x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)
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(Exact name of registrant as specified in its charter) |
Wisconsin | 39-1139844 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |||||||
| 53202-4125 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $1.00 par value | MCS | New York Stock Exchange |
Yes |
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Yes |
| No |
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Large accelerated filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐o
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24,498,243
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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S-1 |
| | | | | | |
| | September 30, | | December 31, | ||
(in thousands, except share and per share data) |
| 2021 |
| 2020 | ||
| | | | | | |
ASSETS |
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Current assets: |
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Cash and cash equivalents | | $ | 8,629 | | $ | 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 |
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Property and equipment: | |
| | |
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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 |
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Operating lease right-of-use assets | | | 220,556 | |
| 229,660 |
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Other assets: | |
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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 |
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 |
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| September 30, |
| December 31, | ||
(in thousands, except share and per share data) |
| 2021 |
| 2020 | ||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable | | $ | 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 |
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Finance lease obligations | |
| 17,796 | |
| 19,744 |
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Operating lease obligations | |
| 220,075 | |
| 230,550 |
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Long-term debt | |
| 236,611 | |
| 193,036 |
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Deferred income taxes | |
| 22,061 | |
| 33,429 |
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Other long-term obligations | | | 61,945 | | | 61,304 |
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Equity: | |
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Shareholders’ equity attributable to The Marcus Corporation | | | | | | |
Preferred Stock, $1 par; authorized 1,000,000 shares; NaN issued | |
| — | |
| — |
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,339,666 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) |
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| 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 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,189,046 | | $ | 1,254,178 |
March 31, 2022 | December 30, 2021 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 23,784 | $ | 35,781 | |||||||
Income taxes | 269 | — | |||||||||
Taxes other than income taxes | 15,658 | 19,566 | |||||||||
Accrued compensation | 13,911 | 20,474 | |||||||||
Other accrued liabilities | 56,742 | 59,678 | |||||||||
Short-term borrowings | 46,577 | 47,346 | |||||||||
Current portion of finance lease obligations | 2,538 | 2,561 | |||||||||
Current portion of operating lease obligations | 15,827 | 16,795 | |||||||||
Current maturities of long-term debt | 11,064 | 10,967 | |||||||||
Total current liabilities | 186,370 | 213,168 | |||||||||
Finance lease obligations | 16,703 | 17,192 | |||||||||
Operating lease obligations | 211,841 | 216,064 | |||||||||
Long-term debt | 203,905 | 204,177 | |||||||||
Deferred income taxes | 22,103 | 26,183 | |||||||||
Other long-term obligations | 56,548 | 57,963 | |||||||||
Equity: | |||||||||||
Shareholders’ equity attributable to The Marcus Corporation | |||||||||||
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued | — | — | |||||||||
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,498,243 shares at March 31, 2022 and 24,345,356 shares at December 30, 2021 | 24,498 | 24,345 | |||||||||
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,110,875 shares at March 31, 2022 and 7,130,125 shares at December 30, 2021 | 7,111 | 7,130 | |||||||||
Capital in excess of par | 149,234 | 145,656 | |||||||||
Retained earnings | 274,403 | 289,306 | |||||||||
Accumulated other comprehensive loss | (10,913) | (11,444) | |||||||||
444,333 | 454,993 | ||||||||||
Less cost of Common Stock in treasury (122,204 shares at March 31, 2022 and 48,111 shares at December 30, 2021) | (2,555) | (1,379) | |||||||||
Total shareholders’ equity attributable to The Marcus Corporation | 441,778 | 453,614 | |||||||||
Noncontrolling interest | — | — | |||||||||
Total equity | 441,778 | 453,614 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,139,248 | $ | 1,188,361 |
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| | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
| | September 30, |
| September 24, |
| September 30, |
| September 24, | ||||
(in thousands, except per share data) |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
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Revenues: |
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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 |
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| 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 |
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Costs and expenses: | |
