FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 18, 1994
[ ] TRANSITION 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)
WISCONSIN 39-1139844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 EAST WISCONSIN AVENUE - MILWAUKEE, WISCONSIN 53202
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (414) 272-6020
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 12, 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.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
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 SEPTEMBER 30, 1994 - 6,921,108
CLASS B COMMON STOCK OUTSTANDING AT SEPTEMBER 30, 1994 - 6,113,209
<PAGE>
THE MARCUS CORPORATION
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Consolidated Financial Statements:
Balance Sheets
(August 18, 1994 and May 26, 1994) 3-4
Statements of Earnings
(Twelve weeks ended August 18, 1994
and August 19, 1993) 5
Statements of Cash Flows
(Twelve weeks ended August 18, 1994
and August 19, 1993) 6
Condensed Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
August 18, May 26,
ASSETS 1994 1994
------------------------------------------------------------------------
CURRENT ASSETS: (unaudited)
Cash and cash equivalents $ 7,490,000 $ 9,974,000
Accounts and notes receivable 6,272,000 6,359,000
Receivables from joint ventures 6,801,000 7,983,000
Other current assets 2,578,000 3,049,000
------------ ------------
Total current assets 23,141,000 27,365,000
------------ ------------
PROPERTY AND EQUIPMENT:
Land and improvements 50,713,000 49,618,000
Buildings and improvements 257,221,000 231,905,000
Leasehold improvements 11,036,000 7,565,000
Furniture, fixtures and equipment 136,928,000 118,123,000
Construction in progress 7,278,000 37,302,000
------------ ------------
Total property and equipment 463,176,000 444,513,000
Less accumulated depreciation
and amortization 127,323,000 122,642,000
------------ ------------
Net property and equipment 335,853,000 321,871,000
------------ ------------
OTHER ASSETS:
Investment in and advances to
joint ventures 627,000 662,000
Other 11,171,000 11,708,000
------------ ------------
Total other assets 11,798,000 12,370,000
------------ ------------
TOTAL ASSETS $370,792,000 $361,606,000
============ ============
See accompanying notes to consolidated financial statements
<PAGE>
THE MARCUS CORPORATION
Consolidated Balance Sheets
August 18, May 26,
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1994
------------------------------------------------------------------------
CURRENT LIABILITIES: (unaudited)
Notes payable $ 4,212,000 $ 4,533,000
Accounts payable 12,814,000 13,248,000
Income taxes 7,978,000 2,796,000
Taxes other than income taxes 8,006,000 7,307,000
Accrued compensation 1,610,000 1,448,000
Other accrued liabilities 6,027,000 6,978,000
Current maturities on long-term debt 4,357,000 4,357,000
------------ ------------
Total current liabilities 45,004,000 40,667,000
------------ ------------
LONG-TERM DEBT 107,324,000 107,681,000
------------ ------------
DEFERRED INCOME TAXES 16,156,000 15,999,000
------------ ------------
DEFERRED COMPENSATION AND OTHER 3,523,000 3,341,000
------------ ------------
SHAREHOLDERS' EQUITY
Preferred Stock, $1 par; authorized
1,000,000 shares; none issued
Common Stock, $1 par; authorized
20,000,000 shares; issued 7,365,427
shares at August 18, 1994,
7,365,987 shares at May 26, 1994 7,367,000 7,366,000
Class B Common Stock, $1 par;
authorized 9,000,000 shares;
issued 6,223,893 shares at
August 18, 1994, 6,225,333
shares at May 26, 1994 6,224,000 6,225,000
Capital in excess of par 44,736,000 44,745,000
Retained earnings 144,628,000 139,777,000
------------ ------------
202,955,000 198,113,000
Less cost of treasury stock
Common stock - 558,233 shares
at August 18, 1994 and 559,608
shares at May 26, 1994 4,170,000 4,195,000
------------ ------------
Total shareholders' equity 198,785,000 193,918,000
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $370,792,000 $361,606,000
============ ============
See accompanying notes to consolidated financial statements
<PAGE>
THE MARCUS CORPORATION
Consolidated Statements of Earnings
(unaudited)
12 Weeks Ended
