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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 25, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-12604
THE MARCUS CORPORATION
(Exact name of registrant)
Wisconsin 39-1139844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 East Wisconsin Avenue - Suite 1700 53202-4220
Milwaukee, Wisconsin (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (414) 905-1000 Securities
registered pursuant to Section 12(b) of the Act:
Common Stock, $1 par value New York Stock Exchange
-------------------------- -----------------------
(Title of class) (Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes|X| No|_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |_|
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of August 11, 2000: $275,292,023.
Number of shares outstanding of each of the classes of the registrant's capital
stock as of August 11, 2000:
Common Stock, $1 par value: 17,368,976 shares
Class B Common Stock, $1 par value: 11,900,760 shares
DOCUMENTS INCORPORATED BY REFERENCE:
2000 Annual Report to Shareholders (incorporated by reference into Parts I, II
and IV); Proxy Statement for 2000 Annual Meeting of Shareholders (to be filed
with the Commission under Regulation 14A within 120 days after the end of the
registrant's fiscal year and, upon such filing, to be incorporated by reference
into Part III).
PART I
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Annual Report on Form 10-K 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 identify properties to acquire, develop and/or
manage and continuing availability of funds for such development; (ii) the
Company's ability to attract potential partners to assist in the acquisition
and/or development of properties; (iii) the limited-service lodging division's
ability to attract and retain quality franchise operators and to effectively
execute its Baymont repositioning strategy; (iv) continuing consumer demand as a
result of general economic conditions with respect to the hotels and resorts and
limited-service lodging divisions; (v) continuing availability, in terms of both
quality and quantity, of films for the theatre division; and (vi) competitive
conditions in the markets served by the Company. 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 Form 10-K and the Company undertakes
no obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
Item 1. Business.
The Marcus Corporation through its subsidiaries (collectively, the
"Company") is primarily engaged in three business segments: limited-service
lodging; movie theatres; and hotels and resorts. As a result of the Company's
stated intention to dispose of its KFC restaurants, the Company's restaurant
business segment has been presented as discontinued operations in the Company's
financial statements.
The Company's limited-service lodging operations include a chain of 171
Baymont Inns & Suites limited-service facilities in 30 states and seven
Woodfield Suites all-suite hotels in Wisconsin, Colorado, Ohio, Illinois and
Texas. Of the 171 Baymont Inns & Suites, 86 are owned or operated by the
Company, nine are operated under joint venture agreements and 76 are franchised.
The Company operates 50 movie theatres with an aggregate of 470 screens
throughout Wisconsin, Ohio, Illinois and Minnesota. The Company also operates a
family entertainment center, Funset Boulevard, in Appleton, Wisconsin.
The Company's hotel and resort operations include the Pfister Hotel and
the Hilton Milwaukee City Center, which are full-service hotels in Milwaukee,
Wisconsin, and the Grand Geneva Resort & Spa and the Miramonte Resort, which are
full-facility destination resorts in Lake Geneva, Wisconsin and Indian Wells,
California, respectively. In May 2000, the Company
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purchased the Hotel Phillips, a downtown Kansas City, Missouri landmark hotel.
The Company also manages three hotels for third parties: the Hotel Mead in
Wisconsin Rapids, Wisconsin, the Crowne-Plaza Northstar in Minneapolis,
Minnesota and Beverly Garland's Holiday Inn in North Hollywood, California.
The Company's restaurant division includes 27 KFC (Kentucky Fried
Chicken) restaurants and three KFC/Taco Bell 2-in-1 restaurants in Wisconsin,
which the Company announced its intention to sell in September 1999.
The Company's current expansion plans include the following goals:
o Continuing to define and build the Baymont Inns & Suites brand,
with a goal to be the "best in class" in the mid-price without
food and beverage segment of the lodging industry. The Company
currently believes that most of its anticipated future growth will
ultimately come from its emphasis on opening new franchised
Baymont Inns and Baymont Inns & Suites. As of the end of fiscal
2000, one new Company-owned and 26 new franchised properties were
under development, the majority of which are expected to open
during fiscal 2001. The Company currently believes that it will
add 25 to 35 new franchised properties per year over the next few
years. By emphasizing franchising, the Company believes the
Baymont brand may grow more rapidly, conserving capital for other
strategic purposes within the Company. In addition to the
development of new franchised properties, the Company plans to
further emphasize franchising in the future by exploring the
potential sale of approximately 20 Company-owned properties to new
and existing franchisees over the next three years, with the
Company possibly retaining a management contract in some cases.
