UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


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

For the transition period from __________ to __________

Commission File Number 1-12604

~~THE MARCUS CORPORATION~~

~~(Exact name of registrant as specified in its charter)~~


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


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

100 East Wisconsin Avenue, Suite 1900 Milwaukee ~~Wisconsin~~ ,Wisconsin						53202-4125
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (414) 905-1000

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


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

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

Yes

☒x

☐o

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

Yes

☒x

☐o

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

Large accelerated filer

☐o

Accelerated filer

☒x

Non-accelerated filer

☐o

Smaller reporting company

☐o

Emerging growth company

☐o

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

~~Yes~~

☐Yes

☒No

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

COMMON STOCK OUTSTANDING AT ~~NOVEMBER 1, 2021~~APRIL 29, 2022 – ~~24,289,438~~

24,498,243

CLASS B COMMON STOCK OUTSTANDING AT ~~NOVEMBER 1, 2021 – 7,130,125~~

APRIL 29, 2022 –7,110,875

Table of Contents

THE MARCUS CORPORATION

INDEX


				Page			~~Page~~
PART I – FINANCIAL INFORMATION


Item 1.			Consolidated Financial Statements:

				Consolidated Balance Sheets (September 30, 2021 and December 31, 2020)			3

		Consolidated Balance Sheets		3

		Consolidated Statements of Earnings (Loss) ~~(13 and 39 weeks ended September 30, 2021 and September 24, 2020)~~		5		5


		Consolidated Statements of Comprehensive Income (Loss) ~~(13 and 39 weeks ended September 30, 2021 and September 24, 2020)~~		6		6


		Consolidated Statements of Cash Flows ~~(39 weeks ended September 30, 2021 and September 24, 2020)~~		7		7


		Condensed Notes to Consolidated Financial Statements		8		8

Item 2.				Management’s Discussion and Analysis of Financial Condition and Results of Operations	20		23

Item 3.				Quantitative and Qualitative Disclosures About Market Risk	32		41

Item 4.				Controls and Procedures	32		41

PART II – OTHER INFORMATION

Item 1A.				Risk Factors	33		41

Item 2.				Unregistered Sales of Equity Securities and Use of Proceeds	33		44

~~Item 4.~~	~~Mine Safety Disclosures~~		44

~~Item 6.~~	~~Exhibits~~		45


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

Item 6.		Exhibits		33

		Signatures		S-1

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

THE MARCUS CORPORATION

Consolidated Balance Sheets

September 30,

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

2021

2020

ASSETS




Current assets:




Cash and cash equivalents

$
8,629

$
6,745
Restricted cash

6,346

7,343
Accounts receivable, net of reserves of $1,134 and $1,284, respectively

18,808

6,359
Government grants receivable

—

4,913
Refundable income taxes

23,051

27,934
Assets held for sale

12,773

4,117
Other current assets

14,360

10,406
Total current assets

83,967

67,817

Property and equipment:


Land and improvements

134,163

145,671
Buildings and improvements

756,530

759,421
Leasehold improvements

165,881

163,879
Furniture, fixtures and equipment

376,602

374,253
Finance lease right-of-use assets

75,318

75,322
Construction in progress

3,810

3,360
Total property and equipment

1,512,304

1,521,906
Less accumulated depreciation and amortization

725,037

673,578
Net property and equipment

787,267

848,328

Operating lease right-of-use assets

220,556

229,660

Other assets:




Investments in joint ventures

—

2,084
Goodwill

75,118

75,188
Deferred incomes taxes

9,964

—
Other

12,174

31,101
Total other assets

97,256

108,373
TOTAL ASSETS

$
1,189,046

$
1,254,178

(in thousands, except share and per share data)


	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

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Balance Sheets

September 30,

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

2021

2020

LIABILITIES AND SHAREHOLDERS’ EQUITY




Current liabilities:




Accounts payable

$
21,141

$
13,158
Taxes other than income taxes

17,277

18,308
Accrued compensation

13,336

7,633
Other accrued liabilities

55,314

58,154
Short-term borrowings

49,796

87,194
Current portion of finance lease obligations

2,666

2,783
Current portion of operating lease obligations

17,010

19,614
Current maturities of long-term debt

11,712

10,548
Total current liabilities

188,252

217,392


Finance lease obligations

17,796

19,744

Operating lease obligations

220,075

230,550

Long-term debt

236,611

193,036

Deferred income taxes

22,061

33,429

Other long-term obligations

61,945

61,304


Equity:


Shareholders’ equity attributable to The Marcus Corporation

Preferred Stock, $1 par; authorized 1,000,000 shares; NaN issued

—

—
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,339,666 shares at September 30, 2021 and 23,264,259 shares at December 31, 2020

24,340

23,264
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,130,125 shares at September 30, 2021 and 7,925,254 shares at December 31, 2020

7,131

7,926
Capital in excess of par

143,276

153,529
Retained earnings

282,861

331,897
Accumulated other comprehensive loss

(13,774)

(14,933)

443,834

501,683
Less cost of Common Stock in treasury (48,794 shares at September 30, 2021 and 124,758 shares at December 31, 2020)

(1,528)

(2,960)
Total shareholders’ equity attributable to The Marcus Corporation

442,306

498,723
Noncontrolling interest

0

0
Total equity

442,306

498,723

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$
1,189,046

$
1,254,178

(in thousands, except share and per share data)


	March 31, 2022		December 30, 2021
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,784	$	35,781
Income taxes	269		—
Taxes other than income taxes	15,658		19,566
Accrued compensation	13,911		20,474
Other accrued liabilities	56,742		59,678
Short-term borrowings	46,577		47,346
Current portion of finance lease obligations	2,538		2,561
Current portion of operating lease obligations	15,827		16,795
Current maturities of long-term debt	11,064		10,967
Total current liabilities	186,370		213,168

Finance lease obligations	16,703		17,192

Operating lease obligations	211,841		216,064

Long-term debt	203,905		204,177

Deferred income taxes	22,103		26,183

Other long-term obligations	56,548		57,963

Equity:
Shareholders’ equity attributable to The Marcus Corporation
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued	—		—
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,498,243 shares at March 31, 2022 and 24,345,356 shares at December 30, 2021	24,498		24,345
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,110,875 shares at March 31, 2022 and 7,130,125 shares at December 30, 2021	7,111		7,130
Capital in excess of par	149,234		145,656
Retained earnings	274,403		289,306
Accumulated other comprehensive loss	(10,913)		(11,444)
	444,333		454,993
Less cost of Common Stock in treasury (122,204 shares at March 31, 2022 and 48,111 shares at December 30, 2021)	(2,555)		(1,379)
Total shareholders’ equity attributable to The Marcus Corporation	441,778		453,614
Noncontrolling interest	—		—
Total equity	441,778		453,614

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,139,248	$	1,188,361

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Earnings (Loss)

13 Weeks Ended

39 Weeks Ended

September 30,

September 24,

September 30,

September 24,
(in thousands, except per share data)

2021

2020

2021

2020

Revenues:




Theatre admissions

$
38,250

$
3,118

$
73,850

$
58,667
Rooms

30,917

9,772

57,293

27,618
Theatre concessions

35,952

3,243

68,932

50,277
Food and beverage

16,731

5,420

32,234

19,620
Other revenues

19,128

8,813

45,253

30,886

140,978

30,366

277,562

187,068
Cost reimbursements

4,884

3,225

11,634

13,916
Total revenues

145,862

33,591

289,196

200,984

Costs and expenses:

Theatre operations

40,513

14,150

87,660

76,806
Rooms

9,682

4,611

22,019

16,132
Theatre concessions

15,094

2,592

29,627

25,634
Food and beverage

12,344

5,109

25,520

20,725
Advertising and marketing

4,827

1,981

11,195

8,446
Administrative

16,536

11,645

45,815

40,555
Depreciation and amortization

17,730

18,690

54,203

56,568
Rent

6,544

6,594

19,229

19,876
Property taxes

4,935

5,950

14,142

18,004
Other operating expenses

6,500

6,266

19,918

18,094
Impairment charges

—

765

3,732

9,477
Reimbursed costs

4,884

3,225

11,634

13,916
Total costs and expenses

139,589

81,578

344,694

324,233

Operating income (loss)

6,273

(47,987)

(55,498)

(123,249)

Other income (expense):

Investment income (loss)

(7)

66

153

207
Interest expense

(4,600)

(4,132)

(14,350)

(10,177)
Other expense

(625)

(590)

(1,881)

(1,771)
Gain (loss) on disposition of property, equipment and other assets

868

(251)

2,908

(299)
Equity losses from unconsolidated joint ventures, net

—

(1,054)

—

(1,539)

(4,364)

(5,961)

(13,170)

(13,579)

Earnings (loss) before income taxes

1,909

(53,948)

(68,668)

(136,828)
Income taxes (benefit)

150

(14,508)

(18,931)

(50,984)
Net earnings (loss)

1,759

(39,440)

(49,737)

(85,844)
Net loss attributable to noncontrolling interests

—

—

—

(23)
Net earnings (loss) attributable to The Marcus Corporation

$
1,759

$
(39,440)

$
(49,737)

$
(85,821)

Net earnings (loss) per share - basic:

Common Stock

$
0.06

$
(1.30)

$
(1.66)

$
(2.84)
Class B Common Stock

$
0.05

$
(1.18)

$
(1.39)

$
(2.57)

Net earnings (loss) per share - diluted:

Common Stock

$
0.06

$
(1.30)

$
(1.66)

$
(2.84)
Class B Common Stock

$
0.05

$
(1.18)

$
(1.39)

$
(2.57)

(in thousands, except per share data)


	13 Weeks Ended
	March 31, 2022		April 1, 2021
Revenues:
Theatre admissions	$	38,417	$	10,685
Rooms	17,430		9,044
Theatre concessions	35,464		9,919
Food and beverage	14,511		5,912
Other revenues	18,807		11,894
	124,629		47,454
Cost reimbursements	7,613		3,333
Total revenues	132,242		50,787

Costs and expenses:
Theatre operations	44,428		18,270
Rooms	8,203		5,265
Theatre concessions	15,193		4,496
Food and beverage	12,140		5,370
Advertising and marketing	4,481		2,549
Administrative	19,081		13,316
Depreciation and amortization	17,231		17,979
Rent	6,250		6,341
Property taxes	4,745		4,739
Other operating expenses	9,674		4,790

Reimbursed costs	7,613		3,333
Total costs and expenses	149,039		86,448

Operating loss	(16,797)		(35,661)

Other income (expense):
Investment income (loss)	(268)		40
Interest expense	(4,092)		(4,843)
Other expense	(577)		(628)
Gain on disposition of property, equipment and other assets	424		2,204
Equity losses from unconsolidated joint ventures	(141)		—
	(4,654)		(3,227)

Loss before income taxes	(21,451)		(38,888)
Income tax benefit	(6,549)		(10,758)
Net loss	(14,902)		(28,130)
Net earnings (loss) attributable to noncontrolling interests	—		—
Net loss attributable to The Marcus Corporation	$	(14,902)	(28,130)

Net loss per share - basic:
Common Stock	$	(0.48)	$	(0.93)
Class B Common Stock	$	(0.44)	$	(0.80)

Net loss per share - diluted:
Common Stock	$	(0.48)	$	(0.93)
Class B Common Stock	$	(0.44)	$	(0.80)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Comprehensive Income (Loss)

13 Weeks Ended

39 Weeks Ended


September 30,

September 24,

September 30,

September 24,
(in thousands)

2021

2020

2021

2020

Net earnings (loss)

$
1,759

$
(39,440)

$
(49,737)

$
(85,844)




Other comprehensive income (loss), net of tax:









Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $84, $64, $256 and $194, respectively

243

184

727

549

Fair market value adjustment of interest rate swaps, net of tax benefit of $4, $10, $0 and $358, respectively

(10)

(30)

—

(1,015)








Reclassification adjustment on interest rate swaps included in interest expense, net of tax effect of $42, $81, $153 and $177, respectively

118

227

432

500

Other comprehensive income

351

381

1,159

34

Comprehensive income (loss)

2,110

(39,059)

(48,578)

(85,810)

Comprehensive loss attributable to noncontrolling interests

—

—

—

(23)

Comprehensive income (loss) attributable to The Marcus Corporation

$
2,110

$
(39,059)

$
(48,578)

$
(85,787)

(in thousands)


	13 Weeks Ended
	March 31, 2022		April 1, 2021

Net loss	$	(14,902)	$	(28,130)
Other comprehensive income, net of tax:
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $67 and $86, respectively	190		242
Fair market value adjustment of interest rate swaps, net of tax effect of $79 and $6, respectively	223		17
Reclassification adjustment on interest rate swaps included in interest expense, net of tax effect of $41, and $68, respectively	118		193
Other comprehensive income	531		452
Comprehensive loss	(14,371)		(27,678)
Comprehensive earnings (loss) attributable to noncontrolling interests	—		—
Comprehensive loss attributable to The Marcus Corporation	$	(14,371)	$	(27,678)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

Consolidated Statements of Cash Flows

39 Weeks Ended
(in thousands)

September 30, 2021

September 24, 2020

OPERATING ACTIVITIES:




Net loss

$
(49,737)

$
(85,844)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Losses on investments in joint ventures

—

1,539
(Gain) loss on disposition of property, equipment and other assets

(2,908)

299
Impairment charges

3,732

9,477
Depreciation and amortization

54,203

56,568
Amortization of debt issuance costs and discount on convertible notes

1,784

697
Share-based compensation

6,673

3,286
Deferred income taxes

(18,817)

(2,787)
Other long-term obligations

2,236

3,938
Contribution of the Company’s stock to savings and profit-sharing plan

1,012

1,315
Changes in operating assets and liabilities:

Accounts receivable

(12,052)

22,558
Government grants receivable

4,913

—
Other assets

(1,552)

1,604
Operating leases

(4,078)

8,519
Accounts payable

7,155

(31,852)
Income taxes

7,613

(48,518)
Taxes other than income taxes

(1,031)

(3,975)
Accrued compensation

5,703

(7,259)
Other accrued liabilities

(2,792)

(10,214)
Total adjustments

51,794

5,195
Net cash provided by (used in) operating activities

2,057

(80,649)

INVESTING ACTIVITIES:

Capital expenditures

(9,121)

(18,687)
Proceeds from disposals of property, equipment and other assets

9,160

1,602
Capital contribution in joint venture

—

(28)
Proceeds from sale of trading securities

—

5,184
Purchase of trading securities

(2,402)

—
Life insurance premium reimbursement

11,411

—
Other investing activities

200

220
Net cash provided by (used in) investing activities

9,248

(11,709)

FINANCING ACTIVITIES:

Debt transactions:

Proceeds from borrowings on revolving credit facility

128,500

209,000
Repayment of borrowings on revolving credit facility

(95,500)

(280,000)
Proceeds from short-term borrowings

—

90,800
Repayments on short-term borrowings

(37,845)

Proceeds from convertible senior notes

—

100,050
Principal payments on long-term debt

(10,285)

(9,356)
Proceeds received from PPP loans expected to be repaid

—

3,147
Proceeds received from borrowing on insurance policy

6,700

-
Debt issuance costs

(208)

(6,543)
Principal payments on finance lease obligations

(2,065)

(1,389)
Equity transactions:

Treasury stock transactions, except for stock options

(1,170)

(542)
Exercise of stock options

1,455

379
Capped call transactions

—

(16,908)
Dividends paid

—

(5,145)
Net cash provided by (used in) financing activities

(10,418)

83,493

Net increase (decrease) in cash, cash equivalents and restricted cash

887

(8,865)
Cash, cash equivalents and restricted cash at beginning of period

14,088

25,618
Cash, cash equivalents and restricted cash at end of period

$
14,975

16,753

Supplemental Information:

Interest paid, net of amounts capitalized

$
12,932

9,313
Income taxes paid (refunded)

(7,733)

322
Change in accounts payable for additions to property, equipment and other assets

828

(2,640)

(in thousands)


	13 Weeks Ended
	March 31, 2022		April 1, 2021

OPERATING ACTIVITIES:
Net loss	$	(14,902)	$	(28,130)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Losses on investments in joint ventures	141		—
Gain on disposition of property, equipment and other assets	(424)		(2,204)

Depreciation and amortization	17,231		17,979
Amortization of debt issuance costs and discount on convertible notes	413		623
Share-based compensation	2,917		1,484
Deferred income taxes	(6,342)		(10,794)
Other long-term obligations	(460)		1,164
Contribution of the Company’s stock to savings and profit-sharing plan	956		1,012
Changes in operating assets and liabilities:
Accounts receivable	7,495		(213)
Government grants receivable	4,335		4,913
Other assets	(1,841)		23
Operating leases	(1,161)		(996)
Accounts payable	(10,956)		(800)
Income taxes	22,704		6,010
Taxes other than income taxes	(3,908)		(1,543)
Accrued compensation	(6,563)		283
Other accrued liabilities	(3,164)		(1,794)
Total adjustments	21,373		15,147
Net cash provided by (used in) operating activities	6,471		(12,983)

INVESTING ACTIVITIES:
Capital expenditures	(6,562)		(1,525)
Proceeds from disposals of property, equipment and other assets	3,438		4,308




Other investing activities	21		(231)
Net cash provided by (used in) investing activities	(3,103)		2,552

FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility	22,000		36,000
Repayment of borrowings on revolving credit facility	(22,000)		(22,000)

Repayments on short-term borrowings	(820)		(4,150)
Principal payments on long-term debt	(427)		(93)

Debt issuance costs	—		(4)
Principal payments on finance lease obligations	(584)		(630)
Equity transactions:
Treasury stock transactions, except for stock options	(1,364)		(1,169)
Exercise of stock options	26		1,292

Net cash provided by (used in) financing activities	(3,169)		9,246
Net increase (decrease) in cash, cash equivalents and restricted cash	199		(1,185)
Cash, cash equivalents and restricted cash at beginning of period	24,054		14,088
Cash, cash equivalents and restricted cash at end of period	$	24,253	$	12,903

Supplemental Information:
Interest paid, net of amounts capitalized	$	5,904	$	5,952
Income taxes refunded, including interest earned	22,911		5,974
Change in accounts payable for additions to property, equipment and other assets	(1,041)		919

See accompanying condensed notes to consolidated financial statements.