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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 |
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Operating income (loss) | |
| 6,273 | |
| (47,987) | |
| (55,498) | |
| (123,249) |
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Other income (expense): | |
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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) |
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| (4,364) | |
| (5,961) | |
| (13,170) | |
| (13,579) |
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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) |
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Net earnings (loss) per share - basic: | |
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Common Stock | | $ | 0.06 | | $ | (1.30) | | $ | (1.66) | | $ | (2.84) |
Class B Common Stock | | $ | 0.05 | | $ | (1.18) | | $ | (1.39) | | $ | (2.57) |
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Net earnings (loss) per share - diluted: | |
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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 | ||||||||||||||||||||||
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) |
| | | | | | | | | | | | |
| | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
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| September 30, |
| September 24, |
| September 30, |
| September 24, | ||||
(in thousands) |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
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Net earnings (loss) | | $ | 1,759 | | $ | (39,440) | | $ | (49,737) | | $ | (85,844) |
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Other comprehensive income (loss), net of tax: | |
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Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect of $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) |
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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) |
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Comprehensive loss attributable to noncontrolling interests | |
| — | |
| — | |
| — | |
| (23) |
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Comprehensive income (loss) attributable to The Marcus Corporation | | $ | 2,110 | | $ | (39,059) | | $ | (48,578) | | $ | (85,787) |
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) |
| | | | | | |
| | 39 Weeks Ended | ||||
(in thousands) | | September 30, 2021 |
| September 24, 2020 | ||
| | | | | | |
OPERATING ACTIVITIES: |
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Net loss | | $ | (49,737) | | $ | (85,844) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |
| | |
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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 Ended | |||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||
OPERATING ACTIVITIES: | |||||||||||
Net loss | $ | (14,902) | $ | (28,130) | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Losses on investments in joint ventures | 141 | — | |||||||||
Gain on disposition of property, equipment and other assets | (424) | (2,204) | |||||||||
Depreciation and amortization | 17,231 | 17,979 | |||||||||
Amortization of debt issuance costs and discount on convertible notes | 413 | 623 | |||||||||
Share-based compensation | 2,917 | 1,484 | |||||||||
Deferred income taxes | (6,342) | (10,794) | |||||||||
Other long-term obligations | (460) | 1,164 | |||||||||
Contribution of the Company’s stock to savings and profit-sharing plan | 956 | 1,012 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 7,495 | (213) | |||||||||
Government grants receivable | 4,335 | 4,913 | |||||||||
Other assets | (1,841) | 23 | |||||||||
Operating leases | (1,161) | (996) | |||||||||
Accounts payable | (10,956) | (800) | |||||||||
Income taxes | 22,704 | 6,010 | |||||||||
Taxes other than income taxes | (3,908) | (1,543) | |||||||||
Accrued compensation | (6,563) | 283 | |||||||||
Other accrued liabilities | (3,164) | (1,794) | |||||||||
Total adjustments | 21,373 | 15,147 | |||||||||
Net cash provided by (used in) operating activities | 6,471 | (12,983) | |||||||||
INVESTING ACTIVITIES: | |||||||||||
Capital expenditures | (6,562) | (1,525) | |||||||||
Proceeds from disposals of property, equipment and other assets | 3,438 | 4,308 | |||||||||
Other investing activities | 21 | (231) | |||||||||
Net cash provided by (used in) investing activities | (3,103) | 2,552 | |||||||||
FINANCING ACTIVITIES: | |||||||||||
Debt transactions: | |||||||||||
Proceeds from borrowings on revolving credit facility | 22,000 | 36,000 | |||||||||
Repayment of borrowings on revolving credit facility | (22,000) | (22,000) | |||||||||
Repayments on short-term borrowings | (820) | (4,150) | |||||||||
Principal payments on long-term debt | (427) | (93) | |||||||||
Debt issuance costs | — | (4) | |||||||||
Principal payments on finance lease obligations | (584) | (630) | |||||||||
Equity transactions: | |||||||||||
Treasury stock transactions, except for stock options | (1,364) | (1,169) | |||||||||
Exercise of stock options | 26 | 1,292 | |||||||||
Net cash provided by (used in) financing activities | (3,169) | 9,246 | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 199 | (1,185) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 24,054 | 14,088 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 24,253 | $ | 12,903 | |||||||
Supplemental Information: | |||||||||||
Interest paid, net of amounts capitalized | $ | 5,904 | $ | 5,952 | |||||||
Income taxes refunded, including interest earned | 22,911 | 5,974 | |||||||||
Change in accounts payable for additions to property, equipment and other assets | (1,041) | 919 |
30, 2021.
