Marcus Corporation - 10-Q quarterly report FY2023 Q1

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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 March 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-12604


THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)


Wisconsin						39-1139844
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

100 East Wisconsin Avenue, Suite 1900 Milwaukee ,Wisconsin						53202-4125
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (414) 905-1000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	MCS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check One).


Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

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 MAY 1, 2023 – 24,594,510

CLASS B COMMON STOCK OUTSTANDING AT MAY 1, 2023 –7,078,410

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THE MARCUS CORPORATION

INDEX

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PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

THE MARCUS CORPORATION

Consolidated Balance Sheets

(in thousands, except share and per share data)


	March 30, 2023		December 29, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	10,051	$	21,704
Restricted cash	2,765		2,802
Accounts receivable, net of reserves of $164 and $172, respectively	19,580		21,455


Assets held for sale	458		460
Other current assets	20,001		17,474
Total current assets	52,855		63,895

Property and equipment:
Land and improvements	132,258		132,285
Buildings and improvements	730,541		729,177
Leasehold improvements	167,596		167,516
Furniture, fixtures and equipment	388,243		386,197
Finance lease right-of-use assets	29,885		29,885
Construction in progress	14,448		10,305
Total property and equipment	1,462,971		1,455,365
Less accumulated depreciation and amortization	755,068		739,600
Net property and equipment	707,903		715,765

Operating lease right-of-use assets	191,125		194,965

Other assets:
Investments in joint ventures	1,896		2,067
Goodwill	74,996		75,015

Other	12,913		12,891
Total other assets	89,805		89,973
TOTAL ASSETS	$	1,041,688	$	1,064,598

See accompanying condensed notes to consolidated financial statements.

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THE MARCUS CORPORATION

Consolidated Balance Sheets

(in thousands, except share and per share data)


	March 30, 2023		December 29, 2022
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	29,110	$	32,187
Income taxes	532		—
Taxes other than income taxes	16,283		17,948
Accrued compensation	12,644		22,512
Other accrued liabilities	54,208		56,275
Current portion of finance lease obligations	2,509		2,488
Current portion of operating lease obligations	14,522		14,553
Current maturities of long-term debt	10,339		10,432
Total current liabilities	140,147		156,395

Finance lease obligations	14,437		15,014

Operating lease obligations	191,187		195,281

Long-term debt	178,918		170,005

Deferred income taxes	23,399		26,567

Other long-term obligations	45,193		44,415

Equity:
Shareholders’ equity attributable to The Marcus Corporation
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued	—		—
Common Stock, $1 par; authorized 50,000,000 shares; issued 24,691,548 shares at March 30, 2023 and 24,498,243 shares at December 29, 2022	24,692		24,498
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 7,078,410 shares at March 30, 2023 and 7,110,875 shares at December 29, 2022	7,078		7,111
Capital in excess of par	157,000		153,794
Retained earnings	263,239		274,254
Accumulated other comprehensive loss	(1,785)		(1,694)
	450,224		457,963
Less cost of Common Stock in treasury (97,220 shares at March 30, 2023 and 78,882 shares at December 29, 2022)	(2,091)		(1,866)
Total shareholders’ equity attributable to The Marcus Corporation	448,133		456,097
Noncontrolling interest	274		824
Total equity	448,407		456,921

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,041,688	$	1,064,598

See accompanying condensed notes to consolidated financial statements.

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THE MARCUS CORPORATION

Consolidated Statements of Earnings (Loss)

(in thousands, except per share data)


	13 Weeks Ended
	March 30, 2023		March 31, 2022
Revenues:
Theatre admissions	$	47,635	$	38,417
Rooms	17,857		17,430
Theatre concessions	42,375		35,464
Food and beverage	15,193		14,511
Other revenues	19,688		18,807
	142,748		124,629
Cost reimbursements	9,528		7,613
Total revenues	152,276		132,242

Costs and expenses:
Theatre operations	51,069		44,428
Rooms	9,278		8,203
Theatre concessions	15,730		15,193
Food and beverage	13,568		12,140
Advertising and marketing	5,065		4,481
Administrative	19,851		19,081
Depreciation and amortization	15,876		17,231
Rent	6,493		6,250
Property taxes	4,757		4,745
Other operating expenses	10,049		9,674


Reimbursed costs	9,528		7,613
Total costs and expenses	161,264		149,039

Operating loss	(8,988)		(16,797)

Other income (expense):
Investment income (loss)	260		(268)
Interest expense	(3,008)		(4,092)
Other expense	(401)		(153)
Equity losses from unconsolidated joint ventures	(171)		(141)
	(3,320)		(4,654)

Loss before income taxes	(12,308)		(21,451)
Income tax benefit	(2,842)		(6,549)
Net loss	(9,466)		(14,902)
Net earnings (loss) attributable to noncontrolling interests	—		—
Net loss attributable to The Marcus Corporation	$	(9,466)	$	(14,902)

Net loss per share - basic:
Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	$	(0.28)	$	(0.44)

Net loss per share - diluted:
Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	$	(0.28)	$	(0.44)

See accompanying condensed notes to consolidated financial statements.

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THE MARCUS CORPORATION

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)


	13 Weeks Ended
	March 30, 2023		March 31, 2022

Net loss	$	(9,466)	$	(14,902)
Other comprehensive income (loss), net of tax:
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax effect (benefit) of $(5), and $67, respectively	(11)		190
Fair market value adjustment of interest rate swap, net of tax effect (benefit) of $(8) and $79, respectively	(22)		223
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect (benefit) of $(20) and $41, respectively	(58)		118
Other comprehensive income (loss)	(91)		531
Comprehensive loss	(9,557)		(14,371)
Comprehensive earnings (loss) attributable to noncontrolling interests	—		—
Comprehensive loss attributable to The Marcus Corporation	$	(9,557)	$	(14,371)

See accompanying condensed notes to consolidated financial statements.

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THE MARCUS CORPORATION

Consolidated Statements of Cash Flows

(in thousands)


	13 Weeks Ended
	March 30, 2023		March 31, 2022

OPERATING ACTIVITIES:
Net loss	$	(9,466)	$	(14,902)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Losses on investments in joint ventures	171		141
(Gain) loss on disposition of property, equipment and other assets	398		(424)

Depreciation and amortization	15,876		17,231
Amortization of debt issuance costs	367		413
Share-based compensation	2,172		2,917
Deferred income taxes	(3,117)		(6,342)
Other long-term obligations	771		(460)
Contribution of the Company’s stock to savings and profit-sharing plan	1,259		956
Changes in operating assets and liabilities:
Accounts receivable	1,910		7,495
Government grants receivable	—		4,335
Other assets	(2,130)		(1,841)
Operating leases	(285)		(1,161)
Accounts payable	(2,501)		(10,956)
Income taxes	265		22,704
Taxes other than income taxes	(1,665)		(3,908)
Accrued compensation	(9,891)		(6,563)
Other accrued liabilities	(1,868)		(3,164)
Total adjustments	1,732		21,373
Net cash provided by (used in) operating activities	(7,734)		6,471

INVESTING ACTIVITIES:
Capital expenditures	(8,921)		(6,562)
Proceeds from disposals of property, equipment and other assets	—		3,438

Proceeds from sale of trading securities	9		1
Purchase of trading securities	(514)		—

Other investing activities	(105)		20
Net cash used in investing activities	(9,531)		(3,103)

FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility	29,000		22,000
Repayment of borrowings on revolving credit facility	(20,000)		(22,000)

Repayments on short-term borrowings	—		(820)
Principal payments on long-term debt	(431)		(427)

Debt issuance costs	(50)		—
Principal payments on finance lease obligations	(556)		(584)
Equity transactions:
Treasury stock transactions, except for stock options	(292)		(1,364)
Exercise of stock options	2		26
Dividends paid	(1,548)		—
Distributions to noncontrolling interest	(550)		—
Net cash provided by ( used in) financing activities	5,575		(3,169)
Net increase (decrease) in cash, cash equivalents and restricted cash	(11,690)		199
Cash, cash equivalents and restricted cash at beginning of period	24,506		24,054
Cash, cash equivalents and restricted cash at end of period	$	12,816	$	24,253

Supplemental Information:
Interest paid, net of amounts capitalized	$	4,356	$	5,904
Income taxes refunded (paid), including interest earned	(11)		22,911
Change in accounts payable for additions to property, equipment and other assets	(588)		(1,041)

See accompanying condensed notes to consolidated financial statements.

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

1. General

Basis of Presentation - The unaudited consolidated financial statements for the 13 weeks ended March 30, 2023 and March 31, 2022 have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at March 30, 2023, 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 or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2022.

Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December 29, 2022, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.

Noncontrolling Interest - The Company has an ownership interest greater than 50% in one joint venture that is considered a Variable Interest Entity (VIE) that is included in the accounts of the Company. The Company is the primary beneficiary of the VIE and the Company’s interest is considered a majority voting interest. The primary asset of this VIE, The Skirvin Hilton, was sold on December 16, 2022. The equity interest of outside owners in consolidated entities is recorded as noncontrolling interest in the consolidated balance sheets. The remaining noncontrolling interest as of March 30, 2023, represents undistributed cash in the joint venture.

Depreciation and Amortization - Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled $15,868 and $17,223 for the 13 weeks ended March 30, 2023 and March 31, 2022, respectively.

Assets Held for Sale – Long-lived assets that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as assets held for sale and included within current assets on the consolidated balance sheet. Assets held for sale are measured at the lower of their carrying value or their fair value less costs to sell the asset. As of March 30, 2023, assets held for sale consists of excess land.

Long-Lived Assets – The Company periodically considers whether indicators of impairment of long-lived assets held for use are present. This includes quantitative and qualitative factors, including evaluating the historical actual operating performance of the long-lived assets and assessing the potential impact of recent events and transactions impacting the long-lived assets. If such indicators are present, the Company determines if the long-lived assets are recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. If the long-lived assets are not recoverable, the Company recognizes any impairment losses based on the excess of the carrying amount of the assets over their fair value. There were no indicators of impairment identified during the 13 weeks ended March 30, 2023 or March 31, 2022.

Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the first day of the fiscal fourth quarter. There were no indicators of impairment identified during the 13 weeks ended March 30, 2023 or March 31, 2022.

Earnings (Loss) Per Share - Net earnings (loss) per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options and convertible debt instruments using the if-converted method. Convertible Class B Common Stock and convertible debt instruments are reflected on an if-converted basis when dilutive to Common Stock. The computation of the diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock in periods that have net earnings since it would be dilutive to Common Stock earnings per share, while the diluted net earnings (loss) per share of Class B Common Stock does not assume the conversion of those shares.

Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of Class B Common Stock. As such, the undistributed earnings (losses) for each period are allocated based on the proportionate share of entitled cash dividends.

The following table illustrates the computation of Common Stock basic and diluted net loss per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:


	13 Weeks Ended
	March 30, 2023		March 31, 2022

Numerator:
Net loss attributable to The Marcus Corporation	$	(9,466)	$	(14,902)
Denominator (in thousands):
Denominator for basic EPS	31,572		31,445
Effect of dilutive employee stock options	—		—
Effect of convertible notes	—		—
Denominator for diluted EPS	31,572		31,445
Net loss per share - basic:
Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	$	(0.28)	$	(0.44)
Net loss per share - diluted:
Common Stock	$	(0.31)	$	(0.48)
Class B Common Stock	$	(0.28)	$	(0.44)

For the periods when the Company reports a net loss, common stock equivalents are excluded from the computation of diluted loss per share as their inclusion would have an antidilutive effect. During the 13 weeks ended March 30, 2023 and March 31, 2022, respectively, approximately 41,869 and 81,076 common stock equivalents were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 13 weeks ended March 30, 2023, and March 31, 2022, respectively, 9,170,800 and 9,084,924 shares related to the convertible notes were excluded from the computation of diluted loss per share as the effect would have been anti-dilutive.

Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interest for the 13 weeks ended March 30, 2023 and March 31, 2022 was as follows:


	Common Stock		Class B Common Stock		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Shareholders’ Equity Attributable to The Marcus Corporation		Non- controlling Interest		Total Equity
BALANCES AT DECEMBER 29, 2022	$	24,498	$	7,111	$	153,794	$	274,254	$	(1,694)	$	(1,866)	$	456,097	$	824	$	456,921
Cash dividends:
$0.045 per share Class B Common Stock	—		—		—		(319)		—		—		(319)		—		(319)
$0.05 per share Common Stock	—		—		—		(1,229)		—		—		(1,229)		—		(1,229)
Exercise of stock options	—		—		(1)		—		—		3		2		—		2
Purchase of treasury stock	—		—		—		—		—		(313)		(313)		—		(313)
Savings and profit-sharing contribution	79		—		1,180		—		—		—		1,259		—		1,259
Reissuance of treasury stock	—		—		(3)		—		—		24		21		—		21
Issuance of non-vested stock	82		—		(143)		—		—		61		—		—		—
Shared-based compensation	—		—		2,172		—		—		—		2,172		—		2,172
Other	—		—		1		(1)		—		—		—		—		—
Conversions of Class B Common Stock	33		(33)		—		—		—		—		—		—		—
Distribution to noncontrolling interest	—		—		—		—		—		—		—		(550)		(550)
Comprehensive income (loss)	—		—		—		(9,466)		(91)		—		(9,557)		—		(9,557)
BALANCES AT MARCH 30, 2023	$	24,692	$	7,078	$	157,000	$	263,239	$	(1,785)	$	(2,091)	$	448,133	$	274	$	448,407


	Common Stock		Class B Common Stock		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Shareholders’ Equity Attributable to The Marcus Corporation		Non- controlling Interest		Total Equity
BALANCES AT DECEMBER 30, 2021	$	24,345	$	7,130	$	145,656	$	289,306	$	(11,444)	$	(1,379)	$	453,614	$	—	$	453,614
Exercise of stock options	—		—		(5)		—		—		31		26		—		26
Purchase of treasury stock	—		—		—		—		—		(1,373)		(1,373)		—		(1,373)
Savings and profit-sharing contribution	56		—		900		—		—		—		956		—		956
Reissuance of treasury stock	—		—		1		—		—		8		9		—		9
Issuance of non-vested stock	78		—		(236)		—		—		158		—		—		—
Shared-based compensation	—		—		2,917		—		—		—		2,917		—		2,917
Other	—		—		1		(1)		—		—		—		—		—
Conversions of Class B Common Stock	19		(19)		—		—		—		—		—		—		—
Comprehensive income (loss)	—		—		—		(14,902)		531		—		(14,371)		—		(14,371)
BALANCES AT MARCH 31, 2022	$	24,498	$	7,111	$	149,234	$	274,403	$	(10,913)	$	(2,555)	$	441,778	$	—	$	441,778

Accumulated Other Comprehensive Loss – Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:


	March 30, 2023		December 29, 2022

Unrecognized gain on interest rate swap agreements	$	—	$	80
Net unrecognized actuarial loss for pension obligation	(1,785)		$	(1,774)
	$	(1,785)	$	(1,694)

Fair Value Measurements - Certain financial assets and liabilities are recorded at fair value in the consolidated financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

The Company’s assets and liabilities measured at fair value are classified in one of the following categories:

Level 1 - Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At March 30, 2023 and December 29, 2022, respectively, the Company’s $4,544 and $3,932 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets. At December 29, 2022, the Company’s $6,000 of investments in money market funds were valued using Level 1 pricing inputs and were included in cash and cash equivalents. The Company had no investments in money market funds at March 30, 2023.

Level 2 - Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At December 29, 2022, the Company’s $108 asset related to the Company’s interest rate swap contract was valued using Level 2 pricing inputs. This contracted terminated on March 1, 2023.

Level 3 - Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At March 30, 2023 and December 29, 2022, none of the Company’s recorded assets or liabilities that are measured on a recurring basis at fair market value were valued using Level 3 pricing inputs.

The carrying value of the Company’s financial instruments (including cash and cash equivalents, restricted cash, accounts receivable and accounts payable) approximates fair value. The fair value of the Company’s $80,000 of senior notes, valued using Level 2 pricing inputs, is approximately $72,554 at March 30, 2023, determined based upon discounted cash flows using current market interest rates for financial instruments with a similar average remaining life. The fair value of the Company's $100,050 of convertible senior notes, valued using Level 2 pricing inputs, is approximately $157,576 at March 30, 2023, determined based on market rates and the closing trading price of the convertible senior notes as of March 30, 2023. The carrying amounts of the Company’s remaining long-term debt approximate their fair values, determined using current rates for similar instruments, or Level 2 pricing inputs.

Defined Benefit Plan - The components of the net periodic pension cost of the Company’s unfunded nonqualified, defined-benefit plan are as follows:


	13 Weeks Ended
	March 30, 2023		March 31, 2022

Service cost	$	122	$	264
Interest cost	453		335
Net amortization of prior service cost and actuarial loss	(16)		257
Net periodic pension cost	$	559	$	856

Service cost is included in Administrative expense while all other components are recorded within Other expense outside of operating income in the consolidated statements of earnings.

Revenue Recognition – The disaggregation of revenues by business segment for the 13 weeks ended March 30, 2023 is as follows:


	13 Weeks Ended March 30, 2023
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	47,635	$	—	$	—	$	47,635
Rooms	—		17,857		—		17,857
Theatre concessions	42,375		—		—		42,375
Food and beverage	—		15,193		—		15,193
Other revenues(1)	6,366		13,233		89		19,688
Cost reimbursements	—		9,528		—		9,528
Total revenues	$	96,376	$	55,811	$	89	$	152,276

(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.

The disaggregation of revenues by business segment for the 13 weeks ended March 31, 2022 is as follows:


	13 Weeks Ended March 31, 2022
	Theatres		Hotels/Resorts		Corporate		Total
Theatre admissions	$	38,417	$	—	$	—	$	38,417
Rooms	—		17,430		—		17,430
Theatre concessions	35,464		—		—		35,464
Food and beverage	—		14,511		—		14,511
Other revenues(1)	5,610		13,103		94		18,807
Cost reimbursements	—		7,613		—		7,613
Total revenues	$	79,491	$	52,657	$	94	$	132,242

(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.

The Company had deferred revenue from contracts with customers of $37,561 and $37,046 as of March 30, 2023 and December 29, 2022, respectively. The Company had no contract assets as of March 30, 2023 and December 29, 2022. During the 13 weeks ended March 30, 2023, the Company recognized revenue of $6,276 that was included in deferred revenues as of December 29, 2022. During the 13 weeks ended March 31, 2022, the Company recognized revenue of $5,383 that was included in deferred revenues as of December 30, 2021. The majority of the Company’s deferred revenue relates to non-redeemed gift cards, advanced ticket sales and the Company’s loyalty program.

As of March 30, 2023, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $2,347 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. As of March 30, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $17,535

and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the tickets and gift cards are redeemed, which is expected to occur within the next two years.

As of March 30, 2023, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was $3,862 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the gift cards are redeemed, which is expected to occur within the next two years.

The majority of the Company’s revenue is recognized in less than one year from the original contract.

2. Long-Term Debt

Long-term debt is summarized as follows:


	March 30, 2023		December 29, 2022


Senior notes	$	80,000	$	80,000
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75%	850		954
Convertible senior notes	100,050		100,050
Payroll Protection Program loans	1,914		2,240
Revolving credit agreement	9,000		—
Debt issuance costs	(2,557)		(2,807)
Total debt, net of debt issuance costs	189,257		180,437
Less current maturities, net of issuance costs	10,339		10,432
Long-term debt	$	178,918	$	170,005

Credit Agreement

On January 9, 2020, the Company replaced its then-existing credit agreement with several banks. On April 29, 2020, the Company entered into the First Amendment, on September 15, 2020, the Company entered into the Second Amendment, on July 13, 2021, the Company entered into the Third Amendment, on July 29, 2022, the Company entered into the Fourth Amendment and on February 10, 2023, the Company entered into the Fifth Amendment (the Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment, hereinafter referred to as the “Credit Agreement”).

The Credit Agreement provides for a revolving credit facility that matures on January 9, 2025 with an initial maximum aggregate amount of availability of $225,000. At March 30, 2023, there were borrowings of $9,000 outstanding on the revolving credit facility, which when borrowed, bear interest at the secured overnight financing rate (“SOFR”) plus a margin, effectively 9.35% at March 30, 2023. Availability under the line at March 30, 2023, was $212,773, after taking into consideration outstanding letters of credit that reduce revolver availability.

Effective with the Fifth Amendment on February 10, 2023, the variable rate LIBOR benchmark in the Credit Agreement was replaced with SOFR. Borrowings under the Credit Agreement now generally bear interest at a variable rate equal to: (i) SOFR plus a credit spread adjustment of 0.10%, subject to a 0% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

generally requires the Company to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment, the Second Amendment and the Fifth Amendment: (A) in respect of revolving loans, (1) the Company is charged a facility fee equal to 0.40% of the total revolving credit facility commitment and (2) the specified margin is 2.35% for SOFR borrowings and 1.35% for ABR borrowings, which facility fee rate and specified margins will remain in effect until the end of the first fiscal quarter ending after the end of any period in which the testing of any financial covenant in the Credit Agreement is suspended (the “specified period”); and (B) in respect of term loans, the specified margin is 2.75% for SOFR borrowings and 1.75% for ABR borrowings, in each case, at all times.

The Credit Agreement contains various restrictions and covenants. Among other requirements, the Credit Agreement (a) limits the amount of priority debt (as defined in the Credit Agreement) held by the Company’s restricted subsidiaries to no more than 20% of the Company’s consolidated total capitalization (as defined in the Credit Agreement), (b) limits the Company’s permissible consolidated debt to capitalization ratio to a maximum of 0.55 to 1.0, (c) requires the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 as of the end of the fiscal quarter ending March 30, 2023 and each fiscal quarter thereafter, and (d) restricts the Company’s ability to incur additional indebtedness and make voluntary prepayments on or defeasance of the Company’s 4.02% Senior Notes due August 2025, 4.32% Senior Notes due February 2027, the notes or certain other convertible securities. Beginning with the first quarter of fiscal 2023, the Company has returned to compliance with prior financial covenants under the Credit Agreement that were temporarily waived (specifically, the consolidated fixed charge coverage ratio), removing any limitations on the total amount of quarterly dividends or share repurchases. During fiscal 2022 the Credit Agreement limited the total amount of quarterly dividend payments or share repurchases to no more than $1,550 per quarter.

In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the Credit Agreement).

The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.

Note Purchase Agreements

At March 30, 2023 and December 29, 2022, the Company’s $80,000 of senior notes consist of two Purchase Agreements maturing in 2025 through 2027, require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 4.32%.

Convertible Senior Notes

On September 17, 2020, the Company entered into a purchase agreement to issue and sell $100,050 aggregate principal amount of its 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes.”) The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between the Company and U.S. Bank National Association, as trustee.

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 the Company’s failure to comply with its reporting obligations under the Indenture or if the Convertible Notes are not freely tradeable 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

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

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.

Upon conversion, the Convertible Notes may be settled, at the Company’s 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 March 30, 2023, the applicable conversion rate is 91.6622 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an applicable conversion price of approximately $10.91 per share of Common Stock). If the Company undergoes certain fundamental changes, holders of Convertible Notes may require the Company 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, the Company will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. The Company 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 the Company and certain of its subsidiaries after which the Convertible Notes become automatically due and payable.

Since the Company’s fiscal 2021 second quarter through the Company’s fiscal 2023 second quarter, the Company’s 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. The Company has the ability to settle the conversion in Company stock. As such, the Convertible Notes will continue to be classified as long-term. Future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s Common Stock during the prescribed measurement period. No Convertible Notes have been converted to date and the Company does not expect any to be converted within the next 12 months.

In connection with the pricing of the Convertible Notes on September 17, 2020, and in connection with the exercise by the Initial Purchasers (as defined in the Convertible Notes purchase agreement) of their option to purchase additional Convertible Notes on September 18, 2020, the Company entered into privately negotiated Capped Call Transactions (the “Capped Call Transactions”) with certain of the Initial Purchasers and/or their respective affiliates and/or other financial institutions (the “Capped Call Counterparties”). The Capped Call Transactions are expected generally to reduce potential dilution of the Company’s common stock upon any conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, in the event that the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, is greater than the strike price of the Capped Call Transactions, which initially corresponds to the conversion price of the Convertible Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution to the extent that such market price exceeds the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions was initially $17.98 per share (in no event shall the cap price be less than the strike price of $11.0128), which represents a premium of 100% over the last reported sale price of the

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

Common Stock of $8.99 per share on The New York Stock Exchange on September 17, 2020. Under the terms of the Capped Call Transactions, the cap price is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At March 30, 2023, the adjusted cap price is approximately $17.81 per share. The Capped Call Transactions are separate transactions entered into by the Company with the Capped Call Counterparties, are not part of the terms of the Convertible Notes and will not change the rights of holders of the Convertible Notes under the Convertible Notes and the Indenture.

3. Leases

The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASU No. 2016-02, Leases (Topic 842). The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease.

The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Total lease cost consists of the following:


		13 Weeks Ended
Lease Cost	Classification	March 30, 2023		March 31, 2022

Finance lease costs:
Amortization of finance lease assets	Depreciation and amortization	$	691	$	705
Interest on lease liabilities	Interest expense	198		221
		$	889	$	926
Operating lease costs:
Operating lease costs	Rent expense	$	6,044	$	6,377
Variable lease cost	Rent expense	416		(163)
Short-term lease cost	Rent expense	33		36
		$	6,493	$	6,250

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

Additional information related to leases is as follows:


	13 Weeks Ended
Other Information	March 30, 2023		March 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	556	$	584
Operating cash flows from finance leases	198		221
Operating cash flows from operating leases	6,430		7,124

Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities	—		72
Operating lease liabilities	—		183


	March 30, 2023		December 29, 2022

Finance leases:
Property and equipment – gross	$	29,885	$	29,885
Accumulated depreciation and amortization	(16,022)		(15,332)
Property and equipment - net	$	13,863	$	14,553

Remaining lease terms and discount rates are as follows:

Lease Term and Discount Rate

March 30, 2023

December 29, 2022

Weighted-average remaining lease terms:

Finance leases

7 years

Operating leases

12 years

Weighted-average discount rates:

Finance leases

4.59

Operating leases

4.51

Deferred rent payments of approximately $790 for the Company’s operating leases have been included in the total operating lease obligations as of March 30, 2023, of which approximately $587 is included in long-term operating lease obligations.

4. Income Taxes

The Company’s effective income tax rate for the 13 weeks ended March 30, 2023 and March 31, 2022 was 23.1% and 30.5%, respectively. During the 13 weeks ended March 31, 2022, the Company received $22,959 of income tax refunds related to its fiscal 2020 tax return, including $636 of interest which is included within income tax benefit in the consolidated statement of earnings (loss).

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THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED MARCH 30, 2023

(in thousands, except share and per share data)

5. Business Segment Information

The Company’s primary operations are reported in the following business segments: Theatres and Hotels/Resorts. Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.

Following is a summary of business segment information for the 13 weeks ended March 30, 2023 and March 31, 2022:


13 Weeks Ended	Theatres		Hotels/ Resorts		Corporate Items		Total
March 30, 2023
Revenues	$	96,376	$	55,811	$	89	$	152,276
Operating income (loss)	1,519		(5,032)		(5,475)		(8,988)
Depreciation and amortization	11,488		4,301		87		15,876

13 Weeks Ended	Theatres		Hotels/ Resorts		Corporate Items		Total
March 31, 2022
Revenues	$	79,491	$	52,657	$	94	$	132,242
Operating loss	(8,020)		(2,974)		(5,803)		(16,797)
Depreciation and amortization	12,191		4,950		90		17,231

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THE MARCUS CORPORATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and elsewhere in this Form 10-Q 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 include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the adverse effects the COVID-19 pandemic, or future pandemics, may have on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (particularly following the COVID-19 pandemic, during which the release dates for certain motion pictures have been postponed); (3) the effects of theatre industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (4) the effects of adverse economic conditions in our markets; (5) the effects of adverse economic conditions on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) the effects on our occupancy and room rates caused by the relative industry supply of available rooms at comparable lodging facilities in our markets; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (9) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our business; (10) the effects of changes in the availability of and cost of labor and other supplies essential to the operation of our business; (11) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (12) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (13) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, other incidents of violence in public venues such as hotels and movie theatres or epidemics; and (14) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Our forward-looking statements are based upon our assumptions, which are based upon currently available information. 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 we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS

General

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. Fiscal 2023 is a 52-week year beginning on December 30, 2022 and ending on December 28, 2023. Fiscal 2022 was a 52-week year that began on December 31, 2021 and ended on December 29, 2022.

We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The first quarter of fiscal 2023 consisted of the 13-week period beginning on December 30, 2022 and ended on March 30, 2023. The first quarter of fiscal 2022 consisted of the 13-week period beginning December 31, 2021 and ended on March 31, 2022. Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts. 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.

COVID-19 did not materially impact our results for the first quarter of fiscal 2023. For discussion regarding the impact of COVID-19 and related economic conditions on our results for the year ended December 29, 2022, see “Part II-Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Annual Report. For

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discussion regarding potential impacts of future pandemics refer to the discussion of our operational risks and financial risks found in “Part I-Item 1A-Risk Factors” in our 2022 Annual Report.

Overall Results

The following table sets forth revenues, operating income (loss), other income (expense), net earnings (loss) and net earnings (loss) per diluted common share for the first quarter of fiscal 2023 and fiscal 2022 (in millions, except for per share and variance percentage data):


	First Quarter
					Variance
	F2023		F2022		Amt.		Pct.
Revenues	$	152.3	$	132.2	$	20.1	15.1	%
Operating loss	(9.0)		(16.8)		7.8		46.5	%
Other income (expense)	(3.3)		(4.7)		1.3		28.7	%
Net loss attributable to The Marcus Corp.	$	(9.5)	$	(14.9)	$	5.4	36.5	%
Net loss per common share - diluted	$	(0.31)	$	(0.48)	$	0.17	35.4	%

Revenues increased and operating loss, net loss attributable to The Marcus Corporation and net loss per diluted common share improved significantly during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Increased revenues from both our theatre division and hotels and resorts division and a reduced operating loss from our theatre division contributed to the improvement during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Our first quarter is typically the seasonally weakest quarter of our fiscal year due to the traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned hotels. The first quarter of fiscal 2022 was also negatively impacted due to the fact that releases of new films were limited and travel was reduced due to the lingering impacts of the COVID-19 pandemic and subsequent variants.

Net loss attributable to The Marcus Corporation during the first quarter of fiscal 2023 was favorably impacted by decreased interest expense compared to the first quarter of fiscal 2022 and investment income during the first quarter of fiscal 2023 compared to investment losses in the first quarter of fiscal 2022.

We recognized investment income of $0.3 million during the first quarter of fiscal 2023 compared to investment losses of $0.3 million in the first quarter of fiscal 2022. Variations in investment income were due to changes in the value of marketable securities.

Our interest expense totaled $3.0 million for the first quarter of fiscal 2023 compared to $4.1 million for the first quarter of fiscal 2022. The decrease in interest expense in fiscal 2023 was primarily due to decreased borrowings and a decrease in non-cash amortization of deferred financing costs. 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.

We reported an income tax benefit for the first quarter of fiscal 2023 of $2.8 million compared to an income tax benefit of $6.5 million during the first quarter of fiscal 2022. Our fiscal 2023 first quarter effective income tax rate was 23.1%, and was favorably impacted by a decrease in valuation allowances on certain state income tax net operating loss carryforwards expected to be utilized in the current year. Our fiscal 2022 first quarter effective income tax rate was 30.5%. We anticipate that our effective income tax rate for fiscal 2023 may be in the 24-28% range, excluding any potential further changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits. Our actual fiscal 2023 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

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Theatres

The following table sets forth revenues, operating income (loss) and operating margin for our theatre division for the first quarter of fiscal 2023 and fiscal 2022 (in millions, except for variance percentage and operating margin):


	First Quarter
							Variance
	F2023			F2022			Amt.		Pct.
Revenues	$	96.4		$	79.5		$	16.9	21.2	%
Operating income (loss)	1.5			(8.0)			9.5		118.8	%
Operating margin (% of revenues)	1.6		%	(10.1)		%

Our theatre division revenues and operating income increased during the first quarter of fiscal 2023, with an increase in the number of new films released by movie studios resulting in higher attendance compared to the first quarter of fiscal 2022. Our operating income during the first quarter of fiscal 2023 significantly improved compared to the operating loss in the first quarter of fiscal 2022 as a result of higher overall revenues and greater labor productivity.

The following table provides a further breakdown of the components of revenues for the theatre division for the first quarter of fiscal 2023 and fiscal 2022 (in millions, except for variance percentage):


	First Quarter
					Variance
	F2023		F2022		Amt.		Pct.
Admission revenues	$	47.6	$	38.4	$	9.2	24.0	%
Concession revenues	42.4		35.5		6.9		19.5	%
Other revenues	6.4		5.6		0.8		14.3	%
Total revenues	96.4		79.5		16.9		21.2	%

According to data received from Comscore (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal 2023 first quarter results, U.S. box office receipts increased 26.3% during our fiscal 2023 first quarter compared to the same comparable weeks in fiscal 2022, indicating that our increase in admission revenues during the first quarter of fiscal 2023 of 24.0% underperformed the industry by 2.3 percentage points. We believe our underperformance is attributable to the more significant impact of the Omicron variant of COVID-19 in other regions of the country than in our primarily Midwestern markets during the first quarter of fiscal 2022, representing a higher opportunity for growth in 2023 nationally than in our markets. Additional data received and compiled by us from Comscore indicates our admission revenues during the first quarter of fiscal 2023 represented approximately 3.2% of the total admission revenues in the U.S. during the periods (commonly referred to as market share in our industry). This represents a decrease over our reported market share of approximately 3.4% during the first quarter of fiscal 2022, which we believe is also attributable to the Omicron variant more significantly impacting other regions of the country during the first quarter of fiscal 2022. Our goal is to continue our past pattern of outperforming the industry, but our ability to do so in any given quarter will likely be partially dependent upon film mix, weather and the competitive landscape in our markets.

Total theatre attendance increased significantly during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022, resulting primarily from an increase in the number of wide-release films. During the first quarter of fiscal 2023 there were 21 wide-release films, compared to 12 wide-release films during the first quarter of fiscal 2022. Total theatre attendance increased 13.9% during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022, resulting in increases in both admission revenues and concession revenues.

Our highest grossing films during the fiscal 2023 first quarter included Avatar: The Way of Water, Ant-Man and the Wasp: Quantumania, Creed III, Puss in Boots: The Last Wish and M3GAN. Our top five films during our fiscal 2023 first quarter accounted for 51% of our total box office results, compared to 66% for the top five films during the first quarter of fiscal 2022, both expressed as a percentage of the total admission revenues for the period. A decreased concentration of blockbuster films during a given quarter often has the effect of lowering our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. While the first quarter of fiscal 2023 was less concentrated on blockbuster films compared to the first quarter of

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fiscal 2022, due to the impact of one particularly strong blockbuster showing during the quarter (Avatar: The Way of Water), our overall film rental cost as a percentage of admission revenues remained flat compared to the prior year.

Our average ticket price increased 8.8% during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. The increase in our average ticket price during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 was favorably impacted by a higher percentage of 3D films in our fiscal 2023 first quarter, and inflationary price increases that we implemented during the second quarter of fiscal 2022 in response to increases in labor and supply costs, which were partially offset by a lower proportion of admission revenues from premium large format screens (with a higher ticket price) due to the mix of films. The increase in average ticket price favorably impacted our admission revenues of our comparable theatres by $3.9 million during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. During the last week of the first quarter of fiscal 2023, we implemented several pricing changes to our Value Tuesday promotion across our theatre circuit, which has historically offered $5 admission and free complementary-size popcorn to our loyalty program members. Our new Value Tuesday promotion features $6 admission for members of our free Magical Movie Rewards (MMR) loyalty program, $7 admission for non-MMR customers, and replaces free complementary-size popcorn with a 20% discount on all concessions, food and non-alcoholic beverages for MMR members.

Our average concession revenues per person increased by 5.0% during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. The increase in our average concession revenues per person during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 was due to inflationary increases in concessions prices in response to increases in food and labor costs. We also believe average concession revenues per person was positively impacted by a new food and beverage menu introduced in the fourth quarter of fiscal 2022. Finally, we believe that an increased percentage of customers buying their concessions in advance using our website, kiosk or our mobile app likely contributed to higher average concession revenues per person, as our experience has shown that customers are more likely to purchase more items when they order and pay electronically. The increase in average concession revenues per person favorably impacted our concession revenues of our comparable theatres by $2.0 million during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.

Other revenues increased by approximately $0.8 million during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. The increase was primarily due to the impact of increased attendance on internet surcharge ticketing fees and preshow and in-app advertising income.

Several films have performed well in the early weeks of our fiscal 2023 second quarter, including Creed III, Scream VI, Air, John Wick: Chapter 4, Dungeons & Dragons: Honor Among Thieves, Evil Dead Rise, and The Super Mario Bros. Movie. While the quantity of films available for theatrical exhibition remains below pre-pandemic levels, we expect to see increases in the quantity of available films in 2023 and 2024. Although it is possible that schedule changes may occur, new films scheduled to be released during the remainder of fiscal 2023 that have potential to perform very well include Guardians of the Galaxy Vol. 3, Fast X, The Little Mermaid, Spider-Man: Across the Spiderverse, Transformers: Rise of the Beasts, Elemental, The Flash, Indiana Jones & The Dial of Destiny, The Marvels, Mission: Impossible - Dead Reckoning Part One, Barbie, Oppenheimer, The Haunted Mansion, Gran Turismo, Teenage Mutant Ninja Turtles: Mutant Mayhem, Killers of the Flower Moon, The Meg 2, Trolls 3, Hunger Games: The Ballad of Songbirds and Snakes, Wish, Dune: Part Two, Wonka, The Ghostbusters Sequel and Aquaman and the Lost Kingdom.

Revenues for the theatre business and the motion picture industry in general are heavily dependent on the number of films produced by studios and the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of appropriate “windows” between the date a film is released in theatres and the date a motion picture is released to other channels, including premium video-on-demand (“PVOD”), video on-demand (“VOD”), streaming services and DVD. These are factors over which we have no control.

We ended the first quarter of fiscal 2023 with a total of 1,053 company-owned screens in 84 theatres, compared to 1,064 company-owned screens in 85 theatres at the end of the first quarter of fiscal 2022. Early in our fiscal 2023 first quarter, we made the decision to close one of our owned theatres.

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Hotels and Resorts

The following table sets forth revenues, operating income (loss) and operating margin for our hotels and resorts division for the first quarter of fiscal 2023 and fiscal 2022 (in millions, except for variance percentage and operating margin):


	First Quarter
							Variance
	F2023			F2022			Amt.		Pct.
Revenues	$	55.8		$	52.7		$	3.2	6.0	%
Operating loss	(5.0)			(3.0)			(2.1)		(69.2)	%
Operating margin (% of revenues)	(9.0)		%	(5.6)		%

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.

Excluding The Skirvin Hilton from fiscal 2022 results, hotels and resorts revenues increased 13.6% during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Our hotels and resorts division operating loss during the first quarter of fiscal 2023 increased compared to the first quarter of fiscal 2022 due to the sale of The Skirvin Hilton (which had operating income during the first quarter of fiscal 2022), a decrease in certain other revenue at one of our condo hotel properties, and increased labor costs during the fiscal 2023 period as we increased our staffing levels to enhance the customer experience compared to the first quarter of fiscal 2022 when various positions were unfilled due to staffing shortages.

The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the first quarter of fiscal 2023 and fiscal 2022 (in millions, except for variance percentage):


	First Quarter
					Variance
	F2023		F2022		Amt.		Pct.
Room revenues	$	17.9	$	17.4	$	0.4	2.4	%
Food/beverage revenues	15.2		14.5		0.7		4.7	%
Other revenues	13.2		13.1		0.1		1.0	%
Total revenues before cost reimbursements	46.3		45.0		1.2		2.8	%
Cost reimbursements	9.5		7.6		1.9		25.2	%
Total revenues	$	55.8	$	52.7	$	3.2	6.0	%

Our first quarter is typically the seasonally weakest quarter of our fiscal year for our hotels and resorts division due to the traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned hotels. Division revenues before cost reimbursements increased during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022, despite the negative impact of the sale of the Skirvin Hilton, due to increased occupancy and average daily rate at our seven remaining owned hotels.

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The following table sets forth certain operating statistics for the first quarter of fiscal 2023 and fiscal 2022, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for company-owned properties:


	First Quarter
							Variance
	F2023			F2022			Amt.		Pct.
Occupancy pct.	50.8		%	46.1		%	4.7 pts		10.1	%
ADR	$	155.35		$	145.68		$	9.67	6.6	%
RevPAR	$	78.95		$	67.19		$	11.76	17.5	%

Note: These operating statistics represent averages of our seven distinct comparable company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort. The Skirvin Hilton is not included in the fiscal 2022 statistics.

RevPAR increased at all seven of our comparable company-owned properties during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Leisure travel customers provided the most demand during the fiscal 2023 first quarter, with weekend business relatively strong at the majority of our properties. Leisure travel demand was negatively impacted during the first quarter of fiscal 2023 by a lack of snow, resulting in unfavorable ski conditions at our Grand Geneva Resort and Spa compared to the first quarter of the prior year. During the first quarter of fiscal 2023, our non-group business represented approximately 71% of our total rooms revenue, consistent with approximately 71% during the first quarter of fiscal 2022. Non-group retail pricing remained very strong in the majority of our markets during the first quarter of fiscal 2023, with leisure demand contributing to increased occupancy percentages and ADR.

According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2023 first quarter results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced an increase in RevPAR of 28.3% during our fiscal 2023 first quarter compared to the same period during fiscal 2022, leading us to believe we underperformed the industry during the fiscal 2023 first quarter by approximately 10.8 percentage points. Data received from Smith Travel Research for our various “competitive sets”—hotels identified in our specific markets that we deem to be competitors to our hotels—indicates that these hotels experienced an increase in RevPAR of 25.6% during our first quarter, again compared to the same period in fiscal 2022. Therefore, we believe we underperformed our competitive sets during the first quarter of fiscal 2023 by approximately 8.1 percentage points. To put this in context, we believe our underperformance to both the industry and our competitive sets occurred because occupancy at our hotels recovered earlier in fiscal 2022 than the industry and competitive hotels in our markets, which generally lagged our occupancy levels in fiscal 2022. This resulted in the industry and competitive hotels in our markets growing occupancy at a faster rate than our owned hotels during the first quarter of fiscal 2023 compared to the prior year as lagging occupancy levels recovered.

Looking to future periods, overall occupancy in the U.S. is expected to slowly increase given that, in recent months, occupancy reached its highest level since the start of the pandemic. In the near term, we expect most demand will continue to come from the leisure travel segment. Leisure travel in our markets has a seasonal component, peaking in the summer months and slowing down as children return to school and the weather turns colder. We are experiencing gradual increases in business travel as corporate training events, meetings, and conferences return and downtown offices reopen. As of the date of this report, our group room revenue bookings for fiscal 2023 - commonly referred to in the hotels and resorts industry as “group pace” - is running approximately 7% ahead of where we were at the same time last year. Group room revenue bookings for fiscal 2024 is running approximately 5% behind where we were at the same time in early fiscal 2022 for fiscal 2023. Banquet and catering revenue pace for fiscal 2023 and fiscal 2024 is similarly running ahead of where we were at this same time last year. We are encouraged by continuing positive trends in group bookings for fiscal 2023 and beyond.

Adjusted EBITDA

Adjusted EBITDA is a measure used by management and our board of directors to assess our financial performance and enterprise value. We believe that Adjusted EBITDA is a useful measure for us and investors, as it eliminates certain expenses that are not indicative of our core operating performance and facilitates a comparison of our core operating performance on a consistent basis from period to period. We also use Adjusted EBITDA as a basis to determine certain annual cash bonuses and long-term incentive awards, to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other

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peer companies using similar measures. Adjusted EBITDA is also used by analysts, investors and other interested parties as a performance measure to evaluate industry competitors.

Adjusted EBITDA is a non-GAAP measure of our financial performance and should not be considered as an alternative to net earnings (loss) as a measure of financial performance, or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of liquidity or free cash flow for management’s discretionary use. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

We define Adjusted EBITDA as net earnings (loss) attributable to The Marcus Corporation before investment income or loss, interest expense, other expense, gain or loss on disposition of property, equipment and other assets, equity earnings or losses from unconsolidated joint ventures, net earnings or losses attributable to noncontrolling interests, income taxes and depreciation and amortization, adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine Adjusted EBITDA, such as acquisition expenses, preopening expenses, accelerated depreciation, impairment charges and other adjustments. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Definitions and calculations of Adjusted EBITDA differ among companies in our industries, and therefore Adjusted EBITDA disclosed by us may not be comparable to the measures disclosed by other companies.

The following table sets forth Adjusted EBITDA by reportable operating segment for the first quarter of fiscal 2023 and fiscal 2022 (in millions, except for variance percentage):


	First Quarter
					Variance
	F2023		F2022		Amt.		Pct.
Theatres	$	13.8	$	4.8	$	9.0	188.8	%
Hotels and resorts	(0.4)		2.4		(2.8)		(117.2)	%
Corporate items	(3.9)		(3.8)		(0.1)		(3.2)	%
Total Adjusted EBITDA	$	9.5	$	3.4	$	6.1	182.2	%

The following table sets forth our reconciliation of Adjusted EBITDA (in millions):


	First Quarter
	F2023		F2022
Net loss attributable to The Marcus Corporation	$	(9.5)	$	(14.9)
Add (deduct):
Investment (income) loss	(0.3)		0.3
Interest expense	3.0		4.1
Other expense	0.4		0.6
Loss (gain) on disposition of property, equipment and other assets	0.4		(0.4)
Equity (earnings) losses from unconsolidated joint ventures	0.2		0.1

Income tax benefit	(2.8)		(6.5)
Depreciation and amortization	15.9		17.2
Share-based compensation expenses (1)	2.2		2.9


Total Adjusted EBITDA	$	9.5	$	3.4

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The following tables sets forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):


	First Quarter, F2023
	Theatres		Hotels & Resorts		Corp. Items		Total
Operating income (loss)	$	1.5	$	(5.0)	$	(5.5)	$	(9.0)
Depreciation and amortization	11.5		4.3		0.1		15.9
Loss (gain) on disposition of property, equipment and other assets	0.3		0.1		—		0.4
Share-based compensation (1)	0.5		0.2		1.5		2.2


Total Adjusted EBITDA	$	13.8	$	(0.4)	$	(3.9)	$	9.5


	First Quarter, F2022
	Theatres		Hotels & Resorts		Corp. Items		Total
Operating loss	$	(8.0)	$	(3.0)	$	(5.8)	$	(16.8)
Depreciation and amortization	12.2		5.0		0.1		17.2
Share-based compensation (1)	0.6		0.4		1.9		2.9
Total Adjusted EBITDA	$	4.8	$	2.4	$	(3.8)	$	3.4

(1)Non-cash expense related to share-based compensation programs.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our movie theatre and hotels and resorts businesses, when open and operating normally, each generate significant and consistent daily amounts of cash, subject to previously-noted seasonality, because each segment’s revenue is derived predominantly from consumer cash purchases. Under normal circumstances, we believe that these relatively consistent and predictable cash sources, as well as the availability of unused credit lines, would be adequate to support the ongoing operational liquidity needs of our businesses.

Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our 88-year history and our financial position remains strong. As of March 30, 2023, we had a cash balance of approximately $10.1 million, $212.8 million of availability under our $225 million revolving credit facility, and our debt-to-capitalization ratio was 0.30. With our strong liquidity position combined with cash generated from operations, we believe we are positioned to have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements, as well as our longer-term capital requirements.

However, future compliance with our debt covenants could be impacted if we are unable to continue operations as currently expected, which could be impacted by matters that are not entirely in our control, such as the protective actions resulting from future pandemics and the timing of new movie releases. Future compliance with our debt covenants could also be impacted if the speed of recovery of our theatres business is slower than currently expected. For example, our current expectations are that our theatre division will continue to improve during fiscal 2023, but still report results below comparable periods in fiscal 2019. In the event we are unable to comply with our debt covenants in future periods, we would either seek covenant waivers or attempt to amend our covenants, though there is no certainty that we would be successful in such efforts.

Financial Condition

Net cash used in operating activities totaled $7.7 million during the first quarter of fiscal 2023, compared to net cash provided by operating activities of $6.5 million during the first quarter of fiscal 2022. The $14.2 million decrease in net cash provided by operating activities was due primarily to the receipt of refundable income taxes of $22.7 million and government grants of $4.3 million during the first quarter of fiscal 2022 that did not recur in fiscal 2023, partially offset by a reduced net loss and the favorable timing in the payment of accounts payable and other working capital payments during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.

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Net cash used in investing activities during the first quarter of fiscal 2023 totaled $9.5 million, compared to net cash used in investing activities of $3.1 million during the first quarter of fiscal 2022. The increase in net cash used in investing activities of $6.4 million was the result of an increase of $2.4 million in capital expenditures and the sale of non-core real estate assets of $3.4 million during the first quarter of fiscal 2022 that did not recur in fiscal 2023. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $8.9 million during the first quarter of fiscal 2023 compared to $6.6 million during the first quarter of fiscal 2022.

Fiscal 2023 first quarter cash capital expenditures included approximately $4.2 million incurred in our theatre division, primarily related to normal maintenance capital projects. We also incurred capital expenditures in our hotels and resorts division during the first quarter of fiscal 2023 of approximately $4.7 million, including costs related to guest rooms renovations at the Grand Geneva and normal maintenance capital projects.

Net cash provided by financing activities during the first quarter of fiscal 2023 totaled $5.6 million compared to net cash used in financing activities of $3.2 million during the first quarter of fiscal 2022. During the first quarter of fiscal 2023, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added $29.0 million of new short-term revolving credit facility borrowings, and we made $20.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2023 (net increase in borrowings on our credit facility of $9.0 million). We ended the first quarter of fiscal 2023 with $9.0 million of outstanding borrowings under our revolving credit facility. During the first quarter of fiscal 2022, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As a result, we added $22.0 million of new short-term revolving credit facility borrowings, and we made $22.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2022.

Principal payments on long-term debt were approximately $0.4 million during the first quarter of fiscal 2023 compared to payments of $0.4 million during the first quarter of fiscal 2022. Our debt-to-capitalization ratio (excluding our finance and operating lease obligations) was 0.30 at March 30, 2023, compared to 0.28 at December 29, 2022.

During the first quarter of fiscal 2023 and the first quarter of fiscal 2022, we did not repurchase any shares of our common stock in the open market. As of March 30, 2023, approximately 2.5 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions.

During the first quarter of fiscal 2023 the Board of Directors declared a regular quarterly dividend of $0.05 per share of common stock. The dividend was paid on March 20, 2023 to shareholders of record on March 13, 2023. The Board of Directors also declared a dividend of $0.045 per share on the Class B common stock. The dividend on the Class B common stock, which is not publicly traded, was paid on March 20, 2023 to shareholders of record on March 13, 2023. Dividends paid during the first quarter of fiscal 2023 were $1.5 million. We did not make any dividend payments during the first quarter of fiscal 2022.

Our Credit Agreement, as amended, limited the total amount of quarterly dividend payments or share repurchases during fiscal 2022 to no more than $1.55 million per quarter. Beginning with the first quarter of fiscal 2023, we have returned to compliance with prior financial covenants under the Credit Agreement that were temporarily waived (specifically, the consolidated fixed charge coverage ratio), removing any limitations on the total amount of quarterly dividends or share repurchases. We have the ability to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.

During the first quarter of fiscal 2023, we amended the Credit Agreement by entering into the Fifth Amendment effective on February 10, 2023, which replaced the variable rate LIBOR benchmark with the secured overnight financing rate (“SOFR”). Borrowings under the Credit Agreement now generally bear interest at a variable rate equal to: (i) SOFR plus a credit spread adjustment of 0.10%, subject to a 0% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date; or (ii) the base rate (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon our consolidated debt to capitalization ratio as of the most recent determination date. In addition, the Credit Agreement generally requires us to pay a facility fee equal to 0.125% to 0.25% of the total revolving commitment, depending on our

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consolidated debt to capitalization ratio, as defined in the Credit Agreement. However, pursuant to the First Amendment, the Second Amendment and the Fifth Amendment: (1) we are charged a facility fee equal to 0.40% of the total revolving credit facility commitment and (2) the specified margin is 2.35% for SOFR borrowings and 1.35% for ABR borrowings, which facility fee rate and specified margins will remain in effect until the end of the first fiscal quarter ending after the end of any period in which the testing of any financial covenant in the Credit Agreement is suspended (the “specified period”).

Critical Accounting Policies and Estimates

We have included a summary of our Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 29, 2022. There have been no material changes to the summary provided in that report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have not experienced any material changes in our market risk exposures since December 29, 2022.

Item 4. Controls and Procedures

a.Evaluation of disclosure controls and procedures

Based on their evaluations and the evaluation of management, as of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

b.Changes in internal control over financial reporting

There were no significant changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15 of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 29, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information with respect to purchases made by us or on our behalf of our Common Stock during the periods indicated.


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
December 30 - February 3	—	$	—	—	2,522,646
February 4 - March 3	19,858	15.74		19,858	2,502,788
March 4 - March 30	—	—		—	2,502,788
Total	19,858	$	15.74	19,858	2,502,788

(1)Through March 30, 2023, our Board of Directors had authorized the repurchase of up to approximately 11.7 million shares of our outstanding Common Stock. Under these authorizations, we may repurchase shares of our Common Stock from time to time in the open market, pursuant to privately negotiated transactions or otherwise. As of March 30, 2023, we had repurchased approximately 9.2 million shares of our Common Stock under these authorizations. The repurchased shares are held in our treasury pending potential future issuance in connection with employee benefit, option or stock ownership plans or other general corporate purposes. These authorizations do not have an expiration date. The shares purchased during the first quarter of 2022 were purchased in conjunction with the exercise of stock options pursuant to the publicly announced repurchase authorization.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 6. Exhibits



4.1			Fifth Amendment to Credit Agreement, dated February 10, 2023, among The Marcus Corporation, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporate d by reference to Exhibit 4 .6 to our Annual Report on Form 10-K for the fis cal year ended December 2 9, 2022 .]

4.2			The Fifth Amendment to Note Purchase Agreement, dated June 27, 2013, dated February 10, 2023. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by reference to Exhibit 4.12 to our Ann ual Report on Form 10-K for the fiscal year en ded Decem ber 29, 2022 .]

4.3			The Fifth Amendment to Note Purchase Agreement, dated December 21, 2016, dated February 10, 2023. [Schedules and exhibits have been omitted and The Marcus Corporation agrees to furnish supplementally to the Securities and Exchange Commission a Copy of any omitted schedules and exhibits upon request.] [Incorporated by refer ence to Exhibit 4.18 to our Ann u al Report on Form 10-K for the fiscal year ended December 29, 2022.]

31.1			Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32			Written Statement of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350.

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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

DATE: May 4, 2023	By:	/s/ Gregory S. Marcus
		Gregory S. Marcus
		President and Chief Executive Officer


DATE: May 4, 2023	By:	/s/ Chad M. Paris
		Chad M. Paris
		Chief Financial Officer and Treasurer

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Marcus Corporation - 10-Q quarterly report FY2023 Q1

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PART I – FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited):

	Consolidated Balance Sheets	3

	Consolidated Statements of Earnings (Loss)	5

	Consolidated Statements of Comprehensive Income (Loss)	6

	Consolidated Statements of Cash Flows	7

	Condensed Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II – OTHER INFORMATION

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 4.	Mine Safety Disclosures	24

Item 6.	Exhibits	25

	Signatures	S-1