The Marcus Corporation Reports Increased Third Quarter Revenues and Operating Income

Operating income more than triples to $6.3 million

MILWAUKEE–(BUSINESS WIRE)–The Marcus Corporation (NYSE:MCS) today reported increased revenues and operating income for the third quarter ended February 28, 2008.

Third Quarter Fiscal 2008 Highlights

  • Total revenues for the third quarter of fiscal 2008 were $86,040,000, a 20.5 % increase from revenues of $71,418,000 for the third quarter of fiscal 2007.
  • Operating income was $6,257,000 for the third quarter of fiscal 2008, a 237.7% increase from operating income of $1,853,000 for the same period in the prior year.
  • Net earnings were $1,785,000 or $0.06 per diluted common share for the third quarter of fiscal 2008, compared to net earnings of $4,028,000 or $0.13 per diluted common share for the third quarter of the prior year.
  • Last years net earnings included pre-tax gains on the disposition of property, equipment and other assets of $5,519,000, related primarily to development gains on the sale of units at the companys condominium hotel project in Las Vegas. Prior year results also benefited from historic tax credits related to the renovation of the Skirvin Hilton in Oklahoma City.

First Three Quarters of Fiscal 2008 Highlights

  • Total revenues were $281,612,000 for the first three quarters of fiscal 2008, a 19.6% increase from revenues of $235,430,000 for the same period in the prior year.
  • Operating income was $38,410,000 for the first three quarters of fiscal 2008, a 21.9% increase from operating income of $31,502,000 for the same period in fiscal 2007.

  • Net earnings were $16,456,000 or $0.54 per diluted common share for the first three quarters of fiscal 2008, compared to earnings of $27,826,000 or $0.90 per diluted common share for the comparable prior period.
  • Last years net earnings included pre-tax gains on the disposition of property, equipment and other assets of $14,088,000, related to the sale of surplus movie theatre and restaurant properties and development gains on the sale of units at the companys condominium hotel project in Las Vegas. Prior year results also benefited from historic tax credits related to the renovation of the Skirvin Hilton in Oklahoma City.

We are pleased to report operating income up more than three-fold over the third quarter of last year. The strong performance was driven by solid increases in revenues and operating income in both of our divisions for the quarter, said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation.

Marcus Theatres®

Revenues for Marcus Theatres increased 21.3% in the third quarter, due to a solid slate of films and the addition of 122 screens at 11 locations acquired in April 2007 from Cinema Entertainment Corporation (CEC). We are especially pleased with the results, given that this years third quarter did not include the Thanksgiving holiday weekend, which we had last year during this quarter, said Marcus.

Marcus said the top performing films for Marcus Theatres in the third quarter were National Treasure: Book of Secrets, Alvin and the Chipmunks, I Am Legend and Juno. In addition, the Hannah Montana/Miley Cyrus: Best of Both Worlds Concert in Digital 3D presented at two of our theatre locations in Wisconsin was a huge success. In response to the overwhelming demand, this run was extended from one week to three weeks, said Marcus.

In addition to the 3D tests at these locations, last week we announced a test of the Thomson Technicolor Digital Cinema technology at our theatre in Sturtevant, Wis. This digital cinema projection system will deliver razor-sharp images and dynamic digital sound to moviegoers and will enable a range of programming opportunities such as live concerts, sporting events and 3D, said Marcus.

He noted that the company opened its eleventh UltraScreen® at an existing 16-screen location in the Columbus, Ohio, area and purchased a portion of the Silk Film Buying Company of Minneapolis in the third quarter. Marcus Theatres is now providing film buying, booking and other related services for a total of 747 motion picture screens in six states.

The motion picture line-up for spring and summer includes a number of potentially strong hits. Movies that have already opened well early in our fourth quarter include 10,000 B.C. and Dr. Seuss Horton Hears a Who!. Additional films opening before the end of our fiscal year include Iron Man, Speed Racer, The Chronicles of Narnia: Prince Caspian and Indiana Jones and the Kingdom of the Skull. Promising films for the summer season include Sex and the City, Kung Fu Panda, Get Smart, The Love Guru, Pixars Wall-E, Journey to the Center of the Earth 3D and the latest Batman film, The Dark Knight, said Marcus.

