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| For additional information, contact: |
| Douglas A. Neis |
| (414) 905-1100 |
FOR IMMEDIATE RELEASE
THE MARCUS CORPORATION REPORTS FIRST QUARTER RESULTS
Earnings from continuing operations increase 10.1%
Milwaukee, Wis., September 19, 2005….. The Marcus Corporation (NYSE: MCS) today reported results for the first quarter ended August 25, 2005.
Total revenues for the first quarter of fiscal 2006 were $88,202,000, a 1.0% increase from revenues of $87,339,000 for the first quarter of fiscal 2005. Earnings from continuing operations increased 10.1% to $12,316,000 or $0.40 per diluted share for the first quarter of fiscal 2006, from earnings from continuing operations of $11,186,000 or $0.37 per diluted share for the comparable prior period. Net earnings were $15,489,000 or $0.50 per diluted share for the first quarter of fiscal 2006, compared to net earnings of $18,145,000 or $0.60 per diluted share for the first quarter of the prior year. The net earnings include net after-tax income from discontinued operations of $3,173,000 or $0.10 per diluted share in the first quarter of fiscal 2006 and $6,959,000 or $0.23 per diluted share in the first quarter of fiscal 2005. The company’s former limited-service lodging division and Miramonte Resort have been classified as discontinued operations in accordance with current accounting pronouncements and prior year results have been restated to conform to the current presentation.
“Marcus Hotels and Resorts continued to build momentum, with a 4.8% increase in revenue per available room (RevPAR) for the quarter for comparable properties. However, the results for Marcus Theatres were impacted by a disappointing summer at the box office,” said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation.
Marcus said the increase in earnings from continuing operations was due to increased investment income and a reduced income tax rate resulting from the company’s significant cash balances, along with several significant gains from the sale of property and equipment in the first quarter of fiscal 2006. The cash balances, which were generated by proceeds from the sale of the company’s limited-service lodging division and Miramonte Resort in fiscal 2005, are currently invested in tax-free instruments. In addition, net earnings for the first quarter of fiscal 2006 included additional gains on sale of discontinued operations resulting from the receipt of proceeds previously held in escrow pending completion of certain transfer requirements on two of the company’s former Baymont Inns & Suites.
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Marcus Theatres reported decreased revenues and operating income for the first quarter of fiscal 2006 compared to the prior year, consistent with the movie theatre industry as a whole. “The movies drive attendance and overall, the quality and depth of the summer movie slate was lacking. As an example, none of the five highest grossing movies for Marcus Theatres –War of the Worlds, Star Wars: Episode III — Revenge of the Sith, Batman Begins, MadagascarandCharlie & The Chocolate Factory– did as well as last summer’s top three.”
“Box office revenues have improved during the last two weeks compared to the prior year and we are hopeful that attendance will continue to pick up for the fall movie season, with possible hits includingFlightplan, Wallace & Gromit: The Curse of the Were-Rabbit, The Legend of Zorro andChicken Little, to name a few. The holiday season is expected to start well withHarry Potter and the Goblet of Firein mid-November, with other potentially popular holiday pictures includingThe Chronicles of Narnia: The Lion, The Witch and The Wardrobe, King Kong, Big Momma’s House 2, The ProducersandFun with Dick and Jane,” said Marcus.
Marcus Hotels and Resorts reported increased revenues for the first quarter, with slightly decreased operating income compared to the prior year. “Our revenues benefited from the RevPAR increase, as well as the two new company-owned hotels we added in early June. We are pleased with the guest response to our first summer for the Four Points by Sheraton Chicago Downtown/Magnificent Mile and Wyndham Milwaukee Center and look forward to continued growth from these two properties,” Marcus said. Marcus noted that operating income for the division was impacted by reduced earnings for the company’s timeshare development and start-up and preopening costs for the Four Points by Sheraton in Chicago.
“We believe both of our divisions are positioned for the long-term. Marcus Theatres continues to lead its markets and is working to further improve the moviegoing experience for its guests. What the division really needs is quality movies with broad appeal, which we hope are on the horizon. Marcus Hotels and Resorts has a number of exciting projects underway which provide future growth opportunities for the division. We continue to evaluate potential uses of the proceeds from the sale of the limited-service lodging division, including returns of capital to shareholders. We anticipate that we will provide additional direction on potential applications of at least a portion of these proceeds in the next few months,” Marcus said.
