MARCUS : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-K) (2024)

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 December. We divide ourfiscal year into three 13-week quarters and a final quarter consisting of 13 or14 weeks. Our primary operations are reported in two business segments:theatres, and hotels and resorts.Fiscal 2018 was a 52-week year, beginning on December 29, 2017 and ending onDecember 27, 2018. Fiscal 2019 was a 52-week year, beginning on December 28,2018 and ending on December 26, 2019. Fiscal 2020 was a 53-week year, beginningon December 27, 2019 and ending on December 31, 2020.Fiscal 2020 results by quarter were significantly impacted by the COVID-19pandemic, which began late in our first fiscal quarter and impacted our resultsfor the remainder of fiscal 2020. Under normal conditions, our first fiscalquarter typically produces the weakest operating results in our hotels andresorts division due primarily to the effects of reduced travel during thewinter months. The quality of film product in any given quarter typicallyimpacts the operating results in our theatre division. Our second and thirdfiscal quarters generally produce our strongest operating results because theseperiods coincide with the typical summer seasonality of the movie theatreindustry and the summer strength of the lodging business. Due to the fact thatthe week between Christmas and New Year's Eve is historically one of thestrongest weeks of the year for our theatre division, the specific timing of thelast Thursday in December impacts the results of our fiscal first and fourthquarters in that division, particularly when we have a 53-week year.This Management's Discussion and Analysis of Financial Condition and Results ofOperations ("MD&A") generally discusses fiscal 2020 and fiscal 2019 items andyear-to-year comparisons between fiscal 2020 and fiscal 2019. Discussions offiscal 2018 items and year-to-year comparisons between fiscal 2019 and fiscal2018 that are not included in this MD&A can be found in "Management's Discussionand Analysis of Financial Condition and Results of Operations" in Part II, Item7 of the Company's Annual Report on Form 10-K for the fiscal year ended December26, 2019.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic has had an unprecedented impact on the world and both ofour business segments. The situation continues to be volatile and the social andeconomic effects are widespread. As an operator of movie theatres, hotels andresorts, restaurants and bars, each of which consists of spaces where customersand guests gather in close proximity, our businesses are significantly impactedby protective actions that federal, state and local governments have taken tocontrol the spread of the pandemic, and our customers' reactions or responses tosuch actions. These actions have included, among other things, declaringnational and state emergencies, encouraging social distancing, restrictingfreedom of movement and congregation, mandating non-essential business closures,issuing curfews, limiting business capacity, mandating mask-wearing and issuingshelter-in-place, quarantine and stay-at-home orders.As a result of these measures, we temporarily closed all of our theatres onMarch 17, 2020, and did not generate any significant revenues from our theatreoperations during our fiscal 2020 second quarter and the first two months of ourfiscal 2020 third quarter (other than revenues from six theatres opened on avery limited basis in June 2020 primarily to test new operating protocols, fiveparking lot cinemas, and some limited online and curbside sales of popcorn,pizza and other assorted food and beverage items). As of August 28, 2020, wehad reopened approximately 80% of our theatres, although seating capacity at ourreopened theatres has been temporarily reduced in response to COVID-19 as a wayto ensure proper social distancing. In October 2020, we temporarily closedseveral theatres due to changes in the release schedule for new films, reducingour percentage of theatres open to approximately 66%. In November 2020, newstate and local restrictions in several of our markets required us totemporarily reclose several theatres, and as a result, approximately 52% of ourtheatres were open as of December 31, 2020. Subsequent to year-end, several ofthese new restrictions were lifted and as of the date of this report,approximately 69% of our theatres are currently open with temporarily reducedseating capacity in response to COVID-19. Temporarily closed theatres are readyto quickly reopen as restrictions are lifted, new films are released and demandreturns. 25

We also temporarily closed all of our hotel division restaurants and bars atapproximately the same time as our theatres and closed five of our eightcompany-owned hotels and resorts on March 24, 2020 due to a significantreduction in occupancy at those hotels. We closed our remaining threecompany-owned hotels in early April 2020. We re-opened four of ourcompany-owned hotels and several of our restaurants and bars during June 2020.

We reopened three additional company-owned hotels during our fiscal 2020 thirdquarter and we reopened our remaining company-owned hotel in November 2020.

As

such, as of December 31, 2020, all eight of our company-owned hotels and all butone of our managed hotels are open. The majority of our restaurants and bars inour hotels and resorts are also now open, operating under applicable state andlocal restrictions and guidelines. The majority of our hotels and restaurantsare generating significantly reduced revenues as compared to prior years.

Maintaining and protecting a strong balance sheet has always been a corephilosophy of The Marcus Corporation during our 85-year history. As a result,we believe we entered the global COVID-19 crisis with a strong financialposition. At the end of fiscal 2019, our debt-to-capitalization ratio was 0.26.

 Despite the majority of our theatres being closed during most of the second andthird quarters of fiscal 2020, our hotels being closed during most of the secondquarter and portions of the third quarter of fiscal 2020, and both of ourbusinesses operating at significantly reduced attendance and occupancy levelsduring the fourth quarter of fiscal 2020, our financial position remains strong.

As of December 31, 2020, our debt-to-capitalization ratio was 0.37, which isequal to or lower than the same ratio we had at seven of our last 10 fiscalyear-ends.

Despite our strong financial position, the COVID-19 pandemic has had and isexpected to continue to have adverse effects on our business, results ofoperations, cash flows, financial condition, access to credit markets andability to service our existing and future indebtedness. In light of theCOVID-19 pandemic and in keeping with our core philosophies, we have beenworking to preserve cash and ensure sufficient liquidity to endure the impactsof the global pandemic, even if prolonged. On April 29, 2020, we entered intothe First Amendment to Credit Agreement (the "First Amendment") which amendedour existing credit agreement dated January 9, 2020 (the Credit Agreement, asamended by the First Amendment and the Second Amendment, as defined below, the"Credit Agreement"). The First Amendment provided a new $90.8 million 364-daySenior Term Loan A (the "Term Loan A") to further support our balance sheet. Weused the proceeds from the Term Loan A to repay borrowings under the CreditAgreement, to pay costs and expenses related to the First Amendment, and forgeneral corporate purposes. On July 22, 2020, we repaid $55 million ofborrowings under our revolving credit facility. On September 15, 2020, weentered into the Second Amendment to Credit Agreement (the "Second Amendment")which amended the Credit Agreement and, among other things, extended thematurity date of the Term Loan A to September 22, 2021.In addition, on September 22, 2020, we received $100.05 million of grossproceeds from the issuance of Convertible Senior Notes due 2025 (the"Convertible Notes"). We used a portion of the proceeds from the ConvertibleNotes to enter into privately negotiated capped call transactions with certainfinancial institutions in order to reduce the potential dilution to our commonstock upon any conversion of the Convertible Notes. We used the remainingproceeds from the Convertible Notes to repay borrowings under the CreditAgreement, to pay costs and expenses related to the Convertible Notes, and forgeneral corporate purposes. Our net proceeds from this offering wereapproximately $78.6 million (after deducting estimated fees and expenses relatedto the offering and the cost of the capped call transactions). This additionalfinancing further enhanced our liquidity, and combined with the expected receiptof income tax refunds, state grants and proceeds from the sale of surplus realestate (discussed below), we believe we are positioned to repay the Term Loan Ain September 2021 and continue to sustain our operations throughout fiscal 2021and into fiscal 2022, even if our properties continue to generate significantlyreduced revenues throughout fiscal 2021. As of December 31, 2020, we had a cashbalance of approximately $7 million and $220 million of availability under our$225 million revolving credit facility.Since the COVID-19 pandemic began, we have been working proactively to preservecash. In addition to temporarily suspending our quarterly dividend payments asrequired by the Credit Agreement, additional measures we took during all orportions of fiscal 2020 to enhance our liquidity included:

? Discontinuing all non-essential operating and capital expenditures;

Temporarily laying off the majority of our hourly theatre and hotel associates,

? in addition to temporarily reducing property management and corporate office

staff levels;

Temporarily reducing the salary of our chairman and our president and chief

? executive officer by 50%, as well as temporarily reducing the salary of all

other executives and remaining divisional/corporate staff;

? Temporarily eliminating all board of directors cash compensation;

? Actively working with landlords and major suppliers to modify the timing and

 terms of certain contractual payments; 26

Evaluating the provisions of the Coronavirus Aid, Relief, and Economic Security

? Act of 2020 (the "CARES Act") and utilizing the benefits, relief and resources

under those provisions as appropriate; and

Evaluating the provisions of a COVID Relief Bill signed by the President on

? December 27, 2020 and any subsequent federal or state legislation enacted as a

response to the COVID-19 pandemic.

After reviewing certain provisions of the CARES Act, we filed income tax refundclaims of $37.4 million in the third quarter of fiscal 2020, with the primarybenefit derived from several accounting method changes and new rules forqualified improvement property and net operating loss carrybacks. Early in ourfiscal 2020 fourth quarter, we received $31.5 million of the requested taxrefunds. We expect to receive the remaining $5.9 million of tax refunds duringthe first quarter of fiscal 2021. We also expect to apply a significant portionof our tax loss incurred in fiscal 2020 to prior year income, resulting in ananticipated tax refund of approximately $21.0 million in fiscal 2021 when ourfiscal 2020 tax return is filed (with additional tax loss carryforwards that maybe used in future years).During the fourth quarter of fiscal 2020, a number of states elected to providegrants to certain businesses most impacted by the COVID-19 pandemic, utilizingfunds received by the applicable state under provisions of the CARES Act. As aresult, grants from seven states totaling $5.8 million were awarded to asignificant number of our theatres and grants from two states totaling $1.2million were awarded to several of our hotels. The $7.0 million of total grantsare reported as an offset to "other operating expenses" on our earnings (loss)statement. As of December 31, 2020, we had received approximately $2.1 millionof these grants, and the remaining $4.9 million was received in January 2021.

Early in fiscal 2021, we were awarded an additional $1.3 million in theatregrants from another state.

In addition, 11 of our subsidiaries successfully applied for and received acumulative total of approximately $13.5 million in funds under the CARES ActPaycheck Protection Program (PPP) that allowed our subsidiaries to rehire manyof our hotel associates for eight weeks during the second quarter of fiscal2020, as well as fund certain other qualifying expenses (described in detail inthe Hotels and Resorts section of this MD&A). Approximately $10.1 million ofthese funds were used by our subsidiaries to fund qualifying expenses, themajority of which we would not have incurred otherwise (i.e., the rehiring oflaid off hotel associates despite the underlying hotels being temporarilyclosed). Cumulatively, approximately $9.1 million, or 90% of the qualifyingexpenses paid with these PPP loan proceeds benefitted associates and did notimpact the operating loss of the hotels and resorts division. The remainingapproximately $1.0 million of qualified expenses paid were used by oursubsidiaries to offset rent expense, utility costs and mortgage interestexpense. Approximately $3.4 million of the cumulative PPP loan proceeds were notused on qualifying expenses as of December 31, 2020 and contributed to theincrease in net cash provided by financing activities during fiscal 2020compared to the prior year. We believe the portion of the PPP loan proceeds usedby our subsidiaries for qualifying expenses will be forgiven under the currentterms of the CARES Act. The receipt of these funds, and the forgiveness of theloans accompanying these funds, is dependent on us having initially qualifiedfor the PPP loan proceeds and qualifying for the forgiveness of the PPP loanproceeds based on our future adherence to the forgiveness criteria establishedby the Small Business Administration. We believe we met the initialqualification for the loans and we believe we will continue to meet therequirements for forgiveness of qualified expenses.The Credit Agreement also allows us to consider additional borrowings fromgovernmental authorities under provisions of the CARES Act or any othersubsequent governmental actions that we could avail ourselves of if we deemed itnecessary and appropriate. Although we have sought and obtained, and intend tocontinue to seek, any available potential benefits under the CARES Act,including those described above, we cannot predict the manner in which suchbenefits will be allocated or administered, and we cannot assure that we will beable to access such benefits in a timely manner or at all. We also cannotassure that potential benefits under the CARES Act will not be amended oreliminated under any subsequent governmental actions.It is also important to note our significant real estate ownership. In additionto our owned hotels, unlike most of our peers, we own the underlying real estatefor the majority of our theatres (representing over 60% of our screens), therebyreducing our monthly fixed lease payments. We believe this real estate ownershipis a significant advantage for us relative to our peers, as it enables us toquickly react to changing theatre trends without requiring landlord approval fornecessary changes, keeps our monthly fixed lease payments low and providessignificant underlying credit support for our balance sheet. We also own surplusreal estate and other non-core real estate that may be monetized in futureperiods if opportunities arise. During the fourth quarter of fiscal 2020, wesold two land parcels and a former budget theatre, generating total proceeds ofapproximately $3.0 million. As of December 31, 2020, we had letters of intentor contracts to sell several pieces of real estate with a carrying value of $4.1million and we believe we may receive total sales proceeds from real estatesales during the next 12-18 months totaling approximately $10-$40 million,depending upon demand for the real estate in question. 27The COVID-19 pandemic and the fact that all of our theatres and the majority ofour hotels were closed as of the end of our fiscal 2020 first quarter, requiredus to review many of the assets on our balance sheet as of March 26, 2020. As aresult, we increased our allowances for bad debts and wrote off a portion of ourfood inventories in both our theatre and hotels and resorts divisions. Wereviewed our indefinite life trade name intangible asset and determined that, asa result of a change in circ*mstances, the carrying value exceeded fair value,and we reported a pre-tax impairment charge of $2.2 million during the firstquarter of fiscal 2020. We reviewed our long-lived assets, including propertyand equipment and operating lease right-of-use assets, for impairment due to thechange in circ*mstances and determined that an additional pre-tax impairmentcharge of $6.5 million was required during the first quarter of fiscal 2020 forseveral theatre properties. We reviewed goodwill at the theatre reporting unitlevel and determined that the fair value of our theatre reporting unit exceededour carrying value as of March 26, 2020 and thus was not impaired as of thatdate. Additionally, we reviewed each of these asset types described above as ofSeptember 24, 2020, the end of our third quarter of fiscal 2020, and concludedthat no additional impairment charges were required at that time for goodwilland our indefinite life trade name intangible asset. We did, however, concludethat an additional pre-tax impairment charge of $765,000 was required during thethird quarter of fiscal 2020 for several theatre properties. During the thirdquarter of fiscal 2020, we determined that the fair value of our equity methodinvestment in a hotel joint venture was less than its carrying value andrecorded an other-than-temporary impairment loss of approximately $811,000. Lastly, we once again reviewed each of these asset types described above as ofDecember 31, 2020, the end of our fiscal 2020, and concluded that an additionalimpairment charge of $400,000 was required for our indefinite life trade nameintangible asset. We also concluded that an additional pre-tax impairmentcharge of $14.8 million was required during the fourth quarter of fiscal 2020for several theatre properties, due in part to the fact that several leasedtheatres have not reopened yet and a planned new theatre project was abandoned.

No impairment charges were required at the end of fiscal 2020 for goodwill.

As a result of temporarily closing the majority of our properties, we alsoincurred approximately $5.5 million of nonrecurring expenses during the firstquarter of fiscal 2020 related primarily to salary continuation payments toemployees temporarily laid off. We incurred an additional $3.0 million ofnonrecurring expenses during the second quarter of fiscal 2020, includingadditional payments to and on behalf of laid off employees and additionalallowances for bad debts (including the write-off of deferred expenses for ahotel tenant who vacated space because of the COVID-19 pandemic). Nonrecurringexpenses during the fiscal 2020 second quarter also included extensive cleaningcosts, operating supplies and employee training, among other items, related tothe reopening of selected theatre and hotel properties and implementing newoperating protocols (described in greater detail below). We incurred anadditional $1.6 million and $1.4 million of nonrecurring expenses during thethird and fourth quarters of fiscal 2020, respectively, primarily related toadditional reopening costs of selected theatre and hotel properties, as well asadditional payments to and on behalf of laid off employees. In total, weestimate we incurred approximately $11.5 million in nonrecurring expensesrelated to the above-described items during fiscal 2020.As part of our reopening experience in our theatres, we have introduced our"Movie STAR" approach, which incorporates new health and safety measures and isin alignment with the Centers for Disease Control and Prevention ("CDC")guidelines. Everyone can be a Movie STAR and play a role in creating a safeenvironment with social distancing (S); thorough cleaning (T); app and websiteordering of tickets, food and concessions for no-to-low contact interactions(A); and respecting each other by following these new protocols (R). Specificmeasures we have implemented in conjunction with the reopening of theatresinclude, but are not limited to:

Initially reducing each theatre auditorium's capacity by 50% (or lower

depending upon specific local or state restrictions) and implementing a

? checkerboard seating pattern that will allow guests to reserve seats together

with two empty seats between groups to allow for proper social distancing in

accordance with CDC guidelines;

? Staggering showtimes to limit the number of people in common areas of the

theatre and allowing extra time between shows for thorough cleanings;

? Requiring masks to be worn by guests except for when they are eating or

drinking in the auditoriums;

? Conducting associate wellness checks and requiring the use of face masks, as

well as gloves as appropriate, during the associate's shift;

Increasing frequency of cleaning (especially high-touch surfaces), providing

? hand sanitizer throughout the theatre and introducing signage to encourage

proper social distancing;

? Encouraging guests to purchase their tickets online or via the Marcus Theatres

 app; 28

Encouraging low-contact food ordering through the Marcus Theatres app and

? website, with food orders picked up at a designated area within the theatre;

and

? Introducing Marcus Private Cinema, allowing a guest to purchase an entire

auditorium for up to 20 of their friends and family for a fixed charge.

