10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 27, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-12604

THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin	39-1139844
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
100 East Wisconsin Avenue, Suite 1900 Milwaukee, Wisconsin	53202-4125
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (414) 905-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes     x      No       ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes    x No       ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check One).

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    ¨ No      x     

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

COMMON STOCK OUTSTANDING AT December 31, 2014 – 18,679,403

CLASS B COMMON STOCK OUTSTANDING AT December 31, 2014 , 2014 – 8,731,786

THE MARCUS CORPORATION

INDEX

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements:
	Consolidated Balance Sheets (November 27, 2014 and May 29, 2014)	3
	Consolidated Statements of Earnings (13 and 26 weeks ended November 27, 2014 and November 28, 2013)	5
	Consolidated Statements of Comprehensive Income (13 and 26 weeks ended November 27, 2014 and November 28, 2013)	6
	Consolidated Statements of Cash Flows (26 weeks ended November 27, 2014 and November 28, 2013)	7
	Condensed Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II – OTHER INFORMATION
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 4.	Mine Safety Disclosures	28
Item 6.	Exhibits	28
	Signatures	S-1

2

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

THE MARCUS CORPORATION

Consolidated Balance Sheets

(in thousands, except share and per share data)	November 27, 2014		May 29, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	9,033	$	6,780
Restricted cash		9,132		8,032
Accounts and notes receivable, net of reserves of $1,502 and $1,423, respectively		14,608		9,472
Refundable income taxes		—		2,958
Deferred income taxes		3,180		3,056
Other current assets		6,052		6,367
Total current assets		42,005		36,665
Property and equipment:
Land and improvements		100,222		97,611
Buildings and improvements		615,675		613,873
Leasehold improvements		67,301		62,379
Furniture, fixtures and equipment		272,499		270,993
Construction in progress		8,924		5,843
Total property and equipment		1,064,621		1,050,699
Less accumulated depreciation and amortization		411,341		399,119
Net property and equipment		653,280		651,580
Other assets:
Investments in joint ventures		3,790		2,025
Goodwill		43,789		43,858
Other		35,995		34,795
Total other assets		83,574		80,678
TOTAL ASSETS	$	778,859	$	768,923

See accompanying condensed notes to consolidated financial statements.

3

THE MARCUS CORPORATION

Consolidated Balance Sheets

(in thousands, except share and per share data)	November 27,2014			May 29, 2014
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	23,320		$	30,954
Income taxes		2,687			—
Taxes other than income taxes		15,953			14,333
Accrued compensation		11,340			12,914
Other accrued liabilities		29,351			31,912
Current portion of capital lease obligation		4,999			4,871
Current maturities of long-term debt		8,605			7,030
Total current liabilities		96,255			102,014
Capital lease obligation		20,861			23,370
Long-term debt		234,740			233,557
Deferred income taxes		42,148			42,561
Deferred compensation and other		41,217			37,442
Equity:
Shareholders’ equity attributable to The Marcus Corporation
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued		—			—
Common Stock, $1 par; authorized 50,000,000 shares; issued 22,457,727 shares at November 27, 2014 and May 29, 2014		22,458			22,458
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 8,731,786 shares at November 27, 2014 and May 29, 2014		8,732			8,732
Capital in excess of par		54,570			53,844
Retained earnings		306,937			294,334
Accumulated other comprehensive loss		(4,554	)		(4,558	)
		388,143			374,810
Less cost of Common Stock in treasury (3,781,733 shares at November 27, 2014 and 3,890,871 shares at May 29, 2014)		(47,327	)		(48,599	)
Total shareholders' equity attributable to The Marcus Corporation		340,816			326,211
Noncontrolling interest		2,822			3,768
Total equity		343,638			329,979
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	778,859		$	768,923

See accompanying condensed notes to consolidated financial statements.

4

THE MARCUS CORPORATION

Consolidated Statements of Earnings

(in thousands, except per share data)	November 27, 2014						November 28, 2013
	13 Weeks			26 Weeks			13 Weeks			26 Weeks
Revenues:
Theatre admissions	$	32,794		$	74,139		$	27,973		$	70,082
Rooms		29,678			64,359			28,548			61,118
Theatre concessions		20,484			45,406			15,876			39,565
Food and beverage		20,134			36,289			15,546			31,076
Other revenues		12,971			27,637			12,645			27,779
Total revenues		116,061			247,830			100,588			229,620
Costs and expenses:
Theatre operations		27,953			62,816			25,461			60,084
Rooms		10,725			22,127			10,160			20,852
Theatre concessions		5,841			12,562			4,768			10,906
Food and beverage		15,924			27,987			11,491			23,037
Advertising and marketing		6,710			14,098			6,529			13,413
Administrative		12,955			25,347			11,126			23,370
Depreciation and amortization		10,156			19,234			8,457			16,784
Rent		2,160			4,314			2,115			4,240
Property taxes		3,719			7,625			3,752			7,174
Other operating expenses		8,298			17,411			7,919			16,603
Total costs and expenses		104,441			213,521			91,778			196,463
Operating income		11,620			34,309			8,810			33,157
Other income (expense):
Investment income		25			50			17			20
Interest expense		(2,388	)		(4,792	)		(2,584	)		(4,978	)
Loss on disposition of property, equipment and other assets		(495	)		(501	)		(789	)		(772	)
Equity earnings (losses) from unconsolidated joint ventures, net		27			(14	)		54			(29	)
		(2,831	)		(5,257	)		(3,302	)		(5,759	)
Earnings before income taxes		8,789			29,052			5,508			27,398
Income taxes		3,398			11,385			2,026			11,070
Net earnings		5,391			17,667			3,482			16,328
Net earnings (loss) attributable to noncontrolling interests		168			12			237			(348	)
Net earnings attributable to The Marcus Corporation	$	5,223		$	17,655		$	3,245		$	16,676
Net earnings per share – basic:
Common Stock	$	0.20		$	0.67		$	0.12		$	0.64
Class B Common Stock	$	0.18		$	0.60		$	0.11		$	0.58
Net earnings per share – diluted:
Common Stock	$	0.19		$	0.64		$	0.12		$	0.62
Class B Common Stock	$	0.18		$	0.60		$	0.11		$	0.58
Dividends per share:
Common Stock	$	0.095		$	0.190		$	0.085		$	0.170
Class B Common Stock	$	0.086		$	0.173		$	0.077		$	0.155

See accompanying condensed notes to consolidated financial statements.

5

THE MARCUS CORPORATION

Consolidated Statements of Comprehensive Income

(in thousands except per share data)	November 27, 2014						November 28, 2013
	13 Weeks			26 Weeks			13 Weeks			26 Weeks
Net earnings	$	5,391		$	17,667		$	3,482		$	16,328
Other comprehensive income (loss), net of tax:
Change in unrealized loss on available for sale investments, net of tax benefit of $0, $0, $0 and $1, respectively		—			—			—			(1	)
Fair market value adjustment of interest rate swap, net of tax benefit of $63, $37, $194 and $36, respectively		(95	)		(55	)		(294	)		(53	)
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect of $20, $39, $20 and $37, respectively		30			59			30			57
Other comprehensive income (loss)		(65	)		4			(264	)		3
Comprehensive income		5,326			17,671			3,218			16,331
Comprehensive income (loss) attributable to noncontrolling interests		168			12			237			(348	)
Comprehensive income attributable to The Marcus Corporation	$	5,158		$	17,659		$	2,981		$	16,679

See accompanying condensed notes to consolidated financial statements.

6

THE MARCUS CORPORATION

Consolidated Statements of Cash Flows

	26 Weeks Ended
(in thousands)	November 27, 2014			November 28, 2013
OPERATING ACTIVITIES:
Net earnings	$	17,667		$	16,328
Adjustments to reconcile net earnings to net cash provided by operating activities:
Losses on investments in joint ventures		14			29
Distribution from joint venture		120			—
Loss on disposition of property, equipment and other assets		501			772
Amortization of favorable lease right		167			167
Depreciation and amortization		19,234			16,784
Stock compensation expense		683			1,036
Deferred income taxes		(470	)		(949	)
Deferred compensation and other		3,775			469
Changes in operating assets and liabilities:
Accounts and notes receivable		(5,101	)		(1,734	)
Other current assets		(165	)		136
Accounts payable		(4,360	)		(2,064	)
Income taxes		5,692			3,020
Taxes other than income taxes		1,620			1,679
Accrued compensation		(1,574	)		135
Other accrued liabilities		(2,561	)		2,036
Total adjustments		17,575			21,516
Net cash provided by operating activities		35,242			37,844
INVESTING ACTIVITIES:
Capital expenditures		(27,047	)		(20,954	)
Proceeds from disposals of property, equipment and other assets		183			876
Decrease (increase) in restricted cash		(1,100	)		432
Increase in other assets		(1,142	)		(640	)
Purchase of interest in joint venture		(1,500	)		—
Capital contribution in joint venture		(399	)		(706	)
Cash advanced to joint venture		—			(231	)
Net cash used in investing activities		(31,005	)		(21,223	)
FINANCING ACTIVITIES:
Debt transactions:
Proceeds from issuance of long-term debt		67,000			71,000
Principal payments on long-term debt		(64,242	)		(79,157	)
Debt issuance costs		—			(276	)
Equity transactions:
Treasury stock transactions, except for stock options		173			(1,035	)
Exercise of stock options		1,095			744
Dividends paid		(5,052	)		(4,466	)
Distributions to noncontrolling interest		(958	)		(1,059	)
Net cash used in financing activities		(1,984	)		(14,249	)
Net increase in cash and cash equivalents		2,253			2,372
Cash and cash equivalents at beginning of period		6,780			10,158
Cash and cash equivalents at end of period	$	9,033		$	12,530
Supplemental Information:
Interest paid, net of amounts capitalized	$	4,558		$	4,055
Income taxes paid		5,600			8,832
Change in accounts payable for additions to property and equipment		(3,274	)		(1,503	)

See accompanying condensed notes to consolidated financial statements.

7

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 26 WEEKS ENDED NOVEMBER 27, 2014

1.           General

Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended May 29, 2014, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.

Basis of Presentation - The unaudited consolidated financial statements for the 13 and 26 weeks ended November 27, 2014 and November 28, 2013 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 November 27, 2014, 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 May 29, 2014.

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 $10,048,000 and $19,008,000 for the 13 and 26 weeks ended November 27, 2014, respectively, and $8,332,000 and $16,539,000 for the 13 and 26 weeks ended November 28, 2013, respectively.

Accumulated Other Comprehensive Loss - Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:

	Swap Agreements			Available for Sale Investments			Pension Obligation			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at May 29, 2014	$	34		$	(11	)	$	(4,581	)	$	(4,558	)
Other comprehensive loss before reclassifications		(55	)		-			-			(55	)
Amounts reclassified from accumulated other comprehensive loss (1)		59			-			-			59
Net other comprehensive income		4			-			-			4
Balance at November 27, 2014	$	38		$	(11	)	$	(4,581	)	$	(4,554	)

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	Swap Agreements			Available for Sale Investments			Pension Obligation			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at May 30, 2013	$	18		$	(10	)	$	(3,836	)	$	(3,828	)
Other comprehensive loss before reclassifications		(53	)		(1	)		-			(54	)
Amounts reclassified from accumulated other comprehensive loss (1)		57			-			-			57
Net other comprehensive income (loss)		4			(1	)		-			3
Balance at November 28, 2013	$	22		$	(11	)	$	(3,836	)	$	(3,825	)

⁽¹⁾ Amounts are included in interest expense in the consolidated statements of earnings.

Earnings Per Share - Net earnings per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options using the treasury method. Convertible Class B Common Stock is reflected on an if-converted basis. The computation of the diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock, while the diluted net earnings 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 for each period are allocated based on the proportionate share of entitled cash dividends. The computation of diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock and, as such, the undistributed earnings are equal to net earnings for that computation.

The following table illustrates the computation of Common Stock and Class B Common Stock basic and diluted net earnings per share for net earnings and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

9

	13 Weeks Ended November 27, 2014		13 Weeks Ended November 28,  2013		26 Weeks Ended November 27, 2014		26 Weeks Ended November 28, 2013
	(in thousands, except per share data)
Numerator:
Net earnings attributable to The Marcus Corporation	$	5,223	$	3,245	$	17,655	$	16,676
Denominator:
Denominator for basic EPS		27,400		27,059		27,374		27,065
Effect of dilutive employee stock options		168		71		215		43
Denominator for diluted EPS		27,568		27,130		27,589		27,108
Net earnings per share – basic:
Common Stock	$	0.20	$	0.12	$	0.67	$	0.64
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58
Net earnings per share – diluted:
Common Stock	$	0.19	$	0.12	$	0.64	$	0.62
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58

Equity – Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 26 weeks ended November 27, 2014 and November 28, 2013 was as follows:

	Total Shareholders’ Equity Attributable to The Marcus Corporation			Noncontrolling Interests
	(in thousands)
Balance at May 29, 2014	$	326,211		$	3,768
Net earnings attributable to The Marcus Corporation		17,655			–
Net earnings attributable to noncontrolling interests		–			12
Distributions to noncontrolling interests		–			(958	)
Cash dividends		(5,052	)		–
Exercise of stock options		1,095			–
Treasury stock transactions, except for stock options		173			–
Share-based compensation		683			–
Other		47			–
Other comprehensive income, net of tax		4			–
Balance at November 27, 2014	$	340,816		$	2,822

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	Total Shareholders’ Equity Attributable to The Marcus Corporation			Noncontrolling Interests
	(in thousands)
Balance at May 30, 2013	$	306,702		$	9,994
Net earnings attributable to The Marcus Corporation		16,676			–
Net loss attributable to noncontrolling interests		–			(348	)
Distributions to noncontrolling interests		–			(1,059	)
Cash dividends		(4,466	)		–
Exercise of stock options		744			–
Treasury stock transactions, except for stock options		(1,035	)		–
Share-based compensation		1,036			–
Other		85			–
Other comprehensive income, net of tax		3			–
Balance at November 28, 2013	$	319,745		$	8,587

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 November 27, 2014 and May 29, 2014, the Company’s $70,000 of available for sale securities were valued using Level 1 pricing inputs and were included in other current assets.

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 November 27, 2014 and May 29, 2014, respectively, the $62,000 and $56,000 asset 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 November 27, 2014 and May 29, 2014, none of the Company’s fair value measurements were valued using Level 3 pricing inputs.

11

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 Ended November 27, 2014		13 Weeks Ended November 28, 2013		26 Weeks Ended November 27, 2014		26 Weeks Ended November 28, 2013
	(in thousands)
Service cost	$	174	$	175	$	349	$	351
Interest cost		311		294		622		587
Net amortization of prior service cost and actuarial loss		81		67		162		134
Net periodic pension cost	$	566	$	536	$	1,133	$	1,072

New Accounting Pronouncement - In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The guidance will replace most existing revenue recognition guidance in Generally Accepted Accounting Principles when it becomes effective. The new standard is effective for the Company in fiscal 2018 and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method and is evaluating the effect that the guidance will have on its consolidated financial statements and related disclosures.

Reclassifications – Certain reclassifications have been made to the prior year’s consolidated balance sheet to conform to the current year’s presentation to include the condominium units recorded in property and equipment.

2. Derivatives and Hedging Activities

The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions.

The Company entered into an interest rate swap agreement on February 28, 2013 covering $25,000,000 of floating rate debt, which expires January 22, 2018, and requires the Company to pay interest at a defined rate of 0.96% while receiving interest at a defined variable rate of one-month LIBOR (0.19% at November 27, 2014). The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. The Company’s interest rate swap agreement is considered effective and qualifies as a cash flow hedge. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of November 27, 2014, the interest rate swap was considered effective. The notional amount of the swap is $25,000,000 and the fair value of the swap was $62,000 and $56,000 as of November 27, 2014 and May 29, 2014, respectively, and is included in other (long-term assets). The Company does not expect the interest rate swap to have any material effect on earnings within the next 12 months.

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3. Capital Lease Obligation

During fiscal 2012, the Company entered into a master licensing agreement with CDF2 Holdings, LLC, a subsidiary of Cinedigm Digital Cinema Corp (CDF2), whereby CDF2 purchased on the Company’s behalf, and then deployed and licensed back to the Company, digital cinema projection systems (the “systems”) for use by the Company in its theatres. As of November 27, 2014, 642 of the Company’s screens were utilizing the systems under a 10-year master licensing agreement with CDF2. Included in furniture, fixtures and equipment is $45,510,000 related to the digital systems as of November 27, 2014 and May 29, 2014, which is being amortized over the remaining estimated useful life of the assets. Accumulated amortization of the digital systems was $15,347,000 and $12,259,000 as of November 27, 2014 and May 29, 2014, respectively.

Under the terms of the master licensing agreement, the Company made an initial one-time payment to CDF2. The Company expects that the balance of CDF2’s costs to deploy the systems will be covered primarily through the payment of virtual print fees (VPF’s) from film distributors to CDF2 each time a digital movie is booked on one of the systems deployed on a Company screen. The Company agreed to make an average number of bookings of eligible digital movies on each screen on which a licensed system has been deployed to provide for a minimum level of VPF’s paid by distributors (standard booking commitment) to CDF2. To the extent the VPF’s paid by distributors are less than the standard booking commitment, the Company must make a shortfall payment to CDF2. Based upon the Company’s historical booking patterns, the Company does not expect to make any shortfall payments during the life of the agreement. Accounting Standards Codification No. 840, Leases, requires that the Company consider the entire amount of the standard booking commitment minimum lease payments for purposes of determining the capital lease obligation. The maximum amount per year that the Company could be required to pay is approximately $6,163,000 until the obligation is fully satisfied.

The Company’s capital lease obligation is being reduced as VPF’s are paid by the film distributors to CDF2. The Company has recorded the reduction of the obligation associated with the payment of VPF’s as a reduction of the interest related to the obligation and the amortization incurred related to the systems, as the payments represent a specific reimbursement of the cost of the systems by the studios. Based on the Company’s expected minimum number of eligible movies to be booked, the Company expects the obligation to be reduced by at least $4,999,000 within the next 12 months. This reduction will be recognized as an offset to amortization and is expected to offset the majority of the amortization of the systems.

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4. Income Taxes

The Company’s effective income tax rate, adjusted for losses from noncontrolling interests, for the 13 and 26 weeks ended November 27, 2014 was 39.4% and 39.2%, respectively, and was 38.4% and 39.9% for the 13 and 26 weeks ended November 28, 2013, resepctively. The Company does not include the income tax expense or benefit related to the net earnings or loss attributable to noncontrolling interest in its income tax expense as the entities are considered pass-through entities and, as such, the income tax expense or benefit is attributable to its owners.

5. Business Segment Information

The Company’s primary operations are reported in the following business segments: Theatres and Hotels/Resorts. Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.

Following is a summary of business segment information for the 13 and 26 weeks ended November 27, 2014 and November 28, 2013 (in thousands):

13 Weeks Ended November 27, 2014	Theatres		Hotels/ Resorts		Corporate Items			Total
Revenues	$	56,275	$	59,626	$	160		$	116,061
Operating income (loss)		9,783		5,729		(3,892	)		11,620
Depreciation and amortization		5,005		5,035		116			10,156

13 Weeks Ended November 28, 2013	Theatres		Hotels/ Resorts		Corporate Items			Total
Revenues	$	46,772	$	53,704	$	112		$	100,588
Operating income (loss)		5,307		7,045		(3,542	)		8,810
Depreciation and amortization		4,147		4,169		141			8,457

26 Weeks Ended November 27, 2014	Theatres		Hotels/ Resorts		Corporate Items			Total
Revenues	$	125,662	$	121,873	$	295		$	247,830
Operating income (loss)		24,637		16,733		(7,061	)		34,309
Depreciation and amortization		9,735		9,282		217			19,234

26 Weeks Ended November 28, 2013	Theatres		Hotels/ Resorts		Corporate Items			Total
Revenues	$	115,884	$	113,514	$	222		$	229,620
Operating income (loss)		22,220		17,943		(7,006	)		33,157
Depreciation and amortization		8,133		8,350		301			16,784

14

THE MARCUS CORPORATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Form 10-Q are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (2) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (3) the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets; (4) the effects of competitive conditions in our markets; (5) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (6) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our businesses; (7) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other markets; (8) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; and (9) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or incidents such as the tragedy in a movie theatre in Colorado in July 2012. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS

General

We report our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in May. Fiscal 2015 is a 52-week year, as was fiscal 2014. We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts.

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The following table sets forth revenues, operating income, other income (expense), net earnings and net earnings per common share for the comparable second quarter and first half of fiscal 2015 and fiscal 2014 (in millions, except for per share and variance percentage data):

	Second Quarter											First Half
							Variance											Variance
	F2015			F2014			Amt.		Pct.			F2015			F2014			Amt.			Pct.
Revenues	$	116.1		$	100.6		$	15.5		15.4	%	$	247.8		$	229.6		$	18.2			7.9	%
Operating Income		11.6			8.8			2.8		31.9	%		34.3			33.2			1.1			3.5	%
Other income (expense)		(2.8	)		(3.3	)		0.5		14.3	%		(5.3	)		(5.8	)		0.5			8.7	%
Net earnings (loss) attributable to noncontrolling interests		0.2			0.2			–		–	%		–			(0.3	)		(0.3	)		-100.0	%
Net earnings attributable to The Marcus Corp.	$	5.2		$	3.2		$	2.0		61.0	%	$	17.7		$	16.7		$	1.0			5.9	%
Net earnings per common share – diluted:	$	0.19		$	0.12		$	0.07		58.3	%	$	0.64		$	0.62		$	0.02			3.2	%

Revenues increased during the second quarter and first half of fiscal 2015 to record levels for such periods due to increases from both our theatre and hotels and resorts divisions. Operating income (earnings before other income/expense and income taxes) and net earnings attributable to The Marcus Corporation increased during the second quarter and first half of fiscal 2015 compared to the same periods last year due to record second quarter and first half operating results from our theatre division, partially offset by decreased operating income from our hotels and resorts division. Operating results from our theatre division during the fiscal 2015 periods were favorably impacted by increased attendance, due primarily to positive customer responses to our recent investments and pricing strategies. Operating income from our hotels and resorts division during the fiscal 2015 periods were negatively impacted by several factors, including increased depreciation expense and reduced results from our Chicago hotel as a result of starting construction on the conversion of the hotel into a new brand. Our operating results for the fiscal 2015 periods were favorably impacted by a decrease in our interest expense as well as a decrease in losses on disposition of property, equipment and other assets during the fiscal 2015 periods.

Our interest expense totaled $2.4 million and $4.8 million for the second quarter and first half of fiscal 2015, respectively, compared to $2.6 million and $5.0 million, respectively, during the same periods last year, a decrease of approximately $200,000, or 7.6%, and $200,000, or 3.7%, respectively. The decrease in interest expense during the fiscal 2015 periods was due entirely to a lower average interest rate, as we had slightly higher total borrowings during the periods compared to the same periods during fiscal 2014. Our average interest rate was lower during the fiscal 2015 periods due primarily to our decision to pay off an approximately $21 million fixed rate mortgage related to one of our hotels at the end of May 2014 using borrowings from our revolving credit facility. Changes in our borrowing levels due to variations in our operating results, capital expenditures, share repurchases and asset sale proceeds, among other items, may impact our actual reported interest expense in future periods. Our borrowing levels typically increase later in our fiscal year as our operating cash flows decline and our capital expenditures increase during our slower operating months.

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We reported a loss on disposition of property, equipment and other assets of $495,000 during the second quarter of fiscal 2015 compared to a loss of $789,000 during the second quarter of fiscal 2014. The majority of the fiscal 2015 loss was related to old theatre seats and other items disposed of in conjunction with our theatre renovations. Approximately $750,000 of the fiscal 2014 loss was related to the sale of our 15% joint venture ownership interest in the Columbus Westin hotel in Columbus, Ohio to the majority partner in that venture. The timing of periodic sales or disposals of our property, equipment and other assets varies from quarter to quarter, resulting in variations in our reported gains or losses on disposition of such assets.

We did not have any significant variations in investment income or net equity earnings or losses from unconsolidated joint ventures during the second quarter and first half of fiscal 2015 compared to the same periods last year.

We reported income tax expense for the second quarter and first half of fiscal 2015 of $3.4 million and $11.4 million, respectively, compared to $2.0 million and $11.1 million, respectively, during the same periods of fiscal 2014. Our fiscal 2015 first half effective income tax rate, after adjusting for a loss from noncontrolling interests that is not tax-effected because the entities involved are tax pass-through entities, was 39.2%, compared to our fiscal 2014 first half effective income tax rate of 39.9%. We currently anticipate that our effective income tax rate for the remaining quarters of fiscal 2015 will remain close to our historical 39-40% average, excluding any changes in our liability for unrecognized tax benefits or potential changes in federal and state income tax rates. Our actual fiscal 2015 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

The operating results of two majority-owned hotels, The Skirvin Hilton and The Cornhusker, A Marriott Hotel, are included in the hotels and resorts division revenue and operating income, and the after-tax net earnings or loss attributable to noncontrolling interests is deducted from or added to net earnings on the consolidated statements of earnings. We reported net earnings attributable to noncontrolling interests of $168,000 and $237,000, respectively, during the second quarter of fiscal 2015 and 2014. We reported net earnings attributable to noncontrolling interests of $12,000 during the first half of fiscal 2015 and a net loss attributable to noncontrolling interests of $348,000 during the first half of fiscal 2014. The loss during the first half of fiscal 2014 was primarily due to a true-up of a prior-year allocation of earnings attributable to noncontrolling interests and, as a result, negatively impacted comparisons to our fiscal 2015 results by approximately $0.01 per share.

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Theatres

The following table sets forth revenues, operating income and operating margin for our theatre division for the second quarter and first half of fiscal 2015 and fiscal 2014 (in millions, except for variance percentage and operating margin):

	Second Quarter											First Half
							Variance											Variance
	F2015			F2014			Amt.		Pct.			F2015			F2014			Amt.		Pct.
Revenues	$	56.3		$	46.8		$	9.5		20.3	%	$	125.7		$	115.9		$	9.8		8.4	%
Operating income		9.8			5.3			4.5		84.3	%		24.6			22.2			2.4		10.9	%
Operating margin (% of revenues)		17.4	%		11.3	%							19.6	%		19.2	%

Consistent with the seasonal nature of the motion picture exhibition industry, the second quarter of our fiscal year is typically the slowest period for our theatre division. Our theatre division revenues, operating income and operating margin increased during the second quarter and first half of fiscal 2015 compared to the same periods of the prior year due primarily to an increase in attendance, resulting in increased box office receipts. Both fiscal 2015 periods also benefitted from an increase in our total concession revenues compared to the same periods in 2014.

The following table sets forth a breakdown of the components of revenues for the theatre division for the second quarter and first half of fiscal 2015 and fiscal 2014 (in millions, except for variance percentage):

	Second Quarter									First Half
					Variance									Variance
	F2015		F2014		Amt.		Pct.			F2015		F2014		Amt.			Pct.
Box office receipts	$	32.8	$	28.0	$	4.8		17.2	%	$	74.1	$	70.1	$	4.0			5.8	%
Concession revenues		20.5		15.9		4.6		29.0	%		45.5		39.6		5.9			14.8	%
Other revenues		3.0		2.9		0.1		2.5	%		6.1		6.2		(0.1	)		-1.9	%
Total revenues	$	56.3	$	46.8	$	9.5		20.3	%	$	125.7	$	115.9	$	9.8			8.4	%

The increase in our box office receipts for the second quarter and first half of fiscal 2015 compared to the same periods last year was due entirely to an increase in comparable theatre attendance. According to data received from Rentrak (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal 2015 second quarter and first half results, United States box office receipts increased 0.4% during our fiscal 2015 second quarter and decreased 7.9% during our fiscal 2015 first half, compared to the same periods in 2014, indicating that our box office receipts in the fiscal 2015 periods outperformed the industry by nearly 17 and 14 percentage points, respectively (the fourth consecutive quarter in which we have outperformed the industry average). We believe we significantly outperformed the industry average during our fiscal 2015 periods due to the recent investments we have made in new features and amenities in select theatres and our implementation of innovative operating and marketing strategies, including our $5 Tuesday promotion and our new customer loyalty program.

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Our average ticket price decreased 6.6% during the second quarter of fiscal 2015 and 8.9% during the first half of fiscal 2015, compared to the same periods last year. The decreases were directly attributable to our $5 Tuesday promotion. We rolled out the $5 Tuesday promotion to our entire circuit in mid-November 2013, so comparisons to fiscal 2014 should not be negatively impacted by this promotion during the remaining quarters of fiscal 2015. In addition, we introduced our first selected admission price increases since April 2013 to our theatres in mid-October 2014. We operated six weeks with the new pricing during the second quarter of fiscal 2015. Our price increases were generally modest, as we continue to be sensitive to the favorable price-value proposition we have established, although we did increase some prices at our DreamLounger^SM recliner seating locations by approximately $0.50-$0.75 per ticket.

Our fiscal 2015 second quarter concession revenues increased compared to the same period last year as a result of increased attendance at comparable theatres and a 2.7% increase in our average concession revenues per person compared to our fiscal 2014 second quarter. The increase in our average concession revenues per person at comparable theatres contributed approximately $521,000, or approximately 11%, of the increase in our concession revenues during the second quarter of fiscal 2015 compared to the same period last year. Selected concession price increases introduced in mid-October 2014 and a change in concession product mix, including increased sales of non-traditional food and beverage items from our Take Five Lounge^SM and Zaffiro’s® Express outlets, were the primary reasons for our increased average concession sales per person during the fiscal 2015 period, partially offset by the fact that we offered a free small popcorn to our loyalty program members on Tuesdays as part of our $5 Tuesday promotion. As noted above, we rolled out the $5 Tuesday promotion to our entire circuit in mid-November 2013, so comparisons to fiscal 2014 should not be negatively impacted by this promotion during the remaining quarters of fiscal 2015.

Our fiscal 2015 first half concession revenues increased compared to the same period last year entirely as a result of increased attendance at comparable theatres, partially offset by a 1.2% decrease in our average concession revenues per person compared to our fiscal 2014 first half. The decrease in our fiscal 2015 first half concession revenues per person was due primarily to the $5 Tuesday free small popcorn described above. In addition, the fact that our top two films during the fiscal 2014 first quarter were animated family movies (Despicable Me 2 and Monsters University) also contributed to our decrease in concession sales per person during the first half of fiscal 2015, as these types of films typically result in stronger concession sales compared to more adult-oriented films. The film slate during the first quarter of fiscal 2015 was lacking in strong family-oriented movies. Other revenues did not change significantly during the fiscal 2015 periods compared to the fiscal 2014 periods.

Comparable theatre attendance increased 25.6% during the second quarter of fiscal 2015 and 16.2% during the first half of fiscal 2015 compared to the same periods last year, despite a film slate that produced U.S. box office receipts that were essentially flat during our fiscal 2015 second quarter and significantly less during the first half of our fiscal 2015 compared to the same periods last year. We believe a combination of several factors contributed to this significant increase in attendance and our above-described industry outperformance. In addition to the $5 Tuesday promotion, our fiscal 2015 second quarter and first half attendance was favorably impacted by increased attendance at eight theatres that added our spacious new DreamLounger electric all-recliner seating during fiscal 2014. Four of our DreamLounger recliner seating locations were open by the end of the first half of fiscal 2014. As a result, we do not expect these locations to favorably impact box office receipts and attendance comparisons during the remaining quarters of fiscal 2015 as significantly as they did during the first two quarters of the fiscal year.

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For the second quarter of fiscal 2015, we experienced increased box office receipts compared to the prior year during 10 of the 13 weeks of the quarter, with October films performing significantly better as compared to the prior year. Our highest grossing films during the fiscal 2015 second quarter included The Hunger Games: Mockingjay - Part 1, Gone Girl, Big Hero 6, The Maze Runner and Interstellar. Our top five and top 15 films during our fiscal 2015 second quarter accounted for 35% and 67%, respectively, of our total box office results compared to 43% and 72%, respectively, for the top five and top 15 films during the second quarter of last year, both expressed as a percentage of the total box office receipts for the period. The quantity of top performing films also increased during the second quarter of fiscal 2015, as 10 movies produced box office receipts of over $1.0 million for our circuit during our fiscal 2015 second quarter, compared to only seven films that reached that milestone during the same period last year. We believe our $5 Tuesday program has increased movie-going frequency among our customers, which we believe benefits the next tier of films after the blockbusters, contributing to a higher quantity of top performing films during the quarter.

Box office performance during the early weeks of our fiscal 2015 third quarter, including the important holiday period, has thus far not matched the record box office performance from the comparable weeks last year, due primarily to the fact that there has not been a film that has been able to match the extremely strong performance of the top film last year, Frozen. Top performing holiday films this year include November holdover The Hunger Games: Mockingjay - Part 1, as well as December releases such as The Hobbit: The Battle of the Five Armies, Annie, Night at the Museum: Secret of the Tomb, Into the Woods and Unbroken. Films scheduled to be released during the remainder of our fiscal 2015 third quarter that may also generate box office interest include Taken 3, The Wedding Ringer, The Spongebob Movie: Sponge Out of Water, Fifty Shades of Grey and Kingsman: The Secret Service. Revenues for the theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of the current “windows” between the date a film is released in theatres and the date a motion picture is released to other channels, including video on-demand and DVD. These are factors over which we have no control.

We launched our new customer loyalty program, Magical Movie Rewards™, on March 30, 2014. We are very encouraged by the response to this program to date, which has added approximately 860,000 members in its first nine months. In addition to earning points for each dollar spent, members also receive special concession offers, promotions and exclusive screening opportunities. We believe the benefit of this program to us is the ability to better understand customer preferences and to engage loyalty program members with customized communications and rewards. We believe that this will result in increased movie-going frequency, higher average concession revenues per person, increased loyalty to Marcus Theatres and ultimately, continued improved operating results.

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We ended the second quarter of fiscal 2015 and fiscal 2014 with a total of 674 company-owned screens in 53 theatres and 11 managed screens in two theatres. Early in our fiscal 2015 second quarter, we opened two additional Take Five Lounge outlets and Zaffiro’s Express outlets, bringing our total number of each concept to 11. Two more Take Five Lounges and three more Zaffiro’s Express outlets are currently under construction at existing theatres. We also recently announced plans to add additional food and beverage options and relocate and expand our original Take Five Lounge at our flagship Majestic Cinema of Brookfield.

We commenced construction on the conversion of three more theatres to DreamLounger recliner seating during the fiscal 2015 second quarter. When completed, approximately 25% of our total screens will offer this amenity, one of the highest percentages in the industry. In addition, existing UltraScreen® auditoriums at two theatres, as well as an existing auditorium at a third theatre, will be upgraded to our UltraScreen DLX® concept, which combines our premium, large-format presentation with DreamLounger recliner seating and Dolby® Atmos® immersive sound. When completed, we will have 14 UltraScreen DLX auditoriums and seven traditional UltraScreen auditoriums in our theatre circuit, meaning that nearly 36% of our company-owned theatres will offer our premium large screen format. Some of these renovated auditoriums opened in time for Christmas and all of the above-described amenities, including the new food and beverage outlets, are scheduled to open by the end of our fiscal 2015 third quarter. We also continued construction on our new theatre in Sun Prairie, Wisconsin, The Palace at Sun Prairie. Designed to replace an existing nearby theatre, this new 12-screen theatre will incorporate each of the above-referenced amenities, as well as four Big Screen Bistro^SM in-theatre dining auditoriums, and is currently scheduled to open in May 2015.

Hotels and Resorts

The following table sets forth revenues, operating income and operating margin for our hotels and resorts division for the second quarter and first half of fiscal 2015 and fiscal 2014 (in millions, except for variance percentage and operating margin):

	Second Quarter												First Half
							Variance												Variance
	F2015			F2014			Amt.			Pct.			F2015			F2014			Amt.			Pct.
Revenues	$	59.6		$	53.7		$	5.9			11.0	%	$	121.9		$	113.5		$	8.4			7.4	%
Operating income		5.7			7.0			(1.3	)		-18.7	%		16.7			17.9			(1.2	)		-6.7	%
Operating margin (% of revenues)		9.6	%		13.1	%								13.7	%		15.8	%

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Our second quarter is historically the second strongest quarter of our fiscal year for our hotels and resorts division due to generally strong business and group travel during the fall months. Increased occupancy percentages during both periods and an increased average daily room rate during the first half of fiscal 2015 contributed to the increases in division revenues during our fiscal 2015 periods compared to the same periods last year.

Division operating income for the second quarter and first half of fiscal 2015 decreased compared to the record results that we reported during the fiscal 2014 periods, although it still represented the second highest operating results that we have reported subsequent to the 2008 recession. Our operating results during the fiscal 2015 periods were negatively impacted by increased depreciation. In addition, the removal of our former Four Points by Sheraton brand at our downtown Chicago hotel and commencement of a major renovation that will convert this hotel into one of the first AC Hotels by Marriott in the United States resulted in disruption in room reservations and rooms out of service during the second quarter of fiscal 2015, contributing to our overall reduced operating income during the fiscal 2015 periods.

The following table sets forth certain operating statistics for the second quarter and first half of fiscal 2015 and fiscal 2014, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for company-owned properties:

	Second Quarter(1)												First Half(1)
							Variance												Variance
	F2015			F2014			Amt.			Pct.			F2015			F2014			Amt.		Pct.
Occupancy pct.		78.7	%		75.1	%		3.6 pts			4.8	%		82.4	%		78.7	%		3.7 pts		4.7	%
ADR	$	145.05		$	145.83		$	(0.78	)		-0.5	%	$	149.85		$	148.75		$	1.10		0.7	%
RevPAR	$	114.14		$	109.44		$	4.70			4.3	%	$	123.42		$	117.03		$	6.39		5.5	%

(1) These operating statistics represent averages of our nine distinct comparable company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort.

RevPAR increased at six of our nine comparable company-owned or majority-owned properties during the second quarter of fiscal 2015 and seven of our nine comparable company-owned properties during the first half of fiscal 2015 compared to the same periods last year. According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2015 second quarter and first half results, comparable “upper upscale” hotels throughout the United States experienced an increase in RevPAR of 8.5% and 8.1% during our fiscal 2015 second quarter and first half, respectively. We believe our RevPAR increases during the fiscal 2015 periods do not match the United States results because of the fact that our properties are predominately in Midwestern markets that have not experienced the higher ADR increases more prevalent in larger cities in other areas of the country, such as New York and San Francisco. In fact, data received from Smith Travel Research for our various “competitive sets” – hotels identified in our specific markets that we deem to be competitors to our hotels – indicates that these hotels experienced an increase in RevPAR of 3.4% and 2.2%, respectively, during our fiscal 2015 periods. Based upon that data, our hotels collectively outperformed their respective markets during the second quarter and first half of fiscal 2015.

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The lodging industry continued to recover at a steady pace during the second quarter of our fiscal 2015. Fiscal 2015 second quarter and first half occupancy rates showed improvement over the same periods during the prior year and continued to be at record levels for this division, significantly higher than prior to the recession-driven downturn in the hotel industry. However, one of the continued challenges facing our hotels and resorts division, and the industry as a whole, has been the slow recovery of ADR compared to pre-recession levels. Recent trends in ADR have generally been positive, although we experienced our first quarterly decline in year-over-year ADR during the second quarter of fiscal 2015 in nearly four years. We believe our reduced ADR during the second quarter was an anomaly resulting from several factors, including the removal of our brand at our Chicago hotel, a conscious decision to spur group demand at another property by lowering ADR, and the complete lack of city-wide business events in Milwaukee during the second quarter of fiscal 2015, compared to a number of city-wide events last year, including Harley Davidson’s 110^th anniversary celebration. We were able to successfully replace the business, as evidenced by our increased occupancy percentage, but the lack of city-wide events that typically compress the market place and result in higher ADRs required us to be more aggressive with our rates during the second quarter.

Group business continued to be the customer segment experiencing the slowest recovery. Typically, when we have substantial blocks of rooms committed to group business, we are able to raise rates with non-group business. During the first quarter of fiscal 2015, we believe strong group business contributed to our 8%-9% increases in ADR at selected hotels compared to the prior-year first quarter. Ultimately, we believe the most effective way to increase our operating margins in future periods is to increase our ADR. We are encouraged by the fact that our group booking pace for the remainder of fiscal 2015 is running slightly ahead of fiscal 2014 as of the date of this report.

Whether the current positive trends in the lodging industry continue depends in large part on the economic environment in which the industry operates, as hotel revenues have historically tracked very closely with traditional macroeconomic statistics such as the Gross Domestic Product. We generally expect our favorable revenue trends to continue in future periods and to generally track the overall industry trends, particularly in our respective markets. As referenced above, we began construction on the conversion of our Chicago hotel into an AC Hotel by Marriott in November 2014. Although we will keep the hotel open, under the name “Hotel Rush,” for most of the construction period until the scheduled completion in Spring 2015, we anticipate that the disruption associated with the construction will negatively impact operating results at the hotel during the remaining quarters of fiscal 2015. We also continue to monitor our important Milwaukee market very closely, as this market continued to experience an increase in room supply during the first half of our fiscal 2015. Late in our fiscal 2015 first quarter, a new 381-room casino hotel opened near downtown Milwaukee. We did not identify any specific impact of this new hotel during our fiscal 2015 second quarter on our reported results, but we will continue to monitor the potential impact of this hotel. We believe that our hotels will be less impacted by the additional room supply than other hotels in the Milwaukee market due in large part to recent renovations that we have made to our hotels, which we believe make our hotels a more attractive option for travelers.

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Early in our fiscal 2015 second quarter, we entered into an agreement to assume management of The Hotel Zamora and Castile Restaurant in St. Pete Beach, Florida, effective November 1, 2014. We also acquired a 10% minority ownership interest in the hotel and restaurant for $1.5 million. The Hotel Zamora offers 72 luxurious guest rooms, including 22 two-bedroom suites, and has 9,000 square feet of meeting space, including one of the most scenic rooftops in Florida. This boutique luxury property opened in June 2014 and overlooks the Intracoastal Waterway and the Gulf of Mexico. Castile is the hotel’s destination restaurant and rooftop lounge.

We have a number of additional potential growth opportunities that we are currently evaluating. The timing and nature of the opportunities may vary and include pure management contracts, management contracts with equity investments, and joint venture investments.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our movie theatre and hotels and resorts businesses each generate significant and consistent daily amounts of cash, subject to previously noted seasonality, because each segment’s revenue is derived predominantly from consumer cash purchases. We believe that these relatively consistent and predictable cash sources, as well as the availability of approximately $137 million of unused credit lines as of the end of our fiscal 2015 second quarter, will be adequate to support the ongoing operational liquidity needs of our businesses during the remainder of fiscal 2015.

Financial Condition

Net cash provided by operating activities decreased by $2.6 million to $35.2 million during the first half of fiscal 2015, compared to net cash provided by operating activities of $37.8 million during the first half of the prior year. The decrease was due primarily to the unfavorable timing in the collection of accounts and notes receivable and payment of accounts payable, accrued compensation, and other accrued liabilities, partially offset by increased net earnings, depreciation and amortization, and favorable timing in the payment of income taxes.

Net cash used in investing activities during the first half of fiscal 2015 totaled $31.0 million, compared to $21.2 million during the first half of fiscal 2014. The increase in net cash used in investing activities was primarily the result of increased capital expenditures. We also purchased an interest in a joint venture during the second quarter of fiscal 2015 (the Hotel Zamora) that contributed to our increased net cash used in investing activities during fiscal 2015. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $27.0 million during the first half of fiscal 2015 compared to $21.0 million during the first half of the prior year. We did not incur any acquisition-related capital expenditures during the first half of fiscal 2015 or fiscal 2014.

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Fiscal 2015 first half cash capital expenditures included approximately $15.7 million incurred in our theatre division, including costs associated with the completion of several previously-described fiscal 2014 projects, newly started fiscal 2015 projects (DreamLounger recliner seating additions, UltraScreen DLX conversions and new Take Five Lounge and Zaffiro’s Express outlets) and approximately $2.6 million of costs related to the development of a new theatre in Sun Prairie, Wisconsin. We also incurred capital expenditures in our hotel division during the first half of fiscal 2015 of approximately $9.9 million, including costs associated with the completion of the fiscal 2014 renovation of the tower guest rooms of the Pfister Hotel in Milwaukee, Wisconsin, completion of the renovation of The Cornhusker by Marriott in Lincoln, Nebraska, and the commencement of the conversion of our Chicago hotel into an AC Hotel by Marriott. Capital expenditures for the first half of fiscal 2014 included approximately $12.6 million incurred in our theatre division, including costs associated with the multiple theatre renovations and the addition of Take Five Lounge outlets at two theatres, the construction of an UltraScreen at one theatre and the addition of DreamLounger recliner seating in four theatres. We also incurred capital expenditures in our hotel division during the first half of fiscal 2014 of approximately $8.3 million, including costs associated with the renovation of The Cornhusker.

Net cash used in financing activities during the first half of fiscal 2015 totaled $2.0 million compared to $14.2 million during the first half of fiscal 2014. We used excess cash during both periods to reduce our borrowings under our revolving credit facility. As short-term borrowings became due, we replaced them as necessary with new short-term borrowings. As a result, we added $67.0 million of new debt and we made $64.2 million of principal payments on long-term debt during the first half of fiscal 2015 (net increase in long-term debt of $2.8 million) compared to $71.0 million of new debt added (including $50 million of newly issued senior notes) and $79.2 million of principal payments made during the first half of fiscal 2014 (net reduction in long-term debt of $8.2 million), accounting for the majority of the decrease in net cash used in financing activities during the current-year period. Our debt-to-capitalization ratio was 0.42 at November 27, 2014 and at our fiscal 2014 year-end.

We repurchased approximately 1,000 shares of our common stock in conjunction with the exercise of stock options during the first half of fiscal 2015. We repurchased approximately 97,000 shares of our common stock for approximately $1.2 million during the first half of fiscal 2014 in conjunction with the exercise of stock options and the purchase of shares in the open market. As of November 27, 2014, approximately 3.3 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. We expect that we will execute any future repurchases on the open market or in privately-negotiated transactions, depending upon a number of factors, including prevailing market conditions.

Dividend payments during the first half of fiscal 2015 totaled $5.1 million compared to dividend payments of $4.5 million during the first half of fiscal 2014. The increase in dividend payments was the result of an 11.8% increase in our regular quarterly dividend payment initiated during the fourth quarter of fiscal 2014. During the first half of fiscal 2015, we made distributions to noncontrolling interests of $958,000, compared to distributions of nearly $1.1 million during the first half of fiscal 2014.

25

We previously indicated that we expected our full-year fiscal 2015 capital expenditures, including potential purchases of interests in joint ventures (but excluding any significant unidentified acquisitions), to be in the $70-$90 million range. At this stage of our fiscal year, barring any growth opportunities that could arise in the remaining months, we believe our actual fiscal 2015 capital expenditures may approximate $60-$70 million, with as much as $40-45 million of that amount expected to be expended in our theatre division. We are still finalizing the scope and timing of several of the various projects requested by our two divisions. Some of these projects may carry over to the next fiscal year, and if that occurs, we expect we will incur capital expenditures in the current year at the lower end of our estimated range. The actual timing and extent of the implementation of all of our current expansion plans will depend in large part on industry and general economic conditions, our financial performance and available capital, the competitive environment, evolving customer needs and trends, and the availability of attractive opportunities. We expect that our plans will continue to evolve and change in response to these and other factors.

We also continued to pursue an opportunity to be the co-developer of a previously-described mixed-use retail development known as The Corners of Brookfield. During the first half of fiscal 2015, our focus was on completing negotiations on a joint venture agreement with an identified equity partner that would include a minority interest for us. In anticipation of completing that agreement, we also began demolition of existing buildings on the site and our proposed partner assumed management of the leasing and project management process. If the joint venture agreement is signed as currently expected, upon completion of certain milestones, we would contribute our land to the joint venture, be reimbursed for the majority of our previously-incurred pre-development costs at commencement of construction and potentially recognize development profit during fiscal 2015 or fiscal 2016, which would favorably impact our reported operating results. If the project unexpectedly does not meet the necessary milestones, then we anticipate that we would write off our pre-development costs, which would unfavorably impact our operating results at that point in time. We would then market the land, which would likely result in a significant gain at some point in the future. We do not expect to incur significant additional expenditures for this project in future quarters.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have not experienced any material changes in our market risk exposures since May 29, 2014.

Item 4. Controls and Procedures

a. Evaluation of disclosure controls and procedures

Based on their evaluations and the evaluation of management, as of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

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b. Changes in internal control over financial reporting

There were no significant changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15 of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. Risk Factors

Risk factors relating to us are contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 29, 2014. No material change to such risk factors has occurred during the 26 weeks ended November 27, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information with respect to purchases made by us or on our behalf of our Common Stock during the periods indicated. All of these repurchases were made in conjunction with the exercise of stock options and the purchase of shares in the open market and pursuant to the publicly announced repurchase authorization described below.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
August 29 – September 25		-	$	-		-		3,289,436
September 26 – October 30		-		-		-		3,289,436
October 31 – November 27		-		-		-		3,289,436
Total		-	$	-		-		3,289,436

(1) Through November 27, 2014, our Board of Directors had authorized the repurchase of up to approximately 11.7 million shares of our outstanding Common Stock. Under these authorizations, we may repurchase shares of our Common Stock from time to time in the open market, pursuant to privately negotiated transactions or otherwise. As of November 27, 2014, we had repurchased approximately 8.4 million shares of our Common Stock under these authorizations. The repurchased shares are held in our treasury pending potential future issuance in connection with employee benefit, option or stock ownership plans or other general corporate purposes. These authorizations do not have an expiration date.

27

Item 4. Mine Safety Disclosures

Not applicable.

Item 6.	Exhibits
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Written Statement of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350.
101	The following materials from The Marcus Corporation’s Quarterly Report on Form 10-Q for the quarter ended November 27, 2014 are filed herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) the Condensed Notes to Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE MARCUS CORPORATION

DATE:  January 6, 2015	By:	/s/ Gregory S. Marcus
	Gregory S. Marcus President and Chief Executive Officer
DATE:  January 6, 2015	By:	/s/ Douglas A. Neis
	Douglas A. Neis Chief Financial Officer and Treasurer

S-1

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934

I, Gregory S. Marcus, certify that:

1.          I have reviewed this Quarterly Report on Form 10-Q of The Marcus Corporation;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: January 6, 2015

By:	/s/ Gregory S. Marcus
	Gregory S. Marcus
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934

I, Douglas A. Neis, certify that:

1.          I have reviewed this Quarterly Report on Form 10-Q of The Marcus Corporation;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.          The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: January 6, 2015

By:	/s/ Douglas A. Neis
	Douglas A. Neis
	Chief Financial Officer and Treasurer

EX-32

Exhibit 32

Written Statement of the Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. §1350

Solely for the purposes of complying with 18 U.S.C. §1350, we, the undersigned Chief Executive Officer and Chief Financial Officer of The Marcus Corporation (the “Company”), hereby certify, based on our knowledge, that the accompanying Quarterly Report on Form 10-Q of the Company (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gregory S. Marcus

Gregory S. Marcus

President and Chief Executive Officer

/s/ Douglas A. Neis

Douglas A. Neis

Chief Financial Officer and Treasurer

Date:  January 6, 2015

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Derivatives and Hedging Activities

6 Months Ended

Nov. 27, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Acivities

2. Derivatives and Hedging Activities

The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions.

The Company entered into an interest rate swap agreement on February 28, 2013 covering $25,000,000 of floating rate debt, which expires January 22, 2018, and requires the Company to pay interest at a defined rate of 0.96% while receiving interest at a defined variable rate of one-month LIBOR (0.19% at November 27, 2014). The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. The Company’s interest rate swap agreement is considered effective and qualifies as a cash flow hedge. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of November 27, 2014, the interest rate swap was considered effective. The notional amount of the swap is $25,000,000 and the fair value of the swap was $62,000 and $56,000 as of November 27, 2014 and May 29, 2014, respectively, and is included in other (long-term assets). The Company does not expect the interest rate swap to have any material effect on earnings within the next 12 months.

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General

6 Months Ended

Nov. 27, 2014

General [Abstract]

General

1.           General

Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended May 29, 2014, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.

Basis of Presentation - The unaudited consolidated financial statements for the 13 and 26 weeks ended November 27, 2014 and November 28, 2013 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 November 27, 2014, 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 May 29, 2014.

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 $10,048,000 and $19,008,000 for the 13 and 26 weeks ended November 27, 2014, respectively, and $8,332,000 and $16,539,000 for the 13 and 26 weeks ended November 28, 2013, respectively.

Accumulated Other Comprehensive Loss - Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:

							Accumulated
			Available for				Other
	Swap		Sale		Pension		Comprehensive
	Agreements		Investments		Obligation		Loss
	(in thousands)
Balance at May 29, 2014	$	34	$	(11)	$	(4,581)	$	(4,558)
Other comprehensive loss before reclassifications		(55)		-		-		(55)
Amounts reclassified from accumulated other comprehensive loss (1)		59		-		-		59
Net other comprehensive income		4		-		-		4
Balance at November 27, 2014	$	38	$	(11)	$	(4,581)	$	(4,554)

							Accumulated
			Available for				Other
	Swap		Sale		Pension		Comprehensive
	Agreements		Investments		Obligation		Loss
	(in thousands)
Balance at May 30, 2013	$	18	$	(10)	$	(3,836)	$	(3,828)
Other comprehensive loss before reclassifications		(53)		(1)		-		(54)
Amounts reclassified from accumulated other comprehensive loss (1)		57		-		-		57
Net other comprehensive income (loss)		4		(1)		-		3
Balance at November 28, 2013	$	22	$	(11)	$	(3,836)	$	(3,825)

⁽¹⁾ Amounts are included in interest expense in the consolidated statements of earnings.

Earnings Per Share - Net earnings per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options using the treasury method. Convertible Class B Common Stock is reflected on an if-converted basis. The computation of the diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock, while the diluted net earnings 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 for each period are allocated based on the proportionate share of entitled cash dividends. The computation of diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock and, as such, the undistributed earnings are equal to net earnings for that computation.

The following table illustrates the computation of Common Stock and Class B Common Stock basic and diluted net earnings per share for net earnings and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

	13 Weeks		13 Weeks		26 Weeks		26 Weeks
	Ended		Ended		Ended		Ended
	November 27,		November 28,		November 27,		November 28,
	2014		2013		2014		2013
	(in thousands, except per share data)
Numerator:
Net earnings attributable to The Marcus Corporation	$	5,223	$	3,245	$	17,655	$	16,676
Denominator:
Denominator for basic EPS		27,400		27,059		27,374		27,065
Effect of dilutive employee stock options		168		71		215		43
Denominator for diluted EPS		27,568		27,130		27,589		27,108
Net earnings per share – basic:
Common Stock	$	0.20	$	0.12	$	0.67	$	0.64
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58
Net earnings per share – diluted:
Common Stock	$	0.19	$	0.12	$	0.64	$	0.62
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58

Equity – Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 26 weeks ended November 27, 2014 and November 28, 2013 was as follows:

	Total
	Shareholders’
	Equity
	Attributable to
	The Marcus		Noncontrolling
	Corporation		Interests
	(in thousands)
Balance at May 29, 2014	$	326,211	$	3,768
Net earnings attributable to The Marcus Corporation		17,655		–
Net earnings attributable to noncontrolling interests		–		12
Distributions to noncontrolling interests		–		(958)
Cash dividends		(5,052)		–
Exercise of stock options		1,095		–
Treasury stock transactions, except for stock options		173		–
Share-based compensation		683		–
Other		47		–
Other comprehensive income, net of tax		4		–
Balance at November 27, 2014	$	340,816	$	2,822

	Total
	Shareholders’
	Equity
	Attributable to
	The Marcus		Noncontrolling
	Corporation		Interests
	(in thousands)
Balance at May 30, 2013	$	306,702	$	9,994
Net earnings attributable to The Marcus Corporation		16,676		–
Net loss attributable to noncontrolling interests		–		(348)
Distributions to noncontrolling interests		–		(1,059)
Cash dividends		(4,466)		–
Exercise of stock options		744		–
Treasury stock transactions, except for stock options		(1,035)		–
Share-based compensation		1,036		–
Other		85		–
Other comprehensive income, net of tax		3		–
Balance at November 28, 2013	$	319,745	$	8,587

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 November 27, 2014 and May 29, 2014, the Company’s $70,000 of available for sale securities were valued using Level 1 pricing inputs and were included in other current assets.

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 November 27, 2014 and May 29, 2014, respectively, the $62,000 and $56,000 asset 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 November 27, 2014 and May 29, 2014, none of the Company’s fair value measurements were valued using Level 3 pricing inputs.

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		13 Weeks		26 Weeks		26 Weeks
	Ended		Ended		Ended		Ended
	November 27,		November 28,		November 27,		November 28,
	2014		2013		2014		2013
	(in thousands)
Service cost	$	174	$	175	$	349	$	351
Interest cost		311		294		622		587
Net amortization of prior service cost and actuarial loss		81		67		162		134
Net periodic pension cost	$	566	$	536	$	1,133	$	1,072

New Accounting Pronouncement - In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The guidance will replace most existing revenue recognition guidance in Generally Accepted Accounting Principles when it becomes effective. The new standard is effective for the Company in fiscal 2018 and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method and is evaluating the effect that the guidance will have on its consolidated financial statements and related disclosures.

Reclassifications – Certain reclassifications have been made to the prior year’s consolidated balance sheet to conform to the current year’s presentation to include the condominium units recorded in property and equipment.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Nov. 27, 2014	May 29, 2014
Current assets:
Cash and cash equivalents	$ 9,033	$ 6,780
Restricted cash	9,132	8,032
Accounts and notes receivable, net of reserves of $1,502 and $1,423, respectively	14,608	9,472
Refundable income taxes	0	2,958
Deferred income taxes	3,180	3,056
Other current assets	6,052	6,367
Total current assets	42,005	36,665
Property and equipment:
Land and improvements	100,222	97,611
Buildings and improvements	615,675	613,873
Leasehold improvements	67,301	62,379
Furniture, fixtures and equipment	272,499	270,993
Construction in progress	8,924	5,843
Total property and equipment	1,064,621	1,050,699
Less accumulated depreciation and amortization	411,341	399,119
Net property and equipment	653,280	651,580
Other assets:
Investments in joint ventures	3,790	2,025
Goodwill	43,789	43,858
Other	35,995	34,795
Total other assets	83,574	80,678
TOTAL ASSETS	778,859	768,923
Current liabilities:
Accounts payable	23,320	30,954
Income taxes	2,687	0
Taxes other than income taxes	15,953	14,333
Accrued compensation	11,340	12,914
Other accrued liabilities	29,351	31,912
Current portion of capital lease obligation	4,999	4,871
Current maturities of long-term debt	8,605	7,030
Total current liabilities	96,255	102,014
Capital lease obligation	20,861	23,370
Long-term debt	234,740	233,557
Deferred income taxes	42,148	42,561
Deferred compensation and other	41,217	37,442
Equity:
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued	0	0
Capital in excess of par	54,570	53,844
Retained earnings	306,937	294,334
Accumulated other comprehensive loss	(4,554)	(4,558)
Stockholders' Equity before Treasury Stock	388,143	374,810
Less cost of Common Stock in treasury (3,781,733 shares at November 27, 2014 and 3,890,871 shares at May 29, 2014)	(47,327)	(48,599)
Total shareholders' equity attributable to The Marcus Corporation	340,816	326,211
Noncontrolling interest	2,822	3,768
Total equity	343,638	329,979
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	778,859	768,923
Common Stock [Member]
Equity:
Common Stock	22,458	22,458
Class B Common Stock [Member]
Equity:
Common Stock	$ 8,732	$ 8,732

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013
Other Comprehensive Income (Loss), Available-for-sale Securities, Tax, Total	$ 0	$ 0	$ 0	$ 1
Other Comprehensive Amortization Of Loss Derivatives Qualifying As Hedges Tax	63	194	37	36
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax	$ 20	$ 20	$ 39	$ 37

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Capital Lease Obligation (Details Textual) (USD $)	6 Months Ended
	Nov. 27, 2014	May 29, 2014
Property, Plant and Equipment [Line Items]
Capital Leased Assets, Number of Units	642
Term Of Licensing Agreement	10 years
Commitment Minimum Lease Payments	$ 6,163,000
Payments Obligation Reduced Amount	4,999,000
Expect Period Of Payments Obligation	12 months
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Capital Leases, Balance Sheet, Assets by Major Class, Net	45,510,000	45,510,000
Digital Systems [Member]
Property, Plant and Equipment [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	$ 15,347,000	$ 12,259,000

XML

Business Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013
Segment Reporting Information [Line Items]
Revenues	$ 116,061	$ 100,588	$ 247,830	$ 229,620
Operating income (loss)	11,620	8,810	34,309	33,157
Depreciation and amortization	10,156	8,457	19,234	16,784
Theatres [Member]
Segment Reporting Information [Line Items]
Revenues	56,275	46,772	125,662	115,884
Operating income (loss)	9,783	5,307	24,637	22,220
Depreciation and amortization	5,005	4,147	9,735	8,133
Hotels/Resorts [Member]
Segment Reporting Information [Line Items]
Revenues	59,626	53,704	121,873	113,514
Operating income (loss)	5,729	7,045	16,733	17,943
Depreciation and amortization	5,035	4,169	9,282	8,350
Corporate Items [Member]
Segment Reporting Information [Line Items]
Revenues	160	112	295	222
Operating income (loss)	(3,892)	(3,542)	(7,061)	(7,006)
Depreciation and amortization	$ 116	$ 141	$ 217	$ 301

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013
OPERATING ACTIVITIES:
Net earnings	$ 17,667	$ 16,328
Adjustments to reconcile net earnings to net cash provided by operating activities:
Losses on investments in joint ventures	14	29
Distribution from joint venture	120	0
Loss on disposition of property, equipment and other assets	501	772
Amortization of favorable lease right	167	167
Depreciation and amortization	19,234	16,784
Stock compensation expense	683	1,036
Deferred income taxes	(470)	(949)
Deferred compensation and other	3,775	469
Changes in operating assets and liabilities:
Accounts and notes receivable	(5,101)	(1,734)
Other current assets	(165)	136
Accounts payable	(4,360)	(2,064)
Income taxes	5,692	3,020
Taxes other than income taxes	1,620	1,679
Accrued compensation	(1,574)	135
Other accrued liabilities	(2,561)	2,036
Total adjustments	17,575	21,516
Net cash provided by operating activities	35,242	37,844
INVESTING ACTIVITIES:
Capital expenditures	(27,047)	(20,954)
Proceeds from disposals of property, equipment and other assets	183	876
Decrease (increase) in restricted cash	(1,100)	432
Increase in other assets	(1,142)	(640)
Purchase of interest in joint venture	(1,500)	0
Capital contribution in joint venture	(399)	(706)
Cash advanced to joint venture	0	(231)
Net cash used in investing activities	(31,005)	(21,223)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt	67,000	71,000
Principal payments on long-term debt	(64,242)	(79,157)
Debt issuance costs	0	(276)
Equity transactions:
Treasury stock transactions, except for stock options	173	(1,035)
Exercise of stock options	1,095	744
Dividends paid	(5,052)	(4,466)
Distributions to noncontrolling interest	(958)	(1,059)
Net cash used in financing activities	(1,984)	(14,249)
Net increase in cash and cash equivalents	2,253	2,372
Cash and cash equivalents at beginning of period	6,780	10,158
Cash and cash equivalents at end of period	9,033	12,530
Supplemental Information:
Interest paid, net of amounts capitalized	4,558	4,055
Income taxes paid	5,600	8,832
Change in accounts payable for additions to property and equipment	$ (3,274)	$ (1,503)

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Nov. 27, 2014	May 29, 2014
Accounts and notes receivable, reserves	$ 1,502	$ 1,423
Preferred Stock, par (in dollars per share)	$ 1	$ 1
Preferred Stock, authorized	1,000,000	1,000,000
Preferred Stock, issued	0	0
Cost of Common Stock in treasury, shares	3,781,733	3,890,871
Common Stock [Member]
Common Stock, par (in dollars per share)	$ 1	$ 1
Common Stock, authorized	50,000,000	50,000,000
Common Stock, issued	22,457,727	22,457,727
Class B Common Stock [Member]
Common Stock, par (in dollars per share)	$ 1	$ 1
Common Stock, authorized	33,000,000	33,000,000
Common Stock, issued	8,731,786	8,731,786
Common Stock, outstanding	8,731,786	8,731,786

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General (Details 1) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013
Numerator:
Net earnings attributable to The Marcus Corporation	$ 5,223	$ 3,245	$ 17,655	$ 16,676
Denominator:
Denominator for basic EPS	27,400	27,059	27,374	27,065
Effect of dilutive employee stock options	168	71	215	43
Denominator for diluted EPS	27,568	27,130	27,589	27,108
Common Stock [Member]
Net earnings per share - basic:
Common Stock	$ 0.20	$ 0.12	$ 0.67	$ 0.64
Net earnings per share - diluted:
Common Stock	$ 0.19	$ 0.12	$ 0.64	$ 0.62
Class B Common Stock [Member]
Net earnings per share - basic:
Common Stock	$ 0.18	$ 0.11	$ 0.60	$ 0.58
Net earnings per share - diluted:
Common Stock	$ 0.18	$ 0.11	$ 0.60	$ 0.58

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Document And Entity Information	6 Months Ended
	Nov. 27, 2014	Dec. 31, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 27, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Entity Registrant Name	MARCUS CORP
Entity Central Index Key	0000062234
Current Fiscal Year End Date	--05-28
Entity Filer Category	Accelerated Filer
Trading Symbol	MCS
Class B Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		8,731,786
Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		18,679,403

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General (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013
Total Shareholders' Equity Attributable to The Marcus Corporation
Beginning Balance			$ 326,211	$ 306,702
Net earnings attributable to The Marcus Corporation	5,223	3,245	17,655	16,676
Cash dividends			(5,052)	(4,466)
Exercise of stock options			1,095	744
Treasury stock transactions, except for stock options			173	(1,035)
Share-based compensation			683	1,036
Other			47	85
Other comprehensive income, net of tax	(65)	(264)	4	3
Ending Balance	340,816	319,745	340,816	319,745
Noncontrolling Interests
Beginning Balance			3,768	9,994
Net earnings attributable to noncontrolling interests			12	(348)
Distributions to noncontrolling interests			(958)	(1,059)
Ending Balance	$ 2,822	$ 8,587	$ 2,822	$ 8,587

