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Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2023
oTRANSITION 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 as specified in its charter)
Wisconsin39-1139844
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
100 East Wisconsin Avenue, Suite 1900
Milwaukee ,Wisconsin
53202-4125
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (414) 905-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par valueMCSNew York Stock Exchange
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 filing requirements for the past 90 days.
Yesx Noo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesxNoo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check One).
Large accelerated fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YesoNox
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
COMMON STOCK OUTSTANDING AT MAY 1, 2023 – 24,594,510
CLASS B COMMON STOCK OUTSTANDING AT MAY 1, 2023 –7,078,410


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THE MARCUS CORPORATION
INDEX
Page
S-1
2

Table of Contents


PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
March 30,
2023
December 29,
2022
ASSETS
Current assets:
Cash and cash equivalents$10,051 $21,704 
Restricted cash2,765 2,802 
Accounts receivable, net of reserves of $164 and $172, respectively
19,580 21,455 
Assets held for sale458 460 
Other current assets20,001 17,474 
Total current assets52,855 63,895 
Property and equipment:
Land and improvements132,258 132,285 
Buildings and improvements730,541 729,177 
Leasehold improvements167,596 167,516 
Furniture, fixtures and equipment388,243 386,197 
Finance lease right-of-use assets29,885 29,885 
Construction in progress14,448 10,305 
Total property and equipment1,462,971 1,455,365 
Less accumulated depreciation and amortization755,068 739,600 
Net property and equipment707,903 715,765 
Operating lease right-of-use assets191,125 194,965 
Other assets:
Investments in joint ventures1,896 2,067 
Goodwill74,996 75,015 
Other12,913 12,891 
Total other assets89,805 89,973 
TOTAL ASSETS$1,041,688 $1,064,598 
See accompanying condensed notes to consolidated financial statements.
3

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THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
March 30,
2023
December 29,
2022
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$29,110 $32,187 
Income taxes532  
Taxes other than income taxes16,283 17,948 
Accrued compensation12,644 22,512 
Other accrued liabilities54,208 56,275 
Current portion of finance lease obligations2,509 2,488 
Current portion of operating lease obligations14,522 14,553 
Current maturities of long-term debt10,339 10,432 
Total current liabilities140,147 156,395 
Finance lease obligations14,437 15,014 
Operating lease obligations191,187 195,281 
Long-term debt178,918 170,005 
Deferred income taxes23,399 26,567 
Other long-term obligations45,193 44,415 
Equity:
Shareholders’ equity attributable to The Marcus Corporation
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued
  
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,691,548 shares at March 30, 2023 and 24,498,243 shares at December 29, 2022
24,692 24,498 
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,078,410 shares at March 30, 2023 and 7,110,875 shares at December 29, 2022
7,078 7,111 
Capital in excess of par157,000 153,794 
Retained earnings263,239 274,254 
Accumulated other comprehensive loss(1,785)(1,694)
450,224 457,963 
Less cost of Common Stock in treasury (97,220 shares at March 30, 2023 and 78,882 shares at December 29, 2022)
(2,091)(1,866)
Total shareholders’ equity attributable to The Marcus Corporation448,133 456,097 
Noncontrolling interest274 824 
Total equity448,407 456,921 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,041,688 $1,064,598 
See accompanying condensed notes to consolidated financial statements.
4

