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 17, 1995
[] 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, SUITE 1700 - 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 21, 1995 - 7,010,549
CLASS B COMMON STOCK OUTSTANDING AT SEPTEMBER 21, 1995 - 6,068,252
<PAGE>
THE MARCUS CORPORATION
INDEX
Page
No.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Balance Sheets
(August 17, 1995 and May 25, 1995) . . . . 3
Statements of Earnings
(Twelve weeks ended August 17, 1995
and August 18, 1994) . . . . . . . . . . . 5
Statements of Cash Flows
(Twelve weeks ended August 17, 1995 and
August 18, 1994) . . . . . . . . . . . . . 6
Condensed Notes to Financial Statements . 7
Item 2. Management's Discussion and Analysis
of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . 12
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
August 17, May 25,
1995 1995
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 27,470,000 $ 8,798,000
Accounts and notes receivable 10,884,000 6,166,000
Receivables from joint
ventures 1,554,000 1,861,000
Other current assets 4,301,000 4,817,000
---------- ----------
Total current assets 44,209,000 21,642,000
---------- ----------
PROPERTY AND EQUIPMENT:
Land and improvements 53,415,000 54,740,000
Buildings and improvements 298,864,000 290,219,000
Leasehold improvements 6,188,000 7,562,000
Furniture, fixtures and
equipment 134,505,000 128,035,000
Construction in progress 6,879,000 27,434,000
----------- -----------
Total property and equipment 499,851,000 507,990,000
Less accumulated depreciation
and amortization 136,609,000 133,706,000
----------- -----------
Net property and equipment 363,242,000 374,284,000
----------- -----------
OTHER ASSETS:
Investment in and advances to
joint ventures 676,000 629,000
Other 7,044,000 10,527,000
----------- -----------
Total other assets 7,720,000 11,156,000
----------- -----------
TOTAL ASSETS $415,171,000 $407,082,000
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
THE MARCUS CORPORATION
Consolidated Balance Sheets
August 17, May 25,
1995 1995
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited)
CURRENT LIABILITIES:
Notes payable $ 3,931,000 $ 4,452,000
Accounts payable 8,407,000 17,886,000
Income taxes 16,150,000 2,069,000
Taxes other than income taxes 9,899,000 9,091,000
Accrued compensation 2,388,000 1,458,000
Other accrued liabilities 9,647,000 8,052,000
Current maturities on long-term
debt 6,913,000 9,245,000
----------- -----------
Total current liabilities 57,335,000 52,253,000
----------- -----------
LONG-TERM DEBT 98,157,000 116,364,000
----------- -----------
DEFERRED INCOME TAXES 20,603,000 19,957,000
----------- -----------
DEFERRED COMPENSATION AND OTHER 4,238,000 4,044,000
----------- -----------
SHAREHOLDERS' EQUITY
Preferred Stock, $1 par;
authorized 1,000,000 shares;
none issued
Common Stock, $1 par; authorized
30,000,000 shares; issued
7,522,368 shares at August 17,
1995, 7,522,368 shares at May
25, 1995 7,522,000 7,522,000
Class B Common Stock, $1 par;
authorized 20,000,000 shares;
issued 6,068,952 shares at
August 17, 1995, 6,068,952
shares at May 25, 1995 6,069,000 6,069,000
Capital in excess of par 45,147,000 45,154,000
Retained earnings 179,975,000 159,675,000
----------- -----------
238,713,000 218,420,000
Less cost of treasury stock Common
stock - 513,979 shares at
August 17 and 525,847 shares
at May 25 3,875,000 3,956,000
----------- -----------
Total shareholders' equity 234,838,000 214,464,000
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $415,171,000 $407,082,000
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
THE MARCUS CORPORATION
Consolidated Statements of Earnings
(unaudited)
12 Weeks Ended
August 17, August 18,
1995 1994
Revenues:
Rooms and telephone $37,012,000 $31,706,000
Theatre operations 18,857,000 17,438,000
Food and beverage 11,866,000 23,337,000
Other income 5,833,000 3,869,000
---------- ----------
73,568,000 76,350,000
---------- ----------
Costs and Expenses:
Rooms and telephone 12,014,000 10,603,000
Theatre operations 11,247,000 10,221,000
Food and beverage 8,306,000 17,471,000
Advertising and marketing 3,324,000 3,951,000
Administrative 7,359,000 6,403,000
Depreciation and amortization 5,875,000 5,198,000
Rent 1,019,000 1,361,000
Property taxes 2,203,000 2,263,000
Other costs and expenses 2,794,000 1,707,000
---------- ----------
54,141,000 59,178,000
---------- ----------
Operating income 19,427,000 17,172,000
Other income (loss):
Investment income 787,000 508,000
Interest expense (2,534,000) (2,210,000)
Gain (loss) on disposition of property
and equipment (Note C) 24,607,000 (8,000)
---------- ----------
22,860,000 (1,710,000)
---------- ----------
Earnings from operations before income
taxes 42,287,000 15,462,000
Income taxes 16,977,000 6,372,000
---------- -----------
Net earnings $25,310,000 $ 9,090,000
========== ===========
Net earnings per weighted average share
of Common Stock and Class B Common
Stock $1.92* $0.69
===== =====
Weighted average shares outstanding 13,162,000 13,150,000
Dividends per share
Common Stock $0.40 $0.34
Class B Common Stock $0.36 $0.31
* Includes a one time net of tax gain equal to $1.12 on the disposition
of certain restaurant locations. (See note C.)
See accompanying notes to consolidated financial statements.
<PAGE>
THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
For the Twelve Weeks Ended August 17, August 18,
(unaudited) 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $25,310,000 $9,090,000
Adjustments to reconcile net earnings
to cash provided by operating
activities:
Earnings on investments in joint
ventures (80,000) (118,000)
(Gain) loss on disposition of
property and equipment (24,607,000) 8,000
Depreciation and amortization 5,875,000 5,198,000
Deferred tax provision 646,000 157,000
Deferred compensation and other 194,000 182,000
Changes in assets and liabilities:
Accounts and notes receivable (4,411,000) 1,269,000
Other current assets 516,000 471,000
Accounts and notes payable (10,000,000) (755,000)
Income taxes 14,081,000 5,182,000
Taxes other than income taxes 808,000 699,000
Accrued compensation 930,000 162,000
Other accrued liabilities 1,595,000 (951,000)
---------- ----------
Cash provided by operating activities 10,857,000 20,594,000
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to property and equipment (19,306,000) (19,580,000)
Proceeds from disposals of property
and equip 49,080,000 392,000
Investments in joint ventures (222,000) (143,000)
Decrease in other assets 3,483,000 537,000
Cash received from joint ventures 255,000 296,000
---------- -----------
Cash provided by (used in) investing
activities 33,290,000 (18,498,000)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt transactions:
Proceeds from issuance of long-term
debt - 2,545,000
Principal payments on long-term debt (20,539,000) (2,902,000)
Equity transactions:
Treasury stock transactions (except
for stock options) (109,000) (1,000)
Exercise of stock options 183,000 17,000
Dividends paid (5,010,000) (4,239,000)
----------- ----------
Cash used in financing activities (25,475,000) (4,580,000)
----------- ----------
CASH AND CASH EQUIVALENTS;
Net increase (decrease) during period 18,672,000 (2,484,000)
Beginning balance 8,798,000 9,974,000
---------- ---------
Ending balance $27,470,000 $7,490,000
========== =========
See accompanying notes to consolidated financial statements.
<PAGE>
THE MARCUS CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS FOR THE
TWELVE WEEKS ENDED
AUGUST 17, 1995
(Unaudited)
A. Refer to the Company's audited financial statements (including
footnotes) for the year ended May 25, 1995, 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 17, 1995 and August 18, 1994, 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 17, 1995,
and for all periods presented have been made.
C. Pursuant to an asset purchase agreement dated April 12, 1995, the
Company completed the sale of its 18 existing Applebee's Neighborhood
Grill & Bar restaurants (Applebee's), two Applebee's under
construction, five Applebee's under development and its development
rights for Applebee's to Apple South, Inc. (the Purchaser). On
June 5, 1995, the Company entered into a management agreement with
the Purchaser, whereby the Purchaser commenced to immediately manage,
operate and assume all of the Company's existing operating and
development responsibilities related to the Company's Applebee's
restaurant operations. The Purchaser received all profits of the
restaurants between June 5, 1995 and June 30, 1995, as reimbursement
for its management service. On June 30, 1995, proceeds from the sale
of approximately $48.3 million were received in cash.
<PAGE>
THE MARCUS CORPORATION
Item 2. 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 1996 will consist of 17 weeks
for the Company and its theatre division, while the Company's remaining
divisions will report a 16-week fourth quarter. The Company and all of
its divisions reported a 52-week year in fiscal 1995.
Revenues for the first quarter of fiscal 1996, ended August 17,
1995, totaled $73.6 million dollars, a decrease of $2.8 million, or 3.6%,
from revenues reported for the first quarter of fiscal 1995. The decline
in first quarter comparative revenues, which was anticipated by the
Company, was due to a reduction of $11.8 million in restaurant division
revenue resulting primarily from the June 1995 sale of the Company's
Applebee's restaurants and the disposition through lease of the Company's
11 Marc's Cafe & Coffee Mill restaurants in February 1995. Earnings from
ongoing operations for the first quarter of fiscal 1996 were $10.5
million, or $0.80 per share, excluding the after-tax gain of $14.8
million, or $1.12 per share, resulting from the Company's sale of its
Applebee's restaurants and related rights. These results represented an
increase of 15.4% and 15.9%, respectively, compared to net earnings of
$9.1 million, or $0.69 per share, for the same period in the prior year.
Including the gain from the Applebee's sale, net earnings were $25.3
million, or $1.92 per share, for the first quarter of fiscal 1996.
Motels
Total revenues for the first quarter of fiscal 1996 for the
motel division were $30.5 million, an increase of $4.4 million, or 17.0%,
compared to the same period in fiscal 1995. The motel division's
operating profits for the fiscal 1996 first quarter totaled $8.2 million,
an increase of $1.6 million, or 24.6%, over the division's same period
fiscal 1995 operating profits.
Compared to the first quarter of fiscal 1995, there were eight
new Company-owned and five new franchised Budgetel Inns in operation
during the fiscal 1996 first quarter. These new facilities contributed
additional revenues of $2.6 million to the division's fiscal 1996 first
quarter revenues. Increased occupancy and average daily room rates at the
Company's continuing motels during the first quarter of fiscal 1996
compared to the prior year's first quarter contributed $1.4 million to the
division's increased revenues, as the Company benefitted from a strong
summer business and leisure travel season. At the end of the first
quarter, the Company operated 113 Budgetel Inns, of which 85 were Company-
owned and 28 were franchised. The Company is continuing to pursue an
aggressive expansion program for its Budgetel Inns and currently plans to
open up to an additional 20 new Company-owned or franchised Budgetel Inns
during the remainder of fiscal 1996. The Company also owns and operates
three Woodfield Suites all-suite motels.
Theatres
The theatre division's fiscal 1996 first quarter revenues were
$18.9 million, an increase of $1.5 million, or 8.3%, over the same period
in fiscal 1995. Operating profits for the first quarter in fiscal 1996
were $4.4 million, an increase of $197,000, or 4.7%, over the same prior
year period.
Total box office receipts for the fiscal 1996 first quarter were
$13.3 million, an increase of $725,000, or 5.8%, from the same period in
the prior year. Box office receipts increased due to the operation during
the first quarter of fiscal 1996 of two new eight-plex theatres and a
four-screen addition to the Gurnee Mills theatre complex, together with a
5.8% increase in average ticket prices and a 12.4% increase in vending
revenues per person for the first quarter in fiscal 1996 compared to the
prior year's first quarter. Four screens were closed from last year's
first quarter. The Company operated 202 total screens during the first
quarter of fiscal 1996 compared to 189 during last year's first quarter.
The additional screens in operation during the quarter allowed over-all
theatre attendance to remain flat compared to the fiscal 1995 first
quarter. Theatre attendance is largely dependent upon the audience appeal
of available films. During last year's first quarter, The Lion King,
Forrest Gump and True Lies each generated more box office revenue than the
Company's highest grossing film, Apollo 13, in the first quarter of fiscal
1996.
Hotels and Resorts
Total revenues from the hotels and resorts division during the
first quarter of fiscal 1996 increased by $3.4 million, or 25.3%, to $16.7
million, over the previous year's comparable period. Operating profits
increased by $1.3 million, or 73.7%, to $3.1 million, compared to the
prior fiscal year's first quarter. Substantially improved occupancy and
room rates at the Grand Geneva Resort & Spa were the primary reasons for
the increases. Occupancy rates and average room rates at the Company's
owned and managed hotels also remained strong during the first quarter.
Pre-opening costs for the Company's newly franchised Milwaukee Hilton
(formerly the Marc Plaza), which are being amortized over a one-year
period beginning in the first quarter of fiscal 1996, reduced otherwise
stronger operating profits. Non-renewal of the Company's operating
agreement for the Sheraton-Mayfair Inn had a nominal effect on reported
revenues and operating profits for the quarter.
Restaurants
Restaurant division revenues totaled $7.3 million for the fiscal
1996 first quarter, a decrease of $11.8 million, or 61.8%, from the same
period in fiscal 1995. The decreased revenue was due to the disposition
or closure of 38 restaurants since last year's first quarter. The
division's operating loss for the fiscal 1996 period was $368,000,
compared to an operating profit of $827,000 in the first quarter of the
prior year due primarily to the sale of the Company's profitable
Applebee's restaurants. The Company's KFC restaurants experienced a 3.5%
decrease in revenues and a 42.3% decrease in operating profits during the
quarter compared to the prior year's first quarter as a result of
increased operating expenses, including significantly higher chicken
costs. The decrease in revenues between comparative quarters was the
result of the closure of two underperforming KFC restaurants since last
year's first quarter. Guest counts at same store KFCs were down 2.0%
during the first quarter of fiscal 1996 compared to the first quarter of
fiscal 1995; however, this decrease was offset by increased average guest
check amounts.