We expect policies and guidelines will continue to evolve with time and will beassessed and updated on an ongoing basis. We opened our initial six theatreswith reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) andreduced operating hours. In late August, when we initially reopened themajority of our theatres, we returned to more standard operating hours and days. As the quantity of new film releases subsided in September 2020, we beganreducing our operating hours and days and currently have returned to being openonly on weekends and Tuesdays (with expanded hours/days during selected holidaytime periods). While we were showing and continue to show older "library" filmproduct, admission to those movies is only $5, with no upcharges. As new moviesare released, we have returned to standard pricing for those movies. As morenew movies are released, we currently expect to return to standard operatingdays, hours and pricing, although likely with reduced seating capacityinitially.A reduction in capacity does not necessarily translate to an equal reduction inpotential revenues. Reduced capacity may potentially impact attendance on $5Tuesdays and on opening weekends of major new film releases, but other showingsmay be relatively unaffected given normal attendance counts. Based upon ourpast experience, we believe that customers impacted on those $5 Tuesdays andopening weekends may adapt to reduced seat availability by shifting theirattendance to different days and times of day. In addition, as new films arefirst released, we anticipate dedicating a larger number of auditoriums to theblockbuster films to increase seating capacity for those movies.We believe that the exhibition industry has historically fared well duringrecessions, and we remain optimistic that the industry will rebound and benefitfrom pent-up social demand as a large percentage of the population isvaccinated, home sheltering subsides and people seek togetherness with a returnto normalcy. A return to "normalcy" may span multiple months driven bystaggered theatre openings due to government limits, reduced operating hours,lingering social distancing requirements, the timing of the vaccination rolloutin each state and a gradual ramp-up of consumer comfort with public gatherings. We are very encouraged by the recent performance of theatres in markets such asChina and Japan, where the impact of the COVID-19 pandemic has lessened. Asdescribed further below in the Theatres section of this MD&A, a significantnumber of films originally scheduled to be released through March 2021 have beendelayed until later in fiscal 2021 or fiscal 2022, further increasing thequality and quantity of films expected to be available during those future timeperiods.There has been some speculation that the COVID-19 pandemic may result in achange in how film studios distribute their product in the future, includingaccelerating the release of films on alternate distribution channels such aspremium video-on-demand ("PVOD") and streaming services. In several cases, filmsthat were scheduled to be released to theatres have instead been releaseddirectly to these alternate channels. In the case of one studio, an agreementwas reached with several large exhibitors, including ourselves, that includes a17-day PVOD window for certain films and a 31-day window for certain moresuccessful films. The agreement with this studio did not change the window forrelease for "free" viewing on streaming services. In addition, recently onestudio announced that it intended to release all of its 2021 films theatricallyand on its proprietary streaming service on the same day and date. This studioindicated that its actions were primarily a response to the immediatecirc*mstances of movie theatres being closed or negatively impacted bygovernmental restrictions worldwide (including important markets such as NewYork and Los Angeles) and does not necessarily reflect a change in permanentdistribution plans. This same studio has subsequently announced plans todistribute several films in 2022 and 2023 exclusively in theatres. The vastmajority of films with greater expected box office potential from the remainingstudios have been delayed rather than released early and comments from the filmcommunity in general have been very supportive of the importance of thetheatrical experience. Specific release models are negotiated with distributorsand exhibitors individually and we believe any changes to the existing financialmodel between exhibitors and film studios would likely only become a workableindustry-wide model with the support of many exhibitors and distributors aftereach group evaluates the potential risks and benefits appropriately. Theexhibition industry is an $11-$12 billion industry in the U.S. and approximately$40 billion worldwide, and the film studios derive a significant portion oftheir return on investment in film content from theatrical distribution. Webelieve distributing films in a movie theatre will continue to be an importantcomponent of their business model. 29When we closed our hotels, it was not because of any governmental requirementsto close. Our restaurants and bars within our hotels were required to close,but the hotels themselves were considered "essential businesses" under mostdefinitions. We closed our hotels due to a significant drop in demand that madeit financially prudent for us to close rather than stay open. As a result, thetiming of reopening our hotels and resorts was driven by demand, as individualand business travelers began to travel more freely once again. The futureeconomic environment will have a significant impact on the pace of our return to"normal" hotel operations. After past events such as the terrorist attacks onSeptember 11, 2001 and the 2008 financial crisis, hotel demand softened for aperiod of time, particularly among business transient and group businesstravelers as travel budgets tightened in uncertain economic times. Whether thereturn to more normal demand is relatively rapid, as it was after September 11,2001, or occurs over the course of one or more years, as it was after the 2008financial crisis, is unknown at this time.Late in our fiscal 2020 second quarter, we reopened several of our hotels(including several of our restaurants and bars), beginning with The Pfister®Hotel on June 8, followed by the Grand Geneva® Resort & Spa, the Hilton MadisonMonona Terrace and The Skirvin Hilton hotel in subsequent weeks in June. Wereopened the Hilton Milwaukee City Center hotel, the AC Hotel Chicago Downtownand The Lincoln Marriott Cornhusker Hotel during our fiscal 2020 third quarterand we reopened Saint Kate® - The Arts Hotel (the "Saint Kate") during ourfiscal 2020 fourth quarter. As expected, the primary initial customer forhotels has come from the "drive-to leisure" market, as air travel remainssignificantly reduced and the number of transient and group business customerswill likely remain limited in the near term. We will continue to monitor marketdemand and adjust our operating plans as appropriate.Overall hotel occupancy in the U.S. has slowly increased since the initial onsetof the COVID-19 pandemic in March 2020. Most current demand continues to comefrom the drive-to leisure segment. Most organizations implemented travel bansat the onset of the pandemic and are currently only allowing essential travel,which will likely limit business travel in the near term. Our company-ownedhotels experienced a significant decrease in group bookings for fiscal 2020compared to fiscal 2019. As of the date of this report, our group room revenuebookings for fiscal 2021 - commonly referred to in the hotels and resortsindustry as "group pace" - is running significantly behind where we were lastyear at this time for fiscal 2020, with the largest portion of that decline inMilwaukee because last year's group bookings included bookings in anticipationof Milwaukee hosting the Democratic National Convention ("DNC") in July 2020. Banquet and catering revenue pace for fiscal 2021 is also running behind wherewe were last year at this same time for fiscal 2020, but not as much as grouproom revenues, due in part to increases in wedding bookings. Many of ourcancelled group bookings due to COVID-19 are re-booking for future dates,excluding one-time events that could not rebook for future dates such as thoseconnected to the DNC. However, some group bookings for the first half of fiscal2021 have subsequently canceled or postponed their event, and we cannot predictto what extent any of our hotel bookings will be canceled or rescheduled due toCOVID-19 or otherwise.Like our theatres, in response to the COVID-19 pandemic, we reopened our hotelswith new operating protocols. This includes the introduction of our CleanCarePledge that incorporates the best industry practices and protocols for operatingour hotels, resorts, spas, golf courses and restaurants with an enhanced focuson cleanliness, sanitization and safety. Key elements and examples of theCleanCare Pledge include:

? Introducing new processes and easy-to-use technology to create a low-to-no

contact experience;

? Incorporating social distancing into processes and various spaces;

? Outfitting associates with masks and gloves, and making masks available for

guests; and

? Enhanced cleaning and sanitization protocols that go beyond leading hospitality

industry standards and CDC guidelines.

We cannot assure that the impact of the COVID-19 pandemic will not continue tohave a material adverse effect on both our theatre and hotels and resortsbusinesses, results of operations, cash flows, financial condition, access tocredit markets and ability to service our existing and future indebtedness. 30

Implementation of New Accounting Standards

During fiscal 2019, we adopted Accounting Standards Update ("ASU") No. 2016-02,Leases (Topic 842), intended to improve financial reporting related to leasingtransactions. ASU No. 2016-02 requires a lessee to recognize a right-of-use("ROU") asset and a lease liability for most leases. The new guidance requiresdisclosures to help investors and other financial statement users betterunderstand the amount, timing and uncertainty of cash flows arising from theleases. Leases are now classified as finance or operating, with classificationaffecting the pattern and classification of expense recognition in theconsolidated statements of net earnings (loss). ASU No. 2018-11, Leases (Topic842): Targeted Improvements, amended ASU No. 2016-02 and allows entities theoption to initially apply Topic 842 at the adoption date and recognize acumulative-effect adjustment to the opening balance of retained earnings in theperiod of adoption. We adopted the new accounting standard as of the first dayof fiscal 2019 using the modified retrospective approach, which resulted in thecumulative effect of adoption recognized at the date of application, rather thanas of the earliest period presented. As a result, no adjustment was made toprior period financial information and disclosures.In conjunction with the adoption of the new standard, companies were able toelect several practical expedients to aid in the transition to Topic 842. Weelected the package of practical expedients which permits us to foregoreassessment of our prior conclusions related to lease identification, leaseclassification and initial direct costs. Topic 842 also provides practicalexpedients for an entity's ongoing accounting. We elected the practicalexpedient to not separate lease and non-lease components for all of our leases.We also made a policy election not to apply the lease recognition requirementsfor short-term leases. As a result, we do not recognize ROU assets or leaseliabilities for short-term leases that qualify for the policy election (thosewith an initial term of 12 months or less which do not include a purchase orrenewal option which is reasonably certain to be exercised), but insteadrecognize these lease payments as lease costs on a straight-line basis over thelease term.Adoption of this new standard resulted in a material impact related to therecognition of ROU assets and lease liabilities on the consolidated balancesheet for assets currently subject to operating leases. We recognized leaseliabilities representing the present value of the remaining future minimum leasepayments for all of our operating leases as of December 28, 2018 of $81.5million. We recognized ROU assets for all assets subject to operating leases inan amount equal to the operating lease liabilities, adjusted for the balances oflong-term prepaid rent, favorable lease intangible assets, deferred leaseexpense, unfavorable lease liabilities and deferred lease incentive liabilitiesas of December 28, 2018.

The adoption of the new standard did not have a material effect on ourconsolidated statements of net earnings (loss).

Consolidated Financial Comparisons

The following table sets forth revenues, operating income (loss), other income(expense), net earnings (loss) and net earnings (loss) per common share for thepast three fiscal years (in millions, except for per share and percentage changedata) : Change F20 v. F19 Change F19 v. F18 F2020 F2019 Amt. Pct. F2018 Amt. Pct.Revenues $ 237.7 $ 820.9 $ (583.2) (71.0) % $ 707.1 $ 113.8 16.1 %

Operating income (loss) (178.4) 68.2 (246.6) (361.7) % 83.2 (15.0) (18.0) %Other income (expense) (17.4) (13.8) (3.6) (26.3) % (16.6) 2.8 17.1 %Net earnings attributable tononcontrolling interests - 0.1 (0.1) (123.5) % 0.1 - - %Net earnings (loss) attributableto The Marcus Corporation $ (124.8) $ 42.0 $ (166.8) (397.1) % $ 53.4 $ (11.4) (21.3) %Net earnings (loss) per commonshare - diluted $ (4.13) $ 1.35 $ (5.48) (405.9) % $ 1.86 $ (0.51) (27.4) %

Fiscal 2020 versus Fiscal 2019

Revenues, operating income (loss), net earnings (loss) attributable to TheMarcus Corporation and net earnings (loss) per common share all decreased duringfiscal 2020 compared to fiscal 2019 due to the temporary closing of all of ourtheatres and hotels and subsequent significant reduction of revenues uponreopening a majority of our theatres and hotels as a result of the COVID-19pandemic as described above. Both of our operating divisions were negativelyimpacted by nonrecurring expenses during fiscal 2020 and fiscal 2019. Netearnings (loss) attributable to The Marcus Corporation during fiscal 2020 wasnegatively impacted by increased interest expense compared to fiscal 2019 andbenefited from a substantial tax benefit provided for by the CARES Act. 31Our operating performance during fiscal 2020 was negatively impacted bynonrecurring expenses totaling approximately $11.5 million, or approximately$0.27 per diluted common share, including payments to and on behalf of laid offemployees. Nonrecurring expenses during fiscal 2020 also included extensivecleaning costs, supply purchases and employee training, among other items,related to the reopening of selected theatre and hotel properties andimplementing new operating protocols (described in greater detail above). Inaddition, impairment charges related to intangible assets and several theatrelocations negatively impacted our fiscal 2020 operating loss by approximately$24.7 million, or approximately $0.59 per diluted common share. Conversely, ouroperating performance during fiscal 2020 was favorably impacted by nonrecurringstate governmental grants totaling approximately $7.0 million, or approximately$0.17 per diluted common share, and net insurance proceeds of approximately $1.8million, or approximately $0.04 per diluted common share, related to COVID-19pandemic related insurance claims. Our additional 53rd week of operationscontributed approximately $5.1 million in revenues and did not have a materialimpact on our operating loss or net loss during fiscal 2020.On February 1, 2019, we acquired the assets of Movie Tavern®, a NewOrleans-based industry leading circuit known for its in-theatre dining concept(the "Movie Tavern Acquisition"). Now branded Movie Tavern by Marcus, theacquired circuit consisted of 208 screens at 22 locations in nine states -Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texasand Virginia. The purchase price consisted of $30 million in cash, subject tocertain adjustments, and 2,450,000 shares of our common stock for a totalpurchase price of approximately $139 million, based upon our closing share priceon January 31, 2019. Excluding acquisition and preopening expenses, theacquisition did not have a material impact on operating income during fiscal2019. Acquisition and preopening expenses related to the Movie TavernAcquisition and the opening of a newly built Movie Tavern theatre in Brookfield,Wisconsin negatively impacted our operating income during fiscal 2019 byapproximately $2.5 million, or $0.06 per diluted common share. An impairmentcharge related to a specific theatre location negatively impacted our fiscal2019 operating income by approximately $1.9 million, or $0.04 per diluted commonshare.We closed the InterContinental Milwaukee hotel in early January 2019 and began asubstantial renovation project that converted this hotel into an experientialarts hotel named Saint Kate - The Arts Hotel. The newly renovated hotelreopened during the first week of June 2019 (although a portion of the rooms andfood and beverage outlets didn't fully open until later in the month). Revenuesfrom our hotels and resorts division during fiscal 2019 were unfavorablyimpacted by the closing of the hotel for nearly six months for renovation andthe negative impact of comparing a newly-opened independent hotel (i.e., theSaint Kate) to a stabilized branded hotel (i.e., the InterContinental Milwaukee)in the prior year. Division revenues during fiscal 2019 were also negativelyimpacted by a major renovation that occurred at our Hilton Madison hotel duringthe first half of fiscal 2019. Our operating income from our hotels and resortsdivision during fiscal 2019 was negatively impacted by preopening expenses andinitial start-up losses related to the Saint Kate hotel closure and conversion.

These costs totaled approximately $6.8 million, or $0.16 per diluted commonshare, during fiscal 2019.

