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Hotel Industry News |
Tuesday October 7th, 2008 |
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The Marcus Corporation Reports Second Quarter Results |
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Earnings from continuing operations up 16% company reports gain on sale of limited-service lodging division |
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The Marcus Corporation (NYSE:MCS) today reported results for the second quarter ended November 25, 2004.
Total revenues for the second quarter of fiscal 2005 were $62,135,000, compared to revenues of $62,485,000 for the second quarter of the prior year. Earnings from continuing operations rose 15.6% to $4,417,000 or $0.14 per diluted share for the second quarter of fiscal 2005, from earnings from continuing operations of $3,821,000 or $0.13 per diluted share for the comparable quarter of the prior year. Net earnings, which include a net gain of $67.2 million or $2.20 per diluted share from discontinued operations, were $71,588,000 or $2.34 per diluted share for the second quarter of fiscal 2005, compared to net earnings of $4,803,000 or $0.16 per diluted share for the second quarter of fiscal 2004. Continuing operations include The Marcus Corporation's theatre and hotels and resorts divisions. The company's former limited-service lodging division and the Miramonte Resort in Indian Wells, Calif., 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. The Miramonte Resort was sold subsequent to the end of the second quarter on December 1, 2004.
For the first half of fiscal 2005, total revenues were $149,474,000, a 2.6% increase from revenues of $145,640,000 for the first half of fiscal 2004. Earnings from continuing operations were $15,603,000 or $0.52 per diluted share for the first half of fiscal 2005, a 21.3% increase from earnings from continuing operations of $12,867,000 or $0.43 per diluted share for the same period in the prior fiscal year. Net earnings were $89,733,000 or $2.96 per diluted share for the first half of fiscal 2005, compared to net earnings of $17,748,000 or $0.60 per diluted share for the first half of the prior fiscal year.
"The performance of Marcus Hotels and Resorts continued to improve in the second quarter, helping to offset the impact of an overall weak slate of movies and a strong prior year comparison on the results of Marcus Theatres®," said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation. "We are pleased with the increase in earnings from continuing operations in the second quarter. In addition, we reported a significant gain on the sale of our former limited-service lodging division."
Marcus Hotels and Resorts achieved increases in both revenues and operating income in the second quarter, with improved occupancy contributing to a 2.1% increase in revenue per available room (RevPAR) for the quarter, including the Miramonte. "Strong food and beverage sales and continued improvement in business travel drove the division's solid second quarter performance. We continue to be encouraged by the steady improvement in the lodging industry and the pace of advance bookings," said Marcus.
Marcus noted that the division currently has two major projects underway, with a third scheduled to begin in the near future. The division is co-developing the Platinum Suite Hotel & Spa, a luxury condominium hotel located just off the Las Vegas Strip, and construction is continuing on the division's new hotel in downtown Chicago. In addition, the division will be participating in an extensive public/private renovation and restoration of the Skirvin Hotel in Oklahoma City.
On December 1, 2004, Marcus Hotels and Resorts completed the previously announced sale of the Miramonte Resort in Indian Wells, Calif., for $28.7 million in cash. Marcus said the company expects to report a pre-tax gain on the sale in excess of $5 million in its fiscal third quarter.
Marcus Theatres reported lower revenues and operating income in the second quarter. "Overall, the slate of movies in the second quarter was not as strong as in the prior year, particularly during September and October," said Marcus. "The good news is that the top grossing movies for the quarter were two animated films, The Incredibles and Shark Tale. Strong family fare is always good for our concession business, which lessened the impact of the reduced box office revenues."
"The second quarter ended on a high note, with a strong week leading into the Thanksgiving holiday weekend," said Marcus. "To date, our holiday season has benefited from films including National Treasure, The Polar Express and last week's strong opening of Ocean's 12. Other potential hit movies that will be released in the next two weeks include Lemony Snicket's A Series of Unfortunate Events, Meet the Fockers and The Aviator. However, we don't expect any single movie to dominate like last year's blockbuster Lord of the Rings: The Return of the King, making comparisons to last year's strong third quarter difficult."
The division opened three new screens at its existing theatre in La Crosse, Wis. in the second quarter, and three additional screens will open December 22 at its theatre in Oshkosh, Wis. In the last four months, Marcus Theatres has announced plans for three new theatres. The company will build a 16-screen theatre near Racine in Sturtevant, Wis., a 14-screen facility in Green Bay and an eight-screen theatre in East Troy, Wis. Construction is continuing on a new 12-screen theatre in Saukville, Wis. that is expected to open in early 2005. In addition, the division opened its fifth 75-foot-wide UltraScreen® in Columbus, Ohio, during the second quarter, and a sixth UltraScreen is under construction in the Twin Cities area.
"We are also making good progress on our Project 2010 remodeling program. This is a major effort that will further improve 28 of our facilities with enhanced art deco facades, luxurious design packages and remodeled lobbies, vestibules and concession areas, including the addition of self-serve soft drinks. The Project 2010 makeover has been completed at six theatres and remodeling is currently underway or nearly finished at theatres in New Berlin, La Crosse and Green Bay, Wis., and in Addison, Ill.," said Marcus.
The Marcus Corporation's second quarter results include an after-tax gain of $71.0 million on the sale of its limited-service lodging division, which was sold on September 3, 2004, offset slightly by an operating loss on the discontinued operations. "We operated the limited-service lodging division for the first week of the second quarter. The operating loss from discontinued operations includes costs associated with exiting this business, as well as operating losses from our now-sold Miramonte Resort," said Marcus. He added that approximately $40 million in proceeds from the sale of the limited-service lodging division remain in escrow pending the completion of additional customary transfer requirements. Additional gains will be recorded in future quarters as these escrow proceeds are released.
Marcus said the company's management team is continuing to evaluate the potential uses of the proceeds from the sale of the limited-service lodging division. "We are committed to growing our Marcus Theatres and Marcus Hotels and Resorts divisions. We will also consider other opportunities and potential uses of the proceeds," said Marcus.
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