The Marcus Corporation Reports Improved
Year-End Results;
Record Performance of Marcus Theatres Boosts
Results
MILWAUKEE - July 25, 2002--The Marcus Corporation (NYSE: MCS) today
reported strong performance for the fourth quarter and fiscal year ended
May 30, 2002.
Total revenues for the fourth quarter of fiscal 2002 were $101,557,000,
a 6.4% increase from revenues of $95,407,000 for the same period in the
prior year. Net earnings and earnings from continuing operations were $4,292,000
or $0.14 per diluted share for the fourth quarter of fiscal 2002, compared
to earnings from continuing operations at a break-even level of $0.00 per
share for the fourth quarter of fiscal 2001, excluding an after-tax impairment
loss of $2,116,000 or $0.07 per diluted share. Net earnings for the fourth
quarter of fiscal 2001 were $5,890,000 or $0.20 per diluted share, including
an after-tax gain on the sale of the company's KFC operations of $7,817,000
or $0.27 per diluted share. Continuing operations include The Marcus Corporation's
limited-service lodging, theatre and hotels and resorts divisions.
For fiscal 2002, total revenues were $389,833,000, a 3.9% increase
from revenues of $375,335,000 in fiscal 2001. Net earnings and earnings
from continuing operations were $22,460,000 or $0.76 per diluted share
for fiscal 2002, compared to earnings from continuing operations of $0.50
per diluted share in fiscal 2001, excluding the after-tax impairment loss.
Net earnings for fiscal 2001 were $21,776,000 or $0.74 per diluted share,
including the after-tax gain on the sale of the KFC operations.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
was $22,155,000 for the fourth quarter of fiscal 2002, up 31.0% from EBITDA
of $16,912,000 for the same period in fiscal 2001, excluding the impairment
loss. For fiscal 2002, EBITDA was $92,345,000, a 7.8% increase from EBITDA
of $85,701,000 in fiscal 2001, excluding the impairment loss.
"Our ability to achieve a 51% increase in earnings from continuing
operations in fiscal 2002, excluding last year's impairment loss, is due
to the outstanding performance of Marcus Theatres, which generated a 57%
increase in operating income on a 16% increase in revenues. These strong
results more than compensated for decreases in operating income in both
of our lodging divisions and once again underscored the benefits of our
diversified business mix," said Stephen H. Marcus, chairman and chief executive
officer of The Marcus Corporation.
Marcus said earnings also benefited from reduced interest expense and
a lower effective income tax rate due to historic tax credits for the renovation
of the Hotel Phillips in Kansas City, Mo. Results for fiscal 2002 are based
on a 13-week fourth quarter and a 52-week fiscal year, compared to a 14-week
fourth quarter and 53-week year in fiscal 2001.
The record results of Marcus Theatres were due to a strong slate of
movies throughout the year. "Ten pictures produced box office receipts
in excess of $2 million for Marcus Theatres in fiscal 2002, compared to
just five in the prior year. The division's excellent performance highlights
the leverage we can achieve with a steady stream of hit movies, as well
as the added benefits of strict cost controls," said Marcus.
The top five box office attractions in fiscal 2002 were Harry Potter
and the Sorcerer's Stone, Lord of the Rings, Monsters, Inc., Spider-Man
and Star Wars: Episode II - Attack of the Clones.
"The summer is off to an excellent start and we are encouraged by the
number of potential hit movies in the pipeline for late summer, including
Austin Powers in Goldmember, Signs and XXX. With much-anticipated sequels
to Harry Potter and Lord of the Rings opening in November and December,
the film product through the remainder of the calendar year appears to
be very strong," said Marcus.
Marcus Theatres ended the fiscal year with 490 screens at 47 locations,
including 34 screens at three locations in Chicago that were added in May
through the division's first theatre management contract.
Marcus Theatres continues to be a leader in the industry, with the
highest percentage of stadium seating among the top 20 chains and an average
of 10.4 screens per location, well above the average of the top 10 chains.
Looking at the company's lodging businesses, Marcus said the entire
amount of the 2002 decrease in operating income for both Baymont Inns &
Suites and Marcus Hotels and Resorts occurred in the company's second quarter,
which included the September 11 tragedy and its immediate aftermath.
"Since then, operating income has been trending upward. Operating income
for Marcus Hotels and Resorts improved in the fourth quarter. Baymont's
operating income improved in the third quarter and would have improved
in the fourth quarter as well, if not for the extra week in the comparison
with the fourth quarter of last year," said Marcus.
Marcus said both lodging divisions have focused on reducing operating
costs and increasing efficiency, but not at the expense of providing an
exceptional guest experience. He noted that Baymont's comparative results
also benefited from the fact that the third and fourth quarters of fiscal
2001 included approximately $1.7 million in one-time costs related to the
introduction of a new frequent stay program, interior design renovations
and a systemwide training program.