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 ~~AND 39~~ WEEKS ENDED ~~SEPTEMBER 30, 2021~~

MARCH 31, 2022

(in thousands, except share and per share data)

1. General

Basis of Presentation - The unaudited consolidated financial statements for the 13 ~~and 39~~ weeks ended ~~September 30,~~March 31, 2022 and April 1, 2021 ~~and September 24, 2020~~ have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at ~~September 30, 2021,~~March 31, 2022, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December ~~31, 2020.~~

30, 2021.

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

~~During~~

Noncontrolling Interests - The Company has an ownership interest greater than 50% in one joint venture that is considered a Variable Interest Entity (VIE) that is included in the ~~39 weeks ended September 30, 2021, there were no significant changes made~~accounts of the Company. The Company is the primary beneficiary of the VIE and the Company’s interest is considered a majority voting interest. The equity interest of outside owners in consolidated entities is recorded as noncontrolling interests in the consolidated balance sheets, and their share of earning is recorded as net earnings (loss) attributable to noncontrolling interests in the consolidated statements of earnings (loss) in accordance with the partnership agreement. Due to the ~~Company’s significant accounting policies other than~~cumulative losses of the ~~changes attributable~~entity, the noncontrolling interest balance is $0 as of March 31, 2022 and December 30, 2021. The Company will not record earnings or losses from noncontrolling interests until the entity returns to ~~the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2020-06,~~ Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The convertible debt policy updates are applied prospectively in the Company’s financial statements from January 1, 2021 forward. Reported financial information for the historical comparable period was not revised and continues to be reported under the accounting standards in effect during the historical period. See Note 4 for further discussion.

profitability.

Depreciation and Amortization - Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled ~~$17,714,000~~$17,223 and ~~$54,147,000~~$17,958 for the 13 ~~and 39~~ weeks ended ~~September 30,~~March 31, 2022, and April 1, 2021, ~~respectively, and $18,698,000 and $56,584,000 for the 13 and 39 weeks ended September 24, 2020,~~ respectively.

Assets Held for Sale – Long-lived assets that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as assets held for sale and included within current assets on the consolidated balance sheet. Assets held for sale are measured at the lower of their carrying value or their fair value less costs to sell the asset. As of ~~September 30, 2021,~~March 31, 2022, assets held for sale consists primarily of excess ~~land and one retail plaza.~~

~~Insurance Policies~~– During the 13 weeks ended September 30, 2021, the Company received $6,700,000 of loan proceeds, recorded against the cash surrender value of a key-man life insurance policy. The loan bears interest at 8.0% which is payable annually. The loan is netted against the value of the life insurance policy and is included in other long-term assets in the consolidated balance sheet. Also during the 13 weeks ended September 30, 2021, the Company received $11,400,000 as reimbursement on a split dollar life insurance policy.

land.

Long-Lived Assets – The Company periodically considers whether indicators of impairment of long-lived assets held for use are present. This includes quantitative and qualitative factors, including evaluating the historical actual operating performance of the long-lived assets and assessing the potential impact of recent events and transactions impacting the long-lived assets. If such indicators are present, the Company determines if the long-lived assets are recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. If the long-lived assets are not recoverable, the Company recognizes any impairment losses based on the excess of the carrying amount of the assets over their fair value. ~~During the 39 weeks ended September 30, 2021 and September 24, 2020, the Company determined that~~There were no indicators of impairment ~~were present for certain assets. As such,~~identified during the ~~Company evaluated the value of its property and equipment and the value of its operating lease right-of-use assets and recorded impairment charges as discussed in Note 3.~~

13 weeks ended March 31, 2022 or April 1, 2021.

~~Table of Contents~~Goodwill

~~Goodwill~~ – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the ~~last~~first day of ~~its~~the fiscal year. Goodwill is tested for impairment at a reporting unit level, determined to be at an operating segment level. When reviewing goodwill for impairment, the Company considers the amount of excess fair value over the carrying value of the reporting unit, the period of time since its last quantitative test, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. Examples of qualitative factors that the Company assesses include its share price, its financial performance, market and competitive factors in its industry, and other events specific to the reporting unit. If the Company concludes that it is more likely than not that the fair value of its reporting unit is less than 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 3913 weeks ended ~~September 30,~~March 31, 2022 or April 1, 2021.

~~Trade Name Intangible Asset~~ – The Company recorded a trade name intangible asset in conjunction with the Movie Tavern acquisition that was determined to have an indefinite life. The Company reviews its trade name intangible asset for impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. During the 39 weeks ended September 24, 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 39 weeks ended September 30, 2021.

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

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

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

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

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

13 Weeks

13 Weeks

39 Weeks

39 Weeks

Ended

Ended

Ended

Ended


September 30, 2021

September 24, 2020

September 30, 2021

September 24, 2020

(in thousands, except per share data)
Numerator:








Net earnings (loss) attributable to The Marcus Corporation

$
1,759

$
(39,440)

$
(49,737)

$
(85,821)
Denominator:

Denominator for basic EPS

31,421

31,064

31,340

31,033
Effect of dilutive employee stock options

48

—

—

—
Effect of convertible notes

—

—

—

—
Denominator for diluted EPS

31,469

31,064

31,340

31,033
Net earnings (loss) per share - basic:

Common Stock

$
0.06

$
(1.30)

$
(1.66)

$
(2.84)
Class B Common Stock

$
0.05

$
(1.18)

$
(1.39)

$
(2.57)
Net earnings (loss) per share - diluted:

Common Stock

$
0.06

$
(1.30)

$
(1.66)

$
(2.84)
Class B Common Stock

$
0.05

$
(1.18)

$
(1.39)

$
(2.57)


	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)

~~Table of Contents~~

For the periods when the Company reports a net loss, ~~both~~ common stock equivalents ~~and shares issuable upon conversion of convertible debt instruments~~ are excluded from the computation of diluted loss per ~~shares~~share as their inclusion would have an antidilutive effect. During the 13 weeks ended ~~September 30,~~March 31, 2022 and April 1, 2021, ~~9,085,000~~approximately 81,076 and 119,611 common stock equivalents, respectively, were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 13 weeks ended March 31, 2022 and April 1, 2021, 9,084,924 shares related to the convertible notes were excluded from the computation of diluted ~~earnings~~loss per share as the effect would have been anti-dilutive.

Table of Contents
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 31, 2022
(in thousands, except share and per share data)

Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 13 ~~and 39~~ weeks ended ~~September 30,~~March 31, 2022 and April 1, 2021 ~~and September 24, 2020~~ was as ~~follows (in thousands, except per share data):~~

follows:

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

$
0

$
437,528
Exercise of stock options

—

—

(44)

—

—

125

81

—

81
Purchase of treasury stock

—

—

—

—

—

(60)

(60)

—

(60)
Reissuance of treasury stock

—

—

20

—

—

106

126

—

126
Forfeitures of non-vested stock

(2)

—

(137)

—

—

139

—

—

—
Shared-based compensation

—

—

2,521

—

—

—

2,521

—

2,521
Comprehensive income

—

—

—

1,759

351

—

2,110

—

2,110
BALANCES AT SEPTEMBER 30, 2021

$
24,340

$
7,131

$
143,276

$
282,861

$
(13,774)

$
(1,528)

$
442,306

$
0

$
442,306


	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

~~Table of Contents~~

Shareholders’




Equity

Accumulated

Attributable

Class B

Capital

Other

to The

Non-

Common

Common

in Excess

Retained

Comprehensive

Treasury

Marcus

controlling

Total

Stock

Stock

of Par

Earnings

Loss

Stock

Corporation

Interests

Equity
BALANCES AT DECEMBER 26, 2019

$
23,254

$
7,936

$
145,549

$
461,884

$
(12,648)

$
(4,540)

$
621,435

$
23

$
621,458
Cash Dividends:
















$.15 Class B Common Stock

—

—

—

(1,224)

—

—

(1,224)

—

(1,224)
$.16 Common Stock

—

—

—

(3,921)

—

—

(3,921)

—

(3,921)
Exercise of stock options

—

—

5

—

—

40

45

—

45
Purchase of treasury stock

—

—

—

—

—

(274)

(274)

—

(274)
Savings and profit-sharing contribution

—

—

299

—

—

1,016

1,315

—

1,315
Reissuance of treasury stock

—

—

2

—

—

46

48

—

48
Issuance of non-vested stock

—

—

(149)

—

—

149

—

—

—
Shared-based compensation

—

—

988

—

—

—

988

—

988
Conversions of Class B Common Stock

10

(10)

—

—

—

—

—

—

—
Comprehensive loss

—

—

—

(19,352)

(547)

—

(19,899)

(148)
��

(20,047)
BALANCES AT MARCH 26, 2020

$
23,264

$
7,926

$
146,694

$
437,387

$
(13,195)

$
(3,563)

$
598,513

$
(125)

$
598,388
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

$
0

$
572,980
Exercise of stock options

—

—

(68)

—

—

391

323

—

323
Purchase of treasury stock

—

—

—

—
��

—

(422)

(422)

—

(422)
Reissuance of treasury stock

—

—

(1)

—

—

12

11

—

11
Issuance of non-vested stock

—

—

(158)

—

—

158

—

—

—
Shared-based compensation

—

—

1,108

—

—

—

1,108

—

1,108
Equity component of issuance of convertible notes, net of tax and issuance costs

—

—

16,522

—

—

—

16,522

—

16,522
Capped call transactions, net of tax

—

—

(12,495)

—

—

—

(12,495)

—

(12,495)
Comprehensive income (loss)

—

—

—

(39,440)

381

—

(39,059)

—

(39,059)
BALANCES AT SEPTEMBER 24, 2020

$
23,264

$
7,926

$
152,598

$
370,919

$
(12,614)

$
(3,125)

$
538,968

$
0

$
538,968

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


	March 31, 2022		December 30, 2021

Unrecognized loss on interest rate swap agreements	$	(168)	$	(509)
Net unrecognized actuarial loss for pension obligation	(10,745)		$	(10,935)
	$	(10,913)	$	(11,444)

September 30,

December 31,

2021

2020

(in thousands)
Unrecognized loss on interest rate swap agreements

$
(654)

$
(1,086)
Net unrecognized actuarial loss for pension obligation

(13,120)

(13,847)

$
(13,774)

$
(14,933)

Fair Value Measurements - Certain financial assets and liabilities are recorded at fair value in the consolidated financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

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

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

Level 1 - Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At ~~September~~March 31, 2022 and December 30, 2021, ~~and December 31, 2020,~~ respectively, the Company’s ~~$4,139,000~~$4,329 and ~~$1,415,000~~$4,617 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets.

Level 2 - Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At ~~September~~March 31, 2022 and December 30, 2021, ~~and December 31, 2020,~~ respectively, the Company’s ~~$885,000~~$228 and ~~$1,470,000~~$689 liability related to the Company’s interest rate swap contracts was valued using Level 2 pricing inputs.

~~Table of Contents~~

Level 3 - Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At ~~September~~March 31, 2022 and December 30, 2021, ~~and December 31, 2020,~~ none of the Company’s recorded assets or liabilities that are measured on a recurring basis at fair market value were valued using Level 3 pricing inputs. ~~Assets and liabilities that are measured on a non-recurring basis are discussed in Note 3.~~

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

13 Weeks

13 Weeks

39 Weeks

39 Weeks

Ended

Ended

Ended

Ended


September 30, 2021

September 24, 2020

September 30, 2021

September 24, 2020

(in thousands)
Service cost

$
278

$
274

$
839

$
821
Interest cost

300

342

901

1,028
Net amortization of prior service cost and actuarial loss

331

248

986

743
Net periodic pension cost

$
909

$
864

$
2,726

$
2,592


	13 Weeks Ended
	March 31, 2022		April 1, 2021

Service cost	$	264	$	281
Interest cost	335		$	300
Net amortization of prior service cost and actuarial loss	257		$	328
Net periodic pension cost	$	856	$	909

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

Revenue Recognition – The disaggregation of revenues by business segment for the 13 ~~and 39~~ weeks ended ~~September 30, 2021~~March 31, 2022 is as ~~follows (in thousands):~~

follows:

13 Weeks Ended September 30, 2021


Reportable Segment

Theatres

Hotels/Resorts

Corporate

Total
Theatre admissions

$
38,250

$
—

$
—

$
38,250
Rooms

—

30,917

—

30,917
Theatre concessions

35,952

—

—

35,952
Food and beverage

—

16,731

—

16,731
Other revenues⁽¹⁾

5,793

13,272

63

19,128
Cost reimbursements

1

4,883

—

4,884
Total revenues

$
79,996

$
65,803

$
63

$
145,862

39 Weeks Ended September 30, 2021

Reportable Segment


Theatres

Hotels/Resorts

Corporate

Total
Theatre admissions

$
73,850

$
—

$
—

$
73,850
Rooms

—

57,293

—

57,293
Theatre concessions

68,932

—

—

68,932
Food and beverage

—

32,234

—

32,234
Other revenues⁽¹⁾

11,989

33,006

258

45,253
Cost reimbursements

88

11,546

—

11,634
Total revenues

$
154,859

$
134,079

$
258

$
289,196

~~(1)~~

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


	13 Weeks Ended March 31, 2022
	Reportable Segment
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	38,417	$	—	$	—	$	38,417
Rooms	—		17,430		—		17,430
Theatre concessions	35,464		—		—		35,464
Food and beverage	—		14,511		—		14,511
Other revenues(1)	5,610		13,103		94		18,807
Cost reimbursements	—		7,613		—		7,613
Total revenues	$	79,491	$	52,657	$	94	$	132,242

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

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

The disaggregation of revenues by business segment for the 13 ~~and 39~~ weeks ended ~~September 24, 2020~~April 1, 2021 is as ~~follows (in thousands):~~

follows:


	13 Weeks Ended April 1, 2021
	Reportable Segment
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	10,685	$	—	$	—	$	10,685
Rooms	—		9,044		—		9,044
Theatre concessions	9,919		—		—		9,919
Food and beverage	—		5,912		—		5,912
Other revenues(1)	1,915		9,879		100		11,894
Cost reimbursements	43		3,290		—		3,333
Total revenues	$	22,562	$	28,125	$	100	$	50,787

(1)

13 Weeks Ended September 24, 2020


Reportable Segment

Theatres

Hotels/Resorts

Corporate

Total
Theatre admissions

$
3,118

$
—

$
—

$
3,118
Rooms

—

9,772

—

9,772
Theatre concessions

3,243

—

—

3,243
Food and beverage

—

5,420

—

5,420
Other revenues⁽¹⁾

934

7,820

59

8,813
Cost reimbursements

59

3,166

—

3,225
Total revenues

$
7,354

$
26,178

$
59

$
33,591

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

39 Weeks Ended September 24, 2020


Reportable Segment

Theatres

Hotels/Resorts

Corporate

Total
Theatre admissions

$
58,667

$
—

$
—

$
58,667
Rooms

—

27,618

—

27,618
Theatre concessions

50,277

—

—

50,277
Food and beverage

—

19,620

—

19,620
Other revenues⁽¹⁾

9,194

21,375

317

30,886
Cost reimbursements

276

13,640

—

13,916
Total revenues

$
118,414

$
82,253

$
317

$
200,984

~~(1)~~

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

The Company had deferred revenue from contracts with customers of ~~$37,377,000~~$38,310 and ~~$37,307,000~~$39,144 as of ~~September~~March 31, 2022 and December 30, 2021, ~~and December 31, 2020,~~ respectively. The Company had 0no contract assets as of ~~September 30, 2021~~March 31, 2022 and December ~~31, 2020.~~30, 2021. During the 3913 weeks ended ~~September~~March 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 ~~$8,394,000~~$2,240 that was included in deferred revenues as of December 31, 2020. ~~During the 39 weeks ended September 24, 2020, the Company recognized revenue of $12,444,000 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.

As of ~~September 30, 2021,~~March 31, 2022, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was ~~$4,380,000~~$3,448 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. The Company recognizes revenue as the tickets are redeemed, which is expected to occur within the next two years.

As of ~~September 30, 2021,~~March 31, 2022, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was ~~$2,998,000~~$3,575 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the gift cards are redeemed, which is expected to occur within the next two years.

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

~~Table of Contents~~

New Accounting Pronouncements – ~~On January 1, 2021,~~During the first quarter of fiscal 2022, the Company adopted Accounting Standards Update (ASU) No. ~~2019-12,~~ ~~Income Taxes~~2021-10, Government Assistance (Topic ~~740)~~832): ~~Simplifying the Accounting for Incomes Taxes~~Disclosures by Business Entities about Government Assistance. The amendments in ~~ASU No. 2019-12 are designed to simplify~~this update provide increased transparency of government assistance including the ~~accounting for incomes taxes by removing~~requirement of certain ~~exceptions~~disclosures in a company’s notes to the general principles in Topic 740. The amendments also improve consistent application of and simplify generally accepted accounting principles for other areas of Topic 740 by clarifying and amending existing guidance.consolidated financial statements about transactions with a government. The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements.

~~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.

In March 2020, the ~~FASB~~Financial Accounting Standards Board issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. ASU No. 2020-14 is effective as of March 12, 2020 through

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

December 31, 2022. The Company will evaluate the effect the new standard will have on its consolidated financial statements when a replacement rate is chosen.