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Marcus Corporation management will host a conference call today, September 19, 2005, at 3:00 p.m. Central/4:00 p.m. Eastern time to discuss the first quarter results. Interested parties can listen to the call live on the Internet through the investor relations section of the company’s Web site:www.marcuscorp.com, or by dialing 1-913-981-4900. Listeners should dial in to the call at least 5 — 10 minutes prior to the start of the call or should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for telephone replay through Thursday, September 26, 2005 by dialing 1-888-203-1112 and entering the passcode 4010723. The Webcast of the conference call will be archived on the company’s Web site until the next earnings release.
Headquartered in Milwaukee, Wis., The Marcus Corporation is a leader in the lodging and entertainment industries. The Marcus Corporation’s movie theatre division, Marcus Theatres, owns or manages 504 screens at 45 locations in Wisconsin, Illinois, Minnesota and Ohio, and one family entertainment center in Wisconsin. The company’s lodging division, Marcus Hotels and Resorts, owns or manages 12 hotels and resorts in Wisconsin, California, Minnesota, Missouri, Texas and Illinois and one vacation club in Wisconsin. For more information, visit the company’s Web site atwww.marcuscorp.com.
Certain matters discussed in this Press Release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division; (2) the effects of increasing depreciation expenses and preopening and start-up costs due to the capital intensive nature of our businesses; (3) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (4) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other markets; (5) the effects on our occupancy and room rates from the relative industry supply of available rooms at comparable lodging facilities in our markets; (6) the effects of competitive conditions in the markets served by us; (7) our ability to identify properties to acquire, develop and/or manage and continuing availability of funds for such development; and (8) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, the United States’ responses thereto and subsequent hostilities. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this Press Release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
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THE MARCUS CORPORATION
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share data)
| 13 Weeks Ended
|
|---|
| August 25, 2005
| August 26, 2004
|
|---|
| Revenues: | | | | | | | | |
| Rooms and telephone | | | $ | 23,286 | | $ | 18,617 | |
| Theatre admissions | | | | 28,747 | | | 32,116 | |
| Theatre concessions | | | | 13,656 | | | 14,971 | |
| Food and beverage | | | | 10,774 | | | 9,891 | |
| Other revenues | | | | 11,739 | | | 11,744 | |
|
| |
| |
| Total revenues | | | | 88,202 | | | 87,339 | |
Costs and expenses: | | | | | | | | |
| Rooms and telephone | | | | 7,513 | | | 6,021 | |
| Theatre operations | | | | 21,963 | | | 24,254 | |
| Theatre concessions | | | | 2,943 | | | 3,224 | |
| Food and beverage | | | | 8,187 | | | 7,319 | |
| Advertising and marketing | | | | 5,170 | | | 4,227 | |
| Administrative | | | | 7,602 | | | 6,667 | |
| Depreciation and amortization | | | | 6,501 | | | 6,148 | |
| Rent | | | | 924 | | | 471 | |
| Property taxes | | | | 2,545 | | | 2,031 | |
| Preopening expenses | | | | 336 | | | 49 | |
| Other operating expenses | | | | 6,374 | | | 5,871 | |
|
| |
| |
| Total costs and expenses | | | | 70,058 | | | 66,282 | |
|
| |
| |
| Operating income | | | | 18,144 | | | 21,057 | |
Other income (expense): | | | | | | | | |
| Investment income | | | | 1,883 | | | 346 | |
| Interest expense | | | | (3,738) | | | (3,879) | |
| Gain on disposition of property, equipment and | | | | | | | | |
| investments in joint ventures | | | | 2,983 | | | 966 | |
|
| |
| |
| | | | | 1,128 | | | (2,567) | |
|
| |
| |
| Earnings from continuing operations | | | | | | | | |