The Company also anticipates exploring additional growth of the
Baymont brand through potential acquisitions and joint venture
investments.
o Reaching its target of 500 movie theatre screens during fiscal
2001. The Company plans to open up to 36 new screens during fiscal
2001, including 19 new screens to be added to existing locations
in Wisconsin, Illinois and Minnesota. The Company's second large
UltraScreen(TM) opened in June 2000 at a Madison, Wisconsin
location. The Company also has plans to complete its stadium
seating retrofit program, resulting in stadium seating in
approximately 90% of its first-run screens by the end of 2001.
o Increasing the number of rooms managed by the hotel and resort
division to 10,000 rooms over the next five years, either
Company-owned or managed for others. The Company anticipates that
the majority of this growth will come from management contracts
for other owners. In some cases, the Company may own a partial
interest in the new properties. The Company opened an extensive
addition to the Hilton Milwaukee City Center in June 2000. In
addition, the Company currently has two Company-owned projects
under construction or in development: the Hilton Madison at Monona
Terrace - a 238-room public/private endeavor with the City of
Madison, Wisconsin scheduled to open late in fiscal 2001; and the
Hotel Phillips - a 240-room public/private project in Kansas City,
Missouri. The Company purchased
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the Hotel Phillips in May 2000 and currently plans to close the
property this fall in order to undertake a complete restoration of
this landmark property.
o Evaluating additional growth opportunities. The Company opened its
seventh Woodfield Suites during fiscal 2000 and is evaluating
additional sites and franchising opportunities. The Company began
selling units of a vacation ownership development at the Grand
Geneva Resort & Spa during fiscal 2000 and recently opened its
first 18 units and a sales center, representing the Company's
entrance into the timesharing business. The Company expects to
continue growing this business in fiscal 2001 and beyond.
The actual number, mix and timing of potential future new facilities and
expansions will depend in large part on continuing favorable industry and
economic conditions, the Company's financial performance and available capital,
the competitive environment, evolving customer needs and trends, customer
acceptance of the new Baymont brand, the Company's ability to increase the
number of franchised locations at a pace faster than that achieved under the
Budgetel name and the continued availability of attractive opportunities. It is
likely that the Company's expansion goals will continue to evolve and change in
response to these and other factors with no assurance that these current goals
will be achieved.
Business Segment Data
Certain business segment data for the Company's three most recent fiscal
years relating to the Company's three industry segments is set forth in footnote
12 to the Notes to Consolidated Financial Statements included on Page 28 of the
Company's 2000 Annual Report to Shareholders, which pages are incorporated by
reference herein.
Limited-Service Lodging Operations
Baymont Inns & Suites
The Company owns, operates or franchises 171 limited-service facilities,
with over 16,000 available rooms, under the names "Baymont Inns" and "Baymont
Inns & Suites" in 30 states. Of this total, 76 Baymont Inns & Suites are
operated by franchisees, 86 are Company-owned or operated and nine are operated
under joint venture agreements. During fiscal 2000, 14 new franchised properties
were opened, with an additional 26 new franchised properties and one new
Company-owned property under construction or in development at fiscal year-end.
During fiscal 2000, the Company sold four Baymont Inns & Suites, including one
to a franchisee.
Targeted at the business traveler, Baymont Inns & Suites feature an
upscale, contemporary exterior appearance, are generally located in high traffic
commercial areas in close proximity to interstate highway exits and major
thoroughfares and vary in size between 57 and 191 rooms. The Company believes
that providing amenities typically associated with full-service hotels
distinguishes Baymont Inns & Suites from many of its competitors. These
amenities include executive conference centers, king-sized beds, free local
telephone calls, incoming fax transmissions, non-smoking rooms, in-room coffee
makers, remote control cable televisions, extra-long telephone cords and large
working desks. Additional amenities that have been introduced
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include lobby breakfasts, two-room suites, 25-inch televisions, fitness
facilities, voice mail, hair dryers, irons and ironing boards, complimentary
copies of USA Today and high speed Internet access. To enhance customer
security, all Baymont Inns & Suites feature "card key" room locking systems and
provide well-lighted parking areas and all-night front desk staffing. The
interior of each Baymont Inns & Suites is refurbished in accordance with a
strict periodic schedule.
Baymont Inns & Suites has a national franchise program and has increased
its emphasis on opening more franchised Baymont Inns & Suites. Sales offices in
Wisconsin, Texas, Florida, Tennessee, South Dakota, New Jersey and Oregon and
service offices in Florida and Tennessee are intended to help support expansion
of the Baymont Inns & Suites franchise. Franchisees pay an initial franchise fee
and annual marketing assessments, reservation system assessments and royalty
fees based on room revenues. The Company is qualified to sell, and anticipates
ultimately selling, franchises in all 50 states. The Company plans to further
emphasize franchising in the future by exploring the potential sale of
approximately 20 Company-owned properties to new and existing franchisees over
the next three years as a part of the Company's strategy to emphasize growth
through franchising. In some cases, the Company may continue to manage a sold
property for a new owner under the terms of a management contract. The Company
believes that the sale of selected properties will allow its franchise partners
to develop a significant market presence and the Company to use the proceeds
from such sales for other growth opportunities, including developing Baymont
properties in new markets.
