General

9 Months Ended

Sep. 28, 2023

Basis of Presentation - The unaudited consolidated financial statements for the 13 and 39 weeks ended September 28, 2023 and September 29, 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 September 28, 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 $19,150 and $51,004 for the 13 and 39 weeks ended September 28, 2023, respectively, and $16,444 and $50,411 for the 13 and 39 weeks ended September 29, 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 September 28, 2023, assets held for sale consists of excess land and one closed theatre.

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.

During the 13 weeks ended September 28, 2023, the Company determined that indicators of impairment were present at one theatre asset group. As such, the Company evaluated the fair value of these assets, consisting primarily of land, building and furniture, fixtures and equipment, and determined that the fair value, measured using Level 3 pricing inputs (using estimated discounted cash flows over the life of the primary asset, including estimated sales proceeds) was less than their carrying values and recorded a $684 impairment loss, reducing certain property and equipment assets. The remaining net book value of the impaired assets as of the date of the asset write-down (September 28, 2023) was $3,040. There were no indicators of impairment identified during the 39 weeks ended September 29, 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 39 weeks ended September 28, 2023 or September 29, 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 Ended				39 Weeks Ended
	September 28, 2023		September 29, 2022		September 28, 2023		September 29, 2022

Numerator:
Net earnings (loss)	$	12,234	$	3,289	$	16,234	$	(2,653)
Denominator (in thousands):
Denominator for basic EPS	31,691		31,506		31,645		31,481
Effect of dilutive employee stock options	41		84		48		—
Effect of convertible notes	9,242		9,112		9,242		—
Denominator for diluted EPS	40,974		40,702		40,935		31,481
Net earnings (loss) per share - basic:
Common Stock	$	0.39	$	0.11	$	0.52	$	(0.09)
Class B Common Stock	$	0.36	$	0.10	$	0.48	$	(0.08)
Net earnings (loss) per share - diluted:
Common Stock	$	0.32	$	0.10	$	0.46	$	(0.09)
Class B Common Stock	$	0.31	$	0.10	$	0.46	$	(0.08)

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 39 weeks ended September 29, 2022, approximately 76,714 common stock equivalents were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 39 weeks ended September 29, 2022, 9,111,846 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 39 weeks ended September 28, 2023 and September 29, 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 contribution	79		—		1,180		—		—		—		1,259		—		1,259
Reissuance of treasury stock	—		—		(3)		—		—		24		21		—		21
Issuance of non-vested stock	82		—		(143)		—		—		61		—		—		—
Shared-based compensation	—		—		2,172		—		—		—		2,172		—		2,172
Other	—		—		1		(1)		—		—		—		—		—
Conversions of Class B Common Stock	33		(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
Cash dividends:
$0.064 per share Class B Common Stock	—		—		—		(453)		—		—		(453)		—		(453)
$0.07 per share Common Stock	—		—		—		(1,723)		—		—		(1,723)		—		(1,723)
Exercise of stock options	—		—		(184)		—		—		1,171		987		—		987
Purchase of treasury stock	—		—		—		—		—		(914)		(914)		—		(914)
Reissuance of treasury stock	—		—		(3)		—		—		27		24		—		24
Issuance of non-vested stock	—		—		(53)		—		—		53		—		—		—
Shared-based compensation	—		—		1,313		—		—		—		1,313		—		1,313
Comprehensive income	—		—		—		12,234		(12)		—		12,222		—		12,222
BALANCES AT SEPTEMBER 28, 2023	$	24,692	$	7,078	$	159,304	$	285,215	$	(1,809)	$	(1,582)	$	472,898	$	—	$	472,898


	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 contribution	56		—		900		—		—		—		956		—		956
Reissuance of treasury stock	—		—		1		—		—		8		9		—		9
Issuance of non-vested stock	78		—		(236)		—		—		158		—		—		—
Shared-based compensation	—		—		2,917		—		—		—		2,917		—		2,917
Other	—		—		1		(1)		—		—		—		—		—
Conversions of Class B Common Stock	19		(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
Other	—		—		(1)		1		—		—		—		—		—