2. Impact of COVID-19 Pandemic

The COVID-19 pandemic has had an unprecedented impact on the world and both of the Company’s business segments. ~~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, the Company’s businesses ~~are~~were significantly impacted by protective actions that federal, state and local governments have taken to control the spread of the pandemic, and the customers’ reactions or responses to such actions. ~~These~~The extent of these protective actions ~~have included, among other things, declaring national~~ and ~~state emergencies, encouraging social distancing, restricting freedom~~their impact on the Company’s businesses has continued to dissipate during the first quarter of movement and congregation, mandating non-essential business closures, issuing curfews, limiting business capacity, mandating mask-wearing and issuing shelter-in-place, quarantine and stay-at-home orders.

fiscal 2022.

The Company began fiscal ~~2021~~2022 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 39 weeks ended September 30, 2021 and ended the fiscal 2021 third quarteropen with approximately 97% 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 fiscal 2021 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 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. While still below ~~pre-COVID~~pre-COVID-19 levels, attendance has continued to gradually ~~improved beginning in June 2021~~improve as the number of vaccinated individuals increased, more films ~~were~~are released, and ~~customer~~customers indicate increasing willingness to return to movie ~~theatres increased.~~

theatres.

The Company began fiscal ~~2021~~2022 with all eight of its company-owned ~~hotels~~ and ~~all but one of its~~ managed hotels open. The majority of the Company’s restaurants and bars in its hotels and resorts ~~have been~~were open during the first ~~three~~ quarters of fiscal ~~2021,~~2022, operating under applicable state and local restrictions and guidelines, and in some cases reduced operating hours. The majority of the Company’s hotels and restaurants are generating ~~significantly~~ reduced revenues as compared to ~~prior~~ pre-COVID-19 pandemic years, although hotel occupancy ~~has been increasing throughout~~continues to improve as the ~~2021 fiscal year.~~

travel activity increases.

~~Table of Contents~~

Since the COVID-19 ~~crisis~~pandemic began, the Company has been working proactively to preserve cash and enhance liquidity. ~~In fiscal 2020,~~As of March 31, 2022, the Company ~~obtained additional financing~~had cash and modified previously existing debt covenants (see Note 7 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020). Additionally, early in the Company’s fiscal 2021 third quarter, in conjunction with an amendment tocash equivalents of approximately $19,431 and $221,449 of availability under its $225,000 revolving credit ~~agreement,~~facility. With this strong liquidity position, combined with cash generated from operations and proceeds from the sale of surplus real estate, the Company ~~modified~~believes it is positioned to meet its ~~previously existing debt covenants (see Note 4 for further reference). During~~obligations as they come due and continue to sustain its operations throughout fiscal 2022 and 2023, even if the 39 weeks ended September 30, 2021, the Company received the remaining $5,900,000 of requested tax refunds from its fiscal 2019 tax return. During fiscal 2020 and continuing into fiscal 2021, a number of states electedproperties continue 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”) or subsequent federal relief programs. The Company received $8,197,000 ofgenerate reduced revenues during these grants during the 39 weeks ended September 30, 2021, which are included within other operating expenses on the consolidated statement of earnings (loss). The Company has applied for additional state grants totaling approximately $4,600,000 that are expected to be received during the Company’s fiscal 2021 fourth quarter.

periods.

During the first quarter of fiscal ~~2021,~~2022, the Company ~~filed~~received a $22,959 federal income tax refund ~~claims~~(including $636 of ~~$24,200,000~~interest) related to its fiscal 2020 tax return, with the primary benefit derived from net operating loss ~~carrybacks.~~carrybacks to prior years. The Company also received ~~approximately $1,800,000~~$4,335 in state theatre grants during the first quarter of ~~this refund in July~~fiscal 2022 that were awarded during the fourth quarter of fiscal 2021. ~~Additional income tax loss carryforwards are expected to be generated during fiscal 2021 that will benefit future years.~~

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 September 30, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

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

~~3. Impairment Charges~~

During the 13 weeks ended July 1, 2021, the Company determined that indicators of impairment were evident at certain theatre asset groups. For certain of the theatre asset groups evaluated for impairment, the sum of the estimated undiscounted future cash flows attributable to these assets was less than their carrying amount. The Company evaluated the fair value of these assets, consisting primarily of leasehold improvements, furniture, fixtures and equipment, and operating lease right-of-use-assets less lease obligations, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary asset, including estimated sales proceeds) was less than their carrying values and recorded a $3,732,000 impairment loss, reducing certain property and equipment and certain operating lease right-of-use assets. The remaining net book value of the impaired assets was $10,200,000 as of July 1, 2021, excluding any applicable remaining lease obligations. There were no indicators of impairment identified during the 13 weeks ended September 30, 2021.

During the 13 weeks ended March 26, 2020, the Company determined that indicators of impairment were evident at all asset groups. For certain theatre asset groups, the sum of the estimated undiscounted future cash flows attributable to these assets was less than their carrying amount. The Company evaluated the fair value of these assets, consisting primarily of leasehold improvements, furniture, fixtures and equipment, and operating lease right-of-use assets less lease obligations, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary asset, including estimated sale proceeds) was less than their carrying values and recorded a $6,512,000 impairment loss, reducing certain property and equipment and certain operating lease right-of-use assets. The remaining net book value of the impaired assets was $13,686,000 as of March 26, 2020, excluding any applicable remaining lease obligations.

Table of Contents

~~During the~~THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 ~~weeks ended September 24, 2020, the Company determined that indicators of impairment were evident at certain theatre~~WEEKS ENDED MARCH 31, 2022

(in thousands, except share and hotel asset groups. For certain of the theatre asset groups evaluated for impairment, the sum of the estimated undiscounted future cash flows attributable to these assets was less than their carrying amount. The Company evaluated the fair value of these assets, consisting primarily of leasehold improvements, furniture, fixtures and equipment, and operating lease right-of-use assets less lease obligations, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary asset, including estimated sale proceeds) was less than their carrying values and recorded a $765,000 impairment loss, reducing certain property and equipment and certain operating lease right-of-use assets. The remaining net book value of the impaired assets was $7,221,000 as of September 24, 2020, excluding any applicable remaining lease obligations.

During the 13 weeks ended March 26, 2020 and 13 weeks ended September 24, 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 and September 24, 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 September 24, 2020) and a discount rate (17.0% as of March 26, 2020 and September 24, 2020). During the 13 weeks ended March 26, 2020, the Company determined that the fair value of the asset was less than the carrying value and recorded a $2,200,000 impairment loss. During the 13 weeks ended September 24, 2020, the Company determined that the fair value of the asset was greater than its carrying value and thus was not impaired at that time. The fair value of the trade name intangible asset was $7,300,000 as of September 24, 2020.

per share data)

3. Long-Term Debt and Short-Term Borrowings

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

September 30, 2021

December 31, 2020


(in thousands, except payment data)
Mortgage notes

$
24,478

$
24,482
Senior notes

90,000

100,000
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75%

1,452

1,735
Convertible senior notes

100,050

100,050
Payroll Protection Program loans

3,426

3,424
Revolving credit agreement

33,000

—
Debt issuance costs

(4,083)

(3,684)
Total debt, net of debt issuance costs

248,323

226,007
Less current maturities, net of issuance costs

11,712

10,548
Less debt discount

—

22,423
Long-term debt

$
236,611

$
193,036

Short-term borrowings

49,796

87,194
Total debt and short-term borrowings, net of issuance costs

$
298,119

$
313,201

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

On January 9, 2020, the Company ~~entered into a Credit Agreement~~replaced its then-existing credit agreement with several ~~banks, including JPMorgan Chase Bank, N.A., as Administrative Agent, and U.S. Bank National Association, as Syndication Agent.~~banks. On April 29, 2020, the Company entered into the First Amendment, on September 15, 2020, the Company entered into the Second Amendment, and on July 13, 2021, the Company entered into the Third Amendment (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 ~~$225,000,000.~~$225,000. At ~~September 30, 2021,~~March 31, 2022, there were borrowings of ~~$33,000,000~~$0 outstanding on the revolving credit facility, ~~bearing~~which when borrowed, bear interest at LIBOR plus a margin, effectively 3.35% at ~~September 30, 2021.~~March 31, 2022. Availability under the line at ~~September 30, 2021,~~March 31, 2022, was ~~$188,449,000,~~$221,449, after taking into consideration outstanding letters of credit that reduce revolver availability. In conjunction with the First Amendment, the Company added an initial ~~$90,800,000~~$90,800 term loan facility that was scheduled to mature on September 22, 2021. In conjunction with the Third Amendment, the term loan facility was reduced to ~~$50,000,000~~$50,000 and the maturity date was extended to September 22, 2022. As of ~~September 30, 2021,~~March 31, 2022, the balance of the term loan was ~~$49,796,000,~~$46,577, which is included in short-term borrowings on the consolidated balance sheet.

~~Table of Contents~~

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~~the Company’s consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires usthe Company to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on ~~our~~its consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment and the Second Amendment: (A) in respect of revolving loans, (1) ~~we are~~the Company is charged a facility fee equal to 0.40% of the total revolving credit facility commitment and (2) the specified margin is 2.35% for LIBOR borrowings and 1.35% for ABR borrowings, which facility fee rate and specified margins will remain in effect until the end of the first fiscal quarter ending after the end of any period in which any portion of the term loan facility remains outstanding or the testing of any financial covenant in the Credit Agreement is suspended (the ~~“specified~~

Table of Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

“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.~~covenants. Among other requirements, the Credit Agreement (a) limits the amount of priority debt (as defined in the Credit Agreement) held by ~~our~~the Company’s restricted subsidiaries to no more than 20% of ~~our~~the Company’s consolidated total capitalization (as defined in the Credit Agreement), (b) limits ~~our~~the Company’s permissible consolidated debt to capitalization ratio to a maximum of 0.55 to 1.0, (c) requires usthe Company 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’~~the Company’s ability to incur additional indebtedness, pay dividends and other distributions (the restriction on dividends and other distributions does not apply to subsidiaries), and make voluntary prepayments on or defeasance of ~~our~~the Company’s 4.02% Senior Notes due August 2025, 4.32% Senior Notes due February 2027, the notes or certain other convertible securities, (e) requires ~~our~~the Company’s consolidated EBITDA not to be less than or equal to (i) ~~$10 million~~$10,000 as of December 30, 2021 for the two consecutive fiscal quarters then ending, (ii) ~~$25 million~~$25,000 as of March 31, 2022 for the three consecutive fiscal quarters then ending, (iii) ~~$50 million~~$50,000 as of June 30, 2022 for the four consecutive fiscal quarters then ending, (iv) ~~$65 million~~$65,000 as of September 29, 2022 for the four consecutive fiscal quarters then ending, or (v) ~~$70 million~~$70,000 as of December 29, 2022 for the four consecutive fiscal quarters then ending, (f) requires ~~our~~the Company’s consolidated liquidity not to be less than or equal to (i) ~~$100 million~~$100,000 as of September 30, 2021, (ii) ~~$100 million~~$100,000 as of December 30, 2021, (iii) ~~$100 million~~$100,000 as of March 31, 2022, (iv) ~~$100 million~~$100,000 as of June 30, 2022, or (v) ~~$50 million~~$50,000 as of the end of any fiscal quarter thereafter until and including the fiscal quarter ending December 29, 2022; however, each such required minimum amount of consolidated liquidity would be reduced to ~~$50 million~~$50,000 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~~the Company 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~~$40,000 plus certain adjustments, or (ii) during ~~our~~the Company’s 2022 fiscal year in excess of ~~$50 million~~$50,000 plus certain adjustments.

Pursuant to the Credit Agreement, the Company is required to apply net cash proceeds received from certain events, including certain asset disposition, casualty losses, condemnations, equity issuances, capital contributions, and the incurrence of certain debt, to prepay outstanding term loans. During the 13 weeks ended March 31, 2022, approximately $820 in asset sale proceeds were applied to the term loan balance. In addition, if, at any time during the specified period, the Company’s unrestricted cash on hand exceeds $75,000, the Company is required to prepay revolving loans under the Credit Agreement by the amount of such excess, without a corresponding reduction in the revolving commitments under the Credit Agreement.

In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the Credit Agreement).

The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.

~~Amendments to~~

Note Purchase Agreements

~~The~~

At March 31, 2022 and December 30, 2021, the Company’s ~~$90,000,000~~$90,000 of senior notes consist of 2 Purchase Agreements maturing in ~~2021~~2025 through 2027, require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 4.32%.

Table of Contents

~~On July~~THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 ~~2021, the Company~~WEEKS ENDED MARCH 31, 2022

(in thousands, except share and certain purchasers entered into amendments (the “Note Amendments”) to the Note Purchase Agreement, dated June 27, 2013, and the Note Purchase Agreement, dated December 21, 2016 (collectively, the Note Purchase Agreements”). The Note Amendments amend certain covenants and other terms of the Note Purchase Agreements and are identical to the amended covenants that are referenced in the Credit Agreement section above.

per share data)

Convertible Senior Notes

~~During fiscal~~

On September 17, 2020, the Company entered into a purchase agreement to issue and sell ~~$100,050,000~~$100,050 aggregate principal amount of its 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes.”) The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between the Company and U.S. Bank National Association, as trustee.

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

~~Additionally, upon adoption of ASU No. 2020-06, the Company uses the if-converted method when calculating diluted earnings (loss) per share for convertible debt 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.

~~Table of Contents~~

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

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

Table of Contents
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 31, 2022
(in thousands, except share and per share data)

Derivatives

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

The Company entered into two interest rate swap agreements on March 1, 2018 covering ~~$50,000,000~~$50,000 of floating rate debt. The first agreement 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 ~~September 30, 2021)~~March 31, 2022). The Company’s interest rate swap agreement is considered effective and qualifies as a cash flow hedge. The Company assesses, both at the inception of each hedge and on an on-going basis, whether the derivatives that are used in its hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. As of ~~September 30, 2021,~~March 31, 2022, the remaining interest rate swap was considered highly effective. The fair value of the interest rate swap on ~~September 30, 2021~~March 31, 2022 was a liability of ~~$885,000,~~$228, which is included in other ~~long-term obligations~~accrued liabilities in the consolidated balance sheet. The fair value of the interest rate ~~swaps~~swap on December ~~31, 2020,~~30, 2021, was a liability of ~~$1,470,000, of~~$689, which ~~$100,000 was included in other accrued liabilities and $1,370,000~~ was included in other long-term obligations in the consolidated balance sheet. The Company does not expect the interest rate swap to have a material effect on earnings within the next 12 months.

4. Leases

~~5. Leases~~

The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASU No. 2016-02, Leases (Topic 842). The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease.

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

~~Table of Contents~~

Total lease cost consists of the following:


		13 Weeks Ended
Lease Cost	Classification	March 31, 2022		April 1, 2021

Finance lease costs:
Amortization of finance lease assets	Depreciation and amortization	$	705	$	712
Interest on lease liabilities	Interest expense	221		250
		$	926	$	962
Operating lease costs:
Operating lease costs	Rent expense	$	6,377	$	6,321
Variable lease cost	Rent expense	(163)		(15)
Short-term lease cost	Rent expense	36		35
		$	6,250	$	6,341

Table of Contents

13 Weeks

13 Weeks

39 Weeks

39 Weeks

Ended

Ended

Ended

Ended

Lease Cost

Classification

September 30, 2021

September 24, 2020

September 30, 2021

September 24, 2020

(in thousands)

Finance lease costs:







Amortization of finance lease assets

Depreciation and amortization

$
677

$
707

$
2,057

$
2,137

Interest on lease liabilities

Interest expense

234

263

724

794

$
911

$
970

$
2,781

$
2,931

Operating lease costs:



Operating lease costs

Rent expense

$
6,365

$
6,357

$
19,151

$
19,236

Variable lease cost

Rent expense

144

124

(29)

371

Short-term lease cost

Rent expense

35

113

107

269

$
6,544

$
6,594

$
19,229

$
19,876

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

Additional information related to leases is as follows:

13 Weeks

13 Weeks

39 Weeks

39 Weeks

Ended

Ended

Ended

Ended
Other Information

September 30, 2021

September 24, 2020

September 30, 2021

September 24, 2020

(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:





Financing cash flows from finance leases

$
736

$
584

$
2,065

$
1,389
Operating cash flows from finance leases

234

263

724

794
Operating cash flows from operating leases

8,253

4,963

23,545

$
11,376

Right of use assets obtained in exchange for new lease obligations:

Finance lease liabilities

—

1,200

—

1,364
Operating lease liabilities

287

14

1,862

9,644

September 30, 2021

December 31, 2020

(in thousands)
Finance leases:

Property and equipment – gross

$
75,318

$
75,322
Accumulated depreciation and amortization

(57,684)

(55,547)
Property and equipment - net

$
17,634

$
19,775


	13 Weeks Ended
Other Information	March 31, 2022		April 1, 2021

Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	584	$	630
Operating cash flows from finance leases	221		250
Operating cash flows from operating leases	7,124		7,393

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


	March 31, 2022		December 30, 2021

Finance leases:
Property and equipment – gross	$	75,195	$	75,124
Accumulated depreciation and amortization	(58,901)		(58,197)
Property and equipment - net	$	16,294	$	16,927

Remaining lease terms and discount rates are as follows:

Lease Term and Discount Rate

September 30, 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

4.58%

4.62%
Operating leases

4.52%

4.53%

Lease Term and Discount Rate

March 31, 2022

December 30, 2021

Weighted-average remaining lease terms:

Finance leases

8 years

Operating leases

13 years

Weighted-average discount rates:

Finance leases

4.57

4.58

Operating leases

4.51

4.48

~~Table of Contents~~

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. Deferred rent payments of approximately ~~$3,649,000~~$1,856 for the Company’s operating leases have been included in the total operating lease obligations as of ~~September 30, 2021,~~March 31, 2022, of which approximately ~~$1,039,000~~$735 is included in long-term operating lease obligations.

5. Income Taxes

The Company’s effective income tax rate ~~adjusted for earnings (losses) from noncontrolling interests,~~ for the 13 ~~and 39~~ weeks ended ~~September 30,~~March 31, 2022 and April 1, 2021 was ~~7.9%~~30.5% and ~~27.6%~~27.7%, ~~respectively, and was 26.9% and 37.3% for~~respectively. During the 13 ~~and 39~~ weeks ended ~~September 24, 2020, respectively. The Company’s effective~~April 1, 2021, the Company filed income tax ~~rate~~refund claims of $24,151 related to its fiscal 2020 tax return, of which $1,828 was received in fiscal 2021, and $22,323 was received during the 13 ~~and 39~~ weeks ended ~~September 24, 2020 benefitted from several accounting method changes~~March 31, 2022. An additional $636 of interest was received during the 13 weeks ended March 31, 2022 and ~~the March 27, 2020 signing of the CARES Act, one of the provisions of which allows the Company’s 2019 and 2020 taxable losses to be carried back to prior fiscal years during which the federal~~is included within income tax ~~rate was 35%, compared to~~benefit in the ~~current statutory federal income tax rate~~consolidated statement of ~~21%~~earnings (loss). The Company does not include the income tax expense or benefit related to the net earnings or loss attributable to noncontrolling interest in its income tax expense or benefit as the entity is considered a pass-through entity and, as such, the income tax expense or benefit is attributable to its owner.

During the 3913 weeks ended ~~September 30,~~April 1, 2021, the Company received the remaining ~~$5,900,000~~$5,900 of requested tax refunds from its fiscal 2019 tax return. ~~Also during the 39 weeks ended September 30, 2021, the Company filed income tax refund claims~~

Table of ~~$24,200,000 related to its fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. The Company received $1,800,000 of this refund during~~Contents

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 31, 2022

(in thousands, except share and per share data)

6. Joint Venture Transactions

During the 13 weeks ended ~~September 30, 2021. Additional income tax loss carryforwards are expected to be generated during fiscal 2021 that will benefit future years.~~

~~7. Joint Venture Transactions~~

During the 39 weeks ended September 30, 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 39 weeks ended September 30,April 1, 2021, the Company sold its interest in an equity investment without a readily determinable fair value for ~~$4,150,000~~$4,150 and recorded a gain of ~~$2,079,000,~~$2,079, which is included in gain ~~(loss)~~ on disposition of property, equipment and other assets in the consolidated statement of earnings (loss).

~~Table of Contents~~

8.7. Business Segment Information

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

Following is a summary of business segment information for the 13 weeks March 31, 2022 and ~~39 weeks ended September 30, 2021 and September 24, 2020 (in thousands):~~

April 1, 2021:


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

13 Weeks Ended	Theatres		Hotels/ Resorts		Corporate Items		Total
April 1, 2021
Revenues	$	22,562	$	28,125	$	100	$	50,787
Operating loss	$	(25,639)	$	(5,708)	$	(4,314)	$	(35,661)
Depreciation and amortization	$	12,786	$	5,127	$	66	$	17,979

13 Weeks Ended



Hotels/

Corporate


September 30, 2021

Theatres

Resorts

Items

Total
Revenues

$
79,996

$
65,803

$
63

$
145,862
Operating income (loss)

(2,604)

13,458

(4,581)

6,273
Depreciation and amortization

12,636

5,018

76

17,730

13 Weeks Ended



Hotels/

Corporate


September 24, 2020

Theatres

Resorts

Items

Total
Revenues

$
7,354

$
26,178

$
59

$
33,591
Operating loss

(37,174)

(6,925)

(3,888)

(47,987)
Depreciation and amortization

13,353

5,210

127

18,690

39 Weeks Ended



Hotels/

Corporate


September 30, 2021

Theatres

Resorts

Items

Total
Revenues

$
154,859

$
134,079

$
258

$
289,196
Operating income (loss)

(46,458)

5,511

(14,551)

(55,498)
Depreciation and amortization

38,807

15,192

204

54,203

39 Weeks Ended



Hotels/

Corporate


September 24, 2020

Theatres

Resorts

Items

Total
Revenues

$
118,414

$
82,253

$
317

$
200,984
Operating loss

(78,788)

(32,459)

(12,002)

(123,249)
Depreciation and amortization

40,245

15,955

368

56,568

Table of Contents

THE MARCUS CORPORATION

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

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and elsewhere in this Form 10-Q are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the adverse effects of the COVID-19 pandemic on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the duration of the COVID-19 pandemic and related government restrictions and ~~social distancing requirements and~~ the level of customer demand following the relaxation of such requirements; (3) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (particularly following the COVID-19 pandemic, during which the ~~production of new movie content temporarily ceased and~~ release dates for certain motion pictures have been postponed), as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (4) the effects of adverse economic conditions in our markets, including but not limited to, those caused by the COVID-19 pandemic; (5) the effects of adverse economic conditions, including but not limited to, those caused by the COVID-19 pandemic, on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) the effects on our occupancy and room rates caused by the COVID-19 pandemic and the effects on our occupancy and room rates ofcaused by the relative industry supply of available rooms at comparable lodging facilities in our ~~markets once hotels and resorts have more fully reopened;~~markets; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (9) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our business; (10) the effects of changes in the availability of and cost of labor and other supplies essential to the operation of our business; (11) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; ~~(11)~~(12) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; ~~(12)~~(13) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, other incidents of violence in public venues such as hotels and movie theatres or epidemics (such as the COVID-19 pandemic);and ~~(13)~~(14) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, including developments related to the COVID-19 pandemic, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Our forward-looking statements are based upon our assumptions, which are based upon currently available information, including assumptions about our ability to manage difficulties associated with or related to the COVID-19 pandemic; the assumption that our theatre closures, hotel closures and restaurant closures are not expected to be permanent or to re-occur; the continued availability of our workforce; and the temporary and long-term effects of the COVID-19 pandemic on our business. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS

General

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

30, 2021.

~~Table of Contents~~

We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The ~~third~~first quarter of fiscal 2022 consisted of the 13-week period beginning on December 31, 2021 and ended on March 31, 2022. The first quarter of fiscal 2021 consisted of the 13-week period beginning on July 2, 2021 and ended on September 30, 2021. The third quarter of fiscal 2020 consisted of the 13-week period beginning June 26, 2020 and ended on September 24, 2020. The first three quarters of fiscal 2021 consisted of the 39-week period beginning on January 1, 2021 and ended on ~~September 30,~~April 1, 2021. ~~The first three quarters~~Our primary

Table of ~~fiscal 2020 consisted of the 39-week period beginning December 27, 2019 and ended on September 24, 2020. Our primary~~ Contents

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

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

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

Impact of the COVID-19 Pandemic

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

fiscal 2022.

We began fiscal ~~2021~~2022 with approximately 52% of our theatres open. As state and local governments eased restrictions in several of our markets and movie studios released several new films, we gradually reopened theatres during fiscal 2021. We ended the fiscal 2021 third quarter with approximately 97%all of our theatres open ~~(including two theatres in Louisiana that have temporarily reclosed due to hurricane damage). 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 three quarters 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. While still below pre-COVID-19 levels, attendance has continued to gradually ~~improved beginning in June 2021~~improve as the number of vaccinated individuals increased, more films ~~were~~are released, and ~~customer~~customers indicate increasing willingness to return to movie ~~theatres increased.~~

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 three quarters 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 reduced revenues as compared to prior pre-COVID-19 pandemic years, although hotel occupancy has been increasing throughout the fiscal 2021 year. We reopened one of our two ~~SafeHouse~~^® ~~restaurants and bars in June 2021.~~

Maintaining and protecting a strong balance sheet has always been a core philosophy of The Marcus Corporation during our 86-year history, and, despite the COVID-19 pandemic, our financial position remains strong. As of September 30, 2021, we had a cash balance of approximately $9 million, $188 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio (including short-term borrowings) was 0.40. With our strong liquidity position, combined with the expected receipt of additional state grants, 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 reduced revenues during these periods. We will continue to work to preserve cash and maintain strong liquidity to endure the impacts of the global pandemic, even if it continues for a prolonged period of time.

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 $50.0 million. In conjunction with the amendment, we extended the maturity date of the term loan facility to September 22, 2022.

~~Table of Contents~~

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 have delayed receipt of our remaining expected income tax refund. We anticipate receiving the remaining refund during the 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 and continuing into fiscal 2021, a number of states elected to provide grants to certain businesses most impacted by the COVID-19 pandemic, utilizing funds received by the applicable state under provisions of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) or subsequent federal relief programs. We received $4.9 million of these prior year grants in January 2021. We were awarded and received an additional $1.3 million in theatre grants during the first quarter of fiscal 2021 and were awarded and received an additional $1.9 million in hotel grants during the third quarter of fiscal 2021, further contributing to our strong liquidity position as of September 30, 2021. We have recently applied for additional state grants totaling approximately $4.6 million for theatres in two states that, if approved, would benefit our fiscal 2021fourth quarter.

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 net proceeds of approximately $4.2 million. During the third quarter of fiscal 2021, we sold several land parcels, generating additional net proceeds of approximately $4.8 million. As of September 30, 2021, we had letters of intent or contracts to sell several pieces of real estate with a total carrying value of $12.8 million, a significant portion of which we currently anticipate closing during the fiscal 2021 fourth quarter. We believe we may receive total sales proceeds from real estate sales during the next 12-15 months totaling approximately $15-30 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.

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

We ~~are~~were very encouraged by the ~~recent~~ performance of multiple films released during the second half of fiscal 2021 and over the holiday season into fiscal 2022. Sony’s Spider-Man: No Way Home, which was released in ~~September~~mid-December and ~~October, including~~ ~~Shang-Chi and~~continued its strong performance during the ~~Legend~~first quarter of fiscal 2022, became the best performing film since the onset of the ~~Ten Rings~~~~, a Marvel film released by Disney exclusively in movie theatres. Following up on~~pandemic and has generated the ~~success~~3rd highest U.S. admission revenues of ~~Shang-Chi and the Legend of the Ten Rings~~~~, Disney recently announced that~~ all ~~of its remaining films for 2021 would receive an exclusive theatrical window.~~time. Total theatre division revenues, expressed as a percentage of fiscal 2019 revenues, ~~have~~ increased inevery quarter of fiscal 2021, increasing from 20% in the first quarter to ~~date, including an increase from 16%~~32% in ~~January 2021 to 48%~~the second quarter, 59% in ~~June 2021, 55% in July 2021, 63% in August 2021~~the third quarter and ~~60% in September 2021. Our relative performance compared to 2019 has improved further early~~82% in the fourth quarter. Total theatre division revenues in the first quarter of fiscal 2021. As described further below in the Theatres section, a significant number of films originally scheduled to be released during fiscal 2020 and the first half of fiscal 2021 were delayed until later in fiscal 2021 or fiscal 2022 ~~further increasing the quality and quantity of films that we expect to be available during those future time periods.~~

As we expected, the primary customer for hotels during the first three quarters of fiscal 2021 continued to come from the “drive-to leisure” market. Demand from this customer segment has exceeded our expectations. Most organizations implemented travel bans at the onset of the pandemic, only allowing essential travel. It is likely 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. Total hotel division revenues, expressed as a percentage of fiscal 2019 revenues ~~have also increased throughout~~was 69%. There was a limited number of new films released during the first quarter of fiscal ~~2021~~2022 as studios waited for the Omicron variant to ~~date, including~~subside.

We began fiscal 2022 with all eight of our company-owned and managed hotels open. The majority of our restaurants and bars in our hotels and resorts were open during the first quarter of fiscal 2022, operating in some cases with reduced operating hours. The majority of our hotels and restaurants are generating reduced revenues as compared to pre-COVID-19 pandemic years, although hotel occupancy continues to improve as the travel activity increases. The primary customer for hotels during the first quarter of fiscal 2022 continued to come from the leisure travel market. While business travel remained limited during the first quarter of fiscal 2022, we continued to see an increase in travel from ~~49% in January 2021 to 71% in June 2021, 90% in July 2021, 85% in August 2021~~this customer segment, particularly from small and ~~97% in September 2021, with the most recent improvement coinciding with busy summer leisure travel and several demand-generating events in certain key markets.~~mid-size group activity. As of the date of this report, our group room revenue bookings for fiscal ~~2022 -~~ 2022—commonly referred to in the hotels and resorts industry as “group pace” - —is running ~~approximately 20%~~ behind where we ~~were~~would typically be at ~~the~~this same time in ~~fiscal 2019~~prior years (pre-pandemic), but ~~that is an improvement~~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. ~~Banquet~~With companies beginning to implement return to office plans, we remain optimistic that business travel will continue to increase during fiscal 2022. Total hotel division revenues, expressed as a percentage of fiscal 2019 revenues, have also increased throughout fiscal 2021 and ~~catering revenue pace for~~into fiscal 2022, ~~is also running behind where we would typically be at this same time~~including an increase during fiscal 2021 from 51% in ~~prior years, but not as much as group room revenues, due~~the first quarter

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

~~Table~~Maintaining and protecting a strong balance sheet has always been a core philosophy of ~~Contents~~

~~Both of~~The Marcus Corporation during our operating divisions are experiencing challenges related to a labor shortage that has arisen as the country emerges from the pandemic. Difficulties in hiring new associates after significantly reducing staffing during the height of87-year history, and, despite the COVID-19 pandemic, our financial position remains strong. As of March 31, 2022, we had a cash balance of approximately $19.4 million, $221.4 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio (including short-term borrowings) was 0.37. With our strong liquidity position, combined with cash generated from operations and proceeds from the sale of surplus real estate (discussed below), we believe we are positioned to meet our obligations as they come due and continue to sustain our operations throughout fiscal 2022 and 2023, even if our properties continue to generate reduced revenues during these periods.

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

We 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 2022, we sold two land parcels, generating net proceeds of approximately $3.4 million. We believe we may ~~impact our ability to service our increasing customer counts~~receive additional sales proceeds from real estate sales during the remainder of fiscal 2022 totaling approximately $5 - $15 million, depending upon demand for the real estate in ~~both theatres and hotels and may also increase labor costs in future periods.~~

question.

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

Overall Results

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

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2020

Amt.

Pct.

F2021

F2020

Amt.

Pct.

Revenues

$
145.9

$
33.6

$
112.3

334.2
%
$
289.2

$
201.0

$
88.2

43.9
%
Operating income (loss)

6.3

(48.0)

54.3

113.1
%

(55.5)

(123.2)

67.7

55.0
%
Other income (expense)

(4.4)

(6.0)

1.6

26.8
%

(13.2)

(13.6)

0.4

3.0
%
Net earnings (loss) attributable to The Marcus Corp.

$
1.8

$
(39.4)

$
41.2

104.5
%
$
(49.7)

$
(85.8)

$
36.1

42.0
%
Net earnings (loss) per common share - diluted:

$
0.06

$
(1.30)

$
1.36

104.6
%
$
(1.66)

$
(2.84)

$
1.18

41.5
%


	First Quarter
					Variance
	F2022		F2021		Amt.		Pct.
Revenues	$	132.2	$	50.8	$	81.5	160.4	%
Operating income (loss)	(16.8)		(35.7)		18.9		52.9	%
Other income (expense)	(4.7)		(3.2)		(1.4)		(44.2)	%
Net earnings (loss) attributable to The Marcus Corp.	$	(14.9)	$	(28.1)	$	13.2	47.0	%
Net earnings (loss) per common share - diluted:	$	(0.48)	$	(0.93)	$	0.45	48.4	%

Revenues increased and operating income (loss), net earnings (loss) attributable to The Marcus Corporation and net earnings (loss) per diluted common share improved significantly during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 compared to the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2020.~~2021. Increased revenues and reduced operating losses from both our theatre division and hotels and resorts division contributed to the improvement during ~~the~~fiscal 2022 compared to fiscal 2021, ~~periods compared to the fiscal 2020 periods,~~ during which ~~the majority~~some of our theatres ~~and hotels~~ were closed for ~~large~~ portions of the ~~second~~first quarter and ~~third quarters~~travel was significantly reduced due to the impact of the COVID-19 pandemic. Our theatres and hotels were operating fairly normally during the first two and one-half months of fiscal 2020 until the onset of the pandemic in mid-March. Net loss attributable to The Marcus Corporation and net loss per diluted common share during the first three quarters of fiscal 2020 were favorably impacted by a favorable income tax benefit described below.

Our operating income (loss) during the third quarter and first three quarters of fiscal 2021 was favorably impacted by state government grants of approximately $2.0 million and $3.3 million, respectively, or approximately $0.05 and $0.08 per diluted common share, respectively. Our operating loss during the first three quarters 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 performance during the third quarter of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $1.6 million, or approximately $0.04 per diluted common share, including payments to and on behalf of laid off employees. Nonrecurring expenses during the fiscal 2020 third 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. In addition, impairment charges related to several theatre locations negatively impacted our fiscal 2020 third quarter operating income by approximately $765,000, or approximately $0.02 per diluted common share. Our operating performance during the first three quarters of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $10.1 million, or approximately $0.23 per diluted common share, related to the expenses in the third 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 three quarters operating loss by approximately $9.5 million, or approximately $0.22 per diluted common share.

~~Table of Contents~~

Operating losses from our corporate items, which include amounts not allocable to the business segments, increased during the fiscal ~~2021 periods~~2022 first quarter compared to the fiscal ~~2020 periods~~2021 first quarter due primarily to increased non-cash long-term incentive compensation ~~expenses and the fact that we reduced salaries and bonus accruals during fiscal 2020 to preserve liquidity at the onset of the pandemic.~~expenses. Net earnings (loss) attributable to The Marcus Corporation during the first quarter of fiscal ~~2021 periods~~2022 was ~~negatively~~favorably impacted by ~~increased~~decreased interest expense compared to the first quarter of fiscal ~~2020 periods, partially~~2021, offset by lower gains on disposition of property, equipment and other assets during the fiscal 2022 first quarter as compared to the first quarter of fiscal 2021. Our operating loss during the first quarter of fiscal 2021 ~~periods.~~was favorably impacted by state government grants of approximately $1.3 million, or approximately $0.03 per diluted common share.

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Our interest expense totaled ~~$4.6~~$4.1 million for the ~~third~~first quarter of fiscal 2022 compared to $4.8 million for the first quarter of fiscal 2021, ~~compared to $4.1 million for the third quarter of fiscal 2020, an increase~~a decrease of approximately $500,000, or 11.3%. Our interest expense totaled approximately $14.4 million for the first three quarters of fiscal 2021 compared to approximately $10.2 million for the first three quarters of fiscal 2020, an increase of approximately $4.2$0.8 million, or ~~41.0%~~15.5%. The ~~increase~~decrease 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 third quarter and first three quarters of fiscal 2021 due to the fact that we incurred approximately $540,000 and $1.8 million, respectively, in noncash amortization of debt issuance costs, compared to approximately $510,000 and $666,000 of such costs during the third quarter and first three quarters 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.

We did not have any significant variations in investment income or other expenses during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 compared to the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2020.~~2021. We reported net gains on disposition of property, equipment and other assets of ~~$868,000 and $2.9~~$0.4 million ~~respectively,~~ during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021,~~2022, compared to ~~small~~ net ~~losses~~gains on disposition of property, equipment and other assets of $2.2 million during the first quarter of fiscal ~~2020 periods.~~2021. The net gain on disposition of property, equipment and other assets during the ~~third~~first quarter of fiscal ~~2021~~2022 was due primarily to the sale of surplus land. The net gain on disposition of property, equipment and other assets during the first ~~three quarters~~quarter of fiscal 2021 included the sale of an equity investment in a joint venture. The timing of periodic sales and disposals of our property, equipment and other assets varies from quarter to quarter, resulting in variations in our reported gains or losses on disposition of property, equipment and other assets. We anticipate additional disposition gains or losses from periodic sales of property, equipment and other assets during ~~the fourth quarter of~~ fiscal ~~2021~~2022 and beyond.

Equity losses from unconsolidated joint ventures during the third quarter and first three quarters of fiscal 2020 included an other-than-temporary impairment loss of approximately $811,000 in which we determined that the fair value of our equity method investment in a hotel joint venture was less than its carrying value as of September 24, 2020.

We reported ~~income tax expense for the third quarter of fiscal 2021 of $150,000 and~~ an income tax benefit for the first ~~three quarters~~quarter of fiscal ~~2021~~2022 of ~~$18.9~~$6.5 million compared to an income tax benefit of ~~$14.5~~$10.8 million ~~and $51.0 million, respectively,~~ during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2020.~~2021. The larger income tax benefit during the fiscal ~~2020 periods~~2021 period was primarily the result of the significant losses before income taxes incurred as a result of the ~~closing of the majority of our properties in March 2020 and the subsequent~~ reduction in our operating performance due to the impact of the COVID-19 ~~pandemic.~~pandemic as described above. Our fiscal 2020 income tax benefit was also favorably impacted by an adjustment of approximately $17.4 million, or approximately $0.56 per diluted common share, resulting from several accounting method changes and the March 27, 2020 signing of the CARES Act. One of the provisions of the CARES Act allowed our 2019 and 2020 taxable losses to be carried back to prior fiscal years during which the federal2022 first quarter effective income tax rate was ~~35% compared to the current statutory federal income tax rate of 21%~~30.5%. Our fiscal 2021 first ~~three quarters~~quarter effective income tax rate was 27.6%. Our fiscal 2020 first three quarters effective income tax rate was 37.3% and benefitted from the $17.6 million adjustment described above. Excluding this favorable adjustment to income tax benefit, our effective income tax rate during the first three quarters of fiscal 2020 was 24.5%27.7%. We anticipate that our effective income tax rate for the remaining ~~quarter~~quarters of fiscal ~~2021~~2022 may be in the ~~24-26%~~24-28% range, excluding any potential changes in federal or state income tax rates or other one-time tax benefits. Our actual fiscal ~~2021~~2022 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

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 three quarters 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.

~~Table of Contents~~

Theatres

~~Theatres~~

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

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2020

Amt.

Pct.

F2021

F2020

Amt.

Pct.

Revenues

$
80.0

$
7.4

$
72.6

987.8
%
$
154.9

$
118.4

$
36.5

30.8
%
Operating loss

(2.6)

(37.2)

34.6

93.0
%

(46.5)

(78.8)

32.3

41.0
%
Operating margin (% of revenues)

(3.3)
%

N/A
%

(30.0)
%

(66.5)
%


	First Quarter
							Variance
	F2022			F2021			Amt.		Pct.
Revenues	$	79.5		$	22.6		$	56.9	252.3	%
Operating income (loss)	(8.0)			(25.6)			17.6		68.8	%
Operating margin (% of revenues)	(10.1)		%	(113.6)		%

Our theatre division revenues increased and operating loss decreased significantly during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021 compared to the third quarter and first three quarters of fiscal 2020 due entirely to the fact that we temporary closed~~2022 with all of our theatres ~~on March 17, 2020~~open and new films released by movie studios, compared to the first quarter of fiscal 2021 in which a significant number of our theatres were temporarily closed in response to the COVID-19 ~~pandemic. Other than six theatres that~~pandemic and new film releases were reopened during the last week of the fiscal 2020 second quarter and a phased reopening of a larger portion of our theatre circuit in late August 2020, all of our theatres remained closed during the majority of the third quarter of fiscal 2020. Our theatres 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, ending the fiscal 2021 second quarter with approximately 95% of our theatres open and ending the fiscal 2021 third quarter with approximately 97% of our theatres open (including two theatres in Louisiana that have temporarily reclosed due to hurricane damage).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~~Our 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.~~

~~Our operating loss~~ during the first ~~three quarters~~quarter of fiscal 2022. Our fiscal 2021 ~~was negatively impacted by impairment charges of approximately $3.7 million primarily related to surplus real estate that we intend to sell. Conversely,~~first quarter operating loss would have been even larger if not for a nonrecurring state government grant of approximately $1.3 million that favorably impacted our theatre division operating ~~loss during the first three quarters~~loss.

Table of ~~fiscal 2021.~~

In addition to the impact of reduced attendance due to the theatre closings, our theatre division operating loss during the third quarter and first three quarters of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $1.2 million and $4.6 million, respectively, related to expenses incurred (primarily payroll continuation payments to employees temporarily laid off) due to the closing of all of our movie theatres during the fiscal 2020 periods and subsequent costs incurred in the second and third quarters of fiscal 2020 for cleaning, supply purchases and employee training, among other items, related to the reopening of our theatre properties and implementing new operating protocols. Impairment charges related to intangible assets and several theatre locations also negatively impacted our theatre division third quarter and first three quarters of fiscal 2020 operating loss by approximately $765,000 and $9.5 million, respectively.

Contents

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

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2020

Amt.

Pct.

F2021

F2020

Amt.

Pct.

Admission revenues

$
38.2

$
3.1

$
35.1

1,126.7
%
$
73.9

$
58.7

$
15.2

25.9
%
Concession revenues

36.0

3.3

32.7

1,008.6
%

68.9

50.3

18.6

37.1
%
Other revenues

5.8

0.9

4.9

520.3
%

12.0

9.1

2.9

30.4
%

80.0

7.3

72.7

996.6
%

154.8

118.1

36.7

31.0
%
Cost reimbursements

—

0.1

(0.1)

(98.3)
%

0.1

0.3

(0.2)

(68.1)
%
Total revenues

$
80.0

$
7.4

$
72.6

987.8
%
$
154.9

$
118.4

$
36.5

30.8
%


	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	%

~~Table of Contents~~

As described above, revenues were ~~virtually non-existent~~significantly reduced during the ~~second and third quarters~~first quarter of fiscal ~~2020~~2021 due to the temporary ~~closing of all of~~closures and reduced operating days and hours at our theatres ~~on March 17, 2020~~ in response to the COVID-19 pandemic. Prior to reopening approximately 80% of our theatres during the final month of our fiscal 2020 third quarter for a very limited number of new films, the only revenues generated during the majority of the second and third quarters of fiscal 2020 were from the six theatres opened in June in order to begin testing our new operating protocols, as well as additional revenues from five parking lot cinemas opened during the quarter, curbside sales of popcorn, pizza and other food items and restaurant takeout sales from our three Zaffiro’s restaurants and bars. As a result, we believe it is also beneficial to compare our revenues to pre-pandemic levels. The following table compares the components of revenues for the theatre division for the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 to the ~~third~~first quarter ~~and first three quarters~~ of fiscal 2019 (in millions, except for variance percentage):

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2019

Amt.

Pct.

F2021

F2019

Amt.

Pct.

Admission revenues

$
38.2

$
69.8

$
(31.6)

(45.2)
%
$
73.9

$
211.8

$
(137.9)

(65.1)
%
Concession revenues

36.0

57.0

(21.0)

(37.0)
%

68.9

172.1

(103.2)

(60.0)
%
Other revenues

5.8

9.8

(4.0)

(40.8)
%

12.0

29.5

(17.5)

(59.4)
%

80.0

136.6

(56.6)

(41.4)
%

154.8

413.4

(258.6)

(62.6)
%
Cost reimbursements

—

0.2

(0.2)

(79.7)
%

0.1

0.7

(0.6)

(86.5)
%
Total revenues

$
80.0

$
136.8

$
(56.8)

(41.5)
%
$
154.9

$
414.1

$
(259.2)

(62.6)
%


	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)	%

We acquired Movie Tavern theatres on February 1, 2019. Admission revenues decreased 39.4% on a pro forma basis for the acquisition as of the first day of fiscal 2019.

According to data received from Comscore (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal ~~2021 third~~2022 first quarter, ~~and first three quarters results,~~ U.S. box office receipts decreased ~~52.8%~~44.1% during our fiscal ~~2021 third~~2022 first quarter ~~and 71.1% during our fiscal 2021 first three quarters~~ compared to the same comparable weeks in fiscal 2019, indicating that our ~~decrease in admission revenues during the third quarter of fiscal 2021 of 45.2% outperformed the industry by 7.6 percentage points. Our~~pro forma decrease in admission revenues during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 of ~~65.1%~~39.4% outperformed the industry by ~~6.0~~4.7 percentage points. Based upon this metric, we believe we ~~have been~~were once again one of the top performing theatre circuits during the first quarter of fiscal ~~2021 of~~2022 compared to the top 10 circuits in the U.S. Additional data received and compiled by us from Comscore indicates our admission revenues during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 represented approximately ~~3.5% and 3.6%, respectively,~~3.4% of the total admission revenues in the U.S. during the ~~periods~~period (commonly referred to as market share in our industry). This represents a notable increase over our reported market share of approximately 3.1% during the comparable fiscal 2019 ~~periods,~~period, prior to the pandemic. ~~Closed theatres in other markets in the U.S. partially 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.

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

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.

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Total theatre attendance increased significantly during the ~~third~~first quarter of fiscal 2022 compared to the first quarter of fiscal 2021, ~~compared to the third quarter~~when a significant portion of ~~fiscal 2020, when~~ our theatres were ~~primarily~~temporarily closed. Total theatre attendance increased ~~18.7%~~238.3% during

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the first ~~three quarters~~quarter of fiscal ~~2021~~2022 compared to the first ~~three quarters~~quarter of fiscal ~~2020,~~2021, resulting in increases in both admission revenues and concession revenues. Conversely, a decrease in the number of new films ~~the lack of awareness of theatres being open (due in part to limited new film advertising), ongoing state~~ and ~~local capacity restrictions and~~lingering customer concerns regarding visiting indoor businesses ~~all~~ negatively impacted attendance during the ~~third~~first quarter ~~and first three quarters of~~ fiscal ~~2021~~2022 as compared to the same ~~periods~~period in fiscal 2019. As described above, attendance from MPC events (estimated to average 13 guests per event) partially offset the reduction in traditional movie going attendance, particularly during the fiscal 2021 first quarter.

Our highest grossing films during the fiscal ~~2021 third~~2022 first quarter included ~~Black Widow~~,The Batman, Spider-Man: No Way Home, Uncharted, Sing 2 ~~Shang-Chi~~ and ~~the Legend of the Ten Rings~~, ~~Jungle Cruise~~, ~~Free Guy~~ ~~and~~ Scream~~Space Jam: A New Legacy~~. ~~Three~~All of these five films debuted with an exclusive theatrical run prior to release on streaming services. This compares with four of the top five films in the first quarter of fiscal 2021 that were released “day-and-date” on streaming services. We believe such “day-and-date” releases negatively impact theatrical revenues, particularly in week two and beyond of a films’ release. We also believe “day-and-date” releases increase piracy, further impacting potential revenues. We believe our theatre circuit outperformed its ~~historical market share~~competition on ~~four~~two of our top five revenue producing films during the ~~third~~first quarter of fiscal ~~2021.~~2022. In addition, we believe our overall admission revenue outperformed the industry due in part to the fact that we believe our theatre circuit outperformed its ~~historical market share~~competition on the next tier of ~~films (including all five of the films ranked six thru ten in admissions revenues during the fiscal 2021 third quarter).~~films. Due to the impact of two particularly strong blockbusters released or showing during the ~~third~~first quarter of fiscal ~~2019~~2022 (~~Lion King~~The Batman, Spider-Man: ~~Far From~~No Way Home), the film slate during the ~~third~~first quarter of fiscal ~~2021~~2022 was weighted ~~less~~more towards our top movies compared to the ~~third~~first quarter of fiscal 2021 and fiscal 2019, as evidenced by the fact that our top five films during our fiscal ~~2021 third~~2022 first quarter accounted for ~~49%~~66% of our total box office results, compared to ~~58%~~59% and 39% for the top five films during the ~~third~~first quarter of fiscal 2021 and fiscal 2019 (prior to the pandemic), respectively, both expressed as a percentage of the total admission revenues for the period. ~~A decreased~~An increased reliance on just a few blockbuster films during a given quarter often has the effect of ~~slightly reducing~~increasing our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. As a result of a more ~~balanced~~concentrated film slate ~~and the fact that films released during the fiscal 2021 periods to date have not performed at pre-pandemic admission revenue levels,~~ our overall film rental cost ~~decreased~~increased during the first quarter of fiscal ~~2021 periods~~2022 compared to the same ~~periods~~period in the prior ~~years.~~year.

Our average ticket price increased ~~6.1%~~6.4% during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 compared to the first ~~three quarters~~quarter of fiscal ~~2020~~2021 and increased by ~~8.4%~~18.0% compared to the first ~~three quarters of fiscal 2019 (comparisons to the third~~ quarter of fiscal ~~2020 are not applicable because the majority of our theatres were closed during the third quarter of fiscal 2020).~~2019. A larger proportion of admission revenues from our proprietary premium large format screens (with a higher ticket price) and ~~the increase in MPC events~~a lower mix of films targeted at children and family audiences contributed to the increase in our average ticket price during the first quarter of fiscal 2022. During portions of the first quarter of fiscal 2021 ~~periods, partially offset by the fact that~~ we ~~continued to offer~~also offered older “library” film product for only $5.00 per ticket ~~during portions of the first half of fiscal 2021~~ when there was limited availability of new ~~films.~~

films resulting in a lower average ticket price in the same period in the prior year.

Our average concession revenues per person increased by ~~15.7%~~5.7% during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 compared to the first ~~three quarters~~quarter of fiscal ~~2020~~2021 and increased by ~~24.0%~~36.1% compared to the first ~~three quarters of fiscal 2019 (comparisons to the third~~ quarter of fiscal ~~2020 are not applicable because the majority of our theatres were closed during the third quarter of fiscal 2020). As~~2019. In addition, as customers have returned to “normal” activities such as going to the movie theatre, they have demonstrated a propensity to spend at a higher rate than before the pandemic closures. ~~In addition,~~We also believe a portion of the increase in our average concession revenues per person during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 may be attributed to shorter lines at our concession stand due to reduced attendance (during periods of high attendance, some customers do not purchase concessions because the line is too long). ~~We also~~A small portion of the increase in our average concession revenues per person is attributable to inflationary increases in concessions prices in response to increases in food and labor costs. Finally, we believe that an increased percentage of customers buying their concessions in advance using our website, kiosk or our mobile app likely contributed to higher average concession revenues per person, as our experience has shown that customers are more likely to purchase more items when they order and pay electronically. We expect to continue to report increased average concession revenues per person in future periods, but whether our customers will continue to spend at these current significantly higher levels in future periods is currently unknown.

Other revenues increased by approximately ~~$2.9~~$3.7 million during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 compared to the first ~~three quarters of fiscal 2020 (comparisons to the third~~ quarter of fiscal ~~2020 are not applicable because the majority of our theatres were closed during the majority of the third quarter of fiscal 2020).~~2021. This increase was primarily due to the impact of increased attendance on internet surcharge ticketing fees and preshow and in-app advertising income.

~~Table~~Several films have performed well in the early weeks of ~~Contents~~our fiscal 2022 second quarter, including

Sonic the Hedgehog 2,Fantastic Beasts: The Secrets of Dumbledore, and The Bad Guys. The film product release schedule for the remainder of fiscal 2021, which had been changing in response to reduced near-term customer demand and changing state and local restrictions in various key markets in the U.S. and the world as a result of the ongoing COVID-19 pandemic, has solidified in recent months. With2022 remains strong, ~~performances from~~with several ~~recent films, film studios have shown an increased willingness to begin releasing many of the~~ new ~~films that had previously been delayed. Several films that have contributed to our early fiscal 2021 fourth quarter results include~~ ~~Venom: Let There Be Carnage~~, ~~The Addams Family 2~~, ~~No Time to Die~~, ~~Halloween Kills~~ ~~and~~ ~~Dune~~~~. New~~ films scheduled to be released during the remainder of ~~our~~the fiscal ~~2021 fourth~~2022 second quarter ~~include~~that have potential to perform very well including ~~Eternals~~Doctor Strange in the Multiverse of Madness, ~~Ghostbusters: Afterlife~~Downton Abbey: A New Era, ~~King Richard~~Top Gun: Maverick, ~~Encanto~~Jurassic World: Dominion, ~~West Side Story~~,Lightyear ~~Spider-Man: No Way Home~~, and~~Sing 2~~, The ~~King’s Man~~ Black Phone. ~~and~~ The ~~Matrix Resurrections~~.film slate for the second half of fiscal 2022 also appears very strong. We believe that with a greater percentage of the population now vaccinated and consumer comfort now at post-pandemic highs, and assuming that concerns over the Delta, ~~variant~~Omicron or any new variants of COVID-19 do not result in significant new restrictions, demand for out-of-home entertainment will continue to

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increase during the remainder of fiscal ~~2021 and into fiscal~~ 2022. The early list of films ~~currently~~ scheduled ~~for release~~to be released during fiscal ~~2022 includes a significant number of familiar titles and franchises and~~2023 also appears quite strong.

