MARCUS CORP (Form: 10-Q, Received: 10/08/2013 15:16:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended August 29, 2013

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

For the transition period from __________ to __________

Commission File Number 1-12604

THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)

Wisconsin		39-1139844
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

100 East Wisconsin Avenue, Suite 1900
Milwaukee, Wisconsin		53202-4125
(Address of principal executive offices)		(Zip Code)

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

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

Yes x

No ¨

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

Yes x

No ¨

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

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

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

Yes ¨

No x

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

COMMON STOCK OUTSTANDING AT SEPTEMBER 30, 2013 – 18,296,251

CLASS B COMMON STOCK OUTSTANDING AT SEPTEMBER 30, 2013 – 8,757,039

THE MARCUS CORPORATION

INDEX

PART I – FINANCIAL INFORMATION		Page

Item 1.	Consolidated Financial Statements:

	Consolidated Balance Sheets
	(August 29, 2013 and May 30, 2013)	3

	Consolidated Statements of Earnings
	(13 weeks ended August 29, 2013 and August 30, 2012)	5

	Consolidated Statements of Comprehensive Income
	(13 weeks ended August 29, 2013 and August 30, 2012)	6

	Consolidated Statements of Cash Flows
	(13 weeks ended August 29, 2013 and August 30, 2012)	7

	Condensed Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II – OTHER INFORMATION

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 4.	Mine Safety Disclosures	24

Item 6.	Exhibits	25

	Signatures	S-1

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

THE MARCUS CORPORATION

Consolidated Balance Sheets

	August 29,		May 30,
(in thousands, except share and per share data)	2013		2013

ASSETS
Current assets:
Cash and cash equivalents	$	12,214	$	10,158
Restricted cash		6,891		7,895
Accounts and notes receivable, net of reserves
of $1,330 and $1,324, respectively		11,712		8,568
Refundable income taxes		─		255
Deferred income taxes		2,895		2,877
Other current assets		6,717		6,384
Total current assets		40,429		36,137

Property and equipment:
Land and improvements		95,253		95,295
Buildings and improvements		578,164		575,166
Leasehold improvements		61,871		61,726
Furniture, fixtures and equipment		253,581		250,203
Construction in progress		11,722		11,414
Total property and equipment		1,000,591		993,804
Less accumulated depreciation and amortization		377,286		368,047
Net property and equipment		623,305		625,757

Other assets:
Investments in joint ventures		3,022		2,713
Goodwill		43,963		43,997
Condominium units		3,508		3,508
Other		35,071		34,584
Total other assets		85,564		84,802

TOTAL ASSETS	$	749,298	$	746,696

See accompanying condensed notes to consolidated financial statements.

THE MARCUS CORPORATION

Consolidated Balance Sheets

	August 29,			May 30,
(in thousands, except share and per share data)	2013			2013

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	19,636		$	25,330
Income taxes		8,223			─
Taxes other than income taxes		13,638			14,000
Accrued compensation		7,839			10,940
Other accrued liabilities		27,423			25,183
Current portion of capital lease obligation		4,636			4,562
Current maturities of long-term debt		32,084			11,193
Total current liabilities		113,479			91,208

Capital lease obligation		27,076			28,241

Long-term debt		202,801			231,580

Deferred income taxes		43,330			43,516

Deferred compensation and other		36,003			35,455

Equity:
Shareholders’ equity attributable to The Marcus Corporation
Preferred Stock, $1 par; authorized 1,000,000 shares;
none issued		─			─
Common Stock, $1 par; authorized 50,000,000 shares;
issued 22,432,474 shares at August 29, 2013 and
May 30, 2013		22,433			22,433
Class B Common Stock, $1 par; authorized 33,000,000
shares; issued and outstanding 8,757,039 shares at
August 29, 2013 and May 30, 2013		8,757			8,757
Capital in excess of par		52,256			51,979
Retained earnings		289,734			278,536
Accumulated other comprehensive loss		(3,561	)		(3,828	)
		369,619			357,877
Less cost of Common Stock in treasury (4,112,386 shares at
August 29, 2013 and 4,117,217 shares at May 30, 2013)		(51,359	)		(51,175	)
Total shareholders' equity attributable to The Marcus Corporation		318,260			306,702
Noncontrolling interests		8,349			9,994
Total equity		326,609			316,696

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	749,298		$	746,696

See accompanying condensed notes to consolidated financial statements.

THE MARCUS CORPORATION

Consolidated Statements of Earnings

(in thousands, except per share data)	13 Weeks Ended
	August 29, 2013			August 30, 2012
Revenues:
Theatre admissions	$	42,109		$	38,478
Rooms		32,570			29,964
Theatre concessions		23,689			20,979
Food and beverage		15,530			14,769
Other revenues		15,134			13,749
Total revenues		129,032			117,939

Costs and expenses:
Theatre operations		34,623			32,566
Rooms		10,692			9,857
Theatre concessions		6,138			5,557
Food and beverage		11,546			10,729
Advertising and marketing		6,884			6,405
Administrative		12,244			10,762
Depreciation and amortization		8,327			8,313
Rent		2,125			2,113
Property taxes		3,422			3,635
Other operating expenses		8,684			7,547
Total costs and expenses		104,685			97,484

Operating income		24,347			20,455

Other income (expense):
Investment income		3			24
Interest expense		(2,394	)		(2,074	)
Gain on disposition of property, equipment and other assets		17			22
Equity losses from unconsolidated joint ventures, net		(83	)		(40	)
		(2,457	)		(2,068	)

Earnings before income taxes		21,890			18,387
Income taxes		9,044			7,708
Net earnings		12,846			10,679
Net loss attributable to noncontrolling interests		(585	)		-
Net earnings attributable to The Marcus Corporation	$	13,431		$	10,679

Net earnings per share – basic:
Common Stock	$	0.51		$	0.38
Class B Common Stock	$	0.47		$	0.35

Net earnings per share – diluted:
Common Stock	$	0.50		$	0.37
Class B Common Stock	$	0.46		$	0.34

Dividends per share:
Common Stock	$	0.085		$	0.085
Class B Common Stock	$	0.077		$	0.077

See accompanying condensed notes to consolidated financial statements.

THE MARCUS CORPORATION

Consolidated Statements of Comprehensive Income

(in thousands except per share data)	13 Weeks Ended
	August 29, 2013			August 30, 2012

Net earnings	$	12,846		$	10,679

Other comprehensive income (loss):
Change in unrealized loss on available for sale investments, net of tax benefit of $1 and $0, respectively		(1	)		─
Amortization of loss on swap agreement, net of tax effect of $0 and $11, respectively		─			17
Change in fair value of interest rate swap, net of tax effect of $176 and $0, respectively		268			─

Other comprehensive income		267			17

Comprehensive income		13,113			10,696

Comprehensive loss attributable to noncontrolling interests		(585	)		─

Comprehensive income attributable to The Marcus Corporation	$	13,698		$	10,696

See accompanying condensed notes to consolidated financial statements.

THE MARCUS CORPORATION

Consolidated Statements of Cash Flows

	13 Weeks Ended
(in thousands)	August 29, 2013			August 30, 2012

OPERATING ACTIVITIES:
Net earnings	$	12,846		$	10,679
Adjustments to reconcile net earnings to net cash provided by operating activities:
Losses on investments in joint ventures		83			40
Distribution from joint venture		─			94
Gain on disposition of property, equipment and other assets		(17	)		(22	)
Amortization of loss on swap agreement		─			28
Amortization of favorable lease right		83			83
Depreciation and amortization		8,327			8,313
Stock compensation expense		386			574
Deferred income taxes		(345	)		(634	)
Deferred compensation and other		499			(1,369	)
Changes in operating assets and liabilities:
Accounts and notes receivable		(3,140	)		(2,076	)
Other current assets		(333	)		(939	)
Accounts payable		(3,914	)		(3,013	)
Income taxes		8,478			7,280
Taxes other than income taxes		(362	)		(350	)
Accrued compensation		(3,101	)		(5,208	)
Other accrued liabilities		2,240			1,641
Total adjustments		8,884			4,442
Net cash provided by operating activities		21,730			15,121

INVESTING ACTIVITIES:
Capital expenditures		(8,724	)		(5,292	)
Proceeds from disposals of property, equipment and other assets		115			27
Decrease (increase) in restricted cash		1,004			(283	)
Decrease (increase) in other assets		24			(59	)
Contribution to joint venture		(343	)		─
Net cash used in investing activities		(7,924	)		(5,607	)

FINANCING ACTIVITIES:
Debt transactions:
Proceeds from issuance of long-term debt		64,500			32,000
Principal payments on long-term debt		(72,388	)		(37,176	)
Debt issuance costs		(276	)		─
Equity transactions:
Treasury stock transactions, except for stock options		(554	)		(1,217	)
Exercise of stock options		261			892
Dividends paid		(2,233	)		(2,393	)
Distributions to noncontrolling interest		(1,060	)		─
Net cash used in financing activities		(11,750	)		(7,894	)

Net increase in cash and cash equivalents		2,056			1,620
Cash and cash equivalents at beginning of period		10,158			6,020
Cash and cash equivalents at end of period	$	12,214		$	7,640

Supplemental Information:
Interest paid, net of amounts capitalized	$	1,119		$	845
Income taxes paid	$	822		$	932

See accompanying condensed notes to consolidated financial statements.

THE MARCUS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 13 WEEKS ENDED AUGUST 29, 2013

1. General

Accounting Policies – Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended May 30, 2013, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.

Basis of Presentation – The unaudited consolidated financial statements for the 13 weeks ended August 29, 2013 have been prepared by the Company. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary to present fairly the unaudited interim financial information at August 29, 2013, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended May 30, 2013.

Depreciation and Amortization – Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled $8,207,000 and $8,259,000 for the 13 weeks ended August 29, 2013 and August 30, 2012, respectively.

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

	Swap Agreements		Available for Sale Investments			Pension Obligation			Accumulated Other Comprehensive Loss
	(in thousands)

Balance at May 30, 2013	$	18	$	(10	)	$	(3,836	)	$	(3,828	)
Other comprehensive income (loss) before reclassifications		241		(1	)		-			240
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾		27		-			-			27
Net other comprehensive income (loss)		268		(1	)		-			267
Balance at August 29, 2013	$	286	$	(11	)	$	(3,836	)	$	(3,561	)

	Swap Agreements			Available for Sale Investments			Pension Obligation			Accumulated Other Comprehensive Loss
	(in thousands)

Balance at May 31, 2012	$	(58	)	$	(8	)	$	(4,073	)	$	(4,139	)
Other comprehensive income (loss) before reclassifications		-			-			-			-
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾		17			-			-			17
Net other comprehensive income		17			-			-			17
Balance at August 30, 2012	$	(41	)	$	(8	)	$	(4,073	)	$	(4,122	)

⁽¹⁾

Amounts are included in interest expense in the consolidated statements of earnings

Earnings Per Share – Net earnings per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted net earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options using the treasury method. Convertible Class B Common Stock is reflected on an if-converted basis. The computation of the diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock, while the diluted net earnings per share of Class B Common Stock does not assume the conversion of those shares.

Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of Class B Common Stock. As such, the undistributed earnings for each period are allocated based on the proportionate share of entitled cash dividends. The computation of diluted net earnings per share of Common Stock assumes the conversion of Class B Common Stock and, as such, the undistributed earnings are equal to net earnings for that computation.