--------------- ---------------
August 18, 1994 August 19, 1993
--------------- ---------------
Revenues:
Food and beverage $ 23,337,000 $ 19,219,000
Rooms and telephone 31,706,000 25,993,000
Theatre operations 17,438,000 16,372,000
Other income 4,369,000 3,162,000
-------------- -------------
76,850,000 64,746,000
-------------- -------------
Costs and Expenses:
Food and beverage 17,471,000 14,426,000
Rooms and telephone 10,603,000 8,772,000
Theatre operations 10,221,000 9,666,000
Administration and selling 10,354,000 8,524,000
Depreciation and amortization 5,198,000 4,472,000
Rent 1,361,000 1,504,000
Property taxes 2,263,000 1,980,000
Other costs and expenses 1,707,000 602,000
Interest 2,210,000 1,584,000
-------------- -------------
61,388,000 51,530,000
-------------- -------------
Earnings before income taxes and change
in accounting principle 15,462,000 13,216,000
Income Taxes 6,372,000 5,421,000
-------------- -------------
Earnings before change in accounting
principle 9,090,000 7,795,000
Cumulative effect of change in accounting
principle - 1,782,000
-------------- -------------
Net Earnings $ 9,090,000 $ 9,577,000
============== =============
Net Earnings per weighted average share
of Common Stock and Class B Common Stock
Earnings before accounting principle
change $0.69 $0.60
Cumulative effect of change in accounting
principle - 0.13
------------ -------------
Net earnings $0.69 $0.73
============ =============
Weighted average shares outstanding 13,150,000 13,097,000
Dividends per Share
Common Stock $0.34 $0.28
Class B Common Stock $0.31 $0.25
See accompanying notes to consolidated financial statements
<PAGE>
THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
For the Twelve Weeks Ended August 18, August 19,
(unaudited) 1994 1993
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 9,090,000 $ 9,577,000
Adjustments to reconcile net earnings to
cash provided by operating activities:
Earnings on investments in joint ventures (118,000) (203,000)
(Gain) loss on disposals of property
and equip. 8,000 (4,000)
Depreciation and amortization 5,198,000 4,472,000
Effect of change in accounting principle 0 (1,782,000)
Deferred tax provision 157,000 151,000
Deferred compensation and other 182,000 205,000
Changes in assets and liabilities:
Accounts and notes receivable 1,269,000 (1,792,000)
Other current assets 471,000 (1,478,000)
Accounts and notes payable (755,000) 1,528,000
Income taxes 5,182,000 4,570,000
Taxes other than income taxes 699,000 168,000
Accrued compensation 162,000 921,000
Other accrued liabilities (951,000) (549,000)
------------ ------------
Cash provided by operating activities 20,594,000 15,784,000
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to property and equipment (19,580,000) (17,504,000)
Proceeds from disposals of property and
equip 392,000 504,000
Investments in joint ventures (143,000) (495,000)
Decrease in other assets 537,000 2,855,000
Cash received from joint ventures 296,000 922,000
------------ ------------
Cash used in investing activities (18,498,000) (13,718,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt transactions:
Proceeds from issuance of long-term debt 2,545,000 0
Principal payments on long-term debt (2,902,000) (6,572,000)
Equity transactions:
Treasury stock transactions (except for
stock options) (1,000) (105,000)
Exercise of stock options 17,000 241,000
Cash dividend paid (4,239,000) (3,481,000)
------------ ------------
Cash used in financing activities (4,580,000) (9,917,000)
------------ ------------
CASH AND CASH EQUIVALENTS;
Net decrease during period (2,484,000) (7,851,000)
Beginning balance 9,974,000 15,839,000
------------ ------------
Ending balance $ 7,490,000 $ 7,988,000
============ ============
See accompanying notes to consolidated financial statements
<PAGE>
THE MARCUS CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE TWELVE WEEKS ENDED AUGUST 18, 1994
(Unaudited)
A. Refer to the Company's audited financial statements (including
footnotes) for the year ended May 26, 1994, contained in the
Company's Form 10-K Annual Report for such year, for a description of
the Company's accounting policies.
