The Marcus(MCS) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents the company's unaudited consolidated financial statements for the 13 weeks ended March 26, 2020, and March 28, 2019, including balance sheets, statements of earnings (loss), comprehensive income (loss), and cash flows, along with condensed notes detailing accounting policies, the impact of COVID-19, impairment charges, acquisitions, debt, leases, and segment information Consolidated Balance Sheets The consolidated balance sheets show a significant increase in cash and cash equivalents and long-term debt from December 26, 2019, to March 26, 2020, reflecting the company's efforts to bolster liquidity in response to the COVID-19 pandemic. Total assets and liabilities also increased, while shareholders' equity slightly decreased Consolidated Balance Sheet Highlights (in thousands) | Metric | March 26, 2020 | December 26, 2019 | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $126,472 | $20,862 | | Total current assets | $173,327 | $79,264 | | Total assets | $1,441,386 | $1,359,186 | | Total current liabilities | $138,428 | $174,988 | | Long-term debt | $345,206 | $206,432 | | Total equity | $598,388 | $621,458 | Consolidated Statements of Earnings (Loss) For the 13 weeks ended March 26, 2020, the company reported a substantial net loss, a significant reversal from net earnings in the prior year. This decline was driven by decreased revenues across all segments and the recognition of impairment charges, largely attributable to the impact of the COVID-19 pandemic Consolidated Statements of Earnings (Loss) Highlights (13 Weeks Ended, in thousands except per share data) | Metric | March 26, 2020 | March 28, 2019 | Change ($k) | Change (%) | | :------------------------------------------ | :------------- | :------------- | :---------- | :--------- | | Total revenues | $159,460 | $170,039 | $(10,579) | (6.2)% | | Operating income (loss) | $(22,200) | $4,950 | $(27,150) | (548.5)% | | Impairment charges | $8,712 | — | $8,712 | N/A | | Net earnings (loss) attributable to The Marcus Corporation | $(19,352) | $1,860 | $(21,212) | (1140.4)% | | Net earnings (loss) per share - diluted (Common Stock) | $(0.64) | $0.06 | $(0.70) | (1166.7)% | Consolidated Statements of Comprehensive Income (Loss) The company reported a comprehensive loss of $(20,047)k for the 13 weeks ended March 26, 2020, a significant deterioration from the comprehensive income of $1,497k in the prior year, primarily due to the net loss and an increased other comprehensive loss from fair market value adjustments of interest rate swaps Consolidated Statements of Comprehensive Income (Loss) Highlights (13 Weeks Ended, in thousands) | Metric | March 26, 2020 | March 28, 2019 | | :------------------------------------------------ | :------------- | :------------- | | Net earnings (loss) | $(19,500) | $1,794 | | Other comprehensive loss | $(547) | $(297) | | Comprehensive income (loss) | $(20,047) | $1,497 | | Comprehensive income (loss) attributable to The Marcus Corporation | $(19,899) | $1,563 | Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $(16,618)k in Q1 2020, compared to cash provided in Q1 2019, primarily due to the net loss and unfavorable changes in working capital. Investing activities saw a reduced cash outflow, while financing activities provided a substantial cash inflow due to increased borrowings on the revolving credit facility to enhance liquidity Consolidated Statements of Cash Flows Highlights (13 Weeks Ended, in thousands) | Metric | March 26, 2020 | March 28, 2019 | | :------------------------------------------ | :------------- | :------------- | | Net cash provided by (used in) operating activities | $(16,618) | $8,020 | | Net cash used in investing activities | $(10,181) | $(46,086) | | Net cash provided by financing activities | $132,448 | $29,393 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $105,649 | $(8,673) | | Cash, cash equivalents and restricted cash at end of period | $131,267 | $13,254 | Condensed Notes to Consolidated Financial Statements The condensed notes provide detailed explanations of the company's financial reporting, including accounting policies, the significant impact of the COVID-19 pandemic on operations and liquidity, the recognition of impairment charges, details of the Movie Tavern acquisition, changes in long-term debt and related covenants, lease accounting, income tax implications, and segment-specific financial performance 1. General This note outlines the basis of presentation for the interim financial statements, key accounting policies, and details on asset impairment evaluations (long-lived assets, goodwill, trade name intangible assets). It also covers earnings per share computation, shareholders' equity changes, fair value measurements, defined benefit plan costs, revenue recognition, and recent accounting pronouncements - Depreciation expense increased to $19,034k for the 13 weeks ended March 26, 2020, from $15,955k in the prior year[26] - Indicators of impairment were present for long-lived assets and the trade name intangible asset in Q1 2020, leading to impairment charges discussed in Note 3[27][30] - Goodwill was tested for impairment in Q1 2020, but no impairment was identified as the fair value of the reporting unit exceeded its carrying value[29] Accumulated Other Comprehensive Loss (in thousands) | Component | March 26, 2020 | December 26, 2019 | | :------------------------------------ | :------------- | :---------------- | | Unrecognized loss on interest rate swap agreements | $(1,612) | $(882) | | Net unrecognized actuarial loss for pension obligation | $(11,583) | $(11,766) | | Total | $(13,195) | $(12,648) | - Deferred revenue from contracts with customers decreased to $37,108k as of March 26, 2020, from $43,200k as of December 26, 2019, primarily due to gift card and advanced ticket redemptions[45] 2. Impact of COVID-19 Pandemic The COVID-19 pandemic caused significant disruptions, leading to the temporary closure of all theatres (March 17, 2020) and most hotels/resorts (March 24, 2020), halting revenue generation. The company implemented aggressive cash preservation measures, including temporary layoffs, salary reductions, dividend suspension, and securing additional financing, to ensure sufficient liquidity for at least 12 months, though reopening timing and future compliance with debt covenants remain uncertain - All theatres temporarily closed on March 17, 2020, and all hotel division restaurants/bars closed around the same time. Five of eight company-owned hotels/resorts closed on March 24, 2020, with the remaining three closing on April 8, 2020[56] - Liquidity preservation measures include discontinuing non-essential operating and capital expenditures, temporary layoffs and salary reductions for employees and executives, temporarily eliminating board cash compensation, and suspending quarterly dividend payments[60] - The company believes it has sufficient liquidity to meet obligations and comply with debt covenants for at least 12 months, but future compliance could be impacted if operations do not resume as expected[60] - The timing for reopening theatres and hotels is uncertain; theatres are expected to reopen with capacity limitations (e.g., 50% reduced capacity) under social distancing guidelines[58] 3. Impairment Charges During the 13 weeks ended March 26, 2020, the company recorded total impairment charges of $8,712k. This included a $6,512k impairment loss for certain theatre asset groups (leasehold improvements, furniture, fixtures, equipment, and operating lease right-of-use assets) and a $2,200k impairment loss for its trade name intangible asset, both triggered by the COVID-19 pandemic - Recorded a $6,512k impairment loss for certain theatre asset groups, with the fair value of these impaired assets estimated at $13,686k as of March 26, 2020[61] - Recorded a $2,200k impairment loss for the trade name intangible asset, with its fair value estimated at $7,300k as of March 26, 2020[62] 4. Acquisition On February 1, 2019, the company acquired Movie Tavern, a circuit of 22 dine-in theatres with 208 screens, for a total purchase price of $139,310k, comprising $30,000k in cash and 2,450,000 shares of common stock. Acquisition costs of approximately $1,153k were expensed in Q1 2019 - Acquired 22 dine-in theatres with 208 screens from Movie Tavern on February 1, 2019[63] - Total purchase price was $139,310k, consisting of $30,000k cash and 2,450,000 shares of common stock (valued at $109,197k)[63] - Incurred approximately $1,153k in acquisition costs during the 13 weeks ended March 28, 2019[63] 5. Long-Term Debt Long-term debt significantly increased to $345,206k by March 26, 2020, primarily due to increased revolving credit facility borrowings. Post-quarter, the company entered into a First Amendment to Credit Agreement, securing a new $90.8 million term loan, modifying financial covenants (including suspending the fixed charge coverage ratio), and pledging assets as collateral. Similar amendments were made to Note Purchase Agreements, including an additional fee to note holders Long-Term Debt Summary (in thousands) | Debt Type | March 26, 2020 | December 26, 2019 | | :-------------------------- | :------------- | :---------------- | | Mortgage notes | $24,482 | $24,571 | | Senior notes | $109,000 | $109,000 | | Unsecured term note | $2,006 | $2,093 | | Revolving credit agreement | $220,000 | $81,000 | | Debt issuance costs | $(305) | $(322) | | Total Long-Term Debt | $355,183 | $216,342 | | Less current maturities | $(9,977) | $(9,910) | | Net Long-Term Debt | $345,206 | $206,432 | - On April 29, 2020, the company entered into a First Amendment to Credit Agreement, providing a new $90,800k 364-day Senior Term Loan A[65] - The Amendment suspends testing of the minimum consolidated fixed charge coverage ratio until September 2021 and adds new covenants for consolidated EBITDA and liquidity, along with capital expenditure restrictions[67] - In connection with the amendments, the company pledged substantially all personal and real property assets as security for the Credit Agreement and Note Purchase Agreements[69][74] - The fair value of interest rate swaps, designated as cash flow hedges, was a liability of $2,181k as of March 26, 2020[78] 6. Leases The company classifies leases as either finance or operating, with total lease costs for Q1 2020 amounting to $7,934k, predominantly from operating leases. Post-quarter, the company is actively negotiating lease concessions with landlords due to the COVID-19 pandemic and plans to account for these changes as if they were part of the original agreements Total Lease Cost (13 Weeks Ended March 26, 2020, in thousands) | Lease Cost Type | Classification | Amount | | :---------------------- | :----------------------- | :----- | | Amortization of finance lease assets | Depreciation and amortization | $711 | | Interest on lease liabilities | Interest expense | $269 | | Operating lease costs | Rent expense | $6,667 | | Variable lease cost | Rent expense | $227 | | Short-term lease cost | Rent expense | $60 | | Total Lease Cost | | $7,934 | Lease Terms and Discount Rates (March 26, 2020) | Metric | Finance Leases | Operating Leases | | :------------------------------ | :------------- | :--------------- | | Weighted-average remaining lease terms | 10 years | 15 years | | Weighted-average discount rates | 4.67% | 4.54% | - The company is negotiating lease concessions with landlords due to the COVID-19 pandemic and anticipates electing a policy to account for these concessions as if they were made under enforceable rights in the original agreement, avoiding a lease-by-lease modification analysis[83] 7. Income Taxes The company's effective income tax rate for Q1 2020 was 25.3%, a significant increase from 0.7% in Q1 2019, primarily due to a substantial pre-tax loss. The company expects to be eligible for a $15-25 million income tax refund in fiscal 2020, and potentially a significant refund in fiscal 2021, related to provisions of the CARES Act concerning qualified improvement property and net operating loss carrybacks - Effective income tax rate for the 13 weeks ended March 26, 2020, was 25.3%, compared to 0.7% for the same period in 2019[85] - The company anticipates an income tax refund in the $15-25 million range in fiscal 2020 due to CARES Act provisions for qualified improvement property expenditures and net operating loss carrybacks[86] - A significant refund in fiscal 2021 is also possible by applying any fiscal 2020 tax loss to prior year income[86] 8. Business Segment Information Both the Theatres and Hotels/Resorts segments experienced revenue declines and operating losses in Q1 2020 compared to Q1 2019, primarily due to the widespread closures caused by the COVID-19 pandemic. Corporate items also contributed to the overall operating loss Business Segment Performance (13 Weeks Ended, in thousands) | Segment | Revenues (Mar 26, 2020) | Operating income (loss) (Mar 26, 2020) | Revenues (Mar 28, 2019) | Operating income (loss) (Mar 28, 2019) | | :-------------- | :---------------------- | :------------------------------------- | :---------------------- | :------------------------------------- | | Theatres | $109,211 | $(7,083) | $114,885 | $12,594 | | Hotels/Resorts | $50,160 | $(10,853) | $55,061 | $(3,153) | | Corporate Items | $89 | $(4,264) | $93 | $(4,491) | | Total | $159,460 | $(22,200) | $170,039 | $4,950 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, with a significant focus on the unprecedented impact of the COVID-19 pandemic. It details the operational closures, liquidity preservation measures, financial performance declines, and the outlook for both theatre and hotels/resorts segments, as well as changes in debt covenants and capital resources Special Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements, particularly concerning the COVID-19 pandemic's impact, and cautions readers about inherent risks and uncertainties that could cause actual results to differ materially from expectations. These risks include the pandemic's duration, economic conditions, film availability, and the company's ability to service debt - Forward-looking statements are identified by words such as "believe," "anticipate," "expect," and describe future plans, objectives, or goals[91] - Key risks include the adverse effects of the COVID-19 pandemic on theatre and hotels/resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets, and ability to service indebtedness[91] - Statements are based on assumptions about managing COVID-19 difficulties, temporary closures, workforce availability, and the temporary and long-term effects of the pandemic on the business[91] RESULTS OF OPERATIONS The company's Q1 2020 results were severely impacted by the COVID-19 pandemic, leading to significant revenue declines and operating losses across both theatre and hotels/resorts segments. This section details the overall financial performance, segment-specific impacts, and the nonrecurring expenses and impairment charges incurred due to the crisis General The company reports its consolidated and segment results on a 52- or 53-week fiscal year, ending on the last Thursday in December. Fiscal 2020 is a 53-week year. The first quarter of fiscal 2020 covered December 27, 2019, to March 26, 2020, while Q1 2019 covered December 28, 2018, to March 28, 2019. Operations are primarily divided into movie theatres and hotels and resorts - The company's fiscal year ends on the last Thursday in December; fiscal 2020 is a 53-week year[92] - The first quarter of fiscal 2020 ran from December 27, 2019, to March 26, 2020, and the first quarter of fiscal 2019 ran from December 28, 2018, to March 28, 2019[93] - Primary business segments are movie theatres and hotels and resorts[93] Impact of the COVID-19 Pandemic The COVID-19 pandemic led to the temporary closure of all theatres and most hotels/resorts by March 2020, halting revenue generation. The company implemented aggressive cash preservation measures, including securing a new $90.8 million term loan, suspending dividends, and reducing expenses. It also incurred impairment charges and nonrecurring expenses due to the crisis, but believes it has sufficient liquidity to sustain operations well into fiscal 2021, despite uncertainties regarding reopening and recovery - All theatres temporarily closed on March 17, 2020, and most hotel operations ceased by March 24, 2020, due to the COVID-19 pandemic[95] - Secured a new $90.8 million 364-day Senior Term Loan A on April 29, 2020, to further enhance liquidity, positioning the company to sustain operations well into fiscal 2021[97] - Implemented cash preservation measures including discontinuing non-essential expenditures, temporary layoffs, salary reductions, eliminating board cash compensation, and temporarily suspending quarterly dividend payments[100] - Anticipates an income tax refund of $15-25 million in fiscal 2020 due to CARES Act provisions and incurred $8.7 million in pre-tax impairment charges and $5.5 million in nonrecurring expenses in Q1 2020[101][103] - Theatres are expected to reopen with capacity limitations (e.g., 50% reduced capacity), and hotels will reopen based on increased demand, with the pace of recovery uncertain[104][108] Overall Results The company's overall financial performance in Q1 2020 significantly deteriorated, with revenues