FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 30, 1996
OR
[_] 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
250 East Wisconsin Avenue - Suite 1700
Milwaukee, Wisconsin 53202-4220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 272-6020
Securities registered pursuant to Section 12(b) of the Act: Common Stock,
$1 par value
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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 such filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant as of August 9, 1996: $353,000,000
Number of shares outstanding of each of the classes of the registrant's
capital stock as of August 9, 1996:
Common Stock, $1 par value: 10,816,145 shares
Class B Common Stock, $1 par value: 8,856,405 shares
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED HEREIN BY REFERENCE:
Proxy Statement for 1996 annual meeting of shareholders (incorporated by
reference into Part III, to the extent indicated therein).
<PAGE>
PART I
Unless the context indicates otherwise, references to the number
of the Company's various facilities set forth in this Form 10-K Annual
Report are as of May 30, 1996.
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Annual Report on Form 10-K 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 can generally be identified as
such because the context of the statement will include words such as the
Company "believes," "anticipates," "expects" 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 are
described in close proximity to such statements and which could cause
actual results to differ materially from those currently anticipated.
Shareholders, potential investors and other readers are urged to consider
these factors in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking statements.
The forward-looking statements included herein are only made as of the
date of this report and the Company undertakes no obligation to publicly
update such forward-looking statements to reflect subsequent events or
circumstances.
Item 1. Business.
The Marcus Corporation through its subsidiaries (collectively,
the "Company") is engaged in four business segments: motels; movie
theatres; hotels and resorts; and restaurants.
The Company's motel operations include a chain of 124 Budgetel
Inn limited service motels in 28 states and three Woodfield Suites all-
suite hotels. Of the 124 Budgetel Inns, 93 are owned or operated by the
Company and 31 are franchised.
The Company operates 36 movie theatres with an aggregate of 219
screens throughout Wisconsin and in Northern Illinois.
The Company's hotel and resort operations include the Pfister
and the Milwaukee Hilton which are full-service hotels in the Milwaukee,
Wisconsin metropolitan area, and the Grand Geneva Resort & Spa, which is a
full-facility destination resort in Lake Geneva, Wisconsin. The Company
also manages two hotels for third parties: the Mead Inn in Wisconsin
Rapids, Wisconsin and the Crowne-Plaza Northstar in Minneapolis,
Minnesota.
The Company's restaurant division includes 31 KFC (Kentucky
Fried Chicken) restaurants in Wisconsin.
The Company is currently in the third year of an aggressive
multi-year expansion plan which is expected to impact all four divisions.
The Company's current plans include pursuing the following goals:
- Increasing its number of Budgetel Inns to 300 by the year
2000, with up to 12 new Company-owned and 16 new franchised
motels currently planned to be opened in fiscal 1997. The
Company currently believes that much of this anticipated
future growth will ultimately come from its increasing
emphasis on opening new franchised Budgetel Inns.
- Continuing to expand the number of Company-owned Woodfield
Suites, including two new facilities in fiscal 1997.
- Increasing its number of movie theatre screens to 400 by
the year 2000, with planned continued expansion outside of
Wisconsin. Up to 90 new screens are currently planned to
be opened by the Company in fiscal 1997, including the 27
new screens at the three theatres acquired by the Company
immediately after the end of fiscal 1996. Early in fiscal
1997, two new eight-plex theatres opened in Appleton and
New Berlin, Wisconsin, along with a four-screen addition to
an existing theatre in Green Bay, Wisconsin. Currently
under construction is a new 20-screen ultraplex theatre in
Addison, Illinois. Other current expansion plans include a
six-screen addition to the Company's existing 14-plex in
Gurnee Mills, Illinois and 17 new screens to be added to
existing locations in Delafield, Mequon and New Berlin,
Wisconsin and Addison, Illinois.
- Adding up to one or two hotel properties each year over the
next few fiscal years, either Company-owned or managed for
others.
- Expanding and enhancing the Company's KFC franchise.
The actual number, mix and timing of future new facilities or expansions
will depend in large part on continuing favorable industry and general
economic conditions, the Company's financial performance and available
capital, the competitive environment, evolving customer needs and trends,
and the availability of attractive opportunities. It is likely that the
Company's expansion goals will continue to evolve and change in response
to these and other factors and there can be no assurance that the Company
will succeed in achieving these goals.
Business Segment Data
Set forth below is certain business segment data for the
Company's three most recent fiscal years relating to the Company's four
industry segments. Intersegment sales and transfers are not material.
Fiscal Year
1996 1995 1994
(Dollars in thousands)
Revenues from unaffiliated
customers:
Motels $118,679 $104,356 $ 89,043
Theatres 63,696 53,968 50,494
Hotels and resorts 53,498 45,292 32,330
Restaurants 25,927 74,076 70,404
Corporate items(1) 487 298 343
-------- -------- --------
$262,287 $277,990 $242,614
======== ======== ========
Operating income (loss):
Motels $ 36,266 $ 31,992 $ 26,041
Theatres 15,017 12,175 11,483
Hotels and resorts 3,374 1,473 2,550
Restaurants 1,992 3,318 1,499
Corporate items(1) (4,834) (2,163) (3,689)
-------- -------- --------
$ 51,815 $ 46,795 $ 37,884
======== ======== ========
Identifiable assets:
Motels $247,328 $211,112 $182,174
Theatres 63,365 46,928 47,244
Hotels and resorts 73,045 68,731 45,787
Restaurants 29,041 53,090 51,896
Corporate items(1) 42,536 27,221 34,505
-------- -------- --------
$455,315 $407,082 $361,606
======== ======== ========
_______________
(1) Corporate items include amounts not allocable to specific business
segments. Corporate revenues consist principally of rent and the
corporate operating loss includes general corporate expenses.
Corporate assets primarily include cash and cash equivalents, notes
receivable, receivables from joint ventures and land held for
development.
Motel Operations
Budgetel Inns
The Company owns, operates or franchises 124 economy motels,
with over 12,000 rooms, under the name "Budgetel Inn" in 28 states. Of
this total, 31 Budgetel Inns are operated through franchisees, 84 are
Company-owned or operated and nine are operated under joint venture type
agreements.
Targeted at the business traveler, Budgetel Inns feature an
upscale, contemporary exterior appearance, are generally located in high
traffic commercial areas in close proximity to interstate highway exits
and major thoroughfares and typically vary in size between 60 and 150
rooms.
The Company believes that providing amenities not typically
associated with limited service motels distinguish Budgetel Inns from many
of its competitors. These amenities include executive conference centers,
room-delivered complimentary continental breakfasts, king-sized beds, free
local telephone calls and incoming fax transmissions, non-smoking rooms,
in-room coffee makers and hair dryers, remote control cable televisions,
extra-long telephone cords and large working desks. To enhance customer
security, the Company has converted substantially all of its Company-owned
and franchised Budgetel Inn rooms to "card key" locking systems and
provides well-lighted parking areas and all-night front desk staffing.
The interior of each Budgetel Inn is refurbished in accordance with a
strict periodic schedule.
During fiscal 1996, Budgetel Inns opened a new 7,000 square foot
nationwide guest reservations center. Travelers can call 1-800-4-BUDGET
toll-free to obtain Budgetel Inn room reservations and other information.
The Company has a national franchise program for its Budgetel
Inns and has increased its emphasis on opening more franchised Budgetel
Inns. Towards this end, the Company opened a third franchise support
office in fiscal 1996. The new support office in Chicago, together with
existing support offices in Atlanta and Dallas, and a service office in
Florida, are intended to help support expansion of the Budgetel Inn
franchise. Franchisees pay an initial franchise fee and annual marketing
assessments, reservation system assessments and royalty fees based on room
revenues. The Company is qualified to sell, and anticipates ultimately
selling, franchises in all 50 states.
Depending upon continuing favorable industry conditions and
attractive opportunities, the Company currently plans to add up to 28 new
Budgetel Inns in fiscal 1997 (including up to 12 Company-owned and 16
franchised facilities). During fiscal 1996, 11 new Company-owned units
and seven new franchised units were opened.
Woodfield Suites
The Company operates three mid-priced, all-suite hotels under
the name "Woodfield Suites" and currently plans to open two additional
Woodfield Suites in fiscal 1997. Although the Company remains
enthusiastic about the future growth potential of its Woodfield Suites
concept, the number of potential additional Woodfield Suites will depend
on continuing favorable industry and economic conditions, the availability
of attractive site locations and customer acceptance. Woodfield Suites
offers all of its guests the use of its centrally-located swimming pool,
whirlpool and game room. Each suite has a bedroom and separate living
room and features an extra-length bed, sleeper sofa for additional guests,
microwave, refrigerator, wet bar, television and hair dryer. Some suites
also have a kitchenette. All guests receive a free continental breakfast
and are invited to a free cocktail hour.
Hotels and Resorts Operations
The Pfister Hotel
The Company owns and operates the Pfister Hotel in downtown
Milwaukee. The Pfister Hotel, a full service, luxury hotel, has 307 rooms
(including 80 luxury suites), three restaurants, two cocktail lounges, a
night club, an indoor swimming pool, an exercise facility and a 275-car
parking ramp. The Pfister has 20,000 square feet of banquet and
convention facilities. Banquet and meeting rooms can accommodate up to
3,000 persons and the hotel features two large ballrooms, including one of
the largest ballrooms in the Milwaukee metropolitan area, with banquet
seating for 1,200 people. A portion of the Pfister's first-floor space is
leased for use by retail tenants. In fiscal 1996, the Pfister Hotel
earned its 20th consecutive four-diamond award from the American
Automobile Association. The Pfister is also a member of Preferred Hotels
and Resorts Worldwide Association, an organization of independent luxury
hotels and resorts, and the Association of Historic Hotels of America.
The Milwaukee Hilton
The Company owns and operates the 500-room Milwaukee Hilton.
Formerly known as the Marc Plaza Hotel, the Company secured a Hilton
franchise for the hotel which reopened on June 1, 1995 after a six-month
renovation and restoration project. All 500 guest rooms, bathrooms,
public areas and a significant portion of meeting space have been
remodeled. The Company leases office suites on two floors of the
Milwaukee Hilton to professional and other business tenants on a short-
term to intermediate-term basis. The Hilton franchise affiliation has
benefitted the Milwaukee Hilton through the Hilton's international
centralized reservation and marketing system, advertising cooperatives and
frequent stay programs. In connection with the City of Milwaukee's
planned construction of a new convention facility in downtown Milwaukee,
the Company plans to add up to 250 new rooms, together with ancillary
facilities, and connect the Milwaukee Hilton by skywalk to the convention
center by the end of fiscal 1998.
The Grand Geneva Resort & Spa
The Grand Geneva Resort & Spa in Lake Geneva, Wisconsin is a
full-facility destination resort located on 1,300 acres. The largest
convention resort in Wisconsin includes 355 guest rooms, 50,000 square
feet of banquet meeting and exhibit space, three speciality restaurants,
two cocktail lounges, two championship golf courses, several ski-hills,
four indoor and five outdoor tennis courts, four swimming pools, an
executive and fitness complex, horse stables and an on-site airport.
Completed renovation projects at the Grand Geneva in fiscal 1996
included renovation of the resort's condominiums and the renovation of the
renamed "Highland's" golf course, which opened during the late summer of
1996, as well as other property enhancements.
Operated and Managed Hotels
The Company operates the Crowne Plaza-Northstar Hotel in
Minneapolis, Minnesota pursuant to a management agreement. The Crowne
Plaza - Northstar Hotel is located in downtown Minneapolis and has 226
rooms, 13 meeting rooms, 6,370 square feet of ballroom and convention
space, one restaurant, one cocktail lounge, and an exercise facility.
Although closed for a portion of fiscal 1996 due to an electrical fire,
the Northstar has been reopened since May 1996.
The Company manages the Mead Inn in Wisconsin Rapids, Wisconsin,
pursuant to a management agreement. The Mead Inn has 154 guest rooms, 11
meeting rooms totaling 8,180 square feet of meeting space, two cocktail
lounges, two restaurants, and an indoor pool with sauna and whirlpool.
The Company completed construction of a fully-automated laundry
facility in fiscal 1996. This central facility will process the laundry
for the Pfister, Milwaukee Hilton and Grand Geneva Resort & Spa and is
expected to provide significant efficiencies to the hotels and resorts
division.
Theatre Operations
The Company operates 36 movie theatre locations with an
aggregate of 219 screens in Wisconsin and Northern Illinois for an average
of 6.1 screens per location, compared to an average of 5.3 screens per
location at the end of fiscal 1995 and 5.0 at the end of fiscal 1994. The
Company's facilities include 32 multi-screen complexes and four single-
screen theatres. The theatre division's long-term growth strategy is to
focus on multi-screen theatres having between eight to 20 screens and
which typically vary in seating capacity from 150 to 450 seats per screen.
Multi-screen theatres allow the Company to offer a diversified selection
of films to attract additional customers, exhibit movies in larger or
smaller auditoriums within the same theatre depending on the popularity of
the movie and benefit from the economies of having common box office,
concession, projection and lobby facilities. Most of the Company's movie
theatres feature exclusively first-run films.
In fiscal 1996, the Company opened 27 new screens, including a
new ten-plex theatre in Orland Park, Illinois, an eight-plex in Green Bay,
Wisconsin and a total of nine screens added to existing theatres. Three
theatres with a total of seven screens were closed in fiscal 1996.
Immediately after the end of fiscal 1996, the Company acquired an 11-
screen theatre in Chicago Heights, Illinois and two eight-screen budget
movie theatres in the Milwaukee metropolitan area. With the conversion of
one of its existing first-run theatres to a budget theatre shortly after
the end of fiscal 1996, the Company now operates 24 budget movie screens.
In addition to the 27 screens acquired in early fiscal 1997, the Company
plans on opening up to 63 additional new screens in fiscal 1997.
The results of the Company's movie theatre business and the
motion picture industry in general are largely dependent upon the box
office appeal and marketing of available first-run films. Movie
production has been stimulated by additional demand from ancillary markets
such as home video, pay-per-view and cable television, as well as
increased demand from European film markets. The annual number of first-
run film releases has more than doubled since the late 1970s. Fiscal 1996
featured such box office hits as Apollo 13, Toy Story, Twister, Batman
Forever, Grumpier Old Men and Pocahontas.
The Company obtains its films from all of the various national
motion picture production and distribution companies and is not dependent
on any single motion picture supplier. Booking, advertising, refreshment
purchases and promotion are handled centrally by an administrative staff.
The Company strives to provide its movie patrons with high-
quality picture and sound presentation in clean, comfortable, attractive
and contemporary theatre environments. Substantially all of the Company's
movie theatre complexes feature either digital sound, Dolby or other
stereo sound systems; acoustical ceilings; side wall insulation;
engineered drapery folds to eliminate sound imbalance, reverberation and
distortion; tiled floors; loge seats; cup-holder chair-arms; and computer-
controlled heating, air conditioning and ventilation. Many of the
Company's new theatres also offer tiered high-back stadium seating and
oversized "love seats." Computerized box offices permit most of the
Company's movie theatres to sell tickets in advance. Most of the
Company's theatres are accessible to persons with disabilities and provide
wireless headphones for hearing-impaired moviegoers. The Company also
operates an exclusive customer information telephone system in Milwaukee
and Madison, allowing customers to call for information as to the
locations, times and titles of movies being shown by the Company
throughout each metropolitan area.
The Company sells food and beverage concessions at all of its
movie theatres. The Company believes that a wide variety of food and
beverage items, properly merchandised, increases concession revenue per
patron. Although popcorn still remains the traditional favorite with
moviegoers, the Company continues to upgrade its available concessions by
offering a wide range of choices. For example, some of the Company's
theatres offer hot dogs, pizza, ice cream, pretzel bites, frozen yogurt,
coffee, mineral water and juices.
In July 1996, the Company opened its first family entertainment
center, Funset Boulevard, adjacent to its new eight-screen movie theatre
in Appleton, Wisconsin. Funset Boulevard features a 40,000 square foot
entertainment center with a restaurant, soft play areas for toddlers,
laser tag and virtual reality games for teenagers, mini golf for the
family and other entertainment options.
Restaurant Operations
Significant changes occurred in the Company's restaurant
division in early fiscal 1996. On June 30, 1995, the Company sold its
Applebee's restaurants and associated development rights for approximately
$48.3 million, resulting in a substantial gain on investment.
The Company has non-exclusive franchise rights to operate KFC
restaurants in the Milwaukee metropolitan area and in northeast Wisconsin.
The Company has operated KFC restaurants for 36 years, currently operates
31 KFC restaurants and is the largest operator of KFC restaurants in
Wisconsin, based on the number of facilities operated. The restaurants
feature Kentucky Fried Chicken and other franchisor-authorized food items.
Virtually all of the Company's KFC restaurants feature inside
seating for approximately 40 customers, drive-thru windows and updated
electronic equipment to better facilitate food preparation and order
processing. In fiscal 1996, the Company closed four underperforming KFC
restaurants and opened one new KFC restaurant during the fourth quarter.
The Company is exploring various expansion and acquisition opportunities
for its KFC operations.
In fiscal 1996, the Company's KFC restaurants introduced home
delivery service, as well as three new products, including the Colonel's
Crispy Chicken Strips, Chunky Chicken Pot Pies and Tender Roast chicken by
the piece. All three new products were well received by customers and
contributed to increased luncheon sales.
The Company's KFC locations operate under individual franchise
agreements ranging in terms from 10 to 20 years in length. Franchise
royalties approximate 4% of net sales and, in addition, an initial flat
fee of $20,000 is payable for each new KFC restaurant.
The KFC franchisor specifies certain product requirements and
provide for certain approved suppliers of products and supplies in order
to maintain the franchise's quality standards.
Competition
In each of its businesses, the Company experiences intense
competition from national and/or regional chain and franchise operations,
some of which have substantially greater financial and marketing resources
than the Company. There are other facilities in close proximity to most
of the Company's facilities which compete directly with those of the
Company.
The Company's Budgetel Inns compete with such national limited
service motel chains as Days Inn, Hampton Inn (owned by The Promus
Companies Incorporated), Fairfield Inn (owned by Marriott Corporation),
Red Roof Inn, La Quinta Inn, Comfort Inn and others, as well as a large
number of regional and local motels.
The Company's hotels compete in the Milwaukee metropolitan area
with the hotels operated by Hyatt Corporation, Marriott Corporation,
Ramada Inns, Holiday Inns and Wyndham Hotels. The major competition for
the Grand Geneva Resort & Spa consists primarily of independently operated
full-service resorts in the Lake Geneva area and other full service and
destination resorts in Wisconsin and Illinois. The Mead Inn competes with
limited-service motels in Wisconsin Rapids for business, and with other
central Wisconsin properties such as the Holiday Inn of Stevens Point, for
groups. The Crowne Plaza in Minneapolis competes with Hilton Hotels,
Hyatt Corporation, Marriott Corporation, Radisson Hotels and Holiday Inns.
In the restaurant business, the Company's KFC restaurants
compete locally with Hardee's, Boston Market, Popeye's and similar
national, as well as regional, fast food chains and individual restaurants
offering chicken.
The Company's movie theatres compete with large national movie
theatre operators, such as United Artists, Cinemark, Cineplex Odeon and
Carmike Cinemas, Inc., as well as with a wide array of smaller first-run
and discount exhibitors. Although movie exhibitors in general also
compete with the home video, pay-per-view and cable television markets,
the Company believes that such markets have assisted the growth of the
movie theatre industry by encouraging a significant increase in the number
of first-run movies produced and released for initial movie theatre
exhibition, which establishes the demand in the ancillary markets.
The Company believes that the principal factors of competition
in each of its businesses, in varying degrees, are the price and quality
of its product, quality and location of its facilities, and customer
service. The Company believes that it is well positioned to compete on the
basis of these factors.