During
profitability.
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.
8
Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the lastfirst day of itsthe fiscal year. Goodwill is tested for impairment at a reporting unit level, determined to be at an operating segment level. When reviewing goodwill for impairment, the Company considers the amount of excess fair value over the carrying value of the reporting unit, the period of time since its last quantitative test, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. Examples of qualitative factors that the Company assesses include its share price, its financial performance, market and competitive factors in its industry, and other events specific to the reporting unit. If the Company concludes that it is more likely than not that the fair value of its reporting unit is less than its carrying value, the Company performs a quantitative impairment test by comparing the carrying value of the reporting unit to the estimated fair value.fourth quarter. There were no indicators of impairment identified during the 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.
| | | | | | | | | | | | |
| | 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) |
9
13 Weeks Ended | |||||||||||||||||||||||
March 31, 2022 | April 1, 2021 | ||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss attributable to The Marcus Corporation | $ | (14,902) | $ | (28,130) | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Denominator for basic EPS | 31,445 | 31,196 | |||||||||||||||||||||
Effect of dilutive employee stock options | — | — | |||||||||||||||||||||
Effect of convertible notes | — | — | |||||||||||||||||||||
Denominator for diluted EPS | 31,445 | 31,196 | |||||||||||||||||||||
Net loss per share - basic: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) | |||||||||||||||||||
Net loss per share - diluted: | |||||||||||||||||||||||
Common Stock | $ | (0.48) | $ | (0.93) | |||||||||||||||||||
Class B Common Stock | $ | (0.44) | $ | (0.80) |
For the periods when the Company reports a net loss, both common stock equivalents and shares issuable upon conversion of convertible debt instruments are excluded from the computation of diluted loss per sharesshare as their inclusion would have an antidilutive effect. During the 13 weeks ended September 30,March 31, 2022 and April 1, 2021, 9,085,000approximately 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 earningsloss per share as the effect would have been anti-dilutive.
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 |
10
Common Stock | Class B Common Stock | Capital in Excess of Par | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Shareholders’ Equity Attributable to The Marcus Corporation | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
BALANCES AT DECEMBER 30, 2021 | $ | 24,345 | $ | 7,130 | $ | 145,656 | $ | 289,306 | $ | (11,444) | $ | (1,379) | $ | 453,614 | $ | — | $ | 453,614 | |||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | (5) | — | — | 31 | 26 | — | 26 | ||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | (1,373) | (1,373) | — | (1,373) | ||||||||||||||||||||||||||||||||||||||||||||
Savings and profit-sharing contribution | 56 | — | 900 | — | — | — | 956 | — | 956 | ||||||||||||||||||||||||||||||||||||||||||||
Reissuance of treasury stock | — | — | 1 | — | — | 8 | 9 | — | 9 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of non-vested stock | 78 | — | (236) | — | — | 158 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Shared-based compensation | — | — | 2,917 | — | — | — | 2,917 | — | 2,917 | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | 1 | (1) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Conversions of Class B Common Stock | 19 | (19) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (14,902) | 531 | — | (14,371) | — | (14,371) | ||||||||||||||||||||||||||||||||||||||||||||