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

	13 Weeks Ended August 29, 2013		13 Weeks Ended August 30, 2012
	(in thousands, except per share data)
Numerator:
Net earnings attributable to The Marcus Corporation	$	13,431	$	10,679
Denominator:
Denominator for basic EPS		27,071		28,921
Effect of dilutive employee stock options		23		43
Denominator for diluted EPS		27,094		28,964
Net earnings per share – basic:
Common Stock	$	0.51	$	0.38
Class B Common Stock	$	0.47	$	0.35
Net earnings per share – diluted:
Common Stock	$	0.50	$	0.37
Class B Common Stock	$	0.46	$	0.34

Equity - Activity impacting total shareholders' equity attributable to The Marcus Corporation and noncontrolling interests for the 13 weeks ended August 29, 2013 was as follows:

	Total Shareholders’ Equity
	Attributable to The Marcus			Noncontrolling
	Corporation			Interests
	(in thousands)
Balance at May 30, 2013	$	306,702		$	9,994
Net earnings attributable to The Marcus Corporation		13,431			-
Net loss attributable to noncontrolling interests		-			(585	)
Distributions to noncontrolling interests		-			(1,060	)
Cash dividends		(2,233	)		-
Exercise of stock options		261			-
Treasury stock transactions, except for stock options		(554	)		-
Share-based compensation		386			-
Other comprehensive income, net of tax		267			-
Balance at August 29, 2013	$	318,260		$	8,349

Fair Value Measurements – Certain financial assets and liabilities are recorded at fair value in the consolidated financial statements. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

The Company’s assets and liabilities measured at fair value are classified in one of the following categories:

Level 1 – Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At August 29, 2013 and May 30, 2013, the Company’s $70,000 and $71,000, respectively, of available for sale securities were valued using Level 1 pricing inputs and were included in other current assets.

Level 2 – Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At August 29, 2013 and May 30, 2013, respectively, the $474,000 and $30,000 asset related to the Company’s interest rate swap contract was valued using Level 2 pricing inputs.

Level 3 – Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At August 29, 2013 and May 30, 2013, none of the Company’s fair value measurements were valued using Level 3 pricing inputs.

Defined Benefit Plan – The components of the net periodic pension cost of the Company’s unfunded nonqualified, defined-benefit plan are as follows:

	13 Weeks Ended August 29, 2013		13 Weeks Ended August 30, 2012
	(in thousands)
Service cost	$	176	$	178
Interest cost		293		275
Net amortization of prior service cost and actuarial loss		67		71
Net periodic pension cost	$	536	$	524

2. Long-Term Debt

During the first quarter of fiscal 2014, the Company entered into a note purchase agreement with several purchasers pursuant to which the Company issued and sold $50,000,000 in aggregate principal amount of its 4.02% senior notes due August 14, 2025 in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. Interest on the notes is payable semi-annually in February and August of each year and at maturity, commencing on February 14, 2014. Beginning in August 2021 and each August thereafter, to and including August 2024, the Company will be required to prepay $10,000,000 of the principal amount of the notes. The entire unpaid principal balance of the notes will be due and payable in August 2025.

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

The Company entered into an interest rate swap agreement on February 28, 2013 covering $25,000,000 of floating rate debt, which expires January 22, 2018, and requires the Company to pay interest at a defined rate of 0.96% while receiving interest at a defined variable rate of one-month LIBOR (0.19% at August 29, 2013). The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. The Company’s interest rate swap agreement is considered effective and qualifies as a cash flow hedge. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of August 29, 2013, the interest rate swap was considered effective. The increase in fair value of the interest rate swap of $444,000 ($268,000 net of tax) was included in other comprehensive loss for the 13 weeks ended August 29, 2013. The notional amount of the swap is $25,000,000 and the fair value of the swap was $474,000 and $30,000 as of August 29, 2013 and May 30, 2013, respectively, and is included in other (long-term assets). The Company does not expect the interest rate swap to have any material effect on earnings within the next 12 months.

On February 29, 2008, the Company entered into an interest rate swap agreement covering $25,000,000 of floating rate debt, which required the Company to pay interest at a defined rate of 3.49% while receiving interest at a defined variable rate of three-month LIBOR. The interest rate swap agreement was considered effective and qualified as a cash flow hedge. On March 19, 2008, the Company terminated the swap, at which time cash flow hedge accounting ceased. The fair value of the swap on the date of termination was a liability of $567,000 ($338,000 net of tax). For the 13 weeks ended August 30, 2012, the Company reclassified $28,000 ($17,000 net of tax) from accumulated other comprehensive loss to interest expense. The liability was fully amortized as of May 30, 2013.

3. Capital Lease Obligation

During fiscal 2012, the Company entered into a master licensing agreement with CDF2 Holdings, LLC, a subsidiary of Cinedigm Digital Cinema Corp (CDF2), whereby CDF2 purchased on the Company’s behalf, and then deployed and licensed back to the Company, digital cinema projection systems (the “systems”) for use by the Company in its theatres. As of August 29, 2013, 642 of the Company’s screens were utilizing the systems under a 10-year master licensing agreement with CDF2. Included in furniture, fixtures and equipment is $45,510,000 related to the digital systems as of August 29, 2013 and May 30, 2013. Accumulated amortization of the digital systems was $8,580,000 and $7,441,000 as of August 29, 2013 and May 30, 2013, respectively.

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

The Company’s capital lease obligation is being reduced as VPF’s are paid by the film distributors to CDF2. The Company has recorded the reduction of the obligation associated with the payment of VPF’s as a reduction of the interest related to the obligation and the amortization incurred related to the systems, as the payments represent a specific reimbursement of the cost of the systems by the studios. Based on the Company’s expected minimum number of eligible movies to be booked, the Company expects the obligation to be reduced by at least $4,636,000 within the next 12 months. This reduction will be recognized as an offset to amortization and is expected to offset the majority of the amortization of the systems.

4. Income Taxes

The Company’s effective income tax rate, adjusted for earnings from noncontrolling interests, for the 13 weeks ended August 29, 2013 and August 30, 2012 was 40.2% and 41.9%, respectively. The Company does not include the income tax expense or benefit related to the net earnings or loss attributable to noncontrolling interest in its income tax expense as the entities are considered pass-through entities and, as such, the income tax expense or benefit is attributable to its owners.

5. Contingencies

On July 7, 2005, the Company amended its office lease in order to exit leased office space for the Company’s former limited-service lodging division. To induce the landlord to amend the lease, the Company guaranteed the lease obligations of the new tenant of the relinquished space through November 2013. The maximum amount of future payments the Company could be required to pay if the new tenant defaults on its lease obligations was approximately $119,000 as of August 29, 2013.

6. Business Segment Information

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

Following is a summary of business segment information for the 13 weeks ended August 29, 2013 and August 30, 2012 (in thousands):

13 Weeks Ended August 29, 2013	Theatres		Hotels/ Resorts		Corporate Items			Total
Revenues	$	69,112	$	59,810	$	110		$	129,032
Operating income (loss)		16,913		10,898		(3,464	)		24,347
Depreciation and amortization		3,986		4,181		160			8,327

13 Weeks Ended August 30, 2012	Theatres		Hotels/ Resorts		Corporate Items			Total
Revenues	$	62,352	$	55,439	$	148		$	117,939
Operating income (loss)		13,278		10,233		(3,056	)		20,455
Depreciation and amortization		4,210		3,976		127			8,313

THE MARCUS CORPORATION

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

Special Note Regarding Forward-Looking Statements

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

RESULTS OF OPERATIONS

General

We report our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in May. Fiscal 2014 is a 52-week year, as was fiscal 2013. We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts.

The following table sets forth revenues, operating income, other income (expense), net earnings and net earnings per common share for the comparable first quarters of fiscal 2014 and 2013 (in millions, except for per share and variance percentage data):

	First Quarter
							Variance
	F2014			F2013			Amt.			Pct.

Revenues	$	129.0		$	117.9		$	11.1			9.4	%
Operating income		24.3			20.5			3.8			19.0	%
Other income (expense)		(2.5	)		(2.1	)		(0.4	)		-18.8	%
Net loss attributable to noncontrolling interests		0.6			─			0.6			N/A
Net earnings attributable to The Marcus Corp.		13.4			10.7			2.7			25.8	%

Net earnings per common share – diluted	$	0.50		$	0.37		$	0.13			35.1	%

Revenues, operating income (earnings before other income/expense and income taxes) and net earnings attributable to The Marcus Corporation increased during the first quarter of fiscal 2014 compared to the same period last year due to improved operating results from both our theatre division and our hotels and resorts division. Operating results from our theatre division were positively impacted by increased attendance due to a stronger slate of movies during the fiscal 2014 first quarter compared to the same period last year. Operating results from our hotels and resorts division were favorably impacted by higher occupancy rates and average daily room rates during the fiscal 2014 first quarter compared to the first quarter last year.

We did not have any significant variations in investment income, gains or losses on the disposition of property, equipment and other assets or net equity losses from unconsolidated joint ventures during the first quarter of fiscal 2014 compared to the same quarter last year. The timing of periodic sales of our property and equipment varies from quarter to quarter, resulting in variations in our reported gains or losses on disposition of property and equipment.

Our interest expense totaled $2.4 million for the first quarter of fiscal 2014 compared to $2.1 million during the same period last year, an increase of approximately $300,000, or 15.4%. The increase in interest expense during the first quarter of fiscal 2014 was primarily the result of increased borrowings during the period compared to the same quarter last year. Our borrowings increased due to an assumption of a mortgage related to our acquisition of The Cornhusker, A Marriott Hotel, during the second quarter last year, as well as new borrowings incurred during our third quarter last year in order to fund the payment of a special dividend. Due to the stronger cash flow from our operating divisions during the summer months, our borrowing levels are typically at their lowest point at the end of our fiscal first quarter. It is likely that our borrowing levels will increase later this fiscal year as we intend to increase our capital spending throughout the year even though our operating cash flows decline during our slower operating months.

Late in our fiscal 2014 first quarter, we closed on our previously-disclosed issuance of $50 million of unsecured senior notes privately placed with several purchasers. We used the proceeds from the notes, which bear interest at 4.02% and mature in 2025, to reduce borrowings under our revolving credit facility and for general corporate purposes. Assuming no other change in our borrowing levels, we expect that the increase in our average interest rate resulting from the new senior notes replacing less expensive short-term borrowings will be approximately $300,000 in each of our remaining fiscal 2014 quarters compared to the prior year quarters. Changes in our borrowing levels due to variations in our operating results, capital expenditures, share repurchases and asset sale proceeds, among other items, may impact our actual reported interest expense in future periods.

We reported income tax expense for the first quarter of fiscal 2014 of $9.0 million, an increase of $1.3 million, or 17.3%, compared to income tax expense of $7.7 million during the same period of fiscal 2013. Our fiscal 2014 first quarter effective income tax rate, after adjusting for a loss from noncontrolling interests that is not tax-effected because the entities involved are tax pass-through entities, was 40.2%, compared to our fiscal 2013 first quarter effective income tax rate of 41.9%. As a result of our receipt of a preliminary proposed tax audit adjustment from a state taxing authority during our fiscal 2013 first quarter, we increased our liability for unrecognized tax benefits during fiscal 2013 by over $300,000, unfavorably impacting our fiscal 2013 effective income tax rate. We successfully challenged this particular adjustment during our second quarter of fiscal 2013, so comparisons of our reported results for the upcoming fiscal 2014 second quarter to the second quarter of fiscal 2013 will be negatively impacted by a $300,000 favorable adjustment during the second quarter of fiscal 2013. We currently anticipate that our effective income tax rate for the remaining quarters of fiscal 2014 will remain close to our historical 40% average, excluding any changes in our liability for unrecognized tax benefits or potential changes in federal and state income tax rates. Our actual fiscal 2014 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

The operating results of two majority-owned hotels, The Skirvin Hilton and The Cornhusker, A Marriott Hotel, are included in the hotels and resorts division revenue and operating income and the after-tax net earnings or loss attributable to noncontrolling interests is deducted from or added to net earnings on the consolidated statement of earnings. We reported a net loss attributable to noncontrolling interests of $585,000 during the fiscal 2014 first quarter. This loss is primarily due to a true-up of a prior year allocation of earnings attributable to noncontrolling interests.

Theatres

The following table sets forth revenues, operating income and operating margin for our theatre division for the first quarters of fiscal 2014 and 2013 (in millions, except for variance percentage and operating margin):

	First Quarter
							Variance
	F2014			F2013			Amt.		Pct.

Revenues	$	69.1		$	62.4		$	6.7		10.8	%
Operating income		16.9			13.3			3.6		27.4	%
Operating margin (% of revenues)		24.5	%		21.3	%

Consistent with the seasonal nature of the motion picture exhibition industry, the first quarter is typically the strongest period of our fiscal year for our theatre division due to the traditionally strong summer movie season. Fiscal 2014 first quarter revenues, operating income and operating margin in our theatre division increased compared to the same period in the prior year due primarily to increased attendance as a result of a stronger film slate during this year’s first quarter. Fiscal 2014 first quarter operating income was a new fiscal first quarter record for our theatre division.

The following table breaks down the components of revenues for the theatre division for the first quarters of fiscal 2014 and 2013 (in millions, except for variance percentage):

	First Quarter
					Variance
	F2014		F2013		Amt.		Pct.

Box office receipts	$	42.1	$	38.5	$	3.6		9.4	%
Concession revenues		23.7		21.0		2.7		12.9	%
Other revenues		3.3		2.9		0.4		14.9	%
Total revenues	$	69.1	$	62.4	$	6.7		10.8	%

The increase in our box office receipts for the first quarter of fiscal 2014 compared to the same period last year was due primarily to an increase in comparable theatre attendance. Our average ticket price increased 2.2% during the fiscal 2014 first quarter compared to the same period last year. The increase in our average ticket price contributed approximately $900,000, or approximately 25%, of the increase in our box office receipts during our fiscal 2014 first quarter compared to the first quarter of fiscal 2013 and was attributable primarily to small increases in ticket prices. Although four of our top five films were available in 3D, our overall box office revenues from 3D presentations were actually down slightly during the fiscal 2014 first quarter compared to the prior year quarter, so 3D, with its corresponding premium price, did not have a disproportionate impact on our average admission price during the fiscal 2014 first quarter compared to the prior year quarter.

Our fiscal 2014 first quarter concession revenues increased compared to the same period last year as a result of increased attendance at comparable theatres and a 5.6% increase in our average concession revenues per person compared to our fiscal 2013 first quarter. The increase in our average concession revenues per person at comparable theatres contributed approximately $1.2 million, or 44%, of the increase in our concession revenues during our fiscal 2014 first quarter compared to the same period last year. Selected price increases and a change in concession product mix, including increased sales of higher priced non-traditional food and beverage items, were the primary reasons for our increased average concession sales per person during our fiscal 2014 first quarter compared to the same period last year. The fact that our top two films during the fiscal 2014 first quarter were animated family movies also likely contributed to our increase in concession sales per person, as these types of films typically result in stronger concession sales compared to more adult-oriented films. Other revenues increased during our fiscal 2014 first quarter compared to the same period last year due primarily to an increase in marketing and advertising income.

Comparable theatre attendance increased 7.9% during the first quarter of fiscal 2014 compared to the same period last year. June was our strongest month during the summer, but our results were strong throughout the current-year quarter, as we experienced increased box office results in 10 of the 13 weeks during our fiscal 2014 first quarter compared to the same weeks in the prior year. Our highest grossing films during the fiscal 2014 first quarter included Despicable Me 2 (3D), Monsters University (3D), Man of Steel (3D), The Heat and World War Z (3D). The film slate during the first quarter of last year included the outstanding performance of the final installment of the Dark Knight film franchise, but the overall depth of the film product was not as strong. This is evidenced by the fact that our top five and 15 films during our fiscal 2014 first quarter accounted for 39% and 69%, respectively, of our total box office results compared to 44% and 76%, respectively, for the top five and 15 films during the first quarter of last year, both expressed as a percentage of the total box office receipts for the period. This is an indication that the next tier of films (nos. 16 and higher) during the fiscal 2014 first quarter performed significantly better than the next tier of films during the same period last year.

September is typically the slowest month of the year for our theatre division. Film product for the second quarter of fiscal 2014 has thus far produced box office results slightly higher than the same period last year due to the strong performance of films such as Insidious Chapter 2 , Cloudy with a Chance of Meatballs 2 (3D) and Gravity (3D). Films scheduled to be released this fall and during the upcoming Thanksgiving holiday period that may generate substantial box office interest include: Captain Phillips , The Counselor , Ender’s Game , Thor: The Dark World (3D) and The Wolf of Wall Street . Our fiscal 2014 second quarter concludes with the opening of The Hunger Games: Catching Fire , the second installment of this popular series. We reported record operating results during our second quarter last year, so we expect that comparisons to last year’s results will be difficult. The highest grossing films released during the second quarter last year included The Twilight Saga: Breaking Dawn – Part 2 , Skyfall , Wreck-It Ralph (3D), Taken 2 and Hotel Transylvania (3D). Revenues for the theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns and the maintenance of the current “windows” between the date a film is released in theatres and the date a motion picture is released to other channels, including video on-demand and DVD. These are factors over which we have no control.

We ended the first quarter of fiscal 2014 with a total of 674 company-owned screens in 53 theatres and 11 managed screens in two theatres compared to 684 company-owned screens in 54 theatres and 11 managed screens in two theatres at the end of the same period last year. We closed one eight screen theatre in Milwaukee, Wisconsin during fiscal 2013. We also closed two individual screens at separate theatres during fiscal 2013 in conjunction with the construction of a new Take Five Lounge and Ultra Screen® at the respective theatres. We opened our fifth Take Five Lounge , which also serves Zaffiro’s pizza, at our remodeled Point Cinema in Madison, Wisconsin during our fiscal 2014 first quarter. In addition, we renamed the former 20 Grand Cinema the Majestic Cinema of Omaha following an extensive renovation that included the addition of our sixth Take Five Lounge , a Zaffiro’s Express and premium seating in all auditoriums. The initial guest response to these new features has been outstanding. Construction also continues on our 15 ^th premium large-screen Ultra Screen auditorium in Gurnee, Illinois. The new auditorium, featuring a 70-foot wide screen and the latest immersive sound technology, is scheduled to open in November 2013. We also expect to add our all-new DreamLounger™ premium seating concept to three additional theatres in time for the busy 2013 holiday season. Late in our fiscal 2013 first quarter, we opened our third Zaffiro’s Pizzeria and Bar at our theatre in New Berlin, Wisconsin.

We recently launched our new Theatre Entertainment Network, offering weekday alternate programming at 29 theatres across our chain. 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 expand our audience base beyond traditional moviegoers.

During our fiscal 2014 first quarter, Rolando B. Rodriguez joined us as the new president and chief executive officer of Marcus Theatres and executive vice president of The Marcus Corporation. Rolando comes to us with extensive experience in the motion picture industry. For the past two years, he served as CEO, president and a board member of Rave Cinemas, which had been the fifth largest theatre circuit in the U.S. until its sale in May 2013. He also served AMC Theatres, the world’s second-largest motion picture exhibitor, for 30 years in various positions and spent five years with Wal-Mart as well. He currently serves on the executive board of the National Association of Theatre Owners (NATO) and has won numerous awards in the industry. We believe that Rolando’s proven leadership experience and strong roots in the motion picture exhibition industry make him extremely qualified to build on our theatre division’s long history of success. Rolando succeeds Bruce J. Olson, who retired in September after a 39-year career with us.

Hotels and Resorts

The following table sets forth revenues, operating income and operating margin for our hotels and resorts division for the first quarters of fiscal 2014 and 2013 (in millions, except for variance percentage and operating margin):

	First Quarter
							Variance
	F2014			F2013			Amt.		Pct.

Revenues	$	59.8		$	55.4		$	4.4		7.9	%
Operating income		10.9			10.2			0.7		6.5	%
Operating margin (% of revenues)		18.2	%		18.5	%

Our first quarter is historically the strongest quarter of our fiscal year for our hotels and resorts division due to increased travel during the summer months at our predominantly Midwestern properties. Division revenues and operating income increased during our fiscal 2014 first quarter compared to the prior year first quarter due to both increased occupancy percentage and average daily room rate. Division revenues were also favorably impacted by the addition of a new hotel, The Cornhusker, A Marriott Hotel, during last year’s second quarter. Conversely, division operating income was negatively impacted by a small operating loss at The Cornhusker, which we believe was attributable to the significant disruption caused by a major renovation currently underway at this hotel.

The following table sets forth certain operating statistics for the first quarters of fiscal 2014 and 2013, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for company-owned properties:

	First Quarter ⁽¹⁾
							Variance
	F2014			F2013			Amt.		Pct.

Occupancy percentage		86.0	%		84.9	%		1.1 pts		1.3	%
ADR	$	155.39		$	150.72		$	4.67		3.1	%
RevPAR	$	133.68		$	127.95		$	5.73		4.5	%

(1)

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

RevPAR increased at seven of our eight company-owned properties during the first quarter of fiscal 2014 compared to the same period last year, with the only decrease resulting from a difficult group room comparison to the prior year quarter at one of our Milwaukee hotels. An increase in room supply in Milwaukee during the past year may have had a small impact on our results in that important market of ours (three hotels), as our RevPAR increases in this market were less than our overall average. As a result, our RevPAR increase was slightly lower than comparable industry results during the first quarter of fiscal 2014. According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2014 first quarter results, comparable “upper upscale” hotels throughout the United States experienced an increase in RevPAR of 5.5% during our fiscal 2014 first quarter compared to our fiscal 2013 first quarter, greater than the increase of 4.5% we experienced.

The lodging industry continued to recover at a steady pace during the quarter after several very difficult years. In order to better understand our fiscal 2014 first quarter results compared to pre-recessionary levels, the following table compares our fiscal 2014 first quarter operating statistics to our fiscal 2008 first quarter operating statistics for the same eight company-owned properties:

	First Quarter
							Variance
	F2014			F2008			Amt.			Pct.

Occupancy percentage		86.0	%		78.5	%		7.5 pts			9.6	%
ADR	$	155.39		$	158.45		$	(3.06	)		-1.9	%
RevPAR	$	133.68		$	124.45		$	9.23			7.4	%

As indicated by the tables above, fiscal 2014 first quarter occupancy rates again showed improvement over the same period during the prior year and, in fact, continued to be at record levels for this division, significantly higher than they were prior to the recession-driven downturn in the hotel industry. However, one of the biggest challenges facing our hotels and resorts division, and the industry as a whole, has been the overall decline in ADR compared to pre-recession levels, as highlighted in the above comparisons to fiscal 2008. As the comparison to fiscal 2008 indicates, our fiscal 2014 first quarter RevPAR exceeded pre-recession levels (not adjusted for inflation), but our increase in occupancy percentage was partially offset by the fact that ADR remains below fiscal 2008 levels. However, recent trends in ADR continue to be positive, and we were pleased to report our 11th straight quarter of year-over-year ADR increases during our fiscal 2014 first quarter.

Leisure travel remains strong, but that is one of the reasons why there continues to be rate pressure, as that customer tends to be very loyal to online travel agencies. While we have been selective in choosing the online portals to which we grant access to our inventory, such portals are part of the booking landscape today and our goal is to use them in the most efficient way possible. Non-group business travel was also strong and steady during our fiscal 2014 first quarter. Non-group travelers are increasingly looking for package deals, whether it is with parking, breakfast or access to club rooms like the ones we recently added to our Pfister Hotel and Grand Geneva Resort and Spa. Group business was steady as well, not slowing down but no significant increases either. The challenge with group business continues to be a tendency towards smaller, shorter meetings, often booked and executed within a window as short as 90 days. Groups have also tended to contract for less food and beverage during their stay compared to what we typically experienced prior to the recent recession.

This change in our RevPAR mix has had the effect of limiting our ability to rapidly increase our operating margins during the ongoing U.S. economic recovery. Approximately 37% of the revenue increases that we experienced during the first quarter of fiscal 2014 flowed through to our operating income (after adjusting for the impact of The Cornhusker described above and certain legal costs incurred during the prior year quarter related to our Las Vegas property), compared to a 50% flow through that we would target during a higher ADR environment. Operating costs traditionally increase as occupancy increases, which usually negatively impacts our operating margins until we begin to also achieve corresponding improvements in our ADR.

Notwithstanding that dynamic, seven of our eight comparable company-owned properties reported increases in ADR during the fiscal 2014 first quarter compared to the same period last year, and the gap between our current ADR and our pre-recession ADR was the smallest it has been since the recession. We hope that the recent increases we have experienced in our ADR will continue, but in order to realize ADRs at or above pre-recession levels, we believe we will need to continue to regain the ability to increase prices for our business and group travelers and continue a customer mix shift away from lower priced customer segments (such as those using alternate internet booking channels).

Whether the current positive trends continue depends in large part on the economic environment in which we operate, as hotel revenues have historically tracked very closely with traditional macroeconomic statistics such as the Gross Domestic Product. We generally expect our favorable revenue trends to continue in future periods and to generally track the overall industry trends. Group business already booked for our upcoming fiscal 2014 second quarter is solid, and with continued strength from the non-group and leisure segments, we expect another quarter of improved operating results in this division. We also expect that comparisons to last year during the third and fourth quarters of fiscal 2014 will benefit from the fact that last year’s operating results were negatively impacted by the settlement of the Las Vegas legal matters and the start-up operating losses from The Cornhusker.

We continue to monitor our important Milwaukee market very closely, as this market has experienced a recent increase in room supply. Three new hotels have opened in this market within the past year, including two during our fiscal 2014 first quarter. It is too early to quantify any specific impact of this new supply, particularly during our busy summer season in Milwaukee, but without additional demand, it is likely that our Milwaukee hotels will be negatively impacted to some degree by the new supply in the coming years. We have initiated aggressive marketing and operating strategies to try to maintain our market share under these challenging conditions. In general, there has been minimal lodging room supply growth on a national basis, a trend we expect may continue at least in the near-term.

We recently opened our second Miller Time Pub & Grill restaurant as part of the multi-million dollar renovation currently underway at The Cornhusker. The concept, which was initially developed at the Hilton Milwaukee, has a comfortable, relaxing atmosphere with a focus on pairing great beer with great food. The new restaurant has been well received by guests and locals alike. The new restaurant is the first of many new features and amenities that we have planned for The Cornhusker, which is the only full-service hotel in downtown Lincoln, Nebraska. The extensive renovation of this landmark property is well underway, with the majority of the hotel’s 297 guest rooms now completed.

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our movie theatre and hotels and resorts businesses each generate significant and consistent daily amounts of cash, subject to previously noted seasonality, because each segment’s revenue is derived predominantly from consumer cash purchases. We believe that these relatively consistent and predictable cash sources, as well as the availability of approximately $175 million of unused credit lines as of the end of our fiscal 2014 first quarter, should be adequate to support the ongoing operational liquidity needs of our businesses during the remainder of fiscal 2014.

On August 14, 2013, we closed on the issuance and sale of $50 million of our 4.02% senior notes due August 14, 2025 in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. We used the net proceeds from the notes to reduce existing borrowings under our revolving credit facility and for general corporate purposes. The notes are described in detail in our fiscal 2013 Annual Report on Form 10-K and in Note 2 of the Condensed Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Current maturities of long-term debt on our balance sheet as of August 29, 2013 included a $21.1 million mortgage related to our downtown Chicago hotel which matures in June 2014. We currently expect to refinance this debt agreement during fiscal 2014, at which time these borrowings would be reclassified as long-term debt.

Financial Condition

Net cash provided by operating activities increased by $6.6 million during the first quarter of fiscal 2014 to $21.7 million, compared to $15.1 million during the first quarter of the prior year. The increase was due primarily to increased net earnings and the favorable timing in the payment of accrued compensation, income taxes and deferred compensation and other.

Net cash used in investing activities during the fiscal 2014 first quarter totaled $7.9 million, compared to $5.6 million during the fiscal 2013 first quarter. The increase in net cash used in investing activities was the result of increased capital expenditures, partially offset by a decrease in restricted cash. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $8.7 million during the first quarter of fiscal 2014 compared to $5.3 million during the first quarter of the prior year. We did not incur any acquisition-related capital expenditures or capital expenditures related to developing new theatres or hotels during the fiscal 2014 and 2013 reported periods.

Fiscal 2014 first quarter capital expenditures included approximately $4.8 million incurred in our theatre division, including costs associated with the renovation of a theatre in Omaha, Nebraska, the addition of a Take Five Lounge at theatres in Omaha and Madison, Wisconsin, and the construction of an Ultra Screen in Gurnee, Illinois. We also incurred capital expenditures in our hotel division during the first quarter of fiscal 2014 of approximately $3.9 million, including costs associated with the ongoing renovation of The Cornhusker. Fiscal 2013 first quarter capital expenditures included approximately $3.6 million incurred in our theatre division, including costs associated with the completion of our newest Zaffiro’s Pizzeria & Bar and Ultra Screen at two theatres, as well as another theatre renovation.

Net cash used in financing activities during the first quarter of fiscal 2014 totaled $11.8 million compared to $7.9 million during the first quarter of fiscal 2013. We used excess cash during both periods to reduce our borrowings under our revolving credit facility. As short-term borrowings became due, we replaced them as necessary with new short-term borrowings. As a result, we added $64.5 million of new debt (including the $50 million senior notes described above) and we made $72.4 million of principal payments on long-term debt during our fiscal 2014 first quarter (net reduction in long-term debt of $7.9 million) compared to $32.0 million of new debt added and $37.2 million of principal payments made during our fiscal 2013 first quarter (net reduction in long-term debt of $5.2 million), accounting for the majority of the increase in net cash used in financing activities. Our debt-to-capitalization ratio was 0.42 at August 29, 2013 compared to 0.44 at our fiscal 2013 year-end.

We repurchased approximately 48,000 shares of our common stock for approximately $600,000 during the first quarter of fiscal 2014 in conjunction with the exercise of stock options and the purchase of shares in the open market, compared to approximately 97,000 shares repurchased for approximately $1.26 million during the first quarter of fiscal 2013. As of August 29, 2013, approximately 3.6 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. We expect that any future repurchases will be executed on the open market or in privately negotiated transactions depending upon a number of factors, including prevailing market conditions. We also resumed our regular quarterly dividend payment during the first quarter of fiscal 2014 after accelerating to December 2012 the payment of the quarterly dividends that would have normally been paid during the third and fourth quarters of fiscal 2013. During the first quarter of fiscal 2014, we made distributions to noncontrolling interests of $1.1 million.

We previously indicated that we expected our full-year fiscal 2014 capital expenditures, including potential purchases of interests in joint ventures (but excluding any significant unidentified acquisitions), to be in the $60-$90 million range. We are still finalizing the scope and timing of the various projects requested by our two divisions, but at this time, we are not adjusting this estimate. Some of these projects could carry over to the next fiscal year, and if that occurred, it would be less likely that we would incur capital expenditures in the current year at the top end of that range. The actual timing and extent of the implementation of all of our current expansion plans will depend in large part on industry and general economic conditions, our financial performance and available capital, the competitive environment, evolving customer needs and trends and the availability of attractive opportunities. It is likely that our plans will continue to evolve and change in response to these and other factors.

We also continue to pursue an opportunity to be the developer of a previously-described mixed use retail development known as The Corners of Brookfield. During the first quarter of fiscal 2014, we continued to make progress on our negotiations with the local government as we seek financial support for certain infrastructure costs related to this project. We also made progress in our continuing negotiations with our potential equity partners and a preliminary joint venture structure that would include a minority interest for us is beginning to take form. The project also needs a sufficient number of leases to satisfy financing requirements and we believe that we made progress on this matter during the first quarter of fiscal 2014. The actual timing and extent of any additional expenditures for this project may change, depending upon the satisfactory and timely completion of the items noted above. If the project proceeds as currently planned, we believe construction may begin in Spring 2014, which would allow the entire project to possibly open in Fall 2015.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have not experienced any material changes in our market risk exposures since May 30, 2013.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

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

Changes in internal control over financial reporting

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

PART II – OTHER INFORMATION

Item 1A. Risk Factors

Risk factors relating to us are contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 30, 2013. No material change to such risk factors has occurred during the 13 weeks ended August 29, 2013.

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

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

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
May 31 – June 27		18,413	$	12.14		18,413		3,586,457
June 28 – July 25		-		-		-		3,586,457
July 26 – August 29		29,835		12.51		29,835		3,556,622
Total		48,248	$	12.37		48,248		3,556,622

(1)

Through August 29, 2013, our Board of Directors had authorized the repurchase of up to approximately 11.7 million shares of our outstanding Common Stock. Under these authorizations, we may repurchase shares of our Common Stock from time to time in the open market, pursuant to privately negotiated transactions or otherwise. As of August 29, 2013, we had repurchased approximately 8.1 million shares of our Common Stock under these authorizations. The repurchased shares are held in our treasury pending potential future issuance in connection with employee benefit, option or stock ownership plans or other general corporate purposes. These authorizations do not have an expiration date.

Item 4. Mine Safety Disclosures

Not applicable.

Item 6. Exhibits

4.1	Note Purchase Agreement, dated as of June 27, 2013, by and among The Marcus Corporation and the several purchasers listed in Schedule A attached thereto. [Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated June 27, 2013.]

10.1	The Marcus Corporation Retirement Income and Supplemental Retirement Plan, as amended and restated.

31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

101	The following materials from The Marcus Corporation’s Quarterly Report on Form 10-Q for the quarter ended August 29, 2013 are filed herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) the Condensed Notes to Consolidated Financial Statements.