Seasonality
Historically, the Company's first and fourth fiscal quarters
have produced the strongest operating results, since such periods coincide
with the typical summer seasonality of the movie theatre industry and the
spring and summer strength of the travel and food service aspects of the
Company's business.
Research and Development
Research and development expenditures for the Company are not
material.
Environmental Regulation
The Company does not expect federal, state or local
environmental legislation to have a material effect on the Company's
capital expenditures, earnings or competitive position. However, the
Company's activities in acquiring and selling real estate for business
development purposes have been complicated by the continued increased
emphasis placed by Company personnel on properly analyzing real estate
sites for potential environmental problems. This circumstance has resulted
in, and is expected to continue to result in, greater time and increased
costs involved in acquiring and selling properties associated with the
Company's various businesses.
Employees
As of the end of fiscal 1996, the Company had approximately
7,600 employees, a majority of whom were employed on a part-time basis. A
majority of the Company's hotel employees in Milwaukee are covered by
collective bargaining agreements. Relations with employees have been
satisfactory and there have been no work stoppages due to labor disputes.
Item 2. Properties.
The Company owns a substantial portion of its facilities,
including the Pfister Hotel, the Milwaukee Hilton and the Grand Geneva
Resort and Spa, all of the Company-owned Budgetel Inns, the majority of
its theatres and restaurants, and leases the remainder. The Company also
manages two hotel properties for third parties. Additionally, the Company
owns properties acquired for the future construction and operation of new
Company operating facilities. Some of its properties are leased from
entities owned by principal shareholders of the Company. All of the
Company's properties are suitably maintained and adequately utilized to
cover the respective business segment served.
The operating properties owned, leased and franchised by the
Company as of May 30, 1996 are summarized in the following table:
<TABLE>
<CAPTION>
Leased Leased Managed Managed
Total Number From From for for Operated
of Facilities Unrelated Related Related Unrelated By
Business Segment in Operation Owned(1) Parties Parties Parties Parties Franchisees
<S> <C> <C> <C> <C> <C> <C> <C>
Restaurants:
KFC 31 30 1 0 0 0 0
Movie Theatres:
Indoor 36 23 12 1 0 0 0
Hotels and Resorts:
Hotels 4 2 0 0 0 2 0
Resorts 1 1 0 0 0 0 0
Motels:
Budgetel 124 82 0 1 9 1 31
Woodfield Suites 3 3 0 0 0 0 0
--- --- --- -- -- -- ---
TOTALS 199 141 13 2 9 3 31
=== === === == == == ===
<FN>
________________
(1) Two of the KFC restaurants, two of the movie theatres owned by the
Company, and two of the motels are on land leased from unrelated
parties under long-term leases. One of the motels is on land leased
from related parties. The Company's partnership interests in nine
Budgetel Inns that it manages and one movie theatre that it leases
are not included in this column.
</TABLE>
Certain of the above individual properties or facilities are
subject to purchase money or construction mortgages or commercial lease
financing arrangements, none of which encumbrances are considered in the
aggregate to be material to the Company.
Assuming exercise by the Company of all renewal and extension
options, the terms of the Company's operating property leases expire on
various dates, with over 90% of the leases expiring after 1997.
Item 3. Legal Proceedings.
The Company does not believe that any pending legal proceeding
involving the Company is material to its business. No legal proceeding
required to be disclosed under this item was terminated during the fourth
quarter of the Company's 1996 fiscal year.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's
shareholders during the fourth quarter of the Company's 1996 fiscal year.
EXECUTIVE OFFICERS OF COMPANY
Each of the current executive officers of the Company is
identified below together with information about each such officer's age,
current position with the Company and employment history for at least the
past five years:
Name Position Age
Stephen H. Marcus Chairman of the Board, President
and Chief Executive Officer 61
Bruce J. Olson Group Vice President 46
H. Fred Delmenhorst Vice President-Human Resources 55
Kenneth A. MacKenzie Chief Financial Officer and
Treasurer 62
Thomas F. Kissinger General Counsel and Secretary 36
Douglas A. Neis Corporate Controller 37
Stephen H. Marcus became Chairman of the Board of the Company in
December 1991. He also served as Treasurer of the Company prior to the
election of Mr. MacKenzie to such position in September 1987. In December
1988, he became the Chief Executive Officer of the Company, in addition to
Chief Operating Officer. Mr. Marcus has been with the Company for 35
years.
Bruce J. Olson has been employed in his present position with
the Company since July 1991. He was elected to serve on the Company's
Board of Directors in April 1996. Mr. Olson previously served as Vice
President-Administration and Planning for the Company from September 1987
until July 1991 and as Executive Vice President and Chief Operating
Officer of Marcus Theatres Corporation from August 1978 until October
1988, when he was appointed President of that corporation. Mr. Olson
joined the Company in 1974.
H. Fred Delmenhorst has been the Vice President-Human Resources
since he joined the Company in December 1984.
Kenneth A. MacKenzie was elected Treasurer of the Company in
September 1987 and Chief Financial Officer in June 1994. He was the
Controller of the Company or its Marcus Restaurants, Inc. subsidiary June
1979 through September 1995.
Thomas F. Kissinger joined the Company in August 1993 as
Secretary and Director of Legal Affairs and in August 1995 was promoted to
General Counsel and Secretary. Prior thereto, Mr. Kissinger was
associated with the law firm of Foley & Lardner for five years.
Douglas A. Neis joined the Company in February 1986 as
Controller of the Marcus Theatres division. In November 1987, Mr. Neis
was promoted to Controller of Marcus Restaurants. In July 1991, he was
appointed Vice President of Planning and Administration for Marcus
Restaurants. In September 1994, Mr. Neis was also named Director of
Technology for the Company and in September 1995 he was elected Corporate
Controller for the Company.
The executive officers of the Company are generally elected
annually by the Board of Directors after the annual meeting of
shareholders. Each executive officer holds office until his successor has
been duly qualified and elected or until his earlier death, resignation or
removal.
PART II
Item 5. Market for the Company's Common Equity and Related Shareholder
Matters.
The following data has been adjusted, where necessary, to
retroactively adjust for the Company's three-for-two stock split effected
in the form of a 50% stock dividend distributed on November 14, 1995.
Last Sale Price Range of Common Stock
First Quarter Second Quarter Third Quarter Fourth Quarter
Fiscal Year Ended May 30, 1996
High $21.33 $23.67 $28.00 $28.25
Low $19.08 $19.83 $22.25 $25.00
Fiscal Year Ended May 25, 1995
High $19.08 $18.67 $18.67 $20.50
Low $16.42 $16.67 $16.00 $17.08
On August 9, 1996, there were 1,740 shareholders of record for
the Common Stock and 34 shareholders of record for the Class B Common
Stock.
See Item 6 for information on the Company's cash dividends paid
on its Common Stock. Cash dividends paid on the Company's Class B Common
Stock were $0.31 and $0.21 per share in fiscal 1996 and 1995,
respectively. In April 1996, the Company announced that its Board of
Directors intended to commence paying regular quarterly dividends on or
about the middle of February, May, August and November of each year,
subject to future specific Board of Directors' authorization and
declaration in each case based on, among other factors, the Company's
financial performance and condition.
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
Fiscal Year
1996(1) 1995 1994 1993 1992 1991
Operating Results
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues $262,287 $277,990 $242,614 $212,910 $204,297 $188,008
Net earnings $ 42,307 $ 24,136 $ 22,829 $ 16,482 $ 13,289 $ 11,618
Common Stock Data(2)
Net earnings per share $ 2.14 $ 1.23 $ 1.16 $ 0.95 $ 0.79 $ 0.68
Cash dividends per common
share $ 0.34 $ 0.23 $ 0.19 $ 0.17 $ 0.15 $ 0.13
Average shares outstanding
(In Thousands) 19,808 19,691 19,661 17,472 16,883 17,046
Book value per share $ 12.77 $ 10.94 $ 9.92 $ 8.93 $ 7.46 $ 6.81
Financial Position (Year End)
(In Thousands)
Total assets $455,315 $407,082 $361,606 $309,455 $274,394 $255,117
Long-term debt $127,135 $116,364 $107,681 $ 78,995 $100,032 $ 96,183
Shareholders' equity $251,248 $214,464 $193,918 $173,980 $124,874 $114,697
Capital expenditures $ 83,689 $ 77,083 $ 75,825 $ 47,237 $ 27,238 $ 39,861
Financial Ratios
Current ratio (year end) 0.62 0.41 0.67 0.90 0.73 0.65
Debt/capitalization ratio
(year-end) 0.35 0.37 0.37 0.34 0.46 0.47
Return on revenues 16.1% 8.7% 9.4% 7.7% 6.5% 6.2%
Return on average
shareholders' equity 18.2% 11.8% 12.4% 11.0% 11.1% 10.5%
<CAPTION>
Fiscal Year
1990 1989 1988 1987 1986
Operating Results
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Revenues $176,592 $166,710 $162,393 $152,531 $141,202
Net earnings $ 10,781 $ 10,042 $ 10,073 $ 8,078 $ 8,719
Common Stock Data(2)
Net earnings per share $ 0.63 $ 0.58 $ 0.58 $ 0.47 $ 0.50
Cash dividends per common
share $ 0.12 $ 0.11 $ 0.10 $ 0.10 $ 0.09
Average shares outstanding
(In Thousands) 17,226 17,306 17,364 17,364 17,315
Book value per share $ 6.25 $ 5.74 $ 5.29 $ 4.80 $ 4.43
Financial Position (Year End)
(In Thousands)
Total assets $230,789 $197,898 $181,354 $167,289 $156,343
Long-term debt $ 85,563 $ 64,163 $ 56,635 $ 55,255 $ 52,316
Shareholders' equity $106,983 $ 98,250 $ 91,318 $ 82,952 $ 76,328
Capital expenditures $ 42,385 $ 34,253 $ 23,591 $ 28,234 $ 38,865
Financial Ratios
Current ratio (year end) 0.91 0.75 1.00 0.94 1.13
Debt/capitalization ratio
(year-end) 0.45 0.41 0.40 0.41 0.42
Return on revenues 6.1% 6.0% 6.2% 5.3% 6.2%
Return on average
shareholders' equity 10.5% 10.6% 11.6% 10.1% 12.0%
<FN>
_______________
(1) Includes an after-tax gain of $14.8 million, or $0.75 per share,
on the sale of certain restaurant locations.
(2) All per share and shares outstanding data have been adjusted to
reflect stock splits in fiscal 1996, 1993 and 1987.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Certain statements herein constitute "forward-looking statements." See
"Special Note Regarding Forward-Looking Statements" included in the
forepart of this report.
RESULTS OF OPERATIONS
GENERAL
The Marcus Corporation and its four divisions report their
consolidated and individual segment results of operations on either a 52-
or 53-week fiscal year. Fiscal 1996 was a 53-week fiscal year for the
Company and its theatre division, while the Company's remaining divisions
reported on a 52-week fiscal year. Fiscal 1995 and 1994 were 52-week
years for the Company and each of its divisions. Fiscal 1997 will be a
53-week fiscal year for the Company's motel and hotels/resorts divisions,
while the Company and each of its other divisions will report on a 52-week
fiscal year.
Total consolidated revenues for fiscal 1996 were $262.3 million,
a decrease of $15.7 million, or 5.6%, compared to fiscal 1995 consolidated
revenues of $278.0 million. The anticipated decline in fiscal 1996
revenues from the prior year was due to the loss of approximately $46
million in restaurant division revenues in fiscal 1996, resulting from the
Company's June 1995 sale of its 18 Applebee's restaurants and February
1995 disposition through lease of its 11 Marc's Cafe & Coffee Mill
restaurants. However, as described below, the loss of revenues from the
disposition of these restaurants was substantially offset by increased
1996 revenues by all of the Company's other divisions. The Company
increasingly overcame this loss of revenue throughout fiscal 1996, with
the Company's fiscal 1996 fourth quarter revenues equal to fiscal 1995
fourth quarter revenues. The additional week of results reported for the
theatre division in fiscal 1996 contributed an additional $2.0 million in
revenues and $550,000 in operating income to the Company's fourth quarter
and fiscal 1996 results.
Excluding the after-tax gain of $14.8 million, or $0.75 per
share, resulting from the Company's sale of restaurants, fiscal 1996
earnings were $27.5 million, or $1.39 per share. This represented a 14.1%
increase from net earnings of $24.1 million, or $1.23 per share, in fiscal
1995. Including the gain from the sale of restaurants, net earnings were
$42.3 million, or $2.14 per share, for fiscal 1996. Weighted average
shares outstanding were 19.8 million in fiscal 1996 and 19.7 million in
1995. All per share and share data in this discussion have been adjusted
to reflect the Company's three-for-two stock split effected in the form of
a 50% stock dividend on November 14, 1995.
The Company's income tax expense for fiscal 1996 was $27.8
million, an increase of $11.7 million from fiscal 1995. The Company's
effective tax rate for fiscal 1996 was 39.6% versus the prior fiscal
year's 40.0%.
Historically, the Company's first and fourth fiscal quarters
have produced the strongest operating results, since these periods
coincide with the typical summer seasonality of the movie theatre industry
and the spring and summer strength of the Company's travel and food
service businesses.
The Company is currently in the third year of an aggressive
multi-year expansion plan which is expected to impact all four divisions.
The Company's current plans include the following goals:
- Increasing its number of Budgetel Inns to 300 by the year
2000, with up to 12 new Company-owned and 16 new franchised
motels currently planned to be opened in fiscal 1997. The
Company currently believes that much of this anticipated
future growth will ultimately come from its increasing
emphasis on opening new franchised Budgetel Inns.
- Continuing to expand its number of Company-owned Woodfield
Suites, including two new facilities in fiscal 1997.
- Increasing its number of movie theatre screens to 400 by
the year 2000, with continued expansion outside of
Wisconsin. Up to 90 new screens are currently planned to
be opened by the Company in fiscal 1997, including the 27
new screens at the three theatres acquired by the Company
immediately after the end of fiscal 1996. Early in fiscal
1997, two eight-plexes opened in Appleton and New Berlin,
Wisconsin, along with a four-screen addition to an existing
theatre in Green Bay, Wisconsin. Currently under
construction is a new 20-screen ultraplex theatre in
Addison, Illinois. Other current expansion plans include a
six-screen addition to the Company's existing 14-plex in
Gurnee Mills, Illinois and 17 new screens to be added to
existing locations in Delafield, Mequon and New Berlin,
Wisconsin and Addison, Illinois.
- Adding up to one or two hotel properties each year over the
next few fiscal years, either Company-owned or managed for
others.
- Expanding and enhancing the Company's KFC franchise.
The actual number, mix and timing of potential future new
facilities and expansions will depend in large part on continuing
favorable industry and general economic conditions, the Company's
financial performance and available capital, the competitive environment,
evolving customer needs and trends, and the continued availability of
attractive opportunities. It is likely that the Company's expansion goals
will continue to evolve and change in response to these and other factors
and there can be no assurance that these current goals will be achieved.
MOTELS
Fiscal 1996 Versus Fiscal 1995
Total revenues in fiscal 1996 for the motel division were $118.7
million, an increase of $14.3 million, or 13.7%, compared to $104.4
million in fiscal 1995. The motel division's operating income in fiscal
1996 totaled $36.3 million, an increase of $4.3 million, or 13.4%, over
the division's fiscal 1995 operating income of $32.0 million.
Average daily room rates increased by 4.2% at the Company's
motels in fiscal 1996 compared to fiscal 1995 principally as a result of
scheduled selective price increases and continued favorable lodging and
general economic conditions. The Company's motel occupancy percentage in
fiscal 1996 fell slightly compared to fiscal 1995 but still remained well
above industry averages. Factors contributing to this slight decline
included severe weather conditions and two federal government shutdowns
during the third quarter.
At May 30, 1996, there were 124 Budgetel Inns (93 Company owned
or operated and 31 franchised) and three Woodfield Suites in operation,
compared to 106 Budgetel Inns (82 Company owned and operated and 24
franchised) and three Woodfield Suites at 1995 fiscal year end. Eleven
new Company-owned Budgetel locations and seven new franchised Budgetel
locations were opened in fiscal 1996. The Company's newly opened motels
contributed additional revenues of $5.3 million and nominal operating
income in fiscal 1996. Similar comparative operating results are expected
for new facilities to be opened in fiscal 1997.
Fiscal 1995 Versus Fiscal 1994
Total revenues in fiscal 1995 for the motel division were $104.4
million, an increase of $15.4 million, or 17.2%, compared to $89.0 million
in fiscal 1994. The motel division's operating income in fiscal 1995
totaled $32.0 million, an increase of $6.0 million, or 22.9%, over the
division's fiscal 1994 operating income of $26.0 million.
Average daily room rates increased by 6.3% at the Company's
motels in fiscal 1995 principally as a result of increased demand from
continued favorable lodging industry and general economic conditions. The
Company's motel occupancy percentage in fiscal 1995 remained consistent
with fiscal 1994, well above industry averages.
At the end of fiscal 1995, there were 106 Budgetel Inns and
three Woodfield Suites in operation, compared to 98 Budgetel Inns and one
Woodfield Suites at 1994 fiscal year end. Together with the two new
Woodfield Suites, the Company's new motels contributed additional revenues
of $9.9 million and nominal operating income in fiscal 1995.
THEATRES
Fiscal 1996 Versus Fiscal 1995
The theatre division's fiscal 1996 revenues were $63.7 million,
an increase of $9.7 million, or 18.0%, over $54.0 million in fiscal 1995.
The division's operating income for fiscal 1996 was $15.0 million, an
increase of $2.8 million or 23.3%, from $12.2 million in fiscal 1995. The
additional week of operations included in the theatre division's fiscal
1996 results (which included the Memorial Day holiday weekend) contributed
an additional $2.0 million to the division's fiscal 1996 revenues.
At May 30, 1996, the Company operated 219 screens at 36
locations in Wisconsin and Illinois, compared to 199 screens at 37
locations at the end of fiscal 1995. Consistent with the Company's long-
term strategic plan to focus on operating large multi-screen theatres, the
Company opened 27 new screens, including a new ten-plex theatre in Orland
Park, Illinois and an eight-plex in Green Bay, Wisconsin. Additionally,
three theatres with a total of seven screens were closed in fiscal 1996.
These closed theatres had a minimal impact on fiscal 1996 operations. The
addition of the new screens in fiscal 1996 generated additional revenues
of over $7.0 million compared to fiscal 1995. Immediately after the end
of fiscal 1996, the Company acquired an 11-screen theatre in Chicago
Heights, Illinois and two budget-film, eight-plex theatres in the
metropolitan Milwaukee area. The Company also switched the emphasis of
one of its Appleton, Wisconsin theatres from first-run movies to budget
movies, bringing the Company's total number of budget oriented screens to
24. Compared to first-run theatres, budget theatres generally have lower
box office revenues and associated film costs and higher concession sales
as a percentage of box office. Additionally, the Company's first family
entertainment center opened in late July 1996 in Appleton, Wisconsin. The
95,000 square foot Hollywood-themed indoor amusement facility includes an
eight-plex theatre and a restaurant, party rooms, a laser tag center,
virtual reality games, a miniature golf course and an arcade.
Revenues of the theatre business and the motion picture industry
in general are heavily dependent on the general audience appeal of
available films, together with studio marketing, advertising and support
campaigns, factors over which the Company has no control. Fiscal 1996
included such box office hits as Apollo 13, Toy Story, Twister, Batman
Forever, Grumpier Old Men and Pocahontas. Each of these films produced
box office receipts in excess of $1 million for the theatre division in
fiscal 1996. Approximately the same number of first-run films were
released in fiscal 1996 as in fiscal 1995. The Company exhibited five
films which contributed box office receipts in excess of $1 million in
fiscal 1995.