BALANCES AT MARCH 31, 2022 | $ | 24,498 | $ | 7,111 | $ | 149,234 | $ | 274,403 | $ | (10,913) | $ | (2,555) | $ | 441,778 | $ | — | $ | 441,778 | |||||||||||||||||||||||||||||||||||
Common Stock | Class B Common Stock | Capital in Excess of Par | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Shareholders’ Equity Attributable to The Marcus Corporation | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
BALANCES AT DECEMBER 31, 2020 | $ | 23,264 | $ | 7,926 | $ | 153,529 | $ | 331,897 | $ | (14,933) | $ | (2,960) | $ | 498,723 | $ | — | $ | 498,723 | |||||||||||||||||||||||||||||||||||
Adoption of ASU No. 2020-06 | — | — | (16,511) | 702 | — | — | (15,809) | — | (15,809) | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | (659) | — | — | 1,951 | 1,292 | — | 1,292 | ||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | (1,181) | (1,181) | — | (1,181) | ||||||||||||||||||||||||||||||||||||||||||||
Savings and profit-sharing contribution | 44 | — | 968 | — | — | — | 1,012 | — | 1,012 | ||||||||||||||||||||||||||||||||||||||||||||
Reissuance of treasury stock | — | — | 2 | — | — | 10 | 12 | — | 12 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of non-vested stock | 221 | — | (367) | — | — | 146 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Shared-based compensation | — | — | 1,484 | — | — | — | 1,484 | — | 1,484 | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | (1) | — | 1 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Conversions of Class B Common Stock | 520 | (520) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (28,130) | 452 | — | (27,678) | — | (27,678) | ||||||||||||||||||||||||||||||||||||||||||||
BALANCES AT APRIL 1, 2021 | $ | 24,049 | $ | 7,406 | $ | 138,446 | $ | 304,468 | $ | (14,481) | $ | (2,033) | $ | 457,855 | $ | — | $ | 457,855 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| Shareholders’ |
| | |
| | | |
| | | | | | | | | | | | | | | | | | | | Equity | | | | | | | |
| | | | | | | | | | | | | | Accumulated | | | | | Attributable | | | | | | | ||
| | | | | Class B | | Capital | | | | | Other | | | | | to The | | Non- | | | | |||||
| | Common | | Common | | in Excess | | Retained | | Comprehensive | | Treasury | | Marcus | | controlling | | Total | |||||||||
| | Stock | | Stock | | of Par | | Earnings | | Loss | | Stock | | Corporation | | Interests | | Equity | |||||||||
BALANCES AT DECEMBER 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
11
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 SeptemberMarch 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.
| | | | | | | | | | | | |
| | 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 |
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 |
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 | |||||||||||||||
12
follows:
13 Weeks Ended April 1, 2021 | |||||||||||||||||||||||
Reportable Segment | |||||||||||||||||||||||
Theatres | Hotels/Resorts | Corporate | Total | ||||||||||||||||||||
Theatre admissions | $ | 10,685 | $ | — | $ | — | $ | 10,685 | |||||||||||||||
Rooms | — | 9,044 | — | 9,044 | |||||||||||||||||||
Theatre concessions | 9,919 | — | — | 9,919 | |||||||||||||||||||
Food and beverage | — | 5,912 | — | 5,912 | |||||||||||||||||||
Other revenues(1) | 1,915 | 9,879 | 100 | 11,894 | |||||||||||||||||||
Cost reimbursements | 43 | 3,290 | — | 3,333 | |||||||||||||||||||
Total revenues | $ | 22,562 | $ | 28,125 | $ | 100 | $ | 50,787 | |||||||||||||||
| | | | | | | | | | | | |
| | 13 Weeks Ended 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 |
The Company had deferred revenue from contracts with customers of $37,377,000$38,310 and $37,307,000$39,144 as of SeptemberMarch 31, 2022 and December 30, 2021, and December 31, 2020, respectively. The Company had 0no contract assets as of September 30, 2021March 31, 2022 and December 31, 2020.30, 2021. During the 3913 weeks ended SeptemberMarch 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.