Woodfield Suites
The Company operates seven mid-priced, all-suite hotels under the name
"Woodfield Suites" in Illinois, Wisconsin, Colorado, Ohio and Texas. In fiscal
2000, the Company opened a new Company-owned property near the River Walk in San
Antonio, Texas.
Woodfield Suites offers all of its guests the use of a centrally-located
swimming pool, whirlpool and game room. Most suites have a bedroom and separate
living room and feature an extra-length bed, sleeper sofa for additional guests,
microwave, refrigerator, wet bar, television and hair dryer. Some suites also
have a kitchenette. All guests receive a complimentary continental breakfast and
are invited to a complimentary cocktail hour. Meeting rooms and two-line
telephones equipped with dataports in every suite enhance Woodfield Suites'
appeal to business travelers. Woodfield Suites is installing high speed Internet
access to all properties.
Hotels and Resorts Operations
The Pfister Hotel
The Company owns and operates the Pfister Hotel in downtown Milwaukee.
The Pfister Hotel, a full service, luxury hotel, has 307 rooms (including 82
luxury suites), three restaurants, two cocktail lounges (one of which was
recently opened) and a 275-car parking ramp. The Pfister has 24,000 square feet
of banquet and convention facilities. Banquet and meeting rooms accommodate up
to 3,000 persons, and the hotel features two large ballrooms, including one of
the largest ballrooms in the Milwaukee metropolitan area, with banquet seating
for 1,200 people. In addition, the Pfister opened a new indoor swimming pool and
state of the art fitness center in June 2000. A portion of the Pfister's
first-floor space is leased for use by retail tenants. In fiscal
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2000, the Pfister Hotel earned its 24th consecutive four-diamond award from the
American Automobile Association. The Pfister is also a member of Preferred
Hotels and Resorts Worldwide Association, an organization of independent luxury
hotels and resorts, and the Association of Historic Hotels of America.
The Hilton Milwaukee City Center
The Company owns and operates the 730-room Hilton Milwaukee City Center.
The Hilton franchise affiliation has benefited the Hilton Milwaukee City Center
through Hilton's international centralized reservation and marketing system,
advertising cooperatives and frequent stay programs. In June 2000, the Company
completed construction on the rooms and expanded meeting space portion of an
extensive addition, increasing the number of rooms by 175 to the current total
of 730 rooms. The addition will also include an indoor water park and family fun
center that features water slides, swimming pools, a sand beach, lounge and
restaurant.
The Grand Geneva Resort & Spa
The Grand Geneva Resort & Spa in Lake Geneva, Wisconsin is a
full-facility destination resort located on 1,300 acres. The largest convention
resort in Wisconsin includes 355 guest rooms, 50,000 square feet of banquet,
meeting and exhibit space, 6,600 square feet of ballroom space, three specialty
restaurants, two cocktail lounges, two championship golf courses, several
ski-hills, four indoor and five outdoor tennis courts, three swimming pools, a
spa and fitness complex, horse stables and an on-site airport.
The Company began selling units of a vacation ownership development
during fiscal 2000 and recently opened its first 18 units and a sales center,
representing the Company's entrance into the timesharing business. Condominium
owners will be able to participate in exchange programs through Resort
Condominiums International.
Miramonte Resort
The Miramonte Resort in Indian Wells, California, a boutique luxury
resort located on 11 landscaped acres, opened in 1998 following an extensive
renovation. The resort includes 14 two-story Tuscan style buildings housing 226
guest rooms, one restaurant, one lounge and 9,500 square feet of banquet,
meeting and exhibit space, including a 5,000 square foot grand ballroom.
Additionally, there is a fully equipped fitness center and two outdoor swimming
pools, each with an adjacent jacuzzi spa and sauna. New amenities include
outdoor meeting facilities and a golf concierge. During fiscal 2000, the
Miramonte Resort earned its second consecutive four-diamond award from the
American Automobile Association.
Operated and Managed Hotels
The Company operates the Crowne Plaza-Northstar Hotel in Minneapolis,
Minnesota. The Crowne Plaza-Northstar Hotel is located in downtown Minneapolis
and has 226 rooms, 13 meeting rooms, 6,370 square feet of ballroom and
convention space, one restaurant, one cocktail lounge and an exercise facility.
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The Company manages the Hotel Mead in Wisconsin Rapids, Wisconsin. The
Hotel Mead has 157 guest rooms, 10 meeting rooms totaling 14,000 square feet of
meeting space, two cocktail lounges, two restaurants and an indoor pool with a
sauna and whirlpool.
