolving credit facility, reducing the balance of our short-term borrowings from approximately $83.5 million to approximately $50.0 million. In conjunction with the amendment, we extended the maturity date of the term loan facility to September 22, 2022.
23
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 the first quarter of fiscal 2021, we filed income tax refund claims of $24.2 million related to our fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. We received approximately $1.8 million of this refund in July 2021. Significant delays in processing refunds by the Internal Revenue Service may delay receipt of our remaining expected income tax refund until later in the third or fourth quarter of fiscal 2021. We expect to generate additional income tax loss carryforwards during fiscal 2021 that will benefit future years.
During the fourth quarter of fiscal 2020, a number of states elected to provide grants to certain businesses most impacted by the COVID-19 pandemic, utilizing funds received by the applicable state under provisions of the Coronavirus Aid, Relief, 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 contributing to our strong liquidity position as of July 1, 2021. Additional state grants for theatres and hotels have recently been approved or are being discussed by state legislatures that we expect to benefit future periods.
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, we sold an equity interest in a joint venture, generating total proceeds of approximately $4.2 million. As of July 1, 2021, we had letters of intent or contracts to sell several pieces of real estate with a total carrying value of $10.4 million, a portion of which we expect to close during the fiscal 2021 third quarter. We believe we may receive total sales proceeds from real estate sales during the next 12-18 months totaling approximately $20-$40 million, depending upon demand for the real estate in question.
theatres. We remain optimistic that the theatre industry is in the process of rebounding and will continue to benefit from pent-up social demand now that a greater percentage of the population is vaccinated, the majority of state and local restrictions have been lifted, and people seek togetherness with a return to normalcy.
As we expected,pre-COVID-19 pandemic years, although hotel occupancy continues to improve as the travel activity increases. The primary customer for hotels during the first halfquarter of fiscal 20212022 continued to come from the “drive-to leisure”leisure travel market. DemandWhile business travel remained limited during the first quarter of fiscal 2022, we continued to see an increase in travel from this customer segment, exceeded our expectations during the first half of fiscal 2021. Most organizations implemented travel bans at the onsetparticularly from small and mid-size group activity. As of the pandemic, only allowing essential travel. It 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 likelyrunning behind where we would typically be at this same time in prior years (pre-pandemic), but group pace has improved from earlier in the fiscal year and we have experienced increased booking activity in recent months for fiscal 2022 and beyond. With companies beginning to implement return to office plans, we remain optimistic that business travel will continue to be limited in the near term, although we are beginning to experience some increases in travel from this customer segment.increase during fiscal 2022. Total hotel division revenues, expressed as a percentage of fiscal 2019 revenues, have also increased each month inthroughout fiscal 2021 to date,and into fiscal 2022, including an increase from 49% in January 2021 to 71% in June 2021. As of the date of this report, our group room revenue bookings forduring fiscal 2021 - commonly referred tofrom 51% in the hotelsfirst quarter
Both
question.
24
Overall Results
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | | Variance | | | | | | | | | Variance |
| ||||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| ||||||
Revenues | | $ | 92.5 | | $ | 7.9 | | $ | 84.6 |
| 1,066.6 | % | $ | 143.3 | | $ | 167.4 | | $ | (24.1) | | (14.4) | % |
Operating loss | |
| (26.1) | |
| (53.1) | |
| 27.0 |
| 50.8 | % |
| (61.8) | |
| (75.3) | |
| 13.5 | | 17.9 | % |
Other income (expense) | |
| (5.6) | |
| (3.7) | |
| (1.9) |
| (48.9) | % |
| (8.8) | |
| (7.6) | |
| (1.2) | | (15.6) | % |
Net earnings attributable to noncontrolling interests | |
| — | |
| 0.1 | |
| (0.1) |
| (100.0) | % |
| — | |
| — | |
| — | | — | % |
Net loss attributable to The Marcus Corp. | | $ | (23.4) | | $ | (27.0) | | $ | 3.6 |
| 13.6 | % | $ | (51.5) | | $ | (46.4) | | $ | (5.1) | | (11.0) | % |
Net loss per common share - diluted: | | $ | (0.76) | | $ | (0.89) | | $ | 0.13 |
| 14.6 | % | $ | (1.71) | | $ | (1.53) | | $ | (0.18) | | (11.8) | % |
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 | % |
Our operating loss during the second quarter and first half of fiscal 2021 was negatively impacted by impairment charges of approximately $3.7 million, or approximately $0.09 per diluted common share, primarily related to surplus real estate that we intend to sell. Our operating loss during the first half of fiscal 2021 was favorably impacted by a state government grant of approximately $1.3 million, or approximately $0.03 per diluted common share. Our operating performance during the second quarter of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $3.0 million, or approximately $0.07 per diluted common share, including payments to and on behalf of laid off employees and allowances for bad debts (including the write-off of deferred expenses for a hotel tenant who vacated space because of the pandemic). Nonrecurring expenses during the fiscal 2020 second quarter also included extensive cleaning costs, supply purchases and employee training, among other items, related to the reopening of selected theatre and hotel properties and implementing new operating protocols. Our operating performance during the first half of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $8.5 million, or approximately $0.19 per diluted common share, related to the expenses in the second quarter described above and 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 the first quarter. In addition, impairment charges related to intangible assets and several theatre locations negatively impacted our fiscal 2020 first half operating loss by approximately $8.7 million, or approximately $0.20 per diluted common share.
We recognized investment income of $120,000 and $160,000, respectively, during the second quarter and first half of fiscal 2021 compared to investment income of $836,000 and $141,000, respectively, during the second quarter and first half of fiscal 2020. Variations in investment income during both the fiscal 2021 and fiscal 2020 periods were due to changes in the value of marketable securities. A significant market decline arising from the COVID-19 pandemicOur operating loss during the first quarter of fiscal 20202021 was offsetfavorably impacted by a market recovery during the second quarterstate government grants of fiscal 2020.
25
Our interest expense totaled $4.9$4.1 million for the secondfirst quarter of fiscal 2022 compared to $4.8 million for the first quarter of fiscal 2021, compared to $3.5 million for the second quarter of fiscal 2020, an increasea decrease of approximately $1.4$0.8 million, or 39.0%. Our interest expense totaled approximately $9.8 million for the first half of fiscal 2021 compared to approximately $6.1 million for the first half of fiscal 2020, an increase of approximately $3.7 million, or 61.3%15.5%. The increasedecrease in interest expense during the fiscal 2021 periods was due in part to increased borrowings and an increase in our average interest rate. In addition, interest expense increased during the second quarter and first half of fiscal 2021 due to the fact that we incurred approximately $600,000 and $1.2 million, respectively, in noncash amortization of debt issuance costs, compared to approximately $100,000 and $150,000 of such costs during the second quarter and first half 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), which resulted in the elimination of noncash discount on convertible notes beginning with the first quarter of fiscal 2021.2022 was primarily due to decreased borrowings and a decrease in non-cash amortization of deferred financing costs. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.