13
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 Taxes2021-10, Government Assistance (Topic 740)832): Simplifying the Accounting for Incomes TaxesDisclosures by Business Entities about Government Assistance. The amendments in ASU No. 2019-12 are designed to simplifythis update provide increased transparency of government assistance including the accounting for incomes taxes by removingrequirement of certain exceptionsdisclosures 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.
fiscal 2022.
theatres.
14
Since the COVID-19 crisispandemic 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 financinghad 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 modifiedbelieves it is positioned to meet its previously existing debt covenants (see Note 4 for further reference). Duringobligations 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.
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.
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.
15
During theTHE MARCUS CORPORATION
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)
| | | | | | |
|
| 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 |
16
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 ourthe 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 ourits 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 arethe 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
Amendments to
The
17
per share data)
During fiscal
Prior to fiscal 2021, the Company separated the Convertible Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Convertible Notes. The difference between the principal amount of the Convertible Notes and the liability component represented the debt discount, which was recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheet.
On January 1, 2021, the Company early adopted ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU No. 2020-06 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendments remove the separation models in ASC 470-20 for certain contracts. As a result, embedded conversion features would not be presented separately in equity, rather, the contract would be accounted for as a single liability measured at its amortized cost. Upon adoption, the Company recorded a one-time cumulative effect adjustment to the balance sheet on January 1, 2021 as follows:
| | | | | | | | | |
| | Balance at |
| | |
| | | |
| | December 31, | | Cumulative | | Balance at | |||
|
| 2020 |
| adjustment |
| January 1, 2021 | |||
| | (in thousands) | |||||||
Long-term debt | | $ | 193,036 | | $ | 21,393 | | $ | 214,429 |
Deferred income taxes | |
| 33,429 | |
| (5,584) | |
| 27,845 |
Capital in excess of par | |
| 153,529 | |
| (16,511) | |
| 137,018 |
Retained earnings | |
| 331,897 | |
| 702 | |
| 332,599 |
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.
18
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.
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.
19
13 Weeks Ended | ||||||||||||||||||||||||||||||||
Lease Cost | Classification | March 31, 2022 | April 1, 2021 | |||||||||||||||||||||||||||||
Finance lease costs: | ||||||||||||||||||||||||||||||||
Amortization of finance lease assets | Depreciation and amortization | $ | 705 | $ | 712 | |||||||||||||||||||||||||||
Interest on lease liabilities | Interest expense | 221 | 250 | |||||||||||||||||||||||||||||
$ | 926 | $ | 962 | |||||||||||||||||||||||||||||
Operating lease costs: | ||||||||||||||||||||||||||||||||
Operating lease costs | Rent expense | $ | 6,377 | $ | 6,321 | |||||||||||||||||||||||||||
Variable lease cost | Rent expense | (163) | (15) | |||||||||||||||||||||||||||||
Short-term lease cost | Rent expense | 36 | 35 | |||||||||||||||||||||||||||||
$ | 6,250 | $ | 6,341 |
| | | | | | | | | | | | | | | |
| | | | 13 Weeks | | 13 Weeks | | 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 |
|
| | | | | | | | | | | | |
|
| 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 |
| | | | |
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% |
20
Lease Term and Discount Rate | March 31, 2022 | December 30, 2021 | ||||||||||||
Weighted-average remaining lease terms: | ||||||||||||||
Finance leases | 8 years | 8 years | ||||||||||||
Operating leases | 13 years | 13 years | ||||||||||||
Weighted-average discount rates: | ||||||||||||||
Finance leases | 4.57 | % | 4.58 | % | ||||||||||
Operating leases | 4.51 | % | 4.48 | % |
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.
6.
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
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).
21
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 |
22
23
We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The thirdfirst 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 quartersOur primary
Within this MD&A amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.
fiscal 2022.
We began fiscal 2021 with all eight of our company-owned hotels and all but one of our managed hotels open. The majority of our restaurants and bars in our hotels and resorts were open during the first 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.
24
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.
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 throughoutwas 69%. There was a limited number of new films released during the first quarter of fiscal 20212022 as studios waited for the Omicron variant to date, includingsubside.
25
TableMaintaining and protecting a strong balance sheet has always been a core philosophy of Contents
Both ofThe 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.
question.
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | % |
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.
26
Operating losses from our corporate items, which include amounts not allocable to the business segments, increased during the fiscal 2021 periods2022 first quarter compared to the fiscal 2020 periods2021 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 periods2022 was negativelyfavorably impacted by increaseddecreased interest expense compared to the first quarter of fiscal 2020 periods, partially2021, 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.
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.
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.
27
Theatres
The following table sets forth revenues, operating loss and operating margin for our theatre division for the thirdfirst quarter and first three quarters of fiscal 20212022 and fiscal 20202021 (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 operating loss during the first three quartersquarter 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 quartersloss.
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | % |
28
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2021 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Admission revenues | $ | 38.4 | $ | 10.7 | $ | 27.7 | 259.5 | % | |||||||||||||||||||||||||||||||||||||||
Concession revenues | 35.5 | 9.9 | 25.5 | 257.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Other revenues | 5.6 | 1.9 | 3.7 | 193.0 | % | ||||||||||||||||||||||||||||||||||||||||||
79.5 | 22.5 | 57.0 | 253.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Cost reimbursements | — | — | — | (100.0) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 79.5 | $ | 22.6 | $ | 56.9 | 252.3 | % |
As described above, revenues were virtually non-existentsignificantly reduced during the second and third quartersfirst quarter of fiscal 20202021 due to the temporary closing of all ofclosures 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 thirdfirst quarter and first three quarters of fiscal 20212022 to the thirdfirst 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.
29
Total theatre attendance increased significantly during the thirdfirst quarter of fiscal 2022 compared to the first quarter of fiscal 2021, compared to the third quarterwhen a significant portion of fiscal 2020, when our theatres were primarilytemporarily closed. Total theatre attendance increased 18.7%238.3% during
films resulting in a lower average ticket price in the same period in the prior year.
30
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 fromwith 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 ourthe fiscal 2021 fourth2022 second quarter includethat have potential to perform very well including EternalsDoctor Strange in the Multiverse of Madness, Ghostbusters: AfterlifeDownton Abbey: A New Era, King RichardTop Gun: Maverick, EncantoJurassic World: Dominion, West Side Story,Lightyear Spider-Man: No Way Home, andSing 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, variantOmicron or any new variants of COVID-19 do not result in significant new restrictions, demand for out-of-home entertainment will continue to
.
operating.
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | % |
31
The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the thirdfirst quarter and first three quarters of fiscal 20212022 and fiscal 20202021 (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 thirdfirst 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 quartersquarter 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 thirdthe first quarter and first three quarters of fiscal 2021. The2021, the majority of our restaurantsthese properties were generating significantly reduced revenues and bars in our hotels and resorts were open during the first three quarters of fiscal 2021, operating under applicable state and local restrictions and guidelines, and, in some cases, reduced operating hours. We reopened one ofIn addition, our two SafeHouse
As a resultwere temporarily closed during the first quarter of the significantly reduced revenues duringfiscal 2021 (one of our fiscal 2020 periods, we
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | % |
32
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2019 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Room revenues | $ | 17.4 | $ | 18.9 | $ | (1.5) | (8.0) | % | |||||||||||||||||||||||||||||||||||||||
Food /beverage revenues | 14.5 | 15.8 | (1.3) | (8.1) | % | ||||||||||||||||||||||||||||||||||||||||||
Other revenues | 13.1 | 12.2 | 0.9 | 7.7 | % | ||||||||||||||||||||||||||||||||||||||||||
45.0 | 46.9 | (1.8) | (3.9) | % | |||||||||||||||||||||||||||||||||||||||||||
Cost reimbursements | 7.6 | 8.2 | (0.6) | (6.9) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 52.7 | $ | 55.1 | $ | (2.4) | (4.4) | % |
A decline in transient and group business contributed significantly to our reduced revenues during the thirdfirst quarter and first three quarters of fiscal 20212022 compared to the same periodsquarter of fiscal 2019. A decrease in group business subsequently led to a corresponding decrease in banquet and catering revenues, negatively impacting our reported food and beverage revenues compared to the same periodsperiod in fiscal 2019. Other revenues increased during the thirdfirst 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 20212022 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 golfspa revenues at the Grand Geneva® Resort & Spa (“Grand Geneva”), partially offset by decreased management fees. Cost reimbursements decreased slightly during the thirdfirst quarter and first three quarters of fiscal 20212022 compared to the thirdfirst quarter and first three quarters of fiscal 2019 due to reduced revenues and subsequent operating costs at our managed hotels.
