MARCUS CORP
For the period ended Dec 26, 2024. Filed Feb 28, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 28, 2025
MCS$26.76-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-28; filed 2024-03-01.
0000062234-24-000011
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-26; filed 2025-02-28.
0000062234-25-000006
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 191 previous paragraphs and 192 current paragraphs.
75 unchanged; 87 reworded; 26 added; 25 removed; 4 previous and 4 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
Beginning on December 27, 2024, our fiscal year changed from a 52- or 53-week fiscal year ending on the last Thursday in December of each year to a fiscal year ending on December 31 of each year. Accordingly, effective for our fiscal year ending December 31, 2025, our quarterly results will be for three month periods ending March 31, June 30, September 30 and December 31 of each year.
Current report
◦Launching a subscription program that encourages more frequent movie-going. In fiscal 2024, we introduced Marcus Movie Club, replacing the previously piloted test programs, MovieFlex®and MovieFlex®+. For $9.99 per month or $109.89 annually, moviegoers who join Marcus Movie Club receive a credit to see any 2D movie each month with rollover of unused credits, a 20% discount on food and beverage, unlimited access to additional tickets for $9.99, and waived ticket surcharge fees. We plan to promote and grow this program in fiscal 2025, and we believe that the program will drive increased recurring moviegoing and loyalty to Marcus Theatres.
Current report
◦Developing promotions that feature and elevate movies beyond blockbuster films. In fiscal 2024, we debuted Marcus Mystery Movie, a promotion that on two Mondays each month gives customers the opportunity to attend a 7 p.m. screening of an upcoming movie before its official release date for a $5 ticket, while the movie title is not announced until showtime. The program highlights films of all genres and movie types including small and mid-size films, in addition to expected blockbuster releases. Based on our initial experience and customer feedback, we believe the Marcus Mystery Movie program generates additional attendance by bringing customers out to see films that they might not have otherwise chosen to see, yet find themselves enjoying, while building awareness of coming attractions during the preshow trailers.
Current report
In fiscal 2024 we sold 74% more passports than we did in fiscal 2023 and we expect to continue to expand our Marcus Passport offerings in fiscal 2025.
Current report
Revenues increased during fiscal 2024 compared to fiscal 2023, with increased revenues from our hotel division offsetting a decrease in revenues from our theatre division.
Current report
Net earnings (loss) attributable to The Marcus Corporation and net earnings (loss) per diluted common share decreased during fiscal 2024 compared to fiscal 2023, primarily due to decreases in operating income and investment income, an increase in equity losses from unconsolidated joint ventures, and the negative impact of debt conversion expense, partially offset by decreases in interest expense, other expense, and income tax expense compared to fiscal 2023.
Current report
We incurred debt conversion expense of $15.5 million during fiscal 2024 in connection with the $100.1 million aggregate principal amount of Convertible Notes Repurchases. See Convertible Senior Notesin the “Liquidity and Capital Resources” section of this MD&A for further discussion.
Current report
Our theatre division revenues and operating income decreased during fiscal 2024 compared to fiscal 2023 primarily due to lower attendance in the first half of fiscal 2024 compared to the first half of fiscal 2023. The film slate during the first half of fiscal 2024 was negatively impacted by the content supply chain disruption from the shutdown of movie production during the WGA and SAG-AFTRA labor strikes in 2023, which contributed to a weaker slate of available films compared to the first half of fiscal 2023. Our operating income during fiscal 2024 was also negatively impacted by impairment charges of $6.8 million related to four operating theatres, one operating theatre that we closed in early fiscal 2025, and one permanently closed theatre, compared to impairment charges of $1.1 million during fiscal 2023 related to two permanently closed theatres and surplus real estate.
Current report
2024, with several blockbuster films performing well with audiences and four of our top five grossing films opening in the second half of fiscal 2024.
Current report
The film product release schedule for fiscal 2025 has solidified in recent months. Several films that have contributed to our early fiscal 2025 first quarter results include the carryover impact of releases during the fourth quarter of fiscal 2024 including Mufasa: The Lion King, Sonic the Hedgehog 3, Moana 2, and Nosferatu, and new releases during the first quarter of fiscal 2025 including Captain America: Brave New World, One of Them Days, Wolf Man, Flight Riskand Dog Man. Although it is possible that schedule changes may occur, new films scheduled to be released during the remainder of fiscal 2025 that have potential to perform very well include: Snow White, A Minecraft Movie, The Accountant 2, Mickey 17, Thunderbolts, Mission: Impossible - The Final Reckoning, Karate Kid, Elio, How to Train Your Dragon, From the World of John Wick: Ballerina, F1, Jurassic World Rebirth, Megan 2.0, Naked Gun, Superman: Legacy, The Fantastic Four: First Steps, I Know What you Did Last Summer, The Bad Guys 2, The Conjuring: Last Rites, Downton Abbey 3, Saw XI, The Bride, The Black Phone 2, Tron: Ares, Mortal Kombat 2, Blade, Now you See Me 3, Wicked Part 2, Zootopia 2, Five Nights at Freddy’s 2, The SpongeBob Movie: Search for SquarePants and Avatar: Fire and Ash.
Current report
Total hotels and resorts revenues increased 6.2% during fiscal 2024 compared to fiscal 2023. Hotels and resorts operating income during fiscal 2024 increased 5.5% compared to fiscal 2023, with higher revenues driven primarily from higher overall occupancy and increased average daily rates, including a positive impact from the Republican National Convention (RNC) held in Milwaukee during July 2024. The RNC favorably impacted our group room revenue and banquet and catering revenue at our three hotels in downtown Milwaukee by approximately $3.3 million in fiscal 2024.
Current report
Our theatre division Adjusted EBITDA decreased during fiscal 2024 compared to fiscal 2023 due to lower revenue resulting from a weaker film slate and lower attendance, as described in the Theatres section above. Our hotels and resorts division Adjusted EBITDA increased during fiscal 2024 due to higher revenue resulting from improved occupancy percentages and ADR, as described in the Hotels and Resorts section above. Adjusted EBITDA attributable to corporate items decreased during fiscal 2024 compared to fiscal 2023 due primarily to increased long-term incentive compensation expenses, professional fees related to tax planning, and personnel and benefits cost inflation.
Current report
(3)Non-recurring costs related to the closure and exit of one theatre location in fiscal 2024.
Current report
(4)Repair costs and insurance recoveries that are non-operating in nature related to insured property damage at one theatre location.
Current report
(5)Debt conversion expense resulting from repurchases of $100.1 million aggregate principal amount of Convertible Notes. See Convertible Senior Notes in the “Liquidity and Capital Resources” section of this MD&A for further discussion.
Current report
(6)Other non-recurring includes settlement and legal expenses related to an equipment lease agreement impacted by the COVID-19 pandemic in Theatres, and professional fees related to convertible debt repurchase transactions and corporate office relocation expenses in Corporate Items.
Current report
Senior Notes
Current report
On July 9, 2024, we entered into a Master Note Purchase Agreement with several purchasers party to the agreement, pursuant to which we issued and sold $100.0 million aggregate principal amount of senior notes in two tranches: (i) $60.0 million in aggregate principal amount of the Company’s 6.89% Series 2024 Senior Notes, Tranche A due July 9, 2031 (the “Tranche A Notes”) and (ii) $40.0 million in aggregate principal amount of the Company’s 7.02% Series 2024 Senior Notes, Tranche B due July 9, 2034 (the “Tranche B Notes” and, collectively with the Tranche A Notes, the “2024 Senior Notes”). The net proceeds were used to refinance the Convertible Notes Repurchases of $99.9 million aggregate principal amount of Convertible Notes and for general corporate purposes.
Current report
Interest on the 2024 Senior Notes is payable semi-annually in arrears on the 9th day of January and July each year, commencing on January 9, 2025, and on the applicable maturity date. The Tranche A Notes require annual principal amortization payments beginning in fiscal 2027 with a final maturity in fiscal 2031. The Tranche B Notes require annual principal amortization payments beginning in fiscal 2028 with a final maturity in fiscal 2034. The 2024 Senior Notes rank pari passu in right of payment with all of our other senior secured debt. The Master Note Purchase Agreement contains various restrictions and covenants applicable to the Company and certain of its subsidiaries that are consistent with the restrictions, covenants and collateral provisions in the Company’s existing Credit Agreement and Note Purchase Agreements. Among other requirements, the Master Note Purchase Agreement requires us to maintain (i) a ratio of consolidated net debt (as defined in the Master Note Purchase Agreement) to consolidated EBITDA (as defined in the Master Note Purchase Agreement) of 3.50 to 1.00 or less, with some temporary exceptions for material acquisitions, and (ii) a minimum ratio of consolidated EBITDA to consolidated interest expense (as defined in the Master Note Purchase Agreement) for each period of four consecutive fiscal quarters (determined as of the last day of each fiscal quarter) of 3.00 to 1.00 or more.
Current report
Convertible Senior Notes
Current report
During fiscal 2024, we entered into separate, privately negotiated purchase agreements (the “Purchase Agreements”) with the holders of our Convertible Notes. Under the terms of the Purchase Agreements, the holders agreed to exchange $100.1 million in aggregate principal amount of Convertible Notes for cash consideration of $121.8 million (or $103.5 million net of the cash we received in connection with the unwind of a portion of the Capped Call Transactions as discussed below) effected over four separate repurchase tranches (the “Convertible Notes Repurchases”). Upon settlement of the Convertible Note Repurchases all of the Convertible Notes were retired.
Current report
In connection with the Convertible Notes Repurchases, we entered into unwind agreements with the Capped Call Counterparties to terminate a portion of the Capped Call Transactions equal to the notional amounts of the Convertible Notes Repurchases, and to receive aggregate cash of $18.3 million effected over four separate unwind tranches.
Current report
During the fiscal 2024, we incurred debt conversion expense of $15.5 million in connection with the Convertible Notes Repurchases. The unwind of the Capped Call Transactions resulted in a $17.6 million increase in capital in excess of par within shareholders’ equity during fiscal 2024.
Current report
During fiscal 2024 we paid $123.5 million in cash for the Convertible Notes Repurchases (as defined above) and related transaction costs, with no repurchases in fiscal 2023. We received $18.3 million in cash from the proportionate unwind of the Capped Call Transactions in connection with the Convertible Notes Repurchases during fiscal 2024. See Convertible Senior Notes section above for further discussion.
Current report
In connection with the mortgage loan obtained by a wholly-owned subsidiary of The Lofton Hotel joint venture entity, we provided an environmental indemnity and a several payment guaranty that provides that the lender can recover losses from us, a principal in Hempel, and a principal in RP for certain events of default of the borrower up to $6,200,000 for the Company. Under the terms of a cross-indemnity agreement among the guarantors, the other two guarantors have fully indemnified us under the guarantees for any losses in excess of its proportionate liability under the several payment guaranty and environmental indemnity.
Current report
In fiscal 2024, we adopted ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU No. 2023-07), which requires disclosure of incremental segment information on an annual and interim basis. The annual requirements of ASU No. 2023-07 are included in our Business Segment footnote (see Note 13) and prior year information has been recast to conform to the current year presentation. The interim requirements of ASU No. 2023-07 are effective for us the first quarter of fiscal 2025. The adoption of the new standard did not have a material effect on our consolidated financial statements.
Removed paragraphs (25)
Previous report
The COVID-19 pandemic had an unprecedented impact on the world and both of our business segments during fiscal 2020, fiscal 2021 and fiscal 2022. As an operator of movie theatres, hotels and resorts, restaurants and bars, each of which consists of spaces where customers and guests gather in close proximity, our businesses were significantly impacted by protective actions that federal, state and local governments took to control the spread of the pandemic, and our customers’ reactions or responses to such actions. The extent of these protective actions and their impact on our businesses dissipated throughout fiscal 2022.
Previous report
◦Launching a subscription program that encourages more frequent movie-going, particularly for non-blockbuster films. In fiscal 2022, we introduced two such programs, branded MovieFlex SM and MovieFlex SM+, in three separate markets as part of our initial test of this strategy. We expect to expand our subscription programs to additional markets in fiscal 2024.
Previous report
Revenues, operating income, net earnings (loss) attributable to The Marcus Corporation and net earnings (loss) per diluted common share improved significantly during fiscal 2023 compared to fiscal 2022. Increased revenues and operating income from our theatre division contributed to the improvement in our operating income, net earnings (loss) attributable to The Marcus Corporation and net earnings (loss) per diluted common share during fiscal 2023 compared to fiscal 2022, as customers continued to return to theatres following the pandemic. Increased revenues and operating income from our hotels and resorts division at comparable hotels (excluding the impact of the sale of The Skirvin Hilton) also contributed to the improvement of these measures during fiscal 2023 compared to fiscal 2022.
Previous report
Net earnings attributable to The Marcus Corporation and net earnings per diluted common share during fiscal 2023 were positively impacted by a decrease in interest expense compared to fiscal 2022.
Previous report
Net loss attributable to The Marcus Corporation and net loss per diluted common share during fiscal 2022 were positively impacted by a $3.4 million gain on the sale of The Skirvin Hilton (net of $2.9 million of net earnings attributable to noncontrolling interests), and was negatively impacted by a $7.4 million adjustment to valuation allowances as described below.
Previous report
We reported a gain on sale of hotel of $6.3 million during fiscal 2022 resulting from the sale of The Skirvin Hilton on December 16, 2022. See Note 4 in the accompanying consolidated financial statements for further discussion of the sale transaction.
Previous report
The operating results of one majority-owned hotel, The Skirvin Hilton, are included in the hotels and resorts division revenue and operating income (loss) during fiscal 2021 and fiscal 2022 through the date of its sale, and the after-tax net earnings or loss attributable to noncontrolling interests is deducted from or added to net earnings (loss) on the consolidated statements of earnings (loss). As a result of the noncontrolling interest balance reaching zero during the second quarter of fiscal 2020, we did not report additional net losses attributable to noncontrolling interests during the remainder of fiscal 2020 and fiscal 2021. In fiscal 2022, we reported net earnings attributable to noncontrolling interests of $2.9 million, which result from the gain on the sale of The Skirvin Hilton attributable to noncontrolling interests.
Previous report
Our theatre division revenues and operating income increased significantly during fiscal 2023 compared to fiscal 2022 as customers continued to return to our theatres and attendance grew as an increased number of films were released to movie theatres during fiscal 2023. Our operating income during fiscal 2023 was negatively impacted by impairment charges of $1.1 million related to two permanently closed theatres and surplus real estate that we intend to sell, compared to impairment charges of $1.5 million during fiscal 2022 related to two operating theatres.
Previous report
The film product release schedule for fiscal 2024 has solidified in recent months. Several films that have contributed to our early fiscal 2024 first quarter results include Wonka, Mean Girls, Bob Marley: One Love, Migration, Anyone But You, The Beekeeperand Aquaman and the Lost Kingdom. Although it is possible that schedule changes may occur, new films scheduled to be released during the remainder of fiscal 2024 that have potential to perform very well include Dune: Part Two, Kung Fu Panda 4, Ghostbusters: Frozen Empire, Godzilla x Kong: The New Empire, The Fall Guy, If, Kingdom of the Planet of the Apes, Furiosa: A Mad Max Saga, The Garfield Movie, Inside Out 2, Ballerina, The Watchers, Bad Boys 4, It Ends With Us, A Quiet Place: Day One, Deadpool 3, Despicable Me 4, Twisters, Speak No Evil, Borderlands, Alien: Romulus, Kraven the Hunter, Beetlejuice 2, Wolfs, Transformers: One, Joker: Folie A Deux, Saw XI, Smile 2, Venom 3, White Bird, Alto Knghts, The Amateur, Lord of the Rings: The War of the Rohirrim, Moana 2, White Bird, Karate Kid, Mufasa: The Lion King and Sonic the Hedgehog 3.
Previous report
On December 16, 2022 we completed the sale of The Skirvin Hilton in Oklahoma City, Oklahoma (we held a majority-ownership position in this hotel prior to its sale). The results of The Skirvin Hilton are included in our divisional and consolidated results of operations during fiscal 2022 through the date of the sale.
Previous report
Excluding The Skirvin Hilton from fiscal 2022 results, hotels and resorts revenues increased 6.9% during fiscal 2023 compared to fiscal 2022. Excluding The Skirvin Hilton from fiscal 2022 results, hotels and resorts operating income during fiscal 2023 increased slightly compared to fiscal 2022, with higher revenues partially offset by increased labor costs during fiscal 2023 as we increased our staffing levels to enhance customer experience compared to fiscal 2022 when various positions were unfilled due to staffing shortages.
Previous report
In fiscal 2024, we expect to benefit from increases in business at our three hotels in downtown Milwaukee as the city hosts the Republican National Convention (“RNC”), which will occur during our fiscal third quarter. The RNC has favorably impacted our group room revenue and banquet and catering revenue bookings for fiscal 2024. We believe this event will not only favorably impact fiscal 2024, but has the potential to have a positive long-term impact on the overall market as the first major event showcasing the city’s expanded convention center, Baird Center. The Baird Center expansion doubles the size of the overall convention center to 1.3 million total square feet and brings the exhibition hall to 300,000 contiguous square feet, as well as expanded ballroom and meeting space. We expect the expansion will allow Baird Center to host a greater number of events each year, as well as hosting larger convention events.
Previous report
Our theatre division Adjusted EBITDA improved significantly during fiscal 2023 compared to fiscal 2022 due to an increasing number of wide-release films released to movie theatres resulting in increased attendance, increased revenues per person, and continuing cost controls, as described in the Theatres section above. Our hotels and resorts division Adjusted EBITDA decreased during fiscal 2023 due to the impact of sale of the Skirvin Hilton, partially offset by improved occupancy percentages and ADR, and continuing cost controls, as described in the Hotels and Resorts section above.
Previous report
(3)Reflects nonrecurring state government grants and federal tax credits awarded to our theatres and hotels for COVID-19 pandemic relief.
Previous report
4.02% Senior Notes and 4.32% Senior Notes
Previous report
Convertible Notes
Previous report
On September 17, 2020, we entered into a purchase agreement (the “Purchase Agreement”) with J.P. Morgan Securities LLC, as representative of the several initial purchasers (the “Initial Purchasers”), to issue and sell $100.05 million aggregate principal amount of our 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes”) of which an aggregate principal amount of $13.05 million of Notes was issued pursuant to the exercise by the Initial Purchasers of their option to purchase additional Convertible Notes. We offered and sold the Convertible Notes to the Initial Purchasers in reliance on the exemption from registration provided by Section 4(a) (2) of the Securities Act, and for resale by the Initial Purchasers to persons reasonably believed to be qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. We relied on these exemptions from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement. The shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”), issuable upon conversion of the Convertible Notes, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. To the extent that any shares of the Common Stock are issued upon conversion of the Convertible Notes, they will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof because no commission or other remuneration is expected to be paid in connection with conversion of the Convertible Notes and any resulting issuance of shares of the Common Stock. The Purchase Agreement includes customary representations, warranties and covenants by us and customary closing conditions. Under the terms of the Purchase Agreement, we agreed to indemnify the Initial Purchasers against certain liabilities.
Previous report
The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between our company and U.S. Bank National Association, as trustee. The net proceeds from the sale of the Convertible Notes were approximately $78.6 million (after deducting the Initial Purchasers’ fees and our estimated fees and expenses related to the offering and the cost of the capped call transactions). We used approximately $16.9 million of net proceeds from the offering to pay the cost of the Capped Call Transactions (as defined below). We used the remainder of the net proceeds from the offering to repay borrowings under our revolving credit facility and for general corporate purposes. The Convertible Notes are senior unsecured obligations and rank (i) senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Convertible Notes; (ii) equal in right of payment to any of our unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
Previous report
The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00% per year. Interest will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021. The Convertible Notes may bear additional interest under specified circumstances relating to our failure to comply with our reporting obligations under the Indenture or if the Convertible Notes are not freely tradable as required by the Indenture. The Convertible Notes will mature on September 15, 2025, unless earlier repurchased or converted. Prior to March 15, 2025, the Convertible Notes will be convertible at the option of the holders only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending on December 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period immediately after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
Previous report
Upon conversion, the Convertible Notes may be settled, at our election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate was 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $11.01 per share of Common Stock), representing an initial conversion premium of approximately 22.5% to the $8.99 last reported sale price of the Common Stock on The New York Stock Exchange on September 17, 2020. The conversion rate is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At December 28, 2023, the adjusted conversion rate is 92.82 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $10.77 per share of Common Stock). If we undergo certain fundamental changes, holders of Convertible Notes may require us to repurchase for cash all or part of their Convertible Notes for a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change occurs prior to the maturity date, we will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. We may not redeem the Convertible Notes before maturity and no “sinking fund” is provided for the Convertible Notes. The Indenture includes covenants customary for securities similar to the Convertible Notes, sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving our company and certain of our subsidiaries after which the Convertible Notes become automatically due and payable.
Previous report
During our fiscal 2021 second, third and fourth quarters, all quarters during fiscal 2022 and fiscal 2023, and our fiscal 2024 first quarter, the Convertible Notes were (are) eligible for conversion at the option of the holders as the last reported sale price of the Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days during the last 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. We have the ability to settle the conversion in Common Stock.
Previous report
Capped Call Transactions
Previous report
As of December 28, 2023, we had entered into a new office lease that had not yet commenced. The new office lease is for an eleven year term beginning in fiscal 2024 and ending in fiscal 2035, excluding extension options. The contractual obligations related to the new office lease are included in operating lease obligations above, but are not included in operating lease liabilities in the consolidated balance sheet as of December 28, 2023 as the lease has not yet commenced.
Previous report
On March 1, 2018, we entered into two interest rate swap agreements covering $50.0 million of floating rate debt which required us to pay interest at a defined fixed rate while receiving interest at a defined variable rate of one-month LIBOR. The first swap had a notional amount of $25.0 million, expired on March 1, 2021 and had a fixed rate of 2.559%. The second swap had a notional amount of $25.0 million, expired on March 1, 2023 and had a fixed rate of 2.687%. The interest rate swaps were considered effective for accounting purposes and qualified as cash flow hedges. These swap agreements did not materially impact our fiscal 2023 earnings.
Previous report
During the first quarter of fiscal 2022, we adopted Accounting Standards Update (ASU) No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in this update provide increased transparency of government assistance including the requirement of certain disclosures in a company’s notes to the consolidated financial statements about transactions with a government. The adoption of the new standard did not have a material effect on our consolidated financial statements.
Reworded paragraphs (87)
Previous wording
Fiscal 2021 was a 52-week year, beginning on January 1, 2021 and ending on December 30, 2021. Fiscal 2022 was a 52-week year, beginning on December 31, 2021 and ending on December 29, 2022. Fiscal 2023 was a 52-week year, beginning on December 30, 2022 and ending on December 28, 2023.
Current wording
For fiscal 2024 and prior periods, we reported our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December, dividing our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Fiscal 2022 was a 52-week year, beginning on December 31, 2021 and ending on December 29, 2022. Fiscal 2023 was a 52-week year, beginning on December 30, 2022 and ending on December 28, 2023. Fiscal 2024 was a 52-week year, beginning on December 29, 2023 and ending on December 26, 2024.
Previous wording
Fiscal 2021 and fiscal 2022 results by quarter were significantly impacted by the COVID-19 pandemic, which impacted our results throughout fiscal 2021 and during the first half of fiscal 2022. Under normal conditions, our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. The quality of film product in any given quarter typically impacts the operating results in our theatre division. Our second and third fiscal quarters generally produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December impacts the results of our fiscal first and fourth quarters in that division, particularly when we have a 53-week year.
Current wording
Our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. The quality of film product in any given quarter typically impacts the operating results in our theatre division. Our second and third fiscal quarters generally produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December impacts the results of our fiscal first and fourth quarters in that division. The first quarter of fiscal 2025 will include five days during the week between Christmas and New Year’s Eve, and will end on March 31, 2025 due to the change in our fiscal year discussed above.
Previous wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally discusses fiscal 2023 and fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022. Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this MD&A can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2022. Within this MD&A amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.
Current wording
Our primary operations are reported in two business segments: theatres, and hotels and resorts. This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally discusses fiscal 2024 and fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023. Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this MD&A can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2023. Within this MD&A amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.
Previous wording
The COVID-19 pandemic did not materially impact our results during fiscal 2023. For discussion regarding the impact of the COVID-19 pandemic and related economic conditions on our results for fiscal 2022 and fiscal 2021, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2022. For discussion regarding potential impacts of future pandemics refer to the discussion of our operational risks and financial risks found above in “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
Current wording
The COVID-19 pandemic had an unprecedented impact on the world and both of our business segments from fiscal 2020 through fiscal 2022. Fiscal 2022 results by quarter were significantly impacted by the COVID-19 pandemic during the first half of fiscal 2022. For further discussion regarding the impact of the COVID-19 pandemic and related economic conditions on our results for fiscal 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2022. For discussion regarding potential impacts of future pandemics refer to the discussion of our operational risks and financial risks found above in “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
Previous wording
Our aggregate cash capital expenditures, acquisitions and purchases of interests in, and contributions to, joint ventures were $38.8 million during fiscal 2023, compared to $36.8 million during fiscal 2022 and $19.5 million during fiscal 2021. We currently estimate that cash capital expenditures will increase during fiscal 2024 to the $60 - $75 million range with significant investments in our hotels division as discussed below. We will, however, continue to monitor our operating results and economic and industry conditions so that we may adjust our plans accordingly.
Current wording
Our aggregate cash capital expenditures, acquisitions and net purchases of interests in, and contributions to, joint ventures were $83.3 million during fiscal 2024, compared to $38.8 million during fiscal 2023 and $36.8 million during fiscal 2022. We currently estimate that cash capital expenditures during fiscal 2025 will be in the $70 - $85 million range, with significant investments in our hotels division as discussed below. We will, however, continue to monitor our operating results and economic and industry conditions so that we may adjust our plans accordingly.
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•Maximize and leverage our current assets in a post-pandemic world. We have invested approximately $406 million to further enhance the movie-going experience and amenities in new and existing theatres over the last ten-plus years. These investments have included:
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•Maximize and leverage our current assets. We have invested approximately $389 million to further enhance the movie-going experience and amenities in new and existing theatres over the last ten years. These investments have included:
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◦DreamLounger SM recliner seating additions. As of December 28, 2023, we offered all DreamLounger recliner seating in 66 theatres, representing approximately 84% of our theatres. Including our premium, large format (PLF) auditoriums with recliner seating, as of December 28, 2023, we offered our DreamLounger recliner seating in approximately 87% of our screens, a percentage we believe to be the highest among the largest theatre chains in the nation.
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◦DreamLounger SM recliner seating additions. As of December 26, 2024, we offered all DreamLounger recliner seating in 67 theatres, representing approximately 86% of our company-owned theatres. Including our premium, large format (PLF) auditoriums with recliner seating, as of December 26, 2024, we offered our DreamLounger recliner seating in approximately 88% of our company-owned screens, a percentage we believe to be the highest among the largest theatre chains in the nation.
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◦Ultra Screen DLX®, Super Screen DLX® (DreamLounger eXperience) and ScreenX conversions. As of December 28, 2023, we had a total of 125 premium large format (“PLF”) screens at 65 of our theatre locations (31 Ultra Screen DLX auditoriums, one traditional Ultra Screen® auditorium, 89 Super Screen DLX auditoriums - a slightly smaller screen than an Ultra Screen but with the same DreamLounger seating and Dolby Atmos sound - and three IMAX® PLF screens). In fiscal 2023, we introduced our first ScreenX auditorium featuring 270-degree projection providing guests with an immersive viewing experience. As of December 28, 2023, we offered at least one PLF screen in approximately 82% of our theatres – once again a percentage we believe to be the highest percentage among the largest theatre chains in the nation. Our PLF screens generally have higher per-screen revenues and draw customers from a larger geographic region compared to our standard screens, and we charge a premium price to our guests for this experience.
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◦Ultra Screen DLX®, Super Screen DLX® (DreamLounger eXperience) and ScreenX conversions. As of December 26, 2024, we had a total of 125 PLF screens at 65 of our theatre locations (31 Ultra Screen DLX auditoriums, one traditional Ultra Screen® auditorium, 89 Super Screen DLX auditoriums - a slightly smaller screen than an Ultra Screen but with the same DreamLounger seating and Dolby Atmos sound - and three IMAX® PLF screens). In fiscal 2023, we introduced our first ScreenX auditorium featuring 270-degree projection providing guests with an immersive viewing experience. As of December 26, 2024, we offered at least one PLF screen in approximately 83% of our company-owned theatres, once again a percentage we believe to be the highest percentage among the largest theatre chains in the nation. In addition, as of December 26, 2024 we offered more than one PLF screen in approximately 62% of our company-owned theatres, which we believe gives us significant operational flexibility to maximize revenue by showing more than one major film on PLF screens at a theatre, particularly during opening weekends for films and at peak times during the year. Our PLF screens generally have higher per-screen revenues and draw customers from a larger geographic region compared to our standard screens, and we charge a premium price to our guests for this experience.
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◦Signature cocktail and dining concepts. We have continued to further enhance our food and beverage offerings within our existing theatres. We believe our 50-plus years of food and beverage experience in the hotel and restaurant businesses provides us with a unique advantage and expertise that we can leverage to further grow revenues in our theatres. As of December 28, 2023, we offered bars/full liquor service under the concepts Take Five® Lounge, Take Five Expressand The Tavern at 49 theatres, representing approximately 62% of our theatres. As of December 28, 2023, we also offered one or more in-lobby dining concepts, including the pizza concept Zaffiro’s® Express and hamburger and other Americana fare concept Reel Sizzle®, in 39 theatres, representing approximately 66% of our theatres
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◦Signature cocktail and dining concepts. We have continued to further enhance our food and beverage offerings within our existing theatres. We believe our 50-plus years of food and beverage experience in the hotel and restaurant businesses provides us with a unique advantage and expertise that we can leverage to further grow revenues in our theatres. As of December 26, 2024, we offered bars/full liquor service under the concepts Take Five Lounge, Take Five Expressand The Tavern at 49 theatres, representing approximately 63% of our company-owned theatres. As of December 26, 2024, we also offered one or more in-lobby dining concepts, including the pizza concept Zaffiro’s® Express and hamburger and other Americana fare concept Reel Sizzle, in 40 theatres, representing approximately 69% of our company-owned theatres (excluding our in-theatre dining theatres). In select locations without a
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(excluding our in-theatre dining theatres). In select locations without a Take Five Lounge outlet, we offer beer and wine at the Zaffiro’s Express outlet. We also operate three Zaffiro’s® Pizzeria and Bar full-service restaurants.
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Take Five Lounge outlet, we offer beer and wine at the Zaffiro’s Express outlet. We also operate three Zaffiro’s® Pizzeria and Bar full-service restaurants.
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◦In-theatre dining concepts. As of December 28, 2023, we offered in-theatre dining with a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 29 theatres and a total of 227 auditoriums, operating under the names Big Screen Bistro SM, Big Screen Bistro Express SM, Bistro Plex® and Movie Tavern by Marcus, representing approximately 37% of our theatres.
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◦In-theatre dining concepts. As of December 26, 2024, we offered a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 29 theatres, representing approximately 37% of our company-owned theatres, through two service models. At 21 theatres we offer in-theatre dining operating under the Bistro Plex® and Movie Tavern by Marcus brands. In addition, at 8 theatres operating under the Marcus Theatres brand, we offer the same complete menu available for order at the concession stand, bar, or our online/mobile app with food pickup at the concession stand.
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During fiscal 2024 and beyond, we expect to execute on a number of strategies to further maximize and leverage our existing assets in a post-pandemic world. These strategies are expected to include:
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During fiscal 2025 and beyond, we expect to execute on a number of strategies to further maximize and leverage our existing assets. These strategies are expected to include:
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◦Expanding and evolving our food and beverage operations described above. We will continue to test new concepts and enhance our existing concepts in order to provide further options to our guests and increase our average concession/food and beverage revenues per person. Strategies may also include expanded sports programming, live bingo and other entertainment options in our signature bars.
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◦Expanding and evolving our food and beverage operations described above. We will continue to test new concepts and enhance our existing concepts in order to provide further options to our guests and increase our average concession/food and beverage revenues per person. Strategies may also include expanded sports programming, live bingo and other entertainment options in our signature bars. Additionally, we expect to continue refining the service model at our Movie Tavern locations to optimize the use of servers and/or add additional concessions stands and maximize our food and beverage revenues.
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◦Evolving and investing in what we believe to be our best-in-class customer loyalty program called Magical Movie Rewards SM (“MMR”). We currently have approximately 5.9 million members enrolled in the program. Approximately 45% of all box office transactions and 38% of total transactions in our theatres during fiscal 2023 were completed by registered members of the loyalty program. We believe that this program contributes to increased movie-going frequency, more frequent visits to the concession stand, increased loyalty to Marcus Theatres and, ultimately, improved operating results. In fiscal 2024, we plan to make additional investments in technology that will provide further insights into loyalty data on customer preferences, habits and tendencies, facilitating more targeted and effective marketing efforts that are tailored to MMR members.
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◦Evolving and investing in what we believe to be our best-in-class customer loyalty program called Magical Movie Rewards SM (“MMR”). We currently have approximately 6.5 million members enrolled in the program. Approximately 48% of all box office transactions and 41% of total transactions in our theatres during fiscal 2024 were completed by registered members of the loyalty program. We believe that this program contributes to increased movie-going frequency, more frequent visits to the concession stand, increased loyalty to Marcus Theatres and, ultimately, improved operating results. In fiscal 2025, we plan to make additional investments in technology that will provide further insights into loyalty data on customer preferences, habits and tendencies, facilitating more targeted and effective marketing efforts that are tailored to MMR members.
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◦Modernizing pricing strategies based upon consumer demand. We currently offer a number of very successful pricing promotions, including “Value Tuesday,” “Student Thursday” and “Young-at-Heart” program for seniors on Friday afternoons. We believe these promotions have increased movie going frequency and reached a customer who may have stopped going to the movies because of price, without adversely impacting the movie-going habits of our regular weekend customers. Conversely, we charge a higher ticket price for PLF screens and have implemented higher pricing on Friday and Saturday evenings during certain peak moviegoing times of the year. We expect to continue to optimize revenue management and implement additional pricing strategies based upon consumer demand.
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◦Modernizing pricing strategies based upon consumer demand. We currently offer a number of very successful pricing promotions, including “Value Tuesday,” “Student Thursday” and a “Young-at-Heart” program for seniors on Friday afternoons. During fiscal 2024, we also introduced a $7 Everyday Matinee for seniors and children, offering a discounted $7 admission for showtimes before 4 p.m. We believe these promotions have increased movie going frequency and reached a customer who may have stopped going to the movies because of price, without adversely impacting the movie-going habits of our regular weekend customers. Conversely, we charge a higher ticket price for PLF screens and have implemented higher pricing on Friday and Saturday evenings during certain peak moviegoing times of the year. We expect to continue to optimize revenue management and implement additional pricing strategies based upon consumer demand.
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◦Expanding the use of technology in all facets of our business. We continue to enhance our mobile ticketing capabilities, our downloadable Marcus Theatres mobile application and ourmarcustheatres.com website. We added food and beverage ordering capabilities to our mobile application at all of our theatres in fiscal 2020. In fiscal 2024 we plan to make additional investments in our website technology to further improve ease-of-use and the overall customer experience for both ticketing and food and beverage ordering. We have continued to install additional theatre-level technology, such as new ticketing and food ordering kiosks, new digital menu boards and concession advertising monitors. Each of these enhancements is designed to improve customer interactions, both at the theatre and through mobile platforms and other electronic devices, while enhancing add-on food and beverage sales opportunities through promotion and on-screen offers. We also believe that maximizing the use of these technology enhancements will improve labor productivity and efficiency.
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◦Expanding the use of technology in all facets of our business. We continue to enhance our mobile ticketing capabilities, our downloadable Marcus Theatres mobile application and ourmarcustheatres.com website. We added food and beverage ordering capabilities to our mobile application at all of our theatres in fiscal 2020. In fiscal 2025 we plan to make additional investments in both our website and mobile app technology to further improve ease-of-use and the overall customer experience for both ticketing and food and beverage ordering. We have continued to install additional theatre-level technology, such as new ticketing and food ordering kiosks, new digital menu boards and concession advertising monitors. Each of these enhancements is designed to improve customer interactions, both at the theatre and through mobile platforms and other electronic devices, while enhancing add-on food and beverage sales opportunities through promotion and on-screen offers. We also believe that maximizing the use of these technology enhancements will improve labor productivity and efficiency.
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◦Continually evaluating the financial viability of our existing assets. During fiscal 2021, we made the decision to not reopen three theatres that had previously closed due to the COVID-19 pandemic, consisting of one former budget-oriented theatre and two Movie Tavern theatres with leases that were expiring within the next year. During fiscal 2023, we made decisions to close several underperforming theatres, including three owned theatres in Minnesota and two owned theatres and one leased theatre in Wisconsin. In evaluating the viability of our theatres we consider financial performance, lease terms (if applicable), future maintenance capital requirements, strategic importance and opportunities to consolidate our operations within local markets, among other factors.
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◦Continually evaluating the financial viability of our existing assets. During fiscal 2023, we made decisions to close several underperforming theatres, including three owned theatres in Minnesota and two owned theatres and one leased theatre in Wisconsin. During fiscal 2024, we closed one underperforming leased location in Iowa. In early fiscal 2025, we closed one underperforming Movie Tavern theatre with an expiring lease in Texas. In evaluating the viability of our theatres we consider financial performance, lease terms (if applicable), future maintenance capital requirements, strategic importance and opportunities to consolidate our operations within local markets, among other factors.
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◦Regularly upgrading and remodeling our theatres to keep them fresh. To maintain our existing theatres and accomplish the strategies noted above and below, we currently anticipate that our fiscal 2024 capital expenditures in this division will total approximately $15 - $20 million.
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◦Regularly upgrading and remodeling our theatres to keep them fresh. To maintain our existing theatres and accomplish the strategies noted above and below, we currently anticipate that our fiscal 2025 capital expenditures in this division will total approximately $20 - $25 million.
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◦Expanding electronic passports with packaged film series. In fiscal 2023, we launched Marcus Passport, a program that allows customers to purchase a passport ticket with access to every movie that is playing as part of a Marcus Theatres film series, priced at a discount to purchasing tickets for each movie individually. Our film series showcase multiple movies that celebrate specific genres, holidays, franchises, filmmakers and more. The program launched with a Best Picture Passport featuring the ten Academy Awards Best Picture nominees, followed by additional series throughout the year including winter and summer Kids Dream Passports each featuring twelve family films, Flashback Cinema Passport, Hunger Games Passport, The Chosen Passport, Disney Pixar Passport and a holiday Seasons’ Screening Passport. We expect to continue to expand our Marcus Passport offerings in fiscal 2024.
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◦Expanding electronic passports with packaged film series. In fiscal 2023, we launched Marcus Passport, a program that allows customers to purchase a passport ticket with access to every movie that is playing as part of a Marcus Theatres film series, priced at a discount to purchasing tickets for each movie individually. Our film series showcase multiple movies that celebrate specific genres, holidays, franchises, filmmakers and more. The program launched in fiscal 2023 with a Best Picture Passport featuring the ten Academy Awards Best Picture nominees, followed by additional series throughout the year including winter and summer Kids Dream Passports each featuring twelve family films, Flashback Cinema Passport, Hunger Games Passport, The Chosen Passport, Disney Pixar Passport and a holiday Seasons’ Screening Passport. In fiscal 2024, we grew the program from 19 to 22 passport series, including a mix of newly released films, retro films, and a combination of newly released and retro films.
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◦Exploring new viewing experiences for our guests. For example, we currently offer a 4DX auditorium at one of our theatres. 4DX delivers an immersive multi-sensory cinematic experience, including synchronized motion seats and environmental effects such as water, wind, fog, scent and more, to enhance the action on screen. In fiscal 2023, we converted one of our existing auditoriums to a ScreenX auditorium. ScreenX is a panoramic film format that presents films with expanded, dual-sided, 270- degree screens projected on the walls in a theatre. We will consider additional experiential offerings in the future.
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◦Exploring new viewing experiences for our guests. For example, we currently offer a 4DX auditorium at one of our theatres. 4DX delivers an immersive multi-sensory cinematic experience, including synchronized motion seats and environmental effects such as water, wind, fog, scent and more, to enhance the action on screen. In fiscal 2023, we converted one of our existing auditoriums to a ScreenX auditorium. ScreenX is a panoramic film format that presents films with expanded, dual-sided, 270-degree screens projected on the walls in a theatre. In fiscal 2025, we plan to convert several additional screens to ScreenX and we will consider additional experiential offerings in the future.
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◦Acquisitions. Acquisitions of existing theatres or theatre circuits has been a viable growth strategy for us. In February 2019, we acquired the assets of Movie Tavern®, a New Orleans-based industry leading circuit known for its in-theatre dining concept featuring chef-driven menus, premium quality food and drink and luxury seating. The acquired circuit consisted of 208 screens at 22 locations in nine states. The purchase price consisted primarily of shares of our common stock. The acquisition of the Movie Tavern circuit increased our total number of screens at that time by an additional 23%.
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◦Acquisitions. Acquisitions of existing theatres or theatre circuits has been a viable growth strategy for us. In February 2019, we acquired the assets of Movie Tavern®, a New Orleans-based industry leading circuit known for its in-theatre dining concept featuring chef-driven menus, premium quality food and drink and luxury seating. The acquired circuit consisted of 208 screens at 22 locations in nine states. The acquisition of the Movie Tavern circuit increased our total number of screens at that time by an additional 23%.
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Now branded Movie Tavern by Marcus, we subsequently introduced new amenities to select Movie Tavern theatres, including our proprietary PLF screens and DreamLounger recliner seating, signature programming, such as Value Tuesday with discounted concessions, food and non-alcoholic beverages for loyalty members, and proven marketing, loyalty and pricing programs that will continue to benefit Movie Tavern guests in the future.
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Now branded Movie Tavern by Marcus, we subsequently introduced new amenities to select Movie Tavern theatres, including our proprietary PLF screens, DreamLounger recliner seating, and additional concession stands; signature programming, such as Value Tuesday with free complimentary-sized popcorn for loyalty members; and proven marketing, loyalty and pricing programs that benefit customers and leverage the overall scale of our theatre circuit.
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The COVID-19 pandemic and industry labor strikes have been challenging for all theatre operators. A number of theatre operators have filed for bankruptcy relief and many others are facing difficult financial circumstances. We will continue to evaluate the opportunities that these challenging situations create, and will consider potential acquisitions in the future. The movie theatre industry is very fragmented, with approximately 50% of United States screens owned by the three largest theatre circuits and the other 50% owned by an estimated 800 smaller operators, making it very difficult to predict when acquisition opportunities may arise. We do not believe that we are geographically constrained, and we believe that we may be able to add value to certain theatres through our various proprietary amenities and operating expertise.
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The years following the COVID-19 pandemic have been challenging for all theatre operators. We will continue to evaluate the opportunities that these challenging situations create, and will consider potential acquisitions in the future. The movie theatre industry is very fragmented, with approximately 50% of United States screens owned by the three largest theatre circuits and the other 50% owned by an estimated 800 smaller operators, making it very difficult to predict when acquisition opportunities may arise. We do not believe that we are geographically constrained, and we believe that we may be able to add value to certain theatres through our various proprietary amenities and operating expertise.
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◦Management contracts and/or taking over existing theatre leases. In some cases, existing theatres have been returned to landlords. We will consider either managing theatres for existing owners/landlords or entering into new, financially viable lease arrangements if such opportunities arise.
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◦Management contracts and/or taking over existing theatre leases. In some cases, existing theatres have been returned to landlords. We will consider either managing theatres for existing owners/landlords or entering into new, financially viable lease arrangements if such opportunities arise. In fiscal 2024, we entered into an agreement to assume operations of the West End Cinema, a 14 screen theatre in St. Louis Park, Minnesota.
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•Operational excellence and financial discipline. We have always been, and will continue to be, focused on improving the quality of the guest experience, our portfolio of assets, and our associate working environment, with a long-term view of financial success and profitability. During fiscal 2024 and beyond, we expect to execute on a number of strategies to further maximize and leverage our existing assets. These strategies are expected to include:
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•Operational excellence and maximizing performance. We have always been, and will continue to be, focused on improving the quality of the guest experience, our portfolio of assets, and our associate working environment, with a long-term view of financial success and profitability. During fiscal 2025 and beyond, we expect to execute on a number of strategies to further maximize and leverage our existing assets. These strategies are expected to include:
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◦Multiple strategies that are intended to further grow the division’s revenues and profits. Our focus on excellence will continue in fiscal 2024, with guest experience at the forefront. Strategies will include leveraging our food and beverage expertise to further distinguish us from our competition. In addition to rebuilding our banquet and catering business as group demand improves, we will leverage hotel food and beverage concepts developed by our Marcus Restaurant Group, featuring premier brands such as Mason Street Grill, ChopHouse®, Miller Time® Pub & Grilland SafeHouse® restaurants.
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◦Multiple strategies that are intended to further grow the division’s revenues and profits. Our focus on excellence will continue in fiscal 2025, with guest experience at the forefront. Strategies will include leveraging our food and beverage expertise to further distinguish us from our competition. In addition to growing our banquet and catering business as we continue to target group sales opportunities, we will leverage hotel food and beverage concepts developed by our Marcus Restaurant Group, featuring premier brands such as Mason Street Grill®, ChopHouse®, Miller Time® Pub & Grilland SafeHouse® restaurants.
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◦Sales, marketing and revenue management strategies designed to further increase our profitability. The priority will be to focus on capitalizing on strong leisure and improving group demand trends, maximizing revenue per available room, optimizing event space and growing ancillary revenues.
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◦Sales, marketing and revenue management strategies designed to further increase our profitability. The priority will be to focus on capitalizing on strong group demand and improving business travel trends, maximizing revenue per available room, optimizing event space and growing ancillary revenues.
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•Portfolio management. We have invested approximately $199 million to further enhance our hotels and resorts portfolio over the last 10 years. These investments have included:
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•Portfolio management. We have invested approximately $230 million to further enhance our hotels and resorts portfolio over the last 10 years. These investments have included:
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◦Hotel renovations. We regularly renovate and update our hotels and resorts. For example, at the Grand Geneva Resort & Spa we renovated the lobby in fiscal 2021, completed guest room renovations in fiscal 2023 and began a meeting space renovation project that is expected to be completed in fiscal 2024. At The Pfister Hotel, we completed a ballroom and meeting space renovation in fiscal 2023 and began a guest room renovation project that is expected to be completed in fiscal 2024.
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◦Hotel renovations. We regularly renovate and update our hotels and resorts. For example, at the Grand Geneva Resort & Spa we renovated the lobby in fiscal 2021, completed guest room renovations in fiscal 2023, completed a meeting space renovation project in fiscal 2024, and started construction on a new 10-hole golf short course late in fiscal 2024. At The Pfister Hotel, we completed a ballroom and meeting space renovation in fiscal 2023 and completed a guest room renovation project in fiscal 2024. Additionally, we began an approximately $40 million renovation at the Hilton Milwaukee in late fiscal 2024 that will include a transformation of 554 guest rooms, meeting and event spaces, and the hotel lobby, which is expected to be completed in fiscal 2025.
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◦Hotel branding changes. We closed the InterContinental Milwaukee in early January 2019 and undertook a substantial renovation project that converted this hotel into the unbranded experiential arts hotel, Saint Kate - The Arts Hotel. The newly renovated hotel reopened during June 2019.
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◦Hotel branding changes. We closed the InterContinental Milwaukee in early January 2019 and undertook a substantial renovation project that converted this hotel into an independent experiential arts hotel, Saint Kate - The Arts Hotel. The newly renovated hotel reopened during June 2019.
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Our future plans for our hotels and resorts division also include continued reinvestment in our existing properties to maintain and enhance their value. We anticipate additional reinvestments during fiscal 2024 and fiscal 2025 at the Grand Geneva Resort & Spa, The Pfister Hotel and the Hilton Milwaukee City Center. To maintain our existing hotels and resorts, we currently anticipate that our fiscal 2024 capital expenditures in this division will total approximately $40 - $50 million.
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Our future plans for our hotels and resorts division also include continued reinvestment in our existing properties to maintain and enhance their value. We anticipate additional reinvestment during fiscal 2025 and fiscal 2026 at the Grand Geneva Resort & Spa, Hilton Milwaukee and AC Hotel Chicago. To maintain our existing hotels and resorts, we currently anticipate that our fiscal 2025 capital expenditures in this division will total approximately $50 - $60 million, with significant investment in the renovation at Hilton Milwaukee.
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In fiscal 2021, we formed a joint venture with funds managed by Searchlight Capital Partners (“Searchlight”), a leading global private investment firm, to co-invest in lifestyle hotels, resorts and high-quality full-service properties. Through this joint venture, we acquired the Kimpton Hotel Monaco Pittsburgh in December 2021, which we manage. We hope to acquire additional hotels using this strategy in fiscal 2024 and beyond.
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In fiscal 2021, we formed a joint venture with funds managed by Searchlight Capital Partners (“Searchlight”), a leading global private investment firm, to acquire the Kimpton Hotel Monaco Pittsburgh in December 2021, which we manage. In March 2024, we formed a joint venture with Hempel Real Estate (“Hempel”) and Robinson Park (“RP”) to acquire the Loews Minneapolis Hotel, which we manage. The acquired hotel was rebranded as The Lofton Hotel under the Tapestry Collection by Hilton flag. We hope to acquire additional hotels using this strategy in fiscal 2025 and beyond.
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•In addition to operational and growth strategies in our operating divisions, we will continue to seek additional opportunities to enhance shareholder value, including strategies related to our dividend policy and share repurchases. We increased our regular quarterly common stock cash dividend rate by 40% during the third quarter of fiscal 2023, increasing our quarterly cash dividend from $0.05 to $0.07 per share of common stock. In prior years, we have periodically paid special dividends and repurchased shares of our common stock under our existing Board of Directors stock repurchase authorizations.
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•In addition to operational and growth strategies in our operating divisions, we will continue to seek additional opportunities to enhance shareholder value, including strategies related to our dividend policy and share repurchases. During fiscal 2024, we repurchased 0.7 million shares of our common stock for $9.7 million in the open market under our existing Board of Directors stock repurchase authorizations and continued our regular quarterly common stock cash dividend of $0.07 per share of common stock. In prior years, we have periodically paid special dividends.
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•We will also continue to evaluate opportunities to sell real estate when appropriate, allowing us to benefit from the underlying value of our real estate assets. When possible, we will attempt to avail ourselves of the provisions of Internal Revenue Code §1031 related to tax-deferred like-kind exchange transactions. We are actively marketing a number of pieces of surplus real estate and other non-core real estate. During fiscal 2022, we sold surplus land parcels generating total proceeds of $4.9 million. During fiscal 2023, we sold one surplus land parcel and two former theatres generating total proceeds of $4.2 million. We believe we may receive total sales proceeds from real estate sales during the next fiscal year totaling approximately $3 - $5 million, depending upon demand for the real estate in question.
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•We will also continue to evaluate opportunities to sell real estate when appropriate, allowing us to benefit from the underlying value of our real estate assets. When possible, we will attempt to avail ourselves of the provisions of Internal Revenue Code §1031 related to tax-deferred like-kind exchange transactions. We are actively marketing a number of pieces of surplus real estate and other non-core real estate. During fiscal 2023, we sold one surplus land parcel and two former theatres generating total proceeds of $4.2 million. During fiscal 2024, we sold one former theatre generating total proceeds of $3.1 million. We believe we may receive total sales proceeds from real estate sales during the next fiscal year totaling approximately $2 - $3 million, depending upon demand for the real estate in question.
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The following table sets forth revenues, operating income (loss), other income (expense), net earnings (loss) attributable to The Marcus Corporation and net earnings (loss) per diluted common share for the past three fiscal years (in millions, except for per share and percentage change data) :
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The following table sets forth revenues, operating income, other income (expense), net earnings (loss) attributable to The Marcus Corporation and net earnings (loss) per diluted common share for the past three fiscal years (in millions, except for per share and percentage change data) :
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Operating expenses from our corporate items, which include amounts not allocable to the business segments, increased during fiscal 2023 compared to fiscal 2022 due primarily to increased short-term and long-term incentive compensation expenses.
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Operating income decreased during fiscal 2024 compared to fiscal 2023, primarily due to a decrease in operating income from our theatre division and an increase in corporate operating losses, partially offset by increased operating income from our hotels and resorts division. Operating expenses from our corporate items, which include amounts not allocable to the business segments, increased during fiscal 2024 compared to fiscal 2023 due primarily to increased long-term incentive compensation expenses, professional fees related to convertible debt repurchase transactions and tax planning, and expenses related to the relocation of our corporate office.
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Our operating income during fiscal 2023 was negatively impacted by impairment charges of approximately $1.1 million, or approximately $0.02 per diluted common share, related to two permanently closed theatres and surplus real estate that we intend to sell. Our operating income during fiscal 2022 was negatively impacted by impairment charges of approximately $1.5 million, or approximately $0.04 per diluted common share, primarily related to two operating theatres.
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Our operating income during fiscal 2024 was negatively impacted by impairment charges of approximately $6.8 million, or approximately $0.16 per diluted common share, related to four operating theatres, one operating theatre that we closed in early fiscal 2025, and one permanently closed theatre. Our operating income during fiscal 2023 was negatively impacted by impairment charges of approximately $1.1 million, or approximately $0.02 per diluted common share, primarily related to two permanently closed theatres and surplus real estate. Operating income during fiscal 2024 was also negatively impacted by $2.2 million, or $0.05 per diluted common share, related to settlement and legal expenses in connection with an equipment lease agreement impacted by the COVID-19 pandemic in our theatre division.
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Investment income was $2.4 million during fiscal 2023 compared to an insignificant investment loss during fiscal 2022. Investment income (loss) includes interest earned on cash and cash equivalents, as well as increases/decreases in the value of marketable securities and increases in the cash surrender value of a life insurance policy. Investment income (loss) during fiscal 2024 may vary compared to fiscal 2023, primarily dependent upon changes in the value of marketable securities.
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Investment income was $2.2 million during fiscal 2024 compared to $2.4 million of investment income during fiscal 2023. Investment income (loss) includes interest earned on cash and cash equivalents, as well as increases/decreases in the value of marketable securities and increases in the cash surrender value of a life insurance policy. Investment income (loss) during fiscal 2025 may vary compared to fiscal 2024, primarily dependent upon changes in the value of marketable securities.
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MD&A below. Interest expense during fiscal 2023 included approximately $1.1 million of nonrecurring additional interest payable on our convertible notes incurred related to the removal of the restrictive legend and assignment of an unrestricted CUSIP on the convertible notes. In addition, interest expense during fiscal 2023 included approximately $1.5 million in noncash amortization of debt issuance costs. During fiscal 2024, we estimate that noncash amortization of debt issuance costs will be approximately $1.4 million, excluding the impact of any new debt issuance costs. We currently expect our total interest expense to decrease during fiscal 2024 primarily due to decreased borrowings. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.
Current wording
Interest expense totaled $11.0 million during fiscal 2024, a decrease of $1.7 million, or 13.7%, compared to interest expense of $12.7 million during fiscal 2023. The decrease in interest expense during fiscal 2024 was due primarily to $1.1 million of additional interest payable on our convertible notes during fiscal 2023 that did not recur, a decrease in noncash amortization of debt issuance costs, and lower borrowing levels during fiscal 2024, partially offset by an increase in our average interest rate, as discussed in the Liquidity section of this MD&A below. Interest expense during fiscal 2024 included approximately $1.1 million in noncash amortization of debt issuance costs. During fiscal 2025, we estimate that noncash amortization of debt issuance costs will be approximately $0.6 million, excluding the impact of any new debt issuance costs. We currently expect our total interest expense during fiscal 2025 to remain consistent with interest expense in fiscal 2024. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.
Previous wording
We incurred other expense of $1.8 million during fiscal 2023, an increase of approximately $0.8 million compared to other expense of $1.1 million during fiscal 2022. Other expense consists primarily of the non-service cost components of our periodic pension costs and net gains (losses) on disposition of property, equipment and other assets. Net losses on disposition of property, equipment and other assets were insignificant during fiscal 2023. Net gains on disposition of property, equipment and other assets were $1.1 million during fiscal 2022. The net gains on disposition of property, equipment and other assets during fiscal 2022 included the sale of surplus land, partially offset by losses on items disposed of during the year by both divisions. The timing of our periodic sales and disposals of property, equipment and other assets results in variations each year in the gains or losses that we report on dispositions of property, equipment and other assets. We anticipate the potential for additional disposition gains or losses from periodic sales of property, equipment and other assets, during fiscal 2024 and beyond, as discussed in more detail in the “Current Plans” section of this MD&A. Based upon information from an actuarial report for our pension plans, we expect other expense to be approximately $2.0 million during fiscal 2024.
Current wording
We incurred other expense of $1.5 million during fiscal 2024, a decrease of approximately $0.3 million compared to other expense of $1.8 million during fiscal 2023. Other expense consists primarily of the non-service cost components of our periodic pension costs. Based upon information from an actuarial report for our pension plans, we expect other expense to be approximately $1.8 million during fiscal 2025.
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Current report — wording carried from elsewhere
Virginia, and a family entertainment center in Wisconsin. The following tables set forth revenues, operating income, operating margin, screens and theatre locations for the last three fiscal years:
Current report — wording carried from elsewhere
The industry generally considers a film to be a “wide release” if it is shown on over approximately 1,500 theatres nationally, and these films generally have the greatest impact on box office receipts. The quantity of wide-release films shown in our theatres and number of wide-release films provided by the six major studios increased during fiscal 2024 compared to fiscal 2023, but remained below pre-pandemic levels. We played 113 wide-release films at our theatres during fiscal 2024 compared to 110 wide-release films during fiscal 2023. Prior to the pandemic, we played 117 wide-release films at our theatres during fiscal 2019. Although the number of wide-releases increased during fiscal 2024 compared to fiscal 2023, the performance of wide-release films decreased in fiscal 2024 as there were fewer major franchise titles and an overall lower quality of film product as a result of the impact from the WGA and SAG-AFTRA labor strikes, particularly in the first half of fiscal 2024. Film product quality significantly improved during the second half of fiscal
Current report — wording carried from elsewhere
Maintaining and protecting a strong balance sheet has always been a core philosophy of The Marcus Corporation during our 89-year history, and our financial position remains strong. As of December 26, 2024, we had a cash balance of
Current report — wording carried from elsewhere
indebtedness of up to $25.0 million in any new restricted subsidiaries at the time such entity becomes a restricted subsidiary, (d) other indebtedness not exceeding $50.0 million at any time outstanding and (e) other indebtedness as long as the consolidated net leverage ratio is at least 0.25 less than otherwise required under the Credit Agreement; and (vii) revise the covenants to allow us to make investments as long as no default has occurred under the Credit Agreement, or would occur as a result of the investment, as long as the consolidated net leverage ratio is at least 0.25 less than otherwise required under the Credit Agreement.
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Previous report — wording carried elsewhere
We report our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December. We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Our primary operations are reported in two business segments: theatres, and hotels and resorts.
Previous report — wording carried elsewhere
Impact of the COVID-19 Pandemic
Previous report — wording carried elsewhere
Interest expense totaled $12.7 million during fiscal 2023, a decrease of $2.6 million, or 16.9%, compared to interest expense of $15.3 million during fiscal 2022. The decrease in interest expense during fiscal 2023 was due primarily to lower borrowings, partially offset by an increase in our average interest rate, as discussed in the Liquidity section of this
Previous report — wording carried elsewhere
(ii) certain subsidiaries of ours have guaranteed our obligations under the Amended Senior Notes Agreements and the Notes.