Revenues for the theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of appropriate “windows” between the date a film is released in theatres and the date a motion picture is released to other channels, including premium video-on-demand (“PVOD”), video on-demand (“VOD”), streaming services and DVD. These are factors over which we have no control. We currently believe that “day-and-date” film release experiments such as those tested by Warner Brothers and Disney during 2021 will not become the ~~norm~~normal plan of distribution as the pandemic fully subsides. Warner Brothers has already indicated that it ~~intends to return~~is returning to an exclusive 45-day theatrical window with a significant number of its films during fiscal ~~2022. After~~2022, beginning with the ~~success of~~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 ~~release~~releases for its upcoming second quarter films, Doctor Strange in the Multiverse of Madness~~Shang-Chi~~ and ~~the Legend of the Ten Rings, Disney announced that the remainder of its fiscal 2021 films would receive an exclusive theatrical window as well.~~Lightyear

We ended the first ~~three quarters~~quarter of fiscal ~~2021~~2022 with a total of 1,064 company-owned screens in 85 theatres, compared to 1,091 company-owned screens in 88 ~~theatres, compared to 1,104 company-owned screens in 90~~ theatres and six managed screens in one theatre at the end of the first ~~three quarters~~quarter of fiscal ~~2020. Early in our~~2021. As of the end of the first quarter of fiscal ~~2021 third quarter, we ceased providing management services to the 6-screen managed theatre noted above. As of~~2022 and the date of this report, 85all of our 88 company-owned theatres ~~have been reopened (including two theatres in Louisiana that have temporarily reclosed due to hurricane damage). Early in our~~are operating. As of the end of the first quarter of fiscal 2021 ~~fourth quarter, we made the decision to not reopen the remaining three closed~~approximately 74% of our theatres ~~consisting of one former budget-oriented theatre~~were open and two Movie Tavern theatres with leases that will expire within the next year. One of the Marcus Wehrenberg theatres that we reopened in May 2021 recently completed a renovation that added DreamLounger recliner seating, as well as ~~Reel Sizzle~~~~® and~~ ~~Take Five~~^SM ~~Lounge outlets, to the theatre.~~

operating.

Hotels and Resorts

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

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2020

Amt.

Pct.

F2021

F2020

Amt.

Pct.

Revenues

$
65.8

$
26.2

$
39.6

151.4
%
$
134.1

$
82.2

$
51.9

63.0
%
Operating income (loss)

13.5

(6.9)

20.4

294.3
%

5.5

(32.5)

38.0

117.0
%
Operating margin (% of revenues)

20.5
%

(26.5)
%

4.1
%

(39.5)
%


	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)		%

Our first quarter is typically the seasonally weakest quarter of our fiscal year for our hotels and resorts division due to the traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned properties. Our hotels and resorts division ~~returned to profitability~~operating loss during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021, reporting operating income~~2022 decreased compared to ~~significant operating losses during~~ the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2020,~~2021, due to significantly increased revenues during the fiscal ~~2021 periods.~~2022 first quarter. All of our company-owned hotels and resorts contributed to the improved operating results during the ~~fiscal 2021 periods. Our fiscal 2021 third~~first quarter ~~operating income benefited from a state government grant totaling approximately $1.9 million. Our hotels and resorts division operating loss during the third quarter and first three quarters~~ of fiscal 2020 was negatively impacted by nonrecurring expenses totaling approximately $443,000 and $5.5 million, respectively, related to costs associated with initially closing our hotels (primarily payments to and on behalf of laid off employees) and extensive cleaning costs, supply purchases and employee training, among other items, related to the reopening of selected hotel properties and implementing new operating protocols.

2022.

~~Table of Contents~~

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


	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	%

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2020

Amt.

Pct.

F2021

F2020

Amt.

Pct.

Room revenues

$
30.9

$
9.8

$
21.1

216.4
%
$
57.3

$
27.6

$
29.7

107.4
%
Food/beverage revenues

16.7

5.4

11.3

208.7
%

32.2

19.6

12.6

64.3
%
Other revenues

13.3

7.8

5.5

69.7
%

33.0

21.4

11.6

54.4
%

60.9

23.0

37.9

164.7
%

122.5

68.6

53.9

78.6
%
Cost reimbursements

4.9

3.2

1.7

54.2
%

11.6

13.6

(2.0)

(15.4)
%
Total revenues

$
65.8

$
26.2

$
39.6

151.4
%
$
134.1

$
82.2

$
51.9

63.0
%

Division revenues increased significantly during the ~~third~~first quarter of fiscal 2021 compared to the third quarter of fiscal 2020 due to the fact that one of our eight company-owned hotels and resorts was closed the entire third quarter of fiscal 2020 (the Saint Kate), three of our company-owned hotels were only open for a portion of the prior year quarter (the Hilton Milwaukee City Center Hotel, the Lincoln Marriott Cornhusker Hotel and the AC Hotel Chicago Downtown) and all of our reopened hotels (including four hotels opened late in our fiscal 2020 second quarter – The Pfister Hotel, the Grand Geneva Resort & Spa, the Skirvin Hilton and the Hilton Madison Monona Terrace) were operating with reduced occupancy rates due to the impact of the COVID-19 pandemic. In addition to the increased revenues during the fiscal 2021 third quarter, hotels and resorts division revenues also increased during the first three quarters of fiscal 20212022 compared to the first ~~three quarters~~quarter 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. All~~ eight of our company-owned hotels and all but one of our managed hotels were open during ~~our third~~the first quarter ~~and first three quarters~~ of fiscal ~~2021. The~~2021, the majority of ~~our restaurants~~these properties were generating significantly reduced revenues and ~~bars in our hotels and resorts were open during the first three quarters of fiscal 2021,~~ operating under applicable state and local restrictions and guidelines, and, in some cases, reduced operating hours. ~~We reopened one of~~In addition, our two SafeHouse

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restaurants and bars ~~in June 2021.~~

~~As a result~~were temporarily closed during the first quarter of ~~the significantly reduced revenues during~~fiscal 2021 (one of our ~~fiscal 2020 periods, we~~SafeHouse restaurants and bars has subsequently reopened).

We believe it is also beneficial to compare our revenues to pre-pandemic levels. The following table compares the components of revenues for the hotels and resorts division for the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 to the ~~third~~first quarter ~~and first three quarters~~ of fiscal 2019 (in millions, except for variance percentage):

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2019

Amt.

Pct.

F2021

F2019

Amt.

Pct.

Room revenues

$
30.9

$
34.2

$
(3.3)

(9.6)
%
$
57.3

$
81.3

$
(24.0)

(29.5)
%
Food /beverage revenues

16.7

20.2

(3.5)

(17.1)
%

32.2

54.6

(22.4)

(40.9)
%
Other revenues

13.3

13.0

0.3

2.1
%

33.0

36.4

(3.4)

(9.3)
%

60.9

67.4

(6.5)

(9.6)
%

122.5

172.3

(49.8)

(28.9)
%
Cost reimbursements

4.9

7.2

(2.3)

(32.3)
%

11.6

27.3

(15.7)

(57.8)
%
Total revenues

$
65.8

$
74.6

$
(8.8)

(11.8)
%
$
134.1

$
199.6

$
(65.5)

(32.8)
%


	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)	%

~~Table of Contents~~

A decline in transient and group business contributed ~~significantly~~ to our reduced revenues during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 compared to the same ~~periods~~quarter of fiscal 2019. A decrease in group business subsequently led to a corresponding decrease in banquet and catering revenues, negatively impacting our reported food and beverage revenues compared to the same ~~periods~~period in fiscal 2019. Other revenues increased during the ~~third~~first quarter of fiscal ~~2021, with a lesser decrease relative to the decrease in room revenues and food and beverage revenues during the first three quarters of fiscal 2021~~2022 compared to the ~~third quarter and~~ first quarter of fiscal 2019, primarily due to increased revenues from one of our condominium hotels and increased ski and ~~golf~~spa revenues at the Grand Geneva^® Resort & Spa (“Grand Geneva”), partially offset by decreased management fees. Cost reimbursements decreased slightly during the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 compared to the ~~third~~first quarter ~~and first three quarters~~ of fiscal 2019 due to reduced revenues and subsequent operating costs at our managed hotels.

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

Third Quarter⁽¹⁾

First Three Quarters⁽¹⁾

Variance

Variance


F2021

F2020

Amt.

Pct.

F2021

F2020

Amt.

Pct.

Occupancy pct.

64.9
%

36.6
%

+28.3
pts
77.3
%

46.9
%

45.8
%

1.1
pts
2.4
%
ADR

$
195.08

$
163.04

$
32.04

19.7
%
$
165.26

$
140.23

$
25.03

17.8
%
RevPAR

$
126.54

$
59.66

$
66.88

112.1
%
$
77.46

$
64.28

$
13.18

20.5
%

~~(1)~~

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


	First Quarter
							Variance
	F2022			F2021			Amt.		Pct.
Occupancy pct.	48.0		%	28.3		%	19.7 pts		69.6	%
ADR	$	147.10		$	133.12		$	13.98	10.5	%
RevPAR	$	70.59		$	37.66		$	32.93	87.4	%

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

RevPAR increased at all eight of our company-owned properties during the ~~third~~first quarter of fiscal ~~2021 compared to the third quarter of fiscal 2020 and increased at seven of our eight company-owned properties during the first three quarters of fiscal 2021~~2022 compared to the first ~~three quarters~~quarter of fiscal ~~2020. The “drive-to leisure”~~2021. Leisure travel ~~customer~~customers provided the most demand during the fiscal ~~2021 periods,~~2022 first quarter, with weekend business ~~quite~~relatively strong at the majority of our properties. During the ~~third~~first quarter of fiscal ~~2021,~~2022, our non-group business represented approximately ~~62%~~73% of our total rooms revenue, compared to approximately ~~55%~~70% during the ~~third~~first quarter of fiscal 2019 prior to the ~~pandemic – an indication that~~pandemic. Although group business continues to ~~lag.~~lag prior years, it has historically been a smaller component of our rooms revenue during the winter months. Non-group retail pricing was very strong in the majority of our markets, with ~~large demand drivers in our Milwaukee market (Milwaukee Bucks playoffs, major league baseball, Summerfest and the Ryder Cup) and~~ significant leisure demand ~~at Grand Geneva~~ contributing to increased occupancy percentages and ADR.

~~As a result~~

Table of ~~the significantly reduced revenues during our fiscal 2020 periods, we~~Contents

We believe it is also beneficial to compare our operating statistics to pre-pandemic levels. The following table sets forth certain operating statistics for the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 and fiscal 2019, including our average occupancy percentage, our ADR, and our RevPAR, for company-owned properties:

Third Quarter⁽¹⁾

First Three Quarters⁽¹⁾

Variance

Variance


F2021

F2019

Amt.

Pct.

F2021

F2019

Amt.

Pct.

Occupancy pct.

65.9
%

83.0
%

(17.1)
pts
(20.6)
%

48.6
%

75.2
%

(26.6)
pts
(35.4)
%
ADR

$
189.82

$
172.12

$
17.70

10.3
%
$
161.49

$
155.91

$
5.58

3.6
%
RevPAR

$
125.10

$
142.84

$
(17.74)

(12.4)
%
$
78.45

$
117.19

$
(38.74)

(33.1)
%

~~(1)~~

These operating statistics represent averages of our seven distinct comparable company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort. The statistics exclude days where individual hotels may have been closed. The statistics for both the 2021 and 2019 periods exclude the Saint Kate, which was closed or had only recently reopened during the majority of the fiscal 2019 periods presented.


	First Quarter
							Variance
	F2022			F2019			Amt.		Pct.
Occupancy pct.	48.9		%	64.6		%	(15.7) pts		(24.3)	%
ADR	$	144.99		$	130.05		$	14.94	11.5	%
RevPAR	$	70.95		$	84.05		$	(13.10)	(15.6)	%

Note: These operating statistics represent averages of our seven distinct comparable company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort. The statistics for both the 2022 and 2019 periods exclude the Saint Kate, which was closed during the majority of the fiscal 2019 period presented.

~~Table of Contents~~

According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal ~~2021 third~~2022 first quarter ~~and first three quarters~~ results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced a decrease in RevPAR of ~~26.1% and 44.5%, respectively,~~17.7% during our fiscal ~~2021 third~~2022 first quarter ~~and first three quarters~~ compared to the same ~~periods~~period 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 ~~19.5% and 41.1%, respectively,~~24.2% during our fiscal ~~2021 third~~2022 first quarter, ~~and first three quarters,~~ again compared to the same ~~periods~~period in fiscal 2019. ~~Thus,~~Therefore, we ~~believe we outperformed the industry during the fiscal 2021 third quarter and first three quarters by approximately 14 and 11 percentage points, respectively. We~~ also believe we outperformed our competitive sets during the ~~fiscal 2021 third~~2022 first quarter ~~and first three quarters~~ by approximately ~~7 and 8~~9 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.

Looking to future periods, overall occupancy in the U.S. has slowly increased since the initial onset of the COVID-19 pandemic in March 2020, reaching its highest level since the start of the pandemic in recent months. In the near term, we expect most demand will continue to come from the ~~drive-to~~ leisure travel segment. Leisure travel in our markets has a seasonal component, ~~to it,~~ peaking in the summer months and slowing down as children return to school and the weather turns colder. ~~Most organizations implemented travel bans at the onset of the pandemic and have generally only allowed essential travel, which will likely limit business travel in the near term, although we~~We are beginning to experience ~~some~~ increases in business travel ~~from this customer segment. There also are indications that many of these~~as corporate travel bans are beginning to be lifted ~~gradually.~~and downtown offices are reopening. Our company-owned hotels have experienced a ~~material~~ decrease in group bookings compared to pre-pandemic periods. As of the date of this report, our group room revenue bookings for fiscal 2022 - commonly referred to in the hotels and resorts industry as “group pace” - is running approximately ~~20%~~12% behind where we were at the same time in fiscal 2019, but ~~that~~despite our reduced group pace as compared to the first quarter of fiscal 2019, our current group pace is an improvement from recent quarters and we are experiencing increased booking activity for fiscal 2022 and beyond. Banquet and catering revenue pace for fiscal 2022 is also running behind where we ~~would typically be~~were at ~~this~~the same time ~~of the year pre-pandemic,~~in fiscal 2019, but not as much as group ~~room revenues,~~pace, due in part to increases in event and wedding bookings.

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 remains 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 three quarters of fiscal 2021, which exceeded our expectations. We will continue to focus on reaching the drive-to leisure market through aggressive campaigns promoting creative packages for our guests. Overall, we generally expect our revenue trends to track or exceed the overall industry trends for our segment of the industry, particularly in our respective markets.

During the ~~third~~first quarter of fiscal ~~2021,~~2022, we ~~assumed~~ceased management of The DoubleTree by Hilton El Paso Downtown and the ~~Coralville~~Courtyard by Marriott El Paso Downtown/Convention Center effective February 28, 2022. Conversely, the first quarter of fiscal 2022 was our first full quarter of operating the Kimpton Hotel ~~& Conference Center~~Monaco Pittsburgh, a hotel acquired in Coralville, Iowa. Owned by the City of Coralville, this 286-room hotel was recently rebranded under the Hyatt Regency brand as Hyatt Regency Coralville Hotel & Conference Center. The property will undergomid-December 2021 in which we have a ~~phased renovation focusing on the restaurant and all hotel guest rooms.~~

minority equity interest.

