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General (Policies)
 9 Months Ended
Sep. 29, 2022
Accounting Policies [Abstract]  
Basis of Presentation Basis of Presentation - The unaudited consolidated financial statements for the 13 and 39 weeks ended September 29, 2022 and September 30, 2021 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 September 29, 2022, 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 30, 2021.
Noncontrolling Interests Noncontrolling Interests - 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 equity interest of outside owners in consolidated entities is recorded as noncontrolling interests in the consolidated balance sheets, and their share of earnings is recorded as net earnings (loss) attributable to noncontrolling interests in the consolidated statements of earnings (loss) in accordance with the partnership agreement. Due to the cumulative losses of the entity, the noncontrolling interest balance is $0 as of September 29, 2022 and December 30, 2021. The Company will not record earnings or losses from noncontrolling interest until the entity returns to profitability.
Depreciation and Amortization 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 $16,444 and $50,411 for the 13 and 39 weeks ended September 29, 2022, respectively, and $17,714 and $54,147 for the 13 and 39 weeks ended September 30, 2021, respectively.
Assets Held for Sale 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 September 29, 2022, assets held for sale consists of excess land.
Insurance Policies Insurance Policies - During the 13 weeks ended September 30, 2021, the Company received $6,700 of loan proceeds, recorded against the cash surrender value of a key-man life insurance policy. The loan bears interest at 8.0% which is payable annually. The loan is netted against the value of the life insurance policy and is included in other long-term assets in the consolidated balance sheet. Also during the 13 weeks ended September 30, 2021, the Company received $11,400 as reimbursement on a split dollar life insurance policy.
Long-Lived Assets 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. During the 39 weeks ended September 30, 2021, the Company determined that indicators of impairment were present for certain assets. As such, the Company evaluated the value of its property and equipment and the value of its operating lease right-of-use-assets and recorded an impairment charge as discussed in Note 3. There were no indicators of impairment identified during the 39 weeks ended September 29, 2022.
Goodwill 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 39 weeks ended September 29, 2022 or September 30, 2021.
Earnings (Loss) Per Share
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 earnings (loss) per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:
13 Weeks Ended39 Weeks Ended
September 29, 2022September 30, 2021September 29, 2022September 30, 2021
Numerator:
Net earnings (loss) attributable to The Marcus Corporation$3,289 $1,759 $(2,653)$(49,737)
Denominator:
Denominator for basic EPS31,506 31,421 31,481 31,340 
Effect of dilutive employee stock options84 48 — — 
Effect of convertible notes9,112 — — — 
Denominator for diluted EPS40,702 31,469 31,481 31,340 
Net earnings (loss) per share - basic:
Common Stock$0.11 $0.06 $(0.09)$(1.66)
Class B Common Stock$0.10 $0.05 $(0.08)$(1.39)
Net earnings (loss) per share - diluted:
Common Stock$0.10 $0.06 $(0.09)$(1.66)
Class B Common Stock$0.10 $0.05 $(0.08)$(1.39)
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 39 weeks ended September 29, 2022 and September 30, 2021, approximately 76,714 and 104,146 common stock equivalents, respectively, were excluded from the computation of diluted loss per share due to the Company’s net loss. During the 39 weeks ended September 29, 2022, 9,111,846 shares related to the convertible notes were excluded from the computation of diluted loss per share as the effect would have been anti-dilutive. During the 13 and 39 weeks ended September 30, 2021, 9,084,924 shares related to the convertible notes were excluded from the computation of diluted income (loss) per share as the effect would have been anti-dilutive.
Fair Value Measurements
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 September 29, 2022 and December 30, 2021, respectively, the Company’s $3,647 and $4,617 of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets. At December 30, 2021, the Company’s $5,000 of investments in money market accounts were valued using Level 1 pricing inputs and were included in cash and cash equivalents. The Company had no investments in money market accounts at September 29, 2022.
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 September 29, 2022 and December 30, 2021, respectively, the Company’s $130 asset and $689 liability related to the Company’s interest rate swap contract was valued using Level 2 pricing inputs.
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 September 29, 2022 and December 30, 2021, 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. Assets and liabilities that were measured on a non-recurring basis are discussed in Note 3.
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 $69,192 at September 29, 2022, 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 $152,963 at September 29, 2022, determined based on market rates and the closing trading price of the convertible senior notes as of September 29, 2022. 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
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 Ended39 Weeks Ended
September 29, 2022September 30, 2021September 29, 2022September 30, 2021
Service cost$263 $278 $791 $839 
Interest cost335 300 1,005 901 
Net amortization of prior service cost and actuarial loss258 331 772 986 
Net periodic pension cost$856 $909 $2,568 $2,726 
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
Revenue Recognition – The disaggregation of revenues by business segment for the 13 and 39 weeks ended September 29, 2022 is as follows:
13 Weeks Ended September 29, 2022
TheatresHotels/Resorts CorporateTotal
Theatre admissions$49,424 $— $— $49,424 
Rooms— 36,924 — 36,924 
Theatre concessions44,715 — — 44,715 
Food and beverage— 21,444 — 21,444 
Other revenues(1)
7,119 14,963 92 22,174 
Cost reimbursements— 8,969 — 8,969 
Total revenues$101,258 $82,300 $92 $183,650 
39 Weeks Ended September 29, 2022
TheatresHotels/ResortsCorporateTotal
Theatre admissions$150,928 $— $— $150,928 
Rooms— 83,219 — 83,219 
Theatre concessions138,326 — — 138,326 
Food and beverage— 54,969 — 54,969 
Other revenues(1)
20,932 40,938 303 62,173 
Cost reimbursements— 24,832 — 24,832 
Total revenues$310,186 $203,958 $303 $514,447 
(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 and 39 weeks ended September 30, 2021 is as follows:
13 Weeks Ended September 30, 2021
TheatresHotels/ResortsCorporateTotal
Theatre admissions$38,250 $— $— $38,250 
Rooms— 30,917 — 30,917 
Theatre concessions35,952 — — 35,952 
Food and beverage— 16,731 — 16,731 
Other revenues(1)
5,793 13,272 63 19,128 
Cost reimbursements1 4,883 — 4,884 
Total revenues$79,996 $65,803 $63 $145,862 
39 Weeks Ended September 30, 2021
TheatresHotels/ResortsCorporateTotal
Theatre admissions$73,850 $— $— $73,850 
Rooms— 57,293 — 57,293 
Theatre concessions68,932 — — 68,932 
Food and beverage— 32,234 — 32,234 
Other revenues(1)
11,989 33,006 258 45,253 
Cost reimbursements88 11,546 — 11,634 
Total revenues$154,859 $134,079 $258 $289,196 
(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 $35,413 and $39,144 as of September 29, 2022 and December 30, 2021, respectively. The Company had no contract assets as of September 29, 2022 and December 30, 2021. During the 39 weeks ended September 29, 2022, the Company recognized revenue of $12,273 that was included in deferred revenues as of December 30, 2021. During the 39 weeks ended September 30, 2021, the Company recognized revenue of $8,394 that was included in deferred revenues as of December 31, 2020. 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 September 29, 2022, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $3,123 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. The Company recognizes revenue as the tickets are redeemed, which is expected to occur within the next two years.
As of September 29, 2022, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was $3,464 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.
New Accounting Pronouncements
New Accounting Pronouncements – During the first quarter of fiscal 2022, the Company adopted Accounting Standards Update (ASU) No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in this update provide increased transparency of government assistance including the requirement of certain disclosures in a company’s notes to the consolidated financial statements about transactions with a
government. The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements.
In March 2020, the Financial Accounting Standards Board issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions to the existing guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR), or other interbank offered rates, to alternative reference rates such as the Secured Overnight Financing Rate (SOFR). ASU No. 2020-14 is optional, effective immediately, and may be elected over time as reference rate reform activities occur, generally through December 31, 2022. The Company will evaluate the effect the new standard will have on its consolidated financial statements when a replacement rate is chosen.