Total box office receipts in fiscal 1996 were $44.4 million, an
increase of $6.1 million, or 15.9%, from $38.3 million in fiscal 1995.
This increase can be attributed to a 9.2% increase in attendance and a
6.0% increase in the average ticket price. The increase in attendance in
fiscal 1996 was due to the addition of new screens, including the new
Orland Park ten-plex. Attendance at the Company's other comparable
locations was virtually the same between fiscal years.
Vending revenues in fiscal 1996 were $17.7 million, an increase
of $3.1 million, or 20.9%, over $14.6 million in fiscal 1995. Vending
revenues increased due to the increase in theatre attendance from the
Company's added screens and the 10.4% increase in the average concession
sales per person in fiscal 1996 from fiscal 1995.
Fiscal 1995 Versus Fiscal 1994
The theatre division's fiscal 1995 revenues were $54.0 million,
an increase of $3.5 million, or 6.9%, over $50.5 million in fiscal 1994.
Operating income for fiscal 1995 was $12.2 million, an increase of almost
$700,000, or 6.0%, from $11.5 million in fiscal 1994.
At the end of fiscal 1995, the Company operated 199 screens at
37 locations in Wisconsin and Illinois, compared to 189 screens at 36
locations at the end of fiscal 1994. The Company opened a new eight-plex
theatre in Delafield, Wisconsin, in November 1994 and added two screens to
an existing theatre in Racine, Wisconsin. The addition of the new
Delafield theatre for a part of the fiscal year and the operation of the
Gurnee Mills ten-plex theatre for an entire year generated additional
revenues of over $3.8 million compared to fiscal 1994.
In fiscal 1995, over 160 first-run films were released,
including such box office hits as The Lion King, Forrest Gump, The Santa
Clause, True Lies and Speed. Each of these films produced box office
receipts in excess of $1 million for the theatre division. Approximately
the same number of first-run films were released in fiscal 1994. The
Company exhibited six films which contributed box office receipts in
excess of $1 million in fiscal 1994.
Total box office receipts in fiscal 1995 were $38.3 million, an
increase of $2.8 million, or 8.0%, from $35.5 million in fiscal 1994.
This increase can be attributed to a 3.1% increase in attendance and a
4.8% increase in the average ticket price. The increase in attendance was
due solely to the addition of the new Delafield theatre for the last half
of the fiscal year and the operation of Gurnee Mills for an entire fiscal
year. Attendance at other comparable locations decreased 2.0% between
fiscal years.
Vending revenues in fiscal 1995 were $14.6 million, an increase
of $1 million, or 7.3%, over $13.6 million in fiscal 1994, due to the
increase in theatre attendance and the 3.5% increase in the average
concession sales per person in fiscal 1995 from fiscal 1994.
HOTELS AND RESORTS
Fiscal 1996 Versus Fiscal 1995
Total revenues from the Company's hotels and resorts division in
fiscal 1996 increased by $8.2 million, or 18.1%, to $53.5 million,
compared to the $45.3 million recognized in the previous fiscal year,
while operating income increased by $1.9 million, or 129%, to $3.4
million, compared to the $1.5 million earned in fiscal 1995.
Increased occupancy at the Grand Geneva Resort & Spa as a result
of greater market awareness and the reduction of start-up related
expenses, together with the revenue from having the restored and renovated
Milwaukee Hilton (formerly the Marc Plaza) open for the entire 1996 fiscal
year and the impact of increased average daily room rates at all three of
the Company's owned hotels, were the primary reasons for the division's
increased fiscal 1996 revenues and operating income compared to the prior
year. However, the amortization of the Hilton's pre-opening costs, the
loss of revenue from the nonrenewal of the operating agreement for the
Sheraton-Mayfair Inn, together with the effects on occupancy of adverse
winter weather, negatively impacted the division's fiscal 1996 operating
results. Construction of a new central laundry facility during fiscal
1996 is expected to reduce future housekeeping expenses for the division
and further improve the division's profitability.
Fiscal 1995 Versus Fiscal 1994
Total revenues from the Company's hotels and resorts division in
fiscal 1995 increased by $13.0 million, or 40.1%, to $45.3 million,
compared to the $32.3 million recognized in the previous fiscal year,
while operating income decreased by $1.1 million, or 42.2%, to $1.5
million, compared to the $2.6 million earned in fiscal 1994. The reason
for the reduction in operating income was the continuing non-capitalized
start-up and renovation expenses incurred for ongoing upgrades at the
Grand Geneva Resort & Spa.
The division's increase in revenues in fiscal 1995 was
attributable principally to an 11.4% increase in occupancy rates and a
16.5% increase in room rates. The increase in occupancy rates was due
primarily to generally favorable economic conditions and the increase in
room rates was mainly due to the relatively higher room rates at the newly
renovated Grand Geneva which was open for the entire fiscal year. These
factors contributed $14.2 million to the division's revenues in fiscal
1995. Additionally, the continuing favorable customer response to the
fiscal 1994 renovation of the Pfister Hotel contributed positively to
fiscal 1995 revenues, while the temporary closing of the Marc Plaza for
major renovation and remodeling for the last half of fiscal 1995 modestly
reduced revenues. The remainder of the fiscal 1995 revenue increase was
derived from an entire fiscal year of management fees from operating the
Mead Inn and the Crowne Plaza-Northstar. The Company elected not to renew
its Sheraton-Mayfair Inn operating agreement for fiscal 1996. The Marc
Plaza Hotel reopened as the Milwaukee Hilton on June 1, 1995.
RESTAURANTS
Fiscal 1996 Versus Fiscal 1995
Fiscal 1996 restaurant division revenues totaled $25.9 million,
a decrease of $48.1 million, or 65.0%, from $74.1 million in fiscal 1995.
The division's operating income for fiscal 1996 was $2.0 million, a
decrease of $1.3 million, or 40.0%, from operating income of $3.3 million
in fiscal 1995. The sale of the Company's Applebee's restaurants,
together with the fiscal 1995 divestiture of the Marc's Cafe & Coffee Mill
and other restaurants, reduced fiscal 1996 restaurant division revenues by
approximately $46 million and reduced 1996 operating income by
$1.2 million. Annual rental income of approximately $1 million from
leasing the 11 divested Marc's Cafes and one of the sold Applebee's was
included as restaurant division revenue in fiscal 1996.
The Company's KFC restaurants experienced a 1.4% decrease in
aggregate revenues and a 25.0% decrease in aggregate operating income
during fiscal 1996 compared to fiscal 1995. The decreased revenues were
the result of the loss of $1.0 million in revenues from the closure of
four underperforming KFC restaurants during fiscal 1996. The decrease in
operating income was almost entirely the result of start-up costs
associated with the introduction of home delivery services. Same-store
KFC restaurants sales increased 4.3% during fiscal 1996 compared to fiscal
1995 because guest counts increased 3.3% due to increased lunch-time
traffic, the introduction of home delivery service and the introduction of
several new franchisor products. Average check amounts increased over
fiscal 1995 levels. The Company opened a new KFC during the fiscal 1996
fourth quarter and, at the end of fiscal 1996, operated 31 KFC restaurants
compared to 34 at the end of fiscal 1995. The Company is currently
exploring various KFC expansion and acquisition opportunities.
Fiscal 1995 Versus Fiscal 1994
During fiscal 1995, the Company divested 11 Marc's Cafe & Coffee
Mill restaurants by leasing the restaurants to a group of former
restaurant division employees and closed its three remaining Marc's Big
Boy, two Big Boy Expresses, one KFC and one Original Gino's East of
Chicago restaurants.
Restaurant division revenues totaled almost $74.1 million for
fiscal 1995, an increase of almost $3.7 million, or 5.2%, from $70.4
million in fiscal 1994. The revenue increase was due almost entirely to
the Company's five newly opened Applebee's, the operation of three
additional Applebee's for an entire fiscal year, and increasing customer
counts and average check amounts at the Company's 10 continuing Applebee's
and 34 KFC restaurants. The division's operating income for fiscal 1994
was $3.3 million, an increase of $1.8 million, or 121.3%, from operating
income of $1.5 million in fiscal 1994. Fiscal 1995 operating income
improvements were derived principally from improved same store sales at
continuing Applebee's and KFCs and expense savings realized from divesting
its underperforming restaurants.
The Company's KFC operating income increased significantly in
fiscal 1995 over fiscal 1994. KFC's decreased fiscal 1995 guest counts
were more than offset by an increase in average check amounts, resulting
in a same store sales increase of 1.7% in fiscal 1995 over fiscal 1994.
The Company believes that this result was largely caused by the focus of
the franchisor's promotional campaign on higher priced family meals. The
Company closed one underperforming KFC restaurant in fiscal 1995.
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 $44.5
million in unused credit lines at fiscal 1996 year end, should be adequate
to support the ongoing operational liquidity needs of the Company's
businesses.
Net cash provided by operating activities decreased by $15.8
million, or 27.5%, in fiscal 1996 to $41.8 million compared to $57.6
million in fiscal 1995. The decrease was primarily the result of
approximately $10 million of income taxes incurred on the gain on the sale
of restaurants, combined with timing differences in the payment of
accounts payable and receipt of accounts receivable.
Net cash used in investing activities decreased by $27.4
million, or 40.1%, to $40.8 million in fiscal 1996. The net proceeds of
$48.9 million from disposals of property, equipment and other assets
(principally from the sale of Applebee's) more than offset increased
advances to joint ventures and a $6.6 million, or 8.6%, increase in
capital expenditures. Capital expenditures in fiscal 1996 included $51.5
million spent on motel division capital projects, $20.3 million on theatre
division projects and $8.0 million on hotels and resorts division
projects. In fiscal 1995, $32.9 million was spent on motel division
projects, $11.0 million on theatre division projects, $27.2 million on
hotels and resorts division projects and $5.9 million on restaurant
division projects.
Principally as a result of funding a portion of the Company's
fiscal 1996 facility expansions and renovations, the Company's total debt
increased to $136.2 million at the close of fiscal 1996, compared to
$125.6 million at the end of fiscal 1995, primarily through increased
borrowings on its lines of credit. Net cash provided by financing
activities was $5.7 million in fiscal 1996, a decrease of $3.7 million, or
39.2%, from fiscal 1995, as the Company financed more of its capital
requirements from cash generated from operating and investing activities.
The Company issued $19.6 million of new notes payable and long-term debt
in fiscal 1996 compared to $18.0 million in the prior year and made $7.9
million of debt principal payments in fiscal 1996 compared to $4.5 million
in fiscal 1995. The Company's debt-capitalization ratio was 0.35 at May
30, 1996, compared to 0.37 at the prior fiscal year end.
Total capital expenditures (including normal continuing capital
maintenance projects) of $83.7 million and $77.1 million were incurred in
fiscal 1996 and 1995, respectively. Total capital expenditures in fiscal
1997 are expected to exceed fiscal 1996 expenditures and are expected to
be funded by cash generated from operations and additional debt, including
potentially up to $85 million of additional institutional debt.
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
of The Marcus Corporation
We have audited the accompanying consolidated balance sheets of The Marcus
Corporation (the Company) as of May 30, 1996 and May 25, 1995, and the
related consolidated statements of earnings, shareholders' equity and cash
flows for each of the three years in the period ended May 30, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the
Company at May 30, 1996 and May 25, 1995, and the consolidated results of
its operations and its cash flows for each of the three years in the
period ended May 30, 1996, in conformity with generally accepted
accounting principles.
As discussed in Note 7 to the consolidated financial statements, effective
May 28, 1993, the Company changed its method of accounting for income
taxes.
Milwaukee, Wisconsin ERNST & YOUNG LLP
July 19, 1996
<PAGE>
THE MARCUS CORPORATION
CONSOLIDATED BALANCE SHEETS
May 30, 1996 May 25, 1995
(In Thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,466 $ 8,798
Accounts and notes receivable (Note 3) 8,780 6,166
Receivables from joint ventures (Note 9) 4,890 1,861
Other current assets 2,463 4,817
-------- --------
Total current assets 31,599 21,642
PROPERTY AND EQUIPMENT, net (Note 3) 411,563 374,284
OTHER ASSETS:
Investments in joint ventures (Notes 8 and 9) 1,295 629
Other (Note 10) 10,858 10,527
-------- --------
Total other assets 12,153 11,156
-------- --------
Total assets $455,315 $407,082
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable (Note 9) $ 5,555 $ 4,452
Accounts payable 15,646 17,886
Income taxes 1,393 2,069
Taxes other than income taxes 8,323 9,091
Accrued compensation 1,380 1,458
Other accrued liabilities 9,352 8,052
Current maturities on long-term debt (Note 4) 9,069 9,245
-------- --------
Total current liabilities 50,718 52,253
LONG-TERM DEBT (Note 4) 127,135 116,364
DEFERRED INCOME TAXES (Note 7) 20,027 19,957
DEFERRED COMPENSATION AND OTHER (Note 6) 6,187 4,044
COMMITMENTS, LICENSE RIGHTS AND CONTINGENCIES
(Note 8)
SHAREHOLDERS' EQUITY (Note 5):
Preferred Stock, $1 par; authorized
1,000,000 shares; none issued
Common Stock:
Common Stock, $1 par; authorized 30,000,000
shares; issued 11,529,962 shares in 1996
and 7,522,368 shares in 1995 11,530 7,522
Class B Common Stock, $1 par; authorized
20,000,000 shares; issued and outstanding
8,856,605 shares in 1996 and 6,068,952
shares in 1995 8,857 6,069
Capital in excess of par 38,832 45,154
Retained earnings 195,643 159,675
-------- --------
254,862 218,420
Less cost of Common Stock in treasury
(718,352 shares in 1996 and
525,847 shares in 1995) 3,614 3,956
-------- --------
Total shareholders' equity 251,248 214,464
-------- --------
Total liabilities and shareholders' equity $455,315 $407,082
======== ========
See accompanying notes.
<PAGE>
THE MARCUS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
THREE YEARS ENDED MAY 30, 1996
May 30, May 25, May 26,
1996 1995 1994
(In Thousands, Except Per Share Data)
REVENUES:
Rooms and telephone $137,961 $119,705 $100,691
Food and beverage 43,193 89,755 81,948
Theatre operations 63,099 53,733 50,263
Other income 18,034 14,797 9,712
------- ------- -------
Total revenues 262,287 277,990 242,614
COSTS AND EXPENSES:
Rooms and telephone 51,346 42,780 37,100
Food and beverage 32,014 69,137 63,470
Theatre operations 38,055 32,612 30,212
Advertising and marketing 15,273 16,241 13,348
Administrative 25,532 23,080 21,569
Depreciation and amortization 25,117 23,570 20,385
Rent (Note 8) 2,461 3,727 3,572
Property taxes 9,416 9,488 8,873
Other operating expenses 11,258 10,560 6,201
------- ------- -------
Total costs and expenses 210,472 231,195 204,730
------- ------- -------
OPERATING INCOME 51,815 46,795 37,884
OTHER INCOME (LOSS):
Investment income 2,378 1,525 2,162
Interest expense (8,696) (8,587) (6,931)
Gain on disposition of property
and equipment (Note 2) 24,595 463 1,539
------- ------- -------
18,277 (6,599) (3,230)
------- ------- -------
EARNINGS BEFORE INCOME TAXES AND
CHANGE IN ACCOUNTING PRINCIPLE 70,092 40,196 34,654
INCOME TAXES (Note 7) 27,785 16,060 13,607
------- ------- -------
EARNINGS BEFORE CHANGE IN
ACCOUNTING PRINCIPLE 42,307 24,136 21,047
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES
(Note 7) - - 1,782
------- ------- -------
NET EARNINGS $ 42,307 $ 24,136 $ 22,829
====== ====== ======
EARNINGS PER SHARE:
Earnings before change in
accounting principle $2.14 $1.23 $1.07
Cumulative effect of change in
accounting for income taxes - - .09
------- ------- -------
Net earnings $2.14 $1.23 $1.16
====== ====== ======
WEIGHTED AVERAGE SHARES
OUTSTANDING (Note 5) 19,808 19,691 19,661
====== ====== ======
See accompanying notes.
<PAGE>
<TABLE>
THE MARCUS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THREE YEARS ENDED MAY 30, 1996
<CAPTION>
Class B Capital
Common Common in Excess Retained Treasury
Stock Stock of Par Earnings Stock
(In Thousands)
<C> <S> <S> <S> <S> <S>
BALANCES AT MAY 27, 1993 $ 7,269 $6,322 $44,557 $120,429 $(4,597)
Cash dividends:
$.17 per share Class B Common Stock - - - (1,609) -
$.19 per share Common Stock - - - (1,872) -
Exercise of stock options - - (38) - 389
Purchase of treasury stock - - - - (148)
Savings and profit-sharing contribution - - 224 - 160
Reissuance of treasury stock - - 2 - 1
Conversion of Class B Common Stock 97 (97) - - -
Net earnings for the year - - - 22,829 -
------ ------ ------ ------- ------
BALANCES AT MAY 26, 1994 7,366 6,225 44,745 139,777 (4,195)
Cash dividends:
$.21 per share Class B Common Stock - - - (1,924) -
$.23 per share Common Stock - - - (2,314) -
Exercise of stock options - - - - 186
Savings and profit-sharing contribution - - 404 - 49
Reissuance of treasury stock - - 5 - 4
Conversions of Class B Common Stock 156 (156) - - -
Net earnings for the year - - - 24,136 -
------ ------ ------ ------- ------
BALANCES AT MAY 25, 1995 7,522 6,069 45,154 159,675 (3,956)
Cash dividends:
$.31 per share Class B Common Stock - - - (2,770) -
$.34 per share Common Stock - - - (3,559) -
Three-for-two stock split 3,764 3,032 (6,796) (10) -
Exercise of stock options - - 118 - 403
Purchase of treasury stock - - - - (145)
Savings and profit-sharing contribution - - 350 - 83
Reissuance of treasury stock - - 6 - 1
Conversions of Class B Common Stock 244 (244) - - -
Net earnings for the year - - - 42,307 -
------ ------ ------ ------- ------
BALANCES AT MAY 30, 1996 $11,530 $8,857 $38,832 $195,643 $(3,614)
======= ====== ======= ======== =======
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
THE MARCUS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED MAY 30, 1996
<CAPTION>
May 30, May 25, May 26,
1996 1995 1994
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net earnings $42,307 $24,136 $22,829
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Earnings on investments in joint ventures, net
of distributions (406) 33 308
Gain on disposition of property and equipment (24,595) (463) (1,539)
Depreciation and amortization 25,117 23,570 20,385
Deferred income taxes 70 3,958 1,643
Deferred compensation and other 2,143 703 901
Contribution of Company stock to savings and
profit-sharing plan 433 453 384
Changes in assets and liabilities:
Accounts and notes receivable (2,614) 193 (862)
Other current assets 1,767 (1,768) (1,375)
Accounts payable (2,240) 4,638 6,398
Income taxes (676) (727) 2,535
Taxes other than income taxes (768) 1,784 (12)
Accrued compensation (78) 10 (106)
Other accrued liabilities 1,300 1,074 1,272
------- ------- -------
Total adjustments (547) 33,458 29,932
Cumulative effect of change in accounting for
income taxes (Note 7) - - (1,782)
------- ------- -------
Net cash provided by operating activities 41,760 57,594 50,979
INVESTING ACTIVITIES
Capital expenditures (83,689) (77,083) (75,825)
Net proceeds from disposals of property, equipment and
other assets 48,914 1,695 3,349
Purchase of interest in joint ventures, net of cash acquired (260) - (692)
Loan to affiliated hotel - - (2,860)
(Increase) decrease in other assets (2,770) 1,049 (1,986)
Cash received from (advanced to) joint ventures (3,029) 6,122 2,389
------- ------- -------
Net cash used in investing activities (40,834) (68,217) (75,625)
FINANCING ACTIVITIES
Debt transactions:
Net proceeds from issuance of notes payable and
long-term debt 19,603 17,984 64,650
Principal payments on notes payable and long-term debt (7,905) (4,494) (42,594)
Equity transactions:
Treasury stock transactions, except for stock options (138) 9 (145)
Exercise of stock options 521 186 351
Dividends paid (6,339) (4,238) (3,481)
------- ------- -------
Net cash provided by financing activities 5,742 9,447 18,781
------- ------- -------
Net increase (decrease) in cash and cash equivalents 6,668 (1,176) (5,865)
Cash and cash equivalents at beginning of year 8,798 9,974 15,839
------- ------- -------
Cash and cash equivalents at end of year $15,466 $ 8,798 $ 9,974
======= ======= =======
</TABLE>
See accompanying notes.
<PAGE>
THE MARCUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 30, 1996
1. Description of Business and Summary of Significant Accounting Policies
Description of Business - The Marcus Corporation and its subsidiaries (the
Company) operates principally in four business segments:
Motels: Operates and franchises lodging facilities under the
names Budgetel Inns and Woodfield Suites, primarily
located in the eastern half of the United States.
Theatres: Operates multi-screen motion picture theatres in
Wisconsin and Illinois.
Hotels/Resorts: Owns and operates full service hotels and resorts in
Wisconsin and manages full service hotels in Wisconsin
and Minnesota.
Restaurants: Operates KFC restaurants under a license agreement for
certain areas in the state of Wisconsin.
Principles of Consolidation - The consolidated financial statements
include the accounts of The Marcus Corporation and all of its
subsidiaries. Investments in 50%-owned affiliates are accounted for on the
equity method. All intercompany accounts and transactions have been
eliminated in consolidation.
Fiscal Year - The Company reports on a 52/53-week year ending the last
Thursday of May. The Theatres and Corporate segments had a 53-week year in
fiscal 1996. All other segments in 1996 and all segments in fiscal 1995
and 1994 had 52-week years.
Cash Equivalents - The Company considers all highly liquid investments
with maturities of three months or less when purchased to be cash
equivalents. Cash equivalents are carried at cost, which approximates
market.
Inventories - Inventories, consisting principally of food and beverages,
are stated at average cost or at first-in, first-out cost.
Preopening Costs - Certain costs incurred prior to opening new or
remodeled motels and remodeled hotels are deferred and charged to
operations over the 12 months subsequent to the opening. Similar expenses
incurred in connection with the opening and remodeling of theatres and all
restaurants are deferred and charged to operations at the time of opening.
Depreciation and Amortization - Depreciation and amortization of property
and equipment is provided using the straight-line method over the
following estimated useful lives:
Years
Land improvements 10 - 39
Buildings and improvements 10 - 39
Leasehold improvements 3 - 39
Furniture, fixtures and equipment 3 - 15
Recent Accounting Pronouncements - In March 1995, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," which requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets'
carrying amount. Statement No. 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company will
adopt Statement No. 121 in the first quarter of fiscal 1997, and based on
current circumstances, does not believe the effect of adoption will be
material.
During October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-
Based Compensation," which will be effective for the Company beginning May
31, 1996. SFAS No. 123 requires expanded disclosures of stock-based
compensation arrangements with employees and encourages (but does not
require) compensation cost to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue
to apply Accounting Principles Board (APB) Opinion No. 25, which
recognized compensation cost based on the intrinsic value of the equity
instrument award. The Company will continue to apply APB Opinion No. 25 to
its stock-based compensation awards to employees.
Advertising and Marketing Costs - The Company expenses all advertising and
marketing costs as incurred.
Net Earnings Per Share - Net earnings per share were computed based on the
weighted average number of shares of Common Stock, Class B Common Stock
and common stock equivalents (stock options) outstanding during the year.
Capitalization of Interest - The Company capitalizes interest during
construction periods by adding such interest to the cost of property and
equipment. Interest of approximately $1,119,000, $867,000 and $726,000 was
capitalized in fiscal 1996, 1995 and 1994, respectively.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
Reclassifications - Certain items in the accompanying fiscal 1995 and 1994
financial statements have been reclassified to conform to the fiscal 1996
presentation.
2. Disposition of Restaurant Properties
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
would commence immediately managing, operating and assuming all of the
Company's existing operating and development responsibilities related to
the Company's Applebee's restaurant operations. The Purchaser was
entitled to all profits of the restaurants since June 5, 1995, as
reimbursement for its management service.
On June 30, 1995, proceeds from the sale of approximately $48.3 million
were received in cash. The Company realized a net pretax gain of $25.4
million. Revenues and operating income from the Company's Applebee's
operations were not significant in fiscal 1996 and were as follows in
fiscal 1995 and 1994:
Year ended
May 25, May 26,
1995 1994
(In Thousands)
Revenues $35,574 $24,438
Operating Income 2,250 983
On February 27, 1995, the Company leased 11 of its Marc's Cafe and Coffee
Mill restaurants to a group led by former members of the restaurants'
management team. The lease terms, which include certain buyout
incentives, differ for each location with the leases expiring on various
dates through February 28, 2001. Revenues related to the Company's
operation of the 11 restaurants were $10,169,000 and $14,958,000 for
fiscal years ended May 25, 1995 and May 26, 1994, respectively.
3. Additional Balance Sheet Information
The composition of accounts and notes receivable is as follows:
May 30, May 25,
1996 1995
(In Thousands)
Trade receivables $4,981 $2,667
Notes receivable 798 758
Other receivables 3,001 2,741
------ -----
$8,780 $6,166
====== ======
The composition of property and equipment, which is stated at cost, is as
follows:
May 30, May 25,
1996 1995
(In Thousands)
Land and improvements $ 60,177 $ 54,740
Buildings and improvements 329,458 290,219
Leasehold improvements 5,688 7,562
Furniture, fixtures and equipment 137,305 128,035
Construction in progress 22,336 27,434
-------- --------
Total property and equipment 554,964 507,990
Less accumulated depreciation and
amortization 143,401 133,706
-------- --------
$411,563 $374,284
======== ========
4. Long-Term Debt
Long-term debt is summarized as follows:
May 30, May 25,
1996 1995
(In Thousands)
Mortgage notes due to 2001 $ 9,890 $ 10,513
Senior notes, unsecured, due 2005
at 10.22% 25,665 27,298
Industrial Development Revenue Bonds
due to 2006 7,459 9,814
Unsecured term notes 57,719 60,000
Commercial paper 11,971 12,984
Revolving credit agreements 23,500 5,000
-------- --------
136,204 125,609
Less current maturities 9,069 9,245
-------- --------
$127,135 $116,364
======== ========
Substantially all of the mortgage notes, both fixed rate and adjustable,
bear interest from 7.16% to 9.25% at May 30, 1996. Adjustable rate
Industrial Development Revenue Bonds ($3,579,000 at May 30, 1996) bear
interest at 76.5% of prime plus 1% (7.31% at May 30, 1996), or are
adjustable based on high quality tax-exempt obligation rates
(approximately 3.75% at May 30, 1996). The Company's remaining Industrial
Development Revenue Bonds bear interest at 6.3% or 8.8%.
The mortgage notes and the Industrial Development Revenue Bonds are
secured by the related land, buildings and equipment.
The Company has three unsecured term notes outstanding, as follows:
May 30, May 25,
1996 1995
(In Thousands)
Note due May 31, 2004, with quarterly
principal payments of $781,250. The
variable interest rate is based on
the LIBOR rate with an effective rate
of 5.88% at May 30, 1996. $24,219 $25,000
Note due February 1, 2001, with quarterly
principal payments of $714,286 due
beginning May 1, 1997. The variable
interest rate is based on the LIBOR
rate with an effective rate of 6.66%
at May 30, 1996. 20,000 20,000
Note due November 1, 2000, with quarterly
principal payments of $750,000. The
variable interest rate is based on
the LIBOR rate with an effective rate
of 6.21% at May 30, 1996. 13,500 15,000
------- -------
$57,719 $60,000
======= =======
The Company issues commercial paper through an agreement with a bank. The
agreement requires the Company to maintain unused bank lines of credit at
least equal to the principal amount of its outstanding commercial paper.
At May 30, 1996, after reduction for outstanding commercial paper
borrowings, the Company had $44,529,000 of unused credit lines available
under various bank revolving credit agreements. The weighted average
interest rate on amounts outstanding under the revolving credit agreements
was 6.4% at May 30, 1996. There is an annual commitment fee of .25% of the
unused portion of $65,000,000 of these commitments. Interest on
outstanding commercial paper borrowings at May 30, 1996, ranged from 5.5%
to 5.6%. The Company has the ability to replace commercial paper
borrowings with long-term borrowings under its revolving credit agreement,
which matures October 31, 1997. Accordingly, the Company has classified
its outstanding commercial paper borrowings at May 30, 1996, as long-term
debt.
Scheduled annual principal payments on long-term debt for the five years
subsequent to May 30, 1996, are:
Fiscal
Year (In Thousands)
1997 $ 9,069
1998 37,669
1999 27,296
2000 13,165
2001 12,017
Interest paid, net of amounts capitalized, in 1996, 1995 and 1994 totaled
$8,272,000, $8,610,000, and $7,266,000, respectively.
Two swap agreements covering $15,000,000 were terminated during 1995 at a
loss of $185,000. The remaining swap agreement covering $13,500,000, which
is reduced by $750,000 quarterly, expires October 31, 2000, and requires
the Company to pay interest at a defined fixed rate of 5.08% while
receiving interest at a defined variable rate of three-month LIBOR (5.47%
at May 30, 1996), which effectively converts $13,500,000 of the Company's
variable rate unsecured term notes to a fixed rate. The Company recorded
the net interest expense (income) related to these swap agreements as
incurred, totaling ($96,000), $61,000 and $94,000 in 1996, 1995 and 1994,
respectively. The accompanying consolidated balance sheet at May 30, 1996,
does not reflect the fair market value of the remaining swap agreement as
determined by the lender, which totals approximately $457,000.
The carrying amounts of the Company's long-term debt, based on the
respective rates and prepayment provisions of the senior notes,
approximate their fair value.
5. Shareholders' Equity
The Company's Board of Directors declared a three-for-two stock split,
effected in the form of a 50% stock dividend, distributed on November 14,
1995, to all holders of Common and Class B Common Stock. All per share,
weighted average shares outstanding and stock option data prior to
November 14, 1995, have been adjusted to reflect this dividend.
Shareholders may convert their shares of Class B Common Stock into shares
of Common Stock at any time. Class B Common Stock shareholders are
substantially restricted in their ability to transfer their Class_B Common
Stock. Holders of Common Stock are entitled to cash dividends per share
equal to 110% of all dividends declared and paid on each share of the
Class B Common Stock. Holders of Class_B Common Stock are entitled to ten
votes per share while holders of Common Stock are entitled to one vote per
share on any matters brought before the shareholders of the Company.
Liquidation rights are the same for both classes of stock.
Shareholders have approved the issuance of up to 1,668,750 shares of
Common Stock under various stock option plans. The options generally
become exercisable 40% after two years, 60% after three years and 80%
after four years. The remaining options are exercisable four and one-half
years after the date of the grant. At May 30, 1996, there were 895,063
shares available for grants under the plans.
Transactions with respect to the Company's stock option plans for each of
the three years in the period ended May 30, 1996, are summarized as
follows:
Price Range Number of Shares
Outstanding at May 27, 1993 $ 4.67 - $10.00 319,748
Granted $13.83 - $18.00 211,275
Exercised $ 4.67 - $10.00 (48,128)
Canceled $ 4.67 - $10.00 (42,323)
--------
Outstanding at May 26, 1994 $ 4.67 - $18.00 440,572
Granted $17.75 - $19.17 125,550
Exercised $ 4.67 - $10.00 (25,815)
Canceled $ 5.11 - $18.00 (66,735)
--------
Outstanding at May 25, 1995 $ 4.67 - $19.17 473,572
Granted $17.25 - $25.75 124,825
Exercised $ 4.67 - $18.00 (59,296)
Canceled $ 5.11 - $19.50 (32,820)
--------
Outstanding at May 30, 1996 $ 4.67 - $25.75 506,281
========
Shares exercisable at May 30, 1996 144,206
========
The Company's Board of Directors has approved the repurchase of up to
1,125,000 shares of Common Stock to be held in treasury. The Company
intends to reissue these shares upon the exercise of stock options and for
savings and profit-sharing contributions. The Company purchased 7,127 and
9,251 shares pursuant to this plan during 1996 and 1994, respectively.
There were no purchases in 1995. At May 30, 1996, there were 347,680
shares available for repurchase under this authorization.
The Company's loan agreements include, among other covenants, restrictions
on retained earnings and maintenance of certain financial ratios. At May
30, 1996, retained earnings of approximately $69,042,000 were
unrestricted.
6. Employee Benefit Plans
The Company has a qualified profit-sharing savings plan (401(k) plan)
covering eligible employees. The 401(k) plan provides for a contribution
of a minimum of 1% of defined compensation for all plan participants and
matching of 25% of employee contributions up to 6% of defined
compensation. In addition, the Company may make additional discretionary
contributions. The Company also sponsors unfunded nonqualified defined
benefit and deferred compensation plans. Pension and profit-sharing
expense for all plans was $1,355,000, $917,000 and $1,138,000 for 1996,
1995 and 1994, respectively.
7. Income Taxes
Income tax expense consists of the following:
Year ended
May 30, 1996 May 25, 1995 May 26, 1994
(In Thousands)
Currently payable:
Federal $22,347 $ 9,273 $ 9,470
State 5,368 2,829 2,494
Deferred 70 3,958 1,643
------- ------- -------
$27,785 $16,060 $13,607
======= ======= =======
Effective May 28, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax basis of assets and liabilities using enacted
tax rates for the year in which the differences are expected to reverse.
As of May 28, 1993, the Company recorded a tax benefit of $1,782,000, or
$.09 per share, which represents the net change in its deferred income tax
assets and liabilities at that date. Such amount has been reflected in the
1994 consolidated statement of earnings as the cumulative effect of change
in accounting for income taxes.
The components of the net deferred tax liability were as follows:
May 30, 1996 May 25, 1995
(In Thousands)
Deferred tax assets:
Accrued employee benefits $ 1,297 $ 787
Other accrued liabilities 263 294
Total deferred assets 1,560 1,081
------- -------
Deferred tax liability
Depreciation and amortization 21,587 21,038
------- -------
Net deferred tax liability included
in balance sheet $20,027 $19,957
======= =======
A reconciliation of the statutory federal tax rate to the effective tax
rate follows:
Year ended
May 30, 1996 May 25, 1995 May 26, 1994
Expected tax expense: 35.0% 35.0% 35.0%
State income taxes, net of
federal income tax benefit 5.1 5.3 5.3
Jobs tax credits - (.3) (.6)
Other (.5) - (.4)
----- ----- -----
39.6% 40.0% 39.3%
===== ===== =====
Income taxes paid in 1996, 1995 and 1994 totaled $28,391,000, $12,830,000
and $9,445,000, respectively.
8. Commitments, License Rights and Contingencies
Lease Commitments The Company leases real estate under various
noncancellable operating leases with an initial term greater than one
year. Percentage rentals are based on the revenues at the specific rented
property. Rent expense charged to operations under these leases was as
follows:
Year ended
May 30, 1996 May 25, 1995 May 26, 1994
(In Thousands)
Fixed minimum rentals $2,287 $2,358 $2,519
Percentage rentals 356 1,551 1,218
Sublease rental income (182) (182) (165)
------ ------ ------
$2,461 $3,727 $3,572
====== ====== ======
Payments to affiliated parties for lease obligations were approximately
$268,000, $335,000 and $390,000 in 1996, 1995 and 1994, respectively.
Aggregate minimum rental commitments at May 30, 1996, are as follows, in
thousands:
Fiscal Year
1997 $ 1,505
1998 1,348
1999 1,265
2000 1,218
2001 1,245
After 2001 11,464
-------
$18,045
=======
Included in the above commitments is $1,906,000 in minimum rental
commitments to affiliated parties.
Commitments - The Company has commitments for the completion of
construction at various properties and the purchase of various properties
totaling approximately $37,000,000 at May 30, 1996.
License Rights - The Company owns the license rights in certain areas to
operate its restaurants and to sell products using the KFC trademark. In
addition, the Company has license rights to operate a hotel using the
Hilton trademark. Under the terms of the licenses, the Company is
obligated to pay fees based on defined gross sales. The KFC license also
requires the Company to pay an additional fee for each new location
established.
Contingencies - The Company guarantees the debt of joint ventures totaling
approximately $12,858,000 at May 30, 1996. The debt has been
collateralized by the real estate, buildings and improvements, and all
equipment of each joint venture.
9. Joint Venture Transactions
At May 30, 1996 and May 25, 1995, the Company held investments of
$1,295,000 and $629,000, respectively, in various approximately 50%-owned
affiliates (joint ventures) which are accounted for under the equity
method.
The Company has receivables from the joint ventures of $4,890,000 and
$1,861,000 at May 30, 1996 and May 25, 1995, respectively. The Company
earns interest on $4,076,000 and $1,082,000 of the receivables at
approximately prime to prime plus 1.5% at May 30, 1996 and May 25, 1995,
respectively.
Included in notes payable at May 30, 1996 and May 25, 1995, is $1,515,000
and $1,211,000, respectively, due to joint ventures in connection with
cash advanced to the Company. The Company pays interest on the cash
advances based on the 90-day certificate of deposit rates.
10. Business Segment Information
Following is a summary of business segment information for 1994 through
1996:
<TABLE>
<CAPTION>
Hotels/ Corporate
Motels Theatres Resorts Restaurants Items Total
(In Thousands)
1996
<S> <C> <C> <C> <C> <C> <C>
Revenues $118,679 $63,696 $53,498 $25,927 $ 487 $262,287
Operating income (loss) 36,266 15,017 3,374 1,992 (4,834) 51,815
Depreciation and
amortization 13,815 3,265 5,467 2,191 379 25,117
Assets 247,328 63,365 73,045 29,041 42,536 455,315
Capital expenditures 51,542 20,316 8,010 619 3,202 83,689
1995
Revenues $104,356 $53,968 $45,292 $74,076 $ 298 $277,990
Operating income (loss) 31,992 12,175 1,473 3,318 (2,163) 46,795
Depreciation and
amortization 12,883 2,766 4,101 3,385 435 23,570
Assets 211,112 46,928 68,731 53,090 27,221 407,082
Capital expenditures 32,880 10,999 27,207 5,900 97 77,083
1994
Revenues $ 89,043 $50,494 $32,330 $70,404 $ 343 $242,614
Operating income (loss) 26,041 11,483 2,550 1,499 (3,689) 37,884
Depreciation and
amortization 11,246 2,519 3,030 3,112 478 20,385
Assets 182,174 47,244 45,787 51,896 34,505 361,606
Capital expenditures 33,377 7,305 23,654 11,039 450 75,825
</TABLE>
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 assets primarily
include cash and cash equivalents, notes receivable, receivables from
joint ventures and land held for development.
During 1994, the Company entered into contracts to manage two hotel
properties. The Company also has loans outstanding of $3,049,284 at May
30, 1996, to one of these hotels, which bears interest at the prime rate
plus 1% and matures December 31, 2008. Interest on this note totaled
approximately $297,000 and $292,000 for fiscal 1996 and 1995,
respectively.
PART III
Item 10. Directors and Executive Officers of the Company.
The information required by this item with respect to directors
is incorporated herein by reference to the information pertaining thereto
set forth under the caption entitled "Election of Directors" in the
definitive Proxy Statement for the Company's 1996 Annual Meeting of
Shareholders scheduled to be held September 26, 1996 ("Proxy Statement").
The required information with respect to executive officers appears at the
end of Part I of this Form 10-K.
Item 11. Executive Compensation.
The information required by this item is incorporated herein by
reference to the information pertaining thereto set forth under the
caption entitled "Executive Compensation" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is incorporated herein by
reference to the information pertaining thereto set forth under the
caption entitled "Stock Ownership of Management and Others" in the Proxy
Statement.
Item 13. Certain Relationships and Related Transactions.
The information required by this item, to the extent applicable,
is incorporated herein by reference to the information pertaining thereto
set forth under the caption entitled "Certain Transactions" in the Proxy
Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
1. Financial Statement Schedules.
(a) All schedules are omitted because they are inapplicable,
not required under the instructions or the financial
information is included in the consolidated financial
statements or notes thereto.
2. Exhibits and Reports on Form 8-K.
(a) The exhibits filed herewith or incorporated by reference
herein are set forth on the attached Exhibit Index.*
(b) The Company did not file a Form 8-K with the Securities and
Exchange Commission during the fourth quarter of fiscal 1996.
__________________
* Exhibits to this Form 10-K will be furnished to shareholders upon
advance payment of a fee of $0.20 per page, plus mailing expenses.
Requests for copies should be addressed to Thomas F. Kissinger,
General Counsel and Secretary, The Marcus Corporation, 250 East
Wisconsin Avenue, Suite 1700, Milwaukee, Wisconsin 53202.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
THE MARCUS CORPORATION
Date: August 28, 1996 By: /s/ Stephen H. Marcus
Stephen H. Marcus,
Chairman of the Board and
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Company and in the capacities as of the date indicated above.
By: /s/ Stephen H. Marcus By: /s/ George R. Slater
Stephen H. Marcus, George R. Slater, Director
Chairman of the Board and
President (Chief Executive
and Financial Officer)
By: /s/ Kenneth A. MacKenzie By: /s/ Lee Sherman Dreyfus
Kenneth A. MacKenzie, Lee Sherman Dreyfus, Director
Treasurer (Chief
Accounting Officer)
By: /s/ Bruce J. Olson By: /s/ Daniel F. McKeithan, Jr.
Bruce J. Olson, Director Daniel F. McKeithan, Jr.,
Director
By: /s/ John L. Murray By: /s/ Diane Marcus Gershowitz
John L. Murray, Director Diane Marcus Gershowitz,
Director
By: /s/ Alan H. Selig By: /s/ Timothy E. Hoeksema
Alan H. Selig, Director Timothy E. Hoeksema, Director
<PAGE>
EXHIBIT INDEX
3.1 Articles of Incorporation. [Incorporated by reference
to Exhibit 3.1 to the Company's Form S-3 Registration
Statement (No. 33-57468).]
3.2 Bylaws, as amended as of September 28, 1995.*
4 Senior Note Purchase Agreement dated May 31, 1990
between the Company and The Northwestern Mutual Life
Insurance Company. [Incorporated by reference to
Exhibit 4 to the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1990.]
4.1 Other than as set forth in Exhibit 4, the Company has
numerous instruments which define the rights of holders
of long-term debt. These instruments, primarily
promissory notes, have arisen from the purchase of
operating properties in the ordinary course of
business. These instruments are not being filed with
this Annual Report on Form 10-K in reliance upon Item
601(b)(4)(iii) of Regulation S-K. Copies of these
instruments will be furnished to the Securities and
Exchange Commission upon request.
10.1 The Company is the guarantor and/or obligor under
various loan agreements in connection with operating
properties (primarily Budgetel Inns) which were
financed through the issuance of industrial development
bonds. These loan agreements and the additional
documentation relating to these projects are not being
filed with this Annual Report on Form 10-K in reliance
upon Item 601(b)(4)(iii) of Regulation S-K. Copies of
these documents will be furnished to the Securities and
Exchange Commission upon request.
10.2 Comprehensive Image Enhancement Agreement dated October
12, 1988 between the Company and KFC Corporation.
[Incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal
year ended May 25, 1989.]
10.3 Form of individual Kentucky Fried Chicken franchise
agreement between the Company and KFC Corporation.
[Incorporated by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the fiscal
year ended May 25, 1989.]
10.4* The Marcus Corporation 1987 Stock Option Plan.
[Incorporated by reference to Exhibit A to the
Company's 1987 Proxy Statement.]
10.5* The Marcus Corporation 1995 Equity Incentive Plan, as
amended.
10.6* The Marcus Corporation 1994 Nonemployee Director Stock
Option Plan. [Incorporated by reference to Exhibit A
to the Company's 1994 Proxy Statement.]
21 Subsidiaries of the Company as of May 30, 1996.
23.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule
99 Proxy Statement for 1996 Annual Meeting of Shareholders
scheduled to be held on September 26, 1996. (To be
filed with the Securities and Exchange Commission under
Regulation 14A within 120 days of May 30, 1996 and,
upon such filing, to be hereby incorporated by
reference herein to the extent indicated).
__________
* This exhibit is a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this form pursuant
to Item 14(c) of Form 10-K.
EXHIBIT 3.2
BY-LAWS
OF
THE MARCUS CORPORATION
(a Wisconsin corporation)
Amended 3/23/95 (Section 3.01)
Amended 9/28/95 (Sections 3.02 and new Section 3.015)
BY-LAWS
OF
THE MARCUS CORPORATION
(a Wisconsin corporation)
ARTICLE I. OFFICES
1.01. Principal and Business Offices. The corporation may
have such principal and other business offices, either within or without
the State of Wisconsin, as the Board of Directors may designate or as the
business of the corporation may require from time to time.
1.02. Registered Office. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be
maintained in the State of Wisconsin may be, but need not be, identical
with the principal office in the State of Wisconsin, and the address of
the registered office may be changed from time to time by the Board of
Directors or by the registered agent. The business office of the
registered agent of the corporation shall be identical to such registered
office.
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the
shareholders shall be held on such day in September or October of each
year as may be designated by or under the authority of the Board of
Directors, for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the day fixed
for the annual meeting shall be a legal holiday in the State of Wisconsin,
such meeting shall be held on the next succeeding business day.
2.02. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by
the Wisconsin Business Corporation Law, may be called by the Chairman of
the Board, the President or the Board of Directors. The corporation shall
call a special meeting of shareholders in the event that the holders of at
least 10% of all of the votes entitled to be cast on any issue proposed to
be considered at the proposed special meeting sign, date and deliver to
the corporation one or more written demands for the meeting describing one
or more purposes for which it is to be held. The corporation shall give
notice of such a special meeting within thirty days after the date that
the demand is delivered to the corporation.
2.03. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Wisconsin, as
the place of meeting for any annual or special meeting of shareholders.
If no designation is made, the place of meeting shall be the principal
office of the corporation. Any meeting may be adjourned to reconvene at
any place designated by vote of the shares represented thereat.
2.04. Notice of Meeting. Written notice stating the date,
time and place of any meeting of shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten days nor more than sixty days before the date
of the meeting (unless a different time is provided by the Wisconsin
Business Corporation Law or the articles of incorporation), either
personally or by mail, by or at the direction of the President or the
Secretary, to each shareholder of record entitled to vote at such meeting
and to such other persons as required by the Wisconsin Business
Corporation Law. If mailed, such notice shall be deemed to be effective
when deposited in the United States mail, addressed to the shareholder at
his or her address as it appears on the stock record books of the
corporation, with postage thereon prepaid. If an annual or special meeting
of shareholders is adjourned to a different date, time or place, the
corporation shall not be required to give notice of the new date, time or
place if the new date, time or place is announced at the meeting before
adjournment; provided, however, that if a new record date for an adjourned
meeting is or must be fixed, the corporation shall give notice of the
adjourned meeting to persons who are shareholders as of the new record
date.
2.045. Proper Business or Purposes of Shareholder Meetings.
To be properly brought before a meeting of shareholders for voting
consideration, business must be (a) specified in the notice of the meeting
(or any supplement thereto) given by or at the discretion of the Board of
Directors or otherwise as provided in Section 2.04 hereof; (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors; or (c) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before a meeting by a
shareholder, the shareholder must have given written notification thereof,
either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the corporation at its principal business office, and, in
the case of an annual meeting of shareholders, such notification must be
given not later than fifteen (15) days in advance of the Originally
Scheduled Date of such meeting. Any such notification shall set forth as
to each matter the shareholder proposes to bring before the meeting for
voting consideration (i) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at
the meeting and, in the event that such business includes a proposal to
amend either the articles of incorporation or bylaws of the corporation,
the exact language of the proposed amendment; (ii) whether or not such
business is in the nature of a precatory proposal; (iii) the name and
address of the shareholder proposing such business; (iv) a representation
that the shareholder is a holder of record of stock of the corporation
entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to propose such business; and (v) any material
interest of the shareholder in such business. No business shall be
conducted at a meeting of shareholders except in accordance with this
Section 2.045, and the chairperson of any meeting of shareholders may
refuse to permit any business to be brought before such meeting without
compliance with the foregoing procedures. For purposes of these bylaws,
the "Originally Scheduled Date" of any meeting of shareholders shall be
the date such meeting is scheduled to occur as specified in the notice of
such meeting first generally given to shareholders regardless of whether
any subsequent notice is given for such meeting or the record date of such
meeting is changed. Nothing contained in this Section 2.045 shall be
construed to limit the rights of a shareholder to submit proposals to the
corporation which comply with Regulation 14A of the Securities Exchange
Act of 1934, as amended ("Registration 14A"), for inclusion in the
corporation's proxy statement for voting consideration at shareholder
meetings.
2.05. Waiver of Notice. A shareholder may waive any notice
required by the Wisconsin Business Corporation Law, the articles of
incorporation or these bylaws before or after the date and time stated in
the notice. The waiver shall be in writing and signed by the shareholder
entitled to the notice, contain the same information that would have been
required in the notice under applicable provisions of the Wisconsin
Business Corporation Law (except that the time and place of meeting need
not be stated) and be delivered to the corporation for inclusion in the
corporate records. A shareholder's attendance at a meeting, in person or
by proxy, waives objection to all of the following: (a) lack of notice or
defective notice of the meeting, unless the shareholder at the beginning
of the meeting or promptly upon arrival objects to holding the meeting or
transacting business at the meeting; and (b) consideration of a particular
matter at the meeting that is not within the purpose described in the
meeting notice, unless the shareholder objects to considering the matter
when it is presented.
2.06. Fixing of Record Date. The Board of Directors may fix
in advance a date as the record date for the purpose of determining
shareholders entitled to notice of and to vote at any meeting of
shareholders, shareholders entitled to demand a special meeting as
contemplated by Section 2.02 hereof, shareholders entitled to take any
other action, or shareholders for any other purpose. Such record date
shall not be more than seventy days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is fixed by the Board of Directors or by the
Wisconsin Business Corporation Law for the determination of shareholders
entitled to notice of and to vote at a meeting of shareholders, the record
date shall be the close of business on the day before the first notice is
given to shareholders. If no record date is fixed by the Board of
Directors or by the Wisconsin Business Corporation Law for the
determination of shareholders entitled to demand a special meeting as
contemplated in Section 2.02 hereof, the record date shall be the date
that the first shareholder signs the demand. Except as provided by the
Wisconsin Business Corporation Law for a court-ordered adjournment, a
determination of shareholders entitled to notice of and to vote at a
meeting of shareholders is effective for any adjournment of such meeting
unless the Board of Directors fixes a new record date, which it shall do
if the meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting. The record date for determining
shareholders entitled to a distribution (other than a distribution
involving a purchase, redemption or other acquisition of the corporation's
shares) or a share dividend is the date on which the Board of Directors
authorized the distribution or share dividend, as the case may be, unless
the Board of Directors fixes a different record date.
2.07. Shareholders' List for Meetings. After a record date
for a special or annual meeting of shareholders has been fixed, the
corporation shall prepare a list of the names of all of the shareholders
entitled to notice of the meeting. The list shall be arranged by class or
series of shares, if any, and show the address of and number of shares
held by each shareholder. Such list shall be available for inspection by
any shareholder, beginning two business days after notice of the meeting
is given for which the list was prepared and continuing to the date of the
meeting, at the corporation's principal office or at a place identified in
the meeting notice in the city where the meeting will be held. A
shareholder or his or her agent may, on written demand, inspect and,
subject to the limitations imposed by the Wisconsin Business Corporation
Law, copy the list, during regular business hours and at his or her
expense, during the period that it is available for inspection pursuant to
this Section 2.07. The corporation shall make the shareholders' list
available at the meeting and any shareholder or his or her agent or
attorney may inspect the list at any time during the meeting or any
adjournment thereof. Refusal or failure to prepare or make available the
shareholders' list shall not affect the validity of any action taken at a
meeting of shareholders.
2.08. Quorum and Voting Requirements. Shares entitled to
vote as a separate voting group may take action on a matter at a meeting
only if a quorum of those shares exists with respect to that matter. If
the corporation has only one class of stock outstanding, such class shall
constitute a separate voting group for purposes of this Section 2.08.
Except as otherwise provided in the articles of incorporation, any bylaw
adopted under authority granted in the articles of incorporation, or the
Wisconsin Business Corporation Law, a majority of the votes entitled to be
cast on the matter shall constitute a quorum of the voting group for
action on that matter. Once a share is represented for any purpose at a
meeting, other than for the purpose of objecting to holding the meeting or
transacting business at the meeting, it is considered present for purposes
of determining whether a quorum exists for the remainder of the meeting
and for any adjournment of that meeting unless a new record date is or
must be set for the adjourned meeting. If a quorum exists, except in the
case of the election of directors, action on a matter shall be approved if
the votes cast within the voting group favoring the action exceed the
votes cast opposing the action, unless the articles of incorporation, any
bylaw adopted under authority granted in the articles of incorporation, or
the Wisconsin Business Corporation Law requires a greater number of
affirmative votes. Unless otherwise provided in the articles of
incorporation, directors shall be elected by a plurality of the votes cast
by the shares entitled to vote in the election of directors at a meeting
at which a quorum is present. For purposes of this Section 2.08,
"plurality" means that the individuals with the largest number of votes
are elected as directors up to the maximum number of directors to be
chosen at the meeting. Though less than a quorum of the outstanding votes
of a voting group are represented at a meeting, a majority of the votes so
represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
2.09. Conduct of Meeting. The Chief Executive Officer, and
in his or her absence, the Chairman of the Board or the President, as the
case may be, and in their absence, a Vice President in the order provided
under Section 4.09 hereof, and in their absence, any person chosen by the
shareholders represented at the meeting in person or by proxy shall call
the meeting of the shareholders to order and shall act as chairperson of
the meeting, and the Secretary of the corporation shall act as secretary
of all meetings of the shareholders, but, in the absence of the Secretary,
the presiding officer may appoint any other person to act as secretary of
the meeting.
2.10. Proxies. At all meetings of shareholders, a
shareholder may vote his or her shares in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by his or
her attorney-in-fact. An appointment of a proxy is effective when
received by the Secretary or other officer or agent of the corporation
authorized to tabulate votes. An appointment is valid for eleven months
from the date of its signing unless a different period is expressly
provided in the appointment form.
2.11. Voting of Shares. Except as provided in the articles
of incorporation or in the Wisconsin Business Corporation Law, each
outstanding share of Common Stock is entitled to one (1) vote, and each
outstanding share of Class B Common Stock shall be entitled to ten (10)
votes, upon each matter voted on at a meeting of shareholders.
2.12. Action without Meeting. Any action required or
permitted by the articles of incorporation or these bylaws or any
provision of the Wisconsin Business Corporation Law to be taken at a
meeting of the shareholders may be taken without a meeting and without
action by the Board of Directors if a written consent or consents,
describing the action so taken, is signed by all of the shareholders
entitled to vote with respect to the subject matter thereof and delivered
to the corporation for inclusion in the corporate records.
2.13. Acceptance of Instruments Showing Shareholder Action.
If the name signed on a vote, consent, waiver or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in
good faith, may accept the vote, consent, waiver or proxy appointment and
give it effect as the act of a shareholder. If the name signed on a vote,
consent, waiver or proxy appointment does not correspond to the name of a
shareholder, the corporation, if acting in good faith, may accept the
vote, consent, waiver or proxy appointment and give it effect as the act
of the shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed
purports to be that of an officer or agent of the entity.
(b) The name purports to be that of a personal
representative, administrator, executor, guardian or conservator
representing the shareholder and, if the corporation requests,
evidence of fiduciary status acceptable to the corporation is
presented with respect to the vote, consent, waiver or proxy
appointment.
(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation
is presented with respect to the vote, consent, waiver or proxy
appointment.
(d) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if
the corporation requests, evidence acceptable to the corporation
of the signatory's authority to sign for the shareholder is
presented with respect to the vote, consent, waiver or proxy
appointment.
(e) Two or more persons are the shareholders as co-tenants
or fiduciaries and the name signed purports to be the name of at
least one of the co-owners and the person signing appears to be
acting on behalf of all co-owners.
The corporation may reject a vote, consent, waiver or proxy appointment if
the Secretary or other officer or agent of the corporation who is
authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. All corporate powers shall
be exercised by or under the authority of, and the business and affairs of
the corporation managed under the direction of, the Board of Directors.
The number of directors constituting the Board of Directors of the
corporation shall initially be seven (7) and thereafter such number as is
fixed from time to time by a majority vote of the Board of Directors then
in office.
3.015. Directors Emeritus. Any person who has reached sixty-
five (65) years of age and has served as a director of the corporation,
including service as a director of any corporation with which the
corporation is affiliated through common stock ownership, for at least ten
years, or as an officer and director of the corporation for at least ten
years, may, after retirement or resignation from the Board of Directors,
be appointed by the Board of Directors as a Director Emeritus to serve
until he or she resigns or his or her appointment is terminated by
resolution adopted by a majority of the entire Board of Directors.
Directors Emeritus shall serve in an advisory capacity to the Board of
Directors, shall be entitled to attend meetings of the Board of Directors,
shall be reimbursed for their expenses in attending meetings of the Board
of Directors, and shall receive the same fees and compensation paid to
directors. Directors Emeritus shall have no vote on matters brought
before the Board of Directors and shall not be considered as directors
under the Articles of Incorporation or Bylaws of the corporation;
provided, however, that Directors Emeritus shall be entitled to the
liability limitations accorded directors set forth in Section 180.0828 of
the Wisconsin Business Corporation Law and the indemnification and expense
reimbursement provisions accorded directors under Article VIII of these
bylaws, as if such Directors Emeritus were, for such purposes only,
directors of the corporation.
3.02. Tenure and Qualifications. Each director shall hold
office until the next annual meeting of shareholders and until his or her
successor shall have been elected and, if necessary, qualified, or until
there is a decrease in the number of directors which takes effect after
the expiration of his or her term, or until his or her prior death,
resignation or removal. A director may be removed by the shareholders
only at a meeting called for the purpose of removing the director, and the
meeting notice shall state that the purpose, or one of the purposes, of
the meeting is removal of the director. A director may be removed from
office with or without cause if the number of votes cast to remove the
director exceeds the number of votes cast not to remove such director. A
director may resign at any time by delivering written notice which
complies with the Wisconsin Business Corporation Law to the Board of
Directors, to the President (in his or her capacity as chairperson of the
board of directors) or to the corporation. A director's resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. Directors need not be residents of the State of Wisconsin
or shareholders of the corporation. The mandatory retirement of a
director, who is not otherwise also serving as an officer of the
corporation, from the Board of Directors shall take effect at the
conclusion of the annual meeting of the shareholders next following the
date on which said director attains the age of seventy (70) years. No
person, other than a person who is then serving as an officer of the
corporation, shall be eligible for election to the office of director
after he or she shall have attained the age of seventy (70) years. In
either case above, with respect to existing directors of the corporation
as of September 28, 1995, the foregoing two sentences shall not take
effect until immediately prior to the corporation's 1997 annual meeting of
shareholders, unless any such director voluntarily retires from the Board
of Directors prior to such time.
