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THE MARCUS CORPORATION REPORTS RECORD REVENUES AND INCREASED EARNINGS FOR FOURTH QUARTER AND FISCAL 2014

Marcus Theatres® once again outperforms the industry;momentum continues for Marcus® Hotels & Resorts

 

Milwaukee, Wis., July 24, 2014….. The Marcus Corporation (NYSE: MCS) today reported strong fourth quarter and fiscal year results for the periods ended May 29, 2014.

 

Fourth Quarter Fiscal 2014 Highlights

 

·Total revenues for the fourth quarter of fiscal 2014 were $108,474,000, a 7.8% increase from revenues of $100,590,000 for the fourth quarter of fiscal 2013.
·Operating income was $9,564,000 for the fourth quarter of fiscal 2014, a 15.8% increase from operating income of $8,256,000 for the fourth quarter of fiscal 2013.
·Net earnings attributable to The Marcus Corporation were $4,254,000 for the fourth quarter of fiscal 2014, a 22.4% increase from net earnings attributable to The Marcus Corporation of $3,475,000 for the fourth quarter of fiscal 2013.
·Net earnings per diluted common share attributable to The Marcus Corporation were $0.16 for the fourth quarter of fiscal 2014, a 23.1% increase from net earnings per diluted common share attributable to The Marcus Corporation of $0.13 for the fourth quarter of fiscal 2013.

 

Fiscal 2014 Highlights

 

·Total revenues for fiscal 2014 were $447,939,000, an 8.5% increase from revenues of $412,836,000 for fiscal 2013.
·Operating income was $48,382,000 for fiscal 2014, a 26.6% increase from operating income of $38,204,000 for fiscal 2013.
·Net earnings attributable to The Marcus Corporation were $25,001,000 for fiscal 2014, a 42.8% increase from net earnings attributable to The Marcus Corporation of $17,506,000 for fiscal 2013.

 

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·Net earnings per diluted common share attributable to The Marcus Corporation were $0.92 for fiscal 2014, a 46.0% increase from net earnings per diluted common share attributable to The Marcus Corporation of $0.63 for fiscal 2013.

 

“Our excellent fourth quarter results provided a strong ending to a very solid year for The Marcus Corporation. Fiscal 2014 revenues set new records for both divisions and for the company as a whole. Marcus Theatres significantly outperformed the industry for the second consecutive quarter and Marcus Hotels & Resorts continued its steady improvement,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation.

 

Marcus Theatres®

 

“Revenues for Marcus Theatres were up 10.7% for the fourth quarter and 10.8% for the full year, while operating income increased 4.1% for the fourth quarter and 13.6% for fiscal 2014. The fourth quarter revenues and operating income set new records for any 13-week fourth quarter in the division’s history,” said Marcus. “Despite the fact that the national box office was down slightly during our fourth quarter period due to a weaker slate of movies in May, we achieved an 8.2% increase in admissions. We attribute this strong performance to the major investments we are making in our theatres, along with successful marketing and operational strategies.”

 

“The top-five best performing films for Marcus Theatres in the fourth quarter were Captain America: The Winter Soldier, Divergent, The Amazing Spider-Man 2, Godzilla and Neighbors. For fiscal 2014, the top-five movies were Frozen, The Hunger Games: Catching Fire, Despicable Me 2, The Lego® Movie and The Hobbit: The Desolation of Smaug,” said Rolando B. Rodriguez, president and chief executive officer of Marcus Theatres.

 

Rodriguez said films that have performed well to this point in the summer include Maleficient, The Fault in Our Stars, How to Train Your Dragon 2, 22 Jump Street, Transformers: Age of Extinction and Dawn of the Planet of the Apes.

 

“While it has been well documented that the summer films so far have not performed as well as last year’s corresponding film slate, we have continued to outperform the industry during this period. We are hopeful the summer movie season will end on a stronger note, with potential hits including Hercules, Lucy, Guardians of the Galaxy, Teenage Mutant Ninja Turtles, The Expendables 3 and The Giver,” said Rodriguez

 

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“As our results for the past two quarters indicate, our investments in enhancing all aspects of the moviegoing experience are generating results. By the end of the fiscal year in May, we had doubled our number of theatres offering DreamLoungerSM oversized leather recliners in all auditoriums to eight and expanded our UltraScreen DLX™ auditoriums, which combine a premium large-format UltraScreen® and Dolby® Atmos™ immersive sound with DreamLounger seating, to 11 locations. We ended the year with 20 large-screen format auditoriums in our circuit. We are in the final stages of adding five Take FiveSM Lounges and five Zaffiro’s® Express lobby dining locations, which will increase the total outlets for each concept to 11. We are also introducing Big Screen BistroSM full-service in-theatre dining at three additional theatres,” said Rodriguez. “We plan to continue to grow these successful concepts in fiscal 2015 and are already working to identify additional locations.”

 

“Our newest entertainment destination is currently under construction in Sun Prairie, Wis. Named The Palace at Sun Prairie, the new 12-screen theatre will include all of the innovations we are currently expanding across the circuit. It will feature all-reserved DreamLounger recliner seating in every auditorium, two UltraScreen DLX auditoriums, four Big Screen Bistro auditoriums, a Zaffiro’s Express and a Take Five Lounge. With a striking new interior and exterior design and the latest features and amenities, The Palace at Sun Prairie will take the moviegoing experience to a new level,” added Rodriguez.

 

Marcus® Hotels & Resorts
 

“Marcus Hotels & Resorts achieved record revenues for both the quarter and the full year, with fourth quarter revenues up 4.2% and revenues for fiscal 2014 up 5.9%. Increases in food and beverage revenues of 7.0% in the fourth quarter and 6.1% for the full year contributed to the revenue increases. Revenue per available room (RevPAR) for comparable company-owned hotels increased 3.3% in both the fourth quarter and full year, driven by increases in both occupancy and average daily rate. This was the fourth consecutive year of increases in the average daily rate,” said Marcus. He noted that results for the prior year were negatively impacted by $3.3 million of costs related to the settlement of lawsuits concerning the company’s Las Vegas property.

 

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“During the fourth quarter, we assumed management of the Heidel House Resort & Spa in Green Lake, Wis., a 190-room full-service resort and spa nestled on the shore of Green Lake. The property is located just six miles from Ripon, Wis. where our company was founded in 1935. The new management contract is an excellent opportunity to bring our high level of service, food and beverage expertise and spa operations experience to this distinctive, award-winning property,” said Thomas F. Kissinger, interim president of Marcus Hotels & Resorts and senior executive vice president of The Marcus Corporation.

 

“We continue to move forward with major renovation projects at several key properties. The renovation of the guest rooms in the modern tower addition of The Pfister® Hotel in Milwaukee has now been completed. The remodeling of the meeting rooms at The Cornhusker, A Marriott Hotel, in Lincoln, Neb. will be completed by the end of summer, the final phase of a complete multi-million-dollar renovation of the property. An extensive remodeling of the Westin® Atlanta Perimeter North in Atlanta, Ga. has also been completed, except for the redesign and launch of a new Southern-inspired, farm-to-table brasserie restaurant. In addition, the conversion of our Four Points by Sheraton Chicago Downtown/Magnificent Mile to one of the first AC Hotels by Marriott in the U.S. is scheduled to begin in late fall, with completion targeted for spring 2015,” said Kissinger.

 

“The busy summer travel season is off to a good start. As we look ahead, our focus will be on pursuing additional management contracts and potential hotel investment opportunities to further expand the portfolio,” added Kissinger.

 

Return of Capital to Shareholders

 

“We repurchased a total of 314,000 shares of our common stock in fiscal 2014 and increased the quarterly cash dividend by 11.8% in the fourth quarter. Our total return to shareholders was 28% in fiscal 2014 and our three-year average total return to shareholders is now 27%. Our strong balance sheet gives us the ability to return capital to shareholders through our dividend policy and share repurchases, while at the same time continuing to invest in our two businesses and pursue potential growth opportunities,” said Douglas A. Neis, chief financial officer and treasurer of The Marcus Corporation.

 

Conference Call and Webcast

 

Marcus Corporation management will hold a conference call today, July 24, 2014, at 10:30 a.m. Central/11:30 a.m. Eastern time to discuss the fourth quarter results. Interested parties can listen to the call live on the Internet through the investor relations section of the company's website: www.marcuscorp.com, or by dialing 1-617-399-5132 and entering the passcode 35115652. Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. A telephone replay of the conference call will be available through Thursday, July 31, 2014, by dialing 1-888-286-8010 and entering the passcode 28146934. The webcast will be archived on the company’s website until its next earnings release.

 

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About The Marcus Corporation

 

Headquartered in Milwaukee, Wisconsin, The Marcus Corporation is a leader in the lodging and entertainment industries, with significant company-owned real estate assets. The Marcus Corporation’s theatre division, Marcus Theatres®, currently owns or manages 685 screens at 55 locations in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. The company’s lodging division, Marcus® Hotels & Resorts, owns and/or manages 19 hotels, resorts and other properties in 10 states. For more information, please visit the company’s website at www.marcuscorp.com.

