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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 June 29, 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 JULY 31, 2023 – 24,611,944
CLASS B COMMON STOCK OUTSTANDING AT JULY 31, 2023 –7,078,410


Table of Contents


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)
June 29,
2023
December 29,
2022
ASSETS
Current assets:
Cash and cash equivalents$44,580 $21,704 
Restricted cash4,274 2,802 
Accounts receivable, net of reserves of $163 and $172, respectively
20,591 21,455 
Assets held for sale558 460 
Other current assets21,579 17,474 
Total current assets91,582 63,895 
Property and equipment:
Land and improvements131,229 132,285 
Buildings and improvements730,955 729,177 
Leasehold improvements167,873 167,516 
Furniture, fixtures and equipment397,710 386,197 
Finance lease right-of-use assets29,998 29,885 
Construction in progress5,461 10,305 
Total property and equipment1,463,226 1,455,365 
Less accumulated depreciation and amortization764,048 739,600 
Net property and equipment699,178 715,765 
Operating lease right-of-use assets187,275 194,965 
Other assets:
Investments in joint ventures1,865 2,067 
Goodwill74,996 75,015 
Other13,054 12,891 
Total other assets89,915 89,973 
TOTAL ASSETS$1,067,950 $1,064,598 
See accompanying condensed notes to consolidated financial statements.
3

Table of Contents


THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
June 29,
2023
December 29,
2022
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$40,636 $32,187 
Income taxes361  
Taxes other than income taxes19,618 17,948 
Accrued compensation18,901 22,512 
Other accrued liabilities56,861 56,275 
Current portion of finance lease obligations2,538 2,488 
Current portion of operating lease obligations14,596 14,553 
Current maturities of long-term debt10,391 10,432 
Total current liabilities163,902 156,395 
Finance lease obligations13,899 15,014 
Operating lease obligations187,026 195,281 
Long-term debt169,784 170,005 
Deferred income taxes27,292 26,567 
Other long-term obligations44,605 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 June 29, 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 June 29, 2023 and 7,110,875 shares at December 29, 2022
7,078 7,111 
Capital in excess of par158,231 153,794 
Retained earnings275,157 274,254 
Accumulated other comprehensive loss(1,797)(1,694)
463,361 457,963 
Less cost of Common Stock in treasury (90,888 shares at June 29, 2023 and 78,882 shares at December 29, 2022)
(1,919)(1,866)
Total shareholders’ equity attributable to The Marcus Corporation461,442 456,097 
Noncontrolling interest 824 
Total equity461,442 456,921 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,067,950 $1,064,598 
See accompanying condensed notes to consolidated financial statements.
4

Table of Contents


THE MARCUS CORPORATION
Consolidated Statements of Earnings (Loss)
(in thousands, except per share data)
13 Weeks Ended26 Weeks Ended
June 29,
2023
June 30,
2022
June 29,
2023
June 30,
2022
Revenues:
Theatre admissions$68,987 $63,087 $116,622 $101,504 
Rooms28,646 28,865 46,503 46,295 
Theatre concessions59,707 58,147 102,082 93,611 
Food and beverage18,573 19,014 33,766 33,525 
Other revenues21,428 21,192 41,116 39,999 
197,341 190,305 340,089 314,934 
Cost reimbursements9,666 8,250 19,194 15,863 
Total revenues207,007 198,555 359,283 330,797 
Costs and expenses:
Theatre operations66,905 61,737 117,974 106,165 
Rooms10,360 10,471 19,638 18,674 
Theatre concessions22,601 22,993 38,331 38,186 
Food and beverage14,451 15,035 28,019 27,175 
Advertising and marketing5,613 5,978 10,678 10,459 
Administrative19,466 17,627 39,317 36,708 
Depreciation and amortization15,994 16,752 31,870 33,983 
Rent6,594 6,578 13,087 12,828 
Property taxes4,532 4,980 9,289 9,725 
Other operating expenses10,015 9,261 20,064 18,935 
Reimbursed costs9,666 8,250 19,194 15,863 
Total costs and expenses186,197 179,662 347,461 328,701 
Operating income20,810 18,893 11,822 2,096 
Other income (expense):
Investment income (loss)359 (459)619 (727)
Interest expense(3,093)(4,063)(6,101)(8,155)
Other income (expense)(477)(653)(878)(806)
Equity earnings (losses) from unconsolidated joint ventures(31)7 (202)(134)
(3,242)(5,168)(6,562)(9,822)
Earnings (loss) before income taxes17,568 13,725 5,260 (7,726)
Income tax expense (benefit)4,102 4,765 1,260 (1,784)
Net earnings (loss)$13,466 $8,960 $4,000 $(5,942)
Net earnings (loss) per share - basic:
Common Stock$0.43 $0.29 $0.13 $(0.19)
Class B Common Stock$0.39 $0.26 $0.12 $(0.18)
Net earnings (loss) per share - diluted:
Common Stock$0.35 $0.24 $0.13 $(0.19)
Class B Common Stock$0.34 $0.23 $0.12 $(0.18)
See accompanying condensed notes to consolidated financial statements.
5

