The Marcus Corp. (MCS) filed Quarterly Report for the period ended 2009-08-27.
The Marcus Corporation is comprised of four divisions: limited-service lodging movie theatres hotels/resorts and restaurants. The company currently operates or franchises Baymont Inns & Suites in a variety of states and Woodfield Suites in Illinois Wisconsin Colorado Ohio and Texas; movie screens in Wisconsin Ohio Illinois and Minnesota and one family entertainment center in Wisconsin; hotels and resorts in Wisconsin California Minnesota and Missouri; and KFC and KFC/Taco Bell 2-in-1 restaurants in Wisconsin. (Company Press Release) The Marcus Corp. has a market cap of $375.8 million; its shares were traded at around $12.59 with a P/E ratio of 22.9 and P/S ratio of 1. The dividend yield of The Marcus Corp. stocks is 2.7%.
Highlight of Business Operations:
We recognized investment income of $104,000 during the first quarter of fiscal 2010, representing a decrease of $257,000, or 71.2%, compared to investment income of approximately $361,000 during the prior year same period. This decrease was the result of reduced interest rates on short-term investments and reduced interest income from our declining balance of timeshare notes receivable. For the remainder of fiscal 2010, our investment income will likely remain slightly lower than last year’s comparative quarters for the same reason, with one exception. Last year during our second quarter, we reported two unusual investment losses totaling approximately $2.0 million. As a result, we will likely report a very favorable year-over-year comparison for this line item during our fiscal 2010 second quarter.
Our interest expense totaled $3.0 million for the first quarter of fiscal 2010 compared to $3.8 million during the same period last year, a decrease of approximately $800,000, or 21.7%. The decrease in interest expense during fiscal 2010 was the result of reduced borrowings and lower short-term interest rates during fiscal 2010. Due to the stronger cash flow from our operating divisions during the summer months, our borrowing levels are typically at their lowest point at the end of our fiscal first quarter. It is likely that our borrowing levels will increase later this fiscal year as we increase our capital spending and our operating cash flows decline during our slower operating months. As a result, although our interest expense in future periods may still decline compared to the prior year’s same period due to lower short-term interest rates, any future decreases may be partially offset by our expected increased debt levels.
We reported net equity losses from unconsolidated joint ventures of $31,000 during the first quarter of fiscal 2010 compared to losses of approximately $84,000 during the first quarter of fiscal 2009. Net losses during both years included our share of results from our remaining Baymont joint venture and two hotel joint ventures. We currently do not expect significant variations in net equity gains or losses from unconsolidated joint ventures during the remaining quarters of fiscal 2010 compared to the same periods last year.
Net cash provided by operating activities decreased by $14.0 million during the first quarter of fiscal 2010 to $20.2 million, compared to $34.2 million during the prior year’s first quarter. The decrease was due primarily to reduced net earnings and unfavorable timing in the collection of accounts and notes receivable and the payment of accounts payable and income taxes.
Net cash used in investing activities during the fiscal 2010 first quarter totaled $6.7 million, compared to $9.4 million during the fiscal 2009 first quarter. The decrease in net cash used in investing activities was primarily the result of decreased capital expenditures. Capital expenditures totaled $6.7 million during the first quarter of fiscal 2010 compared to $9.3 million during the prior year’s first quarter. Fiscal 2010 first quarter capital expenditures included approximately $5.4 million incurred in our hotels and resorts division, including costs associated with the previously described renovations at our Grand Geneva and Hilton Milwaukee properties. Fiscal 2009 first quarter capital expenditures included approximately $7.4 million incurred in our theatre division, including costs associated with a land purchase in Omaha, Nebraska, an UltraScreen in Orland Park, Illinois and digital 3D projectors purchased during the quarter.
Net cash used in financing activities during the first quarter of fiscal 2010 totaled $12.0 million compared to $25.4 million during the first quarter of fiscal 2009. Our principal payments on notes payable and long-term debt totaled approximately $15.1 million during the first quarter of fiscal 2010 compared to approximately $23.1 million during the same period last year, accounting for a portion of the decrease in net cash used in financing activities. Excess cash during both periods was used to reduce our commercial paper borrowings and borrowings under our revolving credit agreement. As a result, only $5.4 million of new debt was added during our fiscal 2010 first quarter and no new debt was required during our fiscal 2009 first quarter. Our debt-capitalization ratio was 0.42 at August 27, 2009 compared to 0.44 at our fiscal 2009 year-end.
MCS is in the portfolios of Private Capital of Private Capital Management, John Keeley of Keeley Fund Management.
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