Adjusted EBITDA

~~Table~~Adjusted EBITDA is a measure used by management and our board of ~~Contents~~

directors to assess our financial performance and enterprise value. We believe that Adjusted EBITDA

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

Table of Contents

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

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

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

Third Quarter

First Three Quarters


F2021

F2020

F2021

F2020
Net earnings (loss) attributable to The Marcus Corporation

$
1.8

$
(39.4)

$
(49.7)

$
(85.8)
Add (deduct):

Investment income

—

(0.1)

(0.2)

(0.2)
Interest expense

4.6

4.1

14.3

10.2
Other expense

0.6

0.6

1.9

1.7
Loss (gain) on disposition of property, equipment and other assets

(0.9)

0.2

(2.9)

0.3
Equity losses from unconsolidated joint ventures, net

—

1.1

—

1.5
Net (earnings) loss attributable to noncontrolling interests

—

—

—

—
Income tax expense (benefit)

0.2

(14.5)

(18.9)

(51.0)
Depreciation and amortization

17.7

18.7

54.2

56.6
Share-based compensation expenses ⁽¹⁾

2.5

1.1

6.7

3.3
Property closure/reopening expenses – theatres ⁽²⁾

—

1.2

—

4.6
Property closure/reopening expenses – hotels and resorts ⁽³⁾

—

0.4

—

5.5
Impairment charges ⁽⁴⁾

—

0.8

3.7

9.5
Government grants ⁽⁵⁾

(2.0)

—

(3.3)

—
Total Adjusted EBITDA

$
24.5

$
(25.8)

$
5.8

$
(43.8)


	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)

~~Table of Contents~~

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


	First Quarter, F2022
	Theatres		Hotels & Resorts		Corp. Items		Total
Operating loss	$	(8.0)	$	(3.0)	$	(5.8)	$	(16.8)
Depreciation and amortization	12.2		5.0		0.1		17.2
Share-based compensation (1)	0.6		0.4		1.9		2.9

Government grants (2)	—		—		—		—
Total Adjusted EBITDA	$	4.8	$	2.4	$	(3.8)	$	3.4

Table of Contents

Third Quarter, F2021

First Three Quarters, F2021

Hotels &

Hotels &


Theatres

Resorts

Corp. Items

Total

Theatres

Resorts

Corp. Items

Total
Operating income (loss)

$
(2.6)

$
13.5

$
(4.6)

6.3

$
(46.5)

$
5.5

$
(14.5)

(55.5)
Depreciation and amortization

12.6

5.0

0.1

17.7

38.9

15.1

0.2

54.2
Share-based compensation ⁽¹⁾

0.7

0.4

1.4

2.5

1.7

1.3

3.7

6.7
Impairment charges ⁽⁴⁾

—

—

—

—

3.7

—

—

3.7
Government grants ⁽⁵⁾

(0.1)

(1.9)

—

(2.0)

(1.4)

(1.9)

—

(3.3)
Total Adjusted EBITDA

$
10.6

$
17.0

$
(3.1)

24.5

$
(3.6)

$
20.0

(10.6)

5.8


	First Quarter, F2021
	Theatres		Hotels & Resorts		Corp. Items		Total
Operating loss	$	(25.6)	$	(5.7)	$	(4.3)	$	(35.7)
Depreciation and amortization	12.8		5.1		0.1		18.0
Share-based compensation (1)	0.4		0.3		0.8		1.5

Government grants (2)	(1.3)		—		—		(1.3)
Total Adjusted EBITDA	$	(13.7)	$	(0.3)	$	(3.4)	$	(17.5)

(1)

Third Quarter, F2020

First Three Quarters, F2020

Hotels &

Hotels &


Theatres

Resorts

Corp. Items

Total

Theatres

Resorts

Corp. Items

Total
Operating loss

$
(37.2)

$
(6.9)

$
(3.9)

(48.0)

$
(78.8)

$
(32.5)

$
(12.0)

(123.3)
Depreciation and amortization

13.4

5.2

0.1

18.7

40.3

16.0

0.3

56.6
Share-based compensation ⁽¹⁾

0.2

0.2

0.7

1.1

0.8

0.5

2.0

3.3
Property closure/reopening expenses^{(2) (3)}

1.2

0.4

—

1.6

4.6

5.5

—

10.1
Impairment charges ⁽⁴⁾

0.8

—

—

0.8

9.5

—

—

9.5
Total Adjusted EBITDA

$
(21.6)

$
(1.1)

$
(3.1)

(25.8)

$
(23.6)

$
(10.5)

(9.7)

(43.8)

Non-cash expense related to share-based compensation programs.

~~(1)~~

~~Non-cash expense related to share-based compensation programs.~~

~~(2)~~

~~Reflects nonrecurring costs related to the required closure of all of our movie theatres due to the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening theatres.~~

~~(3)~~

Reflects nonrecurring costs related to the closure of our hotels and resorts due to reduced occupancy as a result of the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening hotels.

~~(4)~~

~~Non-cash impairment charges related to surplus theatre real estate for the fiscal 2021 periods and intangible assets (trade name) and several theatre locations for the fiscal 2020 periods.~~

~~(5)~~

~~Reflects nonrecurring state government grants awarded to our hotels and theatres for COVID-19 pandemic relief.~~

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

The following table sets forth Adjusted EBITDA by reportable operating segment for the ~~third~~first quarter ~~and first three quarters~~ of fiscal ~~2021~~2022 and fiscal ~~2020~~2021 (in millions, except for variance percentage):

Third Quarter

First Three Quarters

Variance

Variance


F2021

F2020

Amt.

Pct.

F2021

F2020

Amt.

Pct.

Theatres

$
10.6

$
(21.6)

$
32.2

149.1
%
$
(3.6)

$
(23.6)

$
20.0

84.7
%
Hotels and resorts

17.0

(1.1)

18.1

1,645.5
%

20.0

(10.5)

30.5

290.5
%
Corporate items

(3.1)

(3.1)

-

-
%

(10.6)

(9.7)

(0.9)

(9.3)
%
Total Adjusted EBITDA

$
24.5

$
(25.8)

$
50.3

195.0
%
$
5.8

$
(43.8)

$
49.6

113.2
%

~~Our~~


	First Quarter
					Variance
	F2022		F2021		Amt.		Pct.
Theatres	$	4.8	$	(13.7)	$	18.5	134.8	%
Hotels and resorts	2.4		(0.3)		2.7		908.1	%
Corporate items	(3.8)		(3.4)		(0.4)		(10.7)	%
Total Adjusted EBITDA	$	3.4	$	(17.5)	$	20.8	119.2	%

During the first quarter of fiscal 2022, our theatre division ~~returned to~~reported its third straight quarter with positive Adjusted EBITDA ~~for the first time~~ since the start of the COVID-19 pandemic ~~during the third quarter of fiscal 2021~~ due to increased attendance and increased revenues per person, ~~and strong cost controls,~~ as described in the Theatres section above. ~~Our~~During the first quarter of fiscal 2022, our hotels and resorts division reported its ~~second~~fourth straight quarter with positive Adjusted EBITDA ~~during the third quarter of fiscal 2021~~ due to improved occupancy percentages and ADR, and strong cost controls, as described in the Hotels and Resorts section above. ~~As a result, our third~~Our first quarter of fiscal ~~2021 represented~~2022 is our ~~first~~third straight quarter with consolidated positive Adjusted EBITDA since the start of the pandemic.

~~Table of Contents~~

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

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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

Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our ~~86-year~~87-year history, and, despite the COVID-19 pandemic, our financial position remains strong. As of ~~September 30, 2021,~~March 31, 2022, we had a cash balance of approximately $9$19.4 million, ~~$188~~$221.4 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio (including short-term borrowings) was ~~0.40.~~0.37. With our strong liquidity position, combined with ~~the expected receipt of additional state grants, income tax refunds~~cash generated from operations and proceeds from the sale of surplus real estate (discussed above), we believe we are positioned to meet our obligations as they come due and continue to sustain our operations throughout fiscal ~~2021~~2022 and fiscal ~~2022,~~2023, even if our properties continue to generate reduced revenues during these periods. We will continue to work to preserve cash and maintain strong liquidity to endure the impacts of the global pandemic, even if it continues for a prolonged period of time.

~~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

~~Table of Contents~~

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.

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).

~~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

~~Table of Contents~~

“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.

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 ~~over~~during the past ~~19 months~~two years will allow us to have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements. However, future compliance with our debt covenants could be impacted if we are unable to ~~resume~~continue operations as currently expected, which could be impacted by matters that are not entirely in our control, such as the ~~continuation~~reinstatement of protective actions that federal, state and local governments have taken and the timing of new movie

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releases (as described in the Impact of the COVID-19 Pandemic section of this MD&A and in our Annual Report for the year ended December ~~31, 2020)~~30, 2021). Future compliance with our debt covenants could also be impacted if the speed of recovery of our theatres and hotels and resorts businesses is slower than currently expected. For example, our current expectations are that our theatre division will continue to improve during the ~~fourth quarter of fiscal 2021 and into early~~ fiscal 2022 (but still report results below comparable periods in fiscal 2019), before beginning to progressively return to closer-to-normal performance asin fiscal ~~2022 progresses.~~2023. Our current expectations for our hotels and resorts division are that we will continue to show improvement in each succeeding quarter compared to the prior year, but continue to underperform compared

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to pre-COVID-19 pandemic years. We do not expect to return to pre-COVID-19 occupancy levels during fiscal ~~2021, nor is it likely that we will fully return to those levels in fiscal~~ 2022 due to an expected lag in business ~~and group~~ travel. It is possible that the impact of COVID-19 may be greater than currently expected across one or both of our divisions such that we may be unable to comply with our debt covenants in future periods. In such an event, we would either seek covenant waivers or attempt to amend our covenants, though there is no certainty that we would be successful in such efforts.

Financial Condition

Net cash provided by operating activities totaled ~~$2.1~~$6.5 million during the first ~~three quarters~~quarter of fiscal ~~2021,~~2022, compared to net cash used in operating activities of ~~$80.6~~$13.0 million during the first ~~three quarters~~quarter of fiscal ~~2020.~~2021. The ~~$82.7~~$19.5 million increase in net cash provided by operating activities was due primarily to a reduced net loss and the favorable timing in the collection of ~~government grant receivables,~~accounts receivable and receipt of refundable income taxes ~~and~~of $22.7 million, partially offset by unfavorable timing in the payment of accounts payable, accrued compensation, taxes other than income taxes and other accrued liabilities ~~partially offset by the unfavorable timing in the collection of accounts receivable~~ during the first ~~three quarters~~quarter of fiscal 2021.

Net cash used in investing activities during the first quarter of fiscal 2022 totaled $3.1 million, compared to net cash provided by investing activities of $2.6 million during the first ~~three quarters~~quarter of fiscal ~~2021 totaled $9.2 million, compared to~~2021. The increase in net cash used in investing activities of ~~$11.7 million during the first three quarters of fiscal 2020. The increase in net cash provided by investing activities of $20.9~~$5.7 million was primarily the result of ~~a decrease~~an increase of $5.0 million in capital expenditures, ~~the receipt of $9.2 million in~~partially offset by lower proceeds from disposals of property, equipment and other assets during the first ~~three quarters~~quarter of fiscal ~~2021 and the receipt of $11.4 million in conjunction with payment of a split dollar life insurance policy receivable.~~2022. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled ~~$9.1~~$6.6 million during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 compared to ~~$18.7~~$1.5 million during the first ~~three quarters~~quarter of fiscal ~~2020.~~

2021.

Fiscal ~~2021~~2022 first ~~three quarters~~quarter cash capital expenditures included approximately ~~$5.3~~$2.8 million incurred in our theatre division, ~~including costs associated with the renovation of a theatre.~~primarily related to normal maintenance capital projects. We also incurred capital expenditures in our hotels and resorts division during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 of approximately $3.8 million, including costs related to ~~a lobby renovation~~rooms renovations at the Grand Geneva. Fiscal 2020 first three quarters cash capital expenditures included approximately $14.2 million incurred in our theatre division, including costs associated with the addition of four new screens, DreamLounger recliner seatingGeneva Resort and a ~~Super~~~~Screen DLX~~^® ~~auditorium at an existing Movie Tavern theatre~~Spa and the addition of DreamLounger recliner seating to another existing Movie Tavern theatre. Also during the first three quarters of fiscal 2020, we began projects to add DreamLounger recliner seating, as well as ~~Reel Sizzle~~ ~~and~~ ~~Take Five Lounge~~ outlets, to an existing Marcus Wehrenberg theatre. We also incurred capital expenditures in our hotels and resorts division during the first three quarters of fiscal 2020 of approximately $3.6 million, consisting primarily of normal maintenance capital projects.

Net cash used in financing activities during the first ~~three quarters~~quarter of fiscal ~~2021~~2022 totaled ~~$10.4~~$3.2 million compared to net cash provided by financing activities of ~~$83.5~~$9.2 million during the first ~~three quarters~~quarter of fiscal ~~2020.~~2021. During the first ~~three quarters~~quarter of fiscal ~~2021,~~2022, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added ~~$128.5~~$22.0 million of new short-term revolving credit facility borrowings, and we made ~~$95.5~~$22.0 million of repayments on short-term revolving credit facility borrowings during the first ~~three quarters~~quarter of fiscal 2022 (net zero borrowings on our credit facility). We ended the first quarter of fiscal 2022 with no outstanding borrowings under our revolving credit facility. During the first quarter of fiscal 2021, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As a result, we added $36.0 million of new short-term revolving credit facility borrowings, and we made $22.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2021 (net increase in borrowings on our credit facility of ~~$33.0~~$14.0 million). The net increase in borrowings during the first three quarters of fiscal 2021 was used to repay $37.8 million of short-term borrowings, including the early repayment of a portion of our term loan facility, as described above.

During the first quarter of fiscal ~~2020, at the onset of the pandemic,~~2022 we ~~drew down on the full amount available under our revolving credit facility (after taking into consideration outstanding letters of credit that reduce revolver availability). We also incurred $90.8~~repaid $0.8 million of ~~new~~ short-term term loan borrowings, ~~early in our fiscal 2020 second quarter and issued $100.05~~compared to $4.2 million ~~in convertible notes in our fiscal 2020 third quarter, the majority~~ of ~~which was used to repay existing borrowings under our revolving credit facility. Net cash provided by financing activities~~such repayments during the first three quarters of fiscal 2020 was reduced by $16.9 million of capped call transactions. As a result, we added $209.0 million of new short-term revolving credit facility borrowings, and we made $280.0 million of repayments on short-term revolving credit facility borrowings during the first three quarters of fiscal 2020 (net decrease in borrowings on our credit facility of $71.0 million).

We received $6.7 million in proceeds from borrowings against the cash surrender value of a life insurance policy during the first three quarters 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 believed would result in forgiveness of the loan under provisions of the CARES Act. During the third quarter of fiscal 2021, we received notification that qualifying expenses for all of our PPP loans were forgiven. The portion of the PPP loan proceeds that were not used for qualifying expenses totaling approximately $3.1 million contributed to the increase in net cash provided by financing activities during the first three quarters of fiscal 2020.2021. Principal payments on long-term debt were approximately ~~$10.3~~$0.4 million during the first ~~three quarters~~quarter of fiscal ~~2021, including a $10.0 million installment payment on senior notes,~~2022 compared to payments of ~~$9.4~~$0.1 million during the first ~~three quarters~~quarter of fiscal ~~2020, which included~~

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~~a $9.0 million final payment on senior notes that matured in April 2020.~~2021. Our debt-to-capitalization ratio (including short-term borrowings but excluding our finance and operating lease obligations) was ~~0.40~~0.37 at ~~September 30, 2021,~~March 31, 2022, compared to 0.37 at December ~~31, 2020. A change in~~30, 2021.

During the ~~accounting for our convertible senior notes (described in Note 1~~first quarter of fiscal 2022 and the ~~condensed notes to our consolidated financial statements included in this quarterly report on Form 10Q above) contributed to the increase in our debt-to-capitalization ratio.~~

~~We repurchased approximately 62,000~~first 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 three quarters of fiscal 2021, compared to approximately 38,000 shares of our common stock for approximately $696,000 in conjunction with the payment of income taxes on vested restricted stock during the first three quarters of fiscal 2020.open market. As of ~~September 30, 2021,~~March 31, 2022, approximately ~~2.7~~2.6 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common

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stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions.

We did not make any dividend payments during the first ~~three quarters~~quarter of fiscal ~~2021. Dividend payments during~~2022 and the first ~~three quarters~~quarter of fiscal ~~2020 totaled $5.1 million.~~2021. Our Credit Agreement, as ~~recently~~ amended, ~~requires~~required us to temporarily suspend our quarterly dividend payments and ~~prohibits~~prohibited us from repurchasing shares of our common stock in the open market ~~for the remainder of~~during 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

30, 2021.

Item 4. Controls and Procedures

a.Evaluation of disclosure controls and procedures

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

b.Changes in internal control over financial reporting

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

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PART II – OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as supplemented by the risk factors disclosed in Part II, Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended July 1, 2021, 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 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 have included, among other

30, 2021.

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things, declaring national and state emergencies, encouraging social distancing, restricting freedom of movement and congregation, mandating non-essential business closures and/or capacity restrictions, issuing shelter-in-place, quarantine and stay-at-home orders, and issuing masking and/or vaccination mandates.

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 third quarter with approximately 97% 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 three quarters of fiscal 2021, all of our reopened theatres operated at significantly reduced attendance levels compared to pre-COVID-19 pandemic years due to customer concerns related to COVID-19 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 have generated reduced revenues during fiscal 2021.

Although we do not believe it will be necessary to reclose or further reduce operating levels at our theatres and hotels, we cannot predict when the effects of the COVID-19 pandemic will fully subside, the effect of the Delta variant (or any subsequent variants) 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:

●

~~Lack of availability of films in the short- or long-term, including as a result of (i) major film distributors releasing scheduled films on alternative channels or (ii) disruptions of film production;~~

●

~~Decreased attendance at our theatres, including due to (i) continued safety and health concerns or (ii) a change in consumer behavior in favor of alternative forms of entertainment;~~

●

~~Reduced travel from our various leisure, business transient and group business customers;~~

●

~~Cancellation of major events that were expected to benefit our hotels and resorts division;~~

●

~~Our inability to continue to negotiate favorable terms with our landlords in respect of those properties we lease;~~

●

~~Our inability to service increasing customer counts in both theatres and hotels due to the temporary labor shortage that has arisen as a result of the pandemic;~~

●

~~Increased labor costs due to the temporary labor shortage that has arisen as a result of the pandemic;~~

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●

~~Increased risks related to employee matters, including increased employment litigation and claims relating to terminations or furloughs caused by theatre and hotel closures;~~

●

~~Reductions, suspensions and delays to planned operating and capital expenditures which could result in difficulty obtaining certain growth objectives determined prior to COVID-19;~~

●

~~Our temporary curtailment of certain investments and growth opportunities;~~

●

~~Potential impairment charges;~~

●

Our inability to generate significant cash flow from operations if our theatres and/or hotels and resorts continue to experience demand at levels significantly lower than historical levels, which could lead to a substantial increase in indebtedness and negatively impact our ability to comply with the financial covenants, if applicable, in our debt agreements;

●

~~Our inability to access lending, capital markets and other sources of liquidity, if needed, on reasonable terms, or at all, or obtain amendments, extensions and waivers;~~

●

~~Our inability to effectively meet our short- and long-term obligations; and~~

●

~~Our inability to service our existing and future indebtedness.~~

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 government directives 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 during prior periods. While we have resumed normal operations at our theatres and hotels for the most part, there is uncertainty as to the pace of reaching full capacity and our financial performance. Because we operate in several different jurisdictions, government directives related to customer behavior and our operations may vary within our theatres and hotels and resorts. Fears and concerns regarding the COVID-19 pandemic could cause our customers to avoid assembling in public spaces for some time despite the relaxation or removal of government directives that had been in place. We would have no control over and cannot predict the length of any future required closure of or restrictions on our theatres and hotels and resorts due to the COVID-19 pandemic. 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.