Operating losses from our corporate items, which include amounts not allocableto the business segments, decreased during fiscal 2020 compared to fiscal 2019due in part to reduced bonus and donation expenses as a result of operatinglosses during fiscal 2020. Operating losses from corporate items also decreasedduring fiscal 2020 due to measures taken to increase liquidity, includingreductions in corporate staff, reductions in the salaries of executives andcorporate staff and the suspension of board cash compensation. Operating lossesfrom our corporate items were also favorably impacted during fiscal 2020 by thenet insurance proceeds of $1.8 million described above.We recognized investment income of $564,000 during fiscal 2020 compared toinvestment income of $1.4 million during fiscal 2019. Investment income includesinterest earned on cash and cash equivalents, as well as increases/decreases inthe value of marketable securities and increases in the cash surrender value ofa life insurance policy. A significant market decline arising from the COVID-19pandemic during the first quarter of fiscal 2020 was offset by a market recoverylater in fiscal 2020, but investment income was larger during fiscal 2019 due tomore significant increases in the value of marketable securities and due to thefact that we had more marketable securities in fiscal 2019 compared to fiscal2020. Investment income during fiscal 2021 may vary compared to fiscal 2020,primarily dependent upon changes in the value of marketable securities. 32Interest expense totaled $16.3 million during fiscal 2020, an increase of $4.5million, or 38.0%, compared to interest expense of $11.8 million during fiscal2019. The increase in interest expense during fiscal 2020 was due in part toincreased borrowings and an increase in our average interest rate, as discussedin the Liquidity section of this MD&A below. In addition, interest expenseincreased during fiscal 2020 due to the fact that we incurred approximately $2.2million in noncash amortization of debt issuance costs and discount onconvertible notes, compared to approximately $300,000 of such costs duringfiscal 2019. During fiscal 2021, we estimate that noncash amortization of debtissuance costs will be approximately $2.0 million, excluding the impact of anynew debt issuance costs. On January 1, 2021, we elected to early adopt ASU No.2020-06 (described in the "Accounting Changes" section below), which will resultin the elimination of noncash discount on convertible notes during fiscal 2021. We expect our interest expense to increase during fiscal 2021, however, due toincreased borrowings and an increase in our average interest rate. Changes inour borrowing levels due to variations in our operating results, capitalexpenditures, acquisition opportunities (or the lack thereof) and asset saleproceeds, among other items, may impact, either favorably or unfavorably, ouractual reported interest expense in future periods, as may changes in short-terminterest rates.We incurred other expense of $1.0 million during fiscal 2020, a decrease ofapproximately $900,000, or 48.7%, compared to other expense of $1.9 millionduring fiscal 2019. Other expense consists primarily of the non-service costcomponents of our periodic pension costs. During fiscal 2020, other expense waspartially offset by other income of approximately $1.4 million related to thereceipt of Movie Tavern Acquisition escrow funds returned to us in conjunctionwith a negotiated early release of remaining escrow funds to the seller. Basedupon information from an actuarial report for our pension plans, we expect otherexpense to be approximately $2.5 million during fiscal 2021.We reported net gains on disposition of property, equipment and other assets ofapproximately $900,000 during fiscal 2020, compared to net losses on dispositionof property, equipment and other assets of $1.1 million during fiscal 2019. Thenet gains on disposition of property, equipment and other assets during fiscal2020 were due primarily to the sale of two surplus land parcels and one theatre,partially offset by losses on items disposed of during the year by bothdivisions. The net losses during fiscal 2019 were due primarily to lossesrelated to old theatre seats and other items disposed of in conjunction withtheatre renovations. The timing of our periodic sales and disposals of property,equipment and other assets results in variations each year in the gains orlosses that we report on dispositions of property, equipment and other assets.We anticipate the potential for additional disposition gains or losses fromperiodic sales of property, equipment and other assets, during fiscal 2021 andbeyond, as discussed in more detail in the "Current Plans" section of this MD&A.We reported equity losses from an unconsolidated joint venture of approximately$1.5 million and $274,000, respectively, during fiscal 2020 and fiscal 2019. Theequity losses during both fiscal years consisted of our pro-rata share of lossesfrom the Omaha Marriott Downtown at The Capitol District hotel in Omaha,Nebraska (the "Omaha Marriott") - a hotel we manage and in which we had a 10%minority ownership interest. The loss increased during fiscal 2020 due toincreased losses from the hotel and an other-than-temporary impairment loss ofapproximately $811,000 in which we determined that the fair value of our equitymethod investment in the hotel joint venture was less than its carrying value. The Omaha Marriott has actually performed well historically from an operationalperspective, but has experienced overall losses due to depreciation and interestexpense, further exasperated by the COVID-19 pandemic. Early in fiscal 2021,pursuant to a recapitalization of the hotel, we surrendered our ownershipinterest in this property. We will continue to manage the hotel. We currentlydo not expect any equity earnings or losses from unconsolidated joint venturesduring fiscal 2021, unless we increase the number of joint ventures in which weparticipate during fiscal 2021.The operating results of one majority-owned hotel, The Skirvin Hilton, areincluded in the hotels and resorts division revenue and operating income (loss)during fiscal 2020 and fiscal 2019, and the after-tax net earnings or lossattributable to noncontrolling interests is deducted from or added to netearnings (loss) on the consolidated statements of earnings (loss). As a resultof the noncontrolling interest balance reaching zero during the second quarterof fiscal 2020, we do not expect to report additional net losses attributable tononcontrolling interests in future periods until the hotel returns toprofitability. 33We reported an income tax benefit during fiscal 2020 of $70.9 million, comparedto income tax expense of $12.3 million during fiscal 2019. The large income taxbenefit during fiscal 2020 was primarily the result of the significant lossesbefore income taxes incurred as a result of the closing of the majority of ourproperties in March 2020 and the subsequent reduction in our operatingperformance due to the COVID-19 pandemic. Our fiscal 2020 income tax benefit wasalso favorably impacted by an adjustment of approximately $20.1 million, orapproximately $0.65 per share, resulting from several accounting method changes,the March 27, 2020 signing of the CARES Act and a provision of a COVID Reliefstimulus bill passed in December 2020 that allows us to deduct the $10.1 millionof qualified expenses paid for by PPP loans discussed above. One of theprovisions of the CARES Act allows our 2019 and 2020 taxable losses to becarried back to prior fiscal years during which the federal income tax rate was35% compared to the current statutory federal income tax rate of 21%. Ourfiscal 2020 effective income tax rate, after adjusting for earnings (losses)from noncontrolling interests that are not tax-effected because the entityinvolved is a tax pass-through entity, was 36.2% and benefitted from theadjustments described above. Excluding these favorable adjustments to income taxbenefit, our effective income tax rate during fiscal 2020 was 26.0%. Our fiscal2019 effective income tax rate was 22.7%. We currently anticipate that ourfiscal 2021 effective income tax rate may be in the 24-26% range, excluding anypotential further changes in federal or state income tax rates or other one-timetax benefits.Weighted-average shares outstanding were 31.0 million during fiscal 2020 and31.2 million during fiscal 2019. All per share data in this MD&A is presented ona fully diluted basis, however for periods when we report a net loss, commonstock equivalents are excluded from the computation of diluted loss per share astheir inclusion would have an anti-dilutive effect.

Current Plans

Due to the impact of the COVID-19 pandemic, our aggregate cash capitalexpenditures, acquisitions and purchases of interests in, and contributions to,joint ventures were only approximately $21 million during fiscal 2020, comparedto $94 million during fiscal 2019 (including approximately $30 million in cashconsideration paid in conjunction with the Movie Tavern acquisition describedbelow) and $59 million during fiscal 2018. We anticipate that we will continueto limit our capital expenditures during fiscal 2021, and as a result, wecurrently estimate that our fiscal 2021 cash capital expenditures will be in the$15-$25 million range. We will, however, continue to monitor our operatingresults and economic and industry conditions so that we may adjust our plansaccordingly.

Our current strategic plans include the following goals and strategies:

Theatres

Our long-term plans for growth in our theatre division may include evaluating

opportunities for new theatres and screens. In October 2019, we opened our new

eight-screen Movie Tavern® by Marcus theatre in Brookfield, Wisconsin. This new

theatre became the first Movie Tavern by Marcus in Wisconsin. It includes eight

auditoriums, each with laser projection and comfortable DreamLoungerSM recliner? seating, a full-service bar and food and drink center, and a new

delivery-to-seat service model that also allows guests to order food and

beverage via our mobile phone application or in-theatre kiosk. We will consider

additional sites for potential new theatre locations in both new and existing

markets in the future. Plans discussed previously for a new theatre in Tacoma,

Washington have been abandoned.

In addition to building new theatres, acquisitions of existing theatres or

theatre circuits has also been a viable growth strategy for us. On February 1,

2019, we acquired the assets of Movie Tavern, a New Orleans-based industry

leading circuit known for its in-theatre dining concept featuring chef-driven

menus, premium quality food and drink and luxury seating. The acquired circuit? consisted of 208 screens at 22 locations in nine states - Arkansas, Colorado,

Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia. The

purchase price consisted of $30 million in cash, subject to certain

adjustments, and 2,450,000 shares of our common stock, for a total purchase

price of approximately $139.3 million, based upon our closing share price on

January 31, 2019. The acquisition of the Movie Tavern circuit increased our

total number of screens by an additional 23%.

Now branded Movie Tavern by Marcus, we have subsequently introduced newamenities to select Movie Tavern theatres, including our proprietary premiumlarge format (PLF) screens and DreamLounger recliner seating, signatureprogramming, such as $5 movies on Tuesdays with a free complimentary-sizepopcorn for loyalty members, and proven marketing, loyalty and pricing programsthat will continue to benefit Movie Tavern guests in the future. 34The COVID-19 pandemic has been challenging for all theatre operators. A numberof theatre operators have filed for bankruptcy relief and many others are facingdifficult financial circ*mstances. Although we will prioritize our ownfinances, we will continue to consider potential acquisitions as well asconsider management agreements which may possibly lead to opportunities to own. The movie theatre industry is very fragmented, with approximately 50% of UnitedStates screens owned by the three largest theatre circuits and the other 50%owned by an estimated 800 smaller operators, making it very difficult to predictwhen acquisition opportunities may arise. We do not believe that we aregeographically constrained, and we believe that we may be able to add value tocertain theatres through our various proprietary amenities and operatingexpertise.

We have invested approximately $370 million to further enhance the movie-going? experience and amenities in new and existing theatres over the last seven and

one-half calendar years, with more investments planned for fiscal 2021 and

beyond. These investments include:

DreamLounger recliner additions. These luxurious, state-of-the-art reclinersallow guests to go from upright to a full-recline position in seconds. Theseseat changes require full auditorium remodels to accommodate the necessary 84inches of legroom, resulting in the loss of approximately 50% of the existingtraditional seats in an average auditorium. To date, the addition ofDreamLoungers has increased attendance at each of our applicable theatres,outperforming nearby competitive theatres and growing the overall marketattendance in most cases. Initially, 12 of the 22 acquired Movie Tavern theatreshad recliner seating. We added DreamLounger recliner seats to four additionalexisting Movie Tavern theatres during fiscal 2019, as well as one MarcusWehrenberg® theatre and one newly built Movie Tavern theatre. We completed theaddition of DreamLounger recliner seats at two additional Movie Tavern locationsduring fiscal 2020 and expect to add DreamLounger recliner seats to one MarcusWehrenberg theatre during the second quarter of fiscal 2021. As of December 31,2020, we offered all DreamLounger recliner seating in 65 theatres, representingapproximately 76% of our company-owned, first-run theatres. Including ourpremium, large format (PLF) auditoriums with recliner seating, as of December31, 2020, we offered our DreamLounger recliner seating in approximately 79% ofour company-owned, first-run screens, a percentage we believe to be the highestamong the largest theatre chains in the nation.UltraScreen DLX® and SuperScreen DLX® (DreamLounger eXperience) conversions. Weintroduced one of the first PLF presentations to the industry when we rolled outour proprietary UltraScreen® concept over 20 years ago. We later introduced ourUltraScreen DLX concept by combining our premium, large-format presentation withDreamLounger recliner seating and Dolby® Atmos™ immersive sound to elevate themovie-going experience for our guests. During fiscal 2019, we opened one newUltraScreen DLX at an existing Marcus Wehrenberg theatre and converted oneexisting screen into an UltraScreen DLX auditorium at a Movie Tavern by Marcustheatre. During fiscal 2020, we converted three existing screens at three MovieTavern by Marcus theatres and one existing screen at one Marcus Wehrenbergtheatre to SuperScreen DLX auditoriums. During fiscal 2019, we converted 26existing screens at 13 Movie Tavern by Marcus theatres and two existing screensat one Marcus Wehrenberg theatre to SuperScreen DLX and opened one newSuperScreen DLX auditorium at a newly built Movie Tavern by Marcus theatre. Mostof our PLF screens now include the added feature of heated DreamLounger reclinerseats. As of December 31, 2020, we had 31 UltraScreen DLX auditoriums, onetraditional UltraScreen auditorium, 85 SuperScreen DLX auditoriums (a slightlysmaller screen than an UltraScreen but with the same DreamLounger seating andDolby Atmos sound) and three IMAX® PLF screens at 66 of our theatre locations.As of December 31, 2020, we offered at least one PLF screen in approximately 77%of our first-run, company-owned theatres - once again a percentage we believe tobe the highest percentage among the largest theatre chains in the nation.Our PLF screens generally have higher per-screen revenues and draw customersfrom a larger geographic region compared to our standard screens, and we chargea premium price to our guests for this experience. We continue to evaluateopportunities to convert additional existing screens to SuperScreen DLXauditoriums. 35Signature co*cktail and dining concepts. We have continued to further enhance ourfood and beverage offerings within our existing theatres. We believe our 50-plusyears of food and beverage experience in the hotel and restaurant businessesprovides us with a unique advantage and expertise that we can leverage tofurther grow revenues in our theatres. The concepts we are expanding include:

Take FiveSM Lounge, Take Five Express and The Tavern - These full-service bars

offer an inviting atmosphere and a chef-inspired dining menu, along with a

complete selection of co*cktails, locally-brewed beers and wines. We also offer

full liquor service through the concession stand at two theatres. We acquired

22 new bars, known as The Tavern, in conjunction with our Movie Tavern

acquisition and opened a new Tavern at our new Brookfield, Wisconsin Movie

? Tavern by Marcus theatre in fiscal 2019. We closed one Movie Tavern by Marcus

theatre in the fourth quarter of fiscal 2020. As of December 31, 2020, we

offered bars/full liquor service at 50 theatres, representing approximately 58%

of our company-owned, first-run theatres. We are currently evaluating

opportunities to add bar service to additional locations and expect to add one

Take Five Lounge outlet to a Marcus Wehrenberg theatre currently under renovation in fiscal 2021.

Zaffiro's® Express - These outlets offer lobby dining that includes appetizers,

sandwiches, salads, desserts and our signature Zaffiro's THINCREDIBLE® handmade

thin-crust pizza. In select locations without a Take Five Lounge outlet, we

offer beer and wine at the Zaffiro's Express outlet. We opened one new

? Zaffiro's Express outlet during fiscal 2019 at our new Movie Tavern by Marcus

location in Brookfield, Wisconsin, and our number of theatres with this concept

totaled 29 as of December 31, 2020, representing approximately 45% of our

company-owned, first-run theatres (excluding our in-theatre dining Movie Tavern

theatres). We also operate three Zaffiro's® Pizzeria and Bar full-service

restaurants.

Reel Sizzle® - This signature dining concept serves menu items inspired by

classic Hollywood and the iconic diners of the 1950s. We offer Americana fare

like burgers and chicken sandwiches prepared on a griddle behind the counter,

? along with chicken tenders, crinkle-cut fries, ice cream and signature shakes.

Our new Movie Tavern by Marcus in Brookfield, Wisconsin includes a Real Sizzle.

As of December 31, 2020, we operated eight Reel Sizzle outlets, and we expect

to add one Reel Sizzle outlet in fiscal 2021 to a Marcus Wehrenberg theatre

currently under renovation.

Other in-lobby dining - We also operate one Hollywood Café at an existing

theatre, and four of the Marcus Wehrenberg theatres offer in-lobby dining

concepts sold through the concession stand. In addition, we are currently

? testing a Mexican food concept at one theatre, and we are considering expanding

this new concept in the future. Including these additional concepts, as of

December 31, 2020, we offered one or more in-lobby dining concepts in 40 theatres, representing approximately 62% of our company-owned, first-run theatres (excluding our in-theatre dining Movie Tavern theatres). In-theatre dining - As of December 31, 2020, we offered full-service,

in-theatre dining with a complete menu of drinks and chef-prepared salads,

? sandwiches, entrées and desserts at 31 theatres and a total of 246 auditoriums,

operating under the names Big Screen BistroSM, Big Screen Bistro ExpressSM,

BistroPlexSM and Movie Tavern by Marcus, representing approximately 36% of our

company-owned, first-run theatres.

With each of these strategies, our goal continues to be to introduce and create

entertainment destinations that further define and enhance the customer value

proposition for movie-going. We also expect to continue to maintain and enhance? the value of our existing theatre assets by regularly upgrading and remodeling

our theatres to keep them fresh. To accomplish the strategies noted above, we

currently anticipate that our fiscal 2021 capital expenditures in this division

will total approximately $10-$15 million.

