FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 13, 1997
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________to_______________
Commission file number 1-12604
THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1139844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 EAST WISCONSIN AVENUE - MILWAUKEE, WISCONSIN 53202
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (414) 272-6020
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934, during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON STOCK OUTSTANDING AT DECEMBER 19, 1997 - 17,530,553
CLASS B COMMON STOCK OUTSTANDING AT DECEMBER 19, 1997 - 12,741,031
<PAGE>
THE MARCUS CORPORATION
INDEX
Page
No.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Balance Sheets
(November 13, 1997 and May 29, 1997) . . . . . . 3
Statements of Earnings
(Twelve and twenty-four weeks ended November 13,
1997 and November 14, 1996) . . . . . . . . . . . 5
Statements of Cash Flows
(Twenty-four weeks ended November 13, 1997 and
November 14, 1996) . . . . . . . . . . . . . . . 6
Condensed Notes to Financial Statements . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . 8
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds . . . . 14
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands)
(Unaudited) (Audited)
November 13, May 29,
ASSETS 1997 1997
Current assets:
Cash and cash equivalents $ 7,436 $ 7,991
Accounts and notes receivable 10,595 5,531
Receivables from joint ventures 1,217 1,066
Other current assets 4,108 3,591
------- -------
Total current assets 23,356 18,179
Property and equipment:
Land and improvements 81,313 70,313
Buildings and improvements 412,876 399,416
Leasehold improvements 8,096 8,059
Furniture, fixtures and equipment 168,193 159,715
Construction in progress 19,095 12,019
-------- --------
Total property and equipment 689,573 649,522
Less accumulated depreciation and
amortization 175,158 162,470
-------- --------
Net property and equipment 514,415 487,052
Other assets:
Investments in joint ventures 1,462 1,439
Other 16,027 15,287
-------- --------
Total other assets 17,489 16,726
-------- --------
TOTAL ASSETS $555,260 $521,957
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
THE MARCUS CORPORATION
Consolidated Balance Sheets (in thousands)
(Unaudited) (Audited)
November 13, May 29,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1997
Current liabilities:
Notes payable $ 4,658 $ 5,625
Accounts payable 11,609 10,291
Income taxes 4,067 52
Taxes other than income taxes 11,033 9,297
Accrued compensation 2,909 1,270
Other accrued liabilities 10,216 10,886
Current maturities on long-term debt 9,327 9,327
-------- --------
Total current liabilities 53,819 46,748
Long-term debt 170,214 168,065
Deferred income taxes 22,925 22,425
Deferred compensation and other 8,735 7,426
Shareholders' equity:
Preferred Stock, $1 par; authorized
1,000,000 shares; none issued
Common Stock, $1 par; authorized
50,000,000 shares; issued 12,289,597
shares at November 13, 1997,
11,678,935 shares at May 29, 1997 12,289 11,679
Class B Common Stock, $1 par;
authorized 33,000,000 shares; issued
and outstanding 8,503,752 shares at
November 13, 1997, 8,707,632 shares
at May 29, 1997 8,504 8,708
Capital in excess of par 49,910 39,470
Retained earnings 232,009 220,860
-------- --------
302,712 280,717
Less cost of Common Stock in treasury
(613,843 shares at November 13, 1997
and 668,272 shares at May 29, 1997) 3,145 3,424
-------- --------
Total shareholders' equity 299,567 277,293
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $555,260 $521,957
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
THE MARCUS CORPORATION
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share data)
November 13, 1997 November 14, 1996
12 Weeks 24 Weeks 12 Weeks 24 Weeks
<S> <C> <C> <C> <C>
Revenues:
Rooms and telephone $ 39,847 $ 86,895 $ 36,597 $ 77,150
Food and beverage 11,193 23,739 11,252 22,547
Theatre operations 14,299 37,879 11,878 32,364
Other income 5,845 12,724 5,101 10,591
------- ------- ------- -------
Total revenues 71,184 161,237 64,828 142,652
Costs and expenses:
Rooms and telephone 15,288 31,029 13,081 26,381
Food and beverage 7,708 16,088 7,902 15,824
Theatre operations 8,392 22,675 7,727 20,152
Advertising and marketing 5,328 10,743 5,212 9,106
Administrative 7,041 14,877 5,520 12,128
Depreciation and amortization 7,347 14,573 6,528 12,868
Rent 479 1,548 500 1,306
Property taxes 2,726 5,439 2,494 5,090
Other operating expenses 3,201 6,386 2,377 4,892
------- ------- ------- -------
Total costs and expenses 57,510 123,358 51,341 107,747
------- ------- ------- -------
Operating income 13,674 37,879 13,487 34,905
Other income (expense):
Investment income 477 826 294 437
Interest expense (2,872) (5,637) (2,489) (4,668)
Gain on disposition of property
and equipment 243 242 15 19
------- -------- ------- -------
(2,152) (4,569) (2,180) (4,212)
------- -------- ------- -------
Earnings before income taxes 11,522 33,310 11,307 30,693
Income taxes 4,605 13,328 4,525 12,283
------- -------- ------- -------
Net earnings $ 6,917 $ 19,982 $ 6,782 $ 18,410
======= ======== ======= =======
Net earnings per share* $0.23 $0.67 $0.23 $0.62
===== ===== ===== =====
Weighted Average Shares
Outstanding* 30,231 30,027 29,766 29,765
* All per share and shares outstanding data have been adjusted to
reflect the 50% stock dividend distributed on December 5, 1997.
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE MARCUS CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
24 Weeks Ended
November 13, November 14,
1997 1996
OPERATING ACTIVITIES:
Net earnings $ 19,982 $ 18,410
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Earnings on investments in joint
ventures, net of distributions (23) (189)
Gain on disposition of property and
equipment (242) (19)
Depreciation and amortization 14,573 12,868
Deferred income taxes 500 159
Deferred compensation and other 1,309 3,648
Changes in assets and liabilities:
Accounts and notes receivable (5,064) 342
Other current assets (517) (1,092)
Accounts payable 1,318 (1,063)
Income taxes 4,015 2,710
Taxes other than income taxes 1,736 1,879
Accrued compensation 1,639 963
Other accrued liabilities (670) (1,003)
------- -------
Total adjustments 18,574 19,203
------- -------
Net cash provided by operating activities 38,556 37,613
INVESTING ACTIVITIES:
Capital expenditures (41,932) (60,155)
Net proceeds from disposals of property,
equipment and other assets 318 1,059
Increase in other assets (820) (2,300)
Cash received from (advanced to) joint
ventures (151) 4,436
------- -------
Net cash used in investing activities (42,585) (56,960)
FINANCING ACTIVITIES:
Debt transactions:
Net proceeds from issuance of notes
payable and long-term debt 7,000 97,875
Principal payments on notes payable and
long-term debt (5,818) (52,435)
Equity transactions:
Treasury stock transactions, except for
stock options (376) (117)
Exercise of stock options 973 140
Issuance of stock, net of distribution 3,211
Dividends paid (1,516) (1,415)
------- -------
Net cash provided by financing activities 3,474 44,048
------- -------
Net increase (decrease) in cash and cash
equivalents (555) 24,701
Cash and cash equivalents at beginning of
year 7,991 15,466
------- --------
Cash and cash equivalents at end of period $7,436 $40,167
======= ========
See accompanying notes to consolidated financial statements.
<PAGE>
THE MARCUS CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS FOR THE
TWELVE AND TWENTY-FOUR WEEKS ENDED
NOVEMBER 13, 1997
(Unaudited)
A. Refer to the Company's audited financial statements (including
footnotes) for the fiscal year ended May 29, 1997, contained in the
Company's Form 10-K Annual Report for such fiscal year, for a
description of the Company's accounting policies.
B. The consolidated financial statements for the twelve and twenty-four
weeks ended November 13, 1997 and November 14, 1996 have been
prepared by the Company without audit. In the opinion of management,
all adjustments consisting only of normal recurring accruals
necessary to present fairly the unaudited interim financial
information at November 13, 1997, and for all periods presented, have
been made.
C. The Company's Board of Directors declared a three-for-two stock
split, effected in the form of a 50% stock dividend, distributed on
December 5, 1997, to all holders of Common Stock and Class B Common
Stock. All per share and weighted average shares outstanding data
prior to December 5, 1997, have been adjusted to reflect this
dividend.
D. Pursuant to an Agreement and Plan of Reorganization dated June 30,
1997 between The Marcus Corporation and Guest House Inn, Inc.
("GHI"), the Company issued on October 1, 1997 610,173 Common Shares
in exchange for the net operating assets of GHI and issued 499,320
new Class B Shares in exchange for and cancellation of 449,320
existing Class B Shares owned by GHI. All share data has been
adjusted to reflect the three-for-two stock split. GHI is owned and
controlled by certain officers, directors and/or principal shareholders
of the Company. For financial reporting purposes, the assets acquired
from GHI were recorded at the historical book value of GHI rather than
fair value because GHI and the Company were controlled by the same
shareholders. The Common Shares issued to complete the GHI
Transaction were recorded at their fair value and the excess of this
fair value over the historical book value of the assets was recorded
as a distribution.
Item 2. Managements Discussion and Analysis of Results of Operations and
Financial Condition
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Managements Discussion and Analysis
of Results of Operations and Financial Condition 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, assumptions and uncertainties
which are described in close proximity to such statements and which may
cause actual results to differ materially from those currently
anticipated. Shareholders, potential investors and other readers are
urged to consider these risks, assumptions and uncertainties carefully in
evaluating the forward-looking statements and are cautioned not to place
undue reliance on such forward-looking statements. The forward-looking
statements made herein are only made as of the date of this Form 10-Q and
the Company undertakes no obligation to publicly update such forward-
looking statements to reflect subsequent events or circumstances.
RESULTS OF OPERATIONS
General
The Company reports its results of operations on a 52-or 53-week
fiscal year which ends on the last Thursday in May. Each fiscal year is
divided into three 12-week quarters and a final quarter consisting of 16
or 17 weeks. The final quarter of fiscal 1998 will consist of 17 weeks
for the Company's restaurant division, while the Company and its other
remaining divisions will report a 16-week fourth quarter. Due to the
relative size of the Company's restaurant division compared to the
Company's other divisions, the additional week of results in fiscal 1998
is not anticipated to materially impact the Company's consolidated results
of operations for the fiscal year. Fiscal 1997 was a 53-week fiscal year
for the Company's motel and hotels/resorts divisions, while the Company
and its remaining divisions reported a 52-week year in fiscal 1997.
Revenues for the second quarter of fiscal 1998 ended November 13,
1997, totaled $71.2 million, an increase of $6.4 million, or 9.8%, from
revenues of $64.8 million for the second quarter of fiscal 1997. For the
first half of fiscal 1998, revenues were $161.2 million, an increase of
$18.6 million, or 13.0%, from revenues of $142.6 million during the first
half of fiscal 1997. All four operating segments contributed to the
increase in revenues for the fiscal 1998 second quarter.
Net earnings for the second quarter of fiscal 1998 were $6.9 million,
up 2.0% from net earnings of $6.8 million for the same quarter in the
prior year. Second quarter net earnings per share were $.23 in both
fiscal years. For the first half of fiscal 1998, net earnings were $20.0
million, or $.67 per share. This represented a respective 8.5% and 8.1%
increase over net earnings of $18.4 million, or $.62 per share, for the
first half of fiscal 1997. All earnings per share data have been adjusted
to reflect the three-for-two stock split effected in the form of a 50%
stock dividend on December 5, 1997.
Operating income (earnings before other income/expense and income
taxes) totaled $13.7 million during the second quarter of fiscal 1998, an
increase of $200,000, or 1.4%, compared to the prior year same period.
For the first half of fiscal 1998, operating income was $37.9 million, an
increase of $3.0 million, or 8.5%, over operating income of $34.9 million
for the first half of fiscal 1997. The Company's interest expense, net of
investment income, totaled $2.4 million for the second quarter and $4.8
million for the first half of fiscal 1998. This represents increases of
$200,000 and $600,000, respectively, over the same periods last year and
was the result of increased long-term debt levels necessary to help
finance the Company's capital expansion program.
Motels
Total revenues for the second quarter of fiscal 1998 for the motel
division were $33.4 million, an increase of $3.0 million, or 9.9%,
compared to $30.4 million during the same period in fiscal 1997. Total
revenues for the first half of fiscal 1998 for the motel division were
$72.2 million, an increase of $7.8 million, or 12.1%, compared to $64.4
million during the first half of fiscal 1997. The motel division's
operating income for the fiscal 1998 second quarter totaled $8.4 million,
a decrease of $450,000, or 5.2%, from the $8.8 million earned by the
division during the same period of fiscal 1997. The motel division's
operating income for the first half of fiscal 1998 totaled $21.4 million,
a decrease of $400,000, or 1.9%, from the $21.8 million earned by the
division during the same period of fiscal 1997.
Compared to the end of the second quarter of fiscal 1997, 7 new
Company-owned or operated Budgetel Inns, 7 new franchised Budgetel Inns
and 2 new Company-owned Woodfield Suites were in operation at the end of
the fiscal 1998 second quarter. The Company's newly opened motels
contributed additional revenues of $2.6 million to the division's fiscal
1998 second quarter revenues. The Company experienced slightly lower
occupancy rates and slightly higher average daily room rates for
comparable Budgetel Inns in the second quarter of fiscal 1998, compared to
the same quarter last year. The result of the occupancy decline and
average daily rate increases was a 1.1% decrease in the division's revenue
per available room (RevPAR), for comparable Budgetel Inns for the fiscal
1998 second quarter. For the first half of fiscal 1998, RevPAR for
comparable Budgetel Inns increased 0.8% over the same period last year.
The motel division's results continue to be impacted by the increasing
limited service segment room supply, resulting in minimal RevPAR
growth and pressure on the division's operating margins. In addition, the
Company has increased its marketing expenditures in fiscal 1998, as well
as increased its administrative infrastructure to accommodate the motel
division's recent and planned expansion program. In some highly
competitive markets, the Company has been unable to sufficiently raise
rates to fully offset these and other rising costs.
At the end of the fiscal 1998 second quarter, the Company-owned or
operated 105 Budgetel Inns and franchised an additional 42 Inns, bringing
the total number of Budgetel Inns in operation to 147. In addition, there
are currently 1 Company-owned and 12 franchised Budgetel Inns under
construction, all of which are scheduled to open before the end of fiscal
1998 or shortly thereafter. An additional 4 Company-owned and 17
franchised Budgetel Inns are under development and should begin
construction in the near future. The Company also owns and operates 5
Woodfield Suites all-suite motels. Three company-owned Woodfield Suites
are currently under development, with a new franchise program set to be
launched later this fiscal year.
Theatres
The theatre division's fiscal 1998 second quarter revenues were $14.5
million, an increase of $2.5 million, or 21.4%, over revenues of $11.9
million during the same period in fiscal 1997. Operating income for the
second quarter in fiscal 1998 totaled $2.5 million, an increase of $1.6
million, or 183.8%, over operating income of $880,000 during the same
period last year. The theatre division's fiscal 1998 first half revenues
were $38.1 million, an increase of $5.6 million, or 17.3%, over revenues
of $32.5 million during the first half of fiscal 1997. Operating income
for the first half of fiscal 1998 was $8.0 million, an increase of $2.2
million, or 37.5%, over $5.8 million of operating income during the first
half of fiscal 1997. Consistent with the seasonality of the motion
picture exhibition industry, the second quarter of the Company's fiscal
year is typically the slowest period for its theatre division.
Total box office receipts for the fiscal 1998 first half were $25.3
million, an increase of $3.3 million, or 15.1%, over $22.0 million during
the same period last year. The increase in box office receipts for the
first half of fiscal 1998 compared to the same period in the prior year
was due to additional screens, a 4.2% increase in average ticket prices
and more popular films distributed in the second quarter this year
compared to the same period last year. Vending revenues for the first
half of the year were $11.3 million, an increase of 1.9 million, or 20.6%,
over $9.4 million during the first half of fiscal 1997. The increase in
vending revenues can be attributed to an overall increase in attendance,
including the new screens, and a 9.5% increase in vending revenues per
person. For the first half of fiscal 1998, theatre attendance at
comparable screens has declined slightly. Theatre attendance is largely
dependent upon the audience appeal of available films, a factor over which
the Company has limited control. In addition, the Company experienced a
fire loss early in the third quarter at its North Shore Cinema in Mequon,
Wisconsin. As a result of this loss, the theatre is expected to be
closed for approximately 3 months, which will have a slight negative
impact on the theatre division's third quarter fiscal 1998 results.