The Company manages Beverly Garland's Holiday Inn in North Hollywood,
California. The Beverly Garland has 257 rooms, including 12 suites, meeting
space for up to 600, including an amphitheater and ballroom, and an outdoor
swimming pool and lighted tennis courts. The mission-style hotel is located on
seven acres near Universal Studios.
New Developments
Late in fiscal 2000, the Company purchased the Hotel Phillips, a 240-room
hotel in Kansas City, Missouri. The Company plans to close the property during
Fall 2000 and undertake a complete restoration of the landmark hotel. In late
fiscal 1999, the Company also commenced construction on the Company's new Hilton
Madison at Monona Terrace, a 238-room hotel that will be connected by skywalk to
the new Monona Terrace Convention Center in Madison, Wisconsin and is scheduled
to open in late fiscal 2001.
Theatre Operations
At the end of fiscal 2000, the Company operated 50 movie theatre
locations with an aggregate of 470 screens in Wisconsin, Illinois, Minnesota and
Ohio for an average of 9.4 screens per location, compared to an average of 8.9
screens per location at the end of fiscal 1999 and 7.8 at the end of fiscal
1998. The Company's facilities include 16 megaplex theatres (12 or more
screens), representing 54% of the Company's total screens, 32 multiplex theatres
(2 to 11 screens) and two single-screen theatres. The theatre division's
long-term growth strategy is to focus on megaplex theatres having between 12 and
20 screens which typically vary in seating capacity from 150 to 450 seats per
screen. Multi-screen theatres allow the Company to offer a more diversified
selection of films to attract additional customers, exhibit movies in larger or
smaller auditoriums within the same theatre depending on the popularity of the
movie and benefit from the economies of having common box office, concession,
projection and lobby facilities. Most of the Company's movie theatres feature
exclusively first-run films.
The Company added 42 screens in fiscal 2000, including a new 16-screen
UltraPlex(TM) in Oakdale, Minnesota, 19 screens to four existing theatres and
the Company's second large screen IMAX(R) 2D/3D theatre at its Addison, Illinois
location. The Company also purchased a six-screen theatre in Shakopee,
Minnesota. At fiscal year-end, the Company operated 445 first-run screens and 25
budget-oriented screens.
The results of the Company's movie theatre business and the motion
picture industry in general are largely dependent upon the box office appeal and
marketing of available first-run films, factors over which the Company has no
control. Movie production has been stimulated by additional demand from
ancillary markets such as home video, pay-per-view and cable television, as well
as increased demand from foreign film markets. Fiscal 2000 featured such box
office hits as Star Wars I: The Phantom Menace, The Sixth Sense, Austin Powers
2: The Spy Who Shagged Me, Runaway Bride, Tarzan, Big Daddy, Toy Story 2 and The
Green Mile.
-6-
The Company obtains its films from the national motion picture production
and distribution companies and is not dependent on any single motion picture
supplier. Booking, advertising, concession purchases and promotion are handled
centrally by an administrative staff.
The Company strives to provide its movie patrons with high-quality
picture and sound presentation in clean, comfortable, attractive and
contemporary theatre environments. Substantially all of the Company's movie
theatre complexes feature either digital sound, Dolby or other stereo sound
systems; acoustical ceilings; side wall insulation; engineered drapery folds to
eliminate sound imbalance, reverberation and distortion; tiled floors; loge
seats; cup-holder chair-arms; and computer-controlled heating, air conditioning
and ventilation. Computerized box offices permit all of the Company's movie
theatres to sell tickets in advance. The Company's theatres are accessible to
persons with disabilities and provide wireless headphones for hearing-impaired
moviegoers. Other amenities at certain theatres include THX auditoriums, which
allow customers to hear the softest and loudest sounds, and touch-screen,
computerized, self-service ticket kiosks, which simplify advance ticket
purchases. The Company also operates an exclusive customer information telephone
system in Milwaukee and Madison, allowing customers to call for information
regarding the locations, times and titles of movies being shown by the Company
throughout each metropolitan area. The Company also operates the Marcus Movie
Hitline, which is a satellite-based automated telephone ticketing system
enabling moviegoers to buy tickets to movies at any of 12 Marcus first-run
theatres in the metropolitan Milwaukee area and its two theatres in Columbus,
Ohio using a credit card. In fiscal 2000, the Company announced plans to acquire
a small equity interest in MovieTickets.com, a joint venture of movie and
entertainment companies representing nearly 5,500 screens throughout the United
States and Canada created to sell movie tickets over the Internet. As a result
of its association with MovieTickets.com, the Company expects to introduce
on-line ticketing during fiscal 2001, allowing moviegoers to buy tickets at
certain theatres via the Internet.