decreasing by 6.2% and operating income shifting to a substantial loss of $(22.2) million, primarily due to COVID-19 related closures, $8.7 million in impairment charges, and $5.5 million in nonrecurring expenses. Net earnings attributable to The Marcus Corporation fell to a loss of $(19.4) million, resulting in a diluted EPS of $(0.64) Overall Financial Results (First Quarter, in millions except per share data) | Metric | F2020 | F2019 | Variance Amt. | Variance Pct. | | :------------------------------------------ | :---- | :---- | :------------ | :------------ | | Revenues | $159.5 | $170.0 | $(10.5) | (6.2)% | | Operating income (loss) | $(22.2) | $5.0 | $(27.2) | (548.5)% | | Net earnings (loss) attributable to The Marcus Corp. | $(19.4) | $1.9 | $(21.3) | (1,140.4)% | | Net earnings (loss) per common share - diluted | $(0.64) | $0.06 | $(0.70) | (1,166.7)% | - Operating loss was negatively impacted by $5.5 million in nonrecurring expenses (primarily payroll continuation) and $8.7 million in impairment charges during Q1 2020[112] - Investment income shifted to a loss of $695k in Q1 2020 from income of $473k in Q1 2019 due to significant market declines[116] - Interest expense decreased by $600k (17.8%) in Q1 2020 due to reduced borrowing levels and lower average interest rates[117] - Reported an income tax benefit of $6.6 million in Q1 2020, compared to a $13k expense in Q1 2019, driven by the significant pre-tax loss[119] Theatres The theatre division's revenues decreased by 4.9% in Q1 2020, leading to an operating loss, primarily due to the mid-March COVID-19 closures, impairment charges, and nonrecurring expenses. Despite this, comparable theatres outperformed the national box office decline. The decrease was partially offset by an extra month of Movie Tavern revenues and increases in average ticket price and average concession revenues per person Theatre Division Performance (First Quarter, in millions except operating margin) | Metric | F2020 | F2019 | Variance Amt. | Variance Pct. | | :------------------------ | :---- | :---- | :------------ | :------------ | | Revenues | $109.2 | $114.9 | $(5.7) | (4.9)% | | Operating income (loss) | $(7.1) | $12.6 | $(19.7) | (156.2)% | | Operating margin (% of revenues) | (6.5)% | 11.0% | | | - Operating loss was negatively impacted by $2.8 million in nonrecurring expenses and $8.7 million in impairment charges in Q1 2020[123] - Comparable theatre admission revenues and concession revenues decreased 14.8% and 13.7%, respectively, excluding Movie Tavern theatres[125] - Comparable theatres outperformed the U.S. box office decline of 17.0% by 2.2 percentage points in Q1 2020[126] - Average ticket price increased 7.0% (6.0% for comparable theatres) and average concession revenues per person increased 10.9% (7.4% for comparable theatres) in Q1 2020[128][130] - Total theatre attendance decreased 12.2% (19.5% for comparable theatres) in Q1 2020, primarily due to COVID-19 closures and a weaker film slate in early March[133] - The film product release schedule for the second half of fiscal 2020 and 2021 is expected to be very strong, including many films delayed from early 2020[135] Hotels and Resorts The Hotels and Resorts division experienced an 8.9% revenue decrease and an increased operating loss in Q1 2020, primarily due to COVID-19 related cancellations and the closure of five company-owned hotels in March. RevPAR declined significantly by 14.5%, though the company believes it outperformed the national 'upper upscale' hotel segment and its competitive sets. Group bookings for future periods are running behind prior year levels Hotels and Resorts Division Performance (First Quarter, in millions except operating margin) | Metric | F2020 | F2019 | Variance Amt. | Variance Pct. | | :------------------------ | :---- | :---- | :------------ | :------------ | | Revenues | $50.2 | $55.1 | $(4.9) | (8.9)% | | Operating loss | $(10.9) | $(3.2) | $(7.7) | (244.2)% | | Operating margin (% of revenues) | (21.6)% | (5.7)% | | | - Revenues decreased due to COVID-19 related cancellations in March 2020 and the closure of five company-owned hotels. Excluding the Saint Kate (under renovation in 2019), total revenues decreased by 12.2%[138] - Operating loss was negatively impacted by approximately $2.7 million in nonrecurring expenses (primarily payroll continuation) due to