The Marcus Corporation Completes Acquisition of Movie Tavern Circuit and Announces Preliminary Unaudited Fiscal 2018 Financial Results

The
Marcus Corporation (NYSE: MCS), today announced it has completed the
acquisition of the assets of Movie Tavern from VSS-Southern Theatres,
LLC (“Southern Theatres”), a portfolio company of Veronis Suhler
Stevenson (“VSS”), a private equity firm.

The acquisition increases the footprint of its Marcus Theatres^®
division by 23%, adding 208 screens at 22 locations in Arkansas,
Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas
and Virginia. Marcus Theatres now owns or operates a total of 1,097
screens at 90 locations in 17 states.

As previously announced, the purchase price for the acquisition
consisted of $30 million in cash and the issuance of 2,450,000 shares of
The Marcus Corporation common stock. The shares of The Marcus
Corporation common stock are subject to certain restrictions on resale
by Southern Theatres. Based upon yesterday’s closing share price of The
Marcus Corporation’s common stock, the aggregate purchase price was
valued at approximately $139 million. The terms of the transaction are
described in greater detail in the Current Report on Form 8-K that the
company filed with the Securities and Exchange Commission on November 2,
2018.

Commenting on the Movie Tavern acquisition, Rolando B. Rodriguez,
chairman, president and CEO of Marcus Theatres, said, “We are excited to
welcome Movie Tavern customers and associates to the Marcus Theatres
family. Movie Tavern is an attractive addition to our existing circuit
and we are especially pleased to expand our portfolio of in-theatre
dining locations.”

Rodriguez said the company plans to brand the locations as “Movie Tavern
by Marcus,” which combines the established Movie Tavern name with the
strong Marcus Theatres identity. Marcus Theatres’ popular $5 Movie
Tuesdays will immediately be introduced to the 22 Movie Tavern
locations, enabling guests to not only enjoy the latest blockbusters for
just $5 all day on Tuesdays, but to also receive a free
complimentary-size popcorn. The company also plans to introduce other
new amenities and offerings to select Movie Tavern locations. While
specific decisions have not yet been made, these features may include
Marcus Theatres’ premium large format screens, DreamLounger ^SM recliner
seating and the company’s successful customer loyalty program.

J.P. Morgan served as financial advisor and Foley & Lardner LLP served
as legal counsel to The Marcus Corporation. PJ SOLOMON served as
financial advisor and Ropes & Gray LLP served as legal counsel to
Southern Theatres.

Preliminary Unaudited Fourth Quarter and Fiscal
2018 Financial Results

The company also announced preliminary and unaudited financial results
for the fourth quarter and fiscal year ended December 27, 2018.

For the fourth quarter ended December 27, 2018, the company expects to
report:

• Total revenues of approximately $175 million, a 5.7% increase from
  total revenues of $165.6 million for the fourth quarter of fiscal 2017.
• Theatre admissions revenue growth in line with the industry, after
  adjusting for new theatres.
• Net earnings attributable to The Marcus Corporation of $7.8 million to
  $8.7 million and net earnings per diluted common share attributable to
  The Marcus Corporation of $0.27 to $0.30. Net earnings attributable to
  The Marcus Corporation were $34.4 million and net earnings per diluted
  common share attributable to The Marcus Corporation were $1.21 for the
  fourth quarter of fiscal 2017.
• Adjusted net earnings attributable to The Marcus Corporation of $11.0
  million to $11.8 million, an increase of 6.8% to 15.4% from Adjusted
  net earnings attributable to The Marcus Corporation of $10.3 million
  for the fourth quarter of fiscal 2017.
• Adjusted net earnings per diluted common share attributable to The
  Marcus Corporation of $0.38 to $0.41, an increase of 5.6% to 13.9%
  from Adjusted net earnings per diluted common share attributable to
  The Marcus Corporation of $0.36 for the fourth quarter of fiscal 2017.
• Adjusted EBITDA of $34.8 million to $36.0 million, a 7.0% to 10.7%
  increase from Adjusted EBITDA of $32.5 million for the fourth quarter
  of fiscal 2017.
• Adjusted net earnings attributable to The Marcus Corporation, Adjusted
  net earnings per diluted common share attributable to The Marcus
  Corporation and Adjusted EBITDA reflect adjustments made by the
  company to eliminate the favorable impact of certain nonrecurring
  reductions in deferred income taxes in the fourth quarter of fiscal
  2018 and 2017, to eliminate the negative impact of certain
  nonrecurring acquisition and preopening expenses related to the Movie
  Tavern acquisition, as well as certain nonrecurring preopening
  expenses and accelerated depreciation expense related to the project
  currently underway to convert the former InterContinental Milwaukee
  hotel into Saint Kate, The Arts Hotel, in the fourth quarter of fiscal
  2018, and to eliminate the favorable impact of a significant one-time
  gain related to the sale of an unconsolidated joint venture interest
  in the fourth quarter of fiscal 2017.