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Consolidated Statements of Earnings (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013
Revenues:
Theatre admissions	$ 32,794	$ 27,973	$ 74,139	$ 70,082
Rooms	29,678	28,548	64,359	61,118
Theatre concessions	20,484	15,876	45,406	39,565
Food and beverage	20,134	15,546	36,289	31,076
Other revenues	12,971	12,645	27,637	27,779
Total revenues	116,061	100,588	247,830	229,620
Costs and expenses:
Theatre operations	27,953	25,461	62,816	60,084
Rooms	10,725	10,160	22,127	20,852
Theatre concessions	5,841	4,768	12,562	10,906
Food and beverage	15,924	11,491	27,987	23,037
Advertising and marketing	6,710	6,529	14,098	13,413
Administrative	12,955	11,126	25,347	23,370
Depreciation and amortization	10,156	8,457	19,234	16,784
Rent	2,160	2,115	4,314	4,240
Property taxes	3,719	3,752	7,625	7,174
Other operating expenses	8,298	7,919	17,411	16,603
Total costs and expenses	104,441	91,778	213,521	196,463
Operating income	11,620	8,810	34,309	33,157
Other income (expense):
Investment income	25	17	50	20
Interest expense	(2,388)	(2,584)	(4,792)	(4,978)
Loss on disposition of property, equipment and other assets	(495)	(789)	(501)	(772)
Equity earnings (losses) from unconsolidated joint ventures, net	27	54	(14)	(29)
Nonoperating Income (Expense), Total	(2,831)	(3,302)	(5,257)	(5,759)
Earnings before income taxes	8,789	5,508	29,052	27,398
Income taxes	3,398	2,026	11,385	11,070
Net earnings	5,391	3,482	17,667	16,328
Net earnings (loss) attributable to noncontrolling interests	168	237	12	(348)
Net earnings attributable to The Marcus Corporation	$ 5,223	$ 3,245	$ 17,655	$ 16,676
Common Stock [Member]
Net earnings per share - basic:
Common Stock	$ 0.20	$ 0.12	$ 0.67	$ 0.64
Net earnings per share - diluted:
Common Stock	$ 0.19	$ 0.12	$ 0.64	$ 0.62
Dividends per share:
Common Stock	$ 0.095	$ 0.085	$ 0.190	$ 0.170
Common Class B [Member]
Net earnings per share - basic:
Common Stock	$ 0.18	$ 0.11	$ 0.60	$ 0.58
Net earnings per share - diluted:
Common Stock	$ 0.18	$ 0.11	$ 0.60	$ 0.58
Dividends per share:
Common Stock	$ 0.086	$ 0.077	$ 0.173	$ 0.155

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Business Segment Information

6 Months Ended

Nov. 27, 2014

Business Segment Information [Abstract]

Business Segment Information

5. Business Segment Information

The Company’s primary operations are reported in the following business segments: Theatres and Hotels/Resorts. Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.

Following is a summary of business segment information for the 13 and 26 weeks ended November 27, 2014 and November 28, 2013 (in thousands):

13 Weeks Ended			Hotels/		Corporate
November 27, 2014	Theatres		Resorts		Items		Total
Revenues	$	56,275	$	59,626	$	160	$	116,061
Operating income (loss)		9,783		5,729		(3,892)		11,620
Depreciation and amortization		5,005		5,035		116		10,156

13 Weeks Ended			Hotels/		Corporate
November 28, 2013	Theatres		Resorts		Items		Total
Revenues	$	46,772	$	53,704	$	112	$	100,588
Operating income (loss)		5,307		7,045		(3,542)		8,810
Depreciation and amortization		4,147		4,169		141		8,457

26 Weeks Ended			Hotels/		Corporate
November 27, 2014	Theatres		Resorts		Items		Total
Revenues	$	125,662	$	121,873	$	295	$	247,830
Operating income (loss)		24,637		16,733		(7,061)		34,309
Depreciation and amortization		9,735		9,282		217		19,234

26 Weeks Ended			Hotels/		Corporate
November 28, 2013	Theatres		Resorts		Items		Total
Revenues	$	115,884	$	113,514	$	222	$	229,620
Operating income (loss)		22,220		17,943		(7,006)		33,157
Depreciation and amortization		8,133		8,350		301		16,784

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Income Taxes

6 Months Ended

Nov. 27, 2014

Income Taxes [Abstract]

Income Taxes

4. Income Taxes

The Company’s effective income tax rate, adjusted for losses from noncontrolling interests, for the 13 and 26 weeks ended November 27, 2014 was 39.4% and 39.2%, respectively, and was 38.4% and 39.9% for the 13 and 26 weeks ended November 28, 2013, resepctively. The Company does not include the income tax expense or benefit related to the net earnings or loss attributable to noncontrolling interest in its income tax expense as the entities are considered pass-through entities and, as such, the income tax expense or benefit is attributable to its owners.

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Income Taxes (Details Textual)	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013
Effective Income Tax Rate	39.40%	38.40%	39.20%	39.90%

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General (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013
Service cost	$ 174	$ 175	$ 349	$ 351
Interest cost	311	294	622	587
Net amortization of prior service cost and actuarial loss	81	67	162	134
Net periodic pension cost	$ 566	$ 536	$ 1,133	$ 1,072

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Business Segment Information (Tables)

6 Months Ended

Nov. 27, 2014

Business Segment Information [Abstract]

Schedule of Segment Reporting Information, by Segment

Following is a summary of business segment information for the 13 and 26 weeks ended November 27, 2014 and November 28, 2013 (in thousands):

13 Weeks Ended			Hotels/		Corporate
November 27, 2014	Theatres		Resorts		Items		Total
Revenues	$	56,275	$	59,626	$	160	$	116,061
Operating income (loss)		9,783		5,729		(3,892)		11,620
Depreciation and amortization		5,005		5,035		116		10,156

13 Weeks Ended			Hotels/		Corporate
November 28, 2013	Theatres		Resorts		Items		Total
Revenues	$	46,772	$	53,704	$	112	$	100,588
Operating income (loss)		5,307		7,045		(3,542)		8,810
Depreciation and amortization		4,147		4,169		141		8,457

26 Weeks Ended			Hotels/		Corporate
November 27, 2014	Theatres		Resorts		Items		Total
Revenues	$	125,662	$	121,873	$	295	$	247,830
Operating income (loss)		24,637		16,733		(7,061)		34,309
Depreciation and amortization		9,735		9,282		217		19,234

26 Weeks Ended			Hotels/		Corporate
November 28, 2013	Theatres		Resorts		Items		Total
Revenues	$	115,884	$	113,514	$	222	$	229,620
Operating income (loss)		22,220		17,943		(7,006)		33,157
Depreciation and amortization		8,133		8,350		301		16,784

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General (Policies)

6 Months Ended

Nov. 27, 2014

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation - The unaudited consolidated financial statements for the 13 and 26 weeks ended November 27, 2014 and November 28, 2013 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 November 27, 2014, 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 May 29, 2014.

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 $10,048,000 and $19,008,000 for the 13 and 26 weeks ended November 27, 2014, respectively, and $8,332,000 and $16,539,000 for the 13 and 26 weeks ended November 28, 2013, respectively.

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss - Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:

							Accumulated
			Available for				Other
	Swap		Sale		Pension		Comprehensive
	Agreements		Investments		Obligation		Loss
	(in thousands)
Balance at May 29, 2014	$	34	$	(11)	$	(4,581)	$	(4,558)
Other comprehensive loss before reclassifications		(55)		-		-		(55)
Amounts reclassified from accumulated other comprehensive loss (1)		59		-		-		59
Net other comprehensive income		4		-		-		4
Balance at November 27, 2014	$	38	$	(11)	$	(4,581)	$	(4,554)

							Accumulated
			Available for				Other
	Swap		Sale		Pension		Comprehensive
	Agreements		Investments		Obligation		Loss
	(in thousands)
Balance at May 30, 2013	$	18	$	(10)	$	(3,836)	$	(3,828)
Other comprehensive loss before reclassifications		(53)		(1)		-		(54)
Amounts reclassified from accumulated other comprehensive loss (1)		57		-		-		57
Net other comprehensive income (loss)		4		(1)		-		3
Balance at November 28, 2013	$	22	$	(11)	$	(3,836)	$	(3,825)

⁽¹⁾ Amounts are included in interest expense in the consolidated statements of earnings.

Earnings Per Share

Earnings Per Share - Net earnings per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options using the treasury method. Convertible Class B Common Stock is reflected on an if-converted basis. The computation of the diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock, while the diluted net earnings 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 for each period are allocated based on the proportionate share of entitled cash dividends. The computation of diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock and, as such, the undistributed earnings are equal to net earnings for that computation.

The following table illustrates the computation of Common Stock and Class B Common Stock basic and diluted net earnings per share for net earnings and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

	13 Weeks		13 Weeks		26 Weeks		26 Weeks
	Ended		Ended		Ended		Ended
	November 27,		November 28,		November 27,		November 28,
	2014		2013		2014		2013
	(in thousands, except per share data)
Numerator:
Net earnings attributable to The Marcus Corporation	$	5,223	$	3,245	$	17,655	$	16,676
Denominator:
Denominator for basic EPS		27,400		27,059		27,374		27,065
Effect of dilutive employee stock options		168		71		215		43
Denominator for diluted EPS		27,568		27,130		27,589		27,108
Net earnings per share – basic:
Common Stock	$	0.20	$	0.12	$	0.67	$	0.64
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58
Net earnings per share – diluted:
Common Stock	$	0.19	$	0.12	$	0.64	$	0.62
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58

Equity

Equity – Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 26 weeks ended November 27, 2014 and November 28, 2013 was as follows:

	Total
	Shareholders’
	Equity
	Attributable to
	The Marcus		Noncontrolling
	Corporation		Interests
	(in thousands)
Balance at May 29, 2014	$	326,211	$	3,768
Net earnings attributable to The Marcus Corporation		17,655		–
Net earnings attributable to noncontrolling interests		–		12
Distributions to noncontrolling interests		–		(958)
Cash dividends		(5,052)		–
Exercise of stock options		1,095		–
Treasury stock transactions, except for stock options		173		–
Share-based compensation		683		–
Other		47		–
Other comprehensive income, net of tax		4		–
Balance at November 27, 2014	$	340,816	$	2,822

	Total
	Shareholders’
	Equity
	Attributable to
	The Marcus		Noncontrolling
	Corporation		Interests
	(in thousands)
Balance at May 30, 2013	$	306,702	$	9,994
Net earnings attributable to The Marcus Corporation		16,676		–
Net loss attributable to noncontrolling interests		–		(348)
Distributions to noncontrolling interests		–		(1,059)
Cash dividends		(4,466)		–
Exercise of stock options		744		–
Treasury stock transactions, except for stock options		(1,035)		–
Share-based compensation		1,036		–
Other		85		–
Other comprehensive income, net of tax		3		–
Balance at November 28, 2013	$	319,745	$	8,587

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 November 27, 2014 and May 29, 2014, the Company’s $70,000 of available for sale securities were valued using Level 1 pricing inputs and were included in other current assets.

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 November 27, 2014 and May 29, 2014, respectively, the $62,000 and $56,000 asset 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 November 27, 2014 and May 29, 2014, none of the Company’s fair value measurements were valued using Level 3 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		13 Weeks		26 Weeks		26 Weeks
	Ended		Ended		Ended		Ended
	November 27,		November 28,		November 27,		November 28,
	2014		2013		2014		2013
	(in thousands)
Service cost	$	174	$	175	$	349	$	351
Interest cost		311		294		622		587
Net amortization of prior service cost and actuarial loss		81		67		162		134
Net periodic pension cost	$	566	$	536	$	1,133	$	1,072

New Accounting Pronouncement

New Accounting Pronouncement - In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The guidance will replace most existing revenue recognition guidance in Generally Accepted Accounting Principles when it becomes effective. The new standard is effective for the Company in fiscal 2018 and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method and is evaluating the effect that the guidance will have on its consolidated financial statements and related disclosures.

Reclassifications

Reclassifications – Certain reclassifications have been made to the prior year’s consolidated balance sheet to conform to the current year’s presentation to include the condominium units recorded in property and equipment.

XML

General (Tables)

6 Months Ended

Nov. 27, 2014

General [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Loss - Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:

							Accumulated
			Available for				Other
	Swap		Sale		Pension		Comprehensive
	Agreements		Investments		Obligation		Loss
	(in thousands)
Balance at May 29, 2014	$	34	$	(11)	$	(4,581)	$	(4,558)
Other comprehensive loss before reclassifications		(55)		-		-		(55)
Amounts reclassified from accumulated other comprehensive loss (1)		59		-		-		59
Net other comprehensive income		4		-		-		4
Balance at November 27, 2014	$	38	$	(11)	$	(4,581)	$	(4,554)

							Accumulated
			Available for				Other
	Swap		Sale		Pension		Comprehensive
	Agreements		Investments		Obligation		Loss
	(in thousands)
Balance at May 30, 2013	$	18	$	(10)	$	(3,836)	$	(3,828)
Other comprehensive loss before reclassifications		(53)		(1)		-		(54)
Amounts reclassified from accumulated other comprehensive loss (1)		57		-		-		57
Net other comprehensive income (loss)		4		(1)		-		3
Balance at November 28, 2013	$	22	$	(11)	$	(3,836)	$	(3,825)

⁽¹⁾ Amounts are included in interest expense in the consolidated statements of earnings.

Schedule of Earnings Per Share, Basic and Diluted

The following table illustrates the computation of Common Stock and Class B Common Stock basic and diluted net earnings per share for net earnings and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

	13 Weeks		13 Weeks		26 Weeks		26 Weeks
	Ended		Ended		Ended		Ended
	November 27,		November 28,		November 27,		November 28,
	2014		2013		2014		2013
	(in thousands, except per share data)
Numerator:
Net earnings attributable to The Marcus Corporation	$	5,223	$	3,245	$	17,655	$	16,676
Denominator:
Denominator for basic EPS		27,400		27,059		27,374		27,065
Effect of dilutive employee stock options		168		71		215		43
Denominator for diluted EPS		27,568		27,130		27,589		27,108
Net earnings per share – basic:
Common Stock	$	0.20	$	0.12	$	0.67	$	0.64
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58
Net earnings per share – diluted:
Common Stock	$	0.19	$	0.12	$	0.64	$	0.62
Class B Common Stock	$	0.18	$	0.11	$	0.60	$	0.58

Components of Shareholders' Equity Activity Attributable to The Marcus Corporation and Noncontrolling Interests

Equity – Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 26 weeks ended November 27, 2014 and November 28, 2013 was as follows:

	Total
	Shareholders’
	Equity
	Attributable to
	The Marcus		Noncontrolling
	Corporation		Interests
	(in thousands)
Balance at May 29, 2014	$	326,211	$	3,768
Net earnings attributable to The Marcus Corporation		17,655		–
Net earnings attributable to noncontrolling interests		–		12
Distributions to noncontrolling interests		–		(958)
Cash dividends		(5,052)		–
Exercise of stock options		1,095		–
Treasury stock transactions, except for stock options		173		–
Share-based compensation		683		–
Other		47		–
Other comprehensive income, net of tax		4		–
Balance at November 27, 2014	$	340,816	$	2,822

	Total
	Shareholders’
	Equity
	Attributable to
	The Marcus		Noncontrolling
	Corporation		Interests
	(in thousands)
Balance at May 30, 2013	$	306,702	$	9,994
Net earnings attributable to The Marcus Corporation		16,676		–
Net loss attributable to noncontrolling interests		–		(348)
Distributions to noncontrolling interests		–		(1,059)
Cash dividends		(4,466)		–
Exercise of stock options		744		–
Treasury stock transactions, except for stock options		(1,035)		–
Share-based compensation		1,036		–
Other		85		–
Other comprehensive income, net of tax		3		–
Balance at November 28, 2013	$	319,745	$	8,587

Schedule of Net Benefit Costs

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		13 Weeks		26 Weeks		26 Weeks
	Ended		Ended		Ended		Ended
	November 27,		November 28,		November 27,		November 28,
	2014		2013		2014		2013
	(in thousands)
Service cost	$	174	$	175	$	349	$	351
Interest cost		311		294		622		587
Net amortization of prior service cost and actuarial loss		81		67		162		134
Net periodic pension cost	$	566	$	536	$	1,133	$	1,072

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General (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014		Nov. 28, 2013
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Beginning Balance, Swap Agreements			$ 34		$ 18
Other comprehensive income (loss) before reclassifications , Swap Agreements	(95)	(294)	(55)		(53)
Amounts reclassified from accumulated other comprehensive loss, Swap Agreements	30	30	59	[1]	57	[1]
Net other comprehensive income (loss), Swap Agreements			4		4
Ending Balance, Swap Agreements	38	22	38		22
Beginning Balance, Available for Sale Investments			(11)		(10)
Other comprehensive income (loss) before reclassifications, Available for Sale Investments			0		(1)
Amounts reclassified from accumulated other comprehensive loss, Available for Sale Investments			0	[1]	0	[1]
Net other comprehensive income (loss), Available for Sale Investments	0	0	0		(1)
Ending Balance, Available for Sale Investments	(11)	(11)	(11)		(11)
Beginning Balance, Pension Obligation			(4,581)		(3,836)
Other comprehensive income (loss) before reclassifications, Pension Obligation			0		0
Amounts reclassified from accumulated other comprehensive loss, Pension Obligation			0	[1]	0	[1]
Net other comprehensive income (loss), Pension Obligation			0		0
Ending Balance, Pension Obligation	(4,581)	(3,836)	(4,581)		(3,836)
Beginning Balance, Accumulated Other Comprehensive Loss			(4,558)		(3,828)
Other comprehensive income (loss) before reclassifications, Accumulated Other Comprehensive Loss			(55)		(54)
Amounts reclassified from accumulated other comprehensive loss, Accumulated Other Comprehensive Loss			59	[1]	57	[1]
Net other comprehensive income (loss), Accumulated Other Comprehensive Loss	(65)	(264)	4		3
Ending Balance, Accumulated Other Comprehensive Loss	$ (4,554)	$ (3,825)	$ (4,554)		$ (3,825)

[1] Amounts are included in interest expense in the consolidated statements of earnings.

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Derivatives and Hedging Activities (Details Textual) (USD $)	1 Months Ended
	Feb. 28, 2013	Nov. 27, 2014	May 29, 2014
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional Amount		$ 25,000,000
Interest Rate Derivatives, at Fair Value, Net		62,000	56,000
Interest Rate Swap [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Amount of Hedged Item	$ 25,000,000
Derivative, Fixed Interest Rate	0.96%
Derivative, Variable Interest Rate		0.19%
Description Of Derivative Variable Rate Basis	one-month LIBOR

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014		Nov. 28, 2013
Net earnings	$ 5,391	$ 3,482	$ 17,667		$ 16,328
Other comprehensive income (loss), net of tax:
Change in unrealized loss on available for sale investments, net of tax benefit of $0, $0, $0 and $1, respectively	0	0	0		(1)
Fair market value adjustment of interest rate swap, net of tax benefit of $63, $37, $194 and $36, respectively	(95)	(294)	(55)		(53)
Reclassification adjustment on interest rate swap included in interest expense, net of tax effect of $20, $39, $20 and $37, respectively	30	30	59	[1]	57	[1]
Other comprehensive income (loss)	(65)	(264)	4		3
Comprehensive income	5,326	3,218	17,671		16,331
Comprehensive income (loss) attributable to noncontrolling interests	168	237	12		(348)
Comprehensive income attributable to The Marcus Corporation	$ 5,158	$ 2,981	$ 17,659		$ 16,679

[1] Amounts are included in interest expense in the consolidated statements of earnings.

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Capital Lease Obligation

6 Months Ended

Nov. 27, 2014

Capital Lease Obligation [Abstract]

Capital Lease Obligation

3. Capital Lease Obligation

During fiscal 2012, the Company entered into a master licensing agreement with CDF2 Holdings, LLC, a subsidiary of Cinedigm Digital Cinema Corp (CDF2), whereby CDF2 purchased on the Company’s behalf, and then deployed and licensed back to the Company, digital cinema projection systems (the “systems”) for use by the Company in its theatres. As of November 27, 2014, 642 of the Company’s screens were utilizing the systems under a 10-year master licensing agreement with CDF2. Included in furniture, fixtures and equipment is $45,510,000 related to the digital systems as of November 27, 2014 and May 29, 2014, which is being amortized over the remaining estimated useful life of the assets. Accumulated amortization of the digital systems was $15,347,000 and $12,259,000 as of November 27, 2014 and May 29, 2014, respectively.

Under the terms of the master licensing agreement, the Company made an initial one-time payment to CDF2. The Company expects that the balance of CDF2’s costs to deploy the systems will be covered primarily through the payment of virtual print fees (VPF’s) from film distributors to CDF2 each time a digital movie is booked on one of the systems deployed on a Company screen. The Company agreed to make an average number of bookings of eligible digital movies on each screen on which a licensed system has been deployed to provide for a minimum level of VPF’s paid by distributors (standard booking commitment) to CDF2. To the extent the VPF’s paid by distributors are less than the standard booking commitment, the Company must make a shortfall payment to CDF2. Based upon the Company’s historical booking patterns, the Company does not expect to make any shortfall payments during the life of the agreement. Accounting Standards Codification No. 840, Leases, requires that the Company consider the entire amount of the standard booking commitment minimum lease payments for purposes of determining the capital lease obligation. The maximum amount per year that the Company could be required to pay is approximately $6,163,000 until the obligation is fully satisfied.

The Company’s capital lease obligation is being reduced as VPF’s are paid by the film distributors to CDF2. The Company has recorded the reduction of the obligation associated with the payment of VPF’s as a reduction of the interest related to the obligation and the amortization incurred related to the systems, as the payments represent a specific reimbursement of the cost of the systems by the studios. Based on the Company’s expected minimum number of eligible movies to be booked, the Company expects the obligation to be reduced by at least $4,999,000 within the next 12 months. This reduction will be recognized as an offset to amortization and is expected to offset the majority of the amortization of the systems.

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General (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Nov. 27, 2014	Nov. 28, 2013	Nov. 27, 2014	Nov. 28, 2013	May 29, 2014
General [Line Items]
Depreciation	$ 10,048,000	$ 8,332,000	$ 19,008,000	$ 16,539,000
Percentage Of Cash Dividends			110.00%
Fair Value, Inputs, Level 1 [Member]
General [Line Items]
Available-for-sale Securities, Fair Value Disclosure	70,000		70,000		70,000
Fair Value, Inputs, Level 2 [Member]
General [Line Items]
Interest Rate Fair Value Hedge Asset at Fair Value	$ 62,000		$ 62,000		$ 56,000