UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 24, 2000
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[ ] 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
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THE MARCUS CORPORATION
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(Exact name of registrant as specified in its charter)
Wisconsin 39-1139844
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.
250 East Wisconsin Avenue, Suite 1700
Milwaukee, Wisconsin 53202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 905-1000
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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
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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 OCTOBER 2, 2000 - 17,245,406
CLASS B COMMON STOCK OUTSTANDING AT OCTOBER 2, 2000 - 11,894,377
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THE MARCUS CORPORATION
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INDEX
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PART I - FINANCIAL INFORMATION Page
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Item 1. Consolidated Financial Statements:
Balance Sheets
(August 24, 2000 and May 25, 2000).............................. 3
Statements of Earnings
(Thirteen weeks ended August 24, 2000 and thirteen weeks
ended August 26, 1999).......................................... 5
Statements of Cash Flows
(Thirteen weeks ended August 24, 2000 and thirteen weeks
ended August 26, 1999).......................................... 6
Condensed Notes to Financial Statements......................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk..................................................... 14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................ 14
Signatures...................................................... 15
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
(Unaudited) (Audited)
August 24, May 25,
2000 2000
---- ----
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $2,120 $2,935
Accounts and notes receivable 19,814 11,908
Receivables from joint ventures 3,464 2,468
Refundable income taxes - 3,020
Real estate and development costs 3,903 3,917
Other current assets 4,003 4,147
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Total current assets 33,304 28,395
Property and equipment:
Land and improvements 96,189 96,158
Buildings and improvements 557,707 514,734
Leasehold improvements 8,165 7,650
Furniture, fixtures and equipment 245,390 231,643
Construction in progress 11,596 48,152
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Total property and equipment 919,047 898,337
Less accumulated depreciation and amortization 250,351 240,020
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Net property and equipment 668,696 658,317
Other assets:
Investments in joint ventures 2,135 2,025
Other 36,656 35,039
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Total other assets 38,791 37,064
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TOTAL ASSETS $740,791 $723,776
======== ========
See accompanying notes to consolidated financial statements.
3
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THE MARCUS CORPORATION
Consolidated Balance Sheets
(Unaudited) (Audited)
August 24, May 25,
2000 2000
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(in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $5,620 $4,228
Accounts payable 11,066 24,463
Income taxes 3,317 -
Taxes other than income taxes 13,201 11,219
Accrued compensation 5,062 4,307
Other accrued liabilities 14,063 10,026
Current maturities on long-term debt 14,778 16,228
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Total current liabilities 67,107 70,471
Long-term debt 299,061 286,344
Deferred income taxes 32,876 32,602
Deferred compensation and other 8,926 9,112
Shareholders' equity:
Preferred Stock, $1 par; authorized 1,000,000
shares; none issued
Common Stock, $1 par; authorized 50,000,000 shares;
issued 19,288,753 shares at August 24, 2000,
19,072,617 shares at May 25, 2000 19,289 19,073
Class B Common Stock, $1 par; authorized 33,000,000
shares; issued and outstanding 11,900,760 at
August 24, 2000, 12,116,896 at May 25, 2000 11,901 12,117
Capital in excess of par 40,793 40,774
Retained earnings 278,706 268,808
Accumulated other comprehensive los (222) (257)
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350,467 340,515
Less cost of Common Stock in treasury (1,927,493
shares at August 24, 2000 and 1,708,247 shares
at May 25, 2000) (17,646) (15,268)
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Total shareholders' equity 332,821 325,247
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $740,791 $723,776
======== ========
See accompanying notes to consolidated financial statements.
