Theatre division operating income up 37%; lodging division results reflect industry downturn
MILWAUKEE--(BUSINESS WIRE)--Dec. 18, 2008--The Marcus Corporation (NYSE: MCS) today reported results for the second
quarter ended November 27, 2008.
Second Quarter Fiscal 2009 Highlights
- Total revenues for the second quarter of fiscal 2009 were $87,943,000, a
5.4% increase from revenues of $83,431,000 for the second quarter of
fiscal 2008.
- Operating income was $8,342,000 for the second quarter of fiscal 2009, a
3.4% decrease from operating income of $8,638,000 for the same period in
the prior year.
- Net earnings were $896,000 or $0.03 per diluted common share for the
second quarter of fiscal 2009, compared to net earnings of $2,940,000 or
$0.10 per diluted common share for the comparable prior period.
- Net earnings for the second quarter of fiscal 2009 include one-time
pre-tax investment losses of $2.2 million or $0.05 per diluted common
share related to investment losses on securities held and loans to and
investments in a former Baymont joint venture. Fiscal 2009 net earnings
were also negatively impacted by a pre-tax adjustment of $1.1 million or
$0.02 per diluted common share of prior gains recorded on the company's
Platinum Hotel & Spa condominium hotel project in Las Vegas due to the
downturn in the real estate market. (Per share impact calculated using
the year-to-date income tax rate).
First Half Fiscal 2009 Highlights
- Total revenues for the first half of fiscal 2009 were $208,314,000, a
6.5% increase from revenues of $195,572,000 for the first half of fiscal
2008.
- Operating income was $32,289,000 for the first two quarters of fiscal
2009, a 0.4% increase from operating income of $32,153,000 for the same
period in the prior year.
- Net earnings were $13,329,000 or $0.45 per diluted common share for the
first half of fiscal 2009, compared to net earnings of $14,671,000 or
$0.48 per diluted common share for the comparable prior period.
"A strong year-over-year performance by Marcus Theatres(R)
helped to offset the anticipated decline in performance of Marcus Hotels
and Resorts due to the very difficult lodging industry environment.
Excluding the one-time investment losses and adjusted gains which
totaled approximately $0.07 per diluted common share, our earnings per
share would have matched last year's second quarter results. Given the
current economic conditions, we believe this is quite an achievement,"
said Stephen H. Marcus, chairman and chief executive officer of The
Marcus Corporation.
Marcus Theatres(R)
Marcus Theatres achieved record revenues and a 36.6% increase in
operating income in the second quarter. The improved performance was
driven by a strong slate of movies and an additional 83 screens at seven
locations in Omaha and Lincoln, Neb. acquired from Douglas Theatres in
April 2008.
"Last year's second quarter included the strong Thanksgiving holiday
weekend, which we did not have in this year's results, making the
division's strong second quarter performance even more significant. Box
office revenues for comparable theatres open more than a year rose in
the second quarter, once again confirming that with a good slate of
films, the theatre business can perform quite well, even in a
recession," said Marcus.
The top-performing films in the second quarter were Madagascar:
Escape 2 Africa, Quantum of Solace, High School Musical 3: Senior Year,
Eagle Eye and Twilight. "We were also pleased with the
performance of the latest 3D release, Bolt, and look forward to
the release of a dozen or more 3D films during calendar 2009," said
Marcus.
"The holiday season started strong with November holdovers and the
release of films such as Four Christmases and The Day
the Earth Stood Still. Several films with good box-office potential
are opening during the next week, including Seven Pounds, Yes Man,
Bedtime Stories, Marley & Me, The Curious Case of Benjamin Button and
Valkyrie. This slate has broad appeal for both adults and
families, which should help to make a trip to the movies a popular
holiday season activity," added Marcus.
Marcus noted that the company's newest UltraScreen(R)
opened in late November in Orland Park, Ill. and another 68-foot-wide UltraScreen
is under construction at North Shore Cinema in Mequon, Wis. "We
introduced our new Hollywood Cafe concept in Oakdale, Minn. during the
second quarter. The cafe features a wide variety of menu selections,
along with the exclusive premium brands of pizza, ice cream and coffee
that we have been gradually extending to selected theatres in our
circuit," said Marcus.
Marcus Hotels and Resorts
The company's lodging division reported decreased revenues and operating
income for the second quarter, reflecting industry-wide declines in all
three customer segments - group, business and leisure. Revenue per
available room (RevPAR) declined 6.8% for the second quarter of 2009
over the prior year quarter, with the entire decrease coming from
reduced occupancy rates.
"We are experiencing significant headwinds in the industry. If there's a
bright spot, it's that our RevPAR declined slightly less than many
others in the segment. We attribute that to the location of our
properties, which in general tend to be in slightly less volatile
markets. For example, RevPAR at three of our eight company-owned
properties increased in the second quarter and five of our eight
properties remain up for the first half of the year," said Marcus.
"However, the near-term lodging-industry outlook worsened during the
second quarter and the visibility into the future is very limited. While
we can't control the economy, we are responding to its challenges by
closely scrutinizing operating expenses at each and every one of our
properties and selectively reducing capital expenditures," said Marcus.
"A positive note is that the current credit crunch is slowing down or
halting new projects, which is good news for existing operators like
us," added Marcus.
Summary
"Our balance sheet remains very strong. Our debt to total capitalization
ratio was only 45% at the end of the second quarter. We have strong cash
flow from operations and significant unused credit lines available under
our recently updated credit facilities. We are also looking at every
opportunity we can find to be more efficient and productive in all of
our operations. Overall, we believe we are well positioned to weather
the storm in the economy and to continue to move forward with our
long-term growth strategies," said Gregory S. Marcus, president of The
Marcus Corporation.
Conference Call and Webcast
Marcus Corporation management will host a conference call today,
December 18, 2008, at 10:00 a.m. Central/11:00 a.m. Eastern time to
discuss the second quarter results. Interested parties can listen to the
call live on the Internet through the investor relations section of the
company's Web site: www.marcuscorp.com,
or by dialing 1-857-350-1673 and entering the passcode 95889351.
Listeners should dial in to the call at least 5 - 10 minutes prior to
the start of the call or should go to the Web site at least 15 minutes
prior to the call to download and install any necessary audio software.
The call will be available for telephone replay through Thursday,
December 25, 2008 by dialing 1-888-286-8010 and entering the passcode
73779641. The Webcast of the conference call will be archived on the
company's Web site until the next earnings release.
About The Marcus Corporation
Headquartered in Milwaukee, Wis., The Marcus Corporation is a leader in
the lodging and entertainment industries. The Marcus Corporation's movie
theatre division, Marcus Theatres(R), currently owns or manages
679 screens at 56 locations in Wisconsin, Illinois, Minnesota, Ohio,
North Dakota, Iowa and Nebraska, and one family entertainment center in
Wisconsin. The company's lodging division, Marcus Hotels and Resorts,
owns or manages 20 hotels, resorts and other properties in ten states,
with three additional properties under development. For more
information, visit the company's Web site at www.marcuscorp.com.
Certain matters discussed in this press release are "forward-looking
statements" intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may generally be identified as such
because the context of such statements include words such as we
"believe," "anticipate," "expect" or words of similar import. Similarly,
statements that describe our future plans, objectives or goals are also
forward-looking statements. Such forward-looking statements are subject
to certain risks and uncertainties which may cause results to differ
materially from those expected, including, but not limited to, the
following: (1) the availability, in terms of both quantity and audience
appeal, of motion pictures for our theatre division, as well as other
industry dynamics such as the maintenance of a suitable window between
the date such motion pictures are released in theatres and the date they
are released to other distribution channels; (2) the effects of
increasing depreciation expenses, reduced operating profits during major
property renovations, and preopening and start-up costs due to the
capital intensive nature of our businesses; (3) the effects of adverse
economic conditions in our markets, particularly with respect to our
hotels and resorts division; (4) the effects of adverse weather
conditions, particularly during the winter in the Midwest and in our
other markets; (5) the effects on our occupancy and room rates from the
relative industry supply of available rooms at comparable lodging
facilities in our markets; (6) the effects of competitive conditions in
our markets; (7) our ability to identify properties to acquire, develop
and/or manage and continuing availability of funds for such development;
and (8) the adverse impact on business and consumer spending on travel,
leisure and entertainment resulting from terrorist attacks in the United
States, the United States' responses thereto and subsequent hostilities.
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.
THE MARCUS CORPORATION
Consolidated Statements of Earnings
(Unaudited)
(In thousands, except per share data)
13 Weeks Ended 26 Weeks Ended
November 27, November 29, November 27, November 29,
2008 2007 2008 2007
Revenues:
Rooms and $ 23,908 $ 25,683 $ 52,799 $ 54,922
telephone
Theatre 26,300 20,866 68,819 57,938
admissions
Theatre 13,120 10,259 34,323 28,503
concessions
Food and 13,366 14,676 26,934 28,894
beverage
Other revenues 11,249 11,947 25,439 25,315
Total revenues 87,943 83,431 208,314 195,572
Costs and
expenses:
Rooms and 8,524 8,669 17,792 18,014
telephone
Theatre 22,779 18,093 56,054 46,945
operations
Theatre 3,102 2,746 8,410 7,324
concessions
Food and 10,136 10,850 20,687 21,777
beverage
Advertising 5,569 4,967 11,458 10,307
and marketing
Administrative 9,145 8,932 19,624 18,509
Depreciation
and 8,148 7,959 16,419 16,041
amortization
Rent 1,936 1,292 3,867 2,423
Property taxes 3,914 4,245 7,762 7,128
Preopening 16 10 16 309
expenses
Other
operating 6,332 7,030 13,936 14,642
expenses
Total costs and 79,601 74,793 176,025 163,419
expenses
Operating 8,342 8,638 32,289 32,153
income
Other income
(expense):
Investment (2,016 ) 339 (1,655 ) 706
income (loss)
Interest (3,641 ) (3,815 ) (7,438 ) (7,936 )
expense
Loss on disposition of
property, equipment and (1,104 ) (163 ) (1,172 ) (107 )
other assets
Equity losses from
unconsolidated joint (15 ) (69 ) (99 ) (138 )
ventures
(6,776 ) (3,708 ) (10,364 ) (7,475 )
Earnings before 1,566 4,930 21,925 24,678
income taxes
Income taxes 670 1,990 8,596 10,007
Net earnings $ 896 $ 2,940 $ 13,329 $ 14,671
Net earnings per common $ 0.03 $ 0.10 $ 0.45 $ 0.48
share - diluted:
Weighted average shares 29,816 30,491 29,851 30,611
outstanding - diluted
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited) (Audited)
November 27, May 29,
2008 2008
Assets:
Cash and cash equivalents $ 10,413 $ 13,440
Accounts and notes receivable 15,575 18,870
Refundable income taxes - 2,438
Deferred income taxes 1,370 1,327
Other current assets 7,102 6,205
Property and equipment, net 586,138 587,828
Other assets 89,329 91,540
Total Assets $ 709,927 $ 721,648
Liabilities and Shareholders' Equity:
Accounts and notes payable $ 12,987 $ 17,183
Income taxes 1,685 -
Taxes other than income taxes 14,147 12,819
Other current liabilities 28,078 30,670
Current maturities of long-term debt 25,246 31,922
Long-term debt 240,693 252,992
Deferred income taxes 33,367 32,889
Deferred compensation and other 26,951 25,680
Shareholders' equity 326,773 317,493
Total Liabilities and Shareholders' Equity $ 709,927 $ 721,648
THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)
Theatres Hotels/ Corporate Total
Resorts Items
13 Weeks Ended November 27, 2008
Revenues $ 41,695 $ 45,915 $ 333 $ 87,943
Operating income (loss) 5,867 5,095 (2,620 ) 8,342
Depreciation and amortization 4,098 3,886 164 8,148
13 Weeks Ended November 29, 2007
Revenues $ 33,285 $ 49,760 $ 386 $ 83,431
Operating income (loss) 4,296 6,833 (2,491 ) 8,638
Depreciation and amortization 3,709 4,082 168 7,959
26 Weeks Ended November 27, 2008
Revenues $ 108,592 $ 99,112 $ 610 $ 208,314
Operating income (loss) 22,736 14,615 (5,062 ) 32,289
Depreciation and amortization 8,328 7,761 330 16,419
26 Weeks Ended November 29, 2007
Revenues $ 91,182 $ 103,697 $ 693 $ 195,572
Operating income (loss) 19,680 17,066 (4,593 ) 32,153
Depreciation and amortization 7,462 8,233 346 16,041
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.
CONTACT: The Marcus Corporation
Douglas A. Neis
(414) 905-1100
Source: The Marcus Corporation