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THE MARCUS CORPORATION
Consolidated Statements of Earnings (Loss)
(in thousands, except per share data)
13 Weeks Ended
March 30,
2023
March 31,
2022
Revenues:
Theatre admissions$47,635 $38,417 
Rooms17,857 17,430 
Theatre concessions42,375 35,464 
Food and beverage15,193 14,511 
Other revenues19,688 18,807 
142,748 124,629 
Cost reimbursements9,528 7,613 
Total revenues152,276 132,242 
Costs and expenses:
Theatre operations51,069 44,428 
Rooms9,278 8,203 
Theatre concessions15,730 15,193 
Food and beverage13,568 12,140 
Advertising and marketing5,065 4,481 
Administrative19,851 19,081 
Depreciation and amortization15,876 17,231 
Rent6,493 6,250 
Property taxes4,757 4,745 
Other operating expenses10,049 9,674 
Reimbursed costs9,528 7,613 
Total costs and expenses161,264 149,039 
Operating loss(8,988)(16,797)
Other income (expense):
Investment income (loss)260 (268)
Interest expense(3,008)(4,092)
Other expense(401)(153)
Equity losses from unconsolidated joint ventures(171)(141)
(3,320)(4,654)
Loss before income taxes(12,308)(21,451)
Income tax benefit(2,842)(6,549)
Net loss(9,466)(14,902)
Net earnings (loss) attributable to noncontrolling interests  
Net loss attributable to The Marcus Corporation$(9,466)$(14,902)
Net loss per share - basic:
Common Stock$(0.31)$(0.48)
Class B Common Stock$(0.28)$(0.44)
Net loss per share - diluted:
Common Stock$(0.31)$(0.48)
Class B Common Stock$(0.28)$(0.44)
See accompanying condensed notes to consolidated financial statements.
5

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THE MARCUS CORPORATION
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
13 Weeks Ended
March 30,
2023
March 31,
2022
Net loss$(9,466)$(14,902)
Other comprehensive income (loss), net of tax:
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect (benefit) of $(5), and $67, respectively
(11)190 
Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $(8) and $79, respectively
(22)223 
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect (benefit) of $(20) and $41, respectively
(58)118 
Other comprehensive income (loss)(91)531 
Comprehensive loss(9,557)(14,371)
Comprehensive earnings (loss) attributable to noncontrolling interests  
Comprehensive loss attributable to The Marcus Corporation$(9,557)$(14,371)













See accompanying condensed notes to consolidated financial statements.
6

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THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
13 Weeks Ended
March 30, 2023March 31, 2022
OPERATING ACTIVITIES:
Net loss$(9,466)$(14,902)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Losses on investments in joint ventures171 141 
(Gain) loss on disposition of property, equipment and other assets398 (424)
Depreciation and amortization15,876 17,231 
Amortization of debt issuance costs367 413 
Share-based compensation2,172 2,917 
Deferred income taxes(3,117)(6,342)
Other long-term obligations771 (460)
Contribution of the Company’s stock to savings and profit-sharing plan1,259 956 
Changes in operating assets and liabilities:
Accounts receivable1,910 7,495 
Government grants receivable 4,335 
Other assets(2,130)(1,841)
Operating leases (285)(1,161)
Accounts payable(2,501)(10,956)
Income taxes265 22,704 
Taxes other than income taxes(1,665)(3,908)
Accrued compensation(9,891)(6,563)
Other accrued liabilities(1,868)(3,164)
Total adjustments1,732 21,373 
Net cash provided by (used in) operating activities(7,734)6,471 
INVESTING ACTIVITIES:
Capital expenditures(8,921)(6,562)
Proceeds from disposals of property, equipment and other assets 3,438 
Proceeds from sale of trading securities9 1 
Purchase of trading securities(514) 
Other investing activities(105)20 
Net cash used in investing activities(9,531)(3,103)
FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility29,000 22,000 
Repayment of borrowings on revolving credit facility(20,000)(22,000)
Repayments on short-term borrowings (820)
Principal payments on long-term debt(431)(427)
Debt issuance costs(50) 
Principal payments on finance lease obligations(556)(584)
Equity transactions:
Treasury stock transactions, except for stock options(292)(1,364)
Exercise of stock options2 26 
Dividends paid(1,548) 
Distributions to noncontrolling interest(550) 
Net cash provided by ( used in) financing activities5,575 (3,169)
Net increase (decrease) in cash, cash equivalents and restricted cash(11,690)199 
Cash, cash equivalents and restricted cash at beginning of period24,506 24,054 
Cash, cash equivalents and restricted cash at end of period$12,816 $24,253 
Supplemental Information:
Interest paid, net of amounts capitalized$4,356 $5,904 
Income taxes refunded (paid), including interest earned(11)22,911 
Change in accounts payable for additions to property, equipment and other assets(588)(1,041)
See accompanying condensed notes to consolidated financial statements.
7