The Company did not add any new screens during the second quarter of
fiscal 1998, ending the second quarter with a total of 297 total screens
in 40 theatres compared to 266 screens in 41 theatres at the end of the
same period last year. The Company currently has 45 additional screens
under construction at three locations, including a 12-screen ultraplex in
Menomonee Falls, Wisconsin and 16-screen and 17-screen ultraplexes in
Columbus, Ohio with an IMAX/R/ 2D/3D large-screen theatre at one of the new
Columbus complexes. The Company is also adding 27 screens to nine
existing locations. In addition, the Company also began a recent capital
program to retrofit approximately one-third of its existing screens to
stadium seating and recently announced that it has signed a definitive
purchase agreement for the acquisition of six suburban Minneapolis/St.
Paul theatres with a total of 44 screens.
Hotels and Resorts
Total revenues from the hotels and resorts division during the second
quarter of fiscal 1998 increased by $500,000, or 3.2%, to $16.6 million,
compared to $16.1 million during the previous year's comparable period.
Operating income decreased by $700,000, or 19.8%, to $2.8 million during
the fiscal 1998 second quarter, compared to $3.5 million in the second
quarter of fiscal 1997. Total revenues from the hotels and resorts
division during the first half of fiscal 1998 totaled $36.8 million, an
increase of $4.3 million, or 13.4%, over total first half revenues of
$32.5 million in fiscal 1997. Operating income increased by $1.6 million
during the first half of fiscal 1998, or 22.0%, to $8.8 million, compared
to $7.2 million during the prior year's first half.
For the first half of the year, occupancy rates and average daily
rates have increased at all three of the Company's owned hotels and
resorts, contributing to the increased revenues and operating income in
the fiscal 1998 first half compared to the fiscal 1997 first half. Second
quarter results were impacted by approximately $300,000 of pre-opening
costs at the Company's Miramonte Resort and reduced group occupancy and
poor weather at the Grand Geneva Resort & Spa. The division's total
RevPAR increased 5.5% in fiscal 1998's second quarter compared to the same
quarter last year and has increased 13.3% for the first half of fiscal
1998 compared to the same period last year.
The Company plans to open its second resort, the Miramonte Resort in
Indian Wells, California, in January 1998. Due to anticipated start-up
expenses, this resort is expected to have a slightly negative impact on
the division's fiscal 1998 third quarter operating income and an
immaterial impact on the division's fiscal 1998 results. Shortly after
the end of the second quarter, the Company announced that it had
entered into a management contract to operate its first property in
Michigan, the Mission Point Resort on Mackinac Island. This is the
Company's third resort and fourth management contract, increasing the
division's properties to eight. The Mission Point Resort is a seasonal
property and is not expected to materially impact the division's fiscal
1998 operating income. In addition, the Company expects to begin
construction during the fourth quarter of fiscal 1998 on a 250-room
expansion of the Milwaukee Hilton, which will create the largest hotel in
Wisconsin. The addition is currently scheduled to open in September 1999.
Restaurants
Restaurant division revenues totaled $6.6 million for the second
quarter of fiscal 1998, an increase of $300,000, or 4.7%, over fiscal 1997
second quarter revenues of $6.3 million. The division's operating income
for the fiscal 1998 second quarter totaled $810,000, an increase of
$138,000, or 20.5%, over operating income of $672,000 during the second
quarter of fiscal 1997. Restaurant division revenues totaled $13.9
million for the first half of fiscal 1998, an increase of $800,000, or
6.1%, over first half fiscal 1997 revenues of $13.1 million. The
division's operating income for the first half of fiscal 1998 totaled $1.8
million, an increase of $500,000, or 39.6%, over fiscal 1997 first half
operating income of $1.3 million.
The increases in revenues and operating income for both the second
quarter and first half of fiscal 1998, compared to the same periods last
year, were primarily the result of customer count and average guest check
increases related to recent successful KFC product introductions,
continued strong home delivery sales and results from the Company's first
2-in-1 KFC/Taco Bell conversion, combined with reduced food costs. The
Company operated 30 KFC restaurants and 1 KFC/Taco Bell 2-in-1 restaurant
at the end of the second quarter of fiscal 1998, compared to 31 KFC
restaurants at the end of the fiscal 1997 second quarter.
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 $47 million of unused
credit lines at the end of the second quarter, should be adequate to
support the ongoing operational liquidity needs of the Company's
businesses.
Net cash provided by operating activities increased by $943,000
during the first half of fiscal 1998 to $38.6 million, compared to $37.6
million during the prior year's first half. The increase over the same
period last year was primarily the result of increased net earnings and
depreciation/amortization, combined with timing differences in payments of
accounts payable and receipts of accounts and notes receivable.
Net cash used in investing activities during in the fiscal 1998 first
half totaled $42.6 million, compared to $60.0 million during the fiscal
1997 first half. Capital expenditures to support the Company's continuing
expansion program totaled $41.9 million during the first half of fiscal
1998 compared to $60.1 million during the prior year's first half. The
timing of theatre screen additions accounts for the majority of the
decrease in capital expenditures, as a total of 47 new theatre screens,
including 27 acquired screens, were added during the fiscal 1997 first
half, compared to none during the fiscal 1998 first half. In addition,
growth of Company-owned Budgetel Inns has slowed slightly compared to the
previous year. The Company currently anticipates that its total capital
expenditures for fiscal 1998 will approximate fiscal 1997 amounts, but
with the theatre division spending a greater portion of the total than in
the past.
Cash provided by financing activities during the fiscal 1998 first
half totaled $3.5 million, compared to $44.0 million during the first half
of fiscal 1997. During the fiscal 1998 first half, the Company received
$7.0 million of net proceeds from the issuance of notes payable and long-
term debt, compared to $97.9 million during the first half of fiscal
1997. Included in the fiscal 1997 proceeds was $85 million of senior
unsecured long-term notes privately placed with six institutional lenders.
The Company used a portion of the fiscal 1997 proceeds from the senior
notes to pay off existing debt, resulting in total principal payments on
notes payable and long-term debt of $52.4 million during the first half of
fiscal 1997, compared to only $5.8 million during the same period this
year. The Company has the ability to issue up to $115 million of
additional senior notes under the private placement program through
February 1999 and anticipates issuing additional long-term debt in fiscal
1998 to help fund the Company's ongoing expansion plans.
In addition to the changes in debt transactions noted above, net cash
provided by financing activities also increased in fiscal 1998 due to the
issuance of 610,173 shares of the Company's Common Stock (adjusted for the
three-for-two stock split) in conjunction with the acquisition of operating
assets of a related company, Guest House Inn, Inc. during the second
quarter. The issuance of the stock, which was recorded at its fair value,
net of a distribution, calculated as the excess of the fair value over the
historical book value of the assets acquired, resulted in an additional $3.2
million of net cash provided by financing activities.
The actual timing and extent of the implementation of the Company's
current expansion plans 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 current expansion goals
will continue to evolve and change in response to these and other factors.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On October 1, 1997 the Company issued (a) 610,173 shares of Common
Stock to Guest House Inn, Inc. ("GHI") in exchange for all of the real
estate and operating assets owned by GHI and (b) 449,320 new shares of
Class B Common Stock to GHI in exchange for and cancellation of the
existing 449,320 shares of Class B Common Stock owned by GHI. All share
data has been adjusted to reflect the three-for-two stock split effected
in the form of a 50% stock dividend distributed on December 5, 1997. The
aggregate value of the shares of Common Stock issued was $10,528,871 and
the aggregate value of the shares of Class B Common Stock issued was
$7,753,265. All of such shares received by GHI were distributed in a tax-
free liquidation of GHI to GHI's shareholders pro rata with their GHI
share ownership. The shareholders of GHI were Ben Marcus, Stephen H.
Marcus and Diane Marcus Gershowitz, who are officers, directors and/or
principal shareholders of the Company, Ida Lowe (the sister of Ben
Marcus), and certain trusts for the benefit of members of their families,
all of whom are "accredited investors" for purposes of Rule 501 of
Regulation D under the Securities Act of 1933, as amended ("Regulation
D"). Such issuances were effected in reliance upon the exemption from
registration provided by Rule 506 of Regulation D. No underwriters were
engaged in connection with the foregoing issuances.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1997 annual meeting of shareholders was held on Monday,
September 29, 1997 ("Annual Meeting"). At the Annual Meeting, the
following matters were voted on in person or by proxy, and approved by the
Company's shareholders:
1. The shareholders voted to elect Stephen H. Marcus, Diane Marcus
Gershowitz, Daniel F. McKeithan, Jr., Allan H. Selig, Timothy E.
Hoeksema, Bruce J. Olson, Ulice Payne, Jr. and Philip L.
Milstein to the Company's Board of Directors for one-year terms
to expire at the Company's 1998 annual meeting of shareholders
and until their successors are duly qualified and elected.
2. The shareholders approved and ratified the Agreement and Plan of
Reorganization dated June 30, 1997 between The Marcus
Corporation and GHI.
3. The shareholders approved the amendment to the Company's
Articles of Incorporation to increase the number of authorized
shares of Common Stock from 30,000,000 to 50,000,000 and the
number of authorized shares of Class B Common Stock from
20,000,000 to 33,000,000.
As of the August 8, 1997 record date for the Annual Meeting ("Record
Date"), 11,240,376 shares of Common Stock (pre-stock split) and 8,504,252
shares of Class B Common Stock (pre-stock split) were outstanding and
eligible to vote, with the Common Stock entitled to one vote per share and
the Class B Common Stock entitled to ten votes per share. Following are
the final votes on the matters presented for shareholder approval at the
Annual Meeting (all on a pre-stock split basis):
Election of Directors
<TABLE>
<CAPTION>
For Withheld
Name Votes Percentage(1) Votes Percentage(1)
<S> <C> <C> <C> <C>
Stephen H. Marcus 89,698,734 99.95% 42,122 0.05%
Diane Marcus Gershowitz 89,697,879 99.95% 42,977 0.05%
Daniel F. McKeithan, Jr. 89,697,662 99.95% 43,194 0.05%
Allan H. Selig 89,691,513 99.95% 49,343 0.05%
Timothy E. Hoeksema 89,701,930 99.96% 38,926 0.04%
Bruce J. Olson 89,698,720 99.95% 42,136 0.05%
Ulice Payne, Jr. 89,698,533 99.95% 42,323 0.05%
Philip L. Milstein 89,701,653 99.96% 39,203 0.04%
</TABLE>
Approval of the Agreement and Plan of Reorganization
<TABLE>
<CAPTION>
For Against Abstained Broker Non-Vote
Votes Percentage(1) Votes Percentage(1) Votes Percentage(1) Votes Percentage(1)
<S> <C> <C> <C> <C> <C> <C> <C>
87,491,846 97.50% 50,714 0.06% 39,420 0.04% 2,158,876 2.40%
</TABLE>
Approval of the Amendment to the Company's Articles of Incorporation
<TABLE>
<CAPTION>
For Against Abstained Broker Non-Vote
Votes Percentage(1) Votes Percentage(1) Votes Percentage(1) Votes Percentage(1)
<S> <C> <C> <C> <C> <C> <C> <C>
88,840,350 99.00% 862,954 0.96% 37,552 0.04% 0 0.00%
----------------
(1) Based on a total of 89,740,856 votes represented by shares of Common
Stock and Class B Common Stock actually voted in person or by proxy
at the Annual Meeting.
</TABLE>
No other matters were brought before the Annual Meeting for a shareholder
vote.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 3.1 Form of Amendment to the Articles of
Incorporation of the Marcus Corporation,
effective September 29, 1997.
Exhibit 3.2 Restated Articles of Incorporation of The
Marcus Corporation, effective October 2,
1997.
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE MARCUS CORPORATION
(Registrant)
DATE: December 23, 1997 By: \s\ Stephen H. Marcus
Stephen H. Marcus,
Chairman of the Board, President and
Chief Executive Officer
DATE: December 23, 1997 By: \s\ Douglas A. Neis
Douglas A. Neis
Chief Financial Officer and Treasurer
<PAGE>
THE MARCUS CORPORATION
FORM 10-Q
FOR THE
24 - WEEKS ENDED NOVEMBER 13, 1997
EXHIBIT INDEX
Exhibit Description
3.1 Form of Amendment to the Company's Articles of
Incorporation, effective September 29, 1997
3.2 Restated Articles of Incorporation of the Company,
effective October 2, 1997.
27 Financial Data Schedule
Exhibit (3.1)
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
THE MARCUS CORPORATION
1. The name of the corporation is The Marcus Corporation.
2. Article 2 of the corporation's Articles of Incorporation is
hereby amended by deleting the introductory paragraph of such Article 2 in
its entirety and inserting the following in lieu thereof:
The total number of shares of all classes of capital stock which
the Corporation shall be authorized to issue is eighty-four million
(84,000,000) shares, consisting of (i) fifty million (50,000,000) shares
of a class designated "Common Stock", with a par value of one dollar ($1)
per share; thirty-three million (33,000,000) shares of a class designated
"Class B Common Stock", with a par value of one dollar ($1) per share; and
one million (1,000,000) shares of a class designated "Preferred Stock",
with a par value of one dollar ($1) per share.
3. Section (B)(5) of Article 2 of the corporation's Articles
of Incorporation is hereby amended in its entirety to provide as follows:
(5) Issuance of the Class B Common Stock.
(a) Initial Issuance. One share of Class B Common Stock shall
be initially issued for each outstanding share of Class B Common
Stock, par value one dollar ($1) per share, of The Marcus
Corporation, a Delaware corporation, pursuant to the Agreement and
Plan of Merger, dated August 13, 1992, by and between the Corporation
and The Marcus Corporation.
(b) Subsequent Issuance. Following the initial issuance, the
Board of Directors may only issue shares of the Class B Common Stock
in the form of a distribution or distributions pursuant to a stock
dividend on or split-up of the shares of the Class B Common Stock and
only to the then holders of the outstanding shares of the Class B
Common Stock in conjunction with and in the same ratio as a stock
dividend on or split-up of the shares of the Common Stock. Except as
provided in this subparagraph (b), the Corporation shall not issue
additional shares of Class B Common Stock after the initial issuance
of Class B Common Stock, as described in Paragraph (B)(5)(a) of this
Article, and all shares of Class B Common Stock surrendered for
conversion shall be retired, unless otherwise approved by the
affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock and Class B Common Stock entitled to vote,
voting together as a single class, as provided in Paragraph (B)(1) of
this Article. Notwithstanding the foregoing, the Board of Directors
and the Corporation shall be permitted to make a one-time issuance of
299,547 shares of Class B Common Stock to Guest House Inn, Inc.
("GHI") in connection with the Agreement and Plan of Reorganization
dated June 30, 1997, by and among the Corporation, GHI and the
shareholders of GHI, in exchange for and cancellation of 299,547
shares of Class B Common Stock owned by GHI and, notwithstanding any
other provision of these Articles of Incorporation (including
particularly Section (B)(3) of this Article 2), the shareholders of
GHI on June 30, 1997 shall be "Permitted Transferees" of the shares
of Class B Common Stock issued to GHI.
4. The foregoing amendments to the corporation's Articles of
Incorporation were submitted to the corporation's shareholders by the
Board of Directors of the corporation and were adopted by such
shareholders effective as September 29, 1997, in accordance with Section
180.003 of the Wisconsin Business Corporation Law.
Executed on behalf of the corporation as of this 29th day of
September, 1997.
/s/ Thomas F. Kissinger
Thomas F. Kissinger, Esq.
General Counsel and Secretary
---------------
This instrument was drafted by, and should be returned to, John K.
Wilson, Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin
53202.
Exhibit (3.2)
RESTATED
ARTICLES OF INCORPORATION
OF
THE MARCUS CORPORATION
Pursuant to Section 180.1007 of the Wisconsin Business
Corporation Law, these Restated Articles of Incorporation shall supersede
and take the place of the Corporation's heretofore existing Articles of
Incorporation and all amendments thereto.
ARTICLE 1
Name
The name of the Corporation is The Marcus Corporation.
ARTICLE 2
Authorized Shares
The total number of shares of all classes of capital stock which
the Corporation shall be authorized to issue is eighty-four million
(84,000,000) shares, consisting of (i) fifty million (50,000,000) shares
of a class designated "Common Stock", with a par value of one dollar ($1)
per share; thirty-three million (33,000,000) shares of a class designated
"Class B Common Stock", with a par value of one dollar ($1) per share; and
one million (1,000,000) shares of a class designated "Preferred Stock",
with a par value of one dollar ($1) per share.
Any and all such shares of Common Stock, Class B Common Stock
and Preferred Stock may be issued for such consideration as shall be fixed
from time to time by the Board of Directors. Any and all such shares so
issued, the full consideration for which has been paid or delivered, shall
be deemed fully paid stock and shall not be liable to any further call or
assessment thereon, except with respect to wage claims of employees as
provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation
Law ("WBCL"), and the holders of such shares shall not be liable for any
further payments except as otherwise provided by applicable Wisconsin law.
The preferences, limitations and relative rights of each class shall be as
follows:
(A) POWERS, PREFERENCES AND LIMITATIONS OF THE PREFERRED STOCK.
(1) Series of Preferred Stock.
The Board of Directors shall have authority, by resolution or
resolutions, to divide the Preferred Stock into series, and to determine
and fix the relative powers, preferences and rights, and the
qualifications, limitations and restrictions thereof, in respect of the
shares of any series so established prior to the issuance thereof, but
only with respect to:
(a) The rate of dividend, whether or not such dividend
shall be cumulative and, if cumulative, the date from which such
dividend shall be cumulative;
(b) The price at and the terms and conditions on which
shares may be redeemed;
(c) The amount payable upon shares in the event of
voluntary or involuntary liquidation;
(d) Sinking fund provisions for the redemption or purchase
of shares;
(e) The terms and conditions on which shares may be
converted into shares of Common Stock, if the shares of any
series are issued with the privilege of conversion; and
(f) Whether or not shares shall have voting powers, and
the terms and conditions upon which any voting powers may be
exercised.
Except as to the matters expressly set forth above in this
Paragraph (1), all series of the Preferred Stock of the Corporation,
whenever designated and issued, shall have the same preferences,
limitations and relative rights and shall rank equally, share ratably and
be identical in all respects as to all matters.
All shares of any one series of Preferred Stock hereinabove
authorized shall be alike in every particular, and each series thereof
shall be distinctly designated by letter or descriptive words or figures.
(2) Dividends.
Before any dividends shall be paid or set apart for payment upon
the Common Stock or the Class B Common Stock, the holders of Preferred
Stock shall be entitled to receive dividends at the rate per annum
specified as to each series pursuant to Paragraph (1), payable quarter-
annually when and as declared by the Board of Directors. Such dividends
shall accrue on each share of Preferred Stock from the date of issuance,
or from such other date as may be fixed by the Board of Directors pursuant
to Paragraph (1).
Any dividend paid upon the Preferred Stock entitled to
cumulative dividends at a time when any accrued dividends for any prior
period are delinquent, shall be expressly declared as a dividend in whole
or partial payment of the accrued dividend for the earliest period for
which dividends are then delinquent, and shall be so designated to each
shareholder to whom payment is made.
All shares of Preferred Stock whether cumulative or non-
cumulative (but only after all dividend arrearages for all prior periods
on cumulative shares have been paid or set aide for payment) shall rank
equally and shall share ratably, in proportion to the rate of dividend
fixed hereunder in respect to each such share, in all dividends paid or
set aside for payment for any dividend period or part upon any such
shares.
(3) Liquidation, Dissolution or Winding Up.
In case of voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of each series of Preferred
Stock shall be entitled to receive out of the assets of the Corporation in
money or money's worth the amount specified pursuant to Paragraph (1) with
respect to that series of Preferred Stock, together with all accrued but
unpaid dividends thereon with respect to Preferred Stock entitled to
cumulative dividends (whether or not earned or declared), before any of
such assets shall be paid or distributed to holders of Common Stock or
Class B Common Stock and if the assets of the Corporation shall be
insufficient to pay the holders of all of the Preferred Stock then
outstanding the entire amounts to which they may be entitled, the holders
of each outstanding series of the Preferred Stock shall share ratably in
such assets in proportion to the amounts which would be payable with
respect to such series if all amounts payable thereon were paid in full.
(4) Redemption.
Except as otherwise provided with respect to a particular series
pursuant to Paragraph (1), the following general redemption provisions
shall apply to each series of Preferred Stock (hereinafter in this
Paragraph referred to as "Series").
On or prior to the date fixed for redemption of a particular
Series as specified in the notice of redemption for said Series, the
Corporation shall deposit adequate funds for such redemption, in trust for
the account of holders of the Series to be redeemed, with a bank having
trust powers or a trust company in good standing, organized under the laws
of the United States of America or any state of the United States of
America and having capital, surplus and undivided profits aggregating at
least $1,000,000, and if the name and address of such bank or trust
company and the deposit of or intent to deposit the redemption funds in
such trust account shall have been stated in such notice of redemption,
then from and after the mailing of such notice and the making of such
deposit the shares of the Series called for redemption shall no longer be
deemed to be outstanding for any purpose whatsoever, and all rights of the
holders of such shares in or with respect to the Corporation shall
forthwith cease and terminate except only the right of the holders of such
shares (a) to transfer such shares prior to the date fixed for redemption,
(b) to receive out of said deposit the redemption price of such shares
together with accrued but unpaid dividends with respect to Preferred Stock
entitled to cumulative dividends to the date fixed for redemption, without
interest, upon surrender of the certificate or certificates representing
the shares to be redeemed, and (c) to exercise, on or before the date
fixed for redemption, the privileges of conversion, if any, not
theretofore expired.
Such deposit in trust shall be irrevocable except that (1) any
moneys so deposited by the Corporation which shall remain unclaimed by the
holders of the Series called for redemption and not converted shall, at
the end of six years after the date fixed for redemption, be paid to the
Corporation upon its request, after which repayment the holders of the
shares so called for redemption shall no longer look to the said bank or
trust company for the payment of the redemption price but shall look only
to the Corporation or to others, as may be, for the payment of any lawful
claim for such moneys which holders of said shares may still have; and (2)
any portion of the moneys so deposited by the Corporation, in respect of
shares of the Series converted into Common Stock, shall be repaid to the
Corporation upon its request.
(5) Conversion Rights.
Except as otherwise provided with respect to a particular Series
pursuant to Paragraph (1), the following general conversion provisions
shall apply to each Series of Preferred Stock which is convertible into
Common Stock (hereinafter, in this paragraph, referred to as "Convertible
Series"):
(i) All shares of Common Stock issued upon conversion
shall be fully paid and nonassessable, and shall be free of all
taxes, liens and charges with respect to the issue thereof
except taxes payable by reason of issuance in a name other than
that of the holder of the share or shares converted and except
with respect to wage claims of employees as provided by Section
180.0622(2)(b) of the WBCL.
(ii) The number of shares of Common Stock issuable upon
conversion of a particular Convertible Series at any time shall
be the quotient obtained by dividing the aggregate conversion
value, as herein provided, of the shares of that Convertible
Series surrendered for conversion, by the conversion price per
share of Common Stock then in effect for that Convertible Series
as herein provided. The Corporation shall not be required,
however, upon any such conversion, to issue any fractional share
of Common Stock, but in lieu thereof the Corporation may at its
option issue scrip therefor or may pay to the shareholder who
would otherwise be entitled to receive such fractional share if
issued, a sum in cash equal to the value of such fractional
share at the rate of the then market value per share of the
Common Stock determined in such manner as the Board of Directors
of the Corporation may provide.
(iii) The basic conversion price per share of Common
Stock for a particular Convertible Series, as provided for
herein under the detailed descriptions of the individual
Convertible Series, shall be subject to adjustment as follows:
(aa) An increased conversion price per share of
Common Stock shall become effective whenever the
outstanding shares of Common Stock shall be combined
into a smaller number of shares. Such increased
conversion price per share of Common Stock shall be
computed as follows: (1) separately, for each
Convertible Series, multiply the total number of
shares of Common Stock outstanding immediately prior
to the decrease in the number of such shares through
such combination, by the conversion price then in
effect for each Convertible Series; (2) divide each of
the resulting products by the total number of shares
of Common Stock outstanding immediately after such
decrease in the number of shares through such
combination. The quotients so obtained (if not evenly
divisible by fifty cents then rounded up to the next
full multiple of fifty cents) shall thereafter, until
any further change is required under the provisions of
this subparagraph (5) be respectively the conversion
price per share of Common Stock for each Convertible
Series;
(bb) A reduced conversion price per share of
Common Stock shall become effective for any
Convertible Series whenever the Corporation shall
issue any "Additional Shares of Common Stock" (as
defined in Paragraph (A)(5)(iii)(cc) of this Article)
after the effective date of the amendment to the
Articles of Incorporation which designated such
Convertible Series (hereinafter in this subparagraph
referred to as the "Effective Date"), which results in
the Corporation having received in the aggregate a
consideration per share of less than the conversion
price for such Convertible Series for all of the
shares of Common Stock issued after the Effective
Date. Such reduced conversion price per share of
Common Stock shall be computed as follows: (1)
separately, for each Convertible Series, multiply the
total number of shares of Common Stock outstanding on
the Effective Date by the conversion price for each
Convertible Series then in effect; (2) to these
products separately, for each Convertible Series, add
the total amount of the consideration, if any,
received for the issuance of all Additional Shares of
Common Stock; (3) divide the resulting sums by the
total number of shares of Common Stock outstanding
immediately prior to any such determination. The
quotients so obtained shall thereafter, until any
further change is required under the provisions of
this subparagraph (5), be the respective conversion
prices per share of Common Stock for each Convertible
Series; provided, however, that no adjustment shall be
made in the conversion price of any Convertible Series
in effect immediately prior to such determination if
the amount of such adjustment would be less than fifty
cents, but, in any such case, any adjustment that
would otherwise be required then to be made shall be
carried forward and shall be made at the time of, and
together with, the next subsequent adjustment which
together with any other adjustment or adjustments so
carried forward shall amount to not less than fifty
cents. No upward adjustment to the conversion price
shall be made if the above-described quotients should
be higher than the conversion price to be adjusted as
a result of the Corporation having received a
consideration per Additional Share of Common Stock on
the aggregate of all Additional Shares of Common Stock
which is higher than the conversion price to be
adjusted.
(cc) The term "Additional Shares of Common Stock"
as used in this subparagraph (A)(5) includes all
shares of Common Stock which the Corporation shall in
any manner issue after the Effective Date of a
Convertible Series except shares of Common Stock
issued (1) upon the conversion of any shares of such
Convertible Series, or (2) upon the exercise of any
warrants, options or conversion rights outstanding on
the date of issuance of such Convertible Series
whether at the initial conversion price, an adjusted
conversion price or a voluntarily reduced conversion
price pursuant to Paragraph (A)(5)(x) of this Article,
or (3) pursuant to any employee stock bonus plan or
employee stock purchase plan approved by the
shareholders, or (4) upon the exercise of any employee
stock option granted pursuant to any plan approved by
the shareholders, or (5) upon the conversion of any
Preferred Stock issued in connection with any such
employee stock bonus, stock purchase and/or stock
option, or by reason of the issuance or assumption by
the Corporation of any such stock bonus, stock
purchase and/or option, or (6) pursuant to a stock
dividend authorized by the Board of Directors of not
more than 5% per annum of the number of shares
outstanding at the time such stock dividend is
declared, or (7) upon the conversion of any shares of
Class B Common Stock, or (8) in connection with the
acquisition, or upon the exercise of, any warrants,
options or conversion rights granted or assumed by the
Corporation in connection with an acquisition. As
used herein, "acquisition" shall be construed as any
transaction in which the Corporation acquires
substantially all the assets of another business, or
acquires 50% or more of the outstanding stock of
another corporation or is the surviving corporation in
a statutory merger.
(iv) In the event that the Corporation shall give notice of
redemption of any shares of a particular Convertible Series, an
adjusted conversion price shall be determined in respect only to
the shares so called for redemption, in accordance with the
provisions of clause (iii), except that for the purpose of such
determination, Common Stock shall be deemed to have been issued
in accordance with the terms of all rights to purchase shares of
Common Stock or securities convertible into shares of Common
Stock which may be outstanding immediately prior to the close of
business on the date next preceding the date upon which notice
of redemption is given, but which were not outstanding on the
date of issuance of the Convertible Series so called for
redemption. The conversion price so determined shall be stated
in the notice of redemption and have no application to any
shares other than the shares so called for redemption.
(v) For the purpose of making the computations prescribed
above, the following rules shall apply:
(aa) In determining the consideration received
for the issuance of any Additional Shares of Common
Stock, no deductions shall be made for the amounts of
any commissions or other expenses paid or incurred by
the Corporation for any underwriting or otherwise in
connection with the issuance of such Additional Shares
of Common Stock.
(bb) In case Common Stock shall be issued by way
of stock dividend or in subdivision or
reclassification of Common Stock outstanding prior to
such issue, the excess of the number of shares of
Common Stock outstanding immediately thereafter over
the number of shares of Common Stock outstanding
immediately prior thereto (except such shares issued
as stock dividends which do not in the aggregate
during any fiscal year of the Corporation exceed 5% of
the Common Stock outstanding at the beginning of such
fiscal year) shall be deemed to be Additional Shares
of Common Stock, and the Corporation shall be deemed
to have received no consideration for the issuance
thereof.
(cc) If the Corporation issues any shares
convertible into Common Stock, or any obligations so
convertible, or any warrants to purchase or subscribe
for any shares of Common Stock and if any of such
shares or obligations be converted into Common Stock
or if any of such warrants be exercised and Common
Stock be issued in connection with such exercise, the
Corporation shall be deemed to have received for the
Common Stock issued upon such conversion or exercise
an aggregate consideration equal to the consideration
received by the Corporation for the convertible shares
or obligations so converted or for the warrants so
exercised (before deducting any commissions or other
expenses paid or incurred by the Corporation for any
underwriting or otherwise in connection with the
issuance of the convertible shares or obligations so
converted or the warrants so exercised) plus, in the
case of the issuance of Common Stock in connection
with the exercise of warrants, the consideration
received by the Corporation for the issuance of Common
Stock upon such exercise; provided, however, that
adjustments of the conversion price by reason of the
conversion of such shares or obligations or by reason
of the exercise of such warrants need not be made upon
each such conversion or exercise but may be made from
time to time under such reasonable regulations as
shall be provided by the Board of Directors but at
least once in each month immediately following any
calendar month during which any such conversion or
exercise shall occur, and provided further that no
adjustment to any conversion price shall be required
under the circumstances outlined under Paragraph
(A)(5)(iii)(cc) above.
(dd) If the Corporation shall issue any
Additional Shares of Common Stock, or any shares
convertible into Common Stock, or any obligations, so
convertible, or any warrants to purchase or subscribe
for any shares of Common Stock for a consideration
other than cash, the amount of the consideration
received therefor by the Corporation shall be deemed
to be the fair value of such consideration, which
shall be determined by the Board of Directors at or
before the time of issuance of such shares or
obligations.
(vi) If the Corporation shall be consolidated with or
merged into, or sell or dispose of all or substantially all of
its property and assets, to any other corporation, proper
provision shall be made as part of the terms of such
consolidation, merger or sale that the holder of any shares of a
particular Convertible Series at the time outstanding shall
thereafter be entitled to such conversion rights with respect to
securities and other assets of the Corporation resulting from
such consolidation, merger or sale as shall be substantially
equivalent to the conversion rights herein granted.
(vii) No adjustment with respect to dividends upon any
Convertible Series or with respect to dividends upon Common
Stock shall be made in connection with any conversion.
(viii) Whenever there is an issue of Additional Shares
of Common Stock of the Corporation requiring a change in the
conversion price as provided above, and whenever there occurs
any other event which results in a change in the existing
conversion rights of the holders of shares of a Convertible
Series, the Corporation shall file with its transfer agent or
agents and at its principal office in Milwaukee, Wisconsin, a
statement signed by the President or a Vice President and by the
Treasurer or Assistant Treasurer of the Corporation, describing
specifically such issue of Additional Shares of Common Stock or
such other event (and, in the case of a consolidation or merger,
the terms thereof) and the actual conversion prices or basis of
conversion as changed by such issue or event and the change, if
any, in the securities issuable upon conversion. Whenever there
are issued by the Corporation any options or rights to purchase
shares of Common Stock or securities convertible into shares of
Common Stock, and such issuance requires a change in the
conversion price as above provided, the Corporation shall also
file in like manner a statement describing the same and the
consideration receivable by the Corporation therefrom. The
statement so filed shall be open to inspection by any holder of
record of shares of any Convertible Series. Upon the request of
the Corporation, the transfer agent or agents shall mail copies
of such statement, or brief summaries thereof, (first class and
postage prepaid) to each holder of record of shares of all
Convertible Securities affected by the statement at the last
address of such holders appearing upon the books of the
Corporation. Upon failure of a holder to object to the
statement and the computations therein within a period of 90
days from the date of such mailing, the statement and the
computations therein shall be conclusively presumed correct as
to such holder and shall be binding upon the holder, his heirs,
representatives and assigns. Failure or delay of any holder of
the Convertible Series so affected to receive such statement
shall not extend the period within which objections thereto may
be raised.
(ix) The Corporation shall at all times have authorized and
shall at all times reserve and set aside a sufficient number of
duly authorized shares of Common Stock for the conversion of all
stock of all Convertible Series then outstanding. Upon or prior
to the occurrence of any event which may give rise to a change
in the conversion price per share of Common Stock, the
Corporation shall make adequate provision so that shares of
Common Stock thereafter issued on conversion of shares of each
Convertible Series shall be validly issued, fully paid and
nonassessable (except as provided in Section 180.0622(b)(2) of
the WBCL); and the Corporation shall make appropriate provisions
so that any issue of Common Stock or of any other class of
shares of the Corporation as a dividend on, or in subdivision or
reclassification of, Common Stock, shall be made applicable to
shares of Common Stock held for conversion of each Convertible
Series at the time such shares of Common Stock shall be issued
upon such conversion.
(x) The Corporation shall have the right, at any time and
from time to time, to reduce the conversion price of one or more
Convertible Series then in effect by an amount not in excess of
20% of the then conversion price for such period or periods of
time of not less than 30 days nor more than 180 days as the
Board of Directors of the Corporation may determine. In each
such event, an officer of the Corporation shall prepare and
execute a certificate stating (aa) that the Corporation has
elected to reduce the conversion price of one or more
Convertible Series, (bb) that such election is irrevocable
during the period referred to hereinafter in clause (cc), and
(cc) the period during which such reduced conversion price or
prices shall be in effect. The certificate shall be filed with
the transfer agent or agents and either a brief summary of the
provisions of such certificate or a copy of such certificate
shall be mailed by the Corporation, first class, postage
prepaid, at least 10 days prior to the date fixed for the
commencement of any period in which the reduced conversion price
or prices is to be in effect, to the registered holders of the
Convertible Series so affected at their last address as it shall
appear upon the books of the Corporation. Failure or delay of
any holder of the Convertible Series so affected to receive such
certificate by mail, or any defect therein, shall not affect the
validity of, or the reduction of the conversion price nor extend
the period thereof.
(6) Reissuance of Shares.
Shares of Preferred Stock which have been redeemed or purchased
or retired through the operation of a purchase, retirement or sinking fund
or which have been converted into shares of any other class or classes of
stock of the Company shall thereafter have the status of authorized but
unissued shares of Preferred Stock of the Corporation and may thereafter
be reissued as part of the same or any other series.
(B) POWERS, RIGHTS AND LIMITATIONS OF THE COMMON STOCK AND THE CLASS
B COMMON STOCK.
(1) Voting Rights and Powers.
With respect to all matters upon which shareholders are entitled
to vote or to which shareholders are entitled to give consent, the holders
of the outstanding shares of Common Stock and the holders of the
outstanding shares of Class B Common Stock shall vote together as a single
class, and every holder of any outstanding shares of Common Stock shall be
entitled to cast thereon one (1) vote in person or by proxy for each share
of Common Stock standing in the holder's name on the stock transfer
records of the Corporation, and every holder of any outstanding shares of
Class B Common Stock shall be entitled to cast thereon ten (10) votes in
person or by proxy for each share of Class B Common Stock standing in his
name on the stock transfer records of the Corporation; provided that, with
respect to any proposed amendment to these Articles of Incorporation which
would increase or decrease the number of authorized shares of either the
Common Stock or the Class B Common Stock, increase or decrease the par
value of the shares of the Common Stock or the Class B Common Stock, or
alter or change the powers, preferences, relative voting power or special
rights of the shares of the Common Stock or the Class B Common Stock so as
to affect them adversely, the approval of a majority of the votes entitled
to be cast by the holders of the class affected by the proposed amendment,
voting separately as a class, shall be obtained in addition to the
approval of a majority of the votes entitled to be cast by the holders of
the Common Stock and the Class B Common Stock voting together as a single
class as hereinbefore provided.
(2) Dividends and Distributions.
(a) Cash Dividends. Subject to the rights of the holders
of the Preferred Stock, as and when cash dividends may be
declared from time to time by the Board of Directors, the cash
dividend payable with respect to each share of the Common Stock
shall in all cases, subject to rounding as hereinafter provided,
be in an amount equal to one hundred ten percent (110%) of the
amount of the cash dividend payable with respect to each share
of the Class B Common Stock. For purposes of calculating the
cash dividend to be paid on the Common Stock, the amount of the
cash dividend declared and payable with respect to the Class B
Common Stock shall be determined first and thereafter the cash
dividend payable with respect to the Common Stock shall be
determined in accordance with the formula set forth above,
provided that such dividend may be rounded up to the next
highest half cent. The premium accorded holders of Common Stock
shall not extend to distributions declared by the Board of
Directors to be in connection with the partial or complete
liquidation of the Corporation or any of its subsidiaries.
(b) Other Dividends and Distributions. Each share of
Common Stock and Class B Common Stock shall be equal in respect
of rights to dividends (other than those payable in cash) and
distributions (including distributions declared by the Board of
Directors to be in connection with the partial or complete
liquidation of the Corporation or any of its subsidiaries) when
and as declared, in the form of stock or other property of the
Corporation, except that in the case of dividends or other
distributions payable in stock of the Corporation other than the
Preferred Stock, including distributions pursuant to stock
split-ups or divisions, which occur after the initial issuance
of the Class B Common Stock as described in Paragraph (B)(5)(a)
of this Article, only shares of Common Stock shall be
distributed with respect to the Common Stock and only shares of
Class B Common Stock shall be distributed with respect to the
Class B Common Stock.
(3) Restrictions on Transfer of the Class B Common Stock.
(a) No beneficial owner (as hereinafter defined) of shares of
Class B Common Stock (hereinafter referred to as a "Class B
Shareholder") may transfer, and the Corporation shall not register
the transfer of, shares of Class B Common Stock, whether by sale,
assignment, gift, bequest, appointment or otherwise, except to a
"Permitted Transferee" of such Class B Shareholder. A "Permitted
Transferee" shall be defined as (i) the Class B Shareholder; (ii) the
spouse of the Class B Shareholder; (iii) any parent and any lineal
descendant (including any adopted child) of any parent of the Class B
Shareholder or of the Class B Shareholder's spouse; (iv) any trustee,
guardian or custodian for, or any executor, administrator or other
legal representative of the estate of, any of the foregoing
"Permitted Transferees"; (v) the trustee of a trust (including a
voting trust) principally for the benefit of such Class B Shareholder
and/or any of his or her Permitted Transferees; and (vi) any
corporation, partnership or other entity if a majority of the
beneficial ownership thereof is held by the Class B Shareholder
and/or any of his or her Permitted Transferees. For the purpose of
this Paragraph (3) the term "beneficial owner(s)" of any shares of
Class B Common Stock shall mean a person or persons who, or entity or
entities which, have or share the power, either singly or jointly, to
direct the voting or disposition of such shares.
(b) Notwithstanding anything to the contrary set forth herein,
any Class B Shareholder may pledge his shares of Class B Common Stock
to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness due to the pledgee, provided
that such shares shall not be transferred to or registered in the
name of the pledgee and shall remain subject to the provisions of
this Paragraph (3). In the event of foreclosure or other similar
action by the pledgee, such pledged shares of Class B Common Stock
may only be transferred to a Permitted Transferee of the pledgor or
converted into shares of Common Stock, as the pledgee may elect.
(c) Any purported transfer of shares of Class B Common Stock
not permitted hereunder shall be void and of no effect. The
purported transferee shall have no rights as a shareholder of the
Corporation and no other rights against, or with respect to, the
Corporation, except the right to receive shares of Common Stock upon
the conversion of his shares of Class B Common Stock into shares of
Common Stock. The Corporation may, as a condition to the transfer or
the registration of a transfer of shares of Class B Common Stock to a
purported Permitted Transferee, require the furnishing of such
affidavits or other proof as it deems necessary to establish that
such transferee is Permitted Transferee.
(d) The Corporation shall note on the certificates for
shares of Class B Common Stock the restrictions on transfer and
registration of transfer imposed by this Paragraph (3).
(e) Shares of Class B Common Stock shall be registered in
the name(s) of the beneficial owner(s) thereof and not in
"street" or nominee name.
(4) Conversion of the Class B Common Stock.
(a) Each share of Class B Common Stock may at any time or
from time to time, at the option of the respective holder
thereof, be converted into one (1) fully paid and nonassessable
share of Common Stock (subject to Section 180.0622(2)(b) of the
WBCL). Such conversion right shall be exercised by the
surrender of the certificate representing such share of Class B
Common Stock to be converted to the Corporation at any time
during normal business hours at the principal executive offices
of the Corporation (to the attention of the Secretary of the
Corporation), or if an agent for the registration or transfer of
shares of Class B Common Stock is then duly appointed and acting
(said agent being referred to in this Article as the "Transfer
Agent") then at the office of the Transfer Agent, accompanied by
a written notice of the election by the holder thereof to
convert and (if so required by the Corporation or the Transfer
Agent) by the instruments of transfer, in form satisfactory to
the Corporation and to the Transfer Agent, duly executed by such
holder or his duly authorized attorney, and transfer tax stamps
or funds therefor, if required pursuant to Paragraph (4)(e),
below.
(b) As promptly as practicable after the surrender for
conversion of a certificate representing shares of Class B
Common Stock in the manner provided in Paragraph (4)(a), above,
and the payment in cash of any amount required by the provisions
of Paragraphs (4)(a) and (4)(e), the Corporation will deliver or
cause to be delivered at the office of the Transfer Agent to, or
upon the written order of, the holder of such certificate, a
certificate or certificates representing the number of full
shares of Common Stock issuable upon such conversion, issued in
such name or names as such holder may direct. Such conversion
shall be deemed to have been made immediately prior to the close
of business on the date of the surrender of the certificate
representing shares of Class B Common Stock, and all rights of
the holder of such shares as such holder shall cease at such
time and the person or persons in whose name or names the
certificate or certificates representing the shares of Common
Stock are to be issued shall be treated for all purposes as
having become the record holder or holders of such shares of
Common Stock at such time; provided, however, that any such
surrender and payment on any date when the stock transfer
records of the Corporation shall be closed shall constitute the
person or persons in whose name or names the certificate or
certificates representing shares of Common Stock are to be
issued as the record holder or holders thereof for all purposes
immediately prior to the close of business on the next
succeeding day on which such stock transfer records are open.
(c) No adjustments in respect of dividends shall be made
upon the conversion of any share of Class B Common Stock;
provided, however, that if a share shall be converted subsequent
to the record date for the payment of a dividend or other
distribution on shares of Class B Common Stock but prior to such
payment, the registered holder of such share at the close of
business on such record date shall be entitled to receive the
dividend or other distribution payable on such share on the date
set for payment of such dividend or other distribution
notwithstanding the conversion thereof or the Corporation's
default in payment of the dividend or distribution due on such
date.
(d) The Corporation covenants that it will at all times
reserve and keep available, solely for the purpose of issuance
upon conversion of the outstanding shares of Class B Common
Stock, such number of shares of Common Stock as shall be
issuable upon the conversion of all such outstanding shares;
provided, that nothing contained herein shall be construed to
preclude the Corporation from satisfying its obligations in
respect of the conversion of the outstanding shares of Class B
Common Stock by delivery of purchased shares of Common Stock
which are held in the treasury of the Corporation. The
Corporation covenants that if any shares of Common Stock
required to be reserved for purposes of conversion hereunder,
require registration with or approval of any governmental
authority under any Federal or state law before such shares of
Common Stock may be issued upon conversion, the Corporation will
cause such shares to be duly registered or approved, as the case
may be. The Corporation will endeavor to list the shares of
Common Stock required to be delivered upon conversion prior to
such delivery upon each national securities exchange, if any,
upon which the outstanding Common Stock is listed at the time of
such delivery. The Corporation covenants that all shares of
Common Stock which shall be issued upon conversion of the shares
of Class B Common Stock, will, upon issue, be fully paid and
nonassessable, except as provided in Section 180.0622(2)(b) of
the WBCL, and not subject to any preemptive rights.
(e) The issuance of certificates for shares of Common
Stock upon conversion of shares of Class B Common Stock shall be
made without charge for any stamp or other similar tax in
respect of such issuance. However, if any such certificate is
to be issued in a name other than that of the holder of the
share or shares of Class B Common Stock converted, the person or
persons requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in
respect of any transfer involved in such issuance or shall
establish to the satisfaction of the Corporation that such tax
has been paid.
(f) When the number of outstanding shares of Class B
Common Stock falls below two percent (2%) of the aggregate
number of shares of Common Stock and Class B Common Stock then
outstanding, the outstanding shares of Class B Common Stock
shall be deemed without further act on anyone's part to be
immediately and automatically converted into shares of Common
Stock, and stock certificates formerly representing outstanding
shares of Class B Common Stock shall thereupon and thereafter be
deemed to represent a like number of shares of Common Stock.
(5) Issuance of the Class B Common Stock.
(a) Initial Issuance. One share of Class B Common Stock
shall be initially issued for each outstanding share of Class B
Common Stock, par value one dollar ($1) per share, of The Marcus
Corporation, a Delaware corporation, pursuant to the Agreement
and Plan of Merger, dated August 13, 1992, by and between the
Corporation and The Marcus Corporation.
(b) Subsequent Issuance. Following the initial issuance,
the Board of Directors may only issue shares of the Class B
Common Stock in the form of a distribution or distributions
pursuant to a stock dividend on or split-up of the shares of the
Class B Common Stock and only to the then holders of the
outstanding shares of the Class B Common Stock in conjunction
with and in the same ratio as a stock dividend on or split-up of
the shares of the Common Stock. Except as provided in this
subparagraph (b), the Corporation shall not issue additional
shares of Class B Common Stock after the initial issuance of
Class B Common Stock, as described in Paragraph (B)(5)(a) of
this Article, and all shares of Class B Common Stock surrendered
for conversion shall be retired, unless otherwise approved by
the affirmative vote of the holders of a majority of the
outstanding shares of the Common Stock and Class B Common Stock
entitled to vote, voting together as a single class, as provided
in Paragraph (B)(1) of this Article. Notwithstanding the
foregoing, the Board of Directors shall be permitted to make a
one-time issuance of 299,547 shares of Class B Common Stock to
Guest House Inn, Inc. ("GHI") in connection with the Agreement
and Plan of Reorganization dated June 30, 1997, by and among the
Corporation, GHI and the shareholders of GHI, in exchange for
and cancellation of 299,547 shares of Class B Common Stock owned
by GHI and, notwithstanding any other provision of these
Articles of Incorporation (including particularly Section (B)(3)
of this Article 2), the shareholders of GHI on June 30, 1997
shall be "Permitted Transferees" of the shares of Class B Common
Stock issued to GHI.
ARTICLE 3
Board of Directors
The number of initial directors constituting the Corporation's
initial Board of Directors shall be seven (7) and thereafter such number
as is fixed from time to time by, or in the manner provided in, the By-
laws. At each annual meeting of shareholders, directors shall be chosen
for a term of one year. Despite the expiration of a director's term, the
director shall continue to serve until his or her successor is elected
and, if necessary, qualifies or until there is a decrease in the number of
directors.
ARTICLE 4
Registered Office and Agent
The address of the registered office of the Corporation is 250
East Wisconsin Avenue, Suite 1700, Milwaukee, Wisconsin 53203, and the
name of its registered agent at such address is Thomas F. Kissinger.
<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> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-28-1998
<PERIOD-START> MAY-30-1997
<PERIOD-END> NOV-13-1997
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<SECURITIES> 0
<RECEIVABLES> 10,595
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<PP&E> 689,573
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<TOTAL-ASSETS> 555,260
<CURRENT-LIABILITIES> 53,819
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0
0
<COMMON> 20,793
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<TOTAL-LIABILITY-AND-EQUITY> 555,260
<SALES> 148,513
<TOTAL-REVENUES> 161,237
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<TOTAL-COSTS> 123,358
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<INCOME-PRETAX> 33,310
<INCOME-TAX> 13,328
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