SIGNATURES

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

THE MARCUS CORPORATION

DATE: October 8, 2013	By:	/s/ Gregory S. Marcus
		Gregory S. Marcus
		President and Chief Executive Officer


DATE: October 8, 2013	By:	/s/ Douglas A. Neis
		Douglas A. Neis
		Chief Financial Officer and Treasurer

S- 1

Exhibit 10.1

the marcus corporation

retirement income AND SUPPLEMENTAL RETIREMENT plan

(As Amended and Restated Effective October 1, 2013)

TABLE OF CONTENTS

		Page

ARTICLE I. PURPOSE AND DEFINITIONS		1
	Section 1.01. Purpose	1
	Section 1.02. Definitions	1
	Section 1.03. Construction	6

ARTICLE II. PURPOSE AND EFFECTIVE DATE		8
	Section 2.01. Purpose of Plan	8
	Section 2.02. Effective Date	8

ARTICLE III. PARTICIPATION AND YEARS OF SERVICE		9
	Section 3.01. Participation	9
	Section 3.02. Years of Service.	9

ARTICLE IV. ACCRUED BENEFIT FOR RIP PARTICIPANTS		11
	Section 4.01. RIP Participant’s Eligibility for Accrued Benefit	11
	Section 4.02. Total and Permanent Disability	11
	Section 4.03. Vesting of Accrued Benefit	11
	Section 4.04. RIP Participant’s Surviving Spouse Pre-Retirement Death Benefit	12
	Section 4.05. Calculation of Accrued Benefit	12
	Section 4.06. Payment of Accrued Benefit to RIP Participants	13
	Section 4.07. Optional Methods of Payment of Accrued Benefit	13
	Section 4.08. Pre-Retirement Death Benefit for RIP Participants	15

ARTICLE V. ACCOUNTS FOR SRP PARTICIPANTS		16
	Section 5.01. Establishment of Accounts	16
	Section 5.02. Initial Account Balances	16
	Section 5.03. Annual Allocations.	16
	Section 5.04. Earnings on Accounts	17
	Section 5.05. Vesting of Account Balances.	17
	Section 5.06. Distributions	18

ARTICLE VI. FUNDING OF BENEFITS		21
	Section 6.01. Source of Payments.	21

ARTICLE VII. OTHER PROVISIONS		22
	Section 7.01. Administration of the Plan	22
	Section 7.02. Non-Alienation of Payments	22
	Section 7.03. Incompetency	22
	Section 7.04. Limitation of Rights Against the Employer	22
	Section 7.05. Liability	23
	Section 7.06. Amendment or Termination of the Plan	23
	Section 7.07. Tax Withholding	24
	Section 7.08. Claims Procedures	24

ARTICLE I. PURPOSE AND definitions

Section 1.01. Purpose . The Marks Corporation has established this Retirement Income and Supplemental Retirement Plan to provide retirement benefits to a select group of highly compensated employees in addition to those benefits provided under the Company’s tax-qualified retirement plan. The Plan consists of two components: (1) the “Retirement Income Plan” or “RIP,” which provides an annuity benefit based on a formula that takes into account a participant’s years of service and final average compensation, and (2) the “Supplemental Retirement Plan” or “SRP,” which provides a benefit based on amounts accumulated in a participant’s account.

Section 1.02. Definitions . The following words and phrases when used herein shall have the following meanings, except as otherwise required by the context:

(a) “Account” means the bookkeeping entry established on the records of the Company to reflect the amount owed to a SRP Participant (or Beneficiary thereof) under the Plan.

(b) “Accrued Benefit” means the monthly benefit amount calculated pursuant to Section 4.05 hereof and payable in the form of a life-only annuity commencing the month next following the later of the RIP Participant’s sixty-fifth (65th) birthday or Termination Date.

(c) “Actuarial Equivalent” means a benefit of equivalent value calculated using an interest rate of eight percent (8%) per annum compounded annually and a mortality rate based upon the 1984 UP Mortality Table for purposes of converting from one periodic form of payment to another, including, without limitation, different commencement dates for payment, and for purposes of converting from a periodic form of payment to a lump sum form of payment under Section 4.07(a)(ii) hereof.

(d) “Administrator” means the Marcus Retirement Planning Committee, or such other committee as may be appointed by the Board to administer this Plan.

(e) “Affiliate” means each entity that is required to be included in the controlled group of corporations with the Company within the meaning of Code Section 414(b), or that is under common control with the Company within the meaning of Code Section 414(c); provided that for purposes of determining if a Participant has incurred a Separation from Service, the phrase “at least 50 percent” shall be used in place of the phrase “at least 80 percent” each place it appears therein or in the regulations thereunder.

(f) “Average Monthly Earnings” means a RIP Participant’s total compensation from the Employer for the five (5) calendar years during which the Participant’s compensation was highest within the last ten (10) consecutive calendar years preceding his Termination Date, divided by sixty (60). For purposes of making this calculation, compensation shall include amounts paid by the Employer to a RIP Participant in the form of salary, cash bonuses and commissions, before payroll deductions and any reductions in compensation for amounts deferred through The Marcus Corporation Pension Plus Plan, The Marcus Corporation Deferred Compensation Plan and any Code Section 125 arrangement, but shall exclude imputed income, any other additional remuneration and/or expense reimbursement which the Administrator, in its sole discretion, determines not to be compensation hereunder, and for periods on and after July 1, 2013, long-term incentive cash payments.

(g) “Beneficiary” means the person(s) or entity(ies) designated by a Participant to receive benefits under the Plan, if any, upon the Participant’s death. Beneficiary designations shall be in writing, filed with the Administrator, and in such form as the Administrator may prescribe for this purpose. The last designation filed with the Administrator prior to the Participant’s death shall be given effect.

(h) “Board” means the Board of Directors of the Company.

(i) “ Change of Control” has the meaning ascribed under Code Section 409A.

(j) “Code” means the Internal Revenue Code of 1986, as interpreted and applied by regulations and rulings issued pursuant thereto, all as amended and in effect from time to time.

(k) “Company” means The Marcus Corporation.

(l) “Compensation” means a SRP Participant’s total compensation from the Employer for the Plan Year, subject to adjustments as set forth herein. For this purpose, Compensation shall include amounts paid by the Employer to a SRP Participant in the form of salary, cash bonuses and commissions, before payroll deductions and any reductions in compensation for amounts deferred through The Marcus Corporation Pension Plus Plan, The Marcus Corporation Deferred Compensation Plan and any Code Section 125 arrangement, but shall exclude imputed income, any other additional remuneration and/or expense reimbursement which the Administrator, in its sole discretion, determines not to be compensation hereunder, and for periods on and after July 1, 2013, long-term incentive cash payments.

(m) “Date of Hire” means the date on which an Eligible Employee becomes employed with any Employer.

(n) “Eligible Employee” means any highly compensated employee who is employed by an Employer in an officer, executive or other managerial capacity, as determined by the Administrator, in its sole discretion.

(o) “Employer” means the Company and each of its Affiliates which are participating employers under The Marcus Corporation Pension Plus Plan.

(p) “Highly Compensated Employee” means an Eligible Employee who has met the requirements to be considered a highly compensated employee within the meaning of Code Section 414(q) for a Plan Year.

(q) “Hour of Service” has the meaning ascribed in The Marcus Corporation Pension Plus Plan.

(r) “Other Benefits” means any of the following which may be applied to reduce the Accrued Benefit amount payable hereunder to a RIP Participant as calculated pursuant to Section 4.05 hereof:

(i)

that portion, if any, of the monthly benefits payable to him under any current or prior qualified defined benefit pension plan of any Employer which is attributable to employer contributions and is based upon a period of service that is recognized both under such pension plan and this Plan for benefit accrual purposes; provided, however, that, if the time and/or form of benefit payments under such pension plan (including without limitation, payments pursuant to an annuity purchased as a consequence of such pension plan’s termination and payments of the aforesaid portion included in any distribution from any qualified retirement plan of any Employer to which such portion was transferred) are different from the time and/or form of benefits to be paid under this Plan, the reduction amount to be treated as “Other Benefits” shall be the Actuarial Equivalent of the aforesaid portion which appropriately reflects such difference;

(ii)

an Actuarial Equivalent amount that appropriately reflects the value of any amount not covered by clause (i) above which was distributed or is distributable to such Participant under any qualified profit sharing, money purchase pension, stock bonus or other individual account plan of any Employer (excluding The Marcus Corporation Deferred Compensation Plan) and is attributable to employer contributions (other than Code Section 401(k) deferrals elected by such Participant) and based upon a period of service recognized for any purpose under both that plan and this Plan; and

(iii)

in the case of disability retirement under this Plan, the amount of the monthly benefits payable to the Participant under any long-term disability welfare benefit program of any Employer which is attributable to employer contributions; provided, however, that, if the time and/or form of benefits payments under such program are different from the time and/or form of benefits to be paid under this Plan, the reduction amount to be treated as “Other Benefits” shall be the Actuarial Equivalent of the aforesaid amount payable under such program which appropriately reflects such difference; provided further, however, that the reduction amount specified by this clause (iii) shall only apply during the period that the Participant is receiving benefit payments under both such program and this Plan.

(s) “Participant” means an Eligible Employee who has satisfied the requirements of Section 3.01.

(t) “Period of Severance” means the period of time between a Participant’s Termination Date and the date he is subsequently rehired by any Employer.

(u) “Plan” means The Marcus Corporation Retirement Income and Supplemental Retirement Plan set forth herein, as amended and in effect from time to time. The Plan consists of two components: the “Retirement Income Plan” which covers the RIP Participants as described in Article IV, and the “Supplemental Retirement Plan” which covers the SRP Participants as described in Article V.

(v) “Plan Year” means the twelve (12) month period ending on December 31 of each year during which the Plan is in effect.

(w) “Points” means the combination of a SRP Participant’s age (as of his most recent birthday) and Years of Service as of the last day of a Plan Year.

(x) “RIP Participant” means a Participant in the Plan on December 31, 2008, who meets at least one of the following requirements on January 1, 2009:

(i)

The Participant is age 50 or older; or

(ii)

The Participant has 20 or more Years of Service; or

(iii)

The Participant is a member of the Corporate Executive Committee.

In addition, the individual hired on August 6, 2013 as the President and Chief Executive Officer of Marcus Theatres and Executive Vice President of the Company is considered a RIP Participant as of such date of hire.

(y) “Retirement” for SRP Participant means a termination of employment from the Employer on or after attaining age sixty-five (65) and completing five (5) Years of Service.

(z) “SRP Participant” means a Participant who is not a RIP Participant.

(aa) “Separation from Service” means a Participant’s termination of employment from the Company and its Affiliates within the meaning of Code Section 409A, or if the Participant continues to provide services to the Company and its Affiliates in a capacity other than an employee after his or her termination, such later date as is considered a separation from service within the meaning of Code Section 409A. Specifically, a Participant will be presumed to have incurred a Separation from Service when the level of bona fide services performed by the Participant for the Company and its Affiliates permanently decreases to a level equal to twenty percent (20%) or less of the average level of services performed by the Participant for the Company or its Affiliates during the immediately preceding thirty-six (36) month period (or such lesser period of actual service). Notwithstanding the foregoing, a Participant will not be considered to have terminated employment if the Participant is absent from active employment due to military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed the greater of (i) six (6) months, or if the leave of absence is due to the Participant’s Disability, then the leave period may be extended for up to a total of twenty-nine (29) months; or (ii) the period during which the Participant’s right to reemployment by the Company or an Affiliate is provided either by statute or by contract.

(bb) “Social Security Benefit” means (i) in all cases except disability retirements covered by clause (ii) below, the estimated monthly primary old age insurance benefit payable to the Participant as of the later of his sixty-fifth (65th) birthday or Termination Date under the provisions of the federal Social Security Act in effect on his Termination Date, or (ii) in the case of a disability retirement due to a disability qualifying for disability benefits under said Act, the estimated monthly primary disability insurance benefit payable to the Participant under the provisions of said Act in effect on his Termination Date, regardless in either case of whether he applies for such benefit or whether he is or becomes ineligible therefor for any reason. If a Participant’s employment terminates prior to attainment of age sixty-five (65) other than for a disability retirement covered by clause (ii) immediately above, his Social Security Benefit shall be estimated on the assumption his rate of compensation (as defined in Section 1.02(f) hereof) for the calendar year immediately prior to his Termination Date will continue until age sixty-five (65). Once determined, a Participant’s Social Security Benefit shall not be subject to adjustment except for arithmetical errors in the computation thereof and shall, for all purposes of the Plan, be assumed to remain as finally computed regardless of any subsequent fact, event or occurrence which would cause a change or an adjustment in the annual amount thereof actually payable to the Participant.