B. The consolidated financial statements for the twelve weeks ended
August 18, 1994 and August 19, 1993, have been prepared by the
Company without audit. In the opinion of management, all adjustments
consisting only of normal recurring accruals necessary to present
fairly the unaudited interim financial information at August 18,
1994, and for all periods presented have been made.
C. In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes", which became effective for fiscal years beginning
after December 15, 1992. The Company adopted this standard on a
prospective basis effective August 19, 1993. The adoption resulted
in additional income of $1,782,000.
<PAGE>
THE MARCUS CORPORATION
Management's Discussion and Analysis of
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
General
The Company reports its results of operations on a 52-or 53-week
fiscal year which ends on the last Thursday in May. Each fiscal year is
divided into three 12-week quarters and a final quarter consisting of 16
or 17 weeks. The final quarter of fiscal 1995 will consist of 16 weeks
for all four of the Company's business segments; the same was true for
fiscal 1994.
Revenues for the first quarter of fiscal 1995, ended August 18, 1994,
totaled $76.9 million dollars, an increase of $12.1 million, or 18.7% over
the first quarter of fiscal 1994. Net earnings were $9.1 million for the
first quarter of fiscal 1995, compared to $9.6 million for the same period
in the prior year. Earnings per share were $0.69 for fiscal 1995,
compared to $0.73 for the first quarter of fiscal 1994. However, net
earnings for the first quarter of fiscal 1994 included an extraordinary
gain of $1.8 million, or $0.13 per share, resulting from the Company's
adoption of SFAS 109 "Accounting for Income Taxes." Excluding the impact
on fiscal 1994 earnings of the one-time gain from the accounting change,
net earnings for the first quarter of fiscal 1995 rose 16.6% and earnings
per share increased 15.0% compared to the prior year's first quarter.
Motels
Total revenues for the first quarter of fiscal 1995 for the motel
division were $26.1 million, an increase of $3.9 million, or 17.4%,
compared to the same period in fiscal 1994. The motel division's
operating profits for the fiscal 1995 first quarter totaled $6.6 million,
an increase of $1.6 million, or 32.7%, over the division's same period
fiscal 1994 operating profits.
Occupancy and average daily room rates continued to increase at the
Company's motels during the first quarter of fiscal 1995 as the Company
benefitted from a strong summer travel season. Additionally, compared to
the first quarter of fiscal 1994, there were two new Woodfield Suites and
two new Budgetel Inns in operation during the fiscal 1995 first quarter.
These new facilities contributed additional revenues of $1,467,000 to the
division's fiscal 1995 first quarter revenues.
Theatres
The theatre division's first quarter fiscal 1995 revenues were $17.5
million, an increase of $1.1 million, or 6.6%, over the same period in
fiscal 1994. Operating profits for the first quarter in fiscal 1995 were
$4.2 million, an increase of $297,000, or 7.6%, over the same prior year
period.
Total box office receipts for the fiscal 1995 first quarter were
$12.6 million, an increase of $782,000, or 6.6%, from the same period in
the prior year. This increase was attributable principally to increased
attendance generated by the unexpected record summer of outstanding
quality motion pictures and from the Gurnee Mills 10-plex, which was not
yet open in the first quarter of fiscal 1994. Twelve films over the
summer, including The Lion King and Forrest Gump, reached "blockbuster"
status--nationally grossing over $100 million. There were 189 screens in
operation during the fiscal 1995 first quarter versus 181 in the prior
year. Average ticket prices also increased 3.9% during the 1995 period
from the prior year.
Vending revenues for the first quarter in fiscal 1995 were $4.7
million, an increase of $275,000, or 6.2%, over the prior year, due to the
increase in theatre attendance and the 3.7% increase in average concession
sales per person between the comparable periods.
Hotels and Resort
Total revenues from the hotel and resort division during the first
quarter of fiscal 1995 increased by $4.5 million, or 51.9%, to $13.3
million, over the previous year's comparable period. Operating profits
increased by $177,000, or 11.0%, to $1.8 million, compared to the prior
fiscal year's first quarter, despite continued start-up costs experienced
at the Grand Geneva Resort & Spa. Increased occupancy rates and average
room rates at the Company's three continuing hotels were the principal
factors contributing to the division's increased revenues for the fiscal
1995 period. The remainder of the division's increase in revenues for the
quarter was attributable principally to the receipt of management fees
from the Company's two newly managed hotels, which were not under
management for the same prior year period.
Restaurants
Restaurant division revenues totaled $19.3 million for the fiscal
1995 first quarter, an increase of $2.7 million, or 15.9%, from the same
period in fiscal 1994. The revenue increase was due almost entirely to
increasing customer counts and average check amounts at the Company's
continuing Applebee's and KFC restaurants and the Company's newly opened
Applebee's. The Company opened three new Applebee's during the quarter,
increasing its total to 16 units. The Company's other restaurant concepts
experienced flat or negative trends in revenues during the quarter
compared to the prior year's first quarter. The division's operating
profits for the fiscal 1995 period were $827,000, an increase of $301,000,
or 57.3%, from the prior year.
Subsequent to the quarter's end, the Company announced its intended
disposition of the Marc's Cafe and Coffee Mill, Big Boy and Big Boy
Express restaurant concepts. The anticipated disposition of these 18
restaurants is expected to result in a reduction of $21 million in
annualized revenues, but is not expected to have an adverse impact on the
division's operating results. The closings of these dispositions are
expected to occur later during the fiscal year.
FINANCIAL CONDITION
Net cash provided from operations increased by $4.8 million during
the first quarter of fiscal 1995 to $20.6 million, compared to the prior
year's first quarter. The increase resulted principally from increased
comparable earnings prior to the 1994 non-cash accounting change, a
decrease in accounts receivable and other current assets, and increased
depreciation and tax expense.
Cash used for investing activities increased to $18.5 million from
$13.7 million in the fiscal 1994 first quarter, primarily as a result of
capital expenditures to support the Company's continuing expansion
program. The most significant amount of capital spent by the Company
during the quarter was on the continued renovation of the Grand Geneva
Resort & Spa.
Cash used in financing activities decreased to $4.6 million in the
first quarter of fiscal 1995, compared to $9.9 million in the first
quarter of fiscal 1994. During the 1995 fiscal first quarter, the Company
paid $4.2 million in dividends to shareholders, made debt principal
payments of $2.9 million and issued $2.5 million of long-term debt.
At August 18, 1994, the Company's current ratio was .51, compared to
.67 at the end of fiscal 1994. Given the cash nature of the Company's
various businesses and the availability to the Company of $15 million in
unused credit lines as of the end of the quarter, the Company believes
that the cash generated from its ongoing operations and available credit
facilities are adequate to support the ongoing operational liquidity needs
of the Company's business.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K
None.
<PAGE>
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 thereunto duly authorized.
THE MARCUS CORPORATION
(Registrant)
DATE: September 30, 1994 BY:\s\ Stephen H. Marcus
Stephen H. Marcus,
Chairman of the Board,
President and Chief
Executive
Officer
DATE: September 30, 1994 BY:\s\ Kenneth A. MacKenzie
Kenneth A. MacKenzie
Chief Financial Officer,
Treasurer and Controller
<PAGE>
THE MARCUS CORPORATION
FORM 10-Q
FOR
12 - WEEKS ENDED AUGUST 18, 1994
EXHIBIT INDEX
Exhibit Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCUS
CORPORATION'S CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF
EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-25-1995
<PERIOD-START> MAY-27-1994
<PERIOD-END> AUG-18-1994
<CASH> 7,490,000
<SECURITIES> 0
<RECEIVABLES> 6,272,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,141,000
<PP&E> 463,176,000
<DEPRECIATION> 127,323,000
<TOTAL-ASSETS> 370,792,000
<CURRENT-LIABILITIES> 45,004,000
<BONDS> 107,324,000
<COMMON> 7,367,000
0
0
<OTHER-SE> 191,418,000
<TOTAL-LIABILITY-AND-EQUITY> 370,792,000
<SALES> 72,481,000
<TOTAL-REVENUES> 76,850,000
<CGS> 38,295,000
<TOTAL-COSTS> 61,388,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,462,000
<INCOME-TAX> 6,372,000
<INCOME-CONTINUING> 9,090,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,090,000
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