Marcus Hotels and Resorts

This was also a much-improved quarter for Marcus Hotels and Resorts. Revenues rose 19.5% in the third quarter due to new properties opened during the past year and increased management and development fees. Revenue per available room (RevPAR) for company-owned properties (excluding the recently opened Skirvin Hilton) increased 9.2% for the third quarter and 6.9% year-to-date, said Marcus.

Marcus said the improved performance at the companys newest properties, the InterContinental Milwaukee, the Skirvin Hilton in Oklahoma City and the Platinum Hotel & Spa in Las Vegas, also reflects $1.9 million of preopening expenses in the third quarter of last year that did not recur in the third quarter of the current year. He noted that the Skirvin Hilton is completing its first full year of operation and is performing very well.

Our newest managed property, the new 256-room Hilton Minneapolis/Bloomington in Bloomington, Minn. opened in January. This property is in a great location in an upscale western suburb of the Twin Cities, near the popular Mall of America. It features our fifth ChopHouse restaurant, along with 9,200 square feet of meeting and banquet space and the latest technology and industry amenities. The Hilton Minneapolis/Bloomington is our 20th property and 12th management contract, increasing our total owned or managed room count to approximately 5,200 rooms, said Marcus.

He noted that the company-owned Four Points® by Sheraton Chicago Downtown/Magnificent Mile was recently named the 2007 Four Points by Sheraton Property of the Year. Our hotel was selected from 125 Four Points by Sheraton branded properties in 21 countries to be recognized for overall excellence. When we opened this property about two years ago, our goal was to set a new standard for service, comfort and value in the Chicago market. This award recognizes the success we have achieved in meeting these objectives, added Marcus.


Along with our improved financial performance, we are continuing to move forward with our growth strategies. Marcus Theatres is continuing to add new UltraScreens and new technology. Marcus Hotels and Resorts is benefitting from new properties and management contracts added during the past year. Both of our divisions are continuing to pursue additional growth opportunities, said Gregory S. Marcus, recently elected president of The Marcus Corporation.

We repurchased 383,000 shares of our common stock during the third quarter, bringing our total number repurchased for the year-to-date to 828,000 shares. In January, the Board authorized the purchase of an additional 2,000,000 shares of our common stock, extending our existing share repurchase program. We continue to believe that repurchasing shares is a good investment for the company. With our strong cash flow and balance sheet, we believe that when timing and market conditions are appropriate, we can repurchase shares to enhance shareholder value while at the same time continuing to invest in our businesses to facilitate our long-term growth, he added.

Conference Call and Webcast

Marcus Corporation management will host a conference call today, March 19, 2008, at 10:00 a.m. Central/11:00 a.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 companys Web site:, or by dialing 1-617-614-3529 and entering the passcode 26238872. 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 Wednesday, March 26, 2008 by dialing 1-888-286-8010 and entering the passcode 38443087. The Webcast of the conference call will be archived on the companys 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 Corporations movie theatre division, Marcus Theatres®, currently owns or manages 595 screens at 49 locations in Wisconsin, Illinois, Minnesota, Ohio, North Dakota and Iowa, and one family entertainment center in Wisconsin. The companys lodging division, Marcus Hotels and Resorts, owns or manages 20 hotels, resorts and other properties in 10 states, with two additional properties under development. For more information, visit the companys Web site at

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, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (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; 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.

Consolidated Statements of Earnings
(In thousands, except per share data)
13 Weeks Ended 39 Weeks Ended
February 28, February 22, February 28, February 22,
  2008     2007     2008     2007  
Rooms and telephone $ 16,358 $ 14,361 $ 71,280 $ 64,482
Theatre admissions 29,423 23,431 87,361 71,147
Theatre concessions 14,443 11,747 42,946 35,382
Food and beverage 13,162 10,918 42,056 34,724
Other revenues   12,654     10,961     37,969     29,695  
Total revenues 86,040 71,418 281,612 235,430
Costs and expenses:
Rooms and telephone 7,959 7,282 25,973 23,578
Theatre operations 24,681 19,585 71,626 57,605
Theatre concessions 3,473 2,630 10,797 7,858
Food and beverage 10,794 9,648 32,571 26,826
Advertising and marketing 4,593 4,602 14,900 14,183
Administrative 8,953 7,864 27,462 24,106
Depreciation and amortization 7,656 6,897 23,697 19,605
Rent 1,116 795 3,539 2,473
Property taxes 3,767 2,099 10,895 7,346
Preopening expenses 9 2,010 318 3,216
Other operating expenses   6,782     6,153     21,424     17,132  
Total costs and expenses   79,783     69,565     243,202     203,928  
Operating Income 6,257 1,853 38,410 31,502
Other Income (expense):
Investment income 276 727 982 2,184
Interest expense (3,566 ) (3,359 ) (11,502 ) (9,836 )
Gain on disposition of property, equipment and other assets 155 5,519 48 14,088
Equity earnings (losses) from unconsolidated joint ventures   (184 )   24     (322 )   (1,375 )
  (3,319 )   2,911     (10,794 )   5,061  

Earnings from continuing operations before income taxes

2,938 4,764 27,616 36,563
Income taxes   1,153     510     11,160     8,338  
Earnings from continuing operations 1,785 4,254 16,456 28,225

Losses from discontinued operations, net of income taxes

      (226 )       (399 )
Net earnings $ 1,785   $ 4,028   $ 16,456   $ 27,826  
Earnings per common share – diluted:
Continuing operations $ 0.06 $ 0.14 $ 0.54 $ 0.91
Discontinued operations $   $ (0.01 ) $   $ (0.01 )
Net earnings per share $ 0.06   $ 0.13   $ 0.54   $ 0.90  
Weighted average shares outstanding – diluted 29,823 30,872 30,372 30,805

Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited) (Audited)
February 28, May 31,
2008 2007
Cash and cash equivalents $ 9,503 $ 12,018
Cash held by intermediaries 811 5,749
Accounts and notes receivable 18,145 19,956
Refundable income taxes 354 5,939
Deferred income taxes 552 1,056
Condominium units held for sale 6,948 7,320
Other current assets 5,376 6,340
Assets of discontinued operations 975
Property and equipment, net 552,221 559,785
Other assets   76,751   79,245
Total Assets $ 670,661 $ 698,383
Liabilities and Shareholders’ Equity:
Accounts and notes payable $ 14,052 $ 24,481
Taxes other than income taxes 11,595 11,215
Other current liabilities 33,584 31,466
Current maturities of long-term debt 31,904 57,250
Liabilities of discontinued operations 2,731
Long-term debt 211,012 199,425
Deferred income taxes 28,924 29,376
Deferred compensation and other 24,415 22,930
Shareholders’ equity   315,175   319,509
Total Liabilities and Shareholders’ Equity $ 670,661 $ 698,383



Business Segment Information


(In thousands)











13 Weeks Ended February 28, 2008
Revenues $ 46,116 $ 39,554 $ 370 $ 86,040 $ 86,040
Operating income (loss) 8,852 (347 ) (2,248 ) 6,257 6,257
Depreciation and amortization 3,754 3,736 166 7,656 7,656
13 Weeks Ended February 22, 2007
Revenues $ 38,026 $ 33,112 $ 280 $ 71,418 $ 245 $ 71,663
Operating income (loss) 8,281 (4,236 ) (2,192 ) 1,853 3 1,856
Depreciation and amortization 3,079 3,647 171 6,897 6,897
39 Weeks Ended February 28, 2008
Revenues $ 137,298 $ 143,251 $ 1,063 $ 281,612 $ 281,612
Operating income (loss) 28,532 16,719 (6,841 ) 38,410 38,410
Depreciation and amortization 11,216 11,969 512 23,697 23,697
39 Weeks Ended February 22, 2007
Revenues $ 112,543 $ 121,977 $ 910 $ 235,430 $ 3,935 $ 239,365
Operating income (loss) 25,289 12,916 (6,703 ) 31,502 15 31,517
Depreciation and amortization 8,715 10,304 586 19,605 12 19,617
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.