(cc) “Specified Employee” means a Participant who is a key employee (as defined in Code Section 416(i) but without regard to Code Section 416(i)(5)) of the Company or an Affiliate of the Company any of the stock of which is publicly traded on an established securities market or otherwise, as determined at the time of the Participant’s Separation from Service. A Participant is a key employee under Code Section 416(i) if the Participant meets the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii), applied in accordance with the regulations under Code Section 416, but disregarding Code Section 416(i)(5), at any time during the 12-month period ending on the identification date. For purposes of determining whether a Participant is a key employee, the definition of compensation under Treasury Regulation §1.415-2(a) shall be used, applied as if the Company and its affiliates were not using any safe harbor under Treasury Regulation §1.415-2(d), any of the special timing rules of Treasury Regulation §1.415-2(e) or any of the special rules provided in Treasury Regulation §1.415-2(g). If a Participant is a key employee as of an identification date, the Participant is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the identification date. The identification date for this Plan shall be December 31 of each year, such that if the Participant satisfies the foregoing requirements for key employee status as of December 31 of a year, the Participant shall be treated as a key employee for the 12-month period beginning April 1 of the following calendar year.

(dd) “Spouse” means the person who is legally married to a RIP Participant (i) on the date he first receives a retirement benefit hereunder or, (ii) where his death occurs prior to the commencement of such benefit payments, throughout the entire one (1) year period ending on the date of such death.

(ee) “Termination Date” means the date on which a Participant’s employment with the Employer ends because he quits, retires, is terminated or dies, or if earlier, the date of his Separation from Service.

(ff) “Total and Permanent Disability” means a physical and/or mental disability which:

(i)

results from bodily or mental injury or disease, whether occupational or nonoccupational, while employed by the Employer;

(ii)

has existed for a continuous period of seven (7) consecutive months;

(iii)

either (A) qualifies for disability benefits under the federal Social Security Act or (B) is determined by the Administrator, on the basis of medical evidence satisfactory to the Administrator, to wholly and permanently prevent the Participant from engaging in any occupation or employment for remuneration or profit;

(iv)

was not contracted, suffered or incurred while the Participant was engaged in, or did not result from his having engaged in, a criminal act involving moral turpitude; and

(v)

did not result from addiction to alcohol or narcotics, self-inflicted injury or act of war.

In determining under condition (iii) whether a Participant is wholly or permanently prevented from engaging in any occupation or employment for remuneration or profit, there shall be excepted from consideration: (x) work performed pursuant to a medically recommended plan for rehabilitation; and (y) work from which the annual earnings amount to no more than twenty-five percent (25%) of his compensation (as defined in Section 1.02(l) hereof) for the calendar year immediately preceding the date that he incurred the disability which is found to be a Total and Permanent Disability.

(gg) “Trust” means the trust established pursuant to the trust agreement dated September 30, 1992, by and between the Company and Bank One Wisconsin Trust Company, NA.

(hh) “Year of Service” means twelve (12) full months of employment with the Employer which is credited pursuant to Section 3.04 hereof for purposes of participation eligibility, vesting, benefit accrual, and determining Points under the Plan.

Section 1.03. Construction .

(a) Wherever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply, and wherever any words herein are used in the singular or the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. The words “hereof”, “herein”, “hereunder” and other similar compounds of the word “here” shall mean and refer to the entire Plan and not to any particular Article or Section. Titles of Articles and Sections hereof are for general information only, and the Plan is not to be construed by reference thereto.

(b) The Plan shall be construed and its validity determined according to applicable federal laws and, to the extent not preempted by such federal laws, the laws of the State of Wisconsin without reference to conflict of law principles thereof. In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if said illegal and invalid provisions had never been inserted herein.

(c) The Plan shall be construed and interpreted in a manner that will cause any payment hereunder that is considered deferred compensation and that is not exempt from Code Section 409A to meet the requirements thereof such that no additional tax will be due under Code Section 409A on such payment.

ARTICLE II.

PURPOSE AND EFFECTIVE DATE

Section 2.01. Purpose of Plan . The purpose of the Plan is to provide for the special retirement income needs of certain employees of the Employer which are not deemed to be satisfied by the applicable current and prior qualified retirement plans of the Employer.

Section 2.02. Effective Date . The Plan is amended and restated effective July 1, 2013. The provisions of this amended and restated Plan apply to any individual with an interest hereunder on or after January 1, 2009. Notwithstanding the foregoing, any Participant who began receiving distributions under the Plan prior to January 1, 2009, shall continue to receive such distributions according to the election then in effect.

ARTICLE III.

Participation And Years of Service

Section 3.01. Participation .

(a) Any employee who was a Participant in the Plan on December 31, 2008, shall continue in participation hereunder on January 1, 2009.

(b) Any other Eligible Employee shall become a Participant in the Plan on his participation date (if he is then employed by the Employer), which date shall be the January 1 next following the Eligible Employee’s satisfaction of all the following requirements:

(i)

attainment of age twenty-one (21);

(ii)

completion of one (1) Year of Service; and

(iii)

employment with the Employer resulting in compensation which is reportable on the Eligible Employee’s W-2 form for the calendar year immediately preceding any potential participation date after his satisfying both requirements (i) and (ii) above and which equals or exceeds the amount of compensation applicable to such year under Code Section 414(q)(1)(B); provided, however, that such reportable compensation shall include any amounts excludable therefrom pursuant to compensation reductions for deferrals specified in Section 1.02(l) hereof.

(c) Any employee who terminated his employment with the Employer prior to June 1, 1990 but on or after January 1, 1990, and who satisfied the eligibility requirements of subsection (b) of this Section 3.01 on his Termination Date shall become a Participant in the Income Plan on June 1, 1990.

(d) A Participant who has once satisfied all the eligibility requirements of subsection (a) or (b) of this Section 3.01 will remain eligible to participate in the Plan despite whether he continues to satisfy requirement (iii) of said subsection (b) subsequent to his participation date.

(e) An Eligible Employee whose employment with the Employer terminates and who is subsequently reemployed with an Employer shall be re-credited upon reemployment with his prior Years of Service for eligibility purposes.

(f) Notwithstanding subsection (b), the individual hired on August 6, 2013 as the President and Chief Executive Officer of Marcus Theatres and Executive Vice President of the Company shall immediately be considered a RIP Participant as of such date of hire.

Section 3.02. Years of Service .

(a) A Participant shall earn Years of Service in an amount equal to the number determined as follows:

(i)

the total number of months during the period beginning on the Participant’s Date of Hire and ending on his Termination Date,

plus

(ii)

any Period of Severance of less than twelve (12) months,

divided by

(iii)

twelve (12).

(b) Except as provided below, a Participant who incurs a Period of Severance from employment with the Employer shall have his Years of Service before the Period of Severance reinstated and aggregated with his Years of Service after the Period of Severance.

Notwithstanding the foregoing, for purposes of determining a Participant’s vested interest in his Account:

(i)

If a SRP Participant incurs a Period of Severance of sixty (60) consecutive months or more, all Years of Service earned by the SRP Participant after such Period of Severance shall be disregarded in determining such Participant’s vested interest in his Account attributable to employment before such Period of Severance. However, Years of Service earned both before and after such Period of Severance shall be included in determining the SRP Participant’s vested interest in his Account balance attributable to employment after such Period of Severance.

(ii)

If a SRP Participant incurs a Period of Severance of fewer than sixty (60) consecutive months, Years of Service earned both before and after such Period of Severance shall be included in determining such Participant’s vested interest in his Account attributable to employment both before and after such Period of Severance.

(c) After calculating a Participant’s Years of Service under subsection (a) and (b) of this Section 3.02, any remaining period of less than twelve (12) months shall be disregarded.

ARTICLE IV.

Accrued BENEFIT for RIP participants

Section 4.01. RIP Participant’s Eligibility for Accrued Benefit . Subject to Section 4.03 hereof, a RIP Participant shall be entitled to all or a portion of his Accrued Benefit upon the RIP Participant’s Termination Date that occurs:

(a) on or after his attainment of age sixty-five (65) ( normal retirement );

(b) due to his Total and Permanent Disability occurring prior to age sixty-five (65) and on or after his completion of five (5) Years of Service ( disability retirement );

(c) prior to his attainment of age sixty-five (65) and on or after both his attainment of age sixty (60) and completion of five (5) Years of Service ( early retirement ); or

(d) prior to his attainment of age sixty (60) and on or after his completion of five (5) Years of Service ( deferred vested retirement ).

Section 4.02. Total and Permanent Disability . Any Participant receiving disability retirement benefits hereunder may be required to submit to medical examination at any time during retirement prior to age sixty-five (65), but not more often than semi-annually, to determine whether he is eligible for continuance of the disability retirement benefits hereunder. If on the basis of such examination it is found that he no longer has a Total and Permanent Disability, his disability retirement benefits hereunder shall cease.

Section 4.03. Vesting of Accrued Benefit .

(a) A RIP Participant who qualifies on his Termination Date for normal, disability or early retirement under subsection (a), (b) or (c), respectively, of Section 4.01 hereof shall be one hundred percent (100%) vested in his Accrued Benefit.

(b) A RIP Participant who qualifies on his Termination Date for deferred vested retirement under subsection (d) of Section 4.01 hereof shall be vested in his Accrued Benefit in accordance with the following schedule:

years of service		vested percentage of accrued benefit
Less than 5		0%
5		50%
6		60%
7		70%
8		80%
9		90%
10		100%

(c) Notwithstanding subsections (a) and (b) of this Section 4.03 or any other provision herein to the contrary, one hundred percent (100%) of the entire amount of a RIP Participant’s Accrued Benefit shall be forfeited if the Administrator determines, in its sole discretion, as of or subsequent to the RIP Participant’s Termination Date that either or both of the following events shall have occurred:

(i)

The RIP Participant engaged in misconduct with respect to his employment with the Employer which shall include, but not be limited to by way of enumeration, theft, embezzlement, dishonesty, fraud, malfeasance, misappropriation, divulging trade secrets or confidential business information, conspiracy against any Employer, refusal of a work assignment by his Employer or assisting a competitor of any Employer; and/or

(ii)

During the one (1) year period immediately following the RIP Participant’s Termination Date, the RIP Participant takes employment with, becomes a consultant to or otherwise engages in a business competitive with any business of any Employer within Wisconsin, any state contiguous thereto or any other state in which such Employer does business.

Section 4.04. RIP Participant’s Surviving Spouse Pre-Retirement Death Benefit . In the event a RIP Participant dies both while employed by the Employer and on or after his completion of five (5) Years of Service, the RIP Participant’s surviving Spouse, if any, shall be entitled to receive death benefits hereunder as provided in Section 4.08 hereof.

Section 4.05. Calculation of Accrued Benefit . The Accrued Benefit of any RIP Participant upon terminating employment with the Employer shall be a monthly benefit equal to the amount calculated as follows:

(a) fifty percent (50%) of his Average Monthly Earnings as of his Termination Date,

minus

(b) fifty percent (50%) of his Social Security Benefit,

times

(c) a fraction, the numerator of which shall be the RIP Participant’s total number of Years of Service as of his Termination Date or thirty (30), whichever is less, and the denominator of which shall be thirty (30),

minus

(d) any applicable Other Benefits.

Section 4.06. Payment of Accrued Benefit to RIP Participants .

(a) The vested portion (as determined under Section 4.03 hereof) of a RIP Participant’s Accrued Benefit (as calculated under Section 4.05 hereof) shall be payable monthly (or otherwise in accordance with the regular payroll cycle of the Company if so determined by the Company), commencing with the month next following the later of:

(i)

the month during which the RIP Participant’s Separation from Service occurs, provided that if a RIP Participant is a Specified Employee at the time of his Separation from Service, the payments that are payable during the first six (6) months after his Separation from Service shall be accumulated and paid in a lump sum in the seventh (7 ^th ) month following the month in which his Separation from Service occurs, or

(ii)

the age specified by the RIP Participant in a written election filed no later than December 31, 2008, which date may not be earlier than age sixty (60) or later than age sixty-five (65).

Such election shall be irrevocable as of January 1, 2009. In the absence of an election, the vested portion of a RIP Participant’s Accrued Benefit shall be paid on the later to occur of the RIP Participant’s Separation from Service (in accordance with clause (i) above) and the RIP Participant’s attainment of age sixty-five (65). Subject to Section 4.07 hereof, the vested portion of a RIP Participant’s Accrued Benefit shall be payable for the RIP Participant’s life only and shall end with the last payment made prior to his death.

(b) Any benefit payments to a RIP Participant and his surviving Spouse or other Beneficiary in a form other than that provided in subsection (a) of this Section 4.06 shall be adjusted so that their value is the Actuarial Equivalent to the value of the RIP Participant’s vested Accrued Benefit, assuming it is paid monthly in the form provided in such subsection (a), commencing with the month next following the later of his sixty-fifth (65th) birthday or Separation from Service. Any benefits actually commencing prior to age sixty-five (65) shall be reduced to reflect the number of months by which the benefit payment commencement date precedes such post-age sixty-five (65) month, with such reduction being four-tenths of one percent (0.4%) for each month of the early commencement period, subject in the case of a disability retirement under Section 4.01(b) hereof, to a maximum aggregate reduction of twenty-four percent (24%).

Section 4.07. Optional Methods of Payment of Accrued Benefit .

(a) Prior to the commencement of his benefit payments hereunder and pursuant to procedures established by the Administrator, the RIP Participant may, subject to Section 4.06(b) hereof and subsection (b) of this Section 4.07, and in lieu of the life only annuity otherwise provided under Section 4.06, elect only one of the following applicable optional methods of payment of the vested portion of his Accrued Benefit:

(i)

If a RIP Participant has a Spouse on the date that his benefit payments commence, the RIP Participant may receive payment in the form of a Fifty Percent (50%) Joint and Survivor Annuity which shall provide a reduced monthly payment to the RIP Participant for his lifetime and, upon the RIP Participant’s death, a lifetime monthly benefit to such Spouse, if surviving at the time of RIP Participant’s death, in an amount equal to fifty percent (50%) of the reduced monthly benefit which had been payable to the RIP Participant. The last payment of the Fifty Percent (50%) Joint and Survivor Annuity shall be made as of the first day of the month in which the death of both the RIP Participant and his Spouse has occurred.

(ii)

A RIP Participant, whether or not he has a Spouse on the date that his benefit payments commence, may receive payment in the form of an One Hundred Twenty (120) Month Sum Certain Annuity which provides a reduced monthly benefit payable during the RIP Participant’s life with the provision that, in the event of his death within a period of ten (10) years after his benefit payment commencement date, such benefits shall continue to such Beneficiary(ies) as the RIP Participant shall have designated in writing at the time of his election, for the remainder of the ten (10) year period. If no designated Beneficiary survives the RIP Participant, a single sum payment which is the Actuarial Equivalent of the remaining payments shall be made to the estate of the last to survive of the RIP Participant or his Beneficiary. In the event all designated Beneficiaries die prior to the month for which benefits hereunder commence, then the RIP Participant’s election of this optional annuity form shall not be effective.

The Company may elect to pay the monthly payments provided herein in accordance with the regular payroll cycle of the Company.

(b) A RIP Participant must file his written election of an optional form of benefit payment and a designation of his Beneficiary(ies), if any, under subsection (a) of this Section 4.07 with the Administrator within ninety (90) days prior to the date on which his benefits commence. A RIP Participant’s election of an optional form of benefit payment and his beneficiary designation thereunder may not be changed after benefit payments have commenced except that a RIP Participant’s designation of a Beneficiary(ies) under the One Hundred Twenty (120) Month Sum Certain Annuity may be changed at any time prior to the RIP Participant’s death or prior to the end of the ten (10) year period of benefit payment, whichever is earlier.

(c) In the event that a RIP Participant to whom payment of benefits hereunder has commenced is reemployed as a regular, full time employee by an Employer, his benefit payments hereunder shall not be suspended. Rather, on the first day of the month next following his subsequent Termination Date, any additional benefits to which the RIP Participant may become entitled as a result of his reemployment shall be payable in accordance with the form of distribution in effect. The determination of whether a rehired person is reemployed in a regular, full time capacity shall be made by the Administrator.

(d) Upon a RIP Participant’s Termination Date, the Administrator may elect, at its sole discretion, to distribute the Actuarial Equivalent present value of the RIP Participant’s entire vested Accrued Benefit to such RIP Participant in a lump sum if such single sum value does not exceed the limit in effect under Code Section 402(g)(1)(B) (which is the annual dollar limit on employee elective deferrals to the 401(k) plan, without regard to the age 50 catch-up amount) for the year in which the RIP Participant’s Separation from Service occurs. Notwithstanding any provisions to the contrary contained herein, if a RIP Participant who receives a lump sum distribution pursuant to this subsection (d) is subsequently rehired by an Employer, the amount of any benefit he shall become entitled to receive under the Plan as a result of his reemployment shall be offset by the amount which is the Actuarial Equivalent of such lump sum distribution as if such amount were Other Benefits of the RIP Participant.

Section 4.08. Pre-Retirement Death Benefit for RIP Participants .

(a) Subject to subsection (b) of this Section 4.08, in the event a RIP Participant’s surviving Spouse, if any, is eligible for pre-retirement death benefits pursuant to Section 4.04 hereof, such Spouse shall be entitled to receive fifty percent (50%) of the monthly Joint and Survivor Annuity, determined in accordance with Sections 4.03, 4.05 and 4.07(a)(i), that the RIP Participant would have been entitled to receive had he terminated employment with the Employer on the day before his death.

(b) Payment of benefits to a surviving Spouse shall commence the month next following what would have been the RIP Participant’s sixtieth (60th) birthday or the RIP Participant’s date of death, whichever is later, and the amount of such payments shall be reduced by four-tenths of one percent (0.4%) for each month payments are made prior to the month next following what would have been the RIP Participant’s sixty-fifth (65th) birthday.

ARTICLE V.

Accounts for SRP Participants

Section 5.01. Establishment of Accounts . The Company shall establish an Account for each SRP Participant, and shall credit to each such Account the amounts specified in Sections 5.02, 5.03 and 5.04, as applicable.

Section 5.02. Initial Account Balances . A SRP Participant who is a Participant on January 1, 2009 shall be credited with an opening Account balance in an amount equal to the single sum Actuarial Equivalent present value of such Participant’s vested Accrued Benefit, calculated under Section 4.05 assuming a Termination Date of December 31, 2008. All other SRP Participants shall have an opening Account balance of zero.

Section 5.03. Annual Allocations .

(a) Eligibility for Annual Allocation . Each SRP Participant shall be entitled to an annual allocation to his Account as of the last day of a Plan Year if all of the following requirements are met:

(i)

the SRP Participant has completed 1,000 Hours of Service in such Plan Year, or has terminated employment during such Plan Year as a result of death, Total and Permanent Disability or Retirement;

(ii)

the SRP Participant is considered a Highly Compensated Employee for such Plan Year; and

(iii)

the SRP Participant is employed by an Employer on the last day of such Plan Year, or has terminated employment during such Plan Year as a result of death, Total and Permanent Disability or Retirement.

(b) Amount of Annual Allocation . If a SRP Participant is eligible for an annual allocation pursuant to subsection (a), the amount allocated to his Account as of the last day of the Plan Year shall be determined as follows, based on the Participant’s employment status as of the last day of such Plan Year:

(i)

If the SRP Participant is a member of the Corporate Executive Committee, his allocation shall be an amount equal to the percentage of his Compensation for the Plan Year that corresponds to the Participant’s Points as of the last day of such Plan Year as set forth in the following table:

Points		Percentage Compensation
<60		4%
60 - 69		5%
70 - 79		6%
80+		7%

(ii)

If the SRP Participant is a Senior Vice President, Vice President, Senior Corporate Associate or Hotel General Manager (such designations to be determined in the sole discretion of the Administrator), his allocation shall be an amount equal to the percentage of his Compensation for the Plan Year that corresponds to the Participant’s Points as of the last day of such Plan Year as set forth in the following table:

Points		Percentage Compensation
<60		2.0%
60 - 69		2.5%
70 - 79		3.0%
80+		3.5%

(iii)

For all other Participants, his allocation shall be an amount equal to 0.5% of his Compensation for the Plan Year.

Section 5.04. Earnings on Accounts . Accounts shall be credited as of the last day of each calendar year quarter with simple interest at the reference rate declared by Chase Bank N.A. on the first day of the calendar year quarter. Quarterly adjustments in the reference rate at the beginning of each calendar year quarter will apply to all monies in an Account.

Section 5.05. Vesting of Account Balances .

(a) A SRP Participant shall be 100% vested in the balance of his Account if he terminates employment with the Employer due to death, Total and Permanent Disability, or Retirement. In all other cases, the SRP Participant shall be vested in the balance of his Account as of the date of his Termination Date in accordance with the following schedule:

years of service		vested percentage of Account
Less than 5		0%
5		50%
6		60%
7		70%
8		80%
9		90%
10		100%

(b) Notwithstanding subsection (a), one hundred percent (100%) of the entire balance in a SRP Participant’s Account shall be forfeited if the Administrator determines, in its sole discretion, as of or subsequent to the Participant’s Termination Date that either or both of the following events shall have occurred:

(i)

The Participant engaged in misconduct with respect to his employment with the Employer which shall include, but not be limited to by way of enumeration, theft, embezzlement, dishonesty, fraud, malfeasance, misappropriation, divulging trade secrets or confidential business information, conspiracy against any Employer, refusal of a work assignment by his Employer or assisting a competitor of any Employer; and/or

(ii)

During the one (1) year period immediately following the Participant’s Termination Date, the Participant takes employment with, becomes a consultant to or otherwise engages in a business competitive with any business of any Employer within Wisconsin, any state contiguous thereto or any other state in which such Employer does business.

Section 5.06. Distributions .

(a) Initial Elections . Each SRP Participant who is a Participant on January 1, 2009, shall, prior to December 31, 2008, and pursuant to procedures established by the Administrator, elect the time and form of payment of his Account balance in accordance with subsections (d) and (e), which election shall become irrevocable as of January 1, 2009, except as provided in subsection (b). Each other SRP Participant shall, within the first 30 days of his participation date and pursuant to procedures established by the Administrator, elect the time and form of payment of his Account balance in accordance with subsections (d) and (e), which election shall become irrevocable as of the end of the 30-day period, except as provided in subsection (b).

(b) Subsequent Elections . Beginning in 2010 and each five years thereafter ( i.e. , 2015, 2020, 2025, etc.), a SRP Participant may file a new election as to the time and form of payment of his Account balance, in accordance with subsections (d) and (e), attributable to deferrals made with respect to the following five (5) years. Such election shall be irrevocable as of the January 1 for which it is effective, subject to the SRP Participant’s right to make a new election for a subsequent 5-year cycle. For example, by December 31, 2010, a SRP Participant may file an election with respect to his Account balance attributable to deferrals made with respect to the 2011-2015 time period. By December 31, 2015, a SRP Participant may file an election with respect to his Account balance attributable to deferrals made with respect to the 2016-2020 time period. The Administrator shall create sub-Account(s) to reflect each separate time and form of payment elected by the SRP Participant.

(c) Default Elections . If a SRP Participant fails to make an initial election as to the time and form of payment pursuant to subsection (a), the Account shall be paid in the form of a lump sum at the Participant’s attainment of age sixty-five (65) or Separation from Service, if later. If a SRP Participant fails to file an election with respect to a subsequent 5-year cycle pursuant to subsection (b), the most recent election on file (or deemed election if no election has been made) shall apply to the next 5-year cycle.