For the fiscal year ended December 27, 2018, the company expects to
report:

• Total revenues of approximately $707 million, an 8.2% increase from
  total revenues of $653.6 million for fiscal 2017.
• Theatre admissions revenue growth nearly two percentage points in
  excess of the industry, after adjusting for new theatres.
• Net earnings attributable to The Marcus Corporation of $52.5 million
  to $53.4 million and net earnings per diluted common share
  attributable to The Marcus Corporation of $1.83 to $1.86. Net earnings
  attributable to The Marcus Corporation were $65.0 million and net
  earnings per diluted common share attributable to The Marcus
  Corporation were $2.29 for fiscal 2017.
• Adjusted net earnings attributable to The Marcus Corporation of $54.9
  million to $55.8 million, an increase of 32.0% to 34.1% from Adjusted
  net earnings attributable to The Marcus Corporation of $41.6 million
  for fiscal 2017.
• Adjusted net earnings per diluted common share attributable to The
  Marcus Corporation of $1.91 to $1.94, an increase of 30.8% to 32.9%
  from Adjusted net earnings per diluted common share attributable to
  The Marcus Corporation of $1.46 for fiscal 2017.
• Adjusted EBITDA of $148.2 million to $149.4 million, an 11.7% to 12.6%
  increase from Adjusted EBITDA of $132.7 million for fiscal 2017.
• Adjusted net earnings attributable to The Marcus Corporation, Adjusted
  net earnings per diluted common share attributable to The Marcus
  Corporation and Adjusted EBITDA reflect adjustments made by the
  company to eliminate the favorable impact of certain nonrecurring
  reductions in deferred income taxes in fiscal 2018 and 2017, to
  eliminate the negative impact of certain nonrecurring acquisition and
  preopening expenses related to the Movie Tavern acquisition, as well
  as certain nonrecurring preopening expenses and accelerated
  depreciation expense related to the project currently underway to
  convert the former InterContinental Milwaukee hotel into Saint Kate,
  The Arts Hotel, in fiscal 2018, and to eliminate the favorable impact
  of a significant one-time gain related to the sale of an
  unconsolidated joint venture interest and the negative impact of
  certain preopening expenses in fiscal 2017.

“Fiscal 2018 was another great year for The Marcus Corporation and we
expect to report record revenues and operating income,” said Gregory S.
Marcus, president and chief executive officer of The Marcus Corporation.
“Both Marcus Theatres and Marcus Hotels & Resorts performed very well,
contributing to these strong expected results. We expect Marcus Theatres
to once again deliver record revenues and operating income for the
fourth quarter and full fiscal year.”

The company has provided ranges, rather than specific amounts, for
certain financial results above, primarily because the financial results
discussed above are preliminary and remain subject to the completion of
normal year-end accounting procedures and an external audit of the
company’s financial statements. Actual results may differ materially
from these preliminary results as a result of the completion of year-end
closing procedures, final adjustments and other developments arising
between now and the time that the company’s financial results are
finalized. In addition, these preliminary results are not a
comprehensive statement of the company’s financial results for the
fourth quarter or fiscal year ended December 27, 2018 and should not be
viewed as a substitute for full, audited financial statements prepared
in accordance with generally accepted accounting principles. The company
plans to report completed fourth quarter and fiscal year 2018 financial
results on February 21, 2019.

Non-GAAP Financial Measures

Adjusted net earnings attributable to The Marcus Corporation, Adjusted
net earnings per diluted common share attributable to The Marcus
Corporation and Adjusted EBITDA (which are shown in the reconciliations
below) have been presented in this press release as supplemental
measures of financial performance that are not required by, or presented
in accordance with, GAAP. The company defines Adjusted net earnings
attributable to The Marcus Corporation as net earnings attributable to
The Marcus Corporation adjusted to eliminate the impact of certain items
that the company does not consider indicative of its core operating
performance and the tax effect related to those items. The company
defines Adjusted net earnings per diluted common share attributable to
The Marcus Corporation as Adjusted net earnings attributable to The
Marcus Corporation divided by diluted weighted average shares
outstanding. The company defines Adjusted EBITDA as net earnings
attributable to The Marcus Corporation before investment income,
interest expense, other expense, gain or loss on disposition of
property, equipment and other assets, equity earnings or losses from
unconsolidated joint ventures, net earnings or losses attributable to
noncontrolling interests, income taxes and depreciation and
amortization, adjusted to eliminate the impact of certain items that the
company does not consider indicative of its core operating performance.
Reconciliations of these measures to the equivalent measures under GAAP
are set forth in the tables below.

Adjusted net earnings attributable to The Marcus Corporation, Adjusted
net earnings per diluted common share attributable to The Marcus
Corporation and Adjusted EBITDA are key measures used by management and
the company’s board of directors to assess the company’s financial
performance and enterprise value. The company believes that Adjusted net
earnings attributable to The Marcus Corporation, Adjusted net earnings
per diluted common share attributable to The Marcus Corporation and
Adjusted EBITDA are useful measures, as they eliminate certain expenses
that are not indicative of the company’s core operating performance and
facilitate a comparison of the company’s core operating performance on a
consistent basis from period to period. The company also uses Adjusted
EBITDA as a basis to determine certain annual cash bonuses and long-term
incentive awards, to supplement GAAP measures of performance to evaluate
the effectiveness of its business strategies, to make budgeting
decisions, and to compare its performance against that of other peer
companies using similar measures. Adjusted net earnings, Adjusted
diluted earnings per share and Adjusted EBITDA are also used by
analysts, investors and other interested parties as performance measures
to evaluate companies in the company’s industries.

