THE MARCUS CORPORATION REPORTS THIRD QUARTER RESULTS
Solid gains in revenues and earnings from continuing operations; Marcus Theatres® results improve
Milwaukee, Wis., March 21, 2006…..The Marcus Corporation (NYSE:MCS) today reported increased revenues and earnings from continuing operations for the third quarter ended February 23, 2006.
Third Quarter Fiscal 2006 Highlights
• | Total revenues for the third quarter of fiscal 2006 were $69,586,000, an 11.4% increase from revenues of $62,472,000 for the third quarter of the prior year. |
• | Earnings from continuing operations increased 77.0% to $3,162,000 or $0.10 per diluted share for the third quarter of fiscal 2006, from earnings from continuing operations of $1,786,000 or $0.06 per diluted share for the comparable prior period. |
• | Net earnings were $4,723,000 or $0.15 per diluted share for the third quarter of fiscal 2006, compared to net earnings of $6,595,000 or $0.21 per diluted share for the same period in fiscal 2005. |
• | Last year’s net earnings include gains from the sale of the company’s former limited-service lodging division and Miramonte Resort, which have been classified as discontinued operations in accordance with current accounting pronouncements. |
First Three Quarters of Fiscal 2006 Highlights
• | Total revenues were $226,165,000 for the first three quarters of fiscal 2006, a 6.7% increase from revenues of $211,946,000 for the same period in the prior year. |
• | Earnings from continuing operations were $20,000,000 or $0.65 per diluted share for the first three quarters of fiscal 2006, a 15.0% increase from earnings from continuing operations of $17,389,000 or $0.57 per diluted share for the first three quarters of fiscal 2005. |
• | Net earnings were $25,256,000 or $0.82 per diluted share for the first three quarters of fiscal 2006, compared to net earnings of $96,328,000 or $3.16 per diluted share for the comparable prior period. |
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“We continued to make good progress in the third quarter, reporting our third straight quarter with increased earnings from continuing operations. Marcus Theatres® achieved increases in both revenues and operating income for the quarter due to a solid holiday season. Marcus Hotels and Resorts reported a 24.2% increase in revenues, driven by improved performance at our five existing company-owned properties and results from our two new properties,” said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation.
Marcus Theatres®
“The improvement in Marcus Theatres’ results reflected the strong audience appeal of holiday-season movies includingHarry Potter and the Goblet of Fire, Chronicles of Narnia: The Lion, The Witch and The WardrobeandKing Kong. Each of these films grossed over $200 million at the box office nationally – the first time in history that three films performed at that level during the holiday period. And this was in spite of the fact that Christmas Eve and Christmas Day, as well as News Year’s Eve and News Year’s Day, fell on a Saturday and Sunday this year,” said Marcus.
“We are encouraged by the improving trends in film product and the extended outlook also appears promising. Projected hit motion pictures for early spring includeIce Age 2: The MeltdownandScary Movie 4. May, the last month of our fiscal year, has the potential for four blockbusters, withMission: Impossible III, Poseidon, Over the HedgeandThe Da Vinci Codeall opening that month, compared with just one blockbuster movie —Star Wars: Episode III — Revenge of the Sith, opening during this period last year.
Looking ahead to the summer, potential hits include three computer-generated animated features withPixar’s newest filmCars,along with Monster Houseand Ant Bully.Comedies include Disney’sPirates of the Caribbean: Dead Man’s Chest,Adam Sandler inClickand Jennifer Aniston and Vince Vaughn inThe Break-Up. Familiar titles likeSuperman Returnsand Miami Vicealso have good box-office potential. Two films that may prove to be controversial are M. Night Shyamalan’sLady in the Water and Oliver Stone’sWorld Trade Center,”said Marcus.
Marcus said the division continues to move forward with its expansion plans. “Construction will begin in a matter of weeks on two new theatres – a 13-screen theatre in Sturtevant, Wis., that will include anUltraScreen™, and a new 12-screen theatre in Green Bay, Wis. We are also finalizing the plans for our new flagship theatre in Brookfield, Wis., with construction scheduled to begin by summer,” said Marcus.
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Marcus Hotels and Resorts
Marcus said revenue per available room (RevPAR) for comparable Marcus Hotels and Resorts properties increased 15.6% in the third quarter and 8.8% for the nine months. “RevPAR was up for all five of our existing properties, which is a noteworthy achievement given that the winter season is typically a challenging time for hotels in the Midwest,” said Marcus.
Marcus noted that the division’s operating loss was flat during the third quarter compared to the same quarter last year as a result of start-up losses and expenses for new properties. These include the June 2005 purchase of the Wyndham Milwaukee Center hotel and the opening of the Four Points by Sheraton Chicago Downtown/Magnificent Mile, as well as two new properties under development.
“Last week, we announced plans to purchase The Westin Columbus hotel in downtown Columbus, Ohio. This is a beautiful, 186-room historic hotel that leverages our experience in restoring and operating landmark hotels and further expands our presence in the Midwest. This property will be an exciting addition to our portfolio of full-service hotels and resorts,” said Marcus.
“Construction continues on the Platinum Hotel & Spa, our hotel condominium project in Las Vegas that is scheduled to open in late June 2006. If the project stays on its current course, we anticipate that we will report a significant development profit on the Platinum project in the first quarter of fiscal 2007,” said Marcus. He noted that construction is also underway on the restoration of the Skirvin Hotel in Oklahoma City, which is expected to open in 2007 as the Hilton Skirvin.
“The near-term outlook for our existing hotels is very encouraging. We believe the investments we are making today, both in capital and in start-up expenses, in our two newest hotels, the two hotels under development and the purchase of The Westin Columbus, will contribute to increased revenues and operating income for this division over the long term,” said Marcus.
Special Cash Dividend
The Marcus Corporation paid a special cash dividend of $7.00 per share on February 24, 2006, returning to shareholders approximately $214 million in proceeds resulting from the sale of the limited-service lodging division. “This significant event confirmed the underlying value of our real estate and our philosophy of managing for the long term and we were pleased to be able to return a portion of this value to our loyal long-term shareholders,” said Marcus.
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“We remain committed to growing both Marcus Theatres and Marcus Hotels and Resorts, as evidenced by our investments in the new theatre and hotel projects. We believe we are well positioned to pursue opportunities to grow both of our divisions,” he added.
Conference Call and Webcast
Marcus Corporation management will host a conference call today, March 21, 2006, at 3:00 p.m. Central/4:00 p.m. Eastern time to discuss the third 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 1-913-981-5542. 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 Tuesday, March 28, 2006 by dialing 1-888-203-1112 and entering the passcode 4162217. The Webcast of the conference call will be archived on the company’s Web site until the next earnings release.
About The Marcus Corporation
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 include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which 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, as well as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (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 our markets; (7) our ability to identify properties to acquire, develop and/or manage and continuing availability of funds for such development; (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; and (9) our decisions regarding the use of the remaining proceeds received from the sale of our limited-service lodging division. 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 | 39 Weeks Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 23, 2006 | Feb. 24, 2005 | Feb. 23, 2006 | Feb. 24, 2005 | |||||||||||
Revenues: | ||||||||||||||
Rooms and telephone | $ | 13,154 | $ | 9,226 | $ | 56,761 | $ | 42,612 | ||||||
Theatre admissions | 25,368 | 24,976 | 73,234 | 76,549 | ||||||||||
Theatre concessions | 12,641 | 11,740 | 35,292 | 36,092 | ||||||||||
Food and beverage | 9,859 | 8,213 | 31,360 | 27,863 | ||||||||||
Other revenues | 8,564 | 8,317 | 29,518 | 28,830 | ||||||||||
Total revenues | 69,586 | 62,472 | 226,165 | 211,946 | ||||||||||
Costs and expenses: | ||||||||||||||
Rooms and telephone | 6,251 | 5,085 | 20,723 | 16,861 | ||||||||||
Theatre operations | 19,898 | 19,622 | 57,212 | 59,572 | ||||||||||
Theatre concessions | 2,587 | 2,482 | 7,483 | 7,781 | ||||||||||
Food and beverage | 7,972 | 7,002 | 24,006 | 21,491 | ||||||||||
Advertising and marketing | 4,310 | 3,529 | 14,277 | 11,748 | ||||||||||
Administrative | 7,717 | 6,635 | 22,900 | 19,552 | ||||||||||
Depreciation and amortization | 6,504 | 6,181 | 19,602 | 18,370 | ||||||||||
Rent | 893 | 518 | 2,731 | 1,482 | ||||||||||
Property taxes | 2,567 | 1,671 | 7,771 | 5,723 | ||||||||||
Pre-opening expenses | 42 | 221 | 406 | 396 | ||||||||||
Other operating expenses | 5,697 | 4,811 | 17,743 | 15,443 | ||||||||||
Total costs and expenses | 64,438 | 57,757 | 194,854 | 178,419 | ||||||||||
Operating income | 5,148 | 4,715 | 31,311 | 33,527 | ||||||||||
Other income (expense): | ||||||||||||||
Investment income | 2,565 | 1,982 | 6,326 | 3,801 | ||||||||||
Interest expense | (3,677 | ) | (3,722 | ) | (11,008 | ) | (11,381 | ) | ||||||
Gain on disposition of property, | ||||||||||||||
equipment and investments in joint | ||||||||||||||
ventures | 109 | 19 | 3,331 | 2,251 | ||||||||||
(1,003 | ) | (1,721 | ) | (1,351 | ) | (5,329 | ) | |||||||
Earnings from continuing operations | ||||||||||||||
before income taxes | 4,145 | 2,994 | 29,960 | 28,198 | ||||||||||
Income taxes | 983 | 1,208 | 9,960 | 10,809 | ||||||||||
Earnings from continuing operations | 3,162 | 1,786 | 20,000 | 17,389 | ||||||||||
Discontinued operations: | ||||||||||||||
Income (loss) from discontinued operations, | ||||||||||||||
net of income taxes | (171 | ) | (835 | ) | (765 | ) | 2,338 | |||||||
Gain on sale of discontinued operations, | ||||||||||||||
net of income taxes | 1,732 | 5,644 | 6,021 | 76,601 | ||||||||||
1,561 | 4,809 | 5,256 | 78,939 | |||||||||||
Net earnings | $ | 4,723 | $ | 6,595 | $ | 25,256 | $ | 96,328 | ||||||
Earnings per share - basic: | ||||||||||||||
Continuing operations | $ | 0.10 | $ | 0.06 | $ | 0.66 | $ | 0.58 | ||||||
Discontinued operations | 0.05 | 0.16 | 0.17 | 2.62 | ||||||||||
Net earnings per share | $ | 0.15 | $ | 0.22 | $ | 0.83 | $ | 3.20 | ||||||
Earnings per share - diluted: | ||||||||||||||
Continuing operations | $ | 0.10 | $ | 0.06 | $ | 0.65 | $ | 0.57 | ||||||
Discontinued operations | 0.05 | 0.15 | 0.17 | 2.59 | ||||||||||
Net earnings per share | $ | 0.15 | $ | 0.21 | $ | 0.82 | $ | 3.16 | ||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | 30,509 | 30,224 | 30,381 | 30,061 | ||||||||||
Diluted | 30,877 | 30,770 | 30,756 | 30,508 |
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THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited) | (Audited) | |||||||
February 23, 2006 | May 26, 2005 | |||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 292,684 | $ | 259,057 | ||||
Cash held by intermediaries | 1,578 | 28,552 | ||||||
Accounts and notes receivable | 16,081 | 11,615 | ||||||
Refundable income taxes | -- | 871 | ||||||
Deferred income taxes | 6,139 | 5,464 | ||||||
Real estate and development costs | 3,961 | 4,985 | ||||||
Other current assets | 11,220 | 4,856 | ||||||
Assets of discontinued operations | 3,622 | 16,700 | ||||||
Property and equipment - net | 431,681 | 399,923 | ||||||
Other assets | 52,626 | 55,476 | ||||||
Total Assets | $ | 819,592 | $ | 787,499 | ||||
Liabilities and Shareholders’ Equity: | ||||||||
Accounts and notes payable | $ | 12,654 | $ | 17,785 | ||||
Income taxes | 1,706 | -- | ||||||
Taxes other than income taxes | 9,480 | 8,507 | ||||||
Other current liabilities | 25,563 | 18,116 | ||||||
Current maturities of long-term debt | 50,234 | 25,765 | ||||||
Liabilities of discontinued operations | 7,684 | 9,514 | ||||||
Long-term debt | 142,216 | 170,888 | ||||||
Deferred income taxes | 26,516 | 26,614 | ||||||
Deferred compensation and other | 26,689 | 16,649 | ||||||
Shareholders’ equity | 516,850 | 493,661 | ||||||
Total Liabilities and Shareholders' Equity | $ | 819,592 | $ | 787,499 | ||||
THE MARCUS CORPORATION
Business Segment Information (Unaudited)
(in thousands)
Theatres | Hotels/ Resorts | Corporate Items | Continuing Operations Total | Discontinued Operations | Total | |||||||||||||||
13 Weeks Ended Feb. 23, 2006 | ||||||||||||||||||||
Revenues | $ | 39,841 | $ | 29,429 | $ | 316 | $ | 69,586 | $ | (191 | ) | $ | 69,395 | |||||||
Operating income (loss) | 9,355 | (2,160 | ) | (2,047 | ) | 5,148 | (312 | ) | 4,836 | |||||||||||
Depreciation and amortization | 3,087 | 3,144 | 273 | 6,504 | 0 | 6,504 | ||||||||||||||
13 Weeks Ended Feb. 24, 2005 | ||||||||||||||||||||
Revenues | $ | 38,470 | $ | 23,696 | $ | 306 | $ | 62,472 | $ | 28 | $ | 62,500 | ||||||||
Operating income (loss) | 9,113 | (2,100 | ) | (2,298 | ) | 4,715 | (1,339 | ) | 3,376 | |||||||||||
Depreciation and amortization | 3,050 | 2,729 | 402 | 6,181 | 39 | 6,220 | ||||||||||||||
39 Weeks Ended Feb. 23, 2006 | ||||||||||||||||||||
Revenues | $ | 113,809 | $ | 111,354 | $ | 1,002 | $ | 226,165 | $ | 591 | $ | 226,756 | ||||||||
Operating income (loss) | 26,181 | 11,400 | (6,270 | ) | 31,311 | (1,278 | ) | 30,033 | ||||||||||||
Depreciation and amortization | 9,354 | 9,403 | 845 | 19,602 | 69 | 19,671 | ||||||||||||||
39 Weeks Ended Feb. 24, 2005 | ||||||||||||||||||||
Revenues | $ | 117,809 | $ | 93,074 | $ | 1,063 | $ | 211,946 | $ | 46,172 | $ | 258,118 | ||||||||
Operating income (loss) | 29,018 | 10,451 | (5,942 | ) | 33,527 | 4,039 | 37,566 | |||||||||||||
Depreciation and amortization | 8,906 | 8,267 | 1,197 | 18,370 | 3,770 | 22,140 |
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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