In addition to the growth strategies described above, our theatre division

continues to focus on multiple strategies designed to further increase revenues

and improve the profitability of our existing theatres. These strategies

include various cost control efforts, as well as plans to expand ancillary? theatre revenues, such as pre-show advertising, lobby advertising, additional

corporate and group sales, sponsorships, special film series and alternate

auditorium uses. In response to the COVID-19 pandemic, we introduced Marcus

Private Cinema in the fourth quarter of fiscal 2020. Under this program, a

guest can reserve an entire auditorium for up to 20 people for a fixed charge,

 offering them a safe, fun and stress-free social gathering opportunity. 36

We also have several customer-focused strategies designed to elevate our? consumer knowledge, expectation and connection, and provide us with a

competitive advantage and the ability to deliver improved financial

performance. These strategies include the following:

Marketing initiatives. We offer a "$5 Tuesday" promotion at every theatre in ourcircuit that includes a free complimentary-size popcorn to our loyalty programmembers. We have seen our Tuesday attendance increase dramatically since theintroduction of the $5 Tuesday promotion. We believe this promotion hasincreased movie going frequency and reached a customer who may have stoppedgoing to the movies because of price, creating another "weekend" day for uswithout adversely impacting the movie-going habits of our regular weekendcustomers. We introduced our $5 Tuesday promotion with the free popcorn forloyalty members at our Marcus Wehrenberg theatres immediately upon acquisitionin December 2016 and did the same thing in February 2019 with our newly acquiredMovie Tavern theatres. We experienced an increase in Tuesday performance at theMarcus Wehrenberg theatres and have seen a similar response from customers atour Movie Tavern theatres. When not operating with limited days of operation, wealso offer a "$6 Student Thursday" promotion at all of our locations that hasbeen well received by that particular customer segment. In addition, we offer a$6 "Young-at-Heart" program for seniors on Friday afternoons that was alsointroduced to our Movie Tavern locations during our fiscal 2019 first quarter.Loyalty program. We offer what we believe to be a best-in-class customer loyaltyprogram called Magical Movie RewardsSM. We currently have approximately 4.0million members enrolled in the program. Approximately 47% of all box officetransactions and 43% of total transactions in our theatres during fiscal 2020were completed by registered members of the loyalty program. The program allowsmembers to earn points for each dollar spent and access special offers availableonly to members. The rewards are redeemable at the box office, concession standor at the many Marcus Theatres® food and beverage venues. In addition, we havepartnered with Movio, a global leader in data analysis for the cinema industry,to allow more targeted communication with our loyalty members. The softwareprovides us with insight into customer preferences, attendance habits andgeneral demographics, which we believe will help us deliver customizedcommunication to our members. In turn, members of this program can enjoy andplan for a more personalized movie-going experience. The program also gives usthe ability to cost effectively promote non-traditional programming and specialevents, particularly during non-peak time periods. We believe that this willresult in increased movie-going frequency, more frequent visits to theconcession stand, increased loyalty to Marcus Theatres and ultimately, improvedoperating results. The acquired Wehrenberg theatres offered a loyalty program totheir customers that had approximately 200,000 members. We converted thesemembers to our Magical Movie Rewards program during fiscal 2017. The acquiredMovie Tavern theatres did not offer a loyalty program to their customers. Weintroduced our Magical Movie Rewards program to these theatres during the secondquarter of fiscal 2019 after all necessary technology requirements werecompleted.Technology enhancements. We have recently enhanced our mobile ticketingcapabilities, our downloadable Marcus Theatres mobile application, and ourmarcustheatres.com website. We added food and beverage ordering capabilities toour mobile application at select theatres, including our recently opened MovieTavern location in Brookfield, Wisconsin, in fiscal 2019 and expanded thisfeature to all of our theatres in fiscal 2020. We have continued to installadditional theatre-level technology, such as new ticketing kiosks, digital menuboards and concession advertising monitors. Each of these enhancements isdesigned to improve customer interactions, both at the theatre and throughmobile platforms and other electronic devices.

The addition of digital technology throughout our circuit (we offer digital

cinema projection on 100% of our first-run screens) has provided us with

additional opportunities to obtain non-motion picture programming from other

new and existing content providers, including live and pre-recorded

performances of the Metropolitan Opera, as well as sports, music and other? events, at many of our locations. We offer weekday and weekend alternate

programming at many of our theatres across our circuit. The special programming

includes classic movies, live performances, comedy shows and children's

performances. We believe this type of programming is more impactful when

presented on the big screen and provides an opportunity to continue to expand

 our audience base beyond traditional moviegoers. In addition, digital 3D presentation of films has continued to positively

contribute to our box office receipts during the periods presented in this

Annual Report on Form 10-K. As of December 31, 2020, we had the ability to? offer digital 3D presentations in 382, or approximately 36%, of our first-run

screens, including the vast majority of our UltraScreens. We have the ability

to increase the number of digital 3D capable screens we offer to our guests in

the future and will do so based on the number of digital 3D films released

 during future periods and our customers' response to these 3D releases. 37Hotels and Resorts

The COVID-19 pandemic has been challenging for most hotel operators and many

are facing difficult financial circ*mstances. As a result, most transactional

activity in the hotel industry has temporarily stopped. Although we will

prioritize our own finances, our hotels and resorts division expects to

continue to seek opportunities to invest in new hotels and increase the number? of rooms under management in the future. The goal of our hotel investment

business is to seek opportunities where we may act as an investment fund

sponsor, joint venture partner or sole investor in acquiring additional hotel

properties. We continue to believe that opportunities to acquire high-quality

hotels at reasonable valuations will be present in the future for

well-capitalized companies, and we believe that there are partners available to

work with us when the appropriate hotel assets are identified.

We also continue to pursue additional management contracts for other owners,

some of which may include small equity investments similar to the investments

we have made in the past with strategic equity partners. Although total

revenues from an individual hotel management contract are significantly less

than from an owned hotel, the operating margins are generally significantly

higher due to the fact that all direct costs of operating the property are

typically borne by the owner of the property. Management contracts provide us? with an opportunity to increase our total number of managed rooms without a

significant investment, thereby increasing our returns on equity. In April

2019, we assumed management of the Hyatt Regency Schaumburg hotel in

Schaumburg, Illinois. This 468-room hotel recently completed a $15 million

renovation and offers upscale accommodations, robust amenities and more than

30,000 square feet of indoor and outdoor meeting and event space, including a

3,100 square foot starlit terrace. This was our first Hyatt-branded hotel under

management.

Conversely, we will occasionally lose management contracts due to variouscirc*mstances. In May 2019, we ceased managing the Heidel House Resort & Spa inGreen Lake, Wisconsin, after the owners of this resort decided to close thisproperty permanently. Early in our fiscal 2019 third quarter, the owners of theSheraton Chapel Hill Hotel in Chapel Hill, North Carolina sold the hotel, and asa result, our contract to manage this hotel was terminated. We also ceasedmanaging the Hilton Garden Houston NW/Willowbrook in Houston, Texas in March2020 and the Murieta Inn and Spa in Rancho Murieta, California in July 2020.

Unlike our theatre assets where the majority of our return on investment comes

from the annual cash flow generated by operations, a portion of the return on

our hotel investments is derived from effective portfolio management, which

includes determining the proper branding strategy for a given asset along with? the proper level of investment and upgrades, as well as identifying an

effective divestiture strategy for the asset when appropriate. We closed the

InterContinental Milwaukee in early January 2019 and undertook a substantial

renovation project that converted this hotel into the unbranded experiential

arts hotel, the Saint Kate. The newly renovated hotel reopened during June

2019.

We have been very opportunistic in our past hotel investments as we have, on

many occasions, acquired assets at favorable terms and then improved the

properties and operations to create value. We also will continue to

periodically explore opportunities to monetize one or more owned hotels. We

will consider many factors as we actively review opportunities to execute this? strategy, including income tax considerations, the ability to retain

management, pricing and individual market considerations. We evaluate

strategies for our hotels on an asset-by-asset basis. We have not set a

specific goal for the number of hotels that may be considered for this

strategy, nor have we set a specific timetable. It is possible that we may sell

a particular hotel or hotels during fiscal 2021 or beyond if we determine that

such action is in the best interest of our shareholders.

Our future plans for our hotels and resorts division also include continued

reinvestment in our existing properties to maintain and enhance their value.

Late in fiscal 2018 and carrying over into the first half of fiscal 2019, we

made additional reinvestments in the Hilton Madison Monona Terrace. Early in

fiscal 2021, we began a lobby renovation and initiated select guest room? improvements at the Grand Geneva Resort & Spa. We anticipate additional

reinvestments during fiscal 2022 and fiscal 2023 at The Pfister Hotel, the

Grand Geneva Resort & Spa and the Hilton Milwaukee City Center hotel. We

currently believe our total fiscal 2021 hotels and resorts capital expenditures

 will total approximately $5-$10 million, excluding any presently unidentified growth opportunities. 38

In addition to the growth strategies described above, our hotels and resorts

division continues to focus on several strategies that are intended to further

grow the division's revenues and profits. These include leveraging our food and

beverage expertise for growth opportunities and growing our catering and events

revenues. This also includes hotel food and beverage concepts developed by our? Marcus Restaurant Group, featuring premier brands such as Mason Street Grill,

ChopHouse®, Miller Time® Pub & Grill and SafeHouse® restaurants. Currently, our

SafeHouse restaurants remain closed, but upon reopening, our focus will be on

maximizing the contribution of our newest restaurant, SafeHouse Chicago. We

will consider exploring additional opportunities to expand this concept in the

 future. We have also invested in sales, revenue management and internet marketing

strategies in an effort to further increase our profitability, as well as human? resource and cost improvement strategies designed to achieve operational

excellence and improved operating margins. We are focused on developing our

customer service delivery and technology enhancements to improve customer

interactions through mobile platforms and other customer touch points.

Corporate

We periodically review opportunities to make investments in long-term growth

opportunities that may not be entirely related to our two primary businesses? (but typically have some connection to entertainment, food and beverage,

hospitality, real estate, etc.). Although we will prioritize our own finances,

we expect to continue to review such opportunities in the future.

In addition to operational and growth strategies in our operating divisions, we

will continue to seek additional opportunities to enhance shareholder value,

including strategies related to our dividend policy and share repurchases. We

increased our regular quarterly common stock cash dividend rate by 6.7% during

the first quarter of fiscal 2019 and 6.3% during the first quarter of fiscal

2020, prior to temporarily suspending dividend payments in response to the

COVID-19 pandemic. In prior years, we have periodically paid special dividends? and repurchased shares of our common stock under our existing Board of

Directors stock repurchase authorizations. The Credit Agreement currently

allows us, if we believe it is in the best interest of our shareholders, to

once again return capital to shareholders through dividends or share

repurchases beginning in the third quarter of fiscal 2021, up to a maximum of

$1.5 million per quarter. The current restriction on dividends and share

repurchases will remain in place until the third quarter of fiscal 2022 or

until the Term Loan A is repaid and we have returned to our financial covenants

 in place prior to the restriction (whichever comes first). We will also continue to evaluate opportunities to sell real estate when appropriate, allowing us to benefit from the underlying value of our real estate assets. When possible, we will attempt to avail ourselves of the

provisions of Internal Revenue Code §1031 related to tax-deferred like-kind

exchange transactions. We are actively marketing a significant number of

pieces of surplus real estate and other non-core real estate. During the? fourth quarter of fiscal 2020, we sold two land parcels and a former budget

theatre, generating total proceeds of approximately $3.0 million. As of

December 31, 2020, we had letters of intent or contracts to sell several pieces

of real estate with a carrying value of $4.1 million and we believe we may

receive total sales proceeds from real estate sales during the next 12-18

months totaling approximately $10-$40 million, depending upon demand for the

real estate in question.

The actual number, mix and timing of our potential future new facilities andexpansions and/or divestitures will depend, in large part, on industry, economicand COVID-19 pandemic conditions, our financial performance and availablecapital, the competitive environment, evolving customer needs and trends, andthe availability of attractive acquisition and investment opportunities. It islikely that our growth goals and strategies will continue to evolve and changein response to these and other factors, and there can be no assurance that wewill achieve our current goals. Each of our goals and strategies are subject tothe various risk factors discussed above in this Annual Report on Form 10-K. 39TheatresOur oldest and historically most profitable division is our theatre division.The theatre division contributed 55.8% of our consolidated revenues and 73.5% ofour consolidated operating income (loss), excluding corporate items, duringfiscal 2020, compared to 67.9% and 88.4%, respectively, during fiscal 2019 and63.2% and 87.7%, respectively, during fiscal 2018. As of December 31, 2020, thetheatre division operated motion picture theatres in Wisconsin, Illinois, Iowa,Minnesota, Missouri, Nebraska, North Dakota, Ohio, Arkansas, Colorado, Georgia,Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia, a familyentertainment center in Wisconsin and a retail center in Missouri. The followingtables set forth revenues, operating income (loss), operating margin, screensand theatre locations for the last three fiscal years: Change F20 v. F19 Change F19 v. F18 F2020 F2019 Amt. Pct. F2018 Amt. Pct. (in millions, except percentages)Revenues $ 132.6 $ 557.1 $ (424.5) (76.2) $ 446.8 $ 110.3 24.7 %Operating income (loss) $ (121.4) $ 76.9 $ (198.3) (257.9) $ 88.8 $ (11.9) (13.4) %Operating margin (91.6) % 13.8 % 19.9 %Number of screens and locations at period-end (1)(2) F2020 F2019 F2018Theatre screens 1,097 1,106 889Theatre locations 89 91 68

Average screens per location 12.3 12.2 

13.1

(1) Includes 6 screens at one location managed for another owner.

Includes 22 budget screens at two locations at the end of fiscal 2020 and 29

budget screens at three locations at the end of fiscal 2019 and fiscal 2018.(2) Compared to first-run theatres, budget theatres generally have lower box

office revenues and associated film costs, but higher concession sales as a

percentage of box office revenues.

The following table provides a further breakdown of the components of revenuesfor the theatre division for the last three fiscal years:

 Change F20 v. F19 Change F19 v. F18 F2020 F2019 Amt. Pct. F2018 Amt. Pct. (in millions, except percentages)Admission revenues $ 64.8 $ 284.2 $ (219.4) (77.2) % $ 246.4 $ 37.8 15.3 %Concession revenues 56.7 231.2 (174.5) (75.5) % 166.6 64.6 38.8 %Other revenues 10.8 40.8 (30.0) (73.6) % 32.5 8.3 25.4 % 132.3 556.2 (423.9) (76.2) % 445.5 110.7 24.8 %Cost reimbursem*nts 0.3 0.9 (0.6) (63.1) % 1.3 (0.4) (32.1) %Total revenues $ 132.6 $ 557.1 $ (424.5) (76.2) % $ 446.8 $ 110.3 24.7 %

As described above in the "Current Plans" section of this MD&A, on February 1,2019, we acquired the assets of Movie Tavern, a New Orleans-based industryleading circuit known for its in-theatre dining concept featuring chef-drivenmenus, premium quality food and drink and luxury seating. The acquired circuitconsisted of 208 screens at 22 locations in nine states - Arkansas, Colorado,Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia. Thepurchase price consisted of $30 million in cash, subject to certain adjustments,and 2,450,000 shares of our common stock, for a total purchase price ofapproximately $139.3 million, based upon our closing share price on January 31,2019. At the time, the acquisition of the Movie Tavern circuit increased ourtotal number of screens by an additional 23%. 40

