Marcus Corporation Reports Q3 Results

Performance buoyed by record quarter for Marcus Theatres(R)

. March 20, 2009

MARCH 30, 2009 - The Marcus Corporation (NYSE: MCS) today reported results for the third quarter ended February 26, 2009. The highlight of the quarter was the record performance of Marcus Theatres(R), with a 26% increase in revenues and a 43% increase in operating income.

Third Quarter Fiscal 2009 Highlights:

Total revenues for the third quarter of fiscal 2009 were $91,011,000, a 5.8% increase from revenues of $86,040,000 for the third quarter of fiscal 2008.
Operating income was $6,178,000 for the third quarter of fiscal 2009, a 1.3% decrease from operating income of $6,257,000 for the same period in the prior year.
Net earnings were $1,663,000 or $0.06 per diluted common share for the third quarter of fiscal 2009, compared to net earnings of $1,785,000 or $0.06 per diluted common share for the comparable prior period.

First Three Quarters of Fiscal 2009 Highlights:

Total revenues for the first three quarters of fiscal 2009 were $299,325,000, a 6.3% increase from revenues of $281,612,000 for the same period in fiscal 2008.
Operating income was $38,467,000 for the first three quarters of fiscal 2009, a 0.1% increase from operating income of $38,410,000 for the same period in the prior year.
Net earnings were $14,992,000 or $0.50 per diluted common share for the first three quarters of fiscal 2009, compared to net earnings of $16,456,000 or $0.54 per diluted common share for the comparable prior period.
Net earnings for the first three quarters of fiscal 2009 include one-time pre-tax investment losses and an adjustment of prior gains totaling $3.3 million or $0.07 per diluted common share.

"Once again, the movie-theatre business is proving to be recession-resistant, as indicated by the record revenues and operating income achieved by Marcus Theatres(R) in the third quarter. These strong results helped to offset the decline in performance of Marcus Hotels and Resorts resulting from the very challenging environment in the lodging industry," said Stephen H. Marcus, chairman of The Marcus Corporation.

Marcus Theatres(R)

"We believe the record performance of Marcus Theatres was driven by good movies, a more consistent and better flow of film product from the studios and the fact that going to the movies remains an affordable form of entertainment that provides an escape from reality for moviegoers," said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation. An additional 83 screens in Nebraska acquired in April 2008 also contributed to the division's improved third-quarter performance.

"The top-performing films in the third quarter were Marley & Me, Gran Torino and Paul Blart: Mall Cop. However, the real strength of the quarter was the broad variety of films, which attracted moviegoers of all ages to our theatres. This includes the strong sustained performance of films such as Slumdog Millionaire and The Curious Case of Benjamin Button," said Marcus.

Marcus said two films in digital 3D, My Bloody Valentine and Coraline, also contributed to the division's record results. Building on the popularity of the digital 3D format, the company announced plans to add an additional 13 digital 3D screens at locations across the Midwest, in time for the March 27 opening of DreamWorks Animation's first 3D release, Monsters vs. Aliens. With the 13 new digital screens, Marcus Theatres will offer digital 3D at 27 theatres, or more than half of its first-run locations.

"To date, digital 3D has had a positive impact on attendance trends and box office performance. With 12 or more digital 3D films scheduled for release in both calendar 2009 and 2010, this powerful technology has promising revenue potential," said Marcus. Upcoming digital 3D films include Pixar's newest film Up, as well as Ice Age 3: Dawn of the Dinosaurs, A Christmas Carol and Avatar, James Cameron's first feature film since Titanic.

"Our comparable fourth quarter box office receipts have opened fairly close to last year at this time, with films such as Watchmen and Race to Witch Mountain. Promising films opening in the next few weeks include Hannah Montana: The Movie, Fast and Furious 4 and the previously mentioned Monsters vs. Aliens in 3D. May is also expected to be a good month for film product, with potential blockbusters including X-Men Origins: Wolverine, Star Trek, Angels & Demons, Terminator Salvation and Night at the Museum 2," said Marcus.

In addition to investing in the new digital 3D technology, the company also continues to remodel and enhance its existing properties. A major renovation at the North Shore Cinema in Mequon, Wis. is expected to be completed in May. The renovations will transform this location into an entertainment destination featuring a 70-foot-wide UltraScreen(R), expanded concession area, a free-standing Zaffiro's Italian restaurant, a cocktail lounge and remodeled auditoriums.

Marcus Hotels and Resorts

Results for Marcus Hotels and Resorts were impacted by the continuing industry-wide decline in both business and leisure travel. Revenue per available room (RevPAR) declined 13.5% in the third quarter compared to the prior year quarter and was down 5.9% for the first three quarters of the fiscal year, reflecting significantly reduced occupancy levels.

"In addition to suffering from the recession and the uncertain economic outlook, the industry has faced unusual headwinds produced by the pressure of government officials speaking out against conferences and incentive trips that help to drive lodging-industry revenues and provide a multitude of jobs in the sector," explained Marcus.

Marcus expects the lodging-industry environment to continue to be very challenging for the remainder of calendar 2009. "Within this framework, however, advanced bookings at this point for the typically busy summer and fall seasons suggest that we may see some moderation in the revenue declines in the latter half of the year."

"In this very difficult environment, we are looking very closely at operating expenses at all of our properties and making the adjustments we believe are necessary to weather this storm. At the same time, we are maintaining our focus on the long term by continuing to invest in maintaining and remodeling our properties to keep them well-positioned for the future," added Marcus.

The company recently began major renovation projects at the Hilton Milwaukee City Center in Milwaukee, Wis. and the Grand Geneva Resort & Spa in Lake Geneva, Wis. The total cost for both projects is $30 million. "When the market picks up, we'll be ready with attractive new enhancements at these two major locations," said Marcus.

Summary

"In challenging times like these, a strong balance sheet is more important than ever. Our debt to total capitalization ratio was under 44% at the end of the third quarter. We have nearly $129 million available under our existing credit lines, with minimal maturities over the next few years. This strong financial position enables us to maintain our capital expenditure program, while giving us the ability to take advantage of potential growth opportunities that may arise in this difficult environment," added Marcus.

Conference Call and Webcast

Marcus Corporation management will host a conference call today, March 19, 2009, at 10:00 a.m. Central/11:00 a.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: www.marcuscorp.com, or by dialing 1-857-350-1604 and entering the passcode 11992980. 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. The call will be available for telephone replay through Thursday, March 26, 2009 by dialing 1-888-286-8010 and entering the passcode 36843919. The Webcast of the conference call will be archived on the company's Web site until the next earnings release.

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