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 fiscal 2021 and fiscal 2020 periods, 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 $23,000 during the first half 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.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | | Variance | | | | | | | | | Variance |
| ||||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| ||||||
Revenues | | $ | 52.3 | | $ | 1.9 | | $ | 50.4 |
| 2,728.6 | % | $ | 74.9 | | $ | 111.1 | | $ | (36.2) |
| (32.6) | % |
Operating loss | |
| (18.2) | |
| (34.5) | |
| 16.3 |
| 47.3 | % |
| (43.9) | |
| (41.6) | |
| (2.3) |
| (5.4) | % |
Operating margin (% of revenues) | |
| (34.8) | % |
| N/A | % |
| |
| | |
| (58.6) | % |
| (37.5) | % |
| |
| | |
26
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 increased and operating loss decreased significantly during the secondfirst quarter of fiscal 2022 with all of our theatres open and new films released by movie studios, compared to the first quarter of fiscal 2021 compared to the second quarter of fiscal 2020 due primarily to the fact that the vast majorityin which a significant number of our theatres were temporarily closed during the fiscal 2020 second quarter. Our theatre division revenues decreased and operating loss increased during the first half of fiscal 2021 comparedin response to the first half of fiscal 2020 due primarily to the fact that our theatresCOVID-19 pandemic and new film releases were operating fairly normally during the first two and one-half months of fiscal 2020 until the onset of the pandemic in mid-March.limited. We began the first quarter of fiscal 2021 with approximately 52% of our theatres open. As state and local restrictions were eased in several of our markets and several new films were released by movie studios, we gradually reopened theatres, ending the fiscal 2021 first quarter with approximately 74% of our theatres open and ending the fiscal 2021 second quarter with approximately 95% of our theatres open. The majority of our reopened theatres operated with reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) and reduced operating hours during the fiscal 2021 first quarter. By the end of May 2021, we had returned the vast majorityOur theatres were open with normal operating days and hours at all of our theatres to normal operating days (seven days per week) and operating hours.
during the first quarter of fiscal 2022. Our fiscal 2021 first quarter operating loss during the second quarter and first half of fiscal 2021 was negatively impacted by impairment charges of approximately $3.7 million primarily related to surplus real estate that we intend to sell. Awould 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 halfloss.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | | Variance | | | | | | | | | Variance |
| ||||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| ||||||
Admission revenues | | $ | 24.9 | | $ | 0.2 | | $ | 24.7 |
| 16,078.6 | % | $ | 35.6 | | $ | 55.6 |
| $ | (20.0) |
| (35.9) | % |
Concession revenues | |
| 23.1 | |
| 1.1 | |
| 22.0 |
| 1,988.9 | % |
| 33.0 | |
| 47.0 |
| | (14.0) |
| (29.9) | % |
Other revenues | |
| 4.3 | |
| 0.6 | |
| 3.7 |
| 668.6 | % |
| 6.2 | |
| 8.3 |
| | (2.1) |
| (25.0) | % |
| |
| 52.3 | |
| 1.9 | |
| 50.4 |
| 2,779.2 | % |
| 74.8 | |
| 110.9 |
| | (36.1) |
| (32.5) | % |
Cost reimbursements | |
| — | |
| — | |
| — |
| — | % |
| 0.1 | |
| 0.2 |
| | (0.1) |
| (59.9) | % |
Total revenues | | $ | 52.3 | | $ | 1.9 | | $ | 50.4 |
| 2,728.6 | % | $ | 74.9 | | $ | 111.1 |
| $ | (36.2) |
| (32.6) | % |
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 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | | Variance | | | | | | | | | Variance |
| ||||
|
| F2021 |
| F2019 |
| Amt. |
| Pct. |
| F2021 |
| F2019 |
| Amt. |
| Pct. |
| ||||||
Admission revenues | | $ | 24.9 | | $ | 83.1 | | $ | (58.2) |
| (70.0) | % | $ | 35.6 | | $ | 142.0 |
| $ | (106.4) |
| (74.9) | % |
Concession revenues | |
| 23.1 | |
| 67.9 | |
| (44.8) |
| (66.0) | % |
| 33.0 | |
| 115.1 |
| | (82.1) |
| (71.3) | % |
Other revenues | |
| 4.3 | |
| 11.2 | |
| (6.9) |
| (61.7) | % |
| 6.2 | |
| 19.8 |
| | (13.6) |
| (68.6) | % |
| |
| 52.3 | |
| 162.2 | |
| (109.9) |
| (67.8) | % |
| 74.8 | |
| 276.9 |
| | (202.1) |
| (73.0) | % |
Cost reimbursements | |
| — | |
| 0.2 | |
| (0.2) |
| (81.4) | % |
| 0.1 | |
| 0.4 |
| | (0.3) |
| (79.7) | % |
Total revenues | | $ | 52.3 | | $ | 162.4 | | $ | (110.1) |
| (67.8) | % | $ | 74.9 | | $ | 277.3 |
| $ | (202.4) |
| (73.0) | % |
27
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) | % |
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 second2022 first quarter, and first half results, U.S. box office receipts decreased 73.9%44.1% during our fiscal 2021 second2022 first quarter and 80.0% during our fiscal 2021 first half compared to the same periodscomparable weeks in fiscal 2019, indicating that our decrease in admission revenues during the second quarter of fiscal 2021 of 70.0% outperformed the industry by 3.9 percentage points. Ourpro forma decrease in admission revenues during the first halfquarter of fiscal 20212022 of 74.9%39.4% outperformed the industry by 5.14.7 percentage points. Based upon this metric, we believe we have beenwere once again one of the top performing theatre circuits during the first quarter of fiscal 20212022 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 secondfirst quarter and first half of fiscal 20212022 represented approximately 3.4% and 3.7%, respectively, of the total admission revenues in the U.S. during the periodsperiod (commonly referred to as market share in our industry). This represents a notable increase over our reported market share of approximately 3.2%3.1% during the comparable fiscal 2019 periods,period, prior to the pandemic. Closed theatres in other markets in the U.S. contributed to our outperformance, particularly during the first quarter of fiscal 2021. 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.
As customers have continued to become more comfortable with traditional movie attendance and as an increasing number of new films have been released, the impact of this program lessened significantly during the first quarter of fiscal 2022.
fiscal 2019.
year.