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

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


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
December 31 – February 3	171	$	17.95	171	2,657,169
February 4 – March 3	75,674	18.10		75,674	2,581,495
March 4 – March 31	—	—		—	2,581,495
Total	75,845	$	18.10	75,845	2,581,495

(1)

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)
July 2 - August 1

3,435

$
17.50

3,435

2,657,340
August 2 - August 31

—

—

—

2,657,340
September 1 - September 30

—

—

—

2,657,340
Total

3,435

$
17.50

3,435

2,657,340

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.

~~(1)~~

Through September 30, 2021, our Board of Directors had authorized the repurchase of up to approximately 11.7 million shares of our outstanding Common Stock. Under these authorizations, we may repurchase shares of our Common Stock from time to time in the open market, pursuant to privately negotiated transactions or otherwise. As of September 30, 2021, we had repurchased approximately 9.0 million shares of our Common Stock under these authorizations. The repurchased shares are held in our treasury pending potential future issuance in connection with employee benefit, option or stock ownership plans or other general corporate purposes. These authorizations do not have an expiration date.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 6. Exhibits



~~4.1~~ 31.1		Third Amendment to Credit Agreement, dated July 13, 2021, among The Marcus Corporation, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the quarter ended July 1, 2021.]

~~4.2~~	The Fourth Amendment to Note Purchase Agreement, dated June 27, 2013, dated July 13, 2021. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 4.2 to our Quarterly Report on Form 10-Q for the quarter ended July 1, 2021.]

~~4.3~~	The Fourth Amendment to Note Purchase Agreement, dated December 21, 2016, dated July 13, 2021. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q for the quarter ended July 1, 2021.]

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

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

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

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SIGNATURES

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

~~THE MARCUS CORPORATION~~


THE MARCUS CORPORATION

DATE: ~~November 8, 2021~~ May 5, 2022	By:	~~/s/~~ /s/ Gregory S. Marcus
		Gregory S. Marcus
		President and Chief Executive Officer


DATE: ~~November 8, 2021~~ May 5, 2022	By:	/s/ Douglas A. Neis
		Douglas A. Neis
		Executive Vice President and Chief Financial Officer

S-1


	September 30,		December 31,
(in thousands, except share and per share data)	2021		2020

ASSETS
Current assets:
Cash and cash equivalents	$	8,629	$	6,745
Restricted cash		6,346		7,343
Accounts receivable, net of reserves of $1,134 and $1,284, respectively		18,808		6,359
Government grants receivable		—		4,913
Refundable income taxes		23,051		27,934
Assets held for sale		12,773		4,117
Other current assets		14,360		10,406
Total current assets		83,967		67,817

Property and equipment:
Land and improvements		134,163		145,671
Buildings and improvements		756,530		759,421
Leasehold improvements		165,881		163,879
Furniture, fixtures and equipment		376,602		374,253
Finance lease right-of-use assets		75,318		75,322
Construction in progress		3,810		3,360
Total property and equipment		1,512,304		1,521,906
Less accumulated depreciation and amortization		725,037		673,578
Net property and equipment		787,267		848,328

Operating lease right-of-use assets		220,556		229,660

Other assets:
Investments in joint ventures		—		2,084
Goodwill		75,118		75,188
Deferred incomes taxes		9,964		—
Other		12,174		31,101
Total other assets		97,256		108,373
TOTAL ASSETS	$	1,189,046	$	1,254,178


	13 Weeks Ended				39 Weeks Ended
	September 30,		September 24,		September 30,		September 24,
(in thousands, except per share data)	2021		2020		2021		2020

Revenues:
Theatre admissions	$	38,250	$	3,118	$	73,850	$	58,667
Rooms		30,917		9,772		57,293		27,618
Theatre concessions		35,952		3,243		68,932		50,277
Food and beverage		16,731		5,420		32,234		19,620
Other revenues		19,128		8,813		45,253		30,886
		140,978		30,366		277,562		187,068
Cost reimbursements		4,884		3,225		11,634		13,916
Total revenues		145,862		33,591		289,196		200,984

Costs and expenses:
Theatre operations		40,513		14,150		87,660		76,806
Rooms		9,682		4,611		22,019		16,132
Theatre concessions		15,094		2,592		29,627		25,634
Food and beverage		12,344		5,109		25,520		20,725
Advertising and marketing		4,827		1,981		11,195		8,446
Administrative		16,536		11,645		45,815		40,555
Depreciation and amortization		17,730		18,690		54,203		56,568
Rent		6,544		6,594		19,229		19,876
Property taxes		4,935		5,950		14,142		18,004
Other operating expenses		6,500		6,266		19,918		18,094
Impairment charges		—		765		3,732		9,477
Reimbursed costs		4,884		3,225		11,634		13,916
Total costs and expenses		139,589		81,578		344,694		324,233

Operating income (loss)		6,273		(47,987)		(55,498)		(123,249)

Other income (expense):
Investment income (loss)		(7)		66		153		207
Interest expense		(4,600)		(4,132)		(14,350)		(10,177)
Other expense		(625)		(590)		(1,881)		(1,771)
Gain (loss) on disposition of property, equipment and other assets		868		(251)		2,908		(299)
Equity losses from unconsolidated joint ventures, net		—		(1,054)		—		(1,539)
		(4,364)		(5,961)		(13,170)		(13,579)

Earnings (loss) before income taxes		1,909		(53,948)		(68,668)		(136,828)
Income taxes (benefit)		150		(14,508)		(18,931)		(50,984)
Net earnings (loss)		1,759		(39,440)		(49,737)		(85,844)
Net loss attributable to noncontrolling interests		—		—		—		(23)
Net earnings (loss) attributable to The Marcus Corporation	$	1,759	$	(39,440)	$	(49,737)	$	(85,821)

Net earnings (loss) per share - basic:
Common Stock	$	0.06	$	(1.30)	$	(1.66)	$	(2.84)
Class B Common Stock	$	0.05	$	(1.18)	$	(1.39)	$	(2.57)

Net earnings (loss) per share - diluted:
Common Stock	$	0.06	$	(1.30)	$	(1.66)	$	(2.84)
Class B Common Stock	$	0.05	$	(1.18)	$	(1.39)	$	(2.57)


	39 Weeks Ended
(in thousands)	September 30, 2021		September 24, 2020

OPERATING ACTIVITIES:
Net loss	$	(49,737)	$	(85,844)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Losses on investments in joint ventures		—		1,539
(Gain) loss on disposition of property, equipment and other assets		(2,908)		299
Impairment charges		3,732		9,477
Depreciation and amortization		54,203		56,568
Amortization of debt issuance costs and discount on convertible notes		1,784		697
Share-based compensation		6,673		3,286
Deferred income taxes		(18,817)		(2,787)
Other long-term obligations		2,236		3,938
Contribution of the Company’s stock to savings and profit-sharing plan		1,012		1,315
Changes in operating assets and liabilities:
Accounts receivable		(12,052)		22,558
Government grants receivable		4,913		—
Other assets		(1,552)		1,604
Operating leases		(4,078)		8,519
Accounts payable		7,155		(31,852)
Income taxes		7,613		(48,518)
Taxes other than income taxes		(1,031)		(3,975)
Accrued compensation		5,703		(7,259)
Other accrued liabilities		(2,792)		(10,214)
Total adjustments		51,794		5,195
Net cash provided by (used in) operating activities		2,057		(80,649)

INVESTING ACTIVITIES:
Capital expenditures		(9,121)		(18,687)
Proceeds from disposals of property, equipment and other assets		9,160		1,602
Capital contribution in joint venture		—		(28)
Proceeds from sale of trading securities		—		5,184
Purchase of trading securities		(2,402)		—
Life insurance premium reimbursement		11,411		—
Other investing activities		200		220
Net cash provided by (used in) investing activities		9,248		(11,709)

FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility		128,500		209,000
Repayment of borrowings on revolving credit facility		(95,500)		(280,000)
Proceeds from short-term borrowings		—		90,800
Repayments on short-term borrowings		(37,845)
Proceeds from convertible senior notes		—		100,050
Principal payments on long-term debt		(10,285)		(9,356)
Proceeds received from PPP loans expected to be repaid		—		3,147
Proceeds received from borrowing on insurance policy		6,700		-
Debt issuance costs		(208)		(6,543)
Principal payments on finance lease obligations		(2,065)		(1,389)
Equity transactions:
Treasury stock transactions, except for stock options		(1,170)		(542)
Exercise of stock options		1,455		379
Capped call transactions		—		(16,908)
Dividends paid		—		(5,145)
Net cash provided by (used in) financing activities		(10,418)		83,493

Net increase (decrease) in cash, cash equivalents and restricted cash		887		(8,865)
Cash, cash equivalents and restricted cash at beginning of period		14,088		25,618
Cash, cash equivalents and restricted cash at end of period	$	14,975		16,753

Supplemental Information:
Interest paid, net of amounts capitalized	$	12,932		9,313
Income taxes paid (refunded)		(7,733)		322
Change in accounts payable for additions to property, equipment and other assets		828		(2,640)


	13 Weeks		13 Weeks		39 Weeks		39 Weeks
	Ended		Ended		Ended		Ended
	September 30, 2021		September 24, 2020		September 30, 2021		September 24, 2020

	(in thousands, except per share data)
Numerator:
Net earnings (loss) attributable to The Marcus Corporation	$	1,759	$	(39,440)	$	(49,737)	$	(85,821)
Denominator:
Denominator for basic EPS		31,421		31,064		31,340		31,033
Effect of dilutive employee stock options		48		—		—		—
Effect of convertible notes		—		—		—		—
Denominator for diluted EPS		31,469		31,064		31,340		31,033
Net earnings (loss) per share - basic:
Common Stock	$	0.06	$	(1.30)	$	(1.66)	$	(2.84)
Class B Common Stock	$	0.05	$	(1.18)	$	(1.39)	$	(2.57)
Net earnings (loss) per share - diluted:
Common Stock	$	0.06	$	(1.30)	$	(1.66)	$	(2.84)
Class B Common Stock	$	0.05	$	(1.18)	$	(1.39)	$	(2.57)


													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	$	0	$	437,528
Exercise of stock options		—		—		(44)		—		—		125		81		—		81
Purchase of treasury stock		—		—		—		—		—		(60)		(60)		—		(60)
Reissuance of treasury stock		—		—		20		—		—		106		126		—		126
Forfeitures of non-vested stock		(2)		—		(137)		—		—		139		—		—		—
Shared-based compensation		—		—		2,521		—		—		—		2,521		—		2,521
Comprehensive income		—		—		—		1,759		351		—		2,110		—		2,110
BALANCES AT SEPTEMBER 30, 2021	$	24,340	$	7,131	$	143,276	$	282,861	$	(13,774)	$	(1,528)	$	442,306	$	0	$	442,306


	13 Weeks Ended September 30, 2021
	Reportable Segment
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	38,250	$	—	$	—	$	38,250
Rooms		—		30,917		—		30,917
Theatre concessions		35,952		—		—		35,952
Food and beverage		—		16,731		—		16,731
Other revenues⁽¹⁾		5,793		13,272		63		19,128
Cost reimbursements		1		4,883		—		4,884
Total revenues	$	79,996	$	65,803	$	63	$	145,862


	39 Weeks Ended September 30, 2021
	Reportable Segment
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	73,850	$	—	$	—	$	73,850
Rooms		—		57,293		—		57,293
Theatre concessions		68,932		—		—		68,932
Food and beverage		—		32,234		—		32,234
Other revenues⁽¹⁾		11,989		33,006		258		45,253
Cost reimbursements		88		11,546		—		11,634
Total revenues	$	154,859	$	134,079	$	258	$	289,196


	13 Weeks Ended September 24, 2020
	Reportable Segment
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	3,118	$	—	$	—	$	3,118
Rooms		—		9,772		—		9,772
Theatre concessions		3,243		—		—		3,243
Food and beverage		—		5,420		—		5,420
Other revenues⁽¹⁾		934		7,820		59		8,813
Cost reimbursements		59		3,166		—		3,225
Total revenues	$	7,354	$	26,178	$	59	$	33,591


	39 Weeks Ended September 24, 2020
	Reportable Segment
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	58,667	$	—	$	—	$	58,667
Rooms		—		27,618		—		27,618
Theatre concessions		50,277		—		—		50,277
Food and beverage		—		19,620		—		19,620
Other revenues⁽¹⁾		9,194		21,375		317		30,886
Cost reimbursements		276		13,640		—		13,916
Total revenues	$	118,414	$	82,253	$	317	$	200,984


	September 30, 2021		December 31, 2020

	(in thousands, except payment data)
Mortgage notes	$	24,478	$	24,482
Senior notes		90,000		100,000
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75%		1,452		1,735
Convertible senior notes		100,050		100,050
Payroll Protection Program loans		3,426		3,424
Revolving credit agreement		33,000		—
Debt issuance costs		(4,083)		(3,684)
Total debt, net of debt issuance costs		248,323		226,007
Less current maturities, net of issuance costs		11,712		10,548
Less debt discount		—		22,423
Long-term debt	$	236,611	$	193,036

Short-term borrowings		49,796		87,194
Total debt and short-term borrowings, net of issuance costs	$	298,119	$	313,201


	Balance at
	December 31,		Cumulative		Balance at
	2020		adjustment		January 1, 2021

	(in thousands)
Long-term debt	$	193,036	$	21,393	$	214,429
Deferred income taxes		33,429		(5,584)		27,845
Capital in excess of par		153,529		(16,511)		137,018
Retained earnings		331,897		702		332,599


Lease Term and Discount Rate	September 30, 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	4.58%	4.62%
Operating leases	4.52%	4.53%


13 Weeks Ended			Hotels/		Corporate
September 30, 2021	Theatres		Resorts		Items		Total
Revenues	$	79,996	$	65,803	$	63	$	145,862
Operating income (loss)		(2,604)		13,458		(4,581)		6,273
Depreciation and amortization		12,636		5,018		76		17,730


	Third Quarter								First Three Quarters
						Variance								Variance
	F2021		F2020		Amt.		Pct.		F2021		F2020		Amt.		Pct.
Revenues	$	145.9	$	33.6	$	112.3	334.2	%	$	289.2	$	201.0	$	88.2	43.9	%
Operating income (loss)		6.3		(48.0)		54.3	113.1	%		(55.5)		(123.2)		67.7	55.0	%
Other income (expense)		(4.4)		(6.0)		1.6	26.8	%		(13.2)		(13.6)		0.4	3.0	%
Net earnings (loss) attributable to The Marcus Corp.	$	1.8	$	(39.4)	$	41.2	104.5	%	$	(49.7)	$	(85.8)	$	36.1	42.0	%
Net earnings (loss) per common share - diluted:	$	0.06	$	(1.30)	$	1.36	104.6	%	$	(1.66)	$	(2.84)	$	1.18	41.5	%


	Third Quarter⁽¹⁾											First Three Quarters⁽¹⁾
							Variance											Variance
	F2021			F2020			Amt.			Pct.		F2021			F2020			Amt.			Pct.
Occupancy pct.		64.9	%		36.6	%		+28.3	pts	77.3	%		46.9	%		45.8	%		1.1	pts	2.4	%
ADR	$	195.08		$	163.04		$	32.04		19.7	%	$	165.26		$	140.23		$	25.03		17.8	%
RevPAR	$	126.54		$	59.66		$	66.88		112.1	%	$	77.46		$	64.28		$	13.18		20.5	%


	Third Quarter, F2021							First Three Quarters, F2021
			Hotels &							Hotels &
	Theatres		Resorts		Corp. Items		Total	Theatres		Resorts		Corp. Items		Total
Operating income (loss)	$	(2.6)	$	13.5	$	(4.6)	6.3	$	(46.5)	$	5.5	$	(14.5)	(55.5)
Depreciation and amortization		12.6		5.0		0.1	17.7		38.9		15.1		0.2	54.2
Share-based compensation ⁽¹⁾		0.7		0.4		1.4	2.5		1.7		1.3		3.7	6.7
Impairment charges ⁽⁴⁾		—		—		—	—		3.7		—		—	3.7
Government grants ⁽⁵⁾		(0.1)		(1.9)		—	(2.0)		(1.4)		(1.9)		—	(3.3)
Total Adjusted EBITDA	$	10.6	$	17.0	$	(3.1)	24.5	$	(3.6)	$	20.0		(10.6)	5.8


	Third Quarter, F2020							First Three Quarters, F2020
			Hotels &							Hotels &
	Theatres		Resorts		Corp. Items		Total	Theatres		Resorts		Corp. Items		Total
Operating loss	$	(37.2)	$	(6.9)	$	(3.9)	(48.0)	$	(78.8)	$	(32.5)	$	(12.0)	(123.3)
Depreciation and amortization		13.4		5.2		0.1	18.7		40.3		16.0		0.3	56.6
Share-based compensation ⁽¹⁾		0.2		0.2		0.7	1.1		0.8		0.5		2.0	3.3
Property closure/reopening expenses^{(2) (3)}		1.2		0.4		—	1.6		4.6		5.5		—	10.1
Impairment charges ⁽⁴⁾		0.8		—		—	0.8		9.5		—		—	9.5
Total Adjusted EBITDA	$	(21.6)	$	(1.1)	$	(3.1)	(25.8)	$	(23.6)	$	(10.5)		(9.7)	(43.8)


				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)
July 2 - August 1	3,435	$	17.50	3,435	2,657,340
August 2 - August 31	—		—	—	2,657,340
September 1 - September 30	—		—	—	2,657,340
Total	3,435	$	17.50	3,435	2,657,340