 

Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (2) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, and preopening and start-up costs due to the capital intensive nature of our businesses; (3) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (4) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other markets; (5) the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets; (6) the effects of competitive conditions in our markets; (7) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; and (8) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or incidents such as the tragedy in a movie theatre in Colorado. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

 

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THE MARCUS CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)

 

   (Unaudited)   (Audited) 
   May 29,   May 30, 
   2014   2013 
         
Assets:        
         
Cash and cash equivalents  $14,812   $18,053 
Accounts and notes receivable   9,472    8,568 
Refundable income taxes   2,958    255 
Deferred income taxes   3,056    2,877 
Other current assets   6,367    6,384 
Property and equipment, net   647,592    625,757 
Other assets   84,666    84,802 
           
Total Assets  $768,923   $746,696 
           
Liabilities and Shareholders' Equity:          
Accounts payable  $30,954   $25,330 
Taxes other than income taxes   14,333    14,000 
Other current liabilities   44,826    36,123 
Current portion of capital lease obligation   4,871    4,562 
Current maturities of long-term debt   7,030    11,193 
Capital lease obligation   23,370    28,241 
Long-term debt   233,557    231,580 
Deferred income taxes   42,561    43,516 
Deferred compensation and other   37,442    35,455 
Equity   329,979    316,696 
           
Total Liabilities and Shareholders' Equity  $768,923   $746,696 

 

 
 

 

THE MARCUS CORPORATION

Consolidated Statements of Earnings

(Unaudited)

(In thousands, except per share data)

 

   13 Weeks Ended   52 Weeks Ended 
   May 29,   May 30,   May 29,   May 30, 
   2014   2013   2014   2013 
                 
Revenues:                
Theatre admissions  $35,084   $32,424   $146,039   $134,523 
Rooms   25,325    24,543    105,483    99,668 
Theatre concessions   20,989    18,172    84,062    73,189 
Food and beverage   14,020    13,100    58,826    55,458 
Other revenues   13,056    12,351    53,529    49,998 
Total revenues   108,474    100,590    447,939    412,836 
                     
Costs and expenses:                    
Theatre operations   31,524    28,271    127,531    115,078 
Rooms   10,412    10,056    40,834    38,260 
Theatre concessions   5,957    4,884    23,335    19,816 
Food and beverage   11,390    10,826    46,250    43,062 
Advertising and marketing   5,942    5,481    25,160    23,571 
Administrative   11,294    10,378    46,642    45,266 
Depreciation and amortization   8,777    8,337    33,845    33,827 
Rent   2,143    2,110    8,522    8,418 
Property taxes   3,321    3,821    14,637    14,836 
Other operating expenses   8,150    7,693    32,801    30,986 
Impairment charge   -    477    -    1,512 
Total costs and expenses   98,910    92,334    399,557    374,632 
                     
Operating income   9,564    8,256    48,382    38,204 
                     
Other income (expense):                    
Investment income   221    193    630    494 
Interest expense   (2,497)   (2,454)   (10,060)   (9,309)
Extinguishment of debt   -    -    -    6,008 
Gain (loss) on disposition of property, equipment and other assets   (28)   23    (993)   (266)
Equity losses from unconsolidated joint ventures, net   (57)   (132)   (250)   (450)
    (2,361)   (2,370)   (10,673)   (3,523)
                     
Earnings before income taxes   7,203    5,886    37,709    34,681 
Income taxes   2,905    2,299    16,810    11,350 
Net earnings   4,298    3,587    20,899    23,331 
Net earnings (loss) attributable to noncontrolling interests   44    112    (4,102)   5,825 
Net earnings attributable to The Marcus Corporation  $4,254   $3,475   $25,001   $17,506 
                     
Net earnings per common share attributable to The Marcus Corporation - diluted  $0.16   $0.13   $0.92   $0.63 
                     
Weighted average shares outstading - diluted   27,357    27,090    27,150    27,865 

 

 
 

 

THE MARCUS CORPORATION

Business Segment Information

(Unaudited)

(In thousands)

 

   Theatres   Hotels/ Resorts   Corporate Items   Total 
                 
13 Weeks Ended May 29, 2014                
Revenues  $59,468   $48,706   $300   $108,474 
Operating income (loss)   10,282    2,266    (2,984)   9,564 
Depreciation and amortization   4,469    4,176    132    8,777 
                     
13 Weeks Ended May 30, 2013                    
Revenues  $53,702   $46,726   $162   $100,590 
Operating income (loss)   9,881    1,558    (3,183)   8,256 
Depreciation and amortization   4,103    4,087    147    8,337 
                     
52 Weeks Ended May 29, 2014                    
Revenues  $243,162   $204,138   $639   $447,939 
Operating income (loss)   46,461    15,840    (13,919)   48,382 
Depreciation and amortization   16,747    16,562    536    33,845 
                     
52 Weeks Ended May 30, 2013                    
Revenues  $219,533   $192,676   $627   $412,836 
Operating income (loss)   40,907    10,662    (13,365)   38,204 
Depreciation and amortization   16,753    16,520    554    33,827 

 

Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses.  Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.

 

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