(d) Time of Payment . A SRP Participant’s Account shall be paid on the later of Separation from Service or the age elected by the SRP Participant, which must not be earlier than age sixty (60) or later than age sixty-five (65), or on the default date specified in subsection (c) if applicable (the “ distribution date ”).

(e) Forms of Payment . A SRP Participant may elect to have his vested Account paid in one of the following optional forms of distribution, or payment shall be made in the default form specified in subsection (c) if applicable.

(i)

An optional form of distribution of an Account is payment in a single lump sum amount equal to the vested balance of the SRP Participant’s Account within ninety (90) days after the distribution date; provided that if the distribution is to be made upon a SRP Participant’s Separation from Service and such individual is a Specified Employee at the time of his Separation from Service, then payment shall be made in the seventh (7 ^th ) month following the month in which the SRP Participant’s Separation from Service occurs.

(ii)

An optional form of distribution of an Account is the installment method of payment. Annual installments over not more than ten (10) years may be elected. If the installment method of payment is elected, the periodic payments will include earnings adjustments to any remaining balance during the payout period. Annual amounts to be distributed under the installment method are determined at the beginning of the year in which payments are to be made by multiplying the vested balance of the SRP Participant’s Account by a fraction in which the numerator is one (1) and the denominator is the number of annual payments remaining to be paid (e.g., for 10 installments, 1/10, 1/9, 1/8, etc.). The first installment payment shall be paid no later than ninety (90) days after the distribution date; provided that if the distribution is to be made upon a SRP Participant’s Separation from Service and such individual is a Specified Employee at the time of his Separation from Service, then payment shall be made in the seventh (7 ^th ) month following the month in which the SRP Participant’s Separation from Service occurs. Remaining installment payments will be paid in January of each year subsequent to the year in which the first installment was paid. If the vested balance of a SRP Participant’s Account is ten thousand dollars ($10,000) or less on any payment date, the Company shall make a lump sum distribution to the SRP Participant of the full remaining vested Account balance.

(f) Lump Sum Distribution . Notwithstanding anything to the contrary in subsections (d) and (e), on or after a SRP Participant’s Separation from Service, the Administrator may elect, at its sole discretion, to distribute the SRP Participant’s entire Account balance to such SRP Participant in a lump sum if (i) the sum of (A) such Account balance and (B) any other account balance representing Company contributions and earnings thereon held on behalf of the SRP Participant in a nonqualified deferred compensation plan does not exceed $17,500, which is the annual dollar limit on employee elective deferrals to the 401(k) plan for 2013 without regard to the age 50 catch-up amount, or such other dollar amount that is the elective deferral limit under Code Section 402(g)(1)(B) for the year in which the SRP Participant’s Separation from Service occurs, and (ii) such lump sum distribution results in the termination and liquidation of the entirety of the SRP Participant’s interest in the Account and the other account balance representing Company contributions and earnings thereon.

(g) Death Benefits . If a SRP Participant dies before receiving the full distribution of his vested Account, any remaining distributions shall be made to the Beneficiary in a single lump sum within ninety (90) days following the date of the SRP Participant’s death (provided that the Company shall have no liability to any Beneficiary for the consequences arising from any delay in payment resulting from the failure of the Beneficiary to timely notify the Company of the SRP Participant’s death). If a Beneficiary dies after a SRP Participant while entitled to receive a distribution from the Plan, the distribution shall be paid to the estate of the Beneficiary. If a valid designation of Beneficiary is not in effect at the time of the death of a SRP Participant, or if the Beneficiary does not survive the SRP Participant, the estate of the SRP Participant is deemed to be the sole Beneficiary of the SRP Participant.

ARTICLE VI.

FUNDING OF BENEFITS

Section 6.01. Source of Payments .

(a) Except as otherwise provided in subsection (c) of this Section 6.01, no funds or other assets of the Company or the other Employer shall be segregated and attributable to any benefit payments to be made at a later time as hereinabove provided, but rather benefit payments under the Plan shall be made from the general assets of the Company at the time any such payment becomes due and payable. Benefit payments under the Plan are to be taken as deductions for income tax purposes in the Company’s fiscal year that they are actually made. No Participant or his Spouse or Beneficiary (surviving or otherwise), if any, shall have any proprietary rights of any nature whatsoever with respect to any benefit payments, unless and until such time a benefit payment, and then only as to the amount of such payment, is made to such Participant or the surviving Spouse or Beneficiaries thereof, as the case may be.

(b) The dollar amount of benefits that the Plan is obligated to pay to Participants pursuant to the provisions contained herein will be recorded as part of the Company’s standard accounting procedures.

(c) In the event that there is a change of control or potential change of control (as defined in the Trust document) of the Company, the Company will fund the Trust in accordance with the provisions of the Trust document to assure that obligations owed to all Participants hereunder as of the date of said change shall be met; provided, however, that all monies deposited in the Trust shall remain subject to the claims of the Company’s general creditors.

ARTICLE VII.

OTHER PROVISIONS

Section 7.01. Administration of the Plan . The Plan shall be administered by the Administrator who shall have all such powers that may be necessary to carry out the provisions of the Plan in the absence of any action by the Board, including without limitation, the power to delegate administrative matters to other persons; to amend, construe and interpret the Plan; to adopt and revise rules, regulations and forms relating to and consistent with the Plan’s terms; and to make any other determinations which it deems necessary or advisable for the implementation and administration of the Plan; provided, however, that the right and power to amend the Plan’s Accrued Benefit calculation formula, the Account balances crediting formula, the vesting requirements and/or to terminate the Plan are reserved exclusively to the Board. Subject to the foregoing, all decisions and determinations by the Administrator shall be final, binding and conclusive as to all parties, including without limitation any Employer, any Participant, any Spouse or other Beneficiary of a Participant, all other employees of the Employer and all other persons.

Section 7.02. Non-Alienation of Payments . Any benefits payable under the Plan shall not be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, garnishment or encumbrance of any kind, by will, or by inter vivos instrument. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit payment, whether currently or thereafter payable, shall not be recognized by the Administrator or any Employer. Any benefit payment due hereunder shall not in any manner be liable for or subject to the debts or liabilities of any Participant or the surviving Spouse or Beneficiary thereof, as the case may be. If any such Participant, surviving Spouse or Beneficiary shall attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any benefit payments to be made to that person under the Plan or any part thereof, or if by reason of such person’s bankruptcy or other event happening at any time, such payments would devolve upon anyone else or would not be enjoyed by such person, then the Administrator, in its sole discretion, may terminate such person’s interest in any such benefit payment, and hold or apply it to or for the benefit of that person, the Spouse, children, or other dependents thereof, or any of them, in such manner as the Administrator may deem proper.

Section 7.03. Incompetency . Every person receiving or claiming benefit payments under the Plan shall be conclusively presumed to be mentally competent and age of majority until the date on which the Administrator receives a written notice, in a form and manner acceptable to the Administrator, that such person is incompetent and/or a minor and that a guardian, conservator, or other person legally vested with the care of his estate has been appointed. In the event a guardian or conservator of the estate of any person receiving or claiming benefit payments under this Plan shall be appointed by a court of competent jurisdiction, payments may be made to such guardian or conservator; provided that proper proof of appointment and continuing qualification is furnished in a form and manner acceptable to the Administrator. Any such payment so made shall be a complete discharge of any liability therefor.

Section 7.04. Limitation of Rights Against the Employer . Participation in the Plan, or any modifications thereof, or the payments of any benefits hereunder, shall not be construed as giving to any Participant any right to be retained in the service of any Employer, limiting in any way the right of any Employer to terminate such Participant’s employment at any time, evidencing any agreement or understanding express or implied, that any Employer will employ such Participant in any particular position or at any particular rate of compensation and/or guaranteeing such Participant any right to receive any other form or amount of remuneration from any Employer.

Section 7.05. Liability . Neither the Employer nor any shareholder, director, officer or other employee of any Employer or the Administrator or any other person shall be jointly or severally liable for any act or failure to act hereunder, except for gross negligence or fraud.

Section 7.06. Amendment or Termination of the Plan .

(a) Amendment . The Company, by action of the Board or the Administrator, as applicable, reserves the right to amend or modify the Plan at any time; and such action shall be final, binding and conclusive as to all parties, including any Participant hereunder, any surviving Spouse or Beneficiary thereof and all other employees and persons; provided, however, that any such action by the Board or the Administrator, as applicable, to change the monthly or other payment amount or the time and manner of payment thereof as then provided in the Plan shall not be effective and operative unless and until written consent thereto is obtained from each Participant affected by such action or, if any such Participant is not then living, from the surviving Spouse or beneficiary thereof, as the case may be.

(b) Termination . The Company, by action of the Board, reserves the right to terminate or discontinue the Plan at any time; and such action shall be final, binding and conclusive as to all parties, including any Participant hereunder, any surviving Spouse or Beneficiary thereof and all other employees and persons; provided, however, that any such action by the Board to terminate or discontinue the Plan shall not be effective and operative unless and until written consent thereto is obtained from each Participant affected by such action or, if any such Participant is not then living, from the surviving Spouse or Beneficiary thereof, as the case may be. Upon termination of the Plan, the Board may provide that all benefits will be paid out in connection with the termination of the Plan in the following circumstances:

(i)

The irrevocable termination occurs within thirty (30) days prior to or twelve (12) months following a Change of Control, and all other arrangements required to be aggregated with this Plan under Code Section 409A following the Change of Control are likewise terminated and liquidated with respect to each Participant that experienced the Change of Control event. In such event, each Participant’s benefits or Account balance, including those benefits or Account balances already in pay status, shall be paid in a lump sum as soon as practicable (but not more than twelve (12) months) following the date of such Plan termination.

(ii)

The termination occurs within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A). In such event, each Participant’s benefits or Account balance, including those benefits or Account balances already in pay status, shall be paid in a lump sum in the latest of: (A) the calendar year in which the Plan termination occurs, (B) the first calendar year in which the payment is no longer subject to a substantial risk of forfeiture, or (C) the first calendar year in which payment is administratively practicable.

(iii)

The termination of the Plan is irrevocable and does not occur proximate to a downturn in the financial health of the Company and its Affiliates. In such event, all benefits and vested Account balances will be distributed to all Participants, Spouses or beneficiaries, as applicable, in a single sum payment at least 12, but not more than 24, months after the date of termination. This provision shall not be effective unless all other plans required to be aggregated with this Plan under Code Section 409A are also terminated and liquidated. Notwithstanding the foregoing, any payment that would otherwise be paid during the 12-month period beginning on the Plan termination date pursuant to the terms of the Plan shall be paid in accordance with such terms. In addition, the Company or any Affiliate shall be prohibited from adopting a similar arrangement within three years following the date of the Plan’s termination.

All lump sums payable shall be the single sum Actuarial Equivalent present value of the Accrued Benefit, or the vested Account balance, to which the Participant, Spouse or Beneficiary is entitled, as applicable, as of the date such lump sum is paid.

Section 7.07. Tax Withholding . The Company shall deduct from benefits payable hereunder any amounts it is required to withhold for taxes as to such benefits under any state, federal, or local law. In addition, if prior to the date of distribution of any amount hereunder, the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2), where applicable, becomes due, then the Administrator may authorize a payment from the RIP Participant’s Accrued Benefit or the SRP Participant’s Account balance equal to the amount needed to pay the Participant’s portion of such tax, as well as withholding taxes resulting therefrom (including the additional taxes attributable to the pyramiding of such distributions and taxes).

Section 7.08. Claims Procedures .

(a) Initial Claim . If a Participant, Spouse or Beneficiary (the “claimant”) believes that he is entitled to a distribution from the Plan that was not provided, the claimant or