Fiscal 2020 versus Fiscal 2019

Our theatre division revenues and operating income (loss) decreasedsignificantly during fiscal 2020 compared to fiscal 2019 due entirely todecreased attendance as a result of the temporary closing of all of our theatreson March 17, 2020 in response to the COVID-19 pandemic. Other than six theatresthat were reopened during the last week of the fiscal 2020 second quarter, allof our theatres remained closed during all of the second quarter and themajority of the third quarter of fiscal 2020. During the five-plus months thatmost of our theatres were closed, the only additional revenues we reported werethe result of five parking lot cinemas opened during the second quarter,curbside sales of popcorn, pizza and other food items and restaurant takeoutsales from our three Zaffiro's restaurants and bars. Over the seven-day periodbetween August 21 and August 28, 2020, we reopened a majority of our theatres inconjunction with the release of several new films, resulting in a total of 72reopened theatres, representing 80% of our company-owned theatres. In October2020, we temporarily closed several theatres due to changes in the releaseschedule for new films, reducing our percentage of theatres open toapproximately 66%. In November and December 2020, new state and localrestrictions in several of our markets required us to temporarily recloseseveral theatres, and as a result, approximately 52% of our theatres were openas of December 31, 2020. All of our reopened theatres are operating atsignificantly reduced attendance levels.Our theatres were open for all but nine days during the first quarter of fiscal2020 and the revenue impact of decreased attendance during that period waspartially offset by an increase in our average ticket price and averageconcession revenues per person compared to the first quarter of fiscal 2019. Inaddition, our revenues during the first quarter of fiscal 2020 included an extramonth of Movie Tavern revenues (Movie Tavern theatres were not acquired untilFebruary 1, 2019) and a new Movie Tavern theatre opened in Brookfield, Wisconsinduring the fourth quarter of fiscal 2019.Our theatre division operating loss during the five-plus months our theatreswere closed during fiscal 2020 primarily reflected costs that remained after wetemporarily closed all of our theatres and laid off the vast majority of ourhourly theatre staff, as well as a portion of our corporate staff. These costsincluded a certain number of salaried theatre management staff as well as theremaining corporate staff, all of whom were subject to a reduction in pay. Additional ongoing costs included utilities and repairs and maintenance (bothat reduced levels), rent, property taxes and depreciation. During the lastmonth of our fiscal 2020 third quarter, we brought back an appropriate level oftheatre and corporate staff to meet anticipated reduced levels of initial newfilm supply and customer demand in our recently reopened theatres. Our theatredivision operating results during fiscal 2020 were negatively impacted bynonrecurring expenses totaling approximately $5.8 million related to expensesincurred (primarily payroll continuation payments to employees temporarily laidoff) due to the closing of all of our movie theatres during the first quarterand subsequent costs incurred for cleaning, supply purchases and employeetraining, among other items, related to the reopening of our theatre propertiesand implementing new operating protocols (described in greater detail above). Conversely, our operating loss during fiscal 2020 was favorably impacted byapproximately $5.8 million of state government grants awarded from seven statesfor COVID-19 relief. The additional week of operations favorably impacted ourtheatre division revenues during fiscal 2020 by approximately $2.6 million anddid not have a material impact on our operating loss.Although rent continued to be expensed monthly, discussions with our landlordsresulted in deferral, or in a limited number of situations, abatements, of themajority of our rent payments during our fiscal 2020 second quarter. While theresults of negotiations varied by theatre, the most common result of thesediscussions was a deferral of rent payments for April, May and June, withrepayment generally expected in future periods, most often beginning in calendar2021. We may discuss additional rent deferrals in the future if new film supplyand customer demand dictate that we delay further reopening or close currentlyopen theatres.In addition to the significant impact the closing of our theatres during themajority of our second and third fiscal quarters had on our operating lossduring fiscal 2020, our theatre division operating income (loss) and operatingmargin also decreased during fiscal 2020 compared to fiscal 2019 due primarilyto the impact of the reduced attendance and revenues at comparable theatresduring the fiscal 2020 first quarter and fourth quarter. Impairment chargesreported during fiscal 2020 related to intangible assets and several theatrelocations also negatively impacted our theatre division fiscal 2020 operatingloss by approximately $24.7 million. Our operating income and operating marginduring fiscal 2019 was negatively impacted by approximately $2.5 million ofacquisition and preopening expenses related to the Movie Tavern Acquisition andthe opening of a newly built Movie Tavern theatre in Brookfield, Wisconsin. 41Total theatre attendance decreased 77.1% during fiscal 2020 compared to fiscal2019, primarily as a result of the closure of our theatres for over five monthsduring fiscal 2020 and subsequent reduced attendance at our reopened theatres. A significant decrease in the number of new films, the lack of awareness oftheatres being open (due in part to limited new film advertising), ongoing stateand local capacity restrictions and customer concerns regarding visiting indoorbusinesses contributed to the reductions in attendance during fiscal 2020. Thefollowing table sets forth our percentage change in comparable theatreattendance during each of the interim periods of fiscal 2020 compared to thesame periods during fiscal 2019. We were not able to compare our overall resultsto the industry during the final three quarters of fiscal 2020 because oflimitations on the data available to us from Rentrak (a national box officereporting service for the theatre industry).: Change F20 v. F19 1st Qtr. (1) 2nd Qtr. 3rd Qtr. 4th Qtr. Total

Pct. change in Marcus theatre attendance -19.5 % -99.8

% -95.6 % -90.1 % -77.1 %

Pct. change in Marcus admission revenues -14.8 % -99.8 % -95.5 % -91.5 % -77.2 %Pct. change in U.S. box office revenues -17.0 %Marcus performance vs. U.S. +2.2 pts

(1)Excludes Movie Tavern theatres, which were not acquired until February 1,2019.

Our average ticket price decreased 0.4% during fiscal 2020 compared to fiscal2019. During the fiscal 2020 third and fourth quarters, we charged our normalpricing for new film releases and charged only $5.00 for older "library" filmproduct, which negatively impacted our average ticket price compared to theprior year. Our average concession revenues per person increased by 6.8% duringfiscal 2020 compared to fiscal 2019. We believe a change in concession productmix, including increased sales of non-traditional food and beverage items fromour increased number of Take Five Lounge, Zaffiro's Express, Reel Sizzle andin-theatre dining outlets, contributed to our increased average concession salesper person during fiscal 2020. We also believe a portion of the increase in ouraverage concession revenues per person during fiscal 2020 may be attributed toshorter lines at our concession stand due to reduced attendance (during periodsof high attendance, some customers do not purchase concessions because the lineis too long). We also believe that an increased percentage of customers buyingtheir concessions in advance using our web site or our mobile app likely alsocontributed to higher average concession revenues per person, as our experiencehas shown that customers are more likely to purchase more items when they orderand pay electronically. We currently do not expect our average ticket price tochange significantly during fiscal 2021, but film mix will likely once againimpact our final result. We currently expect to report a modest increase in ouraverage concession sales per person during fiscal 2021 compared to fiscal 2020due to the same contributing factors described above regarding fiscal 2020,although as noted above, several factors may impact our actual results in thiskey metric.Revenues for the theatre business and the motion picture industry in general areheavily dependent on the general audience appeal of available films, togetherwith studio marketing, advertising and support campaigns and the maintenance ofa reasonably lengthy "window" between the date a film is released in theatresand the date a film is released to other channels, including premiumvideo-on-demand ("PVOD"), video on-demand ("VOD"), streaming services and DVD.These are factors over which we have no control (see additional detail in the"Impact of COVID-19 Pandemic" section above). The following top five performingfilms during fiscal 2020, all from our fiscal 2020 first quarter, accounted fornearly 40% of the total admission revenues for our circuit: Star Wars: The Riseof Skywalker, Bad Boys for Life, Jumanji: The Next Level, 1917 and Sonic theHedgehog. The top five performing films during fiscal 2019 accounted forapproximately 26% of our total admission revenues. Our highest grossing films,during the limited time we reopened our theatres during the second half offiscal 2020, included Tenet, The Croods: A New Age, Wonder Woman 1984, Unhingedand The New Mutants.Other revenues, which include management fees, pre-show advertising income,family entertainment center revenues, surcharge revenues, rental income and giftcard breakage income, decreased by $30.0 million during fiscal 2020 compared tofiscal 2019. This decrease was primarily due to the impact of reduced attendanceon internet surcharge ticketing fees and preshow advertising income. Wecurrently expect other revenues to increase in fiscal 2021 if attendanceincreases as we anticipate during the second half of the year and as we returnto normalcy. 42Admission revenues at comparable theatres during the first quarter of fiscal2021 through the date of this report have continued to be significantly reducedcompared to prior year levels. Sales attributable to our Marcus Private Cinemaprogram (discussed in the "Impact of COVID-19 Pandemic" section above) haveexceeded expectations, partially offsetting reduced traditional attendance. Subsequent to year-end, local and state restrictions have been lifted inseveral of our markets and, as of the date of this report, approximately 69% ofour theatres are currently open. Our remaining temporarily closed theatres areready to quickly reopen as additional restrictions are lifted, new films arereleased and demand returns.The film product release schedule for the remainder of fiscal 2021 has beenchanging in response to reduced near-term customer demand and changing state andlocal restrictions in various key markets in the U.S. and the world as a resultof the ongoing COVID-19 pandemic. In particular, restrictions in New York andCalifornia have been cited by film studios as a reason for not releasing newmovies, as these markets are particularly important to a film's success. As aresult, several films originally scheduled to be released during the firstmonths of fiscal 2021 have been delayed or released to alternative consumerchannels. We believe that as a greater percentage of the population getsvaccinated and the pandemic subsides, there will be a large demand forout-of-home entertainment and the studios will once again begin releasing asignificant number of films to theatres. The film slate for the remainder offiscal 2021, which now includes multiple films originally scheduled for fiscal2020, is currently expected to be very strong, particularly during the secondhalf of the year. Although it is possible that more schedule changes may occur,films currently scheduled that have potential to perform very well during theremainder of fiscal 2021 include Godzilla vs. Kong, Mortal Kombat, Black Widow,Peter Rabbit 2: The Runaway, Free Guy, Spiral, Cruella, The Conjuring: The DevilMade Me Do It, In the Heights, Luca, Venom: Let There Be Carnage, Fast & Furious9, Top Gun: Marerick, The Forever Purge, Shang-Chi and the Legend of the TenRings, Cinderella, Space Jam 2, Old, The Tomorrow War, Jungle Cruise, HotelTransylvania 4, The Suicide Squad,, The King's Man, The Hitman's Bodyguard 2,Candyman, Malignant, The Boss Baby: Family Business, A Quiet Place II, Death onthe Nile, The Man From Toronto, Dune, Untitled Addams Family Sequel, No Time ToDie, Halloween Kills, The Last Duel, Snake Eyes: G.I. Joe Origins, Eternals,Clifford the Big Red Dog Movie, Ghostbusters: Afterlife, Mission Impossible 7,Encanto, Gucci, West Side Story, Untitled Disney Live Action, Spider-Man: No WayHome, The Untitled Matrix Film and Sing 2. The early list of films scheduledto be released during fiscal 2022 also appears quite strong.We opened a new eight-screen Movie Tavern by Marcus theatre in Brookfield,Wisconsin early in our fiscal 2019 fourth quarter and added four new screens toan existing Movie Tavern theatre during the first quarter of fiscal 2020. Wealso completed the addition of DreamLounger recliner seating and added a newSuperScreen DLX to that same Movie Tavern theatre during the first quarter offiscal 2020. Early in our fiscal 2020 third quarter, we completed the additionof DreamLounger recliner seating to an existing Movie Tavern theatre. Duringthe first quarter of fiscal 2020, we began a project that would add DreamLoungerrecliner seating, as well as Reel Sizzle and Take Five Lounge outlets, to aMarcus Wehrenberg theatre, but this project was temporarily put on hold as aresult of the COVID-19 pandemic. We currently expect to complete this projectduring the first half of fiscal 2021. During the fourth quarter of fiscal 2020,we ceased operating one six-screen Movie Tavern theatre due to the approachingexpiration of its lease, we sold one 7-screen budget cinema and we agreed uponterms related to a termination of our agreement to build a new theatre inTacoma, Washington.

Hotels and Resorts

The hotels and resorts division contributed 44.0% of our consolidated revenuesand 26.5% of our consolidated operating income (loss), excluding corporateitems, during fiscal 2020, compared to 32.1% and 11.6%, respectively, duringfiscal 2019 and 36.8% and 12.3%, respectively, during fiscal 2018. As ofDecember 31, 2020, the hotels and resorts division owned and operated threefull-service hotels in downtown Milwaukee, Wisconsin, a full-service destinationresort in Lake Geneva, Wisconsin and full-service hotels in Madison, Wisconsin,Chicago, Illinois, Lincoln, Nebraska and Oklahoma City, Oklahoma (we have amajority-ownership position in the Oklahoma City, Oklahoma hotel). In addition,the hotels and resorts division managed 10 hotels, resorts and other propertiesfor other owners. Included in the 10 managed properties is one hotel owned by ajoint venture in which we have a minority interest and two condominium hotels inwhich we own some or all of the public space. The following tables set forthrevenues, operating income (loss), operating margin and rooms data for thehotels and resorts division for the past three fiscal years: Change F20 v. F19 Change F19 v. F18 F2020 F2019 Amt. Pct. F2018 Amt. Pct. (in millions, except percentages)Revenues $ 104.6 $ 263.4 $ (158.8) (60.3) % $ 259.9 $ 3.5 1.3 %Operating income (loss) $ (43.9) $ 10.1 $ (54.0) (536.7) % $ 12.5 $ (2.4) (19.5) %Operating margin (41.9) % 3.8 % 4.8 % 43Available rooms at period-end F2020 F2019 F2018Company-owned 2,628 2,627 2,629

Management contracts with joint ventures 333 333 333Management contracts with condominium hotels 480 480 480Management contracts with other owners 1,691 1,945 1,833Total available rooms

 5,132 5,385 5,275

The following table provides a further breakdown of the components of revenuesfor the hotels and resorts division for the last three fiscal years:

 Change F20 v. F19 Change F19 v. F18 F2020 F2019 Amt. Pct. F2018 Amt. Pct. (in millions, except percentages)Room revenues $ 35.4 $ 105.9 $ (70.5) (66.6) % $ 108.8 $ (2.9) (2.7) %Food/beverage revenues 24.8 74.7 (49.9) (66.8) % 72.8 1.9 2.6 %Other revenues 27.5 46.5 (19.0) (40.8) % 45.3 1.2 2.7 % 87.7 227.1 (139.4) (61.4) % 226.9 0.2 0.1 %Cost reimbursem*nts 16.9 36.3 (19.4) (53.5) % 33.0 3.3 10.0 %Total revenues $ 104.6 $ 263.4 $ (158.8) (60.3) % $ 259.9 $ 3.5 1.3 %

Fiscal 2020 versus Fiscal 2019

Division revenues and operating income (loss) decreased significantly duringfiscal 2020 compared to fiscal 2019 due to the impact of the COVID-19 pandemic.

 Room revenues and food and beverage revenues began decreasing due to COVID-19pandemic related cancellations in March 2020, even before we temporarily closedall of our hotels in late March/early April. In addition, our restaurants andbars were required to close during the last 10 days of the fiscal 2020 firstquarter due to the COVID-19 pandemic. We subsequently reopened four of ourcompany-owned hotels late in our fiscal 2020 second quarter (The Pfister Hotel,the Grand Geneva Resort & Spa, The Skirvin Hilton and the Hilton Madison MononaTerrace), three company-owned hotels during our fiscal 2020 third quarter (theHilton Milwaukee City Center Hotel, The Lincoln Marriott Cornhusker Hotel andthe AC Hotel Chicago Downtown) and our remaining company-owned hotel in ourfiscal 2020 fourth quarter (Saint Kate). Once reopened, all of ourcompany-owned hotels have operated with significantly reduced occupanciescompared to prior years due to the impact of the COVID-19 pandemic. Themajority of our restaurants and bars in our hotels have subsequently reopened inconjunction with the hotel reopenings beginning in June 2020, and are operatingunder applicable state and local restrictions and guidelines. We expect toreopen our two SafeHouse restaurants and bars later in fiscal 2021.Other revenues during fiscal 2020 included ski, spa and golf revenues at ourGrand Geneva Resort & Spa (golf revenues exceeded the prior year), managementfees, laundry revenues, parking revenues and rental revenues. Costreimbursem*nts decreased during fiscal 2020 compared to fiscal 2019 due to thetemporary closure and subsequent reduced revenues upon reopening of our managedhotels, partially offset by the addition of a new large management contractduring fiscal 2019. As of the date of this report, nine of our 10 managedhotels and other properties have reopened.In addition to the impact of significantly reduced revenues, our hotel divisionoperating loss during fiscal 2020 was negatively impacted by nonrecurringexpenses totaling approximately $5.7 million, related to costs associated withinitially closing our hotels (primarily payments to and on behalf of laid offemployees) and extensive cleaning costs, supply purchases and employee training,among other items, related to the reopening of selected hotel properties andimplementing new operating protocols (described in greater detail above). Conversely, our operating loss during fiscal 2020 was favorably impacted byapproximately $1.2 million of state government grants awarded from two statesfor COVID-19 relief. The additional week of operations favorably impacted ourhotels and resorts division revenues during fiscal 2020 by approximately $2.5million and did not have a material impact on our operating loss. Our operatingresults during fiscal 2019 were negatively impacted by approximately $6.8million of preopening expenses and initial start-up losses related to ourconversion of the InterContinental Milwaukee hotel into the Saint Kate. 44

The following table sets forth certain operating statistics, including ouraverage occupancy percentage (number of occupied rooms as a percentage ofavailable rooms), our average daily room rate ("ADR"), and our total revenue peravailable room ("RevPAR"), for company-owned properties:

 Change F20 v. F19Operating Statistics(1) F2020 F2019 Amt. Pct.Occupancy percentage 38.2 % 73.6 % (35.4) pts (48.1) %ADR $ 136.52 $ 154.42 $ (17.90) (11.6) %RevPAR $ 52.12 $ 113.65 $ (61.53) (54.1) %

These operating statistics represent averages of our comparable seven

distinct company-owned hotels and resorts, branded and unbranded, in

different geographic markets with a wide range of individual hotel(1) performance. The statistics are not necessarily representative of any

particular hotel or resort. The statistics only include the periods the

hotels were open during fiscal 2020. The statistics exclude the Saint Kate,

as this hotel was closed for the majority of the first half of fiscal 2019.

According to data received from Smith Travel Research and compiled by us inorder to analyze our fiscal 2020 results, comparable "upper upscale" hotelsthroughout the United States experienced a decrease in RevPAR of 62.0% duringfiscal 2020 compared to fiscal 2019. Although data received from Smith TravelResearch for our various "competitive sets" - hotels identified in our specificmarkets that we deem to be competitors to our hotels - is less comprehensive dueto the number of hotels closed during portions of the periods reported, dataavailable to us indicates that these hotels experienced a decrease in RevPAR of69.8% during fiscal 2020 compared to fiscal 2019. Higher class segments of thehotel industry, such as luxury and upper upscale, continue to experience loweroccupancies compared to lower class hotel segments such as economy and midscale.

Based upon the data received and complied by us, it appears our propertiessignificantly outperformed our segment of the hotel industry and our competitivesets during fiscal 2020.

The following table sets forth the change in our average occupancy percentage,ADR and RevPAR for each quarterly period of fiscal 2020 compared to fiscal 2019(excluding the Saint Kate): Change F20 v. F19 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.

Occupancy percentage (9.0) pts (59.1) pts (46.4) pts (44.7) ptsADR (0.7) % (3.3) % (5.3) % (16.0) %RevPAR (14.5) % (76.6) % (58.2) % (70.3) %

The "drive-to leisure" travel customer provided the most demand during thesecond half of fiscal 2020, with the Grand Geneva Resort & Spa and a managedcondo hotel, the Timber Ridge Lodge & Waterpark, experiencing the highest demandamong our open hotels, particularly on weekends. Leisure travel historicallydecreases during our fiscal fourth quarter as students go back to school and weexperience colder weather in our predominantly Midwestern hotels. Transientbusiness and group business travel subsequent to the onset of the COVID-19pandemic was minimal during fiscal 2020. Our company-owned hotels, and inparticular our largest hotels, have historically derived a significant portionof their revenues from group business, and as a result, we are more susceptibleto variations in RevPAR from quarter to quarter depending upon the strength ofthe group business market during that particular quarter. Group business alsotends to have an impact on our food and beverage revenues because groups aremore likely to use our banquet and catering services during their stay. Asindicated by the smaller decreases in ADR during fiscal 2020 (particularlyduring the second and third quarters), non-group retail pricing held relativelystrong, with most of the decrease in ADR due to an overall reduction in marketpricing resulting from the lack of group business and a reduction in localdemand drivers (restaurants, museums, etc.) in markets with greaterrestrictions. 45Looking to future periods, overall occupancy in the U.S. has slowly increasedsince the initial onset of the COVID-19 pandemic in March 2020. In the nearterm, we expect most current demand will continue to come from the drive-toleisure segment. Most organizations implemented travel bans at the onset of thepandemic and are currently only allowing essential travel, which will likelylimit business travel in the near term. Our company-owned hotels haveexperienced a significant decrease in group bookings compared to the same periodlast year. As of the date of this report, our group room revenue bookings forfiscal 2021 - commonly referred to in the hotels and resorts industry as "grouppace" - is running significantly behind where we were last year at this time forfiscal 2020, and a large portion of that decline is because last year's groupbookings included bookings in anticipation of Milwaukee hosting the DNC in July2020. Banquet and catering revenue pace for fiscal 2021 is also running behindwhere we were last year at this same time for fiscal 2020, but not as much asgroup room revenues, due in part to increases in wedding bookings. Many of ourcancelled group bookings due to COVID-19 are re-booking for future dates,excluding one-time events that could not rebook for future dates such as thoseconnected to the DNC. However, some group bookings for the first half of fiscal2021 have subsequently canceled or postponed their event, and we cannot predictto what extent any of our hotel bookings will be canceled or rescheduled due toCOVID-19 or otherwise.

Unfortunately, the DNC event in Milwaukee in August 2020 was not nearly assignificant to Milwaukee and our hotels as we had originally anticipated.

Another major event that we expected would benefit our Milwaukee hotels infiscal 2020, the Ryder Cup, was originally scheduled for September 2020, but wasrescheduled to September 2021. However, this event is contributing to ourfiscal 2021 group pace.

Forecasting what future RevPAR growth or decline will be during the next 18 to24 months is very difficult at this time. The non-group booking window is veryshort, with most bookings occurring within three days of arrival, making evenshort-term forecasts of future RevPAR growth very difficult. Hotel revenueshave historically tracked very closely with traditional macroeconomic statisticssuch as the Gross Domestic Product, so we will be monitoring the economicenvironment very closely. After past shocks to the system, such as the terroristattacks on September 11, 2001 and the 2008 financial crisis, hotel demand tooklonger to recover than other components of the economy. Conversely, we nowanticipate that hotel supply growth will be limited for the foreseeable future,which can be beneficial for our existing hotels. Most industry experts believethe pace of recovery will be steady, but relatively slow. In the near-term, webelieve it will be very important to have our marketing message focus on thehealth and safety of our associates and guests. We are focused on reaching thedrive-to leisure market through aggressive campaigns promoting creative packagesfor our guests. Overall, we generally expect our revenue trends to track orexceed the overall industry trends for our segment of the industry, particularlyin our respective markets.Our hotels and resorts division operating results during fiscal 2020 benefitedfrom a new management contract added during fiscal 2019 - the 468-room HyattRegency Schaumburg hotel in Schaumburg, Illinois. Conversely, we ceasedmanagement of the Heidel House Resort & Spa in Green Lake, Wisconsin and theSheraton Chapel Hill Hotel in Chapel Hill, North Carolina during fiscal 2019,partially offsetting the impact of the new contract. In addition, early in ourfiscal 2020 second quarter, we ceased management of the Hilton Garden InnHouston NW/Willowbrook in Houston, Texas and early in our fiscal 2020 thirdquarter, we ceased management of the Murieta Inn and Spa. As of the date ofthis filing, our current portfolio of hotels and resorts includes 18 owned andmanaged properties across the country.As discussed in the "Current Plans" section of this MD&A, although we willprioritize our own finances, we will consider a number of potential growthopportunities that may impact fiscal 2021 and future period operating results.In addition, if we were to sell one or more hotels during fiscal 2021, ourfiscal 2021 operating results could be significantly impacted. The extent of anysuch impact will likely depend upon the timing and nature of the growthopportunity (pure management contract, management contract with equity, jointventure investment, or other opportunity) or divestiture (management retained,equity interest retained, etc.).During our fiscal 2020 first quarter, Michael R. Evans joined us as the newpresident of Marcus Hotels & Resorts. Mr. Evans is a proven lodging industryexecutive with more than 20 years of experience in the hospitality industry withcompanies such as Marriott International, Inc. and MGM Resorts International. Webelieve that Mr. Evans' proven development, operating and leadership experienceand strong roots in the hospitality industry make him extremely qualified tobuild on our hotels and resorts division's long history of success. Prior to Mr.Evans joining us, Greg Marcus, our president and chief executive officer, hadassumed operational oversight of this division and served as acting-president ofour hotels and resorts division during fiscal 2019, supported by a strong andexperienced senior leadership team. 46

Liquidity and Capital Resources

Liquidity

Our movie theatre and hotels and resorts businesses, when open and operatingnormally, each generate significant and consistent daily amounts of cash,because each segment's revenue is derived predominantly from consumer cashpurchases. Under normal circ*mstances, we believe that these relativelyconsistent and predictable cash sources, as well as the availability of unusedcredit lines, would be adequate to support the ongoing operational liquidityneeds of our businesses. A detailed description of our liquidity situation asof December 31, 2020 is described in detail above in the "Impact of the COVID-19Pandemic" section of this MD&A.

Credit Agreement

On January 9, 2020, we entered into the Credit Agreement with several banks,including JPMorgan Chase Bank, N.A., as Administrative Agent, and U.S. BankNational Association, as Syndication Agent. On April 29, 2020, we entered intothe First Amendment, and on September 15, 2020 we entered into the SecondAmendment. The Second Amendment became effective on September 22, 2020.The Credit Agreement provides for a revolving credit facility that matures onJanuary 9, 2025 with an initial maximum aggregate amount of availability of $225million. We may request an increase in the aggregate amount of availabilityunder the Credit Agreement by an aggregate amount of up to $125 million byincreasing the revolving credit facility or adding one or more tranches of termloans. Our ability to increase availability under the Credit Agreement issubject to certain conditions, including, among other things, the absence of anydefault or event of default or material adverse effect under the CreditAgreement. On January 9, 2020, we borrowed $68 million under the revolvingcredit facility to refinance the outstanding balance under our then-existingcredit facility and to pay certain fees and expenses incurred in connection withthe closing of the Credit Agreement. In conjunction with the First Amendment, wealso have an initial $90.8 million term loan facility that matures on September22, 2021 (the maturity date was extended in conjunction with the SecondAmendment). We used borrowings under the term loan facility to pay downrevolving loans, to pay costs and expenses related to the First Amendment, andfor general corporate purposes.Borrowings under the Credit Agreement generally bear interest at a variable rateequal to: (i) LIBOR, subject to a 1% floor, plus a specified margin based uponour consolidated debt-to-capitalization ratio as of the most recentdetermination date; or (ii) the base rate (which is the highest of (a) the primerate, (b) the greater of the federal funds rate and the overnight bank fundingrate plus 0.50% or (c) the sum of 1% plus one-month LIBOR), subject to a 1%floor, plus a specified margin based upon our consolidateddebt-to-capitalization ratio as of the most recent determination date. Inaddition, the Credit Agreement generally requires us to pay a facility fee equalto 0.125% to 0.25% of the total revolving commitment, depending on ourconsolidated debt-to-capitalization ratio, as defined in the Credit Agreement.However, pursuant to the First Amendment and the Second Amendment: (A) inrespect of revolving loans, (1) we are charged a facility fee equal to 0.40% ofthe total revolving credit facility commitment and (2) the specified margin is2.35% for LIBOR borrowings and 1.35% for ABR borrowings, which facility fee rateand specified margins will remain in effect until the end of the first fiscalquarter ending after the end of any period in which any portion of the term loanfacility remains outstanding or the testing of any financial covenant in theCredit Agreement is suspended (the "specified period"); and (B) in respect ofterm loans, the specified margin is 2.75% for LIBOR borrowings and 1.75% for ABRborrowings, in each case, at all times. 47The Credit Agreement contains various restrictions and covenants applicable tous and certain of our subsidiaries. Among other requirements, the CreditAgreement (a) limits the amount of priority debt (as defined in the CreditAgreement) held by our restricted subsidiaries to no more than 20% of ourconsolidated total capitalization (as defined in the Credit Agreement), (b)limits our permissible consolidated debt-to-capitalization ratio to a maximum of0.55 to 1.0, (c) requires us to maintain a consolidated fixed charge coverageratio of at least 3.0 to 1.0 as of the end of the fiscal quarter endingSeptember 29, 2022 and each fiscal quarter thereafter, (d) restricts our abilityand certain of our subsidiaries' ability to incur additional indebtedness, paydividends and other distributions (the restriction on dividends and otherdistributions does not apply to subsidiaries), and make voluntary prepayments onor defeasance of our 4.02% Senior Notes due August 2025, 4.32% Senior Notes dueFebruary 2027, the notes or certain other convertible securities, (e) requiresour consolidated EBITDA not to be less than or equal to (i) $0 as of September30, 2021 for the fiscal quarter then ending, (ii) $20 million as of December 30,2021 for the two consecutive fiscal quarters then ending, (iii) $35 million asof March 31, 2022 for the three consecutive fiscal quarters then ending or (iv)$60 million as of June 30, 2022 for the four consecutive fiscal quarters thenending, (f) requires our consolidated liquidity not to be less than or equal to(i) $125 million as of September 24, 2020, (ii) $125 million as of December 31,2020, (iii) $100 million as of April 1, 2021, (iv) $100 million as of July 1,2021, or (v) $50 million as of the end of any fiscal quarter thereafter untiland including the fiscal quarter ending June 30, 2022; however, each suchrequired minimum amount of consolidated liquidity would be reduced to $50million for each such testing date if the initial term loans are paid in full asof such date, and (g) prohibits us and certain of our subsidiaries fromincurring or making capital expenditures, in the aggregate for us and suchsubsidiaries, (i) during the period beginning on April 1, 2020 through andincluding December 31, 2020 in excess of the sum of $22.5 million plus certainadjustments, or (ii) during our 2021 fiscal year in excess of $50 million pluscertain adjustments.Pursuant to the Credit Agreement, we are required to apply net cash proceedsreceived from certain events, including certain asset dispositions, casualtylosses, condemnations, equity issuances, capital contributions, and theincurrence of certain debt, to prepay outstanding term loans. In addition, if,at any time during the specified period, we and certain of our subsidiaries'aggregate unrestricted cash on hand exceeds $75 million, the Credit Agreementrequires us to prepay revolving loans under the Credit Agreement by the amountof such excess, without a corresponding reduction in the revolving commitmentsunder the Credit Agreement.In connection with the Credit Agreement: (i) we and certain of our subsidiarieshave pledged, subject to certain exceptions, security interests and liens in andon (a) substantially all of their respective personal property assets and (b)certain of their respective real property assets, in each case, to secure theCredit Agreement and related obligations; and (ii) certain of our subsidiarieshave guaranteed our obligations under the Credit Agreement. The foregoingsecurity interests, liens and guaranties will remain in effect until theCollateral Release Date (as defined in the Credit Agreement).The Credit Agreement contains customary events of default. If an event ofdefault under the Credit Agreement occurs and is continuing, then, among otherthings, the lenders may declare any outstanding obligations under the CreditAgreement to be immediately due and payable and exercise rights and remediesagainst the pledged collateral.

4.02% Senior Notes and 4.32% Senior Notes

On June 27, 2013, we entered into a Note Purchase Agreement (the "4.02% SeniorNotes Agreement") with the several purchasers party to the 4.02% Senior NotesAgreement, pursuant to which we issued and sold $50 million in aggregateprincipal amount of our 4.02% Senior Notes due August 14, 2025 (the "4.02%Notes") in a private placement exempt from the registration requirements of theSecurities Act of 1933, as amended (the "Securities Act"). We used the netproceeds from the issuance and sale of the 4.02% Notes to reduce existingborrowings under our revolving credit facility and for general corporatepurposes. On December 21, 2016, we entered into a Note Purchase Agreement (the"4.32% Senior Notes Agreement") with the several purchasers party to the 4.32%Senior Notes Agreement, pursuant to which we issued and sold $50 million inaggregate principal amount of our 4.32% Senior Notes due February 22, 2027 (the"4.32% Notes" and, together with the 4.02% Notes, the "Notes") in a privateplacement exempt from the registration requirements of the Securities Act. Weused the net proceeds of the sale of the 4.32% Notes to repay outstandingindebtedness and for general corporate purposes.On September 15, 2020 we entered into an amendment to the 4.02% Senior NotesAgreement (the "4.02% Third Amendment" and the 4.02% Senior Notes Agreement, aspreviously amended and as amended by the 4.02% Third Amendment, the "Amended4.02% Senior Notes Agreement"). The modifications of the 4.02% Senior NotesAgreement under the 4.02% Third Amendment became effective on September 22,2020. On September 15, 2020 we entered into an amendment to the 4.32% SeniorNotes Agreement (the "4.32% Third Amendment" and the 4.32% Senior NotesAgreement, as previously amended and as amended by the 4.32% Third Amendment,the "Amended 4.32% Senior Notes Agreement" and, together with the Amended 4.02%Senior Notes Agreement, the "Amended Senior Notes Agreements"). Themodifications of the 4.32% Senior Notes Agreement under the 4.32% ThirdAmendment became effective on September 22, 2020. 48Interest on the 4.02% Notes is payable semi-annually in arrears on the 14th dayof February and August in each year and at maturity. Interest on the 4.32% Notesis payable semi-annually in arrears on the 22nd day of February and August ineach year and at maturity. Beginning on August 14, 2021 and on the 14th day ofAugust each year thereafter to and including August 14, 2024, we will berequired to prepay $10 million of the principal amount of the 4.02% Notes.Additionally, we may make optional prepayments at any time upon prior notice ofall or part of the Notes, subject to the payment of a make-whole amount (asdefined in the Amended Senior Notes Agreements, as applicable). Furthermore,until the last day of the first fiscal quarter ending after the CollateralRelease Date (as defined in the Amended Senior Notes Agreements, as applicable),we are required to pay a fee to each Note holder in an amount equal to 0.975% ofthe aggregate principal amount of Notes held by such holder. Such fee is payablequarterly (0.24375% of the aggregate principal amount of the Notes per quarter).The entire outstanding principal balance of the 4.32% Notes will be due andpayable on February 22, 2027. The entire unpaid principal balance of the 4.02%Notes will be due and payable on August 14, 2025. The Notes rank pari passu inright of payment with all of our other senior unsecured debt.The Amended Senior Notes Agreements contain various restrictions and covenantsapplicable to us and certain of our subsidiaries. Among other requirements, theAmended Senior Notes Agreements (a) limit the amount of priority debt held by usor by our restricted subsidiaries to 20% of our consolidated totalcapitalization, (b) limit our permissible consolidated debt to 65% of ourconsolidated total capitalization, (c) require us to maintain a consolidatedfixed charge coverage ratio of at least 2.5 to 1.0 as of the end of the fiscalquarter ending September 29, 2022 and each fiscal quarter thereafter, (d)require our consolidated EBITDA not to be less than or equal to (i) $0 as ofSeptember 30, 2021 for the fiscal quarter then ending, (ii) $20 million as ofDecember 30, 2021 for the two consecutive fiscal quarters then ending, (iii) $35million as of March 31, 2022 for the three consecutive fiscal quarters thenending or (iv) $60 million as of June 30, 2022 for the four consecutive fiscalquarters then ending, (e) require our consolidated liquidity not to be less thanor equal to (i) $125 million as of September 24, 2020, (ii) $125 million as ofDecember 31, 2020, (iii) $100 million as of April 1, 2021, (iv) $100 million asof July 1, 2021, or (v) $50 million as of the end of any fiscal quarterthereafter until and including the fiscal quarter ending June 30, 2022; however,each such required minimum amount of consolidated liquidity would be reduced to$50 million for each such testing date if the initial term loans under theCredit Agreement are paid in full as of such date, and (f) prohibit us andcertain of our subsidiaries from incurring or making capital expenditures, inthe aggregate for us and such subsidiaries, (i) during the period beginning onApril 1, 2020 through and including December 31, 2020 in excess of the sum of$22.5 million plus certain adjustments, or (ii) during our 2021 fiscal year inexcess of $50 million plus certain adjustments.In connection with the Amended Senior Notes Agreements: (i) we and certain ofour subsidiaries have pledged, subject to certain exceptions, security interestsand liens in and on (a) substantially all of their respective personal propertyassets and (b) certain of their respective real property assets, in each case,to secure the Notes and related obligations; and (ii) certain subsidiaries ofours have guaranteed our obligations under the Amended Senior Notes Agreementsand the Notes. The foregoing security interests, liens and guaranties willremain in effect until the Collateral Release Date.The Amended Senior Notes Agreements also contain customary events of default. Ifan event of default under the Amended Senior Notes Agreements occurs and iscontinuing, then, among other things, the purchasers may declare any outstandingobligations under the Amended Senior Notes Agreements and the Notes to beimmediately due and payable and the Note holders may exercise their rights andremedies against the pledged collateral. 49

Convertible Notes

On September 17, 2020, we entered into a purchase agreement (the "PurchaseAgreement") with J.P. Morgan Securities LLC, as representative of the severalinitial purchasers (the "Initial Purchasers"), to issue and sell $100.05 millionaggregate principal amount of our 5.00% Convertible Senior Notes due 2025 (the"Convertible Notes") of which an aggregate principal amount of $13.05 million ofNotes was issued pursuant to the exercise by the Initial Purchasers of theiroption to purchase additional Convertible Notes. We offered and sold theConvertible Notes to the Initial Purchasers in reliance on the exemption fromregistration provided by Section 4(a) (2) of the Securities Act, and for resaleby the Initial Purchasers to persons reasonably believed to be qualifiedinstitutional buyers pursuant to the exemption from registration provided byRule 144A under the Securities Act. We relied on these exemptions fromregistration based in part on representations made by the Initial Purchasers inthe Purchase Agreement. The shares of the Company's common stock, par value$1.00 per share (the "Common Stock"), issuable upon conversion of theConvertible Notes, if any, have not been registered under the Securities Act andmay not be offered or sold in the United States absent registration or anapplicable exemption from registration requirements. To the extent that anyshares of the Common Stock are issued upon conversion of the Convertible Notes,they will be issued in transactions anticipated to be exempt from registrationunder the Securities Act by virtue of Section 3(a)(9) thereof because nocommission or other remuneration is expected to be paid in connection withconversion of the Convertible Notes and any resulting issuance of shares of theCommon Stock. The Purchase Agreement includes customary representations,warranties and covenants by us and customary closing conditions. Under the termsof the Purchase Agreement, we agreed to indemnify the Initial Purchasers againstcertain liabilities.The Convertible Notes were issued pursuant to an indenture (the "Indenture"),dated September 22, 2020, between our company and U.S. Bank NationalAssociation, as trustee. The net proceeds from the sale of the Convertible Noteswere approximately $78.6 million (after deducting the Initial Purchasers' feesand our estimated fees and expenses related to the offering and the cost of thecapped call transactions). We used approximately $16.9 million of net proceedsfrom the offering to pay the cost of the Capped Call Transactions (as definedbelow). We used the remainder of the net proceeds from the offering to repayborrowings under our revolving credit facility and for general corporatepurposes. The Convertible Notes are senior unsecured obligations and rank (i)senior in right of payment to any of our indebtedness that is expresslysubordinated in right of payment to the Convertible Notes; (ii) equal in rightof payment to any of our unsecured indebtedness that is not so subordinated;(iii) effectively junior in right of payment to any of our secured indebtednessto the extent of the value of the assets securing such indebtedness; and (iv)structurally junior to all indebtedness and other liabilities (including tradepayables) of our subsidiaries.The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00%per year. Interest will be payable semiannually in arrears on March 15 andSeptember 15 of each year, beginning on March 15, 2021. The Convertible Notesmay bear additional interest under specified circ*mstances relating to ourfailure to comply with our reporting obligations under the Indenture or if theConvertible Notes are not freely tradeable as required by the Indenture. TheConvertible Notes will mature on September 15, 2025, unless earlier repurchasedor converted. Prior to March 15, 2025, the Convertible Notes will be convertibleat the option of the holders only under the following circ*mstances: (i) duringany fiscal quarter commencing after the fiscal quarter ending on December 31,2020 (and only during such fiscal quarter), if the last reported sale price ofthe Common Stock for at least 20 trading days (whether or not consecutive)during a period of 30 consecutive trading days ending on, and including, thelast trading day of the immediately preceding fiscal quarter is greater than orequal to 130% of the conversion price on each applicable trading day; (ii)during the five business day period immediately after any five consecutivetrading day period, or the measurement period, in which the trading price per$1,000 principal amount of the Convertible Notes for each trading day of themeasurement period was less than 98% of the product of the last reported saleprice of the Common Stock and the conversion rate on each such trading day; or(iii) upon the occurrence of specified corporate events. On or after March 15,2025, the Convertible Notes will be convertible at the option of the holders atany time until the close of business on the second scheduled trading dayimmediately preceding the maturity date. 50Upon conversion, the Convertible Notes may be settled, at our election, in cash,shares of Common Stock or a combination thereof. The initial conversion rate is90.8038 shares of Common Stock per $1,000 principal amount of the ConvertibleNotes (equivalent to an initial conversion price of approximately $11.01 pershare of Common Stock), representing an initial conversion premium ofapproximately 22.5% to the $8.99 last reported sale price of the Common Stock onThe New York Stock Exchange on September 17, 2020. If we undergo certainfundamental changes, holders of Convertible Notes may require us to repurchasefor cash all or part of their Convertible Notes for a purchase price equal to100% of the principal amount of the Convertible Notes to be repurchased, plusaccrued and unpaid interest to, but excluding, the fundamental change repurchasedate. In addition, if a make-whole fundamental change occurs prior to thematurity date, we will, under certain circ*mstances, increase the conversionrate for holders who convert Convertible Notes in connection with suchmake-whole fundamental change. We may not redeem the Convertible Notes beforematurity and no "sinking fund" is provided for the Convertible Notes. TheIndenture includes covenants customary for securities similar to the ConvertibleNotes, sets forth certain events of default after which the Convertible Notesmay be declared immediately due and payable and sets forth certain types ofbankruptcy or insolvency events of default involving our company and certain ofour subsidiaries after which the Convertible Notes become automatically due

andpayable.Capped Call TransactionsIn connection with the pricing of the Convertible Notes on September 17, 2020,and in connection with the exercise by the Initial Purchasers of their option topurchase additional Convertible Notes on September 18, 2020, we entered intoprivately negotiated Capped Call Transactions (the "Capped Call Transactions")with certain of the Initial Purchasers and/or their respective affiliates and/orother financial institutions (the "Capped Call Counterparties"). The Capped CallTransactions are expected generally to reduce potential dilution of our commonstock upon any conversion of the Convertible Notes and/or offset any cashpayments we are required to make in excess of the principal amount of suchconverted Convertible Notes, as the case may be, in the event that the marketprice per share or our common stock, as measured under the terms of the CappedCall Transactions, is greater than the strike price of the Capped CallTransactions, which initially corresponds to the conversion price of theConvertible Notes and is subject to anti-dilution adjustments substantiallysimilar to those applicable to the conversion rate of the Convertible Notes. If, however, the market price per share of our common stock, as measured underthe terms of the Capped Call Transactions, exceeds the cap price of the CappedCall Transactions, there would nevertheless be dilution to the extent that suchmarket price exceeds the cap price of the Capped Call Transactions. The capprice of the Capped Call Transactions will initially be $17.98 per share (in noevent shall the cap price be less than the strike price of $11.0128), whichrepresents a premium of 100% over the last reported sale price of the CommonStock of $8.99 per share on The New York Stock Exchange on September 17, 2020,and is subject to certain adjustments under the terms of the Capped CallTransactions. The Capped Call Transactions are separate transactions enteredinto by us with the Capped Call Counterparties, are not part of the terms of theConvertible Notes and will not change the rights of holders of the ConvertibleNotes under the Convertible Notes and the Indenture.

Summary

Our long-term debt has scheduled annual principal payments, net of amortizationof debt issuance costs, of $10.5 million and $10.9 million in fiscal 2021 andfiscal 2022, respectively. We believe that the actions that have been taken willallow us to have sufficient liquidity to meet our obligations as they come dueand to comply with our debt covenants for at least 12 months from the issuancedate of the consolidated financial statements. However, future compliance withour debt covenants could be impacted if we are unable to resume operations ascurrently expected, which could be impacted by matters that are not entirely inour control, such as the continuation of protective actions that federal, stateand local governments have taken and the timing of new movie releases (asdescribed in the Impact of the COVID-19 Pandemic section of this MD&A). Futurecompliance with our debt covenants could also be impacted if the speed ofrecovery of our theatres and hotels and resorts businesses is slower thancurrently expected. For example, our current expectations are that our theatredivision will significantly underperform during our fiscal 2021 first quartercompared to the prior year, improve during the fiscal 2021 second quarter (butstill report results materially below the prior year), before beginning toprogressively return to closer-to-normal performance during the second half offiscal 2021. Our current expectations for our hotels and resorts division arethat we will continue to significantly underperform during our fiscal 2021 firstquarter compared to the prior year, before beginning to show improvement in eachsucceeding quarter compared to our current state. We do not expect to return topre-COVID-19 occupancy levels during fiscal 2021. Even if one or both of ourdivisions progressively return to closer-to-normal performance and operations inthe second half of fiscal 2021, it is possible that the impact of COVID-19 maybe greater than currently expected across one or both of our divisions such thatwe may be unable to comply with our debt covenants. In such an event, we wouldeither seek covenant waivers or attempt to amend our covenants, though there isno certainty that we would be successful in such efforts. 51

Financial Condition

Fiscal 2020 versus Fiscal 2019

Net cash used in operating activities totaled $68.6 million during fiscal 2020,compared to net cash provided by operating activities of $141.5 million duringfiscal 2019, a decrease of $210.1 million. The decrease in net cash provided byoperating activities in fiscal 2020 was due primarily to reduced net earningsand the unfavorable timing in the payment of accounts payable and accruedcompensation, partially offset by the favorable timing in the collection ofaccounts receivable.Net cash used in investing activities during fiscal 2020 totaled $12.1 millioncompared to $93.9 million during fiscal 2019, a decrease of $81.8 million, or87.1%. The decrease in net cash used in investing activities was primarily theresult of the $30.3 million cash consideration in the Movie Tavern Acquisitionduring fiscal 2019 and the fact that we have significantly reduced our capitalexpenditures during fiscal 2020 due to the impact of the COVID-19 pandemic.Proceeds received from disposals of property, equipment and other assets and thesale of trading securities also contributed to our decrease in net cash used ininvesting activities during fiscal 2020. We did not incur anyacquisition-related capital expenditures during fiscal 2020.Total cash capital expenditures (including normal continuing capital maintenanceand renovation projects) totaled $21.4 million during fiscal 2020 compared to$64.1 million during fiscal 2019, a decrease of $42.7 million, or 66.7%. Weincurred capital expenditures of approximately $1.8 million during fiscal 2020related to development costs of a proposed new theatre (as described above, wehave subsequently abandoned plans to build this theatre) . We incurred capitalexpenditures of approximately $3.3 million during fiscal 2019 related todevelopment costs of one new theatre that opened during fiscal 2019. We did notincur any capital expenditures related to developing new hotels during eitherperiod. We incurred approximately $15.8 million and $31.5 million, respectively,of capital expenditures during fiscal 2020 and fiscal 2019 in our theatredivision, including the aforementioned costs associated with constructing a newtheatre, as well as costs associated with the addition of DreamLounger reclinerseating, our Take Five Lounge and Zaffiro's Express and food and beverageconcepts, and UltraScreen DLX and SuperScreen DLX premium large format screensat selected theatres, each as described in the "Current Plans" section of thisMD&A. We incurred approximately $4.7 million of capital expenditures in ourhotels and resorts division during fiscal 2020, consisting primarily ofmaintenance capital projects at our company-owned hotels and resorts. We alsoincurred capital expenditures in our hotels and resorts division during fiscal2019 of approximately $31.8 million, consisting primarily of costs associatedwith the conversion of the InterContinental Milwaukee into the Saint Kate andrenovation of the Hilton Madison Monona Terrace, as well as normal maintenancecapital projects at our other properties. Our current estimated fiscal 2021 cashcapital expenditures, which we anticipate may be in the $15-$25 million range,are described in greater detail in the "Current Plans" section of this MD&A.Net cash provided by financing activities during fiscal 2020 totaled $69.1million, compared to net cash used in financing activities of $43.8 millionduring fiscal 2019. As described above, we drew down on the full amountavailable under our revolving credit facility during the first quarter of fiscal2020 (after taking into consideration outstanding letters of credit that reducerevolver availability). As also described above, we incurred $90.8 million ofnew short-term borrowings early in our fiscal 2020 second quarter and issued$100.05 million in convertible notes in our fiscal 2020 third quarter, themajority of which was used to repay existing borrowings under our revolvingcredit facility. Net cash provided by financing activities during fiscal 2020was reduced by $16.9 million of Capped Call Transactions described above. As aresult, we added $221.5 million of new short-term revolving credit facilityborrowings, and we made $302.5 million of repayments on short-term revolvingcredit facility borrowings during fiscal 2020 (net decrease in borrowings on ourcredit facility of $81.0 million).We did not issue any new long-term debt during fiscal 2019. We used excess cashduring fiscal 2019 to reduce our borrowings under our revolving credit facility.As short-term revolving credit facility borrowings became due, we replaced themas necessary with new short-term revolving credit facility borrowings. Duringfiscal 2019, we also used borrowings from our revolving credit facility to fundthe cash consideration in the Movie Tavern Acquisition. As a result, we added$335.0 million of new short-term revolving credit facility borrowings and wemade $333.0 million of repayments on short-term revolving credit facilityborrowings during fiscal 2019 (net increase in borrowings on our credit facilityof $2.0 million).As described in the Hotels and Resorts section of this MD&A, we received PPPloan proceeds during the second quarter of fiscal 2020, the majority of whichwere used for qualifying expenses during the second quarter that we believe willresult in forgiveness of the loan under provisions of the CARES Act. Approximately $3.4 million of the PPP loan proceeds were not used forqualifying expenses as of December 31, 2020 and contributed to the increase innet cash provided by financing activities during fiscal 2020 compared to theprior year. 52Principal payments on long-term debt were $9.4 million during fiscal 2020 andincluded a $9.0 million final payment on senior notes that matured in April2020. Principal payments on long-term debt were $24.6 million during fiscal2019 and included the repayment of a $14.6 million mortgage note on a hotel. Weincurred $7.6 million in debt issuance costs during fiscal 2020. We did notincur any debt issuance costs during fiscal 2019.Our debt-to-capitalization ratio (including short-term borrowings and excludingour finance lease obligations) was 0.37 at December 31, 2020 compared to 0.26 atDecember 26, 2019. Based upon our current expectations for our fiscal 2021operating results and capital expenditures, we anticipate that our totallong-term debt and debt-to-capitalization ratio may modestly increase duringfiscal 2021. Our actual total long-term debt and debt-to-capitalization ratio atthe end of fiscal 2021 are dependent upon, among other things, our actualoperating results, capital expenditures, asset sales proceeds and potentialequity transactions during the year.We repurchased approximately 38,000 shares of our common stock for approximately$696,000 and 30,000 shares of our common stock for approximately $1.1 million,respectively, during fiscal 2020 and fiscal 2019 in conjunction with theexercise of stock options. As of December 31, 2020, approximately 2.7 millionshares of our common stock remained available for repurchase under prior Boardof Directors repurchase authorizations. Under these authorizations, we mayrepurchase shares of our common stock from time to time in the open market,pursuant to privately-negotiated transactions or otherwise, depending upon anumber of factors, including prevailing market conditions. The CreditAgreement, as amended, currently restricts our ability to repurchase shares inthe open market until such time as we have paid off the Term Loan A and returnedto compliance with our prior covenants under the Credit Agreement.In conjunction with the Movie Tavern acquisition, we issued 2,450,000 shares ofour common stock to the seller during the first quarter of fiscal 2019. Thisnon-cash transaction reduced treasury stock and increased capital in excess ofpar by the value of the shares at closing of approximately $109.2 million.We paid regular quarterly dividends totaling $5.1 million and $19.3 million,respectively, during fiscal 2020 and fiscal 2019. As described above, the CreditAgreement, as amended, required us to temporarily suspend our quarterly dividendpayments for the remainder of 2020 and first two quarters of fiscal 2021. TheCredit Agreement also limits the total amount of quarterly dividend paymentsduring the four subsequent quarters beginning with the third quarter of fiscal2021, unless the Term Loan A is repaid and we are in compliance with priorfinancial covenants under the Credit Agreement, at which point we have theability to declare quarterly dividend payments as we deem appropriate.