3.025. Shareholder Nomination Procedure. Nominations for the
election of directors may be made by (a) the Board of Directors; (b) a
committee appointed by the Board of Directors; or (c) any shareholder
entitled to vote for the election of directors at such meeting who
complies fully with the requirements of this Section 3.025. Any
shareholder entitled to vote for the election of directors at a meeting
may nominate a person or persons for election as a director or directors
only if written notice of such shareholder's intent to make any such
nomination is given, either by personal delivery or by United States mail,
postage prepaid, to the Secretary of the corporation at its principal
business office not later than fifteen (15) days in advance of the
Originally Scheduled Date of such meeting. Each such notice shall set
forth: (a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the shareholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (d) such
background and other information regarding each nominee proposed by such
shareholder as would have been required to be included in a proxy
statement filed pursuant to Regulation 14A had each nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e)
the written consent of each nominee to serve as a director of the
corporation if so elected. The chairperson of any meeting of shareholders
to elect directors and the Board of Directors may refuse to acknowledge
the nomination by a shareholder of any person not made in compliance with
the foregoing procedure.
3.03. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately
after the annual meeting of shareholders and each adjourned session
thereof. The place of such regular meeting shall be the same as the place
of the meeting of shareholders which precedes it, or such other suitable
place as may be announced at such meeting of shareholders. The Board of
Directors may provide, by resolution, the date, time and place, either
within or without the State of Wisconsin, for the holding of additional
regular meetings of the Board of Directors without other notice than such
resolution.
3.04. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chief Executive
Officer, the Chairman of the Board, the President, the Secretary or any
two directors. The President or Secretary may fix any place, either
within or without the State of Wisconsin, as the place for holding any
special meeting of the Board of Directors, and if no other place is fixed
the place of the meeting shall be the principal office of the corporation
in the State of Wisconsin.
3.05. Notice; Waiver. Notice of each meeting of the Board
of Directors (unless otherwise provided in or pursuant to Section 3.03)
shall be given by written notice delivered in person, by telegraph,
teletype, facsimile or other form of wire or wireless communication, or by
mail or private carrier, to each director at his business address or at
such other address as such director shall have designated in writing filed
with the Secretary, in each case not less than forty-eight (48) hours
prior to the meeting. The notice need not describe the purpose of the
meeting of the Board of Directors or the business to be transacted at such
meeting. If mailed, such notice shall be deemed to be effective when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice is given by telegram, such notice shall be deemed to
be effective when the telegram is delivered to the telegraph company. If
notice is given by private carrier, such notice shall be deemed to be
effective when delivered to the private carrier. Whenever any notice
whatever is required to be given to any director of the corporation under
the articles of incorporation or these bylaws or any provision of the
Wisconsin Business Corporation Law, a waiver thereof in writing, signed at
any time, whether before or after the date and time of meeting, by the
director entitled to such notice shall be deemed equivalent to the giving
of such notice. The corporation shall retain any such waiver as part of
the permanent corporate records. A director's attendance at or
participation in a meeting waives any required notice to him or her of the
meeting unless the director at the beginning of the meeting or promptly
upon his or her arrival objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent to
action taken at the meeting.
3.06. Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law or by the articles of incorporation or these
bylaws, a majority of the number of directors specified in Section 3.01 of
these bylaws shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors. Except as otherwise provided by
the Wisconsin Business Corporation Law or by the articles of incorporation
or by these bylaws, a quorum of any committee of the Board of Directors
created pursuant to Section 3.12 hereof shall consist of a majority of the
number of directors appointed to serve on the committee. A majority of
the directors present (though less than such quorum) may adjourn any
meeting of the Board of Directors or any committee thereof, as the case
may be, from time to time without further notice.
3.07. Manner of Acting. The affirmative vote of a majority
of the directors present at a meeting of the Board of Directors or a
committee thereof at which a quorum is present shall be the act of the
Board of Directors or such committee, as the case may be, unless the
Wisconsin Business Corporation Law, the articles of incorporation or these
bylaws require the vote of a greater number of directors.
3.08. Conduct of Meetings. The Chief Executive Officer, and
in his or her absence, the Chairman of the Board or the President, as the
case may be, and in their absence, a Vice President, in the order provided
under Section 4.09, and in their absence, any director chosen by the
directors present, shall call meetings of the Board of Directors to order
and shall act as chairperson of the meeting. The Secretary of the
corporation shall act as secretary of all meetings of the Board of
Directors but in the absence of the Secretary, the presiding officer may
appoint any other person present to act as secretary of the meeting.
Minutes of any regular or special meeting of the Board of Directors shall
be prepared and distributed to each director.
3.09. Vacancies. Except as provided below, any vacancy
occurring in the Board of Directors, including a vacancy resulting from an
increase in the number of directors, may be filled by any of the
following: (a) the shareholders; (b) the Board of Directors; or (c) if
the directors remaining in office constitute fewer than a quorum of the
Board of Directors, the directors, by the affirmative vote of a majority
of all directors remaining in office. In the case of a vacancy created by
the removal of a director by vote of the shareholders, the shareholders
shall have the right to fill such vacancy at the same meeting or any
adjournment thereof. If the vacant office was held by a director elected
by a voting group of shareholders, only the holders of shares of that
voting group may vote to fill the vacancy if it is filled by the
shareholders, and only the remaining directors elected by that voting
group may vote to fill the vacancy if it is filled by the directors. A
vacancy that will occur at a specific later date, because of a resignation
effective at a later date or otherwise, may be filled before the vacancy
occurs, but the new director may not take office until the vacancy occurs.
3.10. Compensation. The Board of Directors, irrespective of
any personal interest of any of its members, may establish reasonable
compensation of all directors for services to the corporation as directors
or may delegate such authority to an appropriate committee. The Board of
Directors also shall have authority to provide for or delegate authority
to an appropriate committee to provide for reasonable pensions, disability
or death benefits, and other benefits or payments, to directors, officers
and employees and to their estates, families, dependents or beneficiaries
on account of prior services rendered by such directors, officers and
employees to the corporation.
3.11. Presumption of Assent. A director who is present and
is announced as present at a meeting of the Board of Directors or any
committee thereof created in accordance with Section 3.12 hereof, when
corporate action is taken, assents to the action taken unless any of the
following occurs: (a) the director objects at the beginning of the
meeting or promptly upon his or her arrival to holding the meeting or
transacting business at the meeting; (b) the director dissents or abstains
from an action taken and minutes of the meeting are prepared that show the
director's dissent or abstention from the action taken; (c) the director
delivers written notice that complies with the Wisconsin Business
Corporation Law of his or her dissent or abstention to the presiding
officer of the meeting before its adjournment or to the corporation
immediately after adjournment of the meeting; or (d) the director dissents
or abstains from an action taken, minutes of the meeting are prepared that
fail to show the director's dissent or abstention from the action taken,
and the director delivers to the corporation a written notice of that
failure that complies with the Wisconsin Business Corporation Law promptly
after receiving the minutes. Such right of dissent or abstention shall
not apply to a director who votes in favor of the action taken.
3.12. Committees. The Board of Directors by resolution
adopted by the affirmative vote of a majority of all of the directors then
in office may create one or more committees, appoint members of the Board
of Directors to serve on the committees and designate other members of the
Board of Directors to serve as alternates. Each committee shall have two
or more members who shall, unless otherwise provided by the Board of
Directors, serve at the pleasure of the Board of Directors. A committee
may be authorized to exercise the authority of the Board of Directors,
except that a committee may not do any of the following: (a) authorize
distributions; (b) approve or propose to shareholders action that the
Wisconsin Business Corporation Law requires to be approved by
shareholders; (c) fill vacancies on the Board of Directors or, unless the
Board of Directors provides by resolution that vacancies on a committee
shall be filled by the affirmative vote of the remaining committee
members, on any Board committee; (d) amend the corporation's articles of
incorporation; (e) adopt, amend or repeal bylaws; (f) approve a plan of
merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or method
prescribed by the Board of Directors; and (h) authorize or approve the
issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences and limitations of a class or
series of shares, except that the Board of Directors may authorize a
committee to do so within limits prescribed by the Board of Directors.
Unless otherwise provided by the Board of Directors in creating the
committee, a committee may employ counsel, accountants and other
consultants to assist it in the exercise of its authority.
3.13. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
bylaws, members of the Board of Directors (and any committees thereof
created pursuant to Section 3.12 hereof) may participate in regular or
special meetings by, or through the use of, any means of communication by
which all participants may simultaneously hear each other, such as by
conference telephone. If a meeting is conducted by such means, then at
the commencement of such meeting the presiding officer shall inform the
participating directors that a meeting is taking place at which official
business may be transacted. Any participant in a meeting by such means
shall be deemed present in person at such meeting. Notwithstanding the
foregoing, no action may be taken at any meeting held by such means on any
particular matter which the presiding officer determines, in his or her
sole discretion, to be inappropriate under the circumstances for action at
a meeting held by such means. Such determination shall be made and
announced in advance of such meeting.
3.14. Action Without Meeting. Any action required or
permitted by the Wisconsin Business Corporation Law to be taken at a
meeting of the Board of Directors or a committee thereof created pursuant
to Section 3.12 hereof may be taken without a meeting if the action is
taken by all members of the Board or of the committee. The action shall
be evidenced by one or more written consents describing the action taken,
signed by each director or committee member and retained by the
corporation. Such action shall be effective when the last director or
committee member signs the consent, unless the consent specifies a
different effective date.
ARTICLE IV. OFFICERS
4.01. Number. The principal officers of the corporation
shall be a President, a Secretary, and a Treasurer, each of whom shall be
elected by the Board of Directors. A Chairman of the Board, any number of
Vice Presidents, other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. The
Board of Directors may also authorize any duly appointed officer to
appoint one or more officers or assistant officers. The Chief Executive
Officer, designated in accordance with Section 4.06 of these By-laws, may
from time to time appoint any number of Vice Presidents as he shall
determine necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as the Chief Executive
Officer shall from time to time determine. Any two or more offices may be
held by the same person.
4.02. Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected
annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as is practicable. Each officer shall
hold office until his or her successor shall have been duly elected or
until his or her prior death, resignation or removal.
4.03. Removal. The Board of Directors may remove any
officer and, unless restricted by the Board of Directors or these By-laws,
an officer may remove any officer or assistant officer appointed by that
officer, at any time, with or without cause and notwithstanding the
contract rights, if any, of the officer removed. The appointment of an
officer does not of itself create contract rights.
4.04. Resignation. An officer may resign at any time by
delivering notice to the corporation that complies with the Wisconsin
Business Corporation Law. The resignation shall be effective when the
notice is delivered, unless the notice specifies a later effective date
and the corporation accepts the later effective date.
4.05. Vacancies. A vacancy in any principal office because
of death, resignation, removal, disqualification or otherwise, shall be
filled by the Board of Directors for the unexpired portion of the term.
If a resignation of an officer is effective at a later date as
contemplated by Section 4.04 hereof, the Board of Directors may fill the
pending vacancy before the effective date if the Board provides that the
successor may not take office until the effective date.
4.06. Chief Executive Officer. The Board of Directors shall
from time to time designate the Chairman of the Board, if any, or the
President of the corporation as the Chief Executive Officer of the
corporation. The President shall be the Chief Executive Officer whenever
the office of Chairman of the Board of the corporation is vacant. Subject
to the control of the Board of Directors, the Chief Executive Officer
shall in general supervise and control all of the business and affairs of
the corporation. He shall preside at all meetings of the shareholders and
of the Board of Directors. He shall have authority, subject to such rules
as may be prescribed by the Board of Directors, to appoint and remove such
agents and employees of the corporation as he shall deem necessary, to
prescribe their powers, duties and compensation, and to delegate authority
to them. He shall have authority to sign, execute and acknowledge, on
behalf of the corporation, all deeds, mortgages, securities, contracts,
leases, reports, and all other documents or other instruments necessary or
proper to be executed in the course of the corporation's regular business,
or which shall be authorized by resolution of the Board of Directors; and,
except as otherwise provided by law or the Board of Directors, he may
authorize any elected Vice President or other officer or agent of the
corporation to sign, execute and acknowledge such documents or instruments
in his place and stead. In general, he shall perform all duties incident
to the office of Chief Executive Officer of the corporation and such other
duties as may be prescribed by the Board of Directors from time to time.
4.07. Chairman of the Board. The Chairman of the Board, if
one be chosen by the Board of Directors, when present, and in the absence
of the Chief Executive Officer if the President is designated as the Chief
Executive Officer, shall preside at all meetings of the Board of Directors
and of the shareholders and shall perform all duties incident to the
office of Chairman of the Board of the corporation and such other duties
as may be prescribed by the Board of Directors from time to time.
4.08. President. The President shall be the principal
executive officer of the corporation and, subject to the direction of the
Board of Directors, shall in general supervise and control all of the
business and affairs of the corporation; provided, however, that should
the Board of Directors elect a Chairman of the Board, any or all of the
powers customarily incidental to the office of President may be assigned
by the Board of Directors to the Chairman of the Board. If the Chairman
of the Board is designated as the Chief Executive Officer, the President
shall be the chief operating officer of the corporation. Unless the Board
of Directors otherwise provides, in the absence of the Chairman of the
Board or in the event of his inability or refusal to act, or in the event
of a vacancy in the office of the Chairman of the Board, the President
shall perform the duties of the Chairman of the Board, and when so acting
shall have all the powers of and be subject to all the restrictions upon
the Chairman of the Board. The President shall, when present, preside at
all meetings of the shareholders and of the Board of Directors. He or she
shall have authority, subject to such rules as may be prescribed by the
Board of Directors, to appoint such agents and employees of the
corporation as he or she shall deem necessary, to prescribe their powers,
duties and compensation, and to delegate authority to them. Such agents
and employees shall hold office at the discretion of the President. He or
she shall have authority to sign, execute and acknowledge, on behalf of
the corporation, all deeds, mortgages, bonds, stock certificates,
contracts, leases, reports and all other documents or instruments
necessary or proper to be executed in the course of the corporation's
regular business, or which shall be authorized by resolution of the Board
of Directors; and, except as otherwise provided by law or the Board of
Directors, he or she may authorize any Vice President or other officer or
agent of the corporation to sign, execute and acknowledge such documents
or instruments in his or her place and stead. In general he or she shall
perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
4.09. The Vice Presidents. In the absence of the Chairman
of the Board, if any, and the President or in the event of their death,
inability or refusal to act, or in the event for any reason it shall be
impracticable for the Chairman of the Board and the President to act
personally, the Vice President (or in the event there be more than one
Vice President, the Vice Presidents in the order designated by the Board
of Directors or the Chief Executive Officer, or in the absence of any
designation, then in the order of their election) shall perform the duties
of the Chairman of the Board and/or the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon
the Chairman of the Board and/or the President. Any Vice President may
sign, with the Secretary or Assistant Secretary, certificates for shares
of the corporation; and shall perform such other duties and have such
authority as from time to time may be delegated or assigned to him or her
by the Chief Executive Officer, the President or the Board of Directors.
The execution of any instrument of the corporation by any Vice President
shall be conclusive evidence, as to third parties, of his or her authority
to act in the stead of the Chairman of the Board and/or the President.
4.10. The Secretary. The Secretary shall: (a) keep minutes
of the meetings of the shareholders and of the Board of Directors (and of
committees thereof) in one or more books provided for that purpose
(including records of actions taken by the shareholders or the Board of
Directors (or committees thereof) without a meeting); (b) see that all
notices are duly given in accordance with the provisions of these bylaws
or as required by the Wisconsin Business Corporation Law; (c) be custodian
of the corporate records and of the seal of the corporation and see that
the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d)
maintain a record of the shareholders of the corporation, in a form that
permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and
class or series of shares held by each shareholder; (e) sign with the
President, or a Vice President, certificates for shares of the
corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and have such other duties and
exercise such authority as from time to time may be delegated or assigned
by the Chief Executive Officer, the President or by the Board of
Directors.
4.11. The Treasurer. The Treasurer shall: (a) have charge
and custody of and be responsible for all funds and securities of the
corporation; (b) maintain appropriate accounting records; (c) receive and
give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall
be selected in accordance with the provisions of Section 5.04; and (d) in
general perform all of the duties incident to the office of Treasurer and
have such other duties and exercise such other authority as from time to
time may be delegated or assigned by the Chief Executive Officer or by the
Board of Directors. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his or her duties in such
sum and with such surety or sureties as the Board of Directors shall
determine.
4.12. Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant Treasurers as
the Board of Directors or the Chief Executive Officer may from time to
time authorize. The Assistant Secretaries may sign with the President or
a Vice President certificates for shares of the corporation the issuance
of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by
the Board of Directors, give bonds for the faithful discharge of their
duties in such sums and with such sureties as the Board of Directors shall
determine. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties and have such authority as shall from
time to time be delegated or assigned to them by the Secretary or the
Treasurer, respectively, or by the Chief Executive Officer, the President
or the Board of Directors.
4.13. Other Assistants and Acting Officers. The Board of
Directors and the Chief Executive Officer shall have the power to appoint,
or to authorize any duly appointed officer of the corporation to appoint,
any person to act as assistant to any officer, or as agent for the
corporation in his or her stead, or to perform the duties of such officer
whenever for any reason it is impracticable for such officer to act
personally, and such assistant or acting officer or other agent so
appointed by the Board of Directors or the Chief Executive Officer shall
have the power to perform all the duties of the office to which he or she
is so appointed to be an assistant, or as to which he or she is so
appointed to act, except as such power may be otherwise defined or
restricted by the Board of Directors or the appointing officer.
4.14. Salaries. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors or by a duly
authorized committee thereof, and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a
director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS
AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute or deliver any instrument in the name of and on behalf of the
corporation, and such authorization may be general or confined to specific
instances. In the absence of other designation, all deeds, mortgages and
instruments of assignment or pledge made by the corporation shall be
executed in the name of the corporation by the Chief Executive Officer,
the President or one of the Vice Presidents and by the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer; the
Secretary or an Assistant Secretary, when necessary or required, shall
affix the corporate seal, if any, thereto; and when so executed no other
party to such instrument or any third party shall be required to make any
inquiry into the authority of the signing officer or officers.
5.02. Loans. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such
indebtedness shall be issued in its name unless authorized by or under the
authority of a resolution of the Board of Directors. Such authorization
may be general or confined to specific instances.
5.03. Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such manner as shall
from time to time be determined by or under the authority of a resolution
of the Board of Directors.
5.04. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries as may be
selected by or under the authority of a resolution of the Board of
Directors.
5.05. Voting of Securities Owned by this Corporation.
Subject always to the specific directions of the Board of Directors, (a)
any shares or other securities issued by any other corporation and owned
or controlled by this corporation may be voted at any meeting of security
holders of such other corporation by the President of this corporation if
he or she be present, or in his or her absence by any Vice President of
this corporation who may be present, and (b) whenever, in the judgment of
the President, or in his or her absence, of any Vice President, it is
desirable for this corporation to execute a proxy or written consent in
respect to any shares or other securities issued by any other corporation
and owned by this corporation, such proxy or consent shall be executed in
the name of this corporation by the President or one of the Vice
Presidents of this corporation, without necessity of any authorization by
the Board of Directors, affixation of corporate seal, if any, or
countersignature or attestation by another officer. Any person or persons
designated in the manner above stated as the proxy or proxies of this
corporation shall have full right, power and authority to vote the shares
or other securities issued by such other corporation and owned by this
corporation the same as such shares or other securities might be voted by
this corporation.
ARTICLE VI. CERTIFICATES FOR SHARES; TRANSFER OF SHARES
6.01. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form, consistent with the
Wisconsin Business Corporation Law, as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation.
All certificates surrendered to the corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except as provided in Section 6.06 hereof.