The Company has enhanced its offerings of amenities at over 77% of its
first-run theatres with stadium seating, a tiered seating system that permits
unobstructed viewing. The Company is continuing an extensive program to add
stadium seating to approximately 90% of its existing first-run screens by the
end of 2001.
The Company sells food and beverage concessions at all of its movie
theatres. The Company believes that a wide variety of food and beverage items,
properly merchandised, increases concession revenue per patron. Although popcorn
remains the traditional favorite with moviegoers, the Company continues to
upgrade its available concessions by offering varied choices. For example, some
of the Company's theatres offer hot dogs, pizza, ice cream, pretzel bites,
frozen yogurt, coffee, mineral water and juices.
The Company also owns a family entertainment center, Funset Boulevard,
adjacent to its 11-screen movie theatre in Appleton, Wisconsin. Funset Boulevard
features a 40,000 square foot Hollywood-themed indoor amusement facility,
including a restaurant, party room, a laser tag center, virtual reality games,
an arcade, an outdoor miniature golf course and batting cages.
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Discontinued Restaurant Operations
In September 1999, the Company announced its intention to sell its 30 KFC
and KFC/Taco Bell 2-in-1 restaurants. The Company decided to dispose of its
restaurant business in order to concentrate on its core lodging and theatre
operations. An agreement entered into by the Company in September 1999 to sell
the KFC restaurants was subsequently terminated during the second quarter. The
Company is currently actively pursuing the sale of the KFC assets, which consist
primarily of land, buildings and equipment.
The Company has non-exclusive franchise rights to operate KFC restaurants
in the Milwaukee metropolitan area and in northeast Wisconsin. The Company
currently operates 27 KFC restaurants and three KFC/Taco Bell 2-in-1
restaurants. The Company is the largest operator of KFC restaurants in
Wisconsin, based on the number of facilities operated. The restaurants feature
Kentucky Fried Chicken and other franchisor-authorized food items.
Virtually all of the Company's KFC restaurants feature inside seating for
approximately 24 to 54 customers, drive-thru windows and updated electronic
equipment to better facilitate food preparation and order processing. Twelve
locations in the Fox Valley and Milwaukee metropolitan areas offer home
delivery.
The Company's KFC locations operate under individual franchise
agreements, all of which were renewed in early fiscal 1998 for a term of 20
years. Franchise royalties approximate 4% of net sales and, in addition, an
initial flat fee of $14,000 is payable for each new KFC restaurant. The KFC
franchisor specifies certain product requirements and provides for certain
approved suppliers of products and supplies in order to maintain quality
standards.
Competition
In each of its businesses, the Company experiences intense competition
from national and/or regional chain and franchise operations, some of which have
substantially greater financial and marketing resources than the Company. Most
of the Company's facilities are located in close proximity to other facilities
which compete directly with those of the Company.
The Company's Baymont Inns & Suites compete with such national
limited-service lodging chains as Hampton Inn (owned by Hilton Hotels
Corporation), Fairfield Inn (owned by Marriott Corporation), Holiday Inn
Express, Comfort Inn and others, as well as a large number of regional and local
chains. The Company's Woodfield Suites compete with such national chains as
Embassy Suites, Comfort Suites, AmeriSuites and Courtyard by Marriott, as well
as other regional and local all-suite facilities.
The Company's hotels and resorts compete with the hotels and resorts
operated by Hyatt Corporation, Marriott Corporation, Ramada Inns, Holiday Inns,
Wyndham Hotels and others, along with other regional and local hotels and
resorts.
In the restaurant business, the Company's KFC restaurants compete locally
with Hardee's, Boston Market, Popeye's and similar national and regional fast
food chains and individual restaurants offering chicken.
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The Company's movie theatres compete with large national movie theatre
operators, such as AMC Entertainment, General Cinemas, Cinemark, Regal Cinemas,
Loews Cineplex and Carmike Cinemas, as well as with a wide array of smaller
first-run and discount exhibitors. Although movie exhibitors also generally
compete with the home video, pay-per-view and cable television markets, the
Company believes that such ancillary markets have assisted the growth of the
movie theatre industry by encouraging the production of first-run movies
released for initial movie theatre exhibition, which establishes the demand for
such movies in these ancillary markets.
The Company believes that the principal factors of competition in each of
its businesses, in varying degrees, are the price and quality of its product,
quality and location of its facilities and customer service. The Company
believes that it is well positioned to compete on the basis of these factors.
Seasonality
Historically, the Company's first fiscal quarter has produced the
strongest operating results, because this period coincides with the typical
summer seasonality of the movie theatre industry and the summer strength of the
Company's lodging and food service businesses. The Company's third fiscal
quarter has historically produced the weakest operating results, primarily due
to the effects of reduced travel during the winter months on the Company's
lodging businesses.
Research and Development
Research and development expenditures for the Company are not material.