4
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THE MARCUS CORPORATION
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share data) 13 Weeks Ended
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August 24, August 26,
2000 1999
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Revenues:
Rooms and telephone $53,069 $49,934
Theatre admissions 24,238 28,648
Theatre concessions 10,720 12,800
Food and beverage 8,086 7,029
Other income 12,715 9,306
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Total revenues 108,828 107,717
Costs and expenses:
Rooms and telephone 19,263 18,408
Theatre operations 18,567 22,011
Theatre concessions 2,568 3,031
Food and beverage 5,680 5,266
Advertising and marketing 7,898 6,359
Administrative 10,218 9,965
Depreciation and amortization 11,061 10,003
Rent 822 825
Property taxes 3,768 3,406
Pre-opening expenses 327 372
Other operating expenses 5,604 3,571
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Total costs and expenses 85,776 83,217
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Operating income 23,052 24,500
Other income (expense):
Investment income 497 377
Interest expense (5,227) (4,880)
Gain on disposition of property and equipment 256 1,327
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(4,474) (3,176)
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Earnings from continuing operations before income taxes 18,578 21,324
Income taxes 7,506 8,628
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Earnings from continuing operations 11,072 12,696
Discontinued operations (Note 2):
Income from discontinued operations, net of
income taxes of $255,000 in 2000 and $322,000 in 1999 377 474
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Net earnings $11,449 $13,170
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Earnings per share - Basic and Diluted:
Continuing operations $0.38 $0.42
Discontinued operations $0.01 $0.02
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Net earnings per share $0.39 $0.44
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Weighted Average Shares Outstanding:
Basic 29,299 29,906
Diluted 29,338 29,946
See accompanying notes to consolidated financial statements.
5
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THE MARCUS CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended
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August 24, August 26,
2000 1999
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(in thousands)
OPERATING ACTIVITIES:
<S> <C> <C>
Net earnings $11,449 $13,170
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Earnings on investments in joint ventures, net of distributions (110) (273)
Gain on disposition of property and equipment (256) (1,327)
Depreciation and amortization 11,314 10,373
Deferred income taxes 274 1,064
Deferred compensation and other (186) 363
Changes in assets and liabilities:
Accounts and notes receivable (7,906) (2,252)
Real estate and development costs 14 -
Other current assets 144 1,455
Accounts payable (13,397) (11,382)
Income taxes 6,337 7,481
Taxes other than income taxes 1,982 2,385
Accrued compensation 755 699
Other accrued liabilities 4,037 5,811
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Total adjustments 3,002 14,397
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Net cash provided by operating activities 14,451 27,567
INVESTING ACTIVITIES:
Capital expenditures, including business acquisitions (21,687) (20,800)
Net proceeds from disposals of property, equipment and other assets 485 6,539
Increase in other assets (1,817) (1,052)
Cash received from (advanced to) joint ventures (996) 20
--- --
Net cash used in investing activities (24,015) (15,293)
FINANCING ACTIVITIES:
Debt transactions:
Net proceeds from issuance of notes payable and long-term debt 16,394 963
Principal payments on notes payable and long-term debt (3,735) (10,792)
Equity transactions:
Treasury stock transactions (2,360) (38)
Dividends paid (1,550) (1,582)
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Net cash provided by (used in) financing activities 8,749 (11,449)
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Net increase (decrease) in cash and cash equivalents (815) 825
Cash and cash equivalents at beginning of year 2,935 3,499
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Cash and cash equivalents at end of period $2,120 $4,324
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
6
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THE MARCUS CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS FOR THE
THIRTEEN WEEKS ENDED
AUGUST 24, 2000
(Unaudited)
1. General
Accounting Policies - Refer to the Company's audited financial statements
(including footnotes) for the fiscal year ended May 25, 2000, contained in the
Company's Form 10-K Annual Report for such year, for a description of the
Company's accounting policies.
Basis of Presentation - The consolidated financial statements for the thirteen
weeks ended August 24, 2000 and August 26, 1999 have been prepared by the
Company without audit. In the opinion of management, all adjustments, consisting
only of normal recurring accruals necessary to present fairly the unaudited
interim financial information at August 24, 2000, and for all periods presented,
have been made. The results of operations during the interim periods are not
necessarily indicative of the results of operations for the entire year.
2. Discontinued Operations
The restaurant business segment has been presented as discontinued operations in
the accompanying consolidated financial statements. KFC revenues for the
thirteen weeks ended August 24, 2000 and August 26, 1999 were $5,939,000 and
$6,653,000, respectively.
3. Business Segment Information
The Company's primary operations are reported in the following three business
segments: limited-service lodging, theatres and hotels/resorts. Corporate items
include amounts not allocable to the business segments and consist principally
of rental revenue and general corporate expenses.
Following is a summary of business segment information for the thirteen weeks
ended August 24, 2000 and August 26, 1999 (in thousands):
13 Weeks Ended Limited-Service Corporate
August 24, 2000 Lodging Theatres Hotels/Resorts Items Total
--------------- --------------- -------- -------------- ----- -----
Revenues $40,902 $35,894 $31,664 $368 $108,828
Operating Income 11,160 7,264 6,284 (1,656) 23,052
13 Weeks Ended Limited-Service Corporate
August 26, 1999 Lodging Theatres Hotels/Resorts Items Total
--------------- --------------- -------- -------------- ----- -----
Revenues $39,880 $42,321 $25,125 $391 $107,717
Operating Income 10,350 9,837 5,580 (1,267) 24,500
7
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Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Management's 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 may generally be identified as such because the context of such
statements 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,
including, but not limited to, the following: (i) the Company's ability to
identify properties to acquire, develop and/or manage and continuing
availability of funds for such development; (ii) the Company's ability to
attract potential partners to assist in the acquisition and/or development of
properties; (iii) the limited-service lodging division's ability to attract and
retain quality franchise operators and to effectively execute its Baymont
repositioning strategy; (iv) continuing consumer demand as a result of general
economic conditions with respect to the hotels and resorts and limited-service
lodging divisions; (v) continuing availability, in terms of both quality and
quantity, of films for the theatre division; and (vi) competitive conditions in
the markets served by the Company. Shareholders, potential investors and other
readers are urged to consider these factors carefully in evaluating the
forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements made herein are made
only as of the date of this 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 Marcus Corporation reports consolidated and individual segment results
of operations on a 52-or-53-week fiscal year ending on the last Thursday in May.
Fiscal 2001 is a 53-week year for the Company and each of its divisions and the
Company anticipates that its reported results for fiscal 2001 will be increased
proportionately by the additional week of operations. Fiscal 2000 was a 52-week
year for the Company. The Company divides its fiscal year into three 13-week
quarters and a final quarter consisting of 13 or 14 weeks. The Company's primary
operations are reported in the following three business segments:
limited-service lodging, theatres and hotels/resorts. As a result of the
Company's stated intention to dispose of its KFC restaurants, the restaurant
business segment has been presented as discontinued operations in the
accompanying financial statements.
Revenues for the first quarter of fiscal 2001 ended August 24, 2000,
totaled $108.8 million, an increase of $1.1 million, or 1.0%, from revenues of
$107.7 million for the first quarter of fiscal 2000. Revenue increases from the
Company's limited-service lodging and
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hotels/resorts divisions during the quarter were partially offset by a decrease
in theatre division revenues compared to the prior year same period.
Earnings from continuing operations during the first quarter of fiscal 2001
were $11.1 million, or $.38 per share, a decrease of 12.8% and 9.5%,
respectively, from earnings from continuing operations of $12.7 million, or $.42
per share, for the same quarter during the prior year. Net earnings during the
first quarter of fiscal 2001 were $11.5 million, or $.39 per share, a decrease
of 13.1% and 11.4%, respectively, from net earnings of $13.2 million, or $.44
per share, during the same quarter last year. All per share data presented
herein is on a diluted basis.
Operating income (earnings before other income/expense and income taxes)
from continuing operations totaled $23.1 million during the first quarter of
fiscal 2001, a decrease of $1.4 million, or 5.9%, compared to the prior year's
same period. Operating income increases from the Company's limited-service
lodging and hotels/resorts divisions during the quarter were offset by reduced
operating income from the theatre division. The Company's interest expense, net
of investment income, totaled $4.7 million for the first quarter of fiscal 2001,
compared to $4.5 million during the same period last year. This increase was the
result of increased long-term debt levels necessary to help finance the
Company's capital expenditures and higher short-term interest rates.
Limited-Service Lodging
Total revenues for the first quarter of fiscal 2001 for the limited-service
lodging division were $40.9 million, an increase of $1.0 million, or 2.6%,
compared to revenues of $39.9 million during the same period in fiscal 2000. The
limited-service lodging division's operating income for the fiscal 2001 first
quarter totaled $11.2 million, an increase of $900,000, or 7.8%, over operating
income of $10.3 million during the same period of fiscal 2000.
Compared to the end of the first quarter of fiscal 2000, two fewer
Company-owned or operated and six new franchised Baymont Inns & Suites were in
operation at the end of the fiscal 2001 first quarter. As a result of the sale
of two Baymont Inns during the second quarter of fiscal 2000 (one of which was
sold to a franchisee), fiscal 2001 first quarter revenues were negatively
impacted by $800,000 compared to the same period during the prior year.
The Company's comparable Baymont Inns & Suites experienced a 5.3 percentage
point decline in occupancy percentage and a 11.9% average daily rate increase
during the first quarter of fiscal 2001, compared to the same quarter last year.
The primary factor contributing to the decline in occupancy has been the
significant increase in the industry supply of limited-service lodging rooms
during the past three years. The significant increase in the average daily rate
is the result of the Company's efforts to reposition the Baymont Inns & Suites
brand from the lower-priced economy segment of the lodging industry to the
mid-price segment of the industry. The result of the average daily rate
increases and occupancy decline was a 3.5%
9
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increase in the division's revenue per available room, or RevPAR, for comparable
BaymontInns during the fiscal 2001 first quarter, compared to the same quarter
last year. Subject to changes in economic and industry conditions, the Company
believes that RevPAR should continue to improve during fiscal 2001 as market
awareness of the Baymont brand continues to increase.
The limited-service lodging division's increased operating results during
the first quarter of fiscal 2001 compared to the prior year's same period
represent the third consecutive quarterly increase after nine straight quarters
of decreased operating income dating back to the first quarter of fiscal 1998.
In addition to the impact of the RevPAR increase during the fiscal 2001 first
quarter, increased revenues from franchising contributed to the division's
improvement during the quarter.
At the end of the fiscal 2001 first quarter, the Company owned or operated
95 Baymont Inns & Suites and franchised an additional 76 Inns, bringing the
total number of Baymont Inns & Suites in operation to 171. In addition, there
were 30 approved franchised locations in development at the end of the first
quarter, including 13 under construction and scheduled to open in fiscal 2001 or
shortly thereafter. One Company-owned Baymont Inn & Suites is under construction
and expected to open during the fiscal 2001 third quarter.
The Company also owned and operated seven Woodfield Suites all-suite hotels
during the first quarter of fiscal 2001, compared to six locations during the
same period last year. The division's seventh Company-owned Woodfield Suites,
located in San Antonio, Texas, opened early during the third quarter of fiscal
2000. Revenues and operating income from Woodfield Suites increased during the
first quarter of fiscal 2001 compared to the same period of fiscal 2000 due to
results from the new location and a year-to-date RevPAR increase of 1.8% for
comparable Woodfield Suites.
Theatres
The theatre division's fiscal 2001 first quarter revenues were $35.9
million, a decrease of $6.4 million, or 15.2%, from revenues of $42.3 million
during the same fiscal 2000 period. Operating income for the first quarter of
fiscal 2001 totaled $7.3 million, a decrease of $2.5 million, or 26.2%, from
operating income of $9.8 million during the same period last year. Consistent
with the seasonal nature of the motion picture exhibition industry, the first
quarter of the Company's fiscal year is typically the busiest period for its
theatre division.
Total box office receipts for the fiscal 2001 first quarter were $24.2
million, a decrease of $4.4 million, or 15.4%, from box office receipts of $28.6
million during the same period last year. The decrease in box office receipts
for the first quarter of fiscal 2001 compared to the same period during the
prior year was despite a 5.1% increase in average ticket prices and the
Company's operation of 45 additional screens, representing a 10.2% increase over
the prior year.
Concession revenues for the fiscal 2001 first quarter totaled $10.7
million, a decrease of $2.1 million, or 16.3%, from concession revenues of $12.8
million during the same quarter last year. The Company's average concession
sales per person increased 4.0% during the quarter compared to last year's same
period.
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Total theatre attendance for the first quarter decreased 19.5% compared to
the same quarter last year. Total theatre attendance at the Company's comparable
locations decreased 26.4% compared to last year's same period. The decline in
total attendance and the resulting decreases in box office receipts and
concession revenues during the first quarter were primarily the result of fewer
quality films during the first quarter of fiscal 2001 compared to the first
quarter of fiscal 2000. The first quarter of fiscal 2000 included 11 films with
box office receipts in excess of $1 million, including the box office
blockbusters Star Wars I: The Phantom Menace, Austin Powers 2: The Spy Who
Shagged Me and Tarzan. Fiscal 2001 first quarter films included only seven
movies with box office receipts in excess of $1 million, including The Perfect
Storm and Mission Impossible 2. The Company does not expect box office receipts
to improve during the fiscal 2001 second quarter, due in part to a lack of
quality films carried over from the August time period and adverse effects on
September 2000 theatre attendance as a result of television coverage of the
summer Olympics. Revenues for the theatre business and the motion picture
industry in general are heavily dependent upon the general audience appeal of
available films, together with studio marketing, advertising and support
campaigns, factors over which the Company has no control.
The Company opened 17 new screens at five existing theatres during the
first quarter of fiscal 2001, including its second large UltraScreen, which
opened at a Madison, Wisconsin location. The Company ended the first quarter
with a total of 487 total screens in 50 theatres compared to 442 screens in 49
theatres at the end of the same period last year. The Company closed one
six-screen theatre early in the second quarter of fiscal 2001. The Company has
three new screens at an existing location in development, including another
UltraScreen, and is reviewing additional development and acquisition
opportunities. The Company also continues to retrofit existing theatres with
stadium seating and digital sound. Currently 82% of its first-run auditoriums
now offer these popular features, which is the highest percentage of any top-20
theatre chain in the United States.
Hotels and Resorts
Total revenues from the hotels and resorts division during the first
quarter of fiscal 2001 increased by $6.5 million, or 26.0%, to $31.7 million,
compared to revenues of $25.1 million during the previous year's comparable
period. Operating income increased by $700,000, or 12.6%, to $6.3 million during
the fiscal 2001 first quarter, compared to operating income of $5.6 million
during the first quarter of fiscal 2000. With four of the Company's five
owned-properties located in the Midwest, the first quarter of the Company's
fiscal year is typically the strongest period for its hotels and resorts
division.
Increases in RevPAR at the Company's comparable owned hotels/resorts and
continued improved operating results from the Company's Miramonte Resort were
the primary reasons for the division's revenue and operating income increases
during the fiscal 2001 first quarter compared to the prior year's same period.
Excluding the Hotel Phillips, which was purchased by the Company in May 2000,
and the Milwaukee Hilton City Center, which opened additional rooms during the
first quarter of fiscal 2001, the division's total RevPAR for
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comparable Company-owned properties increased 8.2% during fiscal 2001's first
quarter compared to the same quarter last year.
The Company opened the rooms portion of its extensive addition to the
Hilton Milwaukee City Center in late-June 2000, contributing to the overall
increase in total division revenues during the fiscal 2001 first quarter
compared to the same period last year. A family water park and fun center,
Paradise Landing, built in conjunction with the Hilton room addition, opened
early in the second quarter of fiscal 2001. Construction also continues on the
division's new Company-owned Hilton Madison at Monona Terrace. The projected
opening of the property, which will be connected to the new Monona Terrace
Convention Center, is currently March 2001. The Company operated the
newly-acquired Hotel Phillips in Kansas City, Missouri during the first quarter
prior to closing the property in September 2000 for a major renovation. The
Company expects the Hotel Phillips to reopen during the first quarter of fiscal
2002.
Sales from the Company's vacation ownership development at the Grand Geneva
Resort & Spa also contributed to the increase in division revenues during the
first quarter of fiscal 2001 compared to the prior year's same quarter. The
development's first two buildings, consisting of 18 units available for sale, a
sales center and a model unit, opened during the first quarter of fiscal 2001.
The Company has also recently begun construction on the third building in this
development. Although the vacation ownership development did not have a material
impact on division operating income during the first quarter of fiscal 2001, the
Company believes that the development will ultimately add to division operating
income in fiscal 2001.
Discontinued Operations
The Company continues to actively pursue the sale of the Company's 30 KFC
and KFC/Taco Bell 2-in-1 restaurants. As a result, the Company continues to
account for the restaurant operations as discontinued operations in the
Company's consolidated financial statements because of its belief that a sale
will be consummated during fiscal 2001.
Revenues from discontinued operations totaled $5.9 million for the first
quarter of fiscal 2001, a decrease of $700,000, or 10.7%, from fiscal 2000 first
quarter revenues of $6.6 million. During the first quarter of fiscal 2001, the
Company had income from discontinued operations, net of applicable income taxes,
of $377,000, a decrease of approximately $100,000, or 20.5%, from income from
discontinued operations during the same period last year. KFC revenues and
operating results were negatively impacted during the first quarter of fiscal
2001 by ineffective national promotions and reduced local advertising, resulting
in reduced guest counts and average guest checks. The Company believes that KFC
revenues and operating income should improve in future quarters during fiscal
2001. This is based upon the Company's assessment of the currently proposed KFC
national marketing program for the remainder of fiscal 2001 and the fact that
sales were reduced during the last three quarters of fiscal 2000 due to an
ineffective sandwich promotion.
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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 $31 million of unused credit lines as of the end
of the first quarter, should be adequate to support the ongoing operational
liquidity needs of the Company's businesses.
Net cash provided by operating activities decreased by $13.1 million during
the first quarter of fiscal 2001 to $14.5 million, compared to $27.6 million
during the prior year's first quarter, due primarily to reduced earnings, timing
differences in payments of accounts payable and increases in accounts and notes
receivable. Depreciation and amortization (a non-cash expense) increased as a
result of the Company's increased capital spending program.
Net cash used in investing activities during the fiscal 2001 first quarter
totaled $24.0 million, compared to $15.3 million during the fiscal 2000 first
quarter. The increase in net cash used in investing activities was primarily the
result of slightly increased capital expenditures and reduced net proceeds from
disposals of property, equipment and other assets, which totaled $500,000 during
fiscal 2001 compared to $6.5 million during fiscal 2000. Capital expenditures to
support the Company's continuing expansion program totaled $21.7 million during
the first quarter of fiscal 2001 compared to $20.8 million during the prior
year's first quarter. Fiscal 2001 first quarter capital expenditures included
approximately $9 million incurred in the theatre division to fund screen
additions to existing theatres, stadium seating retrofits and costs carried over
from projects opened during the fourth quarter of fiscal 2000. In addition,
capital expenditures of approximately $3 million were incurred in the
limited-service lodging division and approximately $10 million were incurred by
the hotels and resorts division to fund its major construction projects.
Net cash provided by financing activities during the first quarter of
fiscal 2001 totaled $8.7 million compared to net cash used in financing
activities of $11.4 million during the first quarter of fiscal 2000. The Company
funded a portion of its capital expansion program during fiscal 2000 with the
net proceeds from disposals of assets. As a result of the reduced net proceeds
from disposals of assets and reduced net cash provided by operating activities
during the fiscal 2001 first quarter compared to the same period last year, the
Company's net proceeds from issuance of notes payable and long-term debt totaled
$16.4 million during the first quarter of fiscal 2001 compared to only $1.0
million during the same period last year. The Company's principal payments on
notes payable and long-term debt totaled $3.7 million during the first quarter
of fiscal 2001 compared to $10.8 million during the same period last year.
Additionally, during the first quarter of fiscal 2001, the Company repurchased
225,000 of its common shares pursuant to its stock repurchase program at a cost
of $2.4 million, compared to 9,000 shares repurchased during the first quarter
of fiscal 2000 at a cost of $112,000. Assuming a sale of the restaurant business
is consummated, the Company will consider using a portion of the anticipated
proceeds from the sale to fund its stock repurchase program. Any such
repurchases are expected to be executed on the open market or in privately
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negotiated transactions depending upon a number of factors, including prevailing
market conditions. At the end of the first quarter, there were 2.1 million
shares available for repurchase under existing Board of Directors
authorizations. As of September 28, 2000, the Company had purchased an
additional 125,000 of its shares during the second quarter of fiscal 2001.
The Company anticipates that it may need to issue additional long-term debt
to help fund the Company's ongoing expansion plans in fiscal 2001. In addition
to the Company's existing credit lines, the Company has the ability to issue up
to $45 million of additional senior notes under an existing private placement
program and currently anticipates doing so during the second quarter of fiscal
2001. Proceeds from the anticipated issuance would be used to repay existing
debt under its revolving credit lines and to fund the Company's capital
expenditure and stock repurchase programs.
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 competitive environment, evolving customer
needs and trends and the availability of attractive opportunities. It is likely
that the Company's current expansion goals will continue to evolve and change in
response to these and other factors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has not experienced any material changes in its market risk
exposure since May 25, 2000.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
--------
Exhibit 10. The Marcus Corporation Nonemployee Director Annual
Retainer Policy, Effective October 4, 1999
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
-------------------
No Form 8-K was filed by the Company during the quarter to which
this Form 10-Q relates.
14
<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: October 6, 2000 By: /s/ Stephen H. Marcus
-----------------------------------------------
Stephen H. Marcus,
Chairman of the Board, President and Chief
Executive Officer
DATE: October 6, 2000 By: /s/ Douglas A. Neis
-----------------------------------------------
Douglas A. Neis
Chief Financial Officer and Treasurer
15
<PAGE>
THE MARCUS CORPORATION
FORM 10-Q
FOR
13 WEEKS ENDED AUGUST 24, 2000
EXHIBIT INDEX
Exhibit Description
------- -----------
10 The Marcus Corporation Nonemployee Director Annual Retainer Policy,
Effective October 4, 1999
27 Financial Data Schedule
16