28
Our average concession revenues per person increased by 17.2%5.7% during the first halfquarter of fiscal 20212022 compared to the first half of fiscal 2020 (comparisons to the second quarter of fiscal 2020 are not applicable because2021 and increased by 36.1% compared to the majority of our theatres were closed during the secondfirst quarter of fiscal 2020). As2019. In addition, as customers have returned to “normal” activities such as going to the movie theatre, they have demonstrated a propensity to spend at a higher rate than before the pandemic closures. In addition,We also believe a portion of the increase in our average concession revenues per person during the first halfquarter of fiscal 20212022 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 alsoA 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 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.
New films scheduled to be released during the remainder of the fiscal 2021 include Free Guy2022 second quarter that have potential to perform very well including
strong.
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.29
Hotels and Resorts
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | Variance | | | | | | | | Variance |
| ||||||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| ||||||
Revenues | | $ | 40.2 | | $ | 5.9 | | $ | 34.3 |
| 578.8 | % | $ | 68.3 | | $ | 56.1 | | $ | 12.2 |
| 21.8 | % |
Operating loss | |
| (2.2) | |
| (14.7) | |
| 12.5 |
| 84.7 | % |
| (7.9) | |
| (25.5) | |
| 17.6 |
| 68.9 | % |
Operating margin (% of revenues) | |
| (5.6) | % |
| (248.2) | % |
| |
| | |
| (11.6) | % |
| (45.5) | % |
| |
| | |
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) | % |
2022.
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 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | Variance | | | | | | | | Variance |
| ||||||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| ||||||
Room revenues | | $ | 17.3 | | $ | 0.8 | | $ | 16.5 |
| 1,922.4 | % | $ | 26.4 | | $ | 17.8 | | $ | 8.6 |
| 47.8 | % |
Food/beverage revenues | |
| 9.6 | |
| 0.6 | |
| 9.0 |
| 1,536.7 | % |
| 15.5 | |
| 14.2 | |
| 1.3 |
| 9.2 | % |
Other revenues | |
| 9.9 | |
| 2.6 | |
| 7.3 |
| 283.3 | % |
| 19.7 | |
| 13.6 | |
| 6.1 |
| 45.6 | % |
| |
| 36.8 | |
| 4.0 | |
| 32.8 |
| 816.2 | % |
| 61.6 | |
| 45.6 | |
| 16.0 |
| 35.1 | % |
Cost reimbursements | |
| 3.4 | |
| 1.9 | |
| 1.5 |
| 77.4 | % |
| 6.7 | |
| 10.5 | |
| (3.8) |
| (36.4) | % |
Total revenues | | $ | 40.2 | | $ | 5.9 | | $ | 34.3 |
| 578.8 | % | $ | 68.3 | | $ | 56.1 | | $ | 12.2 |
| 21.8 | % |
Division revenues increased significantly during the secondfirst quarter and first half of fiscal 20212022 compared to the secondfirst quarter and first half of fiscal 2020 due to the fact that we closed five of our eight company-owned hotels and resorts on March 24, 2020, and closed our remaining three company-owned hotels in early April 2020,2021. While all as a result of extremely low occupancy rates and significant COVID-19 pandemic related cancellations. We reopened four of our company-owned hotels (including several restaurants and bars) during the last weeks of our fiscal 2020 second quarter with significantly reduced occupancy compared to the prior year. All eight of our company-owned hotels and all but one of our managed hotels were open during our secondthe first quarter and first half of fiscal 2021. The2021, the majority of our restaurantsthese properties were generating significantly reduced revenues and bars in our hotels and resorts were open during the first half of fiscal 2021, operating under applicable state and local restrictions and guidelines, and, in some cases, reduced operating hours. We reopened one ofIn addition, our two SafeHouse
As a result(one of the significantly reduced revenues during our fiscal 2020 second quarter, we
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | Variance | | | | | | | | Variance |
| ||||||
|
| F2021 |
| F2019 |
| Amt. |
| Pct. |
| F2021 |
| F2019 |
| Amt. |
| Pct. |
| ||||||
Room revenues |
| $ | 17.3 |
| $ | 28.2 |
| $ | (10.9) |
| (38.5) | % | $ | 26.4 |
| $ | 47.1 |
| $ | (20.7) |
| (44.0) | % |
Food /beverage revenues | |
| 9.6 | |
| 18.6 | |
| (9.0) |
| (48.5) | % |
| 15.5 | |
| 34.4 | |
| (18.9) |
| (54.9) | % |
Other revenues | |
| 9.9 | |
| 11.2 | |
| (1.3) |
| (12.1) | % |
| 19.7 | |
| 23.4 | |
| (3.7) |
| (15.6) | % |
| |
| 36.8 | |
| 58.0 | |
| (21.2) |
| (36.6) | % |
| 61.6 | |
| 104.9 | |
| (43.3) |
| (41.3) | % |
Cost reimbursements | |
| 3.4 | |
| 12.0 | |
| (8.6) |
| (71.8) | % |
| 6.7 | |
| 20.1 | |
| (13.4) |
| (66.9) | % |
Total revenues |
| $ | 40.2 |
| $ | 70.0 |
| $ | (29.8) |
| (42.6) | % | $ | 68.3 |
| $ | 125.0 |
| $ | (56.7) |
| (45.4) | % |
30
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 significantly to our reduced revenues during the secondfirst quarter and first half of fiscal 20212022 compared to the same periodsquarter 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 periodsperiod in fiscal 2019. Other revenues decreasedincreased during the secondfirst quarter and first half of fiscal 20212022 compared to the secondfirst quarter and first half of fiscal 2019, primarily due primarily to reducedincreased revenues from one of our condominium hotels and decreased management fees, partially offset by significantly increased ski and golfspa revenues at the Grand Geneva.Geneva® Resort & Spa (“Grand Geneva”), partially offset by decreased management fees. Cost reimbursements decreased slightly during the secondfirst quarter and first half of fiscal 20212022 compared to the secondfirst quarter and first half of fiscal 2019 due to reduced revenues and subsequent operating costs at our managed hotels.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter(1) | | First Half(1) |