Adjusted net earnings attributable to The Marcus Corporation, Adjusted
net earnings per diluted common share attributable to The Marcus
Corporation and Adjusted EBITDA are non-GAAP measures of the company’s
financial performance and should not be considered as alternatives to
net earnings or diluted earnings per share as a measure of financial
performance, or any other performance measure derived in accordance with
GAAP and they should not be construed as an inference that the company’s
future results will be unaffected by unusual or non-recurring items.
Additionally, Adjusted net earnings attributable to The Marcus
Corporation and Adjusted EBITDA are not intended to be measures of
liquidity or free cash flow for management’s discretionary use. In
addition, these non-GAAP measures exclude certain non-recurring and
other charges. Each of these non-GAAP measures has its limitations as an
analytical tool, and you should not consider them in isolation or as a
substitute for analysis of the company’s results as reported under GAAP.
In evaluating Adjusted net earnings attributable to The Marcus
Corporation, Adjusted net earnings per diluted common share attributable
to The Marcus Corporation and Adjusted EBITDA, you should be aware that
in the future we will incur expenses that are the same as or similar to
some of the items eliminated in the adjustments made to determine
Adjusted net earnings attributable to The Marcus Corporation, Adjusted
net earnings per diluted common share attributable to The Marcus
Corporation and Adjusted EBITDA, such as acquisition expenses,
preopening expenses, accelerated depreciation and other adjustments. The
company’s presentation of Adjusted net earnings attributable to The
Marcus Corporation, Adjusted net earnings per diluted common share
attributable to The Marcus Corporation and Adjusted EBITDA should not be
construed to imply that the company’s future results will be unaffected
by any such adjustments. Definitions and calculations of Adjusted net
earnings, Adjusted diluted earnings per share and Adjusted EBITDA differ
among companies in our industries, and therefore Adjusted net earnings,
Adjusted diluted earnings per share and Adjusted EBITDA disclosed by the
company may not be comparable to the measures disclosed by other
companies.

The reconciliation of estimated Adjusted net earnings attributable to
The Marcus Corporation and Adjusted net earnings per diluted common
share attributable to The Marcus Corporation for the fourth quarter and
fiscal year ended December 27, 2018 and fourth quarter and fiscal year
ended December 28, 2017 is set forth in the table as follows:

Reconciliation of Adjusted net earnings and
Adjusted net earnings per diluted common share

The reconciliation of estimated net earnings attributable to The Marcus
Corporation to estimated Adjusted EBITDA for the fourth quarter and
fiscal year ended December 27, 2018 and fourth quarter and fiscal year
ended December 28, 2017 is set forth in the table as follows:

Reconciliation of Net earnings to Adjusted EBITDA

The preliminary estimated unaudited financial results disclosed above
(including in the GAAP reconciliation tables) reflect management’s
estimates based solely upon information available as of the date of this
press release and are not a comprehensive statement of the company’s
financial results for the fourth quarter and fiscal year ended December
27, 2018. The information presented herein should not be considered a
substitute for the financial information to be filed with the Securities
and Exchange Commission in the company’s Annual Report on Form 10-K for
the fiscal year ended December 27, 2018 once it becomes available. The
company has no intention or obligation to update the preliminary
estimated unaudited financial results (or GAAP reconciliations) in this
press release prior to reporting its completed results for the fourth
quarter and fiscal year ended December 27, 2018 on February 21, 2019.

About Marcus Theatres

Marcus
Theatres^®, a division of The
Marcus Corporation, is the fourth largest theatre circuit in the
United States and currently owns or operates 1,097 screens at 90
locations in 17 states. For more information, please visit www.marcustheatres.com
and follow the company on Facebook
and Twitter
(@Marcus_Theatres).

About The Marcus Corporation

Headquartered in Milwaukee, The
Marcus Corporation is a leader in the lodging and entertainment
industries, with significant company-owned real estate assets. In
addition to its Marcus Theatres division, its lodging division, Marcus^®
Hotels & Resorts, owns and/or manages 21 hotels, resorts and
other properties in nine states. For more information, please visit the
company’s website at www.marcuscorp.com.

Certain matters discussed in this press release are “forward-looking
statements” intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995,
including the expectation that the Movie Tavern acquisition will be
accretive to earnings, earnings per share and cash flow in the first
twelve months following the closing of the transaction. 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 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; (9) the adverse impact on
business and consumer spending on travel, leisure and entertainment
resulting from terrorist attacks in the United States or other incidents
of violence in public venues such as hotels and movie theatres;(10) a
disruption in our business and reputational and economic risks
associated with civil securities claims brought by shareholders; and
(11) our ability to timely and successfully integrate the Movie Tavern
operations into our own circuit. 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 press
release and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.

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