Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2001
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 15, 2001: $269,766,742.
Number of shares outstanding of each of the classes of the registrant's capital
stock as of August 15, 2001:
Common Stock, $1 par value: 19,253,798 shares
Class B Common Stock, $1 par value: 9,948,973 shares
DOCUMENTS INCORPORATED BY REFERENCE:
2001 Annual Report to Shareholders (incorporated by reference into Parts I, II
and IV); Proxy Statement for 2001 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," "intends" 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; and (viii) the
effects of increased energy costs. 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
sale of its KFC restaurants in May, 2001, 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
184 Baymont Inns & Suites limited-service facilities in 30 states and 7
Woodfield Suites all-suite hotels in Wisconsin, Colorado, Ohio, Illinois and
Texas. Of the 184 Baymont Inns & Suites, 87 are owned or operated by the
Company, nine are operated under joint venture agreements and 88 are franchised.
The Company operates 49 movie theatres with an aggregate of 482
screens throughout Wisconsin, Ohio, Illinois and Minnesota. The Company also
operates a family entertainment center, Funset Boulevard, in Appleton,
Wisconsin.
-1-
The Company's owned hotels and resorts operations include six hotels
and resorts in Wisconsin, California and Missouri. The Company also manages five
hotels for third parties in Wisconsin, Minnesota, Texas and California.
The Company's current strategic plans include the following goals:
* 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 limited-service lodging division's anticipated future growth in
earnings will ultimately come as a result of revenue growth at its
Company-owned inns (as the brand captures a greater share of its segment of
the industry) and from its emphasis on opening new franchised Baymont Inns
and Baymont Inns & Suites. As of the end of fiscal 2001, 21 new franchised
properties were under development, approximately one-half of which are
expected to open during fiscal 2002. The Company hopes to approve 25 to 35
new franchised properties per year over the next few fiscal years. By
emphasizing franchising, the Company believes the Baymont brand may grow
more rapidly, conserving capital for other strategic purposes. The Company
also anticipates exploring additional growth of the Baymont brand through
potential acquisitions and joint venture investments, focusing on selected
key strategic urban and suburban markets. The Company is currently in the
early stages of developing its first urban Baymont Inn & Suites in downtown
Chicago, Illinois, with an opening expected sometime in fiscal 2003.
* Maximizing the return on the Company's significant recent investments in
its theatres through both revenue and cost improvements. The Company has
invested over $200 million in its theatre division over the last five
fiscal years, more than doubling its number of movie theatre screens from
219 at the end of fiscal 1996 to 482 screens at the end of fiscal 2001 and
offering stadium seating in approximately 84% of its first-run screens, the
highest percentage in the industry. The Company does not anticipate its
total screen count significantly changing during fiscal 2002 unless
attractive acquisition opportunities present themselves.
* Doubling the number of rooms either managed or owned by the hotels and
resorts division to 6,000 rooms over the next three to five years. The
Company anticipates that the majority of this potential growth will come
from management contracts for other owners. In some cases, the Company may
own a partial interest in the new managed properties. Many of the recent
growth opportunities for the hotels and resorts division required a lengthy
development period during which significant capital was committed and
pre-opening costs and early start-up losses reduced division operating
income. The Company expects its recent development projects to provide
earnings growth opportunities during fiscal 2002 and beyond.
The actual number, mix and timing of potential future new facilities and
expansions will depend in large part on 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 Baymont locations at a pace consistent with the Company's current
plans and the availability of
-2-
attractive opportunities. It is likely that the Company's growth goals will
continue to evolve and change in response to these and other factors, and there
can be 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 Consolidated Financial Statements included on Page 30 of the
Company's 2001 Annual Report to Shareholders, which pages are incorporated by
reference herein.
Limited-Service Lodging Operations
Baymont Inns & Suites
The Company owns, operates or franchises 184 limited-service
facilities, with over 17,700 available guest rooms, under the name "Baymont Inns
& Suites" in 30 states. Of this total, 88 Baymont Inns & Suites are operated by
franchisees, 87 are Company-owned or operated and nine are operated under joint
venture agreements. During fiscal 2001, one new Company-owned property was
opened and 12 new franchised properties were opened. In addition, 21 new
franchised properties and one new Company-owned property were under construction
or in development at fiscal year-end. During fiscal 2001, the Company sold one
Baymont Inn & Suites to a franchisee and bought one Baymont Inn & Suites from 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 53 and 187 guest 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 multi-channel televisions, extra-long telephone cords and
large working desks. Additional amenities that have been introduced include
lobby breakfasts, two-room suites, 25-inch televisions, fitness facilities,
voice mail, hair dryers, irons and ironing boards, complimentary copies of USA
Today, bottled water, name brand soap and shampoo, pillow-top mattresses,
down-lite pillows and a new frequent stay reward program, Guest Ovations.TM 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.
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 has identified 15-20 additional Company-owned Baymont
Inns & Suites that will be considered for sale to new and existing franchisees.
In some cases, the Company may continue to manage a disposed property for a new
owner under the terms of a management contract. The Company believes that this
strategy will give its franchise partners the opportunity to develop a
significant market presence and will allow the Company to utilize the sales
proceeds for
-3-
other growth opportunities, including developing Baymont properties in new
markets. Although this strategy will result in reduced revenues until the sales
proceeds are reinvested, the Company expects that profitability will increase
over time.
Woodfield Suites
The Company operates seven mid-priced, all-suite hotels under the name
"Woodfield Suites" in Illinois, Wisconsin, Colorado, Ohio and 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 and some suites have a
kitchenette. All Woodfield Suites' 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.
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 guest rooms (including
82 luxury suites), three restaurants, two cocktail lounges 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. A portion of the
Pfister's first-floor space is leased for use by retail tenants. In fiscal 2001,
the Pfister Hotel earned its 25th 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 729-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. The Hilton
Milwaukee City Center has an indoor water park and family fun center that
features water slides, swimming pools, a sand beach, lounge, restaurant and will
soon have a new parking ramp.
Hilton Madison at Monona Terrace
In February 2001, the Company opened its 240-room Hilton Madison at
Monona Terrace. The Hilton Madison is connected by skywalk to the new Monona
Terrace Convention Center, has four meeting rooms totaling 2,400 square feet, an
indoor swimming pool, a fitness center, a lounge and a 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
-4-
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 currently operates 31 timeshare units and a timeshare
sales center. Timeshare owners can 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 2001, the
Miramonte Resort earned its third consecutive four-diamond award from the
American Automobile Association.
Hotel Philips
Late in fiscal 2000, the Company purchased the Hotel Phillips, a
217-room hotel in Kansas City, Missouri. The Company closed the property during
fall of 2000 and undertook a complete restoration of the landmark hotel, which
is expected to be completed in September 2001. When completed, the Hotel
Phillips will have conference rooms totaling 5,600 square feet of meeting space,
a 2,300 square foot ballroom, a restaurant and a lounge.
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 guest rooms, thirteen meeting rooms, 6,370 square feet of ballroom
and convention space, a restaurant, a cocktail lounge and an exercise facility.
The Company manages the Hotel Mead in Wisconsin Rapids, Wisconsin. The
Hotel Mead has 157 guest rooms, ten 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 operates Beverly Garland's Holiday Inn in North Hollywood,
California. The Beverly Garland has 257 guest rooms, including twelve suites,
meeting space for up to 600, including an amphitheater and ballroom, an outdoor
swimming pool and lighted tennis courts. The mission-style hotel is located on
seven acres near Universal Studios.
The Company also manages the Timber Ridge Lodge, an indoor/outdoor
waterpark and condominium complex in Lake Geneva, Wisconsin. The Timber Ridge
Lodge, which partially opened in July 2001, is a 225-unit condominium hotel
adjacent to the Company's Grand Geneva Resort & Spa. The Timber Ridge Lodge has
meeting rooms totaling 3,640 square feet, a general store, a restaurant-cafe, a
snack bar and lounge, a state-of-the-art fitness center and an entertainment
arcade.
-5-
The Company has signed a long-term contract to manage the Hilton
Garden Inn Houston NW/Chateau in Houston, Texas. The Hilton Garden Inn, which
will open in fiscal 2002, will have 171 guest rooms, a ballroom, a restaurant, a
fitness center, a convenience mart and a swimming pool. The hotel will be a part
of Chateau Court, a thirteen acre, European-style mixed-use development that
also includes retail space and an office village.
Theatre Operations
At the end of fiscal 2001, the Company operated 49 movie theatre
locations with an aggregate of 482 screens in Wisconsin, Illinois, Minnesota and
Ohio for an average of 9.8 screens per location, compared to an average of 9.4
screens per location at the end of fiscal 2000 and 8.9 at the end of fiscal
1999. The Company's facilities include 17 megaplex theatres (12 or more
screens), representing 56% of the Company's total screens, 30 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 increased its total screen count by 12 screens during
fiscal 2001, adding 17 screens to five existing theatres and its second large
UltraScreen, which opened at a Madison, Wisconsin location. One theatre with a
total of six screens was closed during fiscal 2001. In addition, a four-screen
theatre in Stevens Point, Wisconsin was sold and a five-screen theatre in
Wausau, Wisconsin was purchased. The Company believes that it may close
approximately four to six theatres with 18-32 screens over the next two years
with minimal impact on operating results. At fiscal year-end, the Company
operated 447 first-run screens and 35 budget-oriented screens.
Revenues for the theatre business and the motion picture industry in
general are heavily dependent on the general audience appeal of available films,
together with studio marketing, advertising and support campaigns, 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
2001 featured such box office hits as The Perfect Storm, Mission Impossible 2,
How the Grinch Stole Christmas, Cast Away, What Women Want, Meet the Parents,
Mummy Returns and Hannibal.
The Company obtains its films from 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-
-6-
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 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 2001, the Company
acquired a minority 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 became the first
theatre company to introduce on-line ticketing at all of its first-run theatres
during fiscal 2001, allowing moviegoers to buy tickets via the Internet and
print them at home.
The Company offers stadium seating, a tiered seating system that
permits unobstructed viewing, at over 84% of its first-run screens.
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.
Competition
In each of its businesses, the Company experiences intense competition
from national, regional and local 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, 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.
-7-
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 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 Company personnel must place 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 2001, the Company had approximately 7,800
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.
Item 2. Properties.
- ------ ----------
The Company owns a substantial portion of its facilities, including
the Pfister Hotel, the Hilton Milwaukee City Center, the Hilton Madison at
Monona Terrace, the Grand Geneva Resort and Spa, the Miramonte Resort and the
Hotel Phillips, all of the Company-owned Baymont Inns & Suites and Woodfield
Suites and the majority of its theatres. The Company leases the
-8-
remainder of its facilities. The Company also manages five hotel properties for
third parties (including the Hilton Garden Inn NW/Chateau in Houston, Texas,
which is expected to open in fiscal 2002). 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:
Leased Managed Managed
Total Number from for for
of Facilities Unrelated Related Unrelated Owned By
Business Segment in Operation Owned(1) Parties Parties Parties Franchisees(2)
---------------- ------------ -------- ------- ------- ------- --------------
Movie Theatres 49 37 12 0 0 0
Hotels and Resorts:
Hotels 9 4 0 0 5(3) 0
Resorts 2 2 0 0 0 0
Limited-Service Lodging:
Baymont Inns & Suites 184 86 0 9 1 88
Woodfield Suites 7 7 0 0 0 0
--- ---- -- -- -- --
TOTALS 251 136 12 9 6 88
=== === == = = ==
- ------------------------
(1) 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 are not included in this column.
(2) The Company manages one Baymont Inn & Suites for a franchisee.
(3) This total includes the Hilton Garden Inn NW/Chateau in Houston, Texas, which is scheduled to open in
Fall 2001.
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.
Over 90% of the Company's operating property leases expire on various
dates after the end of fiscal 2002 (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 2001 fiscal year.
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 2001 fiscal year.
-9-
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 66
Bruce J. Olson Group Vice President 51
H. Fred Delmenhorst Vice President-Human Resources 60
Thomas F. Kissinger General Counsel and Secretary 41
Douglas A. Neis Chief Financial Officer and Treasurer 42
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.
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.
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.
-10-
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 18, 31 and 32 of the
Company's 2001 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 31 of the Company's 2001
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 18 of the
Company's 2001 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 18 of the Company's 2001
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 30 of the
Company's 2001 Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting
- ------- -----------------------------------------------------------
and Financial Disclosure.
------------------------
Not applicable.
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 2001 Annual Meeting of Shareholders scheduled to be
held October 23, 2001 (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.
-11-
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 31,
2001 and May 25, 2000 and for each of the three years in the period ended May
31, 2001, together with the report thereon of Ernst & Young LLP, dated July 20,
2001, appear on Pages 19 through 30 of the Company's 2001 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.
(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 2001.
- ------------------
* 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.
-12-
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 27, 2001 By: /s/ Stephen H. Marcus
----------------------------------------
Stephen H. Marcus,
Chairman of the Board, President and
Chief Executive Officer
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, President and Chief Executive
Officer (Principal Executive Officer)
By: /s/ Douglas A. Neis By: /s/ Diane Marcus Gershowitz
------------------------------------ ------------------------------------
Douglas A. Neis, Treasurer and Diane Marcus Gershowitz, Director
Controller (Principal Financial
Officer 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 By: /s/ James D. Ericson
------------------------------------ ------------------------------------
Bronson J. Haase, Director James D. Ericson, 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 December 29, 2000, among the Company,
Bank One, as Administrative Agent, LaSalle Bank National Association,
as Documentation Agent, the other financial institutions parties
thereto and Banc One Capital Markets, Inc., as Lead Arranger and Sole
Book Runner.
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.
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.
E-1
10.1* 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.]]
10.2* 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 2001 Annual Report to Shareholders, to the extent
incorporated by reference herein. Except to the extent specifically
incorporated by reference, the 2001 Annual Report to Shareholders
shall not be deemed to be filed with the Securities and Exchange
Commission as part of this Annual Report on Form 10-K.
21 Subsidiaries of the Company as of May 31, 2001.
23 Consent of Ernst & Young LLP.
99 Proxy Statement for the 2001 Annual Meeting of Shareholders. (The
Proxy Statement for the 2001 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.)
- ----------
* 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