8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

_______________________

Date of Report
(Date of earliest
event reported):	May 5, 2020

              The Marcus Corporation             

(Exact name of registrant as specified in its charter)

Wisconsin	1-12604	39-1139844
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

  100 East Wisconsin Avenue, Suite 1900, Milwaukee, Wisconsin 53202-4125  

(Address of principal executive offices, including zip code)

                    (414) 905-1000                    

(Registrant’s telephone number, including area code)

                    Not Applicable                    

(Former name or former address, if changed since last report)

_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17-CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17-CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1.00 par value	MCS	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

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. ¨

Item 2.02. Results of Operations and Financial Condition.

On May 5, 2020, The Marcus Corporation (the “Company”) issued a press release announcing its financial results for its first quarter ended March 26, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Certain matters discussed in the press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe the Company’s 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 of the COVID-19 pandemic (as defined below) on the Company’s theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service the Company’s existing and future indebtedness; (2) the duration of the COVID-19 pandemic and related shelter at home and social distancing requirements and the level of customer demand following the relaxation of such requirements; (3) the availability, in terms of both quantity and audience appeal, of motion pictures for the Company’s theatre division (particularly following the COVID-19 pandemic, during which the production of new movie content has essentially ceased), as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (4) the effects of adverse economic conditions in the Company’s markets, including but not limited to, those caused by the COVID-19 pandemic; (5) the effects of adverse economic conditions on the Company’s occupancy and room rates caused by the COVID-19 pandemic and the effects on the Company’s occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in the Company’s markets once hotels and resorts are able to reopen; (6) the effects of competitive conditions in the Company’s markets; (7) the Company’s ability to achieve expected benefits and performance from the Company’s strategic initiatives and acquisitions; (8) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of the Company’s business; (9) the effects of weather conditions, particularly during the winter in the Midwest and in the Company’s other markets; (10) the Company’s ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (11) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, other incidents of violence in public venues such as hotels and movie theatres or epidemics (such as the COVID-19 pandemic); (12) a disruption in the Company’s business and reputational and economic risks associated with civil securities claims brought by shareholders; (13) the Company’s ability to timely and successfully integrate the Movie Tavern operations into the Company’s own circuit; and (14) the Company’s ability to achieve the additional revenues and operating income that it anticipates from the Company’s additional week of operations in fiscal 2020 and certain extraordinary events that are scheduled to take place in or near Milwaukee during fiscal 2020, such as the Democratic National Convention and The Ryder Cup, which may be significantly impacted by the COVID-19 pandemic. The Company’s forward-looking statements are based upon the Company’s assumptions, which are based upon currently available information, including assumptions about the Company’s ability to manage difficulties associated with or related to the COVID-19 pandemic; the assumption that the Company’s theatre closures, hotel closures and restaurant closures are not expected to be permanent or to re-occur; the continued availability of the Company’s workforce following the temporary layoffs the Company has implemented as a result of the COVID-19 pandemic; and the temporary and long-term effects of the COVID-19 pandemic on the Company’s business. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made in the press release are made only as of the date of the press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Item 8.01. Other Events.

Form 10-Q Filing

In accordance with the Securities and Exchange Commission Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies, SEC Release No. 34-88465, dated March 25, 2020 (the “Order”), the Company will be relying on the relief provided by the Order to delay the filing of its Quarterly Report on Form 10-Q for the quarter ended March 26, 2020 (the “Form 10-Q”) by up to 45 days.

Due to the novel coronavirus outbreak (the “COVID-19 pandemic”) and measures taken to limit the spread of the COVID-19 pandemic, the Company’s operations and business have experienced significant disruptions. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for its employees, including the temporary closure of its corporate headquarters, and having employees work remotely, which slowed the Company’s routine quarterly financial statement close process. At the same time, the COVID-19 pandemic has resulted in unprecedented operational challenges for the exhibition industry and the hospitality industry generally and the Company in particular. These operational challenges have increased the required disclosures for the Form 10-Q, which have in turn increased the difficulty of the Company’s implementation of inline eXtensible Business Reporting Language requirements. The Company is therefore unable to file the Form 10-Q on its customary schedule.

The Company expects to file the Form 10-Q in mid-May 2020 (but in any event no later than June 19, 2020 which is 45 days from the original filing deadline for the Form 10-Q of May 5, 2020).

Risk Factors Update

In addition, in light of the rapidly evolving COVID-19 pandemic, the Company is also filing this Current Report on Form 8-K for the purpose of supplementing the risk factors disclosed in Item 1A of its Annual Report on Form 10-K for the fiscal year ended December 26, 2019. Accordingly, the Company’s risk factor disclosure is hereby updated as follows:

The COVID-19 pandemic has had and may continue to have adverse effects on the Company’s theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service the Company’s existing and future indebtedness, some of which may be significant.

The recent outbreak of the COVID-19 pandemic has had an unprecedented impact on the world and both of the Company’s business segments. The situation continues to be volatile and the social and economic effects are widespread. As an operator of movie theatres, hotels and resorts, restaurants and bars, each of which consists of spaces where customers and guests gather in close proximity, the Company’s businesses are significantly impacted by protective actions that federal, state and local governments have taken to control the spread of the pandemic. These actions include, among other things, declaring national and state emergencies, encouraging social distancing, restricting freedom of movement, mandating non-essential business closures and issuing shelter-in-place, quarantine and stay-at-home orders.

As a result of these measures, the Company temporarily closed all of its theatres on March 17, 2020, and the Company currently is not generating any revenues from the Company’s theatre operations (other than some limited online sales and curbside sales of popcorn, pizza and other assorted food and beverage items). The Company also temporarily closed all of its hotel restaurants and bars at approximately the same time and closed five of its eight company-owned hotels and resorts on March 24, 2020 due to a significant reduction in occupancy at those hotels. The Company announced the closing of its remaining three company-owned hotels on April 8, 2020. The Company currently is not generating any revenues from its hotels and resorts operations.

The Company also (i) temporarily suspended quarterly dividend payments, (ii) halted all non-essential operating and capital expenditures, (iii) temporarily laid-off the majority of its hourly theatre and hotel associates, in addition to temporarily reducing property management and corporate office staff levels, (iv) temporarily reduced salaries of all remaining employees, including a 50% salary reduction for its chairman and president and CEO, and (iv) taken additional measures to preserve cash and improve liquidity. Additionally, the Company has sought and received a waiver of its compliance with the consolidated fixed charge coverage ratio covenant in its existing Credit Agreement, dated January 9, 2020, and all of its senior notes, in each case, until September 2021.

Although the Company believes the closure of its theatres and hotels is temporary, it cannot predict when the effects of the COVID-19 pandemic will subside or when its businesses will return to normal levels. The longer and more severe the pandemic, including repeat or cyclical outbreaks beyond the one the Company is currently experiencing, the more severe the adverse effects will be on its businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service its existing and future indebtedness.

Even when the COVID-19 pandemic subsides, the Company cannot guarantee that it will recover as rapidly as other industries. For example, once federal, state and local government restrictions are lifted, it is unclear how quickly patrons will return to the Company’s theatres and hotels, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses, among other things. Even once theatres and hotels are reopened, a single case of COVID-19 in a theatre or hotel could result in additional costs and further closures. If the Company does not respond appropriately to the pandemic, or if customers do not perceive the Company’s response to be adequate, the Company could suffer damage to its reputation, which could adversely affect its businesses.

Furthermore, the effects of the pandemic on the Company’s businesses could be long-lasting and could continue to have adverse effects on the Company’s businesses, results of operations, liquidity, cash flows and financial condition, some of which may be significant, and may adversely impact its ability to operate its businesses after its temporary closure ends on the same terms as the Company conducted business prior to the pandemic. Significant impacts on the Company’s businesses caused by the COVID-19 pandemic may include, among others:

· lack of availability of films in the short- or long-term, including as a result of (i) major film distributors releasing scheduled films on alternative channels or (ii) disruptions of film production;

· decreased attendance at the Company’s theatres after they reopen, including due to (i) continued safety and health concerns or (ii) a change in consumer behavior in favor of alternative forms of entertainment;

· reduced travel from the Company’s various leisure, business transient and group business customers;

· cancellation of major events that were expected to benefit the Company’s hotels and resorts division, including the Democratic National Convention in August 2020 and the Ryder Cup in September 2020;

· the Company’s inability to negotiate favorable rent payment terms with its landlords;

· unavailability of employees and/or their inability or unwillingness to conduct work under any revised work environment protocols;

· increased risks related to employee matters, including increased employment litigation and claims relating to terminations or furloughs caused by theatre and hotel closures;

· reductions and delays to planned operating and capital expenditures;

· potential impairment charges;

· the Company’s inability to generate significant cash flow from operations if its theatres and/or hotels and resorts continue to experience demand at levels significantly lower than historical levels, which could lead to a substantial increase in indebtedness and negatively impact the Company’s ability to comply with the financial covenants, if applicable, in its debt agreements;

· the Company’s inability to access lending, capital markets and other sources of liquidity, if needed, on reasonable terms, or at all, or obtain amendments, extensions and waivers;

· the Company’s inability to effectively meet its short- and long-term obligations; and

· the Company’s inability to service its existing and future indebtedness.

Additionally, although the Company has sought and obtained, and intends to continue to seek, available benefits under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”), or any subsequent governmental relief bills, the Company cannot predict the manner in which any additional benefits under the CARES Act, or any subsequent governmental relief bills, will be allocated or administered and the Company cannot assure you that it will be able to access such benefits in a timely manner or at all. Accessing these benefits and the Company’s response to the COVID-19 pandemic have required the Company’s management team to devote extensive resources and are likely to continue to do so in the near future, which negatively affects the Company’s ability to implement its business plan and respond to opportunities.

The Duration of the COVID-19 Pandemic and Related Shelter-in-Place and Social Distancing Requirements and the Level of Customer Demand Following the Relaxation of Such Requirements May Adversely Affect the Company’s Financial Results.

As noted above, due to the COVID-19 pandemic, the Company’s operations at its theatres and hotels and resorts have been suspended temporarily, and there is uncertainty as to when the Company will be permitted to reopen its facilities. Because the Company operates in several different jurisdictions, the Company may be able to reopen some, but not all, of its theatres and hotels and resorts within a certain timeframe. The Company’s current expectation is that, when it does reopen, it will open to capacity limitations. A reduction in capacity does not necessarily translate to an equal reduction in potential revenues. Reduced capacity may potentially impact attendance on $5 Tuesdays and on opening weekends of major new film releases, but based upon the Company’s past experience, it believes that customers will adapt to reduced seat availability by shifting their attendance to different days and times of day. However, fears and concerns regarding the COVID-19 pandemic could cause the Company’s customers to avoid assembling in public spaces for some time despite the relaxation of shelter-in-place and social distancing measures. Although the Company believes it has sufficient resources to fund its operations well into 2021 in the unlikely event that shelter-in-place, stay-at-home and social distancing requirements last substantially beyond the currently mandated closure periods, the Company has no control over and cannot predict the length of the closure of it theatres and hotels and resorts due to the COVID-19 pandemic. If the Company is unable to generate revenues due to a prolonged period of closure or experiences significant declines in its businesses volumes upon reopening, this would negatively impact its ability to remain in compliance with its debt covenants and meet its payment obligations. In such an event, the Company would either seek covenant waivers or attempt to amend its covenants, though there is no certainty that the Company would be successful in such efforts. Additionally, the Company could seek additional liquidity through the issuance of new debt. The Company’s ability to obtain additional financing and the terms of any such additional financing would depend in part on factors outside of its control.

In addition to the specific risks described above, the COVID-19 pandemic (including federal, state and local governmental responses, broad economic impacts and market disruptions) has heightened the materiality of the other risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 26, 2019.

Item 9.01. Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits. Exhibit 99.1 is being furnished herewith:

Exhibit Number
99.1	Press Release of The Marcus Corporation, dated May 5, 2020, regarding its financial results for its first quarter ended March 26, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE MARCUS CORPORATION
Date:  May 5, 2020	By:	/s/ Douglas A. Neis
		Douglas A. Neis
		Executive Vice President, Chief Financial Officer and Treasurer

EX-99.1

Exhibit 99.1

 

THE MARCUS CORPORATION REPORTS FIRST QUARTER FISCAL 2020 RESULTS

Temporary property closures and nonrecurring expenses related to the COVID-19 pandemic impact results

Milwaukee, May 5, 2020… The Marcus Corporation (NYSE: MCS) today reported results for the first quarter of fiscal 2020 ended March 26, 2020.

First Quarter Fiscal 2020 Highlights

· Total revenues for the first quarter of fiscal 2020 were $159,460,000, a 6.2% decrease from total revenues of $170,039,000 for the first quarter of fiscal 2019.

· Operating loss was $22,200,000 for the first quarter of fiscal 2020, compared to operating income of $4,950,000 for the prior year quarter.

· Net loss attributable to The Marcus Corporation was $19,352,000 for the first quarter of fiscal 2020, compared to net earnings attributable to The Marcus Corporation of $1,860,000 for the same period in fiscal 2019.

· Net loss per diluted common share attributable to The Marcus Corporation was $0.64 for the first quarter of fiscal 2020, compared to net earnings per diluted common share attributable to The Marcus Corporation of $0.06 for the first quarter of fiscal 2019.

· Adjusted net loss attributable to The Marcus Corporation was $8,837,000 for the first quarter of fiscal 2020, compared to Adjusted net earnings attributable to The Marcus Corporation of $4,085,000 for the first quarter of fiscal 2019.

· Adjusted net loss per diluted common share attributable to The Marcus Corporation was $0.29 for the first quarter of fiscal 2020, compared to Adjusted net earnings per diluted common share attributable to The Marcus Corporation of $0.13 for the prior year first quarter.

· Adjusted EBITDA was $12,050,000 for the first quarter of fiscal 2020, compared to Adjusted EBITDA of $24,756,000 for the comparable prior year period.

· Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA reflect adjustments made by the company to eliminate the impact of certain nonrecurring property closure expenses and impairment charges during first quarter of fiscal 2020, as well as certain nonrecurring acquisition and preopening expenses related to the Movie Tavern acquisition and certain nonrecurring preopening expenses related to the conversion of the former InterContinental Milwaukee hotel into Saint Kate^® – The Arts Hotel, during the first quarter of fiscal 2019.

“Similar to so many businesses across the entertainment and hospitality industries, we faced unprecedented challenges resulting from the COVID-19 pandemic in the first quarter. We had to make some very difficult decisions during the quarter, including temporarily closing our movie theatres, restaurants and bars, as well as subsequently temporarily closing our hotels and resorts due to an increase in cancellations and a decrease in occupancy. We believe the actions we took were the right thing to do to help ensure the safety and well-being of our associates, customers, guests and communities,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation.

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He noted the fiscal 2020 first quarter results were further reduced by non-recurring expenses related to the temporary closure of properties and impairment charges resulting from the impact of the COVID-19 pandemic on the valuation of certain balance sheet items.

Marcus Theatres^®

“We temporarily closed all of our movie theatres on March 17, 2020, following guidance from the Centers for Disease Control and state and local authorities in response to the COVID-19 pandemic. This resulted in decreased revenues and operating income for Marcus Theatres for the first quarter of fiscal 2020, offset slightly by an extra month of operation at our Movie Tavern theatres during the quarter compared to the prior year quarter,” said Marcus. The company acquired the Movie Tavern theatres on February 1, 2019.

“The first quarter was off to a very good start, with revenues and operating income up significantly through February 2020, benefiting from several new films and strong carryover holiday season films,” said Rolando B. Rodriguez, chairman, president and chief executive officer of Marcus Theatres. “March started with a difficult comparison to last year’s top film, Captain Marvel, and then, of course, everything changed when we were required to close our theatres mid-March.”

On a comparable theatre basis, the division’s box office outperformed the industry by over two percentage points in the first quarter of 2020, according to data received from Rentrak. The outperformance comparison does not include the company’s Movie Tavern theatres because Marcus Theatres did not own them for the full quarter last year. Based upon data available from the previous owner, however, the company believes its Movie Tavern theatres outperformed the industry by over ten percentage points during the first quarter of fiscal 2020.

“Despite the lower attendance, we achieved a 7.0% increase in average ticket price and a 10.9% increase in concession revenues per person during the quarter, due in part to the extra month of operations for the Movie Tavern theatres,” said Rodriguez. He noted that the division’s operating loss was negatively impacted by nonrecurring expenses of $2.8 million which was primarily for payroll continuation payments for associates impacted by the theatre closures, and impairment charges of approximately $8.7 million.

During the first quarter, the company added four new screens, signature DreamLounger^SM recliner seating and a new SuperScreen DLX^® auditorium at one Movie Tavern location. In response to the COVID-19 pandemic, the company placed on hold several projects, some of which were underway, to add DreamLounger recliner seating and new food and beverage outlets at additional theatres.

The five highest grossing films for Marcus Theatres in the first quarter of fiscal 2020 were Star Wars: The Rise of Skywalker, Bad Boys for Life, Jumanji: The Next Level, 1917 and Sonic the Hedgehog.

“Although numerous films scheduled to be released during the second quarter have been postponed due to the COVID-19 pandemic and the exact timing of when our theatres will reopen is unknown at this time, there are still a significant number of films currently scheduled to hit the box office during the second half of the year which the company expects will appeal to a broad audience base. These include Tenet, Mulan, The SpongeBob Movie: Sponge on the Run, Wonder Woman 1984, The Quiet Place Part II, The Conjuring: The Devil Made Me Do It, Halloween Kills, Black Widow, Soul, No Time to Die, West Side Story, Coming 2 America, Dune, The Croods 2 and Top Gun: Maverick,” said Rodriguez. “Looking ahead to next year, the anticipated film slate for 2021 is expected to be very strong as it now includes several films that were originally scheduled for 2020.” 

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Marcus^® Hotels & Resorts

“Revenue per available room (RevPAR) for comparable company-owned hotels decreased 14.5% in the first quarter of fiscal 2020 due entirely to the impact of the COVID-19 pandemic,” said Marcus. On March 17, 2020, the company temporarily closed its restaurants and bars, and on March 24, 2020, temporarily closed five of its eight company-owned hotels and resorts. Marcus Hotels & Resorts’ remaining company-owned hotels were temporarily closed on April 8, 2020.

“Understandably, growing public concern surrounding the COVID-19 pandemic led to increased cancellations and rapidly declining occupancy at our properties beginning in early March, which ultimately resulted in our decision to temporarily close our hotels. Despite these closures, data from Smith Travel Research indicates we outperformed the industry by over six percentage points and our competitive set by over 10 percentage points for the first quarter of fiscal 2020,” said Michael R. Evans, president of Marcus Hotels & Resorts. He added that the division’s operating loss was negatively impacted by nonrecurring expenses of approximately $2.7 million, primarily related to payroll continuation payments to associates who were temporarily laid off during the quarter in connection with hotel closures.

“The safety of our guests and associates remains our top priority, and we are looking forward to reopening our properties and welcoming guests as soon as mandates allow and we see an increase in demand,” added Evans.

Balance Sheet

On April 30, 2020, The Marcus Corporation announced it had entered into an amendment to its credit agreement, which included a new $90.8 million term loan that further solidifies the company’s already strong balance sheet and increases its liquidity. The company also provided an update on its response to the COVID-19 pandemic.

“Amidst these unprecedented times, we are on strong financial footing that we believe will help sustain our business and weather the challenges created by the COVID-19 pandemic. With the nation now beginning to make plans for reopening its economy, we look forward to gradually and safely ramping up our businesses and once again delivering the exceptional experiences people enjoy at our movie theatres, hotels and restaurants,” said Marcus.

Conference Call and Webcast

The Marcus Corporation management will hold a conference call today, Tuesday, May 5, 2020, at 10:00 a.m. Central/11:00 a.m. Eastern time. Interested parties may listen to the call live on the internet through the investor relations section of the company's website: www.marcuscorp.com, or by dialing 1-574-990-3059 and entering the passcode 8193343.

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A telephone replay of the conference call will be available through Tuesday, May 12, 2020, by dialing 1-855-859-2056 and entering passcode 8193343. The webcast will be archived on the company’s website until its next earnings release.

Non-GAAP Financial Measures

Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA have been presented in this press release as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. The company defines Adjusted net earnings (loss) attributable to The Marcus Corporation as net earnings (loss) attributable to The Marcus Corporation adjusted to eliminate the impact of certain items that the company does not consider indicative of its core operating performance and the tax effect related to those items. The company defines Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation as Adjusted net earnings (loss) attributable to The Marcus Corporation divided by diluted weighted average shares outstanding. The company defines Adjusted EBITDA as net earnings (loss) attributable to The Marcus Corporation before investment income or loss, interest expense, other expense, gain or loss on disposition of property, equipment and other assets, equity earnings or losses from unconsolidated joint ventures, net earnings or losses attributable to noncontrolling interests, income taxes and depreciation and amortization, adjusted to eliminate the impact of certain items that the company does not consider indicative of its core operating performance. Reconciliations of these measures to the equivalent measures under GAAP are set forth in the attached tables.

Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA are key measures used by management and the company’s board of directors to assess the company’s financial performance and enterprise value. The company believes that Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA are useful measures, as they eliminate certain expenses that are not indicative of the company’s core operating performance and facilitate a comparison of the company’s core operating performance on a consistent basis from period to period. The company also uses Adjusted EBITDA as a basis to determine certain annual cash bonuses and long-term incentive awards, to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies, to make budgeting decisions, and to compare its performance against that of other peer companies using similar measures. Adjusted net earnings, Adjusted diluted earnings per share and Adjusted EBITDA are also used by analysts, investors and other interested parties as performance measures to evaluate industry competitors.

Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA are non-GAAP measures of the company’s financial performance and should not be considered as alternatives to net earnings (loss) or diluted earnings (loss) per share as a measure of financial performance, or any other performance measure derived in accordance with GAAP and they should not be construed as an inference that the company’s future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted net earnings (loss) attributable to The Marcus Corporation and Adjusted EBITDA are not intended to be measures of liquidity or free cash flow for management’s discretionary use. In addition, these non-GAAP measures exclude certain non-recurring and other charges. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the company’s results as reported under GAAP. In evaluating Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA, you should be aware that in the future the company will incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA, such as acquisition expenses, preopening expenses, accelerated depreciation, impairment charges and other adjustments. The company’s presentation of Adjusted net earnings (loss) attributable to The Marcus Corporation, Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation and Adjusted EBITDA should not be construed to imply that the company’s future results will be unaffected by any such adjustments. Definitions and calculations of Adjusted net earnings (loss), Adjusted diluted earnings (loss) per share and Adjusted EBITDA differ among companies in our industries, and therefore Adjusted net earnings (loss), Adjusted diluted earnings (loss) per share and Adjusted EBITDA disclosed by the company may not be comparable to the measures disclosed by other companies.

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About The Marcus Corporation

Headquartered in Milwaukee, The Marcus Corporation is a leader in the lodging and entertainment industries, with significant company-owned real estate assets. The Marcus Corporation’s theatre division, Marcus Theatres^®, is the fourth largest theatre circuit in the U.S. and currently owns or manages 1,110 screens at 91 locations in 17 states under the Marcus Theatres, Movie Tavern^® and BistroPlex^® brands. The company’s lodging division, Marcus^® Hotels & Resorts, owns and/or manages 19 hotels, resorts and other properties in eight states. For more information, please visit the company’s website at www.marcuscorp.com.

Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the adverse effects of the COVID-19 pandemic 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 and future indebtedness; (2) the duration of the COVID-19 pandemic and related shelter at home and social distancing requirements and the level of customer demand following the relaxation of such requirements; (3) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (particularly following the COVID-19 pandemic, during which the production of new movie content has essentially ceased), as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (4) the effects of adverse economic conditions in our markets, including but not limited to, those caused by the COVID-19 pandemic; (5) the effects on our occupancy and room rates caused by the COVID-19 pandemic and the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets once hotels and resorts are able to reopen; (6) the effects of competitive conditions in our markets; (7) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (8) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our business; (9) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (10) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (11) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, other incidents of violence in public venues such as hotels and movie theatres or epidemics (such as the COVID-19 pandemic); (12) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders; (13) our ability to timely and successfully integrate the Movie Tavern operations into our own circuit; and (14) our ability to achieve the additional revenues and operating income that we anticipate from our additional week of operations in fiscal 2020 and certain extraordinary events that are scheduled to take place in or near Milwaukee during fiscal 2020, such as the Democratic National Convention and The Ryder Cup, which may be significantly impacted by the COVID-19 pandemic. Our forward-looking statements are based upon our assumptions, which are based upon currently available information, including assumptions about our ability to manage difficulties associated with or related to the COVID-19 pandemic; the assumption that our theatre closures, hotel closures, and restaurant closures are not expected to be permanent or to re-occur; the continued availability of our workforce following the temporary layoffs we have implemented as a result of the COVID-19 pandemic; and the temporary and long-term effects of the COVID-19 pandemic on our business. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

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THE MARCUS CORPORATION

Consolidated Statements of Earnings (Loss)

(Unaudited)

(in thousands, except per share data)

	13 Weeks Ended
	March 26,			March 28,
	2020			2019
Revenues:
Theatre admissions	$	55,395		$	58,969
Rooms		16,989			18,938
Theatre concessions		45,930			47,155
Food and beverage		13,614			15,783
Other revenues		18,776			20,829
		150,704			161,674
Cost reimbursements		8,756			8,365
Total revenues		159,460			170,039
Costs and expenses:
Theatre operations		54,016			56,378
Rooms		9,655			9,035
Theatre concessions		22,211			17,269
Food and beverage		14,465			13,609
Advertising and marketing		5,390			4,910
Administrative		17,732			17,859
Depreciation and amortization		19,033			15,985
Rent		6,954			5,403
Property taxes		6,029			5,393
Other operating expenses		8,707			10,883
Impairment charges		8,712			-
Reimbursed costs		8,756			8,365
Total costs and expenses		181,660			165,089
Operating income (loss)		(22,200	)		4,950
Other income (expense):
Investment income (loss)		(695	)		473
Interest expense		(2,516	)		(3,059	)
Other expense		(590	)		(480	)
Gain (loss) on disposition of property, equipment and other assets		(12	)		7
Equity losses from unconsolidated joint ventures		(57	)		(84	)
		(3,870	)		(3,143	)
Earnings (loss) before income taxes		(26,070	)		1,807
Income taxes (benefit)		(6,570	)		13
Net earnings (loss)		(19,500	)		1,794
Net loss attributable to noncontrolling interests		(148	)		(66	)
Net earnings (loss) attributable to The Marcus Corporation	$	(19,352	)	$	1,860
Net earnings (loss) per common share attributable to
The Marcus Corporation - diluted	$	(0.64	)	$	0.06

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THE MARCUS CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)

	(Unaudited)		(Audited)
	March 26,		December 26,
	2020		2019
Assets:
Cash and cash equivalents	$	126,472	$	20,862
Restricted cash		4,795		4,756
Accounts and notes receivable		14,765		29,465
Refundable income taxes		10,438		5,916
Other current assets		16,857		18,265
Property and equipment, net		912,268		923,254
Operating lease right-of-use assets		244,468		243,855
Other assets		111,323		112,813
Total Assets	$	1,441,386	$	1,359,186
Liabilities and Shareholders' Equity:
Accounts payable	$	27,178	$	49,370
Taxes other than income taxes		15,844		20,613
Other current liabilities		67,605		79,189
Current portion of finance lease obligations		2,438		2,571
Current portion of operating lease obligations		15,386		13,335
Current maturities of long-term debt		9,977		9,910
Finance lease obligations		20,302		20,802
Operating lease obligations		238,010		232,111
Long-term debt		345,206		206,432
Deferred income taxes		45,771		48,262
Deferred compensation and other		55,281		55,133
Equity		598,388		621,458
Total Liabilities and Shareholders' Equity	$	1,441,386	$	1,359,186

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THE MARCUS CORPORATION

Business Segment Information

(Unaudited)

(In thousands)

	Theatres			Hotels/   Resorts			Corporate Items			Total
13 Weeks Ended March 26, 2020
Revenues	$	109,211		$	50,160		$	89		$	159,460
Operating income (loss)		(7,083	)		(10,853	)		(4,264	)		(22,200	)
Depreciation and amortization		13,510			5,412			111			19,033
13 Weeks Ended March 28, 2019
Revenues	$	114,885		$	55,061		$	93		$	170,039
Operating income (loss)		12,594			(3,153	)		(4,491	)		4,950
Depreciation and amortization		11,127			4,767			91			15,985

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

Reconciliation of Adjusted net earnings (loss) and Adjusted net earnings (loss) per diluted common share

(Unaudited)

(In thousands, except per share data)

	13 Weeks Ended
	March 26,			March 28,
	2020			2019
Net earnings (loss) attributable to The Marcus Corporation	$	(19,352	)	$	1,860
Add (deduct):
Acquisition/preopening expenses - theatres (a)		-			1,809
Preopening expenses - hotels (b)		-			1,235
Property closure expenses - theatres (c)		2,787			-
Property closure expenses - hotels (d)		2,730			-
Impairment charges (e)		8,712			-
Tax impact of adjustments to net earnings (f)		(3,714	)		(819	)
Adjusted net earnings (loss) attributable to The Marcus Corporation	$	(8,837	)	$	4,085
Net earnings (loss) per diluted common share attributable to The Marcus Corporation	$	(0.64	)	$	0.06
Adjusted net earnings (loss) per diluted common share attributable to The Marcus Corporation	$	(0.29	)	$	0.13

(a) Acquisition and preopening costs incurred related to the Movie Tavern acquisition.

(b) Preopening costs incurred related to the conversion of the InterContinental Milwaukee into Saint Kate - The Arts Hotel.

(c) Reflects nonrecurring costs (primarily payroll) related to the required closure of all of the company's movie theatres due to the COVID-19 pandemic.

(d) Reflects nonrecurring costs (primarily payroll) related to the closure of the majority of the company's hotels and resorts due to reduced occupancy as a result of the COVID-19 pandemic.

(e) Impairment charges related to intangible assets (trade name) and several theatre locations.

(f) Represents the tax effect related to adjustments (a), (b), (c), (d) and (e) to net earnings, calculated using statutory tax rates of 26.1% for the fiscal 2020 period and 26.9% for the fiscal 2019 period.

Reconciliation of Net earnings (loss) to Adjusted EBITDA

(Unaudited)

(In thousands)

	13 Weeks Ended
	March 26,			March 28,
	2020			2019
Net earnings (loss) attributable to The Marcus Corporation	$	(19,352	)	$	1,860
Add (deduct):
Investment (income) loss		695			(473	)
Interest expense		2,516			3,059
Other expense		590			480
(Gain) loss on disposition of property, equipment and other assets		12			(7	)
Equity losses from unconsolidated joint ventures		57			84
Net loss attributable to noncontrolling interests		(148	)		(66	)
Income tax expense (benefit)		(6,570	)		13
Depreciation and amortization		19,033			15,985
Share-based compensation expenses (a)		988			777
Acquisition/preopening expenses - theatres (b)		-			1,809
Preopening expenses - hotels (c)		-			1,235
Property closure expenses - theatres (d)		2,787			-
Property closure expenses - hotels (e)		2,730			-
Impairment charges (f)		8,712			-
Adjusted EBITDA	$	12,050		$	24,756

(a) Non-cash charges related to share-based compensation programs.

(b) Acquisition and preopening costs incurred related to the Movie Tavern acquisition.

(c) Preopening costs incurred related to the conversion of the InterContinental Milwaukee into Saint Kate - The Arts Hotel.

(d) Reflects nonrecurring costs (primarily payroll) related to the required closure of all of the company's movie theatres due to the COVID-19 pandemic.

(e) Reflects nonrecurring costs (primarily payroll) related to the closure of the majority of the company's hotels and resorts due to reduced occupancy as a result of the COVID-19 pandemic.

(f) Impairment charges related to intangible assets (trade name) and several theatre locations.

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