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | % |
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 | % |
As a result
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | % |
33
First Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
F2022 | F2019 | Amt. | Pct. | ||||||||||||||||||||||||||||||||||||||||||||
Occupancy pct. | 48.9 | % | 64.6 | % | (15.7) pts | (24.3) | % | ||||||||||||||||||||||||||||||||||||||||
ADR | $ | 144.99 | $ | 130.05 | $ | 14.94 | 11.5 | % | |||||||||||||||||||||||||||||||||||||||
RevPAR | $ | 70.95 | $ | 84.05 | $ | (13.10) | (15.6) | % |
According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2021 third2022 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 third2022 first quarter and first three quarters compared to the same periodsperiod during fiscal 2019.2019, leading us to believe we outperformed the industry during the fiscal 2022 first quarter by approximately 2 percentage points. Data received from Smith Travel Research for our various “competitive sets” – —hotels identified in our specific markets that we deem to be competitors to our hotels – hotels—indicates that these hotels experienced a decrease in RevPAR of 19.5% and 41.1%, respectively,24.2% during our fiscal 2021 third2022 first quarter, and first three quarters, again compared to the same periodsperiod 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 third2022 first quarter and first three quarters by approximately 7 and 89 percentage points, respectively.points. Higher class segments of the hotel industry, such as luxury and upper upscale (with an increased reliance on business travel), continue to experience lower occupancies compared to lower class hotel segments such as economy and midscale.
Forecasting what future RevPAR growth or decline will be during the next 18 to 24 months is very difficult at this time. The non-group booking window 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.
34
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 presentalso use Adjusted EBITDA as a supplementalbasis 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.
| | | | | | | | | | | | |
| | 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) |
35
First Quarter | |||||||||||||||||||||||
F2022 | F2021 | ||||||||||||||||||||||
Net earnings (loss) attributable to The Marcus Corporation | $ | (14.9) | $ | (28.1) | |||||||||||||||||||
Add (deduct): | |||||||||||||||||||||||
Investment income | 0.3 | — | |||||||||||||||||||||
Interest expense | 4.1 | 4.8 | |||||||||||||||||||||
Other expense | 0.6 | 0.6 | |||||||||||||||||||||
Loss (gain) on disposition of property, equipment and other assets | (0.4) | (2.2) | |||||||||||||||||||||
Equity losses from unconsolidated joint ventures, net | 0.1 | — | |||||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interests | — | — | |||||||||||||||||||||
Income tax expense (benefit) | (6.5) | (10.8) | |||||||||||||||||||||
Depreciation and amortization | 17.2 | 18.0 | |||||||||||||||||||||
Share-based compensation expenses (1) | 2.9 | 1.5 | |||||||||||||||||||||
Government grants (2) | — | (1.3) | |||||||||||||||||||||
Total Adjusted EBITDA | $ | 3.4 | $ | (17.5) |
The following tables sets forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):
First Quarter, F2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Theatres | Hotels & Resorts | Corp. Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
Operating loss | $ | (8.0) | $ | (3.0) | $ | (5.8) | $ | (16.8) | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 12.2 | 5.0 | 0.1 | 17.2 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation (1) | 0.6 | 0.4 | 1.9 | 2.9 | |||||||||||||||||||||||||||||||||||||||||||
Government grants (2) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | 4.8 | $ | 2.4 | $ | (3.8) | $ | 3.4 |
| | | | | | | | | | | | | | | | | | | | | | |
|
| 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) |
| | | | | | | | | | | | | | | | | | | | | | |
|
| 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.