| ||||||||||||||||||
| | | | | | | | Variance | | | | | | | | Variance |
| ||||||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| ||||||
Occupancy pct. |
| | 48.8 | % | | 18.8 | % | | +30.0 | pts | 159.6 | % | | 37.9 | % | | 50.8 | % | | (12.9) | pts | (25.4) | % |
ADR | | $ | 143.37 | | $ | 154.50 | | $ | (11.13) | | (7.2) | % | $ | 139.73 | | $ | 130.69 | | $ | 9.04 | | 6.9 | % |
RevPAR | | $ | 69.99 | | $ | 29.08 | | $ | 40.91 | | 140.7 | % | $ | 52.93 | | $ | 66.34 | | $ | (13.41) | | (20.2) | % |
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 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter(1) | | First Half(1) |
| ||||||||||||||||||
| | | | | | | | Variance | | | | | | | | Variance |
| ||||||
|
| F2021 |
| F2019 |
| Amt. |
| Pct. |
| F2021 |
| F2019 |
| Amt. |
| Pct. |
| ||||||
Occupancy pct. |
|
| 51.0 | % |
| 77.9 | % |
| (26.9) | pts | (34.5) | % |
| 39.9 | % |
| 71.2 | % |
| (31.3) | pts | (44.0) | % |
ADR | | $ | 141.24 |
| $ | 160.10 |
| $ | (18.86) | | (11.8) | % | $ | 138.10 |
| $ | 146.47 |
| $ | (8.37) | | (5.7) | % |
RevPAR | | $ | 72.03 |
| $ | 124.67 |
| $ | (52.64) | | (42.2) | % | $ | 55.12 |
| $ | 104.36 |
| $ | (49.24) | | (47.2) | % |
31
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) | % |
According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2021 second2022 first quarter and first half results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced a decrease in RevPAR of 46.5% and 55.2%, respectively,17.7% during our fiscal 2021 second2022 first quarter and first half compared to the same periodsperiod during fiscal 2019.2019, 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 51.2% and 55.3%, respectively,24.2% during our fiscal 20212022 first quarter, again compared to the same periodsperiod in fiscal 2019. Thus,Therefore, we believe we outperformed the industry during the fiscal 2021 second quarter and first half by approximately four and eight percentage points, respectively. We also believe we outperformed our competitive sets during the fiscal 2021 second2022 first quarter and first half by approximately seven and eight9 percentage points, respectively.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.
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 very closely. After past shocks to the system, such as the terrorist attacks on September 11, 2001 and the 2008 financial crisis, hotel demand took longer to recover than other components of the economy. Conversely, we now anticipate that hotel supply growth will be limited for the foreseeable future, which can be beneficial for our existing hotels. 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 half 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.
Adjusted EBITDA
We present Adjusted EBITDA as a supplemental measure of our performance. 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 its 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.
32
The following table sets forth our reconciliation of Adjusted EBITDA (in millions):
| | | | | | | | | | | | |
| | Second Quarter | | First Half | ||||||||
|
| F2021 |
| F2020 |
| F2021 |
| F2020 | ||||
Net earnings attributable to The Marcus Corporation |
| $ | (23.4) | | $ | (27.0) | | $ | (51.5) | | $ | (46.4) |
Add (deduct): | | | | | | | | | | | | |
Investment income | | | (0.1) | | | (0.8) | | | (0.2) | | | (0.1) |
Interest expense | | | 4.9 | | | 3.5 | | | 9.7 | | | 6.0 |
Other expense | | | 0.6 | | | 0.6 | | | 1.3 | | | 1.2 |
Loss (gain) on disposition of property, equipment and other assets | | | 0.2 | | | — | | | (2.0) | | | — |
Equity losses from unconsolidated joint ventures, net | | | — | | | 0.4 | | | — | | | 0.5 |
Net (earnings) loss attributable to noncontrolling interests | | | — | | | 0.1 | | | — | | | — |
Income tax expense (benefit) | | | (8.3) | | | (29.9) | | | (19.1) | | | (36.5) |
Depreciation and amortization | | | 18.5 | | | 18.9 | | | 36.5 | | | 37.9 |
Share-based compensation expenses (1) | | | 2.7 | | | 1.2 | | | 4.2 | | | 2.2 |
Property closure/reopening expenses – theatres (2) | | | — | | | 0.7 | | | — | | | 3.5 |
Property closure/reopening expenses – hotels and resorts (3) | | | — | | | 2.3 | | | — | | | 5.0 |
Impairment charges (4) | | | 3.7 | | | — | | | 3.7 | | | 8.7 |
Government grants (5) | | | — | | | — | | | (1.3) | | | — |
Total Adjusted EBITDA | | $ | (1.2) | | $ | (30.0) | | $ | (18.7) | | $ | (18.0) |
The following tables sets forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):
| | | | | | | | | | | | | | | | | | | | | | |
|
| Second Quarter, F2021 |
| First Half, F2021 | ||||||||||||||||||
| | | | Hotels & | | | | | | | | Hotels & | | | | | ||||||
|
| Theatres |
| Resorts |
| Corp. Items |
| Total |
| Theatres |
| Resorts |
| Corp. Items |
| Total | ||||||
Operating income | | $ | (18.2) | | $ | (2.2) | | $ | (5.7) | | (26.1) | | $ | (43.9) | | $ | (7.9) | | $ | (10.0) | | (61.8) |
Depreciation and amortization |
| | 13.4 |
| | 5.0 |
| | 0.1 |
| 18.5 |
| | 26.2 |
| | 10.2 |
|
| 0.1 |
| 36.5 |
Share-based compensation (1) |
| | 0.7 |
| | 0.5 |
| | 1.5 |
| 2.7 |
| | 1.1 |
| | 0.8 |
|
| 2.3 |
| 4.2 |
Property closure/reopening expenses (2) (3) |
| | — |
| | — |
| | — |
| — |
| | — |
| | — |
|
| — |
| — |
Impairment charges (4) |
| | 3.7 |
| | — |
| | — |
| 3.7 |
| | 3.7 |
| | — |
|
| — |
| 3.7 |
Government grants (5) |
| | — |
| | — |
| | — |
|
|
| | (1.3) |
| | — |
|
| — |
| (1.3) |
Total Adjusted EBITDA | | $ | (0.4) | | $ | 3.3 | | $ | (4.1) |
| (1.2) | | $ | (14.2) | | $ | 3.1 |
|
| (7.6) |
| (18.7) |
| | | | | | | | | | | | | | | | | | | | | | |
|
| Second Quarter, F2020 |
| First Half, F2020 | ||||||||||||||||||
| | | | Hotels & | | | | | | | | Hotels & | | | | | ||||||
|
| Theatres |
| Resorts |
| Corp. Items |
| Total |
| Theatres |
| Resorts |
| Corp. Items |
| Total | ||||||
Operating income | | $ | (34.5) | | $ | (14.7) | | $ | (3.8) | | (53.0) | | $ | (41.6) | | $ | (25.6) | | $ | (8.1) | | (75.3) |
Depreciation and amortization |
| | 13.4 |
| | 5.3 |
| | 0.1 |
| 18.8 |
| | 26.9 |
| | 10.8 |
|
| 0.2 |
| 37.9 |
Share-based compensation (1) |
| | 0.3 |
| | 0.2 |
| | 0.7 |
| 1.2 |
| | 0.5 |
| | 0.4 |
|
| 1.3 |
| 2.2 |
Property closure/reopening expenses (2) (3) |
| | 0.7 |
| | 2.3 |
| | — |
| 3.0 |
| | 3.5 |
| | 5.0 |
|
| — |
| 8.5 |
Impairment charges (4) |
| | — |
| | — |
| | — |
| — |
| | 8.7 |
| | — |
|
| — |
| 8.7 |
Total Adjusted EBITDA | | $ | (20.1) | | $ | (6.9) | | $ | (3.0) |
| (30.0) | | $ | (2.0) | | $ | (9.4) |
|
| (6.6) |
| (18.0) |
33
The following table sets forth Adjusted EBITDA by reportable operating segment for the second quarter and first half of fiscal 2021 and fiscal 2020 (in millions, except for variance percentage):
| | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Half |
| ||||||||||||||||||
| | | | | | | | Variance | | | | | | | | Variance |
| ||||||
|
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| F2021 |
| F2020 |
| Amt. |
| Pct. |
| ||||||
Theatres |
| $ | (0.4) |
| $ | (20.1) |
| $ | 19.7 |
| 97.8 | % | $ | (14.2) |
| $ | (2.0) |
| $ | (12.2) |
| (602.2) | % |
Hotels and resorts | |
| 3.3 | |
| (6.9) | |
| 10.2 |
| 148.7 | % |
| 3.1 | |
| (9.4) | |
| 12.5 |
| 132.3 | % |
Corporate items | | | (4.1) | | | (3.0) | | | (1.1) |
| (36.3) | % | | (7.6) | | | (6.6) | | | (1.0) |
| (14.8) | % |
Total Adjusted EBITDA |
| $ | (1.2) | | $ | (30.0) | | $ | 28.8 |
| 96.0 | % | $ | (18.7) | | $ | (18.0) | |
| (0.7) |
| (3.8) | % |
Our hotels and resorts division returned to positive Adjusted EBITDA for the first time since the start of the COVID-19 pandemic during the second quarter of fiscal 2021 due to improved occupancy percentages2022, we ceased management of The DoubleTree by Hilton El Paso Downtown and strong cost controls, as described in the Hotels and Resorts section above. Our theatre division nearly broke even in Adjusted EBITDA duringCourtyard by Marriott El Paso Downtown/Convention Center effective February 28, 2022. Conversely, the secondfirst quarter of fiscal 2021 due to improved attendance, increased concession revenues per person and strong cost controls, as described in the Theatres section above. Both operating divisions delivered positive Adjusted EBITDA during June 2021, contributing to2022 was our first month with consolidated positive full quarter of operating the Kimpton Hotel Monaco Pittsburgh, a hotel acquired in mid-December 2021 in which we have a minority equity interest.
First Quarter | |||||||||||||||||||||||
F2022 | F2021 | ||||||||||||||||||||||
Net earnings (loss) attributable to The Marcus Corporation | $ | (14.9) | $ | (28.1) | |||||||||||||||||||
Add (deduct): | |||||||||||||||||||||||
Investment income | 0.3 | — | |||||||||||||||||||||
Interest expense | 4.1 | 4.8 | |||||||||||||||||||||
Other expense | 0.6 | 0.6 | |||||||||||||||||||||
Loss (gain) on disposition of property, equipment and other assets | (0.4) | (2.2) | |||||||||||||||||||||
Equity losses from unconsolidated joint ventures, net | 0.1 | — | |||||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interests | — | — | |||||||||||||||||||||
Income tax expense (benefit) | (6.5) | (10.8) | |||||||||||||||||||||
Depreciation and amortization | 17.2 | 18.0 | |||||||||||||||||||||
Share-based compensation expenses (1) | 2.9 | 1.5 | |||||||||||||||||||||
Government grants (2) | — | (1.3) | |||||||||||||||||||||
Total Adjusted EBITDA | $ | 3.4 | $ | (17.5) |
First Quarter, F2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Theatres | Hotels & Resorts | Corp. Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
Operating loss | $ | (8.0) | $ | (3.0) | $ | (5.8) | $ | (16.8) | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 12.2 | 5.0 | 0.1 | 17.2 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation (1) | 0.6 | 0.4 | 1.9 | 2.9 | |||||||||||||||||||||||||||||||||||||||||||
Government grants (2) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | 4.8 | $ | 2.4 | $ | (3.8) | $ | 3.4 |
First Quarter, F2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Theatres | Hotels & Resorts | Corp. Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
Operating loss | $ | (25.6) | $ | (5.7) | $ | (4.3) | $ | (35.7) | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 12.8 | 5.1 | 0.1 | 18.0 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation (1) | 0.4 | 0.3 | 0.8 | 1.5 | |||||||||||||||||||||||||||||||||||||||||||
Government grants (2) | (1.3) | — | — | (1.3) | |||||||||||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | (13.7) | $ | (0.3) | $ | (3.4) | $ | (17.5) |
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Theatres | $ | 4.8 | $ | (13.7) | $ | 18.5 | 134.8 | % | |||||||||||||||||||||||||||||||||||||||
Hotels and resorts | 2.4 | (0.3) | 2.7 | 908.1 | % | ||||||||||||||||||||||||||||||||||||||||||
Corporate items | (3.8) | (3.4) | (0.4) | (10.7) | % | ||||||||||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | 3.4 | $ | (17.5) | $ | 20.8 | 119.2 | % |
34
Credit Agreement
On January 9, 2020, we entered into a Credit Agreement with several banks, including JPMorgan Chase Bank, N.A., as Administrative Agent, and U.S. Bank National Association, as Syndication Agent. On April 29, 2020, we entered into the First Amendment, on September 15, 2020 we entered into the Second Amendment, and on July 13, 2021, we entered into the Third Amendment (the Credit Agreement, as amended by the First Amendment, the Second Amendment and the Third Amendment, hereinafter referred to as the “Credit Agreement”).
