MILWAUKEE--(BUSINESS WIRE)--Dec. 20, 2001--The Marcus Corporation (NYSE: MCS) today reported results for the second quarter ended November 29, 2001. As expected, performance for the company's lodging businesses was down due to reduced business travel resulting from the events of September 11 and the subsequent downturn in the general economy. The outstanding results of Marcus Theatres helped to offset the decline in lodging performance, as the division recorded record revenues and operating income for the period. On a year-to-date basis, the company's revenues and earnings were still up over fiscal 2001.
Total revenues for the second quarter of fiscal 2002 were $84,633,000, a 2.9% decrease from revenues of $87,142,000 for the same period in the prior year. Net earnings and earnings from continuing operations decreased 52.9% and 49.0%, respectively, to $1,928,000 or $0.07 per diluted share for the second quarter of fiscal 2002. For the second quarter of fiscal 2001, net earnings were $4,096,000 or $0.14 per diluted share and earnings from continuing operations were $3,779,000 or $0.13 per diluted share. Continuing operations include The Marcus Corporation's limited-service lodging, theatre, and hotels and resorts divisions. Fiscal 2001 net earnings include the company's former KFC business, which was classified as a discontinued operation.
For the first half of fiscal 2002, total revenues were $201,724,000, a 2.9% increase from revenues of $195,970,000 for the same period in fiscal 2001. Net earnings and earnings from continuing operations increased 7.1% and 12.1%, respectively, to $16,651,000 or $0.57 per diluted share in the first half of fiscal 2002. For the first half of fiscal 2001, net earnings were $15,545,000 or $0.53 per diluted share and earnings from continuing operations were $14,851,000 or $0.51 per diluted share.
Marcus Theatres' excellent results were fueled by a solid slate of movies throughout the quarter, led by Monsters, Inc. and Harry Potter and the Sorcerer's Stone, and outstanding concession sales for this family fare. The significant leverage potential available in the motion picture business once fixed expenses are covered was demonstrated by the division's ability to turn a 16% increase in box office revenues into an 87% increase in operating income for the quarter, said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation. He also noted that the second quarter of fiscal 2002 included the Thanksgiving holiday weekend, which was included in the third quarter of the prior year.
The outlook for Marcus Theatres for the remainder of the calendar year is strong, with continued solid performance from Harry Potter and Ocean's Eleven, and anticipated hits including The Lord of the Rings, Kate & Leopold, The Majestic and Ali. This broad selection of popular movies, combined with our state-of-the-art theatres, will enable us to capitalize on our position as the leader in our markets, said Marcus. Historically, movie theatres have done well in tough times as consumers look for an escape from the harsh realities of the world. And a night at the movies is still low-cost entertainment, which also helps us in a down economy.
Both of the company's lodging divisions reported lower revenues and operating income for the second quarter. Marcus Hotels and Resorts experienced the most significant impact, reporting a 27% decrease in revenue per available room (RevPAR) for comparable properties for the second quarter. RevPAR for the company's Baymont Inns & Suites decreased 12% for the quarter.
Our results since September 11 have tracked consistently with the national averages, with some favorable exceptions due to our particular property mix. All of our full-service hotels and resorts experienced cancellations of group events in September and October. Since then, group business has stabilized and we are encouraged by the level of advance group bookings for the second half of the fiscal year, said Marcus. Individual business travel has been hit the hardest by the downturn, while leisure travel has held up pretty well.
Marcus said the Hotel Phillips, a new company-owned property in Kansas City, Mo., opened during the difficult period following September 11. He noted that The Marcus Corporation's net earnings for the first half and all of fiscal 2002 are benefiting from a lower effective tax rate due to anticipated historic tax credits related to the Hotel Phillips renovation.
Consistent with the rest of the industry, the company's limited-service, mid-priced Baymont Inns & Suites, while still down, have not been as severely affected by the economic slowdown as our full service hotels and resorts. We believe this is the result of a certain amount of trading-down from higher priced full-service properties, which benefits Baymont with its recognized value, said Marcus.
Baymont began outsourcing its reservations operations during the second quarter. We are pleased with the initial response to the new system, which has given us access to new sales channels and improved technology. In the few weeks since the conversion to the new system, bookings over the Internet have increased and we are converting a higher rate of inquiries to sales, he said.
Marcus said the company's lodging businesses have moved aggressively to lessen the impact of the lost revenues on overall performance. Both divisions have significantly reduced expenses throughout their operations and are working to increase sales, with a focus on regional and local business. Marcus Hotels and Resorts has also reduced staffing levels and hours at some outlets within its hotels.
Looking ahead to the second half of the fiscal year, we believe our upscale hotels will perform a little better than the industry averages because of our property mix. Marcus Hotels and Resorts' properties are located in mid-size cities and resort areas, which have not been affected by the downturn as significantly as major East and West Coast destinations. Baymont does not have a lot of urban and resort locations and its properties along Interstate highways stand to benefit from the increase in over-the-road travel, said Marcus.
In addition, Baymont will launch a new brand initiative in February which will include an advertising campaign highlighting a variety of new best in class amenities that have been added over the past year. The new amenities, which include bottled water and an upgraded sleep experience, are a key part of our strategy to differentiate the Baymont brand in the marketplace, Marcus said.
Overall, we expect that individual business travel will continue to be below prior levels until the economy strengthens. We are optimistic that as the economy improves, the entire industry will benefit from an increase in demand, combined with a slowdown in supply growth, said Marcus.
We believe the major investments we have made in all three of our divisions position us for growth as the economy recovers. Our balance sheet remains strong and our diversity continues to be an asset as the strong performance of our theatres helps to compensate for the slowdown in our two lodging divisions, he added.
Marcus Corporation management will host a conference call today, December 20, 2001, at 3:00 p.m. Central/4:00 p.m. Eastern time to discuss the second 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 1-913-981-5548. 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 replay through Thursday, December 27, 2001 on the company's Web site or by dialing 1-888-203-1112 and entering the passcode 420359.
Headquartered in Milwaukee, Wis., The Marcus Corporation is comprised of three divisions: limited-service lodging, movie theatres and hotels/resorts. The company currently operates or franchises 190 Baymont Inns & Suites in 31 states, and a total of seven Woodfield Suites in Illinois, Wisconsin, Colorado, Ohio and Texas; 469 movie screens in Wisconsin, Ohio, Illinois and Minnesota, and one family entertainment center in Wisconsin; five hotels and a resort in Wisconsin, one hotel and a resort in California, one hotel in Minnesota and one hotel in Missouri. For more information, visit the company's Web site at www.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 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, including, but not limited to, the following: (i) the Company's ability to successfully define and build the Baymont brand within the limited-service, mid-price without food and beverage segment of the lodging industry; (ii) the availability, in terms of both quantity and audience appeal, of motion pictures for the Company's theatre division; (iii) the effects of increasing depreciation expenses and pre-opening and start-up costs due to the capital intensive nature of the Company's businesses; (iv) the effects of adverse economic conditions in the Company's markets, particularly with respect to the Company's limited-service lodging and hotels and resorts divisions; (v) the effects of adverse weather conditions, particularly during the winter in the Midwest and in the Company's other markets; (vi) the effects on the Company's occupancy and room rates from the relative industry supply of available rooms at comparable lodging facilities in the Company's markets; (vii) the effects of competitive conditions in the markets served by the Company; (viii) the effects of increased energy costs; and (ix) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from the September 11, 2001 terrorist attacks in the United States, the United States' responses thereto and subsequent related 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 the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
THE MARCUS CORPORATION
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share data)
13 Weeks Ended 26 Weeks Ended
-------------- --------------