6.02. Facsimile Signatures and Seal. The seal of the
corporation, if any, on any certificates for shares may be a facsimile.
The signature of the President or Vice President and the Secretary or
Assistant Secretary upon a certificate may be facsimiles if the
certificate is manually signed on behalf of a transfer agent, or a
registrar, other than the corporation itself or an employee of the
corporation.
6.03. Signature by Former Officers. The validity of a share
certificate is not affected if a person who signed the certificate (either
manually or in facsimile) no longer holds office when the certificate is
issued.
6.04. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer the corporation may
treat the registered owner of such shares as the person exclusively
entitled to vote, to receive notifications and otherwise to have and
exercise all the rights and power of an owner. Where a certificate for
shares is presented to the corporation with a request to register for
transfer, the corporation shall not be liable to the owner or any other
person suffering loss as a result of such registration of transfer if (a)
there were on or with the certificate the necessary endorsements, and (b)
the corporation had no duty to inquire into adverse claims or has
discharged any such duty. The corporation may require reasonable
assurance that such endorsements are genuine and effective and compliance
with such other regulations as may be prescribed by or under the authority
of the Board of Directors.
6.05. Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of
any restriction imposed by the corporation upon the transfer of such
shares.
6.06. Lost, Destroyed or Stolen Certificates. Where the
owner claims that certificates for shares have been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if
the owner (a) so requests before the corporation has notice that such
shares have been acquired by a bona fide purchaser, (b) files with the
corporation a sufficient indemnity bond if required by the Board of
Directors or any principal officer, and (c) satisfies such other
reasonable requirements as may be prescribed by or under the authority of
the Board of Directors.
6.07. Consideration for Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible
or intangible property or benefit to the corporation, including cash,
promissory notes, services performed, contracts for services to be
performed or other securities of the corporation. Before the corporation
issues shares, the Board of Directors shall determine that the
consideration received or to be received for the shares to be issued is
adequate. The determination of the Board of Directors is conclusive
insofar as the adequacy of consideration for the issuance of shares
relates to whether the shares are validly issued, fully paid and
nonassessable. The corporation may place in escrow shares issued in whole
or in part for a contract for future services or benefits, a promissory
note, or other property to be issued in the future, or make other
arrangements to restrict the transfer of the shares, and may credit
distributions in respect of the shares against their purchase price, until
the services are performed, the benefits or property are received or the
promissory note is paid. If the services are not performed, the benefits
or property are not received or the promissory note is not paid, the
corporation may cancel, in whole or in part, the shares escrowed or
restricted and the distributions credited.
6.08. Stock Regulations. The Board of Directors shall have
the power and authority to make all such further rules and regulations not
inconsistent with law as it may deem expedient concerning the issue,
transfer and registration of shares of the corporation.
ARTICLE VII. SEAL
7.01. The Board of Directors may provide for a corporate
seal for the corporation.
ARTICLE VIII. INDEMNIFICATION
8.01. Certain Definitions. All capitalized terms used in
this Article VIII and not otherwise hereinafter defined in this Section
8.01 shall have the meaning set forth in Section 180.0850 of the Statute.
The following capitalized terms (including any plural forms thereof) used
in this Article VIII shall be defined as follows:
(a) "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee benefit plan,
trust or other enterprise that directly or indirectly through
one or more intermediaries, controls or is controlled by, or is
under common control with, the Corporation.
(b) "Authority" shall mean the entity selected by the
Director or Officer to determine his or her right to
indemnification pursuant to Section 8.04.
(c) "Board" shall mean the entire elected and serving
Board of Directors of the corporation, including all Directors
Emeritus and all members of the Board of Directors of the
corporation and Directors Emeritus who are Parties to the
subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer
breached or failed to perform his or her duties to the
Corporation and his or her breach of or failure to perform those
duties is determined, in accordance with Section 8.04, to
constitute misconduct under Section 180.0851(2)(a) l, 2, 3 or 4
of the Statute.
(e) "Corporation," as used herein and as defined in the
Statute and incorporated by reference into the definitions of
certain other capitalized terms used herein, shall mean this
Corporation, including, without limitation, any successor
corporation or entity to this Corporation by way of merger,
consolidation or acquisition of all or substantially all of the
capital stock or assets of this Corporation.
(f) "Director" or "Officer" shall have the meaning set
forth in the Statute and shall also include all Directors
Emeritus for purposes of the definition of 'Director' under this
Article VIII; provided, that, for purposes of this Article VIII,
it shall be conclusively presumed that any Director or Officer
serving as a director, officer, partner, trustee, member of any
governing or decision-making committee, employee or agent of an
Affiliate shall be so serving at the request of the
corporation."
(g) "Disinterested Quorum" shall mean a quorum of the
Board who are not Parties to the subject Proceeding or any
related Proceeding.
(h) "Party" shall have the meaning set forth in the
Statute; provided, that, for purposes of this Article VIII, the
term "Party" shall also include any Director or Officer or
employee of the Corporation who is or was a witness in a
Proceeding at a time when he or she has not otherwise been
formally named a Party thereto.
(i) "Proceeding" shall have the meaning set forth in the
Statute; provided, that, in accordance with Section 180.0859 of
the Statute and for purposes of this Article VIII, the term
"Proceeding" shall also include all Proceedings (i) brought
under (in whole or in part) the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, their
respective state counterparts, and/or any rule or regulation
promulgated under any of the foregoing; (ii) brought before an
Authority or otherwise to enforce rights hereunder; (iii) any
appeal from a Proceeding; and (iv) any Proceeding in which the
Director or Officer is a plaintiff or petitioner because he or
she is a Director or Officer; provided, however, that any such
Proceeding under this subsection (iv) must be authorized by a
majority vote of a Disinterested Quorum.
(j) "Statute" shall mean Sections 180.0850 through
180.0859, inclusive, of the Wisconsin Business Corporation Law,
Chapter 180 of the Wisconsin Statutes, as the same shall then be
in effect, including any amendments thereto, but, in the case of
any such amendment, only to the extent such amendment permits or
requires the Corporation to provide broader indemnification
rights than the Statute permitted or required the Corporation to
provide prior to such amendment.
8.02. Mandatory Indemnification of Directors and Officers.
To the fullest extent permitted or required by the Statute, the
Corporation shall indemnify a Director or Officer against all Liabilities
incurred by or on behalf of such Director or Officer in connection with a
Proceeding in which the Director or Officer is a Party because he or she
is a Director or Officer.
8.03. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under
Section 8.02 shall make a written request therefor to the Corporation.
Subject to Section 8.03(b), within sixty days of the Corporation's receipt
of such request, the Corporation shall pay or reimburse the Director or
Officer for the entire amount of Liabilities incurred by the Director or
Officer in connection with the subject Proceeding (net of any Expenses
previously advanced pursuant to Section 8.05).
(b) No indemnification shall be required to be paid by the
Corporation pursuant to Section 8.02 if, within such sixty-day period, (i)
a Disinterested Quorum, by a majority vote thereof, determines that the
Director or Officer requesting indemnification engaged in misconduct
constituting a Breach of Duty or (ii) a Disinterested Quorum cannot be
obtained.
(c) In either case of nonpayment pursuant to Section 8.03(b),
the Board shall immediately authorize by resolution that an Authority, as
provided in Section 8.04, determine whether the Director's or Officer's
conduct constituted a Breach of Duty and, therefore, whether
indemnification should be denied hereunder.
(d) (i) If the Board does not authorize an Authority to
determine the Director's or Officer's right to indemnification hereunder
within such sixty-day period and/or (ii) if indemnification of the
requested amount of Liabilities is paid by the Corporation, then it shall
be conclusively presumed for all purposes that a Disinterested Quorum has
affirmatively determined that the Director or Officer did not engage in
misconduct constituting a Breach of Duty and, in the case of subsection
(i) above (but not subsection (ii)), indemnification by the Corporation of
the requested amount of Liabilities shall be paid to the Director or
Officer immediately.
8.04. Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a
Director's or Officer's right to indemnification pursuant to Section 8.03,
then the Director or Officer requesting indemnification shall have the
absolute discretionary authority to select one of the following as such
Authority:
(i) An independent legal counsel; provided, that such
counsel shall be mutually selected by such Director or Officer
and by a majority vote of a Disinterested Quorum or, if a
Disinterested Quorum cannot be obtained, then by a majority vote
of the Board;
(ii) A panel of three arbitrators selected from the panels
of arbitrators of the American Arbitration Association in
Wisconsin; provided, that (A) one arbitrator shall be selected
by such Director or Officer, the second arbitrator shall be
selected by a majority vote of a Disinterested Quorum or, if a
Disinterested Quorum cannot be obtained, then by a majority vote
of the Board, and the third arbitrator shall be selected by the
two previously selected arbitrators, and (B) in all other
respects (other than this Article VIII), such panel shall be
governed by the American Arbitration Association's then existing
Commerical Arbitration Rules; or
(iii) A court pursuant to and in accordance with
Section 180.0854 of the Statute.
(b) In any such determination by the selected Authority there
shall exist a rebuttable presumption that the Director's or Officer's
conduct did not constitute a Breach of Duty and that indemnification
against the requested amount of Liabilities is required. The burden of
rebutting such a presumption by clear and convincing evidence shall be on
the Corporation or such other party asserting that such indemnification
should not be allowed.
(c) The Authority shall make its determination within sixty
days of being selected and shall submit a written opinion of its
conclusion simultaneously to both the Corporation and the Director or
Officer.
(d) If the Authority determines that indemnification is
required hereunder, the Corporation shall pay the entire requested amount
of Liabilities (net of any Expenses previously advanced pursuant to
Section 8.05), including interest thereon at a reasonable rate, as
determined by the Authority, within ten days of receipt of the Authority's
opinion; provided, that, if it is determined by the Authority that a
Director or Officer is entitled to indemnification against Liabilities'
incurred in connection with some claims, issues or matters, but not as to
other claims, issues or matters, involved in the subject Proceeding, the
Corporation shall be required to pay (as set forth above) only the amount
of such requested Liabilities as the Authority shall deem appropriate in
light of all of the circumstances of such Proceeding.
(e) The determination by the Authority that indemnification is
required hereunder shall be binding upon the Corporation regardless of any
prior determination that the Director or Officer engaged in a Breach of
Duty.
(f) All Expenses incurred in the determination process under
this Section 8.04 by either the Corporation or the Director or Officer,
including, without limitation, all Expenses of the selected Authority,
shall be paid by the Corporation.
8.05. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse from time to time or
at any time, within ten days after the receipt of the Director's or
Officer's written request therefor, the reasonable Expenses of the
Director or Officer as such Expenses are incurred; provided, the following
conditions are satisfied:
(i) The Director or Officer furnishes to the Corporation
an executed written certificate affirming his or her good faith
belief that he or she has not engaged in misconduct which
constitutes a Breach of Duty; and
(ii) The Director or Officer furnishes to the Corporation
an unsecured executed written agreement to repay any advances
made under this Section 8.05 if it is ultimately determined by
an Authority that he or she is not entitled to be indemnified by
the Corporation for such Expenses pursuant to Section 8.04.
(b) If the Director or Officer must repay any previously
advanced Expenses pursuant to this Section 8.05, such Director or Officer
shall not be required to pay interest on such amounts.
8.06. Indemnification and Allowance of Expenses of Certain
Others.
(a) The Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify a
director or officer of an Affiliate (who is not otherwise serving as a
Director or Officer) against all Liabilities, and shall advance the
reasonable Expenses, incurred by such director or officer in a Proceeding
to the same extent hereunder as if such director or officer incurred such
Liabilities because he or she was a Director or Officer, if such director
or officer is a Party thereto because he or she is or was a director or
officer of the Affiliate.
(b) The Corporation shall indemnify an employee who is not a
Director or Officer, to the extent he or she has been successful on the
merits or otherwise in defense of a Proceeding, for all reasonable
Expenses incurred in the Proceeding if the employee was a Party because he
or she was an employee of the Corporation.
(c) The Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify (to the
extent not otherwise provided in Section 8.06(b) hereof) against
Liabilities incurred by, and/or provide for the allowance of reasonable
Expenses of, an employee or authorized agent of the Corporation acting
within the scope of his or her duties as such and who is not otherwise a
Director or Officer.
8.07. Insurance. The Corporation may purchase and maintain
insurance on behalf of a Director or Officer or any individual who is or
was an employee or authorized agent of the Corporation against any
Liability asserted against or incurred by such individual in his or her
capacity as such or arising from his or her status as such, regardless of
whether the Corporation is required or permitted to indemnify against any
such Liability under this Article VIII.
8.08. Notice to the Corporation. A Director, Officer or
employee shall promptly notify the Corporation in writing when he or she
has actual knowledge of a Proceeding which may result in a claim of
indemnification against Liabilities or allowance of Expenses hereunder,
but the failure to do so shall not relieve the Corporation of any
liability to the Director, Officer or employee hereunder unless the
Corporation shall have been irreparably prejudiced by such failure (as
determined, in the case of Directors or Officers only, by an Authority
selected pursuant to Section 8.04(a)).
8.09. Severability. If any provision of this Article VIII
shall be deemed invalid or inoperative, or if a court of competent
jurisdiction determines that any of the provisions of this Article VIII
contravene public policy, this Article VIII shall be construed so that the
remaining provisions shall not be affected, but shall remain in full force
and effect, and any such provisions which are invalid or inoperative or
which contravene public policy shall be deemed, without further action or
deed by or on behalf of the Corporation, to be modified, amended and/or
limited, but only to the extent necessary to render the same valid and
enforceable; it being understood that it is the Corporation's intention to
provide the Directors and Officers with the broadest possible protection
against personal liability allowable under the Statute.
8.10. Nonexclusivity of Article VIII. The rights of a
Director, Officer or employee (or any other person) granted under this
Article VIII shall not be deemed exclusive of any other rights to
indemnification against Liabilities or allowance of Expenses which the
Director, Officer or employee (or such other person) may be entitled to
under any written agreement, Board resolution, vote of shareholders of the
Corporation or otherwise, including, without limitation, under the
Statute. Nothing contained in this Article VIII shall be deemed to limit
the Corporation's obligations to indemnify against Liabilities or allow
Expenses to a Director, Officer or employee under the Statute.
8.11. Contractual Nature of Article VIII; Repeal or
Limitation of Rights. This Article VIII shall be deemed to be a contract
between the Corporation and each Director, Officer and employee of the
Corporation and any repeal or other limitation of this Article VIII or any
repeal or limitation of the Statute or any other applicable law shall not
limit any rights of indemnification against Liabilities or allowance of
Expenses then existing or arising out of events, acts or omissions
occurring prior to such repeal or limitation, including, without
limitation, the right to indemnification against Liabilities or allowance
of Expenses for Proceedings commenced after such repeal or limitation to
enforce this Article VIII with regard to acts, omissions or events arising
prior to such repeal or limitation.
ARTICLE IX. AMENDMENTS
9.01. By Shareholders. These bylaws may be amended or
repealed and new bylaws may be adopted by the shareholders at any annual
or special meeting of the shareholders at which a quorum is in attendance.
9.02. By Directors. Except as otherwise provided by the
Wisconsin Business Corporation Law or the articles of incorporation, these
bylaws may also be amended or repealed and new bylaws may be adopted by
the Board of Directors by affirmative vote of a majority of the number of
directors present at any meeting at which a quorum is in attendance;
provided, however, that the shareholders in adopting, amending or
repealing a particular bylaw may provide therein that the Board of
Directors may not amend, repeal or readopt that bylaw.
9.03. Implied Amendments. Any action taken or authorized by
the shareholders or by the Board of Directors which would be inconsistent
with the bylaws then in effect but which is taken or authorized by
affirmative vote of not less than the number of shares or the number of
directors required to amend the bylaws so that the bylaws would be
consistent with such action shall be given the same effect as though the
bylaws had been temporarily amended or suspended so far, but only so far,
as is necessary to permit the specific action so taken or authorized.
Exhibit 10.5
THE MARCUS CORPORATION
1995 EQUITY INCENTIVE PLAN
AMENDED AND RESTATED JUNE 26, 1996
(Section 6(a)(ii) amended in its entirety)
<PAGE>
THE MARCUS CORPORATION
1995 EQUITY INCENTIVE PLAN
AMENDED AND RESTATED JUNE 26, 1996
(Section 6(a)(ii) amended in its entirety)
Section 1. Purpose
The purpose of The Marcus Corporation 1995 Equity Incentive Plan
(the "Plan") is to promote the best interests of The Marcus Corporation
(the "Company") and its shareholders by providing key employees of the
Company and its Affiliates (as defined below) with an opportunity to
acquire a, or increase their, proprietary interest in the Company. It is
intended that the Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company by those key
employees who are primarily responsible for shaping and carrying out the
long-range plans of the Company and securing the Company's continued
growth and financial success.
Section 2. Definitions
As used in the Plan, the following terms shall have the
respective meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through
one or more intermediaries, is controlled by, controls, or is under common
control with, the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock or Performance Share granted under the Plan.
(c) "Award Agreement" shall mean any written agreement,
contract or other instrument or document evidencing any Award granted
under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Commission" shall mean the Securities and Exchange
Commission.
(f) "Committee" shall mean the Compensation and Nominating
Committee of the Board of Directors of the Company (or any other committee
thereof designated by such Board to administer the Plan); provided,
however, that the Committee is composed of not less than two directors,
each of whom is a "disinterested person" within the meaning of Rule 16b-3.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(h) "Fair Market Value" shall mean, with respect to any
property (including, without limitation, any Shares or other securities),
the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee.
(i) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code (or any successor provision thereto).
(j) "Key Employee" shall mean any officer or other key employee
of the Company or of any Affiliate who is responsible for or contributes
to the management, growth or profitability of the business of the Company
or any Affiliate as determined by the Committee in its discretion.
(k) "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive
Stock Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock Option.
(m) "Participating Key Employee" shall mean a Key Employee
designated to be granted an Award under the Plan.
(n) "Performance Period" shall mean, in relation to Performance
Shares, any period for which a performance goal or goals have been
established.
(o) "Performance Share" shall mean any right granted under
Section 6(d) of the Plan that will be paid out as a Share (which, in
specified circumstances, may be a Share of Restricted Stock).
(p) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization or government or political subdivision thereof.
(q) "Released Securities" shall mean Shares of Restricted Stock
with respect to which all applicable restrictions have expired, lapsed or
been waived.
(r) "Restricted Securities" shall mean Awards of Restricted
Stock or other Awards under which issued and outstanding Shares are held
subject to certain restrictions.
(s) "Restricted Stock" shall mean any Share granted under
Section 6(c) of the Plan or, in specified circumstances, a Share paid in
connection with a Performance Share under Section 6(e) of the Plan.
(t) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation
thereto.
(u) "Shares" shall mean shares of common stock of the Company,
$1 par value, and such other securities or property as may become subject
to Awards pursuant to an adjustment made under Section 4(b) of the Plan.
(v) "Stock Appreciation Right" shall mean any right granted
under Section 6(b) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in existence, the
functions of the Committee as specified in the Plan shall be exercised by
those members of the Board of Directors of the Company who qualify as
"disinterested persons" under Rule 16b-3. Subject to the terms of the
Plan and applicable laws and without limitation by reason of enumeration,
the Committee shall have full discretionary power and authority to: (i)
designate Participating Key Employees; (ii) determine the type or types of
Awards to be granted to each Participating Key Employee under the Plan;
(iii) determine the number of Shares to be covered by (or with respect to
which payments, rights or other matters are to be calculated in connection
with) Awards granted to Participating Key Employees; (iv) determine the
terms and conditions of any Award granted to a Participating Key Employee;
(v) determine whether, to what extent and under what circumstances Awards
granted to Participating Key Employees may be settled or exercised in
cash, Shares, other securities, other Awards or other property, and the
method or methods by which Awards may be settled, exercised, canceled,
forfeited or suspended; (vi) determine whether, to what extent and under
what circumstances cash, Shares, other Awards and other amounts payable
with respect to an Award granted to Participating Key Employees under the
Plan shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under, the
Plan (including, without limitation, any Award Agreement); (viii)
establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of
the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of
the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion
of the Committee, may be made at any time or from time to time, and shall
be final, conclusive and binding upon all Persons, including the Company,
any Affiliate, any Participating Key Employee, any holder or beneficiary
of any Award, any shareholder and any employee of the Company or of any
Affiliate.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Number of Shares Available. The number of Shares with
respect to which Awards may be granted under the Plan shall be
500,000, subject to the limitations set forth in Section 6(c)(i).