FINANCIAL CONDITION
The Company's lodging, movie theatre and restaurant businesses
each generate significant and consistent daily amounts of cash because
each segment's revenue is derived predominantly from consumer cash
purchases. The Company believes that these consistent and predictable
cash sources, together with the availability to the Company of $45 million
in unused credit lines at the end of the first quarter, should be adequate
to support the ongoing operational liquidity needs of the Company's
businesses.
Net cash provided by operating activities decreased by $9.7
million during the first quarter of fiscal 1996 to $10.9 million, compared
to the prior year's first quarter. The decrease between the fiscal first
quarters resulted principally from a $9.2 million decrease in accounts and
notes payable caused by timing differences in payments to vendors and an
increase of $5.7 million in accounts receivable due to a higher volume of
business in the lodging segments of the Company.
As a result of receiving $48.3 million in net cash proceeds in
June 1995 from the sale of its Applebee's restaurants and related rights,
the Company's investing activities generated a positive cash flow of $33.2
million compared to a net use of $18.5 million in the fiscal 1995 first
quarter. Capital expenditures to support the Company's continuing
expansion program totalled $19.3 million in the first quarter of fiscal
1996 compared to $19.6 million in the prior year's first quarter. The
most significant amount of capital spent by the Company during the quarter
was on the Company's new Budgetel Inns.
Cash used in financing activities increased to $25.5 million in
the first quarter of fiscal 1996, compared to $4.6 million in the first
quarter of fiscal 1995. During the fiscal 1996 first quarter, the Company
paid $20.5 million of principal payments on long-term debt (as a result of
its receipt of cash from its Applebee's sale), compared to $2.9 million in
the prior year's first quarter, and made dividend payments of $5.0 million
compared to $4.2 million during the prior year's first quarter. The
Company did not issue any new debt during the quarter compared to $2.5
million of new debt issued in the first quarter of fiscal 1995.
The Company's current fiscal 1996 capital expenditure budget is
$133 million, a 72.5% increase over the amount spent in fiscal 1995. This
budget currently represents approximately $95 million for new Budgetel
Inns and Woodfield Suites; $26 million for movie theatre expansion; $10
million for hotel and resort expansion and renovation; and $2 million for
KFC franchises. These anticipated capital expenditures are expected to be
funded from cash generated from operations, the funds received by the
Company from the prior sale of its Applebee's restaurants and other
facilities, and additional bank debt. The actual timing and extent of the
implementation of the Company's current fiscal 1996 expansion plans will
depend in large part on continuing favorable industry and general economic
conditions, the competitive environment, evolving customer needs and
trends and the availability of attractive opportunities. It is likely
that the Company's current expansion goals will continue to evolve and
change in response to these and other factors.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
A Form 8-K was filed by the Company on July 17, 1995 which
reported the sale of its Applebee's Neighborhood Grill &
Bar restaurants under Items 2 and 7 of such form.
<PAGE>
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 thereunto duly authorized.
THE MARCUS CORPORATION
(Registrant)
DATE: September 29, 1995
By: \s\ Stephen H. Marcus
Stephen H. Marcus,
Chairman of the Board, President and
Chief Executive Officer
DATE: September 29, 1995
By: \s\ Kenneth A. MacKenzie
Kenneth A. MacKenzie
Chief Financial Officer and Treasurer
<PAGE>
THE MARCUS CORPORATION
FORM 10-Q
FOR
12 - WEEKS ENDED AUGUST 17, 1995
EXHIBIT INDEX
Exhibit Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE MARCUS CORPORATION AS OF AND FOR THE
QUARTER ENDED AUGUST 17, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-30-1996
<PERIOD-START> MAY-26-1995
<PERIOD-END> AUG-17-1995
<CASH> 27,470
<SECURITIES> 0
<RECEIVABLES> 10,884
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44,209
<PP&E> 499,851
<DEPRECIATION> 136,609
<TOTAL-ASSETS> 415,171
<CURRENT-LIABILITIES> 57,335
<BONDS> 98,157
<COMMON> 7,522
0
0
<OTHER-SE> 231,191
<TOTAL-LIABILITY-AND-EQUITY> 415,171
<SALES> 67,735
<TOTAL-REVENUES> 73,568
<CGS> 31,567
<TOTAL-COSTS> 54,141
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,534)
<INCOME-PRETAX> 42,287
<INCOME-TAX> 16,977
<INCOME-CONTINUING> 25,310
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,310
<EPS-PRIMARY> 1.92<F1>
<EPS-DILUTED> 1.92<F1>
<FN>
<F1>Includes a one-time gain equal to $1.12 on the disposition of certain
restaurant locations.
</FN>
</TABLE>