The Credit Agreement provides for a revolving credit facility that matures on January 9, 2025 with an initial maximum aggregate amount of availability of $225 million. We may request an increase in the aggregate amount of availability under the Credit Agreement by an aggregate amount of up to $125 million by increasing the revolving credit facility or adding one or more tranches of term loans. Our ability to increase availability under the Credit Agreement is subject to certain conditions, including, among other things, the absence of any default or event of default or material adverse effect under the Credit Agreement. In conjunction with the First Amendment, we also added an initial $90.8 million term loan facility that was scheduled to mature on September 22, 2021. In conjunction with the Third Amendment entered into early in our fiscal 2021 third quarter, the term loan facility was reduced to $50.0 million and the maturity date was extended to September 22, 2022.
Borrowings under the Credit Agreement generally bear interest at a variable rate equal to: (i) LIBOR, subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires us to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment and the Second Amendment: (A) in respect of revolving loans, (1) we are charged a facility fee equal to 0.40% of the total revolving credit facility commitment and (2) the specified margin is 2.35% for LIBOR borrowings and 1.35% for ABR borrowings, which facility fee rate and specified margins will remain in effect until the end of the first fiscal quarter ending after the end of any period in which any portion of the term loan facility remains outstanding or the testing of any financial covenant in the Credit Agreement is suspended (the “specified period”); and (B) in respect of term loans, the specified margin is 2.75% for LIBOR borrowings and 1.75% for ABR borrowings, in each case, at all times.
The Credit Agreement contains various restrictions and covenants applicable to us and certain of our subsidiaries. Among other requirements, the Credit Agreement (a) limits the amount of priority debt (as defined in the Credit Agreement) held by our restricted subsidiaries to no more than 20% of our consolidated total capitalization (as defined in the Credit Agreement), (b) limits our permissible consolidated debt to capitalization ratio to a maximum of 0.55 to 1.0, (c) requires us to maintain a consolidated fixed charge coverage ratio of at least 3.0 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, (d) restricts our ability and certain of our subsidiaries’ ability to incur additional indebtedness, pay dividends and other distributions (the restriction on dividends and other distributions does not apply to subsidiaries), and make voluntary prepayments on or defeasance of our 4.02% Senior Notes due August 2025, 4.32% Senior Notes due February 2027, the notes or certain other convertible securities, (e) requires our consolidated EBITDA not to be less than or equal to (i) $10 million as of December 30, 2021 for the two consecutive fiscal quarters then ending, (ii) $25 million as of March 31, 2022 for the three consecutive fiscal quarters then ending, (iii) $50 million as of June 30, 2022 for the four consecutive fiscal quarters then ending, (iv) $65 million as of September 29, 2022 for the four consecutive fiscal quarters then ending, or (v) $70 million as of December 29, 2022 for the four consecutive fiscal quarters then ending, (f) requires our consolidated liquidity not to be less than or equal to (i) $100 million as of September 30, 2021, (ii) $100 million as of December 30, 2021, (iii) $100 million as of March 31, 2022, (iv) $100 million as of June 30, 2022, or (v) $50 million as of the end of any fiscal quarter thereafter until and including the fiscal quarter ending December 29, 2022; however, each such required minimum amount of consolidated liquidity would be reduced to $50 million for each such testing date if the initial term loans are paid in full as of such date, and (g) prohibits us and certain of our subsidiaries from incurring or making capital expenditures, in the aggregate for us and such subsidiaries, (i) during fiscal 2021 in excess of the sum of $40.0 million plus certain adjustments, or (ii) during our 2022 fiscal year in excess of $50 million plus certain adjustments.
35
Pursuant to the Credit Agreement, we are required to apply net cash proceeds received from certain events, including certain asset dispositions, casualty losses, condemnations, equity issuances, capital contributions, and the incurrence of certain debt, to prepay outstanding term loans, with the exception that we are allowed to sell certain surplus real estate up to $29 million without prepaying the outstanding term loans. In addition, if, at any time during the specified period, we and certain of our subsidiaries’ aggregate unrestricted cash on hand exceeds $75 million, the Credit Agreement requires us to prepay revolving loans under the Credit Agreement by the amount of such excess, without a corresponding reduction in the revolving commitments under the Credit Agreement.
In connection with the Credit Agreement: (i) we and certain of our subsidiaries have pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of their respective personal property assets and (b) certain of their respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of our subsidiaries have guaranteed our obligations under the Credit Agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the Credit Agreement).
The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
4.02% Senior Notes and 4.32% Senior Notes
On June 27, 2013, we entered into a Note Purchase Agreement (the “4.02% Senior Notes Agreement”) with the several purchasers party to the 4.02% Senior Notes Agreement, pursuant to which we issued and sold $50 million in aggregate principal amount of our 4.02% Senior Notes due August 14, 2025 (the “4.02% Notes”) in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). We used the net proceeds from the issuance and sale of the 4.02% Notes to reduce existing borrowings under our revolving credit facility and for general corporate purposes. On December 21, 2016, we entered into a Note Purchase Agreement (the “4.32% Senior Notes Agreement”) with the several purchasers party to the 4.32% Senior Notes Agreement, pursuant to which we issued and sold $50 million in aggregate principal amount of our 4.32% Senior Notes due February 22, 2027 (the “4.32% Notes” and the 4.02% Notes, are together referred to hereafter as the “Notes”) in a private placement exempt from the registration requirements of the Securities Act. We used the net proceeds of the sale of the 4.32% Notes to repay outstanding indebtedness and for general corporate purposes.
On July 13, 2021 we entered into an amendment to the 4.02% Senior Notes Agreement (the “4.02% Fourth Amendment”). The 4.02% Senior Notes Agreement, as previously amended and as amended by the 4.02% Fourth Amendment, is hereafter referred to as the “Amended 4.02% Senior Notes Agreement.” On July 13, 2021 we entered into an amendment to the 4.32% Senior Notes Agreement (the “4.32% Fourth Amendment”). The 4.32% Senior Notes Agreement, as previously amended and as amended by the 4.32% Fourth Amendment, is hereafter referred to as the “Amended 4.32% Senior Notes Agreement.” The Amended 4.02% Senior Notes Agreement and the Amended 4.32% Senior Notes Agreement are together referred to hereafter as the “Amended Senior Notes Agreements.”
Interest on the 4.02% Notes is payable semi-annually in arrears on the 14th day of February and August in each year and at maturity. Interest on the 4.32% Notes is payable semi-annually in arrears on the 22nd day of February and August in each year and at maturity. Beginning on August 14, 2021 and on the 14th day of August each year thereafter to and including August 14, 2024, we will be required to prepay $10 million of the principal amount of the 4.02% Notes. Additionally, we may make optional prepayments at any time upon prior notice of all or part of the Notes, subject to the payment of a make-whole amount (as defined in the Amended Senior Notes Agreements, as applicable). Furthermore, until the last day of the first fiscal quarter ending after the Collateral Release Date (as defined in the Amended Senior Notes Agreements, as applicable), we are required to pay a fee to each Note holder in an amount equal to 0.975% of the aggregate principal amount of Notes held by such holder. Such fee is payable quarterly (0.24375% of the aggregate principal amount of the Notes per quarter). The entire outstanding principal balance of the 4.32% Notes will be due and payable on February 22, 2027. The entire unpaid principal balance of the 4.02% Notes will be due and payable on August 14, 2025. The Notes rank pari passu in right of payment with all of our other senior unsecured debt.
36
The Amended Senior Notes Agreements contain various restrictions and covenants applicable to us and certain of our subsidiaries. Among other requirements, the Amended Senior Notes Agreements (a) limit the amount of priority debt held by us or by our restricted subsidiaries to 20% of our consolidated total capitalization, (b) limit our permissible consolidated debt to 65% of our consolidated total capitalization, (c) require us to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, (d) require our consolidated EBITDA not to be less than or equal to (i) $10 million as of December 30, 2021 for the two consecutive fiscal quarters then ending, (ii) $25 million as of March 31, 2022 for the three consecutive fiscal quarters then ending, (iii) $50 million as of June 30, 2022 for the four consecutive fiscal quarters then ending, (iv) $65 million as of September 29, 2022 for the four consecutive fiscal quarters then ending, or (v) $70 million as of December 29, 2022 for the four consecutive fiscal quarters then ending, (e) require our consolidated liquidity not to be less than or equal to (i) $100 million as of September 30, 2021 , (ii) $100 million as of December 30, 2021, (iii) $100 million as of March 31, 2022, (iv) $100 million as of June 30, 2022, or (v) $50 million as of the end of any fiscal quarter thereafter until and including the fiscal quarter ending December 29, 2022; however, each such required minimum amount of consolidated liquidity would be reduced to $50 million for each such testing date if the initial term loans under the Credit Agreement are paid in full as of such date, and (f) prohibit us and certain of our subsidiaries from incurring or making capital expenditures, in the aggregate for us and such subsidiaries, (i) during fiscal 2021 in excess of the sum of $40.0 million plus certain adjustments, or (ii) during our 2022 fiscal year in excess of $50 million plus certain adjustments.
In connection with the Amended Senior Notes Agreements: (i) we and certain of our subsidiaries have pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of their respective personal property assets and (b) certain of their respective real property assets, in each case, to secure the Notes and related obligations; and (ii) certain subsidiaries of ours have guaranteed our obligations under the Amended Senior Notes Agreements and the Notes. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date.
The Amended Senior Notes Agreements also contain customary events of default. If an event of default under the Amended Senior Notes Agreements occurs and is continuing, then, among other things, the purchasers may declare any outstanding obligations under the Amended Senior Notes Agreements and the Notes to be immediately due and payable and the Note holders may exercise their rights and remedies against the pledged collateral.
Summary
We believe that the actions we have taken overduring the past 16 monthstwo 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 resumecontinue operations as currently expected, which could be impacted by matters that are not entirely in our control, such as the continuationreinstatement of protective actions that federal, state and local governments have taken and the timing of new movie
37
Net cash used in investing activities during the first halfquarter of fiscal 20212022 totaled $3.7$3.1 million, compared to $9.1net cash provided by investing activities of $2.6 million during the first halfquarter of fiscal 2020.2021. The decreaseincrease in net cash used in investing activities of $5.4$5.7 million was primarily the result of a decreasean increase of $5.0 million in capital expenditures, and the receipt of $4.3 million inpartially offset by lower proceeds from disposals of property, equipment and other assets during the first halfquarter of fiscal 2021.2022. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $6.2$6.6 million during the first halfquarter of fiscal 20212022 compared to $15.9$1.5 million during the first halfquarter of fiscal 2020.
2021.
Netcompared to net cash provided by financing activities during the first half of fiscal 2021 totaled $14.5 million compared to $126.5$9.2 million during the first halfquarter of fiscal 2020.2021. During the first halfquarter 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 $66.5$22.0 million of new short-term revolving credit facility borrowings, and we made $46.5$22.0 million of repayments on short-term revolving credit facility borrowings during the first halfquarter 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 $20.0$14.0 million).
We did not issue any new long-term debt during the first half of fiscal 2021. We received Payroll Protection Program (“PPP”) loan proceeds during the second quarter of fiscal 2020, the majority of which were used for qualifying expenses during such quarter that we believe will result in forgiveness of the loan under provisions of the CARES Act. Early in the third quarter of fiscal 2021, we received notification that qualifying expenses for one of our PPP loans was forgiven. Forgiveness documentation has been submitted for the majority of our remaining PPP loans and we are currently awaiting notification on those loans. The portion of the PPP loan proceeds that were not used for qualifying expenses totaling approximately $3.2 million contributed to the increase in net cash provided by financing activities during the first half of fiscal 2020.2021. Principal payments on long-term debt were approximately $200,000$0.4 million during the first halfquarter of fiscal 20212022 compared to payments of $9.3$0.1 million during the first half of fiscal 2020, which included a $9.0 million final payment on senior notes that matured in April 2020. Principal payments on our short-term borrowings totaled approximately $4.2 million during the first halfquarter of fiscal 2021. Our debt-to-capitalization ratio (including short-term borrowings but excluding our finance and operating lease obligations) was 0.430.37 at July 1, 2021,March 31, 2022, compared to 0.37 at December 31, 2020. A change in30, 2021.
We repurchased approximately 58,000first quarter of fiscal 2021 we did not repurchase any shares of our common stock for approximately $1.3 million in conjunction with the exercise of stock options and the payment of income taxes on vested restricted stock during the first half of fiscal 2021, compared to approximately 8,600 shares of our common stock for approximately $274,000 in conjunction with the payment of income taxes on vested restricted stock during the first half of fiscal 2020.open market. As of July 1, 2021,March 31, 2022, approximately 2.72.6 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common
38
We did not make any dividend payments during the first halfquarter of fiscal 2021. Dividend payments during2022 and the first halfquarter of fiscal 2020 totaled $5.1 million.2021. Our Credit Agreement, as recently amended, requiresrequired us to temporarily suspend our quarterly dividend payments and prohibitsprohibited us from repurchasing shares of our common stock in the open market for the remainder ofduring fiscal 2021. The Credit Agreement also limits the total amount of quarterly dividend payments or share repurchases during the four subsequent quarters beginning with the first quarter of fiscal 2022 to no more than $1.55 million per quarter, unless we are in compliance with prior financial covenants under the Credit Agreement (specifically, the consolidated fixed charge coverage ratio), at which point we have the ability to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.
31, 2020, except for the update of the risk factors set forth below:The COVID-19 pandemic has had and will continue to have material adverse effects 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.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 significantly impacted by protective actions that federal, state and local governments have taken to control the spread of the pandemic. These actions include, among other things, declaring national and state emergencies, encouraging social distancing, restricting freedom of movement and congregation, mandating non-essential business closures and/or capacity restrictions and issuing shelter-in-place, quarantine and stay-at-home orders.39
As a result of these measures, we temporarily closed all of our theatres on March 17, 2020. In late August 2020, we reopened approximately 80% of our theatres, but subsequently reclosed multiple theatres due to the lack of available films and new local and state restrictions. As of December 31, 2020, approximately 52% of our theatres were reopened, but seating capacity at our reopened theatres was reduced in response to COVID-19. 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 first and second quarters of fiscal 2021 and ended the fiscal 2021 second quarter with approximately 95% of our theatres open. The majority of our reopened theatres operated with reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) and reduced operating hours during the fiscal 2021 first quarter. By the end of May 2021, we had returned the vast majority of our theatres to normal operating days (seven days per week) and operating hours. During the first half of fiscal 2021, 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 and a reduction in the number of new films released.
We closed five of our eight company-owned hotels and resorts on March 24, 2020 due to a significant reduction in occupancy at those hotels. We also temporarily closed all of our hotel division restaurants and bars at approximately the same time and announced the closing of our remaining three company-owned hotels on April 8, 2020. We re-opened four of our company-owned hotels (including several restaurants and bars) during June 2020, reopened three of our four remaining company-owned hotels during our fiscal 2020 third quarter and reopened our last company-owned hotel during our fiscal 2020 fourth quarter. As a result, as of December 31, 2020, we had reopened all eight of our company-owned hotels and most of our managed hotels, though these properties are currently generating significantly reduced revenues.
Although we believe the remaining closure of and reduced operating levels at our theatres and hotels is temporary, we cannot predict when the effects of the COVID-19 pandemic will fully subside, the effect of the Delta variant on government guidance or consumer behavior, or when our businesses will return to normal levels. The longer and more severe the pandemic, including repeat or cyclical outbreaks, the more severe the adverse effects will be on our businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness.
Even when the COVID-19 pandemic fully subsides, we cannot guarantee that we will recover as rapidly as other industries. For example, it is unclear how quickly patrons will return to our theatres and hotels, which may be a function of continued concerns over safety and/or depressed consumer sentiment and discretionary income due to adverse economic conditions, including job losses, among other things. If customers do not perceive our response to the pandemic to be adequate, we could suffer damage to our reputation, which could adversely affect our businesses.
Furthermore, the effects of the pandemic on our businesses could be long-lasting and could continue to have material adverse effects on our businesses, results of operations, liquidity, cash flows and financial condition, and may materially adversely impact our ability to operate our businesses on the same terms as prior to the pandemic. Significant impacts on our businesses caused by the COVID-19 pandemic may include, among others:
40
Additionally, although we have sought and obtained, and intend to continue to seek, available benefits under the CARES Act, or any subsequent governmental relief bills, we cannot predict the manner in which any additional benefits under the CARES Act, or any subsequent governmental relief bills, will be allocated or administered and we cannot provide assurances that we will be able to access such benefits in a timely manner or at all. We also cannot assure that potential benefits under the CARES Act will not be amended or eliminated under any subsequent governmental actions. Accessing these benefits and our response to the COVID-19 pandemic have required our management team to devote extensive resources and are likely to continue to do so in the near future, which negatively affects our ability to implement our business plan and respond to opportunities.
The duration of the COVID-19 pandemic and related shelter-in-place and social distancing requirements and the level of customer demand following the relaxation of such requirements may materially adversely affect our financial results and condition.
As noted above, due to the COVID-19 pandemic, our operations at our theatres and hotels and resorts were significantly restricted or suspended. While we have resumed operations to varying degrees at our theatres and hotels, there is uncertainty as to the pace of reaching full capacity and our financial performance. Because we operate in several different jurisdictions, we may be able to fully resume operations at some, but not all, of our theatres and hotels and resorts within a certain timeframe. As we reopen and operate our theatres, restaurants and bars, we may need to operate with capacity limitations. A reduction in capacity does not necessarily translate to an equal reduction in potential revenues at our theatres as customers may shift their attendance to different days and times and we may increase seating capacity for certain blockbuster films by dedicating more auditoriums to such films. Fears and concerns regarding the COVID-19 pandemic could cause our customers to avoid assembling in public spaces for some time despite the relaxation of shelter-in-place and social distancing measures. We would have no control over and cannot predict the length of any future required closure of or restrictions on our theatres and hotels and resorts due to the COVID-19 pandemic. If we are unable to generate revenues due to a future prolonged period of closure or do not experience significant increases in our businesses volumes at our reopened theatres and hotels, this would negatively impact our ability to remain in compliance with our debt covenants and meet our payment obligations. 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. If we are not successful in such efforts, our lenders could declare a default and require immediate repayment of amounts owing under our Credit Agreement and senior notes, which could have a material adverse effect on our ability to operate our business. Additionally, we could seek additional liquidity through the issuance of new debt. Our ability to obtain additional financing and the terms of any such additional financing would depend in part on factors outside of our control, and we may be unable to obtain such additional financing on acceptable terms or at all.
41
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 |
| | | | | | | | | |
|
| |
| | |
| 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) | |
April 2 - April 29 | | 406 | | $ | 20.57 |
| 406 |
| 2,664,149 |
April 30 - May 27 | | 2,965 | |
| 18.77 |
| 2,965 |
| 2,661,184 |
May 28 - July 1 | | 409 | |
| 21.74 |
| 409 |
| 2,660,775 |
Total | | 3,780 | | $ | 19.28 |
| 3,780 |
| 2,660,755 |
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 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 purchased in connection with the vesting of grants of restricted stock, in which we repurchased shares from the stockholders whose restricted shares vested in order to cover such stockholders’ related withholding taxes.
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31.2 32 101.INS The instance document does not appear in the interactive data file because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). By: Gregory S. Marcus President and Chief Executive Officer DATE: By: Douglas A. Neis Executive Vice President and Chief Financial Officer4.14.24.331.143THE MARCUS CORPORATIONTHE MARCUS CORPORATION DATE: August 10, 2021May 5, 2022/s/ /s/ Gregory S. MarcusAugust 10, 2021/s/ /s/ Douglas A. Neis and Treasurer