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | % |
36
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
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
37
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).
The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
4.02% Senior Notes and 4.32% Senior Notes
On June 27, 2013, we entered into a Note Purchase Agreement (the “4.02% Senior Notes Agreement”) with the several purchasers party to the 4.02% Senior Notes Agreement, pursuant to which we issued and sold $50 million in aggregate principal amount of our 4.02% Senior Notes due August 14, 2025 (the “4.02% Notes”) in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). We used the net proceeds from the issuance and sale of the 4.02% Notes to reduce existing borrowings under our revolving credit facility and for general corporate purposes. On December 21, 2016, we entered into a Note Purchase Agreement (the “4.32% Senior Notes Agreement”) with the several purchasers party to the 4.32% Senior Notes Agreement, pursuant to which we issued and sold $50 million in aggregate principal amount of our 4.32% Senior Notes due February 22, 2027 (the “4.32% Notes” and the 4.02% Notes, are together referred to hereafter as the “Notes”) in a private placement exempt from the registration requirements of the Securities Act. We used the net proceeds of the sale of the 4.32% Notes to repay outstanding indebtedness and for general corporate purposes.
On July 13, 2021 we entered into an amendment to the 4.02% Senior Notes Agreement (the “4.02% Fourth Amendment”). The 4.02% Senior Notes Agreement, as previously amended and as amended by the 4.02% Fourth Amendment, is hereafter referred to as the
38
“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 overduring the past 19 monthstwo years will allow us to have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements. However, future compliance with our debt covenants could be impacted if we are unable to resumecontinue operations as currently expected, which could be impacted by matters that are not entirely in our control, such as the continuationreinstatement of protective actions that federal, state and local governments have taken and the timing of new movie
39
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.
2021.
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 quartersquarter 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 quartersquarter of fiscal 2020, which included
40
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 0.400.37 at September 30, 2021,March 31, 2022, compared to 0.37 at December 31, 2020. A change in30, 2021.
We repurchased approximately 62,000first quarter of fiscal 2021 we did not repurchase any shares of our common stock for approximately $1.3 million in conjunction with the exercise of stock options and the payment of income taxes on vested restricted stock during the first 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 2.72.6 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common
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 other41
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:
42
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.
43
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 2,657,340Period Total Number of
Shares
PurchasedAverage Price
Paid per ShareTotal Number of
Shares
Purchased as
Part of Publicly
Announced
Programs (1)Maximum
Number of
Shares that May
Yet be Purchased
Under the Plans
or Programs (1)December 31 – February 3 171 $ 17.95 171 2,657,169 February 4 – March 3 75,674 18.10 75,674 2,581,495 March 4 – March 31 — — — 2,581,495 Total 75,845 $ 18.10 75,845 2,581,495 (1)Through March 31, 2022, our Board of Directors had authorized the repurchase of up to approximately 11.7 million shares of our outstanding Common Stock. Under these 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.
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31.2 32 101.INS The instance document does not appear in the interactive data file because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). By: Gregory S. Marcus President and Chief Executive Officer DATE: By: /s/ Douglas A. Neis Douglas A. Neis Executive Vice President and Chief Financial Officer4.14.24.331.145THE MARCUS CORPORATIONTHE MARCUS CORPORATION DATE: November 8, 2021May 5, 2022/s/ /s/ Gregory S. MarcusNovember 8, 2021