| before income taxes | | | | 19,272 | | | 18,490 | |
| Income taxes | | | | 6,956 | | | 7,304 | |
|
| |
| |
| Earnings from continuing operations | | | | 12,316 | | | 11,186 | |
Discontinued operations: | | |
| Income (loss) from discontinued operations, | | | | | | | | |
| net of income taxes | | | | (563) | | | 6,959 | |
| Gain on sale of discontinued operations, | | | | | | | | |
| net of income taxes | | | | 3,736 | | | -- | |
|
| |
| |
| | | | | 3,173 | | | 6,959 | |
|
| |
| |
| Net earnings | | | $ | 15,489 | | $ | 18,145 | |
|
| |
| |
| Earnings per share - basic: | | | | | | | | |
| Continuing operations | | | $ | 0.41 | | $ | 0.38 | |
| Discontinued operations | | | | 0.10 | | | 0.23 | |
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| |
| |
| Net earnings per share | | | $ | 0.51 | | $ | 0.61 | |
|
| |
| |
| Earnings per share - diluted: | | | | | | | | |
| Continuing operations | | | $ | 0.40 | | $ | 0.37 | |
| Discontinued operations | | | | 0.10 | | | 0.23 | |
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| |
| |
| Net earnings per share | | | $ | 0.50 | | $ | 0.60 | |
|
| |
| |
| Weighted average shares outstanding: | | | | | | | | |
| Basic | | | | 30,306 | | | 29,849 | |
| Diluted | | | | 30,688 | | | 30,144 | |
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THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
| (Unaudited) | (Audited) |
|---|
| August 25, 2005
| May 26, 2005
|
|---|
| Assets: | | | | | | | | |
| Cash and cash equivalents | | | | $ 283,847 | | | $ 259,057 | |
| Cash held by intermediaries | | | | 4,110 | | | 28,552 | |
| Accounts and notes receivable | | | | 16,489 | | | 11,615 | |
| Refundable income taxes | | | | -- | | | 871 | |
| Deferred income taxes | | | | 5,689 | | | 5,464 | |
| Real estate and development costs | | | | 4,487 | | | 4,985 | |
| Other current assets | | | | 4,667 | | | 4,856 | |
| Assets of discontinued operations | | | | 12,066 | | | 16,700 | |
| Property and equipment - net | | | | 430,910 | | | 399,923 | |
| Other assets | | | | 49,277 | | | 55,476 | |
|
| |
| |
| Total Assets | | | | $ 811,542 | | | $ 787,499 | |
|
| |
| |
| Liabilities and Shareholders' Equity: | | | | | | | | |
| Accounts and notes payable | | | | $ 13,094 | | | $ 17,785 | |
| Income taxes | | | | 5,941 | | | -- | |
| Taxes other than income taxes | | | | 9,658 | | | 8,507 | |
| Other current liabilities | | | | 23,541 | | | 18,116 | |
| Current maturities of long-term debt | | | | 48,198 | | | 25,765 | |
| Liabilities of discontinued operations | | | | 5,747 | | | 9,514 | |
| Long-term debt | | | | 151,376 | | | 170,888 | |
| Deferred income taxes | | | | 27,475 | | | 26,614 | |
| Deferred compensation and other | | | | 18,341 | | | 16,649 | |
| Shareholders' equity | | | | 508,171 | | | 493,661 | |
|
| |
| |
| Total Liabilities and Shareholders' Equity | | | | $ 811,542 | | | $ 787,499 | |
|
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THE MARCUS CORPORATION
Business Segment Information (Unaudited)
(in thousands)
| Theatres
| Hotels/
Resorts
| Corporate
Items
| Continuing
Operations
Total
| Discontinued
Operations
| Total
|
|---|
| 13 Weeks Ended August 25, 2005 | | | | | | | | | | | | | | | | | | | | |
| Revenues | | | $ | 44,254 | | $ | 43,599 | | $ | 349 | | $ | 88,202 | | $ | 499 | | $ | 88,701 | |
| Operating income (loss) | | | | 11,683 | | | 8,280 | | | (1,819 | ) | | 18,144 | | | (923 | ) | | 17,221 | |
| Depreciation and amortization | | | | 3,167 | | | 3,034 | | | 300 | | | 6,501 | | | 35 | | | 6,536 | |
13 Weeks Ended August 26, 2004 | | |
| Revenues | | | $ | 49,047 | | $ | 37,973 | | $ | 319 | | $ | 87,339 | | $ | 41,622 | | $ | 128,961 | |
| Operating income (loss) | | | | 14,079 | | | 8,601 | | | (1,623 | ) | | 21,057 | | | 11,587 | | | 32,644 | |
| Depreciation and amortization | | | | 2,919 | | | 2,832 | | | 397 | | | 6,148 | | | 3,257 | | | 9,405 | |
Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.
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