The Marcus Corporation Reports Increased Third Quarter Revenues and Earnings – Lodging Performance Improves

MILWAUKEE–(BUSINESS WIRE)–March 21, 2002–The Marcus Corporation (NYSE: MCS) today reported a significant improvement in results for the third quarter of fiscal 2002 ended February 28, 2002.
Net earnings and earnings from continuing operations were $1,517,000 or $0.05 per share for the third quarter of fiscal 2002, an increase from net earnings of $341,000 or $0.01 per share and earnings from continuing operations of $54,000 or $0.00 per share for the same period in the prior year. The company's net earnings for the third quarter of fiscal 2001 included a gain of $1,518,000 or $0.05 per share from insurance contracts on the life of company founder Ben Marcus, who died in December 2000. Excluding the gain, earnings from continuing operations for the third quarter of fiscal 2002 were up $0.10 per share over the same period in the prior year. Continuing operations include The Marcus Corporation's limited-service lodging, theatre and hotels and resorts divisions. Fiscal 2001 net earnings include the company's former KFC business, which was classified as a discontinued operation.
Total revenues were $88,612,000 for the third quarter of fiscal 2002, a 2% increase from revenues of $86,876,000 for the comparable prior period.
For the first nine months of fiscal 2002, net earnings and earnings from continuing operations were $18,168,000 or $0.62 per share, up 14% from net earnings of $15,886,000 or $0.54 per share and up 22% from earnings from continuing operations of $14,905,000 or $0.51 per share. Total revenues for the first nine months of fiscal 2002 were $290,336,000, a 3% increase from revenues of $282,846,000 for the same period in the prior year.
Operating income before depreciation and amortization (EBITDA) was $17,748,000 for the third quarter of fiscal 2002, up 27% from EBITDA of $14,005,000 for the same period in the prior year. For the first nine months of fiscal 2002, EBITDA was $70,190,000, a 2% increase from EBITDA of $68,789,000 for the first nine months of fiscal 2001.
The increase in third quarter results reflects the continued strong performance of Marcus Theatres and improved performance in our limited service lodging division. While both of our lodging businesses continue to be affected by the economy and the events of September 11, we are encouraged by the improvement in performance we have seen since the second quarter, said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation.
Marcus Theatres reported record revenues and operating income for the third quarter of fiscal 2002 due to a solid slate of holiday movies including The Lord of the Rings, Ocean's Eleven, A Beautiful Mind and Harry Potter and the Sorcerer's Stone. We are especially pleased with Marcus Theatres' performance given that the strong Thanksgiving holiday weekend was included in the second quarter of this fiscal year rather than in the third quarter as in the prior year. In spite of this, the division was able to achieve a 23% increase in operating income on a 2% increase in revenues, illustrating the effectiveness of strict cost controls, said Marcus.
Marcus said the film product for the fourth quarter appears to be very strong, with expected hits including Ice Age, Spider Man and Star Wars: Episode II. The summer season also appears to be extremely promising. The investments we have made in our properties and amenities position our theatres as the first choice for moviegoers who want to see these and other popular movies, he said.
Operating income for Baymont Inns & Suites improved substantially over the third quarter of last year as a result of ongoing expense controls and lower utility costs. Marcus also noted that the division's results for the third quarter of fiscal 2001 included significant one-time costs for the introduction of several brand initiatives, including its Guest Ovations frequent stay program, which were not included in the results for the current quarter.
Baymont continues to move forward with its strategy to be the \'best in class' in the mid-price segment of the lodging industry. The latest move in positioning the Baymont brand and setting it apart from the competition is the recent introduction of Ovations Rooms. The new rooms feature plush pillow-top mattresses, down pillows, fluffy towels, branded bath products and a first for the segment–free in-room bottled water. Baymont's recent first-place ranking in an annual hotel chain survey conducted by Business Travel News confirms the progress we are making in establishing the Baymont brand, as well as the value we offer our guests, said Marcus.
Results for Marcus Hotels and Resorts in the third quarter of fiscal 2002, although down slightly from last year, reflected significant improvement compared to the challenges experienced in the second quarter. New properties including Timber Ridge Lodge and Water Park in Lake Geneva, Wis., and the Hilton Madison at Monona Terrace in Madison, Wis., contributed to the improved performance. However, start-up costs for the Hotel Phillips in Kansas City, Mo., which opened during the very challenging month of September, had a negative impact on results.
Marcus said the division is moving forward with a number of projects designed to further strengthen its market leadership at several key properties. The Pfister Hotel in Milwaukee is renovating all 176 tower rooms and the Grand Geneva Resort & Spa in Lake Geneva, Wis., is updating its 355 guest rooms and expanding its full-service spa and sports center to meet increased demand. In addition, the Hilton Milwaukee City Center recently opened its new signature restaurant, the Milwaukee Chop House. All of these projects are part of our strategy to consistently maintain the high level of quality our guests expect, said Marcus.
Marcus said results for both lodging divisions improved from the severe downturn in the industry immediately following the events of September 11. Baymont's experience has generally tracked the national averages for its segment, with revenue per available room (RevPAR) down 6.7% in the third quarter, including a decline of only 1.5% in February. Marcus Hotels and Resorts' RevPAR was down 10.4% for the third quarter, which is better than the national average for this segment of the lodging industry and significantly better than the 27% decline reported during the second quarter, said Marcus.
Marcus also indicated that the company is planning a private placement of $75 million in long-term debt which will be used to pay-off existing bank debt. The private placement is scheduled for closing in early April.
Marcus Corporation management will host a conference call today, March 21, 2002, at 3:00 p.m. Central/4:00 p.m. Eastern time to discuss the third quarter results. Interested parties can listen to the call live on the Internet through the investor relations section of the company's Web site:, or by dialing 1-913-981-5568. Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. A replay of the conference call will be available through Thursday, March 28 on the company's Web site or by dialing 1-888-203-1112 and entering the passcode 723809.

Headquartered in Milwaukee, Wis., The Marcus Corporation is comprised of three divisions: limited-service lodging, movie theatres and hotels/resorts. At the end of the third quarter of fiscal 2002, the company operated or franchised 190 Baymont Inns & Suites in 31 states, and a total of seven Woodfield Suites in Illinois, Wisconsin, Colorado, Ohio and Texas; 464 movie screens in Wisconsin, Ohio, Illinois and Minnesota, and one family entertainment center in Wisconsin; five hotels and a resort in Wisconsin, one hotel and a resort in California, one hotel in Minnesota and one hotel in Missouri. For more information, visit the company's Web site at