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MILWAUKEE--(BUSINESS WIRE)--Dec. 19, 2002--The Marcus Corporation (NYSE:MCS)
today reported increased revenues, operating income and net earnings for the
second quarter ended November 28, 2002.
Total revenues for the second quarter of fiscal 2003 were $88,787,000, a
5.7% increase from revenues of $83,984,000 for the second quarter of the prior
year. Operating income increased 40.4% to $7,752,000 for the second quarter of
fiscal 2003, from operating income of $5,521,000 for the same period in the
prior year. Net earnings increased 32.4% to $2,552,000 and net earnings per
share increased 28.6% to $0.09 per diluted share for the second quarter of
fiscal 2003, from net earnings of $1,928,000 or $0.07 per diluted share for the
comparable prior period.
For the first half of fiscal 2003, total revenues were $208,364,000, a 4.1%
increase from revenues of $200,152,000 for the first half of the prior year.
Operating income rose 8.5% to $32,907,000 for the first half of fiscal 2003,
from operating income of $30,320,000 for the comparable prior period. Earnings
from continuing operations were $14,923,000 or $0.51 per diluted share and net
earnings were $16,139,000 or $0.55 per diluted share for the first half of
fiscal 2003, compared to earnings from continuing operations and net earnings of
$16,651,000 or $0.57 per diluted share for the comparable prior period.
Continuing operations include The Marcus Corporation's limited-service lodging,
theatre and hotels and resorts divisions.
"We continued to make very good progress in the second quarter, with
increased revenues in all three of our divisions. The increases in operating
income and net earnings reflect another excellent quarter for Marcus Theatres
and improved performance for Marcus Hotels and Resorts," said Stephen H. Marcus,
chairman and chief executive officer of The Marcus Corporation.
Marcus Theatres had an outstanding quarter, with solid increases in revenues
and operating income. The division reported its sixth consecutive quarter of
record results, surpassing a strong second quarter in the prior year. Five
movies grossed over $1 million for Marcus Theatres in the second quarter of
fiscal 2003, compared to two in the same period in the prior year. Top films in
the second quarter included Harry Potter and the Chamber of Secrets, My Big Fat
Greek Wedding and Sweet Home Alabama.
"The film product through the end of the calendar year is expected to remain
strong, with anticipated hits including Lord of the Rings: The Two Towers, which
opened yesterday, Gangs of New York and Catch Me if You Can," said Marcus. "In
addition, our recently introduced stored-value gift card has received a strong
response from customers during this holiday season."
He noted that Marcus Theatres announced its second theatre management
contract during the quarter, a new six-screen theatre in Tomah, Wis. that is
being developed by the Ho-Chunk Nation. The division currently manages 34
screens at three locations in Chicago for other owners. The division also opened
three new screens at its Hollywood Cinema in Appleton, Wis. during the quarter,
including its third 70-foot-wide UltraScreen(TM).
Marcus Hotels and Resorts reported a 8.5% increase in revenue per available
room (RevPAR) for comparable properties in the second quarter. "Operating income
was up substantially over the second quarter of last year, however that quarter
included the challenging post-September 11 period. Although business travel has
not returned to the level of two years ago, we are encouraged by the steady
improvement in performance, with both revenues and operating income increasing
at the majority of our properties," said Marcus. He noted that consolidated net
earnings for the second quarter of the prior fiscal year benefited from historic
tax credits related to the Hotel Phillips in Kansas City, Mo.
Marcus said the division strengthened its management team with the addition
of experienced executives in development and sales and marketing. "The division
has a solid infrastructure in place and is continuing to pursue its strategies
to expand the number of rooms under management, primarily through management
contracts," he said.
"Our Baymont Inns & Suites also made progress in the second quarter. RevPAR
increased 6.4%, which was more than double the industry average for our segment
during this same time period. As a result of outperforming the industry, Baymont
Inns continued to gain market share during the quarter," said Marcus.
Marcus said the improved revenue results reflect the positive response from
customers to the division's distinctive amenities and new marketing initiatives.
"Occupancy is up and we are welcoming many new guests to Baymont Inns for the
first time. Our Guest Ovations(TM) frequent stay program contributed over 25% of
revenues in the second quarter and monthly reservations booked through Baymont
Inns' reservation system are up 47% from the same period a year ago. And while
business travel continues to be soft, we are seeing an increase in weekend
leisure business," he said.
"Baymont Inns' operating income for the second quarter was slightly lower
than for the same period a year ago. This was due in part to a challenging
quarter for the division's Woodfield Suites properties, which operate in a
higher-priced segment of the market, and additional investments in marketing
programs to continue to build the Baymont Inns brand," said Marcus.
"As we look ahead, there are positive signs in each of our businesses. On
the lodging side, reduced supply growth, estimated to be under 2% in 2002 and
2003, is good news for existing owners like us who stand to benefit as the
economy recovers. We are encouraged by Baymont Inns' gain in market share and by
marketing studies that show a steady increase in brand awareness. Results of
Marcus Hotels and Resorts' newest properties continue to improve and the holiday
season for Marcus Theatres is off to a good start. Our balance sheet is very
strong and we believe we are well positioned to build each of our businesses
over the long term," said Marcus.
Marcus Corporation management will host a conference call today, December
19, 2002, 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
1-913-981-5568. 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 26, 2002 on the
company's Web site or by dialing 1-888-203-1112 and entering the passcode
751351.
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 182 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 493 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. 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 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 which may cause
results to differ materially from those expected, including, but not limited to,
the following: (i) our 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 our theatre division; (iii) the effects
of increasing depreciation expenses and pre-opening and start-up costs due to
the capital intensive nature of our businesses; (iv) the effects of adverse
economic conditions in our markets, particularly with respect to our
limited-service lodging and hotels and resorts divisions; (v) the effects of
adverse weather conditions, particularly during the winter in the Midwest and in
our other markets; (vi) the effects on our occupancy and room rates from the
relative industry supply of available rooms at comparable lodging facilities in
our markets; (vii) the effects of competitive conditions in the markets served
by us; (viii) our ability to identify properties to acquire, develop and/or
manage and continuing availability of funds for such development; (ix) the
adverse impact on business and consumer spending on travel, leisure and
entertainment resulting from the September 11, 2001 terrorist attacks on the
United States, the United States' responses thereto and subsequent related
hostilities; and (x) our lack of comprehensive terrorist attack insurance.
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.
THE MARCUS CORPORATION
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share data)
13 Weeks Ended 26 Weeks Ended
-------------- --------------
Nov. 28, Nov. 29, Nov. 28, Nov. 29,
2002 2001 2002 2001
-------- -------- -------- --------
Revenues:
Rooms and telephone $ 41,596 $ 39,091 $ 94,392 $ 92,679
Theatre admissions 20,672 18,676 49,883 46,287
Theatre concessions 9,340 8,903 23,032 21,378
Food and beverage 8,353 7,259 17,610 15,738
Other income 8,826 10,055 23,447 24,070
-------- -------- -------- --------
Total revenues 88,787 83,984 208,364 200,152
Costs and expenses:
Rooms and telephone 19,694 19,147 40,680 40,774
Theatre operations 16,113 14,438 38,500 35,002
Theatre concessions 2,084 2,071 5,274 5,098
Food and beverage 6,271 6,019 13,198 12,601
Advertising and
marketing 6,964 6,178 14,695 13,150
Administrative 9,780 9,624 20,110 19,848
Depreciation and
amortization 11,428 11,144 22,866 22,122
Rent 615 703 1,217 1,434
Property taxes 3,925 4,049 8,269 8,018
Pre-opening expenses - 487 3 1,063
Other operating expenses 4,161 4,603 10,645 10,722
-------- -------- -------- --------
Total costs and expenses 81,035 78,463 175,457 169,832
-------- -------- -------- --------
Operating income 7,752 5,521 32,907 30,320
Other income (expense):
Investment income 613 545 1,235 1,116
Interest expense (4,973) (4,703) (10,297) (9,674)
Gain (loss) on disposition
of property, equipment
and investments in
joint ventures 911 (233) 1,320 2,031
-------- --------- -------- --------
(3,449) (4,391) (7,742) (6,527)
--------- --------- --------- ---------
Earnings from continuing
operations before
income taxes 4,303 1,130 25,165 23,793
Income taxes 1,751 (798) 10,242 7,142
-------- --------- -------- --------
Earnings from
continuing operations 2,552 1,928 14,923 16,651
Discontinued operations:
Income from discontinued
operations, net of
applicable income taxes -- -- 1,216 --
-------- -------- -------- --------
Net earnings $ 2,552 $ 1,928 $ 16,139 $ 16,651
======== ======== ======== ========
Earnings per share -
basic and diluted:
Continuing operations $ 0.09 $ 0.07 $ 0.51 $ 0.57
Discontinued
operations 0.00 0.00 0.04 0.00
-------- -------- -------- --------
Net earnings per
share $ 0.09 $ 0.07 $ 0.55 $ 0.57
======== ======== ======== ========
Weighted average shares
outstanding:
Basic 29,373 29,226 29,353 29,212
Diluted 29,510 29,331 29,529 29,377
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited (Audited)
November 28, 2002 May 30, 2002
----------------- ------------
Assets:
Cash and cash equivalents $ 2,629 $ 5,614
Accounts and notes receivables 18,407 19,804
Refundable income taxes -- 4,947
Real estate and development costs 1,493 2,532
Other current assets 5,089 4,512
Property and equipment - net 669,036 683,639
Other assets 56,602 53,738
--------- ---------
Total Assets $ 753,256 $ 774,786
========= =========
Liabilities and Shareholders' Equity:
Accounts and notes payable $ 12,854 $ 20,708
Income taxes 4,023 --
Taxes other than income taxes 15,407 13,947
Other current liabilities 16,451 17,820
Current maturities of long-term debt 20,344 20,777
Long-term debt 265,995 299,761
Deferred income taxes 37,280 36,529
Deferred compensation and other 13,103 11,176
Shareholders' equity 367,799 354,068
--------- ---------
Total Liabilities and
Shareholders' Equity $ 753,256 $ 774,786
========= =========
THE MARCUS CORPORATION
Business Segment Information (Unaudited)
(in thousands)
Limited-
Service Hotels/ Corporate
Lodging Theatres Resorts Items Total
------- -------- ------- ----- -----
13 Weeks Ended Nov. 28, 2002
Revenues $30,543 $31,111 $26,687 $ 446 $88,787
Operating income (loss) 1,708 6,392 1,383 (1,731) 7,752
13 Weeks Ended Nov. 29, 2001
Revenues $29,212 $28,737 $25,505 $ 530 $83,984
Operating income (loss) 1,833 5,442 76 (1,830) 5,521
26 Weeks Ended Nov. 28, 2002
Revenues $67,992 $75,373 $64,145 $ 854 $208,364
Operating income (loss) 10,266 17,733 8,520 (3,612) 32,907
26 Weeks Ended Nov. 29, 2001
Revenues $68,554 $69,902 $60,804 $ 892 $200,152
Operating income (loss) 11,822 15,517 6,506 (3,525) 30,320
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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