hotel closures[140] Operating Statistics (Comparable Company-Owned Properties, First Quarter) | Metric | F2020 | F2019 | Variance | Variance Pct. | | :-------------------- | :------ | :------ | :------- | :------------ | | Occupancy percentage | 55.6% | 64.6% | (9.0)pts | (13.9)% | | ADR | $129.20 | $130.05 | $(0.85) | (0.7)% | | RevPAR | $71.84 | $84.05 | $(12.21) | (14.5)% | - The company believes it outperformed comparable 'upper upscale' hotels nationally (RevPAR decrease of 20.9%) and its competitive sets (RevPAR decrease of 25.1%) in Q1 2020[142] - Group room revenue bookings for the second half of fiscal 2020 and fiscal 2021 are currently running slightly behind prior year levels[144] LIQUIDITY AND CAPITAL RESOURCES The company's liquidity was significantly impacted by COVID-19, leading to increased borrowings. Post-quarter, it secured a new $90.8 million term loan and amended its credit and note purchase agreements, modifying covenants, adding new financial requirements (EBITDA, liquidity, capital expenditure limits), and collateralizing debt to ensure sufficient liquidity for at least 12 months. Operating cash flow turned negative, while financing cash flow surged due to increased debt Liquidity The company secured a new $90.8 million term loan facility and amended its Credit Agreement and Note Purchase Agreements on April 29, 2020. These amendments modified various covenants, including suspending the fixed charge coverage ratio until Q3 2021, adding new minimum EBITDA and consolidated liquidity covenants, and restricting capital expenditures. All debt is now secured by substantially all personal and real property assets. The company believes these actions provide sufficient liquidity for at least 12 months - A new $90.8 million 364-day term loan facility was established on April 29, 2020, with potential to increase up to $100 million[150] - The Credit Agreement was amended to suspend testing of the minimum consolidated fixed charge coverage ratio until Q3 2021 and to add new covenants for consolidated EBITDA and liquidity, along with capital expenditure limitations[154] - All borrowings under the Credit Agreement and Senior Notes are now secured by substantially all of the company's personal and real property assets[156][161] - The Note Amendments include an additional quarterly fee of 0.18125% (0.725% per annum) on outstanding borrowings to each note holder[160] - The company believes it has sufficient liquidity to meet obligations and comply with debt covenants for at least 12 months, contingent on resuming operations as expected[163] Financial Condition Net cash used in operating activities totaled $(16.6) million in Q1 2020, a significant decrease from cash provided in Q1 2019, due to reduced net earnings and unfavorable working capital timing. Net cash used in investing activities decreased by $35.9 million, primarily due to the absence of a large acquisition like Movie Tavern in 2019 and reduced capital expenditures. Net cash provided by financing activities surged to $132.4 million, driven by increased borrowings on the revolving credit facility. The debt-to-capitalization ratio increased to 0.37 - Net cash used in operating activities totaled $(16.6) million in Q1 2020, compared to $8.0 million provided in Q1 2019[164] - Net cash used in investing activities decreased by $35.9 million to $(10.2) million in Q1 2020, primarily due to the Movie Tavern Acquisition in Q1 2019 and reduced capital expenditures[165] - Net cash provided by financing activities increased to $132.4 million in Q1 2020, driven by a net increase of $139.0 million in revolving credit facility borrowings[167] - The debt-to-capitalization ratio (excluding lease obligations) increased to 0.37 at March 26, 2020, from 0.26 at December 26, 2019[168] - Quarterly dividend payments are temporarily suspended for the remainder of 2020 and limited in the first two quarters of fiscal 2021[171] - Fiscal 2020 capital expenditures are now projected to be in the $20-30 million range, significantly reduced from the initial $65-85 million estimate due to COVID-19 and debt restrictions[172] Critical Accounting Policy Update Due to the COVID-19 pandemic, the company performed a quantitative goodwill impairment test for its theatre segment in Q1 2020. The analysis determined that the fair value of the theatre reporting unit exceeded