Baymont's results have tracked fairly consistently with the mid-price
segment of the limited-service lodging industry, with revenue per available
room (RevPAR) down 7.2% in the fourth quarter and 6.7% for fiscal 2002.
"Business travel remains down due to the current economic climate, and
we will continue to face a challenging revenue environment until this segment
of our customer base returns to previous levels," said Marcus.
"We completed Baymont's major brand-building initiatives in fiscal
2002 with the introduction of our Ovations Rooms. Our Guest Ovations(TM)
frequent stay program now has over 130,000 members and our unique 110%
Satisfaction Guarantee has improved guest service. We continue to reimage
existing properties to the new prototype design and have strengthened our
management team and introduced new sales and marketing programs. Although
the events of September 11 and the downturn in the economy have caused
a short-term setback, we continue to believe that our efforts to build
the Baymont brand are on the right track and will generate increased RevPAR
over the long term," said Marcus.
Results for Marcus Hotels and Resorts outperformed the full-service
segment of the lodging industry, with RevPAR down only 1.2% in the fourth
quarter and 8.3% for fiscal 2002. "Several of our properties, including
the Grand Geneva Resort & Spa and Timber Ridge Lodge and Water Park
in Lake Geneva, Wis., and the Hilton Milwaukee City Center, have benefited
from an improvement in group and leisure travel. Other properties, however,
continued to be impacted by the slow rebound in business travel," said
Marcus.
Marcus Hotels and Resorts completed several major capital projects
during fiscal 2002, including the opening of the company-owned Hotel Phillips
in September, the completion of an expanded parking facility at the Hilton
Milwaukee in July 2002, renovation of the tower rooms at the Pfister Hotel
in Milwaukee, and the renovation of guest rooms and expansion of the spa
at the Grand Geneva. "With new hotels, renovations and expansion of existing
properties, and additional management contracts, we believe Marcus Hotels
and Resorts has excellent future growth potential. We look forward to maximizing
the return from our investments in the years ahead," said Marcus.
"We are pleased with our progress in fiscal 2002, especially in view
of the challenges of the September 11 tragedy and the downturn in the economy.
The major investments we have made in each of our divisions are beginning
to show results. Our real estate assets provide significant underlying
value to The Marcus Corporation and are the foundation for our future growth
as we continue to pursue our goal to increase our return to shareholders
over the long term," said Marcus.
THE MARCUS CORPORATION
Consolidated Statements of Earnings
(in thousands, except per share data)
13 Weeks 14 Weeks 52 Weeks
53 Weeks
Ended Ended
Ended Ended
May 30, May 31, May 30,
May 31,
2002 2001
2002 2001
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Rooms and
telephone(1).........$
44,530 $ 48,255 $ 170,949 $ 178,811
Theatre admissions....
24,886 19,118
96,502 84,535
Theatre concessions...
12,063 8,966
45,332 38,144
Food and beverage.....
8,367 7,372
31,812 29,896
Other income..........
11,711 11,696
45,238 43,949
--------- --------- --------- ---------
Total revenues.......... 101,557
95,407 389,833 375,335
Costs and expenses:
Rooms and telephone...
21,392 23,711
79,359 82,348
Theatre operations....
19,824 16,075
73,401 66,971
Theatre concessions...
2,597 2,397
10,370 9,440
Food and beverage.....
6,953 6,211
25,995 22,975
Advertising and
marketing(1).........
7,510 8,303
27,220 27,740
Administrative........
11,142 11,239
39,963 40,412
Depreciation and
amortization.........
11,491 10,945
44,887 43,329
Rent..................
804 925
2,958 3,410
Property taxes........
3,915 3,599
16,339 14,539
Pre-opening expenses..
51 872
1,143 2,040
Other operating
expenses.............
5,214 5,163
20,740 19,759
Impairment loss.......
-- 3,541
-- 3,541
--------- --------- --------- ---------
Total costs and expenses. 90,893
92,981 342,375 336,504
--------- --------- --------- ---------
Operating income........ 10,664
2,426 47,458
38,831
Other income (expense):
Investment income.....
805 690
2,353 2,592
Interest expense......
(4,838) (6,286) (18,807)
(23,019)
Gain on insurance
contracts............
-- 64
-- 1,582
Gain (loss) on
disposition of
property and
equipment and
investments in joint
ventures.............
531 (622)
2,496 304
--------- --------- --------- ---------
(3,502) (6,154) (13,958)
(18,541)
Earnings (loss) from
continuing operations
before income taxes....
7,162 (3,728) 33,500
20,290
Income tax provision
(benefit)
2,870 (1,563) 11,040
7,550
--------- --------- --------- ---------
Earnings from continuing
operations.............
4,292 (2,165) 22,460
12,740
Discontinued operations:
Income from
discontinued
operations, net of
applicable income
taxes
-- 238
-- 1,219
Gain on sale of
discontinued
operations, net of
applicable income
taxes................
-- 7,817
-- 7,817
--------- --------- --------- ---------
Earnings from
discontinued operations.
-- 8,055
-- 9,036
--------- --------- --------- ---------
Net earnings............$ 4,292
$ 5,890 $ 22,460 $ 21,776
========= ========= ========= =========
Earnings per share -
basic:
Continuing operations.$
0.15 $ (0.07) $ 0.77
$ 0.44
Discontinued
operations...........$
0.00 $ 0.27 $
0.00 $ 0.31
--------- --------- --------- ---------
Net earnings per
share................$
0.15 $ 0.20 $
0.77 $ 0.75
========= ========= ========= =========
Earnings per share -
diluted:
Continuing operations.$
0.14 $ (0.07) $ 0.76
$ 0.43
Discontinued
operations...........$
0.00 $ 0.27 $
0.00 $ 0.31
--------- --------- --------- ---------
Net earnings per
share................$
0.14 $ 0.20 $
0.76 $ 0.74
========= ========= ========= =========
Weighted ave. shares
outstanding:
Basic.................
29,307 29,174
29,245 29,187
Diluted...............
29,646 29,424
29,470 29,345
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
May 30, 2002 May 31, 2001
------------ ------------
(Unaudited)
Assets:
Cash and cash equivalents.............$
5,614 $ 1,499
Accounts and notes receivables........
19,804 16,954
Refundable income taxes...............
3,962
121
Real estate and development costs.....
2,532
4,999
Other current assets..................
4,512
4,692
Property and equipment - net..........
683,639 680,346
Other assets..........................
53,738 50,048
------------ ------------
Total Assets............................$
773,801 $ 758,659
============ ============
Liabilities and Shareholders' Equity:
Accounts and notes payable............$
20,708 $ 21,345
Taxes other than income taxes.........
13,947 13,230
Other current liabilities.............
17,820 17,842
Current maturities of long-term debt..
20,777 18,133
Long-term debt........................
299,761 310,239
Deferred income taxes.................
35,544 30,759
Deferred compensation and other.......
11,176
9,410
Shareholders' equity..................
354,068 337,701
------------ ------------
Total Liabilities and Shareholders'
Equity.................................$
773,801 $ 758,659
============ ============
THE MARCUS CORPORATION
Business Segment Information (Unaudited)
(in thousands)
Limited-
Service
Hotels/ Corporate
Lodging Theatres Resorts
Items Total
--------- --------- --------- ---------
---------
13 Weeks
Ended May 30,
2002
Revenues $ 31,803(1)$ 39,063
$ 30,153 $ 538 $
101,557(1)
Operating
income
(loss)
2,003 9,184
1,305 (1,828) 10,664
14 Weeks
Ended May 31,
2001
Revenues $ 36,554(1)$ 29,848
$ 28,600 $ 405 $
95,407(1)
Operating
income
(loss)
2,698 3,822(2) 1,026
(1,579) 5,967(2)
52 Weeks
Ended May 30,
2002
Revenues $ 125,711(1)$ 147,311
$ 114,914 $ 1,897 $ 389,833(1)
Operating
income
(loss) 13,509
34,682 6,263
(6,996) 47,458
53 Weeks
Ended May 31,
2001
Revenues $ 136,606(1)$ 127,476
$ 109,694 $ 1,559 $ 375,335(1)
Operating
income
(loss) 16,309
22,090(2) 10,725 (6,752)
42,372(2)
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.
(1) During fiscal 2002, the company early adopted
EITF No. 00-14,
"Accounting for Certain Sales Incentives." For
comparison purposes, certain discounts previously accounted for as a marketing
expense have been reclassified as a reduction of revenue and prior year
amounts have been restated to conform with the current year presentation.
(2) For comparison purposes, amounts exclude a
$3,541,000 pre-tax impairment loss recognized during the fourth quarter
of fiscal 2001. |
Headquartered in Milwaukee, Wis., The Marcus Corporation is a leader
in the lodging and entertainment industries. The company's limited-service
lodging division operates or franchises 185 Baymont Inns & Suites in
31 states, seven Woodfield Suites in Illinois, Wisconsin, Colorado, Ohio
and Texas and one Budgetel Inn in Wisconsin. Marcus Theatres owns or manages
490 screens at 47
locations in Wisconsin, Ohio, Illinois and Minnesota, and one family
entertainment center in Wisconsin. Marcus Hotels and Resorts owns or manages
11 hotels and resorts in Wisconsin, California, Minnesota, Missouri and
Texas, and one vacation club in Wisconsin.
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. |