Table of Contents


THE MARCUS CORPORATION
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
13 Weeks Ended26 Weeks Ended
June 29,
2023
June 30,
2022
June 29,
2023
June 30,
2022
Net earnings (loss)$13,466 $8,960 $4,000 $(5,942)
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 $(4), $67, $(9) and $134, respectively
(12)190 (23)380 
Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $0, $37, $(8) and $116, respectively
 106 (22)329 
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect (benefit) of $0, $31, $(20) and $72, respectively
 88 (58)206 
Other comprehensive income (loss)(12)384 (103)915 
Comprehensive income (loss)$13,454 $9,344 $3,897 $(5,027)













See accompanying condensed notes to consolidated financial statements.
6

Table of Contents


THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
26 Weeks Ended
June 29, 2023June 30, 2022
OPERATING ACTIVITIES:
Net income (loss)$4,000 $(5,942)
Adjustments to reconcile net loss to net cash provided by operating activities:
Losses on investments in joint ventures202 134 
(Gain) loss on disposition of property, equipment and other assets777 (355)
Depreciation and amortization31,870 33,983 
Amortization of debt issuance costs742 826 
Share-based compensation3,687 4,572 
Deferred income taxes780 (1,505)
Other long-term obligations176 (49)
Contribution of the Company’s stock to savings and profit-sharing plan1,259 956 
Changes in operating assets and liabilities:
Accounts receivable895 2,629 
Government grants receivable 4,335 
Other assets(1,796)(4,294)
Operating leases (522)(1,047)
Accounts payable6,341 551 
Income taxes94 22,720 
Taxes other than income taxes1,670 (347)
Accrued compensation(3,634)(1,595)
Other accrued liabilities785 (344)
Total adjustments43,326 61,170 
Net cash provided by operating activities47,326 55,228 
INVESTING ACTIVITIES:
Capital expenditures(15,896)(16,341)
Proceeds from disposals of property, equipment and other assets46 4,821 
Proceeds from sale of trading securities17  
Purchase of trading securities(514) 
Other investing activities(295)45 
Net cash used in investing activities(16,642)(11,475)
FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility38,000 22,000 
Repayment of borrowings on revolving credit facility(38,000)(22,000)
Repayments on short-term borrowings (820)
Principal payments on long-term debt(763)(851)
Debt issuance costs(50) 
Principal payments on finance lease obligations(1,201)(1,336)
Equity transactions:
Treasury stock transactions, except for stock options(494)(1,461)
Exercise of stock options93 79 
Dividends paid(3,097) 
Distributions to noncontrolling interest(824) 
Net cash used in financing activities(6,336)(4,389)
Net increase in cash, cash equivalents and restricted cash24,348 39,364 
Cash, cash equivalents and restricted cash at beginning of period24,506 24,054 
Cash, cash equivalents and restricted cash at end of period$48,854 $63,418 
Supplemental Information:
Interest paid, net of amounts capitalized$4,622 $7,054 
Income taxes refunded (paid), including interest earned(386)22,998 
Change in accounts payable for additions to property, equipment and other assets2,096 2,003 
See accompanying condensed notes to consolidated financial statements.
7

Table of Contents
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED JUNE 29, 2023
(in thousands, except share and per share data)


1. General
Basis of Presentation - The unaudited consolidated financial statements for the 13 and 26 weeks ended June 29, 2023 and June 30, 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 June 29, 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.
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 $15,986 and $31,854 for the 13 and 26 weeks ended June 29, 2023, respectively, and $16,744 and $33,967 for the 13 and 26 weeks ended June 30, 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 June 29, 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 26 weeks ended June 29, 2023 or June 30, 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 26 weeks ended June 29, 2023 or June 30, 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 earnings (loss) per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:
13 Weeks Ended26 Weeks Ended
June 29, 2023June 30, 2022June 29, 2023June 30, 2022
Numerator:
Net earnings (loss) $13,466 $8,960 $4,000 $(5,942)
Denominator (in thousands):
Denominator for basic EPS31,673 31,492 31,622 31,469 
Effect of dilutive employee stock options61 40 52  
Effect of convertible notes9,201 9,085   
Denominator for diluted EPS40,935 40,617 31,674 31,469 
Net earnings (loss) per share - basic:
Common Stock$0.43 $0.29 $0.13 $(0.19)
Class B Common Stock$0.39 $0.26 $0.12 $(0.18)
Net earnings (loss) per share - diluted:
Common Stock$0.35 $0.24 $0.13 $(0.19)
Class B Common Stock$0.34 $0.23 $0.12 $(0.18)
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 26 weeks ended June 30, 2022, approximately 61,791 common stock equivalents were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 26 weeks ended June 29, 2023, and June 30, 2022, respectively, 9,200,907 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 and 26 weeks ended June 29, 2023 and June 30, 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 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 
Cash dividends:
$0.045 per share Class B Common Stock
— — — (319)— — (319)— (319)
$0.05 per share Common Stock
— — — (1,230)— — (1,230)— (1,230)
Exercise of stock options— — (25)— — 121 96 — 96 
Purchase of treasury stock— — — — — (226)(226)— (226)
Reissuance of treasury stock— — (204)— — 223 19 — 19 
Issuance of non-vested stock — (55)— — 55  —  
Shared-based compensation— — 1,515 — — — 1,515 — 1,515 
Other— —  1 — (1) —  
Distribution to noncontrolling interest— — — — — —  (274)(274)
Comprehensive income (loss)— — — 13,466 (12)— 13,454 — 13,454 
BALANCES AT JUNE 29, 2023$24,692 $7,078 $158,231 $275,157 $(1,797)$(1,919)$461,442 $ $461,442 
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 
Exercise of stock options— — (16)— — 69 53 — 53 
Purchase of treasury stock— — — — — (104)(104)— (104)
Reissuance of treasury stock— — (2)— — 9 7 — 7 
Issuance of non-vested stock — (305)— — 305  —  
Shared-based compensation— — 1,655 — — — 1,655 — 1,655 
Comprehensive income— — — 8,960 384 — 9,344  9,344 
BALANCES AT JUNE 30, 2022
$24,498 $7,111 $150,565 $283,364 $(10,529)$(2,276)$452,733 $ $452,733 
Accumulated Other Comprehensive LossAccumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:
June 29,
2023
December 29,
2022
Unrecognized gain on interest rate swap agreements$ $80 
Net unrecognized actuarial loss for pension obligation(1,797)$(1,774)
$(1,797)$(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 June 29, 2023 and December 29, 2022, respectively, the Company’s $4,894 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 June 29, 2023 and December 29, 2022, respectively, the Company’s $34,999 and $6,000 of investments in money market funds were valued using Level 1 pricing inputs and were included in cash and cash equivalents.
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 June 29, 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 $72,187 at June 29, 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 $150,020 at June 29, 2023, determined based on market rates and the closing trading price of the convertible senior notes as of June 29, 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 Ended26 Weeks Ended
June 29, 2023June 30, 2022June 29, 2023June 30, 2022
Service cost$122 $264 $244 $528 
Interest cost452 335 905 670 
Net amortization of prior service cost and actuarial loss(16)257 (32)514 
Net periodic pension cost$558 $856 $1,117 $1,712 
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 and 26 weeks ended June 29, 2023 is as follows:
13 Weeks Ended June 29, 2023
TheatresHotels/Resorts CorporateTotal
Theatre admissions$68,987 $— $— $68,987 
Rooms— 28,646 — 28,646 
Theatre concessions59,707 — — 59,707 
Food and beverage— 18,573 — 18,573 
Other revenues(1)
8,156 13,181 91 21,428 
Cost reimbursements 9,666 — 9,666 
Total revenues$136,850 $70,066 $91 $207,007 
26 Weeks Ended June 29, 2023
TheatresHotels/Resorts CorporateTotal
Theatre admissions$116,622 $— $— $116,622 
Rooms— 46,503 — $46,503 
Theatre concessions102,082 — — $102,082 
Food and beverage— 33,766 — $33,766 
Other revenues(1)
14,522 26,414 180 $41,116 
Cost reimbursements 19,194 — $19,194 
Total revenues$233,226 $125,877 $180 $359,283 
(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 and 26 weeks ended June 30, 2022 is as follows:
13 Weeks Ended June 30, 2022
TheatresHotels/ResortsCorporateTotal
Theatre admissions$63,087 $— $— $63,087 
Rooms— 28,865 — 28,865 
Theatre concessions58,147 — — 58,147 
Food and beverage— 19,014 — 19,014 
Other revenues(1)
8,203 12,872 117 21,192 
Cost reimbursements 8,250 — 8,250 
Total revenues$129,437 $69,001 $117 $198,555 
26 Weeks Ended June 30, 2022
TheatresHotels/ResortsCorporateTotal
Theatre admissions$101,504 $— $— $101,504 
Rooms— 46,295 — 46,295 
Theatre concessions93,611 — — 93,611 
Food and beverage— 33,525 — 33,525 
Other revenues(1)
13,813 25,975 211 39,999 
Cost reimbursements 15,863 — 15,863 
Total revenues$208,928 $121,658 $211 $330,797 
(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 $37,670 and $37,046 as of June 29, 2023 and December 29, 2022, respectively. The Company had no contract assets as of June 29, 2023 and December 29, 2022. During the 26 weeks ended June 29, 2023, the Company recognized revenue of $10,875 that was included in deferred revenues as of December 29, 2022. During the 26 weeks ended June 30, 2022, the Company recognized revenue of $9,448 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 June 29, 2023, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $1,980 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. As of June 29, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $16,318 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 June 29, 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 $3,834 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:
June 29, 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%
744 954 
Convertible senior notes100,050 100,050 
Payroll Protection Program loans1,687 2,240 
Revolving credit agreement  
Debt issuance costs(2,306)(2,807)
Total debt, net of debt issuance costs180,175 180,437 
Less current maturities, net of issuance costs10,391 10,432 
Long-term debt$169,784 $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 June 29, 2023, there were borrowings of $0 outstanding on the revolving credit facility, which when borrowed, bear interest at the secured overnight financing rate (“SOFR”) plus a margin, effectively 6.22% at June 29, 2023. Availability under the line at June 29, 2023, was $220,623, 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%
8

Table of Contents
THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED JUNE 29, 2023
(in thousands, except share and per share data)

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 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.
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 June 29, 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 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
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED JUNE 29, 2023
(in thousands, except share and per share data)

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 June 29, 2023, the applicable conversion rate is 91.9631 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an applicable conversion price of approximately $10.87 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 third 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 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 June 29, 2023, the adjusted cap price is approximately $17.75 per share. The Capped Call Transactions are separate transactions entered into by the Company with the Capped Call Counterparties, are not part
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED JUNE 29, 2023
(in thousands, except share and per share data)

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 Ended26 Weeks Ended
Lease CostClassificationJune 29, 2023June 30, 2022June 29, 2023June 30, 2022
Finance lease costs: 
Amortization of finance lease assetsDepreciation and amortization$688 $696 $1,379 $1,401 
Interest on lease liabilitiesInterest expense192 216 390 437 
$880 $912 $1,769 $1,838 
Operating lease costs:
Operating lease costsRent expense$6,033 $6,364 $12,077 $12,741 
Variable lease costRent expense527 178 943 15 
Short-term lease costRent expense34 36 67 72 
$6,594 $6,578 $13,087 $12,828 
Additional information related to leases is as follows:
13 Weeks Ended26 Weeks Ended
Other InformationJune 29, 2023June 30, 2022June 29, 2023June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases$645 $752 $1,201 $1,336 
Operating cash flows from finance leases192 216 390 437 
Operating cash flows from operating leases6,429 7,012 12,859 $14,136 
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities136 116 136 188 
Operating lease liabilities   183 
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED JUNE 29, 2023
(in thousands, except share and per share data)

June 29, 2023December 29, 2022
Finance leases:
Property and equipment – gross$29,997 $29,885 
Accumulated depreciation and amortization(16,687)(15,332)
Property and equipment - net$13,310 $14,553 
Remaining lease terms and discount rates are as follows:
Lease Term and Discount RateJune 29, 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 $753 for the Company’s operating leases have been included in the total operating lease obligations as of June 29, 2023, of which approximately $550 is included in long-term operating lease obligations.
4. Income Taxes
The Company’s effective income tax rate for the 13 and 26 weeks ended June 29, 2023 was 23.3% and 24.0%, respectively, and was 34.7% and 23.1% for the 13 and 26 weeks ended June 30, 2022, respectively. The effective tax rate for the 13 weeks ended June 30, 2022 includes discrete tax expense related to various matters. During the 26 weeks ended June 30, 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).
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.
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THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED JUNE 29, 2023
(in thousands, except share and per share data)

Following is a summary of business segment information for the 13 and 26 weeks ended June 29, 2023 and June 30, 2022:
13 Weeks EndedTheatresHotels/
Resorts
Corporate
Items
Total
June 29, 2023
Revenues$136,850 $70,066 $91 $207,007 
Operating income (loss)19,811 6,105 (5,106)20,810 
Depreciation and amortization11,317 4,588 89 15,994 
13 Weeks EndedTheatresHotels/
Resorts
Corporate
Items
Total
June 30, 2022
Revenues$129,437 $69,001 $117 $198,555 
Operating income (loss)16,430 6,817 (4,354)18,893 
Depreciation and amortization11,863 4,801 88 16,752 
26 Weeks EndedTheatresHotels/
Resorts
Corporate
Items
Total
June 29, 2023
Revenues$233,226 $125,877 $180 $359,283 
Operating income (loss)21,330 1,073 (10,581)11,822 
Depreciation and amortization22,805 8,889 176 31,870 
26 weeks endedTheatresHotels/
Resorts
Corporate
Items
Total
June 30, 2022
Revenues$208,928 $121,658 $211 $330,797 
Operating income (loss)8,410 3,843 (10,157)2,096 
Depreciation and amortization24,054 9,751 178 33,983 
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THE MARCUS CORPORATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and elsewhere in this Form 10-Q 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 adverse effects the COVID-19 pandemic, or future pandemics, may have on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing an