XML 19 R8.htm IDEA: XBRL DOCUMENT
v3.10.0.1

General | 9 Months Ended
--- | ---
Sep. 27, 2018
General [Abstract] |
General | 1. General Basis of Presentation – The unaudited consolidated financial statements for the 13 and 39 weeks ended September 27, 2018 and September 28, 2017 have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at September 27, 2018, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2017. Immaterial Restatement of Prior Year Financial Statements – Beginning in the fiscal 2018 first quarter, the Company began appropriately presenting cost reimbursements and reimbursed costs on a gross basis and presented two new line items in the consolidated statements of earnings. These cost reimbursements and reimbursed costs were previously reported on a net basis. Reimbursed costs primarily consist of payroll and related expenses at managed properties where the Company is the employer and may include certain operational and administrative costs as provided for in the Company's contracts with owners. These costs are reimbursed back to the Company. As these costs have no added markup, the revenue and related expense have no impact on operating income or net earnings. Cost reimbursements and reimbursed costs, which totaled $8,557,000 and $23,424,000 for the 13 and 39 weeks ended September 28, 2017, respectively, have been separately presented in the prior year statement of earnings to correct the prior year presentation. The Company believes this correction is immaterial to the consolidated financial statements. Accounting Policies – Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December 28, 2017, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies. During the 39 weeks ended September 27, 2018, there were no significant changes made to the Company’s significant accounting policies other than the changes attributable to the adoption of the Financial Accounting Standards Board Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers , which was adopted on December 29, 2017. These revenue recognition policy updates are applied prospectively in the Company’s financial statements from December 29, 2017 forward. Reported financial information for the historical comparable period was not revised and continues to be reported under the accounting standards in effect during the historical periods. 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 $14,556,000 and $43,037,000 for the 13 and 39 weeks ended September 27, 2018, respectively, and $12,946,000 and $37,368,000 for the 13 and 39 weeks ended September 28, 2017, 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:
|  | Interest Rate Swaps |  |  | Available for Sale Investments |  |  | Pension Obligation |  |  | Accumulated Other Comprehensive Loss |
|  | (in thousands) |
Balance at December 28, 2017 |  | $ | – |  |  | $ | (11 | ) |  | $ | (7,414 | ) |  | $ | (7,425 | )
Amount reclassified to retained earnings on December 29, 2017 in connection with the adoption of ASU No. 2016-01 |  |  | – |  |  |  | 11 |  |  |  | – |  |  |  | 11 |
Balance at December 29, 2017 |  |  | – |  |  |  | – |  |  |  | (7,414 | ) |  |  | (7,414 | )
Amortization of the net actuarial loss and prior service credit |  |  | – |  |  |  | – |  |  |  | 340 |  |  |  | 340 |
Other comprehensive income before reclassifications |  |  | 191 |  |  |  | – |  |  |  | – |  |  |  | 191 |
Amounts reclassified from accumulated other comprehensive loss |  |  | 134 | (1) |  |  | – |  |  |  | – |  |  |  | 134 |
Other comprehensive income |  |  | 325 |  |  |  | – |  |  |  | 340 |  |  |  | 665 |
Balance at September 27, 2018 |  | $ | 325 |  |  | $ | – |  |  | $ | (7,074 | ) |  | $ | (6,749 | )
| (1) | Amount is included in interest expense in the consolidated statements of earnings.
|  | Available for Sale Investments |  |  | Pension Obligation |  |  | Accumulated Other Comprehensive Loss |
|  | (in thousands) |
Balance at December 29, 2016 |  | $ | 3 |  |  | $ | (5,069 | ) |  | $ | (5,066 | )
Change in unrealized gain on available for sale investments |  |  | (14 | ) |  |  | – |  |  |  | (14 | )
Amortization of net actuarial loss and prior service credit |  |  | – |  |  |  | 161 |  |  |  | 161 |
Net other comprehensive income (loss) |  |  | (14 | ) |  |  | 161 |  |  |  | 147 |
Balance at September 28, 2017 |  | $ | (11 | ) |  | $ | (4,908 | ) |  | $ | (4,919 | )
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 Ended September 27, 2018 |  |  | 13 Weeks Ended September 28, 2017 |  |  | 39 Weeks Ended September 27, 2018 |  |  | 39 Weeks Ended September 28, 2017 |
|  | (in thousands, except per share data) |
Numerator: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings attributable to |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
The Marcus Corporation |  | $ | 16,231 |  |  | $ | 10,978 |  |  | $ | 44,671 |  |  | $ | 30,555 |
Denominator: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Denominator for basic EPS |  |  | 28,180 |  |  |  | 27,825 |  |  |  | 28,028 |  |  |  | 27,773 |
Effect of dilutive employee stock options |  |  | 638 |  |  |  | 525 |  |  |  | 606 |  |  |  | 637 |
Denominator for diluted EPS |  |  | 28,818 |  |  |  | 28,350 |  |  |  | 28,634 |  |  |  | 28,410 |
Net earnings per share - basic: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common Stock |  | $ | 0.60 |  |  | $ | 0.41 |  |  | $ | 1.65 |  |  | $ | 1.14 |
Class B Common Stock |  | $ | 0.52 |  |  | $ | 0.36 |  |  | $ | 1.47 |  |  | $ | 1.02 |
Net earnings per share - diluted: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common Stock |  | $ | 0.56 |  |  | $ | 0.39 |  |  | $ | 1.56 |  |  | $ | 1.08 |
Class B Common Stock |  | $ | 0.51 |  |  | $ | 0.37 |  |  | $ | 1.44 |  |  | $ | 1.01 |
Equity – Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interests for the 39 weeks ended September 27, 2018 and September 28, 2017 was as follows:
|  | Total Shareholders’ Equity Attributable to The Marcus Corporation |  |  | Noncontrolling Interests |
|  | (in thousands) |
Balance at December 28, 2017 |  | $ | 445,024 |  |  | $ | 100 |
Net earnings attributable to The Marcus Corporation |  |  | 44,671 |  |  |  | – |
Net earnings attributable to noncontrolling interests |  |  | – |  |  |  | 70 |
Distributions to noncontrolling interests |  |  | – |  |  |  | (65 | )
Cash dividends |  |  | (12,277 | ) |  |  | – |
Exercise of stock options |  |  | 6,902 |  |  |  | – |
Savings and profit sharing contribution |  |  | 1,130 |  |  |  | – |
Treasury stock transactions, except for stock options |  |  | (2,566 | ) |  |  | – |
Share-based compensation |  |  | 1,950 |  |  |  | – |
Cumulative effect of adopting ASU No. 2014-09, net of tax |  |  | (2,568 | ) |  |  | – |
Other comprehensive income, net of tax |  |  | 665 |  |  |  | – |
Balance at September 27, 2018 |  | $ | 482,931 |  |  | $ | 105 |
|  | Total Shareholders’ Equity Attributable to The Marcus Corporation |  |  | Noncontrolling Interests |
|  | (in thousands) |
Balance at December 29, 2016 |  | $ | 390,112 |  |  | $ | 1,535 |
Net earnings attributable to The Marcus Corporation |  |  | 30,555 |  |  |  | – |
Net loss attributable to noncontrolling interests |  |  | – |  |  |  | (495 | )
Cash dividends |  |  | (10,122 | ) |  |  | – |
Exercise of stock options |  |  | 2,083 |  |  |  | – |
Savings and profit sharing contribution |  |  | 1,024 |  |  |  | – |
Treasury stock transactions, except for stock options |  |  | (463 | ) |  |  | – |
Share-based compensation |  |  | 1,867 |  |  |  | – |
Other comprehensive income, net of tax |  |  | 147 |  |  |  | – |
Balance at September 28, 2017 |  | $ | 415,203 |  |  | $ | 1,040 |
Fair Value Measurements – Certain financial assets and liabilities are recorded at fair value in the consolidated financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The Company’s assets and liabilities measured at fair value are classified in one of the following categories: Level 1 – Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At September 27, 2018 and December 28, 2017, respectively, the Company’s $5,762,000 and $4,053,000 of debt and equity 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 September 27, 2018 and December 28, 2017, respectively, the $444,000 and $13,000 asset related to the Company’s interest rate swap contracts was valued using Level 2 pricing inputs. Level 3 – Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At September 27, 2018 and December 28, 2017, 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 Ended September 27, 2018 |  |  | 13 Weeks Ended September 28, 2017 |  |  | 39 Weeks Ended September 27, 2018 |  |  | 39 Weeks Ended September 28, 2017 |
|  | (in thousands) |
Service cost |  | $ | 231 |  |  | $ | 192 |  |  | $ | 694 |  |  | $ | 574 |
Interest cost |  |  | 341 |  |  |  | 339 |  |  |  | 1,023 |  |  |  | 1,017 |
Net amortization of prior service cost and actuarial loss |  |  | 156 |  |  |  | 89 |  |  |  | 466 |  |  |  | 267 |
Net periodic pension cost |  | $ | 728 |  |  | $ | 620 |  |  | $ | 2,183 |  |  | $ | 1,858 |
Service cost is included in Administrative expense while all other components are recorded within Other expense outside of operating income in the consolidated statements of earnings. New Accounting Pronouncements - In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) , intended to improve financial reporting related to leasing transactions. ASU No. 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability for most operating leases with lease terms of more than 12 months. The new guidance will also require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from the leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which amends ASU No. 2016-02 and allows entities the option to initially apply Topic 842 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to adopt the new accounting standard in fiscal 2019 using the optional transition method to apply the new guidance as of the first day of fiscal 2019 rather than as of the earliest period presented. In conjunction with the adoption of the new standard, companies are able to elect several practical expedients to aid in the transition to Topic 842. The following three practical expedients must all be elected together, and the Company intends to elect these practical expedients upon adoption:
| · | An entity need not reassess whether any expired or existing contracts are or contain leases.
| · | An entity need not reassess the lease classification for any expired or existing leases.
| · | An entity need not reassess initial direct costs for any existing leases.
The Company continues to finalize its inventory of leases, assess the additional practical expedients and analyze financial reporting implications. Upon adoption, the most significant impact of the amendments in ASU No. 2016-02 will be the recognition of the new right-of-use assets and lease liabilities for assets currently subject to operating leases. The Company believes that the adoption of ASU No. 2016-02 will have a material impact on its consolidated balance sheet, but the adoption is not expected to have a material effect on its consolidated results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment , which eliminates Step 2 of the goodwill impairment test that had required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU No. 2017-04 is effective for the Company in fiscal 2020 and must be applied prospectively. The Company does not believe the new standard will have a material effect on its consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The amendments in ASU No. 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The amendments in ASU No. 2018-02 also require certain disclosures about stranded tax effects. The new standard is effective for fiscal years beginning after December 15, 2018, and early adoption in any period is permitted. The Company plans to adopt the new accounting standard in fiscal 2019 and has determined that the adoption of ASU No. 2018-02 will not have a material effect on its consolidated financial statements. On December 29, 2017, the Company adopted and applied to all contracts ASU No. 2014-09, Revenue from Contracts with Customers , a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company elected the modified retrospective method for the adoption of ASU No. 2014-09 and its related ASU amendments. Under this method, the Company recognized the cumulative effect of the changes in retained earnings at the date of adoption, but did not restate the 13 or 39 weeks ended September 28, 2017, which continues to be reported under the accounting standards in effect for that time period. The Company performed a review of the requirements of ASU No. 2014-09 and related ASUs in preparation for adoption of the new standard. The Company reviewed its key revenue streams and related customer contracts and has applied the five-step model of the standard to these revenue streams and compared the results to its current accounting practices. The majority of the Company’s revenues continue to be recognized in a manner consistent with historical practice. See Note 2 for further discussion. On December 29, 2017, the Company adopted ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which primarily affects the accounting for equity investments, financial liabilities under fair value option, and the presentation and disclosure requirements of financial instruments. Upon adoption, the Company made an immaterial cumulative effect adjustment to reclassify the unrealized loss of an equity investment previously classified as available for sale from accumulated other comprehensive loss to opening retained earnings. All future changes in fair value for this equity security will be recognized through net earnings. In addition, the Company holds two investments that were previously accounted for under the cost method of accounting, which under ASU No. 2016-01 were deemed to not have readily determinable fair values and thus were not impacted by the adoption of ASU No. 2016-01. The adoption of this standard did not have a material impact on such investments or the Company's consolidated financial statements. On December 29, 2017, the Company adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The standard must be applied using a retrospective transition method for each period presented. The adoption of the new standard did not have an effect on the Company’s consolidated financial statements. On December 29, 2017, the Company adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash . ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As such, restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning of period and ending of period total amount shown on the statement of cash flows. ASU No. 2016-18 was applied on a retrospective basis and prior periods were adjusted to conform to the current period’s presentation. Upon adoption, the Company recorded a $2,438,000 decrease in net cash used in investing activities for the 39 weeks ended September 28, 2017 related to reclassifying the changes in its restricted cash balance from investing activities to cash and cash equivalent balances within the consolidated statement of cash flows. On December 29, 2017, the Company adopted ASU No. 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business , which clarifies the definition of a business with the objective of adding guidance and providing a more robust framework to assist reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The adoption of the new standard did not have an effect on the Company’s consolidated financial statements. On December 29, 2017, the Company adopted ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets . ASU No. 2017-05 clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and defines the term “in-substance nonfinancial asset.” It also covers the transfer of nonfinancial assets to another entity in exchange for a non-controlling ownership interest in that entity. The adoption of the new standard did not have an effect on the Company’s consolidated financial statements. On December 29, 2017, the Company adopted ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Benefit Cost . The ASU requires the service cost component of net periodic benefit cost to be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period. Other components of the net periodic benefit cost are to be presented separately, in an appropriately titled line item outside of any subtotal of operating income or disclosed in the footnotes. The standard also limits the amount eligible for capitalization to the service cost component. ASU No. 2017-07 was applied on a retrospective basis and the prior period was adjusted to conform to the current period’s presentation. During the 13 and 39 weeks ended September 28, 2017, expense of $428,000 and $1,284,000, respectively, was reclassified from operating income to other expense outside of operating income in the consolidated statement of earnings. On December 29, 2017, the Company adopted ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting , to provide clarity and reduce both the diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation - Stock Compensation . The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The adoption of the new standard did not have an effect on the Company’s consolidated financial statements. On December 29, 2017, the Company early adopted ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities , which amends the hedge accounting recognition and presentation requirements in Accounting Standards Codification 815, Derivatives and Hedging (Topic 815) . ASU No. 2017-12 is designed to improve the transparency and understandability of information about an entity’s risk management activities and to reduce the complexity of and simplifying the application of hedge accounting. The adoption of the new standard did not have an effect on the Company’s consolidated financial statements.

X
- References No definition available. + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration