Hotel Online Special Report
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Marcus Corporation Reports First Quarter Earnings - 
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Name Change from Budgetel Inns to Baymont Inns 
Designed to Improve RevPAR by Expanding the Customer Base 
and Increasing Franchise Development
 
MILWAUKEE - Sept. 24, 1998- -The Marcus Corporation (NYSE:MCS) today reported record revenues and increased earnings for the first quarter of fiscal 1999 ended August 27, 1998. Beginning with this quarter, the company is reporting results based on three 13-week quarters and a final quarter comprised of 13 or 14 weeks. Previously, the company's fiscal year consisted of three 12-week quarters and a fourth quarter of 16 or 17 weeks. Comparative results for the first quarter of fiscal 1998 are presented on a pro forma basis, as if the quarter had been reported on the new basis.

Total revenues for the first quarter of fiscal 1999 were $107,360,000, an 11.7% increase from pro forma revenues of $96,111,000 for the prior year's first period. Net earnings were $14,191,000 or $0.47 per diluted share for the first quarter of fiscal 1999, up 3.8% from pro forma earnings of $13,669,000 or $0.46 per share for the same period last year. For the reported 12-week first quarter of fiscal
1998, revenues were $90,053,000 and earnings were $13,065,000 or $0.44 per share.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $35,343,000 for the first quarter of fiscal 1999, a 6.1% increase from pro forma EBITDA of $33,326,000 for the same period in fiscal 1998.

"First quarter revenues increased in all four of our divisions," said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation. "Earnings were boosted by a very strong quarter for our theatre division, which helped to offset reduced operating profit in our two lodging divisions," he added.

"The record theatre division performance was due to a strong summer season of hit movies and the addition of 80 screens compared to the prior year, including 16 screens added during the first quarter. The continuing popularity of our theatres with stadium seating also contributed to the excellent quarter," said Marcus. Blockbusters during the first quarter included Saving Private Ryan, Armageddon, There's Something About Mary and The Truman Show.

The theatre division ended the quarter with 374 screens, well on its way toward its goal of 500 screens by the year 2000. All of the company's new theatres feature stadium seating and a major retrofitting program is under way to install stadium seating in over 80% of the division's first-run screens by the end of fiscal 2000. Early in the second quarter, the division opened a new 16-screen
ultraplex in suburban Columbus, Ohio, which is also the location of the company's first IMAX theatre which will open October 1. The theatre division expects to approach 430 screens by the end of the fiscal year, Marcus said.

In the company's Budgetel Inns division, both revenues and  revenue per available room (RevPAR) improved slightly as the division continued to experience increased competition resulting from overbuilding in some markets. "Although new construction in the industry appears to be slowing down, the demand still hasn't caught up with the supply in this segment," Marcus said. Five franchised properties opened during the quarter, increasing the division's total to 161 properties in 30 states, 106 company-owned and 55 franchised. An additional 22 franchised properties are currently under construction or in development.

"We continue to be excited about the upcoming name change from Budgetel Inns to Baymont Inns and Baymont Inns  Suites. This is a significant move designed to improve RevPAR by expanding the customer base and increasing franchise development," said Marcus. Two company-owned properties and four franchised units are currently operating under the Baymont name. The completion of the repositioning to Baymont has been extended to January 1999 in response to previously unanticipated delays in completing the necessary signage for all properties and to ensure that the quality and consistency of new features and amenities will be uniform throughout the chain when the name change becomes effective. "We are already promoting the new name and amenities to current customers and will kick-off a major advertising program in both print and electronic media when travel picks up after the holiday season," said Marcus.

The hotels and resorts division's three established company-owned properties the Pfister Hotel, Milwaukee Hilton and Grand Geneva Resort Spa all reported increases in revenues and operating profit during the first quarter. Overall division performance was reduced, however, by results at the company's newest property, the Miramonte Resort. Pre-opening costs amortized over the first year of operation, coupled with the traditionally slow summer season in the Palm Springs desert area, impacted performance at the new property. "Since it opened in January, the Miramonte has been well received by customers. Once the start-up costs are behind us, we believe this property will provide a very good return on our investment over the long term," Marcus said.

He added that the development agreement for the division's new company-owned Madison Hilton in Madison, Wisconsin, was recently approved by Madison's City Council. Projected completion for the property, which will be connected by skywalk to the city's Monona Terrace Convention Center, is in the fall of 2000. At the division's Milwaukee Hilton, construction will begin October 5 on a new addition that will make the property Wisconsin's largest hotel and connect it by skywalk to the city's Midwest Express Center.

The company's KFC restaurants reported increases in revenues and operating profit, due in part to expanded lunch and snack business and the continuing success of the division's first 2-in-1 KFC/Taco Bell restaurant in Milwaukee. Two additional 2-in-1 combination restaurants are under development.

Marcus noted that since the end of the company's fiscal year on May 28, 1998, The Marcus Corporation has repurchased 339,000 of its common shares in the open market. "We continue to believe that our strong fundamentals, growth potential and the value of our extensive real estate holdings are not reflected in our current market price and that the repurchase of shares is a good investment for the company. Because of our strong cash flow, we have been able to repurchase the shares while at the same time continuing to move forward with our aggressive capital expenditure program," he said.

Headquartered in Milwaukee, Wisconsin, The Marcus Corporation is comprised of four divisions: limited-service lodging, movie theatres, hotels/resorts and restaurants. The company operates 161 Budgetel Inns (106 company-owned and 55 franchised) in 30 states and five Woodfield
Suites in Wisconsin, Colorado and Ohio; 387 movie screens in Wisconsin, Illinois, Ohio and Minnesota and one family entertainment center in Wisconsin; three hotels and a resort in Wisconsin, one hotel in Minnesota, one hotel and a resort in California and one resort in
Michigan; and 31 KFC restaurants 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. These forward-looking statements can generally be identified as such because of the context of the statement will include words such as the company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

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Contact:
Marcus Corp.
 Douglas A. Neis
414/905-1100
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Also See:
Marcus Hotels and Resorts Enters Into Development Agreement for Chicago Hotel / July 1998 
Marcus Hotels and Resorts Chosen to Develop Madison, WI Convention Center Headquarters Hotel / July 1998 
Budgetel Changes Name to Baymont / Feb 1998 

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