Nov. 29, Nov. 23, Nov. 29, Nov. 23,
2001 2000 2001 2000
-------- -------- -------- --------
Revenues:
Rooms and telephone.........$ 39,740 $ 45,260 $ 94,251 $ 98,329
Theatre admissions.......... 18,676 16,046 46,287 40,284
Theatre concessions......... 8,903 7,152 21,378 17,872
Food and beverage........... 7,259 8,181 15,738 16,267
Other income................ 10,055 10,503 24,070 23,218
-------- -------- -------- --------
Total revenues................ 84,633 87,142 201,724 195,970
Costs and expenses:
Rooms and telephone......... 19,147 18,744 40,774 38,007
Theatre operations.......... 14,438 12,844 35,002 31,411
Theatre concessions......... 2,071 1,818 5,098 4,386
Food and beverage........... 6,019 5,729 12,601 11,409
Advertising and marketing... 6,827 7,260 14,722 15,158
Administrative.............. 9,624 10,557 19,848 20,775
Depreciation and
amortization............... 11,144 10,427 22,122 21,488
Rent........................ 703 826 1,434 1,648
Property taxes.............. 4,049 3,551 8,018 7,319
Pre-opening expenses........ 487 361 1,063 688
Other operating expenses.... 4,603 4,781 10,722 10,385
-------- -------- -------- --------
Total costs and expenses...... 79,112 76,898 171,404 162,674
-------- -------- -------- --------
Operating income.............. 5,521 10,244 30,320 33,296
Other income (expense):
Investment income........... 545 792 1,116 1,289
Interest expense............ (4,703) (5,955) (9,674) (11,182)
Gain (loss) on disposition
of property and equipment.. (233) 1,295 2,031 1,551
-------- -------- -------- --------
(4,391) (3,868) (6,527) (8,342)
-------- -------- -------- --------
Earnings from continuing
operations before income
taxes........................ 1,130 6,376 23,793 24,954
Income taxes.................. (798) 2,597 7,142 10,103
-------- -------- -------- --------
Earnings from continuing
operations................... 1,928 3,779 16,651 14,851
Discontinued operations:
Income from discontinued
operations, net of
applicable income taxes.... -- 317 -- 694
-------- -------- -------- --------
Net earnings..................$ 1,928 $ 4,096 $ 16,651 $ 15,545
======== ======== ======== ========
Earnings per share - basic and
diluted:
Continuing operations.......$ 0.07 $ 0.13 $ 0.57 $ 0.51
Discontinued operations..... 0.00 0.01 0.00 0.02
-------- -------- -------- --------
Net earnings per share......$ 0.07 $ 0.14 $ 0.57 $ 0.53
======== ======== ======== ========
Weighted ave. shares
outstanding:
Basic....................... 29,226 29,141 29,212 29,220
Diluted..................... 29,331 29,284 29,377 29,299
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited) (Audited)
November 29, 2001 May 31, 2001
----------------- -------------
Assets:
Cash and cash equivalents....... $ 6,175 $ 1,499
Accounts and notes receivables.. 18,535 16,954
Refundable income taxes......... -- 121
Real estate and development
costs.......................... 3,639 4,999
Other current assets............ 5,677 4,692
Property and equipment - net.... 685,724 680,346
Other assets.................... 53,594 50,048
-------- --------
Total Assets...................... $773,344 $758,659
======== ========
Liabilities and Shareholders'
Equity:
Accounts and notes payable...... $ 20,009 $ 21,345
Income taxes.................... 2,751 --
Taxes other than income taxes... 13,920 13,230
Other current liabilities....... 16,311 17,842
Current maturities of long-term
debt........................... 18,953 18,133
Long-term debt.................. 308,278 310,239
Deferred income taxes........... 31,124 30,759
Deferred compensation and other. 12,904 9,410
Shareholders' equity............ 349,094 337,701
-------- --------
Total Liabilities and Shareholders'
Equity........................... $773,344 $758,659
======== ========
THE MARCUS CORPORATION
Business Segment Information (Unaudited)
(in thousands)
Limited- Corpor-
Service Hotels/ ate
Lodging Theatres Resorts Items Total
-------- -------- -------- ------- --------
13 Weeks Ended Nov. 29,
2001
Revenues $ 29,861 $ 28,737 $ 25,505 $ 530 $ 84,633
Operating income (loss) 1,833 5,442 76 (1,830) 5,521
13 Weeks Ended Nov. 23,
2000
Revenues $ 34,258 $ 24,273 $ 28,194 $ 417 $ 87,142
Operating income (loss) 4,690 2,904 4,655 (2,005) 10,244
26 Weeks Ended Nov. 29,
2001
Revenues $ 70,126 $ 69,902 $ 60,804 $ 892 $201,724
Operating income (loss) 11,822 15,517 6,506 (3,525) 30,320
26 Weeks Ended Nov. 23,
2000
Revenues $ 75,160 $ 60,167 $ 59,858 $ 785 $195,970
Operating income (loss) 15,850 10,168 10,939 (3,661) 33,296
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.
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