Environmental Regulation
The Company does not expect federal, state or local environmental
legislation to have a material effect on the Company's capital expenditures,
earnings or competitive position. However, the Company's activities in acquiring
and selling real estate for business development purposes have been complicated
by the continued emphasis placed by Company personnel on properly analyzing real
estate sites for potential environmental problems. This circumstance has
resulted in, and is expected to continue to result in, greater time and
increased costs involved in acquiring and selling properties associated with the
Company's various businesses.
Employees
As of the end of fiscal 2000, the Company had approximately 7,300
employees, a majority of whom were employed on a part-time basis. A majority of
the Company's hotel employees in Milwaukee, Wisconsin are covered by collective
bargaining agreements which expire in June 2002. A number of the Company's hotel
employees in Minneapolis, Minnesota are covered by collective bargaining
agreements which expire in April 2005. Relations with employees have been
satisfactory, and the Company has experienced no material work stoppages due to
labor disputes.
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Item 2. Properties.
The Company owns a substantial portion of its facilities, including the
Pfister Hotel, the Hilton Milwaukee City Center, the Grand Geneva Resort and
Spa, the Miramonte Resort and the Hotel Phillips, all of the Company-owned
Baymont Inns & Suites and Woodfield Suites, the majority of its theatres and
restaurants, and leases the remainder. The Company also manages three hotel
properties for third parties. Additionally, the Company owns properties acquired
for the future construction and operation of new Company operating facilities.
Some of its properties are leased from entities owned by principal shareholders
of the Company. All of the Company's properties are suitably maintained and
adequately utilized to cover the respective business segment served.
The operating properties owned, leased and franchised by the Company are
summarized in the following table:
Total Leased Leased Managed Managed
Number of from from for for
Facilities Unrelated Related Related Unrelated Owned By
Business Segment in Operation Owned(1) Parties Parties Parties Parties Franchisees(2)
---------------- ------------ -------- ------- ------- ------- ------- --------------
Restaurants:
KFC 30 29 1 0 0 0 0
Movie Theatres: 50 37 12 1 0 0 0
Hotels and Resorts:
Hotels 6 3 0 0 0 3 0
Resorts 2 2 0 0 0 0 0
Limited-Service Lodging:
Baymont Inns & Suites 171 85 0 0 9 1 76
Woodfield Suites 7 7 0 0 0 0 0
--- ---- -- -- -- -- --
TOTALS 266 163 13 1 9 4 76
=== === == == == == ==
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(1) One of the KFC restaurants, two of the movie theatres and two of the Baymont
Inns & Suites are on land leased from unrelated parties under long-term leases.
One of the Baymont Inns & Suites and one of the Woodfield Suites are located on
land leased from related parties. The Company's partnership interests in nine
Baymont Inns & Suites that it manages and one movie theatre that it leases are
not included in this column.
(2) The Company manages three Baymont Inns & Suites for franchisees.
Certain of the above individual properties or facilities are subject to
purchase money or construction mortgages or commercial lease financing
arrangements; none of these encumbrances are considered in the aggregate to be
material to the Company.
The terms of over 90% of the Company's operating property leases expire
on various dates after fiscal 2001 (assuming exercise by the Company of all
renewal and extension options).
Item 3. Legal Proceedings.
The Company does not believe that any pending legal proceeding involving
the Company is material to its business. No legal proceeding required to be
disclosed under this item was terminated during the fourth quarter of the
Company's 2000 fiscal year.
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Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of the Company's 2000 fiscal year.
EXECUTIVE OFFICERS OF COMPANY
Each of the current executive officers of the Company is identified below
together with information about each such officer's age, current position with
the Company and employment history for at least the past five years:
Name Position Age
Stephen H. Marcus Chairman of the Board, President and Chief Executive Officer 65
Bruce J. Olson Group Vice President 50
James R. Abrahamson President and Chief Operating Officer, Baymont Inns & Suites 44
H. Fred Delmenhorst Vice President-Human Resources 59
Thomas F. Kissinger General Counsel and Secretary 40
Douglas A. Neis Chief Financial Officer and Treasurer 41
Stephen H. Marcus has been Chairman of the Board of the Company since
December 1991 and President and Chief Executive Officer since December 1988. Mr.
Marcus has been employed by the Company for 39 years.
Bruce J. Olson has been employed in his present position with the Company
since July 1991. He was elected to serve on the Company's Board of Directors in
April 1996. Mr. Olson previously served as Vice President-Administration and
Planning for the Company from September 1987 until July 1991 and as Executive
Vice President and Chief Operating Officer of Marcus Theatres Corporation from
August 1978 until October 1988, when he was appointed President of that
corporation. Mr. Olson joined the Company in 1974.
James R. Abrahamson joined the Company in April 2000 as President and
Chief Operating Officer of Baymont Inns & Suites. Mr. Abrahamson previously
served as Executive Vice President of the Franchise Hotel Group of Hilton Hotels
Corporation from January 1995 until April 2000.
H. Fred Delmenhorst has been the Vice President-Human Resources since he
joined the Company in December 1984.
Thomas F. Kissinger joined the Company in August 1993 as Secretary and
Director of Legal Affairs and in August 1995 was promoted to General Counsel and
Secretary. Prior thereto, Mr. Kissinger was associated with the law firm of
Foley & Lardner for five years.
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Douglas A. Neis joined the Company in February 1986 as Controller of the
Marcus Theatres division and in November 1987 he was promoted to Controller of
Marcus Restaurants. In July 1991, Mr. Neis was appointed Vice President of
Planning and Administration for Marcus Restaurants. In September 1994, Mr. Neis
was also named Director of Technology for the Company and in September 1995 he
was elected Corporate Controller for the Company. In September 1996, Mr. Neis
was promoted to Chief Financial Officer and Treasurer of the Company.
The executive officers of the Company are generally elected annually by
the Board of Directors after the annual meeting of shareholders. Each executive
officer holds office until his successor has been duly qualified and elected or
until his earlier death, resignation or removal.
PART II
Item 5. Market for the Company's Common Equity and Related Shareholder Matters.
The information required by this item is incorporated by reference to the
information pertaining thereto included on Pages 30, 31 and 33 of the Company's
2000 Annual Report to Shareholders.
Item 6. Selected Financial Data.
The information required by this item is incorporated by reference to the
information pertaining thereto included on Page 30 of the Company's 2000 Annual
Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The information required by this item is incorporated by reference to the
information pertaining thereto included on Pages 10 through 17 of the Company's
2000 Annual Report to Shareholders.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is incorporated by reference to the
information pertaining thereto included on Page 17 of the Company's 2000 Annual
Report to Shareholders.
Item 8. Financial Statements and Supplementary Data.
The information required by this item is incorporated by reference to the
information pertaining thereto included on Pages 18 through 29 and 31 of the
Company's 2000 Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Company.
The information required by this item with respect to directors is
incorporated herein by reference to the information pertaining thereto set forth
under the caption entitled "Election of Directors" in the definitive Proxy
Statement for the Company's 2000 Annual Meeting of Shareholders scheduled to be
held September 25, 2000 (the "Proxy Statement"). The required information with
respect to executive officers appears at the end of Part I of this Form 10-K.
The required information with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934 by directors and executive officers is
incorporated by reference to the information pertaining thereto set forth under
the caption entitled "Section 16(a) Beneficial Ownership Reporting Compliance"
in the Proxy Statement.
Item 11. Executive Compensation.
The information required by this item is incorporated herein by reference
to the information pertaining thereto set forth under the caption entitled
"Executive Compensation" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is incorporated herein by reference
to the information pertaining thereto set forth under the caption entitled
"Stock Ownership of Management and Others" in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
The information required by this item, to the extent applicable, is
incorporated herein by reference to the information pertaining thereto set forth
under the caption entitled "Certain Transactions" in the Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) Financial Statements.
The consolidated financial statements of the Company as of May 25, 2000
and May 27, 1999 and for each of the three years in the period ended May 25,
2000, together with the report thereon of Ernst & Young LLP, dated July 14,
2000, appear on Pages 18 through 29 of the Company's 2000 Annual Report to
Shareholders, and are incorporated herein by reference.
(a)(2) Financial Statement Schedules.
All schedules are omitted because they are inapplicable, not required
under the instructions or the financial information is included in the
consolidated financial statements or notes thereto.
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(a)(3) Exhibits.
The exhibits filed herewith or incorporated by reference herein are set
forth on the attached Exhibit Index.*
(b) Reports on Form 8-K.
The Company did not file a Form 8-K with the Securities and Exchange
Commission during the fourth quarter of fiscal 2000.
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* Exhibits to this Form 10-K will be furnished to shareholders upon
advance payment of a fee of $0.20 per page, plus mailing expenses.
Requests for copies should be addressed to Thomas F. Kissinger, General
Counsel and Secretary, The Marcus Corporation, 250 East Wisconsin
Avenue, Suite 1700, Milwaukee, Wisconsin 53202.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE MARCUS CORPORATION
Date: August 23, 2000 By: /s/ Stephen H. Marcus
-------------------------------
Stephen H. Marcus,
Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities as of the date indicated above.
By:/s/ Stephen H. Marcus By:/s/ Daniel F. McKeithan
-------------------------------- ---------------------------------
Stephen H. Marcus, Chairman of the Daniel F. McKeithan, Jr., Director
Board and President (Chief Executive
Officer)
By:/s/ Douglas A. Neis By:/s/ Diane Marcus Gershowitz
-------------------------------- ---------------------------------
Douglas A. Neis, Treasurer and Diane Marcus Gershowitz, Director
Controller (Chief Financial and
Accounting Officer)
By:/s/ Bruce J. Olson By:/s/ Timothy E. Hoeksema
-------------------------------- ---------------------------------
Bruce J. Olson, Director Timothy E. Hoeksema, Director
By:/s/ Philip L. Milstein By:/s/ Allan H. Selig
-------------------------------- ---------------------------------
Philip L. Milstein, Director Allan H. Selig, Director
By:/s/ Bronson J. Haase
-------------------------------
Bronson J. Haase, Director
S-1
EXHIBIT INDEX
3.1 Restated Articles of Incorporation. [Incorporated by reference to Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended November 13, 1997.]
3.2* Bylaws, as amended as of December 17, 1998. [Incorporated by reference to
Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended November 26, 1998.]
4.1 Senior Note Purchase Agreement dated May 31, 1990, between the Company
and The Northwestern Mutual Life Insurance Company. [Incorporated by
reference to Exhibit 4 to the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 1990.]
4.2 The Marcus Corporation Note Purchase Agreement dated October 25, 1996.
[Incorporated by reference to Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended November 14, 1996.]
4.3 First Supplement to Note Purchase Agreements dated May 15, 1998.
[Incorporated by reference to Exhibit 4.3 to the Company's Annual Report
on Form 10-K for the fiscal year ended May 28, 1998.]
4.4 Second Supplement to Note Purchase Agreements dated May 7, 1999.
[Incorporated by reference to Exhibit 4.4 to the Company's Annual Report
on Form 10-K for the fiscal year ended May 27, 1999.]
4.5 Credit Agreement dated as of April 29, 1999, among the Company, Bank of
America National Trust and Savings Association, as Administrative Agent,
Bank One, Wisconsin, as Documentation Agent, the other financial
institutions parties thereto and Nationsbanc Montgomery Securities LLC,
as Sole Arranger and Sole Book Manager. [Incorporated by reference to
Exhibit 4.5 to the Company's Annual Report on Form 10-K for the fiscal
year ended May 27, 1999.]
4.6 Other than as set forth in Exhibits 4.1, 4.2, 4.3, 4.4 and 4.5, the
Company has numerous instruments which define the rights of holders of
long-term debt. These instruments, primarily promissory notes, have
arisen from the purchase of operating properties in the ordinary course
of business. These instruments are not being filed with this Annual
Report on Form 10-K in reliance upon Item 601(b)(4)(iii) of Regulation
S-K. Copies of these instruments will be furnished to the Securities and
Exchange Commission upon request.
E-1
10.1 The Company is the guarantor and/or obligor under various loan agreements
in connection with operating properties (primarily Baymont Inns & Suites)
which were financed through the issuance of industrial development bonds.
These loan agreements and the additional documentation relating to these
projects are not being filed with this Annual Report on Form 10-K in
reliance upon Item 601(b)(4)(iii) of Regulation S-K. Copies of these
documents will be furnished to the Securities and Exchange Commission
upon request.
10.2 Comprehensive Image Enhancement Agreement, dated October 12, 1988,
between the Company and KFC Corporation. [Incorporated by reference to
Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal
year ended May 25, 1989.]
10.3 Form of individual Kentucky Fried Chicken franchise agreement between the
Company and KFC Corporation. [Incorporated by reference to Exhibit 10.3
to the Company's Annual Report on Form 10-K for the fiscal year ended May
29, 1997.]
10.4* The Marcus Corporation 1995 Equity Incentive Plan, as amended.
[Incorporated by reference to Exhibit 10.4 to the Company's Annual Report
on Form 10-K for the fiscal year ended May 27, 1999.]
10.5* The Marcus Corporation 1994 Nonemployee Director Stock Option Plan.
[Incorporated by reference to Exhibit A to the Company's 1994 Proxy
Statement.]
13 The Company's 2000 Annual Report to Shareholders, to the extent
incorporated by reference herein.
21 Subsidiaries of the Company as of May 25, 2000.
23 Consent of Ernst & Young LLP.
27 Financial Data Schedule for the fiscal year ended May 25, 2000.
99 Proxy Statement for the 2000 Annual Meeting of Shareholders. (The Proxy
Statement for the 2000 Annual Meeting of Shareholders will be filed with
the Securities and Exchange Commission under Regulation 14A within 120
days after the end of the Company's fiscal year. Except to the extent
specifically incorporated by reference, the Proxy Statement for the 2000
Annual Meeting of Shareholders shall not be deemed to be filed with the
Securities and Exchange Commission as part of this Annual Report on Form
10-K.)
- ----------
* This exhibit is a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to Item 14(c) of Form
10-K.
E-2