(ii) Accounting for Awards. The number of Shares covered
by an Award under the Plan, or to which such Award relates, shall be
counted on the date of grant of such Award against the number of
Shares available for granting Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to
be made available under the Plan, then the Committee may, in such manner
as it may deem equitable, adjust any or all of (i) the number and type of
Shares subject to the Plan and which thereafter may be made the subject of
Awards under the Plan; (ii) the number and type of Shares subject to
outstanding Awards; and (iii) the grant, purchase or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, in each
case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would
cause the Plan to violate Section 422(b) of the Code (or any successor
provision thereto); and provided further that the number of Shares subject
to any Award payable or denominated in Shares shall always be a whole
number.
Section 5. Eligibility
Any Key Employee, including any executive officer or employee-
director of the Company or of any Affiliate, who is not a member of the
Committee shall be eligible to be designated a Participating Key Employee.
Ben Marcus, Stephen H. Marcus, Diane Marcus Gershowitz and any other
person who beneficially owns, directly or indirectly (taking into account
stock ownership attributed to such person pursuant to Section 425(d) of
the Code), stock possessing more than five percent (5%) of the total
combined voting power of all classes of stock of the Company or of any
Affiliate of the Company shall not be eligible to receive Awards under the
Plan.
Section 6. Awards
(a) Option Awards. The Committee is hereby authorized to grant
Options to Key Employees with the terms and conditions as set forth below
and with such additional terms and conditions, in either case not
inconsistent with the provisions of the Plan, as the Committee shall
determine in its discretion.
(i) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 6(a) shall be determined by
the Committee; provided, however, that such exercise price shall not
be less than 100% of the Fair Market Value of a Share on the date of
grant of such Option.
(ii) Option Term. The term of each Option shall be fixed
by the Committee; provided, however, that in no event shall the term
of any Option exceed a period of ten years from the date of its
grant.
(iii) Exercisability and Method of Exercise. An Option
shall become exercisable in such manner and within such period or
periods and in such installments or otherwise as shall be determined
by the Committee. The Committee also shall determine the method or
methods by which, and the form or forms, including, without
limitation, cash, Shares, other securities, other Awards, other
property or any combination thereof, having a Fair Market Value on
the exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be made
or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects with
the provisions of Section 422 of the Code (or any successor provision
thereto) and any regulations promulgated thereunder. Notwithstanding
any provision in the Plan to the contrary, no Incentive Stock Option
may be granted hereunder after the tenth anniversary of the adoption
of the Plan by the Board of Directors of the Company.
(b) Stock Appreciation Right Awards. The Committee is hereby
authorized to grant Stock Appreciation Rights to Key Employees. Subject
to the terms of the Plan and any applicable Award Agreement, a Stock
Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the
Fair Market Value of one Share on the date of exercise over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, which
shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. Subject to the terms of
the Plan, the grant price, term, methods of exercise, methods of
settlement (including whether the Participating Key Employee will be paid
in cash, Shares, other securities, other Awards, or other property or any
combination thereof), and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee in its
discretion. The Committee may impose such conditions or restrictions on
the exercise of any Stock Appreciation Right as it may deem appropriate,
including, without limitation, restricting the time of exercise of the
Stock Appreciation Right to specified periods as may be necessary to
satisfy the requirements of Rule 16b-3.
(c) Restricted Stock Awards.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Restricted Stock to Key Employees; provided, however, that
the aggregate number of Shares of Restricted Stock granted under the
Plan to all Participating Key Employees as a group shall not exceed
50,000 Shares (such number of Shares subject to adjustment in
accordance with the terms of Section 4(b) hereof) of the total number
of Shares available for Awards under Section 4(a)(i).
(ii) Restrictions. Shares of Restricted Stock granted to
Participating Key Employees shall be subject to such restrictions as
the Committee may impose in its discretion (including, without
limitation, any limitation on the right to vote a Share of Restricted
Stock or the right to receive any dividend or other right or
property), which restrictions may lapse separately or in combination
at such time or times, in such installments or otherwise, as the
Committee may deem appropriate in its discretion.
(iii) Registration. Any Restricted Stock granted under
the Plan to a Participating Key Employee may be evidenced in such
manner as the Committee may deem appropriate in its discretion,
including, without limitation, book-entry registration or issuance of
a stock certificate or certificates. In the event any stock
certificate is issued in respect of Shares of Restricted Stock
granted under the Plan to a Participating Key Employee, such
certificate shall be registered in the name of the Participating Key
Employee and shall bear an appropriate legend (as determined by the
Committee) referring to the terms, conditions and restrictions
applicable to such Restricted Stock.
(iv) Payment of Restricted Stock. At the end of the
applicable restriction period relating to Restricted Stock granted to
a Participating Key Employee, one or more stock certificates for the
appropriate number of Shares, free of restrictions imposed under the
Plan, shall be delivered to the Participating Key Employee or, if the
Participating Key Employee received stock certificates representing
the Restricted Stock at the time of grant, the legends placed on such
certificates shall be removed.
(v) Forfeiture. Except as otherwise determined by the
Committee in its discretion, upon termination of employment of a
Participating Key Employee (as determined under criteria established
by the Committee in its discretion) for any reason during the
applicable restriction period, all Shares of Restricted Stock still
subject to restriction shall be forfeited by the Participating Key
Employee; provided, however, that the Committee may, when it finds
that a waiver would be in the best interests of the Company, waive in
whole or in part any or all remaining restrictions with respect to
Shares of Restricted Stock held by a Participating Key Employee.
(d) Performance Share Awards.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Performance Shares to Key Employees.
(ii) Performance Goals and Other Terms. The Committee
shall determine in its discretion the Performance Period, the
performance goal or goals to be achieved during any Performance
Period, the proportion of payments, if any, to be made for
performance between the minimum and full performance levels, the
restrictions applicable to Shares of Restricted Stock received upon
payment of Performance Shares if Performance Shares are paid in such
manner, and any other terms, conditions and rights relating to a
grant of Performance Shares. Performance goals established by the
Committee may be based on one or more measures such as return on
shareholders' equity, earnings or any other standard or standards
deemed relevant by the Committee, measured internally or relative to
other organizations and before or after extraordinary items.
(iii) Rights and Benefits During the Performance
Period. The Committee may provide that, during a Performance Period,
a Participating Key Employee shall be paid cash amounts, with respect
to each Performance Share held by such Participating Key Employee, in
the same manner, at the same time, and in the same amount paid, as a
cash dividend on a Share. Participating Key Employees shall have no
voting rights with respect to Performance Shares held by them.
(iv) Adjustments with Respect to Performance Shares. Any
other provision of the Plan to the contrary notwithstanding, the
Committee may in its discretion at any time or from time to time
adjust performance goals (up or down) and minimum or full performance
levels (and any intermediate levels and proportion of payments
related thereto), adjust the manner in which performance goals are
measured, or shorten any Performance Period or waive in whole or in
part any or all remaining restrictions with respect to Shares of
Restricted Stock issued in payment of Performance Shares, if the
Committee determines that conditions, including but not limited to,
changes in the economy, changes in competitive conditions, changes in
laws or governmental regulations, changes in generally accepted
accounting principles, changes in the Company's accounting policies,
acquisitions or dispositions by the Company or its Affiliates, or the
occurrence of other unusual, unforeseen or extraordinary events, so
warrant.
(v) Payment of Performance Shares. As soon as is
reasonably practicable following the end of the applicable
Performance Period, one or more certificates representing the number
of Shares equal to the number of Performance Shares payable shall be
registered in the name of and delivered to the Participating Key
Employee; provided, however, that any Shares of Restricted Stock
payable in connection with Performance Shares shall, pending the
expiration, lapse, or waiver of the applicable restrictions, be
evidenced in the manner as set forth in Section 6(c)(iii) hereof.
(e) General.
(i) No Consideration for Awards. Awards shall be granted
to Participating Key Employees for no cash consideration unless
otherwise determined by the Committee.
(ii) Award Agreements. Each Award granted under the Plan
shall be evidenced by an Award Agreement in such form (consistent
with the terms of the Plan) as shall have been approved by the
Committee.
(iii) Awards May Be Granted Separately or Together.
Awards to Participating Key Employees under the Plan may be granted
either alone or in addition to, in tandem with, or in substitution
for, any other Award or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to, or in
tandem with, other Awards, or in addition to, or in tandem with,
awards granted under any other plan of the Company or any Affiliate,
may be granted either at the same time as or at a different time from
the grant of such other Awards or awards.
(iv) Forms of Payment Under Awards. Subject to the terms
of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant,
exercise or payment of an Award to a Participating Key Employee may
be made in such form or forms as the Committee shall determine, and
may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee in its discretion. Such rules and
procedures may include, without limitation, provisions for the
payment or crediting of interest on installment or deferred payments.
(v) Limits on Transfer of Awards. No Award (other than
Released Securities), and no right under any such Award, shall be
assignable, alienable, saleable or transferable by a Participating
Key Employee otherwise than by will or by the laws of descent and
distribution (or, in the case of an Award of Restricted Securities,
to the Company); provided, however, that a Participating Key Employee
at the discretion of the Committee may be entitled, in the manner
established by the Committee, to designate a beneficiary or
beneficiaries to exercise his or her rights, and to receive any
property distributable, with respect to any Award upon the death of
the Participating Key Employee. Each Award, and each right under any
Award, shall be exercisable, during the lifetime of the Participating
Key Employee, only by such individual or, if permissible under
applicable law, by such individual's guardian or legal
representative. No Award (other than Released Securities), and no
right under any such Award, may be pledged, alienated, attached or
otherwise encumbered, and any purported pledge, alienation,
attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate.
(vi) Term of Awards. Except as otherwise provided in the
Plan, the term of each Award shall be for such period as may be
determined by the Committee.
(vii) Rule 16b-3 Six-Month Limitations. To the extent
required in order to comply with Rule 16b-3 only, any equity security
offered pursuant to the Plan may not be sold for at least six months
after acquisition, except in the case of death or disability, and any
derivative security issued pursuant to the Plan shall not be
exercisable for at least six months, except in case of death or
disability of the holder thereof. Terms used in the preceding
sentence shall, for the purposes of such sentence only, have the
meanings, if any, assigned or attributed to them under Rule 16b-3.
(viii) Share Certificates; Representation. In addition
to the restrictions imposed pursuant to Section 6(c) and Section 6(d)
hereof, all certificates for Shares delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations and other
requirements of the Commission, New York Stock Exchange or any other
stock exchange or other market upon which such Shares are then listed
or traded, and any applicable federal or state securities laws, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. The
Committee may require each Participating Key Employee, or other
Person who acquires Shares under the Plan by means of an Award
originally made to a Participating Key Employee to represent to the
Company in writing that such Participating Key Employee, or other
Person is acquiring the Shares without a view to the distribution
thereof.
Section 7. Amendment and Termination of the Plan; Correction of
Defects and Omissions
(a) Amendments to and Termination of the Plan. The Board of
Directors of the Company may at any time amend, alter, suspend,
discontinue or terminate the Plan; provided, however, that shareholder
approval of any amendment of the Plan shall also be obtained if otherwise
required by: (i) the rules and/or regulations promulgated under Section 16
of the Exchange Act (in order for the Plan to remain qualified under Rule
16b-3); (ii) the Code or any rules promulgated thereunder (in order to
allow for Incentive Stock Options to be granted under the Plan); or (iii)
the listing requirements of the New York Stock Exchange or any other
principal securities exchange or market on which the Shares are then
traded (in order to maintain the listing of the Shares thereon).
Termination of the Plan shall not affect the rights of Participating Key
Employees with respect to Awards previously granted to them, and all
unexpired Awards shall continue in force and effect after termination of
the Plan except as they may lapse or be terminated by their own terms and
conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may in its discretion correct any defect, supply any omission or
reconcile any inconsistency in any Award or Award Agreement in the manner
and to the extent it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Participating Key
Employee or other Person shall have any claim to be granted any Award
under the Plan, and there is no obligation for uniformity of treatment of
Key Employees, Participating Key Employees or holders or beneficiaries of
Awards under the Plan. The terms and conditions of Awards need not be the
same with respect to each Participating Key Employee.
(b) Withholding. No later than the date as of which an amount
first becomes includable in the gross income of a Participating Key
Employee for federal income tax purposes with respect to any Award under
the Plan, the Participating Key Employee shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations arising with respect to Awards to
Participating Key Employees under the Plan may be settled with Shares
previously owned by the Participating Key Employee; provided, however,
that the Participating Key Employee may not settle such obligations with
Shares that are part of, or are received upon exercise of, the Award that
gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements, and
the Company and any Affiliate shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment otherwise due to the
Participating Key Employee. The Committee may establish such procedures
as it deems appropriate for the settling of withholding obligations with
Shares, including, without limitation, the establishment of such
procedures as may be necessary to satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from
adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.
(d) Rights and Status of Recipients of Awards. The grant of an
Award shall not be construed as giving a Participating Key Employee the
right to be retained in the employ of the Company or any Affiliate.
Further, the Company or any Affiliate may at any time dismiss a
Participating Key Employee from employment, free from any liability, or
any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Award Agreement. Except for rights accorded under the Plan and
under any applicable Award Agreement, Participating Key Employees shall
have no rights as holders of Shares as a result of the granting of Awards
hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined
by the Committee, the Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall
not establish any fiduciary relationship between the Company or the
Committee and any Participating Key Employee or other Person. To the
extent any Person holds any right by virtue of a grant under the Plan,
such right (unless otherwise determined by the Committee) shall be no
greater than the right of an unsecured general creditor of the Company.
(f) Governing Law. The validity, construction and effect of
the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the internal laws of the State of Wisconsin
and applicable federal law.
(g) Severability. If any provision of the Plan or any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal
or unenforceable in any jurisdiction, or as to any Person or Award, or
would disqualify the Plan, any Award Agreement or any Award under any law
deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan, any Award Agreement
or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award, and the remainder of the Plan, any such Award Agreement
and any such Award shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other
securities shall be issued or delivered pursuant to the Plan, any Award
Agreement or any Award, and the Committee shall determine (except as
otherwise provided in the Plan) whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or
other securities, or whether such fractional Shares or other securities or
any rights thereto shall be canceled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of the date the Plan is adopted
by the shareholders, provided such shareholder approval of the Plan is
within 12 months following the date of adoption of the Plan by the Board
of Directors, and all Awards granted under the Plan prior to the date of
shareholder approval shall be subject to such approval and the effective
date of such Award grants shall be deemed to be the date of such
shareholder approval.
Section 10. Term of the Plan
No Award shall be granted under the Plan following the tenth
anniversary of its effective date. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond such date and, to the extent set
forth in the Plan, the authority of the Committee to amend, alter, adjust,
suspend, discontinue or terminate any such Award, or to waive any
conditions or restrictions with respect to any such Award, and the
authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond such date.
Exhibit 21
Subsidiaries of the Company
as of May 30, 1996
The Company owns all of the stock of the following corporations:
Name State of Incorporation
Marcus Theatres Corporation Wisconsin
Marcus Restaurants, Inc. Wisconsin
B & G Realty, Inc. Wisconsin
First American Finance Corporation Wisconsin
Marc Plaza Corporation Wisconsin
Pfister Corporation Wisconsin
Marcus Geneva, Inc. Wisconsin
Marcus Hotels, Inc. Wisconsin
Budgetel Inns, Inc. Wisconsin
Marcus Theatres Corporation owns all of the stock of the following
corporations:
Name State of Incorporation
Appleton Theatres Corporation Wisconsin
Centre Theatres Corporation Wisconsin
LaCrosse Amusement Company Wisconsin
Lake-Vue Drive-In Corp. Wisconsin
Marcus Cinemas, Inc. Wisconsin
Marcus Productions, Inc. Wisconsin
M&S Amusement, Inc. Wisconsin
Pilgrim Theatre Corporation Wisconsin
Southtown Corporation Wisconsin
Starlight-24 Corporation Wisconsin
Stephen Amusement Corporation Wisconsin
Tower 41-Corporation Wisconsin
Vending Corporation Wisconsin
41-Bowl, Inc. Wisconsin
Marcus Amusement Co., Inc. Wisconsin
Budgetel Inns, Inc. owns all of the stock of the following
corporations:
Name State of Incorporation
Budgetel Partners, Inc. Wisconsin
Guest House Inn-Appleton, Inc. Wisconsin
Guest House Inn of Manitowoc, Inc. Wisconsin
Marc's Budgetel of Nebraska, Inc. Nebraska
Budgetel Franchises International, Inc. Wisconsin
Woodfield Refreshments of Colorado, Inc. Colorado
Marcus Restaurants, Inc. owns all of the stock of the following
corporations, except it owns 50% of 642, Inc.:
Name State of Incorporation
Marc's Carryout Corporation Wisconsin
Tops, Inc. Illinois
B&G Leasing Corporation Wisconsin
Captains-Juneau, Inc. Wisconsin
Captains-Mayfair, Inc. Wisconsin
Captains-Wausau, Inc. Wisconsin
Captains-Kenosha, Inc. Wisconsin
Colony Inns Southgate Corporation Wisconsin
Marc's Steak House, Inc. Wisconsin
642, Inc. Wisconsin
Red Garter-Manitowoc, Inc. Wisconsin
Captains-Appleton, Inc. Wisconsin
Speciality Products Corporation of Wisconsin Wisconsin
Glendale Refreshments, Inc. Wisconsin
Grand Avenue Refreshments, Inc. Wisconsin
Marcus Restaurants, Inc. has an option to purchase the remaining 50%
of the stock of 642, Inc. for $5.
Colony Inns Southgate Corporation owns 80% of the stock of Colony
Inns Refreshments, Inc., a Wisconsin corporation, and has an option to
purchase the remaining 20% for $5.
Marcus Hotels, Inc. owns all of the stock of Marcus Northstar, Inc.,
a Minnesota corporation.
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in Registration Statements
(Forms S-8 No. 33-18801 and No. 33-55695) of The Marcus Corporation of our
report dated July 19, 1996, with respect to the consolidated financial
statements of The Marcus Corporation included in the Annual Report (Form
10-K) for the year ended May 30, 1996.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
August 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MARCUS CORPORATION'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-30-1996
<PERIOD-START> MAY-26-1995
<PERIOD-END> MAY-30-1996
<CASH> 15,466
<SECURITIES> 0
<RECEIVABLES> 13,670
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,599
<PP&E> 554,964
<DEPRECIATION> 143,401
<TOTAL-ASSETS> 455,315
<CURRENT-LIABILITIES> 50,718
<BONDS> 127,135
0
0
<COMMON> 20,387
<OTHER-SE> 230,861
<TOTAL-LIABILITY-AND-EQUITY> 455,315
<SALES> 244,253
<TOTAL-REVENUES> 262,287
<CGS> 121,415
<TOTAL-COSTS> 210,472
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,696
<INCOME-PRETAX> 70,092
<INCOME-TAX> 27,785
<INCOME-CONTINUING> 42,307
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<EXTRAORDINARY> 0
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<NET-INCOME> 42,307
<EPS-PRIMARY> 2.14
<EPS-DILUTED> 2.14
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