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
Cash dividends:
$0.045 per share Class B Common Stock	—		—		—		(320)		—		—		(320)		—		(320)
$0.05 per share Common Stock	—		—		—		(1,220)		—		—		(1,220)		—		(1,220)
Exercise of stock options	—		—		(175)		—		—		988		813		—		813
Purchase of treasury stock	—		—		—		—		—		(809)		(809)		—		(809)
Reissuance of treasury stock	—		—		(2)		—		—		20		18		—		18
Issuance of non-vested stock	—		—		(131)		—		—		131		—		—		—
Shared-based compensation	—		—		2,464		—		—		—		2,464		—		2,464
Comprehensive income	—		—		—		3,289		260		—		3,549		—		3,549
BALANCES AT SEPTEMBER 29, 2022	$	24,498	$	7,111	$	152,721	$	285,113	$	(10,269)	$	(1,946)	$	457,228	$	—	$	457,228

Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:


	September 28, 2023		December 29, 2022

Unrecognized gain on interest rate swap agreements	$	—	$	80
Net unrecognized actuarial loss for pension obligation	(1,809)		$	(1,774)
	$	(1,809)	$	(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 September 28, 2023 and December 29, 2022, respectively, the Company’s $4,964 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 September 28, 2023 and December 29, 2022, respectively, the Company’s $27,003 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 contract 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 September 28, 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. Assets that are measured on a non-recurring basis are discussed above under Long-Lived Assets.

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 $70,000 of senior notes, valued using Level 2 pricing inputs, is approximately $62,406 at September 28, 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 $154,936 at September 28, 2023, determined based on market rates and the closing trading price of the convertible senior notes as of September 28, 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				39 Weeks Ended
	September 28, 2023		September 29, 2022		September 28, 2023		September 29, 2022

Service cost	$	122	$	263	$	366	$	791
Interest cost	453		335		1,358		1,005
Net amortization of prior service cost and actuarial loss	(16)		258		(48)		772
Net periodic pension cost	$	559	$	856	$	1,676	$	2,568

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 Recognition – The disaggregation of revenues by business segment for the 13 and 39 weeks ended September 28, 2023 is as follows:


	13 Weeks Ended September 28, 2023
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	63,652	$	—	$	—	$	63,652
Rooms	—		36,456		—		36,456
Theatre concessions	54,551		—		—		54,551
Food and beverage	—		20,214		—		20,214
Other revenues(1)	8,382		15,443		83		23,908
Cost reimbursements	—		9,985		—		9,985
Total revenues	$	126,585	$	82,098	$	83	$	208,766


	39 Weeks Ended September 28, 2023
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	180,274	$	—	$	—	$	180,274
Rooms	—		82,959		—		$	82,959
Theatre concessions	156,633		—		—		$	156,633
Food and beverage	—		53,980		—		$	53,980
Other revenues(1)	22,904		41,857		263		$	65,024
Cost reimbursements	—		29,179		—		$	29,179
Total revenues	$	359,811	$	207,975	$	263	$	568,049

(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 39 weeks ended September 29, 2022 is as follows:


	13 Weeks Ended September 29, 2022
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	49,424	$	—	$	—	$	49,424
Rooms	—		36,924		—		36,924
Theatre concessions	44,715		—		—		44,715
Food and beverage	—		21,444		—		21,444
Other revenues(1)	7,119		14,963		92		22,174
Cost reimbursements	—		8,969		—		8,969
Total revenues	$	101,258	$	82,300	$	92	$	183,650


	39 Weeks Ended September 29, 2022
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	150,928	$	—	$	—	$	150,928
Rooms	—		83,219		—		83,219
Theatre concessions	138,326		—		—		138,326
Food and beverage	—		54,969		—		54,969
Other revenues(1)	20,932		40,938		303		62,173
Cost reimbursements	—		24,832		—		24,832
Total revenues	$	310,186	$	203,958	$	303	$	514,447

(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 $36,934 and $37,046 as of September 28, 2023 and December 29, 2022, respectively. The Company had no contract assets as of September 28, 2023 and December 29, 2022. During the 39 weeks ended September 28, 2023, the Company recognized revenue of $14,545 that was included in deferred revenues as of December 29, 2022. During the 39 weeks ended September 29, 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 September 28, 2023, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $1,882 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. As of September 28, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $15,317 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 September 28, 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 $3,707 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.