Table of Contents
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 30, 2023
(in thousands, except share and per share data)


1. General
Basis of Presentation - The unaudited consolidated financial statements for the 13 weeks ended March 30, 2023 and March 31, 2022 have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at March 30, 2023, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2022.
Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December 29, 2022, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.
Noncontrolling Interest - The Company has an ownership interest greater than 50% in one joint venture that is considered a Variable Interest Entity (VIE) that is included in the accounts of the Company. The Company is the primary beneficiary of the VIE and the Company’s interest is considered a majority voting interest. The primary asset of this VIE, The Skirvin Hilton, was sold on December 16, 2022. The equity interest of outside owners in consolidated entities is recorded as noncontrolling interest in the consolidated balance sheets. The remaining noncontrolling interest as of March 30, 2023, represents undistributed cash in the joint venture.
Depreciation and Amortization - Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled $15,868 and $17,223 for the 13 weeks ended March 30, 2023 and March 31, 2022, respectively.
Assets Held for Sale – Long-lived assets that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as assets held for sale and included within current assets on the consolidated balance sheet. Assets held for sale are measured at the lower of their carrying value or their fair value less costs to sell the asset. As of March 30, 2023, assets held for sale consists of excess land.
Long-Lived Assets – The Company periodically considers whether indicators of impairment of long-lived assets held for use are present. This includes quantitative and qualitative factors, including evaluating the historical actual operating performance of the long-lived assets and assessing the potential impact of recent events and transactions impacting the long-lived assets. If such indicators are present, the Company determines if the long-lived assets are recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. If the long-lived assets are not recoverable, the Company recognizes any impairment losses based on the excess of the carrying amount of the assets over their fair value. There were no indicators of impairment identified during the 13 weeks ended March 30, 2023 or March 31, 2022.
Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the first day of the fiscal fourth quarter. There were no indicators of impairment identified during the 13 weeks ended March 30, 2023 or March 31, 2022.
Earnings (Loss) Per Share - Net earnings (loss) per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options and convertible debt instruments using the if-converted method. Convertible Class B Common Stock and convertible debt instruments are reflected on an if-converted basis when dilutive to Common Stock. The computation of the diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock in periods that have net earnings since it would be dilutive to Common Stock earnings per share, while the diluted net earnings (loss) per share of Class B Common Stock does not assume the conversion of those shares.
Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of Class B Common Stock. As such, the undistributed earnings (losses) for each period are allocated based on the proportionate share of entitled cash dividends.
The following table illustrates the computation of Common Stock basic and diluted net loss per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:
13 Weeks Ended
March 30, 2023March 31, 2022
Numerator:
Net loss attributable to The Marcus Corporation$(9,466)$(14,902)
Denominator (in thousands):
Denominator for basic EPS31,572 31,445 
Effect of dilutive employee stock options  
Effect of convertible notes  
Denominator for diluted EPS31,572 31,445 
Net loss per share - basic:
Common Stock$(0.31)$(0.48)
Class B Common Stock$(0.28)$(0.44)
Net loss per share - diluted:
Common Stock$(0.31)$(0.48)
Class B Common Stock$(0.28)$(0.44)
For the periods when the Company reports a net loss, common stock equivalents are excluded from the computation of diluted loss per share as their inclusion would have an antidilutive effect. During the 13 weeks ended March 30, 2023 and March 31, 2022, respectively, approximately 41,869 and 81,076 common stock equivalents were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 13 weeks ended March 30, 2023, and March 31, 2022, respectively, 9,170,800 and 9,084,924 shares related to the convertible notes were excluded from the computation of diluted loss per share as the effect would have been anti-dilutive.
Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interest for the 13 weeks ended March 30, 2023 and March 31, 2022 was as follows:
Common
Stock
Class B
Common
Stock
Capital
in Excess
of Par
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Shareholders’
Equity
Attributable
to The
Marcus
Corporation
Non-
controlling
Interest
Total
Equity
BALANCES AT DECEMBER 29, 2022
$24,498 $7,111 $153,794 $274,254 $(1,694)$(1,866)$456,097 $824 $456,921 
Cash dividends:
$0.045 per share Class B Common Stock
— — — (319)— — (319)— (319)
$0.05 per share Common Stock
— — — (1,229)— — (1,229)— (1,229)
Exercise of stock options— — (1)— — 3 2 — 2 
Purchase of treasury stock— — — — — (313)(313)— (313)
Savings and profit-sharing contribution79 — 1,180 — — — 1,259 — 1,259 
Reissuance of treasury stock— — (3)— — 24 21 — 21 
Issuance of non-vested stock82 — (143)— — 61  —  
Shared-based compensation— — 2,172 — — — 2,172 — 2,172 
Other— — 1 (1)— —  —  
Conversions of Class B Common Stock33 (33)— — — —  —  
Distribution to noncontrolling interest— — — — — — — (550)(550)
Comprehensive income (loss)— — — (9,466)(91)— (9,557)— (9,557)
BALANCES AT MARCH 30, 2023$24,692 $7,078 $157,000 $263,239 $(1,785)$(2,091)$448,133 $274 $448,407 
Common
Stock
Class B
Common
Stock
Capital
in Excess
of Par
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Shareholders’
Equity
Attributable
to The
Marcus
Corporation
Non-
controlling
Interest
Total
Equity
BALANCES AT DECEMBER 30, 2021$24,345 $7,130 $145,656 $289,306 $(11,444)$(1,379)$453,614 $ $453,614 
Exercise of stock options— — (5)— — 31 26 — 26 
Purchase of treasury stock— — — — — (1,373)(1,373)— (1,373)
Savings and profit-sharing contribution56 — 900 — — — 956 — 956 
Reissuance of treasury stock— — 1 — — 8 9 — 9 
Issuance of non-vested stock78 — (236)— — 158  —  
Shared-based compensation— — 2,917 — — — 2,917 — 2,917 
Other— — 1 (1)—   —  
Conversions of Class B Common Stock19 (19)— — — —  —  
Comprehensive income (loss)— — — (14,902)531 — (14,371) (14,371)
BALANCES AT MARCH 31, 2022$24,498 $7,111 $149,234 $274,403 $(10,913)$(2,555)$441,778 $ $441,778 
Accumulated Other Comprehensive LossAccumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:
March 30,
2023
December 29,
2022
Unrecognized gain on interest rate swap agreements$ $80 
Net unrecognized actuarial loss for pension obligation(1,785)$(1,774)
$(1,785)$(1,694)
Fair Value Measurements - Certain financial assets and liabilities are recorded at fair value in the consolidated financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.
The Company’s assets and liabilities measured at fair value are classified in one of the following categories:
Level 1 - Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At March 30, 2023 and December 29, 2022, respectively, the Company’s $4,544 and $3,932 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets. At December 29, 2022, the Company’s $6,000 of investments in money market funds were valued using Level 1 pricing inputs and were included in cash and cash equivalents. The Company had no investments in money market funds at March 30, 2023.
Level 2 - Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At December 29, 2022, the Company’s $108 asset related to the Company’s interest rate swap contract was valued using Level 2 pricing inputs. This contracted terminated on March 1, 2023.
Level 3 - Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At March 30, 2023 and December 29, 2022, none of the Company’s recorded assets or liabilities that are measured on a recurring basis at fair market value were valued using Level 3 pricing inputs.
The carrying value of the Company’s financial instruments (including cash and cash equivalents, restricted cash, accounts receivable and accounts payable) approximates fair value. The fair value of the Company’s $80,000 of senior notes, valued using Level 2 pricing inputs, is approximately $72,554 at March 30, 2023, determined based upon discounted cash flows using current market interest rates for financial instruments with a similar average remaining life. The fair value of the Company's $100,050 of convertible senior notes, valued using Level 2 pricing inputs, is approximately $157,576 at March 30, 2023, determined based on market rates and the closing trading price of the convertible senior notes as of March 30, 2023. The carrying amounts of the Company’s remaining long-term debt approximate their fair values, determined using current rates for similar instruments, or Level 2 pricing inputs.
Defined Benefit Plan - The components of the net periodic pension cost of the Company’s unfunded nonqualified, defined-benefit plan are as follows:
13 Weeks Ended
March 30, 2023March 31, 2022
Service cost$122 $264 
Interest cost453 335 
Net amortization of prior service cost and actuarial loss(16)257 
Net periodic pension cost$559 $856 
Service cost is included in Administrative expense while all other components are recorded within Other expense outside of operating income in the consolidated statements of earnings.




Revenue RecognitionThe disaggregation of revenues by business segment for the 13 weeks ended March 30, 2023 is as follows:
13 Weeks Ended March 30, 2023
TheatresHotels/Resorts CorporateTotal
Theatre admissions$47,635 $— $— $47,635 
Rooms— 17,857 — 17,857 
Theatre concessions42,375 — — 42,375 
Food and beverage— 15,193 — 15,193 
Other revenues(1)
6,366 13,233 89 19,688 
Cost reimbursements 9,528 — 9,528 
Total revenues$96,376 $55,811 $89 $152,276 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.
The disaggregation of revenues by business segment for the 13 weeks ended March 31, 2022 is as follows:
13 Weeks Ended March 31, 2022
TheatresHotels/ResortsCorporateTotal
Theatre admissions$38,417 $— $— $38,417 
Rooms— 17,430 — 17,430 
Theatre concessions35,464 — — 35,464 
Food and beverage— 14,511 — 14,511 
Other revenues(1)
5,610 13,103 94 18,807 
Cost reimbursements 7,613 — 7,613 
Total revenues$79,491 $52,657 $94 $132,242 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.
The Company had deferred revenue from contracts with customers of $37,561 and $37,046 as of March 30, 2023 and December 29, 2022, respectively. The Company had no contract assets as of March 30, 2023 and December 29, 2022. During the 13 weeks ended March 30, 2023, the Company recognized revenue of $6,276 that was included in deferred revenues as of December 29, 2022. During the 13 weeks ended March 31, 2022, the Company recognized revenue of $5,383 that was included in deferred revenues as of December 30, 2021. The majority of the Company’s deferred revenue relates to non-redeemed gift cards, advanced ticket sales and the Company’s loyalty program.
As of March 30, 2023, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $2,347 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. As of March 30, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $17,535
and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the tickets and gift cards are redeemed, which is expected to occur within the next two years.
As of March 30, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was $3,862 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the gift cards are redeemed, which is expected to occur within the next two years.
The majority of the Company’s revenue is recognized in less than one year from the original contract.

2. Long-Term Debt
Long-term debt is summarized as follows:
March 30, 2023December 29, 2022
Senior notes$80,000 $80,000 
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75%
850 954 
Convertible senior notes100,050 100,050 
Payroll Protection Program loans1,914 2,240 
Revolving credit agreement9,000  
Debt issuance costs(2,557)(2,807)
Total debt, net of debt issuance costs189,257 180,437 
Less current maturities, net of issuance costs10,339 10,432 
Long-term debt$178,918 $170,005 
Credit Agreement
On January 9, 2020, the Company replaced its then-existing credit agreement with several banks. On April 29, 2020, the Company entered into the First Amendment, on September 15, 2020, the Company entered into the Second Amendment, on July 13, 2021, the Company entered into the Third Amendment, on July 29, 2022, the Company entered into the Fourth Amendment and on February 10, 2023, the Company entered into the Fifth Amendment (the Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment, hereinafter referred to as the “Credit Agreement”).
The Credit Agreement provides for a revolving credit facility that matures on January 9, 2025 with an initial maximum aggregate amount of availability of $225,000. At March 30, 2023, there were borrowings of $9,000 outstanding on the revolving credit facility, which when borrowed, bear interest at the secured overnight financing rate (“SOFR”) plus a margin, effectively 9.35% at March 30, 2023. Availability under the line at March 30, 2023, was $212,773, after taking into consideration outstanding letters of credit that reduce revolver availability.
Effective with the Fifth Amendment on February 10, 2023, the variable rate LIBOR benchmark in the Credit Agreement was replaced with SOFR. Borrowings under the Credit Agreement now generally bear interest at a variable rate equal to: (i) SOFR plus a credit spread adjustment of 0.10%, subject to a 0% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 30, 2023
(in thousands, except share and per share data)

generally requires the Company to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment, the Second Amendment and the Fifth Amendment: (A) in respect of revolving loans, (1) the Company is charged a facility fee equal to 0.40% of the total revolving credit facility commitment and (2) the specified margin is 2.35% for SOFR borrowings and 1.35% for ABR borrowings, which facility fee rate and specified margins will remain in effect until the end of the first fiscal quarter ending after the end of any period in which the testing of any financial covenant in the Credit Agreement is suspended (the “specified period”); and (B) in respect of term loans, the specified margin is 2.75% for SOFR borrowings and 1.75% for ABR borrowings, in each case, at all times.
The Credit Agreement contains various restrictions and covenants. Among other requirements, the Credit Agreement (a) limits the amount of priority debt (as defined in the Credit Agreement) held by the Company’s restricted subsidiaries to no more than 20% of the Company’s consolidated total capitalization (as defined in the Credit Agreement), (b) limits the Company’s permissible consolidated debt to capitalization ratio to a maximum of 0.55 to 1.0, (c) requires the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, and (d) restricts the Company’s ability to incur additional indebtedness and make voluntary prepayments on or defeasance of the Company’s 4.02% Senior Notes due August 2025, 4.32% Senior Notes due February 2027, the notes or certain other convertible securities. Beginning with the first quarter of fiscal 2023, the Company has returned to compliance with prior financial covenants under the Credit Agreement that were temporarily waived (specifically, the consolidated fixed charge coverage ratio), removing any limitations on the total amount of quarterly dividends or share repurchases. During fiscal 2022 the Credit Agreement limited the total amount of quarterly dividend payments or share repurchases to no more than $1,550 per quarter.
In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the Credit Agreement).
The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
Note Purchase Agreements
At March 30, 2023 and December 29, 2022, the Company’s $80,000 of senior notes consist of two Purchase Agreements maturing in 2025 through 2027, require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 4.32%.
Convertible Senior Notes
On September 17, 2020, the Company entered into a purchase agreement to issue and sell $100,050 aggregate principal amount of its 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes.”) The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between the Company and U.S. Bank National Association, as trustee.
The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00% per year. Interest will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021. The Convertible Notes may bear additional interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the Convertible Notes are not freely tradeable as required by the Indenture. The Convertible Notes will mature on September 15, 2025, unless earlier repurchased or converted. Prior to March 15, 2025, the Convertible Notes will be convertible at the option of the holders only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending on December 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 30, 2023
(in thousands, except share and per share data)

of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period immediately after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
Upon conversion, the Convertible Notes may be settled, at the Company’s election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate was 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $11.01 per share of Common Stock), representing an initial conversion premium of approximately 22.5% to the $8.99 last reported sale price of the Common Stock on The New York Stock Exchange on September 17, 2020. The conversion rate is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At March 30, 2023, the applicable conversion rate is 91.6622 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an applicable conversion price of approximately $10.91 per share of Common Stock). If the Company undergoes certain fundamental changes, holders of Convertible Notes may require the Company to repurchase for cash all or part of their Convertible Notes for a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change occurs prior to the maturity date, the Company will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. The Company may not redeem the Convertible Notes before maturity and no “sinking fund” is provided for the Convertible Notes. The Indenture includes covenants customary for securities similar to the Convertible Notes, sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company and certain of its subsidiaries after which the Convertible Notes become automatically due and payable.
Since the Company’s fiscal 2021 second quarter through the Company’s fiscal 2023 second quarter, the Company’s Convertible Notes were (are) eligible for conversion at the option of the holders as the last reported sale price of the Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days during the last 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. The Company has the ability to settle the conversion in Company stock. As such, the Convertible Notes will continue to be classified as long-term. Future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s Common Stock during the prescribed measurement period. No Convertible Notes have been converted to date and the Company does not expect any to be converted within the next 12 months.
In connection with the pricing of the Convertible Notes on September 17, 2020, and in connection with the exercise by the Initial Purchasers (as defined in the Convertible Notes purchase agreement) of their option to purchase additional Convertible Notes on September 18, 2020, the Company entered into privately negotiated Capped Call Transactions (the “Capped Call Transactions”) with certain of the Initial Purchasers and/or their respective affiliates and/or other financial institutions (the “Capped Call Counterparties”). The Capped Call Transactions are expected generally to reduce potential dilution of the Company’s common stock upon any conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, in the event that the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, is greater than the strike price of the Capped Call Transactions, which initially corresponds to the conversion price of the Convertible Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution to the extent that such market price exceeds the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions was initially $17.98 per share (in no event shall the cap price be less than the strike price of $11.0128), which represents a premium of 100% over the last reported sale price of the
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 30, 2023
(in thousands, except share and per share data)

Common Stock of $8.99 per share on The New York Stock Exchange on September 17, 2020. Under the terms of the Capped Call Transactions, the cap price is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At March 30, 2023, the adjusted cap price is approximately $17.81 per share. The Capped Call Transactions are separate transactions entered into by the Company with the Capped Call Counterparties, are not part of the terms of the Convertible Notes and will not change the rights of holders of the Convertible Notes under the Convertible Notes and the Indenture.
3. Leases
The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASU No. 2016-02, Leases (Topic 842). The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease.
The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
Total lease cost consists of the following:
13 Weeks Ended
Lease CostClassificationMarch 30, 2023March 31, 2022
Finance lease costs: 
Amortization of finance lease assetsDepreciation and amortization$691 $705 
Interest on lease liabilitiesInterest expense198 221 
$889 $926 
Operating lease costs:
Operating lease costsRent expense$6,044 $6,377 
Variable lease costRent expense416 (163)
Short-term lease costRent expense33 36 
$6,493 $6,250 
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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 30, 2023
(in thousands, except share and per share data)

Additional information related to leases is as follows:
13 Weeks Ended
Other InformationMarch 30, 2023March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases$556 $584 
Operating cash flows from finance leases198 221 
Operating cash flows from operating leases6,430 7,124 
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities 72 
Operating lease liabilities 183 
March 30, 2023December 29, 2022
Finance leases:
Property and equipment – gross$29,885 $29,885 
Accumulated depreciation and amortization(16,022)(15,332)
Property and equipment - net$13,863 $14,553 
Remaining lease terms and discount rates are as follows:
Lease Term and Discount RateMarch 30, 2023December 29, 2022
Weighted-average remaining lease terms:
Finance leases7 years7 years
Operating leases12 years12 years
Weighted-average discount rates:
Finance leases4.59 %4.59 %
Operating leases4.51 %4.51 %
Deferred rent payments of approximately $790 for the Company’s operating leases have been included in the total operating lease obligations as of March 30, 2023, of which approximately $587 is included in long-term operating lease obligations.
4. Income Taxes
The Company’s effective income tax rate for the 13 weeks ended March 30, 2023 and March 31, 2022 was 23.1% and 30.5%, respectively. During the 13 weeks ended March 31, 2022, the Company received $22,959 of income tax refunds related to its fiscal 2020 tax return, including $636 of interest which is included within income tax benefit in the consolidated statement of earnings (loss).
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 30, 2023
(in thousands, except share and per share data)


5. Business Segment Information
The Company’s primary operations are reported in the following business segments: Theatres and Hotels/Resorts. 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.
Following is a summary of business segment information for the 13 weeks ended March 30, 2023 and March 31, 2022:
13 Weeks EndedTheatresHotels/
Resorts
Corporate
Items
Total
March 30, 2023
Revenues$96,376 $55,811 $89 $152,276 
Operating income (loss)1,519 (5,032)(5,475)(8,988)
Depreciation and amortization11,488 4,301 87 15,876 
13 Weeks EndedTheatresHotels/
Resorts
Corporate
Items
Total
March 31, 2022
Revenues$79,491 $