its carrying value by approximately 20%, indicating no impairment as of March 26, 2020. However, future impairment could occur if forecasted cash flows are not met or market conditions worsen - A quantitative goodwill impairment test was performed for the theatre segment in Q1 2020 due to a triggering event from the COVID-19 pandemic[173] - The fair value of the theatre reporting unit was determined to exceed its carrying value by approximately 20%, resulting in no goodwill impairment as of March 26, 2020[173] - Future goodwill impairment could occur if forecasted cash flows are not achieved or if market conditions deteriorate[173] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reported no material changes in its market risk exposures since December 26, 2019 - No material changes in market risk exposures have occurred since December 26, 2019[174] Item 4. Controls and Procedures The company's principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q. No significant changes in internal control over financial reporting were identified during the period - Disclosure controls and procedures were deemed effective as of the end of the reporting period[175] - No significant changes in internal control over financial reporting were identified during the period[175] PART II – OTHER INFORMATION Item 1A. Risk Factors The COVID-19 pandemic has introduced new and heightened risks, significantly impacting the company's theatre and hotels/resorts businesses, liquidity, and financial condition. These risks include prolonged closures, uncertain recovery rates, potential changes in consumer behavior, disruptions in film distribution, and increased challenges in complying with financial covenants. The company cannot guarantee rapid recovery or timely access to governmental relief - The COVID-19 pandemic has had an unprecedented impact, leading to the temporary closure of all theatres and hotels/resorts, halting revenue generation[176][177] - The company has suspended dividends, halted non-essential expenditures, reduced staff/salaries, and obtained waivers for debt covenants, but cannot predict when businesses will return to normal levels[178][179] - Long-lasting effects of the pandemic could include lack of film availability, decreased attendance, reduced travel, cancellation of major events, inability to negotiate favorable rent terms, increased employee risks, potential impairment charges, and challenges in meeting financial obligations or accessing credit markets[181] - Uncertainty exists regarding the speed of recovery, as customers may avoid public spaces, and the company cannot assure timely access to benefits under the CARES Act or other governmental relief bills[180][182][183] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2020, the company repurchased 8,551 shares of its common stock for approximately $274,000 at an average price of $32.06 per share, primarily in conjunction with income tax payments on vested restricted stock. As of March 26, 2020, approximately 2.7 million shares remained available for repurchase under prior Board authorizations Common Stock Repurchases (Q1 2020) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------------- | :----------------------------- | :--------------------------- | | January 31 - February 27 | 8,551 | $32.06 | | Total | 8,551 | $32.06 | - Repurchases were made in conjunction with the payment of income taxes on vested restricted stock[185] - As of March 26, 2020, 2,748,010 shares remained available for repurchase under Board authorizations, which do not have an expiration date[186] Item 4. Mine Safety Disclosures This item is not applicable to The Marcus Corporation - This item is not applicable[187] Item 6. Exhibits This section lists the exhibits filed with the 10-Q report, including amendments to the Credit Agreement and Note Purchase Agreements, certifications by the Chief Executive Officer and Chief Financial Officer, and various Inline XBRL taxonomy documents - Key exhibits include the First Amendment to Credit Agreement and First Amendments to Note Purchase Agreements, both dated April 29, 2020[189] - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 1350 of the Sarbanes-Oxley Act of 2002 are included[189] - Various Inline XBRL Taxonomy Extension documents (Schema, Calculation, Definition, Label, Presentation Linkbase) are also listed[189]