Contractual Obligations, Commercial Commitments and Off-Balance SheetArrangements

The following schedule details our contractual obligations at December 31, 2020(in thousands): Payments Due by Period Less Than After Total 1 Year 1-3 Years 4-5 Years 5 YearsLong-term debt $ 226,007 $ 10,548 $ 21,953 $ 135,605 $ 57,901

Interest on fixed-rate long term debt(1) 52,613 11,278 20,111 16,529 4,695Pension obligations 48,604 1,401 3,235 3,954 40,014Operating lease obligations 337,952 30,318 53,731 50,814 203,089Finance lease obligations 27,516 3,722 6,565 5,954 11,275Short-term borrowings 87,194 87,194 - - -Construction commitments 2,094 2,094 - - -Total contractual obligations $ 781,980 $ 146,555 $ 

105,595 $ 212,856 $ 316,974

Interest on variable-rate debt obligations is excluded due to significant(1) variations that may occur in each year related to the amount of variable-rate

debt and the accompanying interest rate.

Additional detail describing our long-term debt is included in Note 7 to ourconsolidated financial statements.

As of December 31, 2020, we had no additional material purchase obligationsother than those created in the ordinary course of business related to propertyand equipment, which generally have terms of less than 90 days. We had long-termobligations related to our employee benefit plans, which are discussed in detailin Note 10 to our consolidated financial statements. We have not includeduncertain tax obligations in the table of contractual obligations set forthabove due to uncertainty as to the timing of any potential payments. 53

As of December 31, 2020, we had no debt or lease guarantee obligations.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk related to changes in interest rates, and wemanage our exposure to this market risk by monitoring available financingalternatives.

Variable interest rate debt outstanding as of December 31, 2020 (includingshort-term borrowings) totaled $87.8 million ($87.2 million net of debt issuancecosts), carried an average interest rate of 3.75% and represented 27.7% of ourtotal debt portfolio. After adjusting for outstanding swap agreements describedbelow, variable interest rate debt outstanding as of December 31, 2020(including short term borrowing) totaled $37.8 million, carried an averageinterest rate of 3.75% and represented 11.9% of our total debt portfolio. Ourearnings may be affected by changes in short-term interest rates as a result ofour borrowings under our revolving credit facility. Our Credit Agreementcurrently provides for a 1.0% LIBOR floor. Based upon the interest rates ineffect on our variable rate debt outstanding as of December 31, 2020, LIBORwould need to increase by approximately 81 basis points before our annualinterest expense would be impacted. If that were to happen, an additional 100basis point increase in market interest rates above the LIBOR floor wouldincrease our annual interest expense by approximately $378,000, taking ouroutstanding swap agreements into consideration.Fixed interest rate debt totaled $229.7 million as of December 31, 2020, carriedan average interest rate of 4.9% and represented 72.3% of our total debtportfolio. After adjusting for outstanding swap agreements described below,fixed interest rate debt totaled $279.7 million as of December 31, 2020, carriedan average interest rate of 5.0% and represented 88.1% of our total debtportfolio. Fixed interest rate debt included the following: senior notes bearinginterest semiannually at fixed rates ranging from 4.02% to 4.32% (plus aspecified period fee of 0.975% described above), maturing in fiscal 2021 through2027; convertible senior notes bearing interest of 5.0%, maturing in fiscal2025, fixed rate mortgages and other debt instruments bearing interest from3.00% to 5.75%, maturing in fiscal 2025 and 2042, and PPP loans bearing interestat 1.0%, maturing in fiscal 2024. The fair value of our fixed interest rate debtis subject to interest rate risk. Generally, the fair market value of our fixedinterest rate debt will increase as interest rates fall and decrease as interestrates rise. As of December 31, 2020, the fair value of our $100.0 million ofsenior notes was approximately $100.0 million. As of December 31, 2020, thefair value of our $100.05 million of convertible senior notes was approximately$144.7 million. Based upon the respective rate and prepayment provisions of ourremaining fixed interest rate mortgage and unsecured term note at December 31,2020, the carrying amounts of such debt approximated fair value as of such date.

The variable interest rate debt (including short-term borrowings) and fixedinterest rate debt outstanding as of December 31, 2020 matures as follows (inthousands):

 F2021 F2022 F2023 F2024 F2025 Thereafter Total

Variable interest rate $ 87,194 $ - $ - $ - $ - $ - $ 87,194Fixed interest rate 11,317 11,716 11,775 11,835 125,115 57,933 229,691Debt issuance costs (769) (769) (769) (768) (577) (32) (3,684)Total debt $ 97,742 $ 10,947 $ 11,006 $ 11,067 $ 124,538 $ 57,901 $ 313,201We periodically enter into interest rate swap agreements to manage our exposureto interest rate changes. These swaps involve the exchange of fixed and variableinterest rate payments. Payments or receipts on the agreements are recorded asadjustments to interest expense.On March 1, 2018, we entered into two interest rate swap agreements covering$50.0 million of floating rate debt which require us to pay interest at adefined fixed rate while receiving interest at a defined variable rate ofone-month LIBOR. The first swap had a notional amount of $25.0 million, expiredon March 1, 2021 and had a fixed rate of 2.559%. The second swap has a notionalamount of $25.0 million, expires on March 1, 2023 and has a fixed rate of2.687%. The interest rate swaps are considered effective for accounting purposesand qualify as cash flow hedges. These swap agreements did not materially impactour fiscal 2020 earnings and we do not expect the interest rate swaps tomaterially impact our fiscal 2021 earnings.

Critical Accounting Policies and Estimates

This MD&A is based upon our consolidated financial statements, which have beenprepared in accordance with accounting principles generally accepted in theUnited States. The preparation of our financial statements requires us to makeestimates and judgments that affect our reported amounts of assets, liabilities,revenues and expenses, and related disclosure of contingent assets andliabilities. 54On an on-going basis, we evaluate our estimates associated with criticalaccounting policies. We base our estimates on historical experience and onvarious other assumptions that we believe to be reasonable under thecirc*mstances, the results of which form the basis for making judgments aboutthe carrying values of assets and liabilities that are not readily apparent fromother sources. Actual results may differ from these estimates under differentassumptions or conditions.

We believe the following critical accounting policies affect the mostsignificant judgments and estimates used in the preparation of our consolidatedfinancial statements.

We review long-lived assets, including property and equipment, operating lease

right-of-use assets and our trade name intangible asset, for impairment at

least annually, or whenever events or changes in circ*mstances indicate that

the carrying amount of any such asset may not be recoverable. Such review is

primarily done at the individual theatre or hotel property level, which

represents the lowest level for which identifiable cash flows are largely

independent of the cash flows of other asset groups. We use judgment to

determine whether indicators of impairment exist. The determination of the

occurrence of a triggering event is based upon our knowledge of the theatre and

hospitality industries, historical experience such as recent operating results,

location of the property, market conditions, recent events or transactions, and

property-specific information available at the time of the assessment. When a

triggering event occurs, judgment is also required in determining the

assumptions and estimates to use within the recoverability analysis and when

calculating the fair value of the asset if it is determined that the long-lived

asset is not recoverable. In performing these analyses, we must make

? assumptions regarding the estimated future cash flows and other factors that a

market participant would make to determine the fair value of the respective

assets. The estimate of cash flows is based upon, among other things, certain

assumptions about expected future operating performance and anticipated sales

prices. Our estimates of cash flows are sensitive to assumed revenue growth

rates and may differ from actual cash flows due to factors such as economic

conditions, the continuing impact of the COVID-19 pandemic, changes to our

business model or changes in our operating performance and anticipated sales

prices. For long-lived assets other than goodwill, if the sum of the

undiscounted estimated cash flows is less than the current carrying value, we

then prepare a fair value analysis of the asset. If the carrying value of the

asset exceeds the fair value of the asset, we recognize an impairment loss,

measured as the amount by which the carrying value exceeds the fair value of

the asset. During fiscal 2020, we recorded before-tax impairment charges

totaling $24.7 million related to our trade name intangible asset and multiple

theatre locations. During fiscal 2019, we recorded a before-tax impairment

charge of $1.9 million related to a specific theatre location. We did not

record any impairment losses during fiscal 2018.

Periodically, we make acquisitions that may have a material impact on our

consolidated financial position. Assets acquired and liabilities assumed in

acquisitions are recorded at fair value as of the acquisition date. We use

judgment to allocate the purchase price of the businesses acquired to the

identifiable tangible and intangible assets acquired and liabilities assumed.

In some cases, we may use an independent valuation firm to assist with our

valuation, and our assumptions and estimates are based upon comparable market

data and information obtained from our management and the management of the

acquired businesses using acceptable valuation techniques. Generally, tangible

? assets acquired include property and equipment, finance lease right-of-use

assets and operating lease right-of-use assets. Intangible assets acquired may

include tradename intangibles, non-compete agreements or goodwill in a business

combination. While we use our best estimates and assumptions to accurately

value assets acquired and liabilities assumed at the acquisition date, our

estimates are inherently uncertain and subject to refinement. As a result,

during the measurement period, which may be up to one year following the

acquisition date, we record adjustments to the assets acquired and liabilities

assumed with the corresponding offset to goodwill. During fiscal 2019, we

acquired the assets of Movie Tavern for a total purchase price of approximately

$139.3 million. 55 We review goodwill for impairment annually or more frequently if certain

indicators arise. We perform our annual impairment test on the last day of our

fiscal year. We believe performing the test at the end of the fiscal year is

preferable as the test is predicated on qualitative factors which are developed

and finalized near fiscal year-end. Goodwill is tested for impairment at a

reporting unit level, determined to be at an operating segment level. When

reviewing goodwill for impairment, we consider the amount of excess fair value

over the carrying value of the reporting unit, the period of time since the

last quantitative test, and other factors to determine whether or not to first

? perform a qualitative test. When performing a qualitative test, we assess

numerous factors to determine whether it is more likely than not that the fair

value of our reporting unit is less than its carrying value. Examples of

qualitative factors that we assess include our share price, our financial

performance, market and competitive factors in our industry, and other events

specific to the reporting unit. If we conclude that it is more likely than not

that the fair value of our reporting unit is less than its carrying value, we

perform a quantitative test by comparing the carrying value of the reporting

unit to the estimated fair value. Primarily all of our goodwill relates to our

theatre segment.

Due to the COVID-19 pandemic and the temporary closing of all of our theatrelocations, we determined that a triggering event occurred during the 13 weeksended March 26, 2020 and performed a quantitative analysis. In order todetermine fair value, we used assumptions based on information available to usas of March 26, 2020, including both market data and forecasted cash flows. Wethen used this information to determine fair value and determined that the fairvalue of our theatre reporting unit exceeded our carrying value by approximately20% and deemed that no impairment was indicated as of March 26, 2020. During the13 weeks ended June 25, 2020, we determined that there were no indicators ofimpairment that would require an additional quantitative analysis as of June 25,2020. Due to the ongoing impact of the COVID-19 pandemic, the continuedtemporary closing of several of our theatre locations, and a reduction in ourshare price, we determined that a triggering event occurred during the 13 weeksended September 24, 2020 and performed a quantitative analysis. In order todetermine fair value, we used assumptions based on information available to usas of September 24, 2020, including both market data and forecasted cash flows.We then used this information to determine fair value and determined that thefair value of our theatre reporting unit exceeded our carrying value byapproximately 17% and deemed that no impairment was indicated as of September24, 2020. We also performed a quantitative analysis as of December 31, 2020. Inorder to determine fair value, we used assumptions based on informationavailable to us as of December 31, 2020, including both market data andforecasted cash flows. We then used this information to determine fair value anddetermined that the fair value of our theatre reporting unit exceeded ourcarrying value by approximately 21% and deemed that no impairment was indicatedas of December 31, 2020. If we are unable to achieve our forecasted cash flow orif market conditions worsen, our goodwill could be impaired at a later date. Thefair value of our theatre reporting unit exceeded our carrying value for fiscal2019 and fiscal 2018 by a substantial amount.

When accounting for the issuance of convertible debt instruments, we separate

the convertible debt instrument into a liability component and an equity

component. The carrying amount of the liability component is calculated by

estimating the fair value using assumptions that market participants would use

in pricing a similar debt instrument of similar credit quality and maturity

that does not have an associated convertible feature, including market interest

rates. Determining the fair value of the debt component requires the use of

accounting estimates and assumptions. These estimates and assumptions are

judgmental in nature and could have a significant impact on the determination

of the debt component and the associated non-cash interest expense. The

? carrying amount of the equity component, representing the conversion option,

which does not meet the criteria for separate accounting as a derivative if it

is indexed in our own stock, is determined by deducting the fair value of the

liability component from the par value of the convertible debt instrument. The

equity component is included in capital in excess of par in the consolidated

balance sheet and is not remeasured as long as it continues to meet the

conditions for equity classification. The difference between the principal

amount of the convertible debt instrument and the liability component

represents the debt discount, which is recorded as a direct deduction from the

related debt liability and amortized to interest expense using the effective

interest method over the term of the convertible debt instrument.

In addition, debt issuance costs related to the issuance of convertible debtinstruments are allocated to the liability and equity components based on theirrelative values. Debt issuance costs allocated to the liability component areamortized over the life of the convertible debt instrument as additionalnon-cash interest expense. The transaction costs allocated to the equitycomponent are netted with the equity component of the convertible debtinstrument in stockholders' equity. 56On January 1, 2021, the first day of our fiscal 2021, we early adopted ASU No.2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) andDerivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,which eliminates the separation of the convertible debt instrument into alability component and an equity component. Refer to Note 1 of the notes to ourconsolidated financial statements included in Part II, Item 8 of this AnnualReport on Form 10-K.

Depreciation expense is based on the estimated useful life of our assets. The

life of the assets is based on a number of assumptions, including cost and

timing of capital expenditures to maintain and refurbish the asset, as well as

specific market and economic conditions. While management believes its

? estimates are reasonable, a change in the estimated lives could affect

depreciation expense and net earnings or the gain or loss on the sale of any of

the assets. During fiscal 2018, we changed the estimated lives of certain

assets at our InterContinental Milwaukee due to our decision to convert this

hotel into a new, art-themed hotel, the Saint Kate. As a result, we reported

additional depreciation of approximately $3.7 million during fiscal 2018.

Accounting ChangesFor a description of recent accounting pronouncements, Sec Note 1 of the notesto our consolidated financial statements included in Part II, Item 8 of thisannual report on Form 10K.

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