The Marcus Corporation Reports Year-End Results; Total Revenues Increase in All Three Divisions; Operating Income up 4.1%

Business Wire, July 24, 2003

Business Editors

MILWAUKEE--(BUSINESS WIRE)--July 24, 2003

The Marcus Corporation (NYSE:MCS) today reported results for the fourth quarter and fiscal year ended May 29, 2003, highlighted by increased revenues and operating income for the year.

Total revenues for the fourth quarter of fiscal 2003 were $96,565,000, compared to revenues of $101,557,000 for the same period in the prior year. Operating income was $8,728,000 for the fourth quarter of fiscal 2003, compared to operating income of $10,664,000 for the comparable prior period. Net earnings were $2,682,000 or $0.09 per diluted share for the fourth quarter of fiscal 2003, compared to net earnings of $4,292,000 or $0.14 per diluted share for the same period in the prior year.

For fiscal 2003, total revenues were $396,915,000, up 1.8% from revenues of $389,833,000 in fiscal 2002. Operating income increased 4.1% to $49,385,000 in fiscal 2003, from operating income of $47,458,000 in the prior year. Earnings from continuing operations were $19,307,000 or $0.66 per diluted share and net earnings were $20,556,000 or $0.70 per diluted share in fiscal 2003, compared to earnings from continuing operations and net earnings of $22,460,000 or $0.76 per diluted share in fiscal 2002. Continuing operations include The Marcus Corporation's limited-service lodging, theatre and hotels and resorts divisions.

"Fiscal 2003 was a year of many achievements. Revenues were up in all three of our divisions and the strong year-over-year performance of Marcus Theatres and Marcus Hotels and Resorts contributed to the 4.1% increase in operating income for the year. Excluding investment losses in fiscal 2003 and the impact of favorable historic tax credits in fiscal 2002, we would have exceeded last year's earnings per share," said Stephen H. Marcus, chairman and chief executive officer of The Marcus Corporation.

The company's fiscal 2003 results include a pre-tax investment loss of $2.6 million or $0.05 per diluted share related to loans to and investments in joint ventures. "We have a limited number of joint ventures and our exposure to additional losses from these joint ventures is not significant," said Marcus. He also noted that historic tax credits favorably impacted net earnings for fiscal 2002 by $2.6 million or $0.09 per share.

Marcus Theatres reported another year of record revenues and operating income. Both box office and concession revenues also reached new highs. "Marcus Theatres had another strong performance in fiscal 2003, despite a fourth quarter that, as good as it was, still fell short of the same period last year. The division's operating income for the fourth quarter of fiscal 2003 was the second highest in its history, however, with hit movies including The Matrix Reloaded, X2: X-Men United and Anger Management. Unfortunately, these hits simply could not beat the blockbuster movies of the fourth quarter of fiscal 2002 which included Spider-Man, Star Wars: Attack of the Clones and Ice Age," said Marcus. "And while it has been generally accepted that the war in Iraq negatively impacted the lodging industry and our lodging businesses in the fourth quarter, it is also likely that the television coverage of the war had an adverse impact on our theatre business during this same period."

Marcus said the division's fiscal 2003 results benefited from a particularly strong slate of movies with broad audience appeal throughout the summer and the busy holiday season. Top-grossing pictures for the year were Lord of the Rings: The Two Towers, Harry Potter and the Chamber of Secrets, My Big Fat Greek Wedding, Signs and Austin Powers in Goldmember.

"The current summer movie season got off to a good start with films such as Bruce Almighty and Finding Nemo performing well. Although ticket sales declined in late June and early July, strong performances from Terminator 3: Rise of the Machines, Pirates of the Caribbean: The Curse of the Black Pearl, and last week's Bad Boys II have re-energized the box office. With films including Seabiscuit, American Pie 3: American Wedding and Freaky Friday still to come this summer and a projected strong fall and holiday line-up, including the next Matrix and Lord of the Rings films, the future for our theatre division continues to be bright," said Marcus.

Looking at the company's lodging businesses, Marcus Hotels and Resorts achieved increased revenues and significantly improved operating income in fiscal 2003, despite what continues to be a challenging period for the lodging industry overall. Marcus said improved performance at the company's newest properties and its two Milwaukee hotels contributed to the higher results for the year.

"Leisure travel remains strong, but the slow rebound in group and business travel continues to impact our results. We are pleased that we continued to perform equal to or better than others in the full-service segment of the lodging industry, with revenue per available room (RevPAR) down only 0.5% and our average daily rate actually up slightly for the year, in spite of significant pricing pressures. Our advance bookings are encouraging and we look forward to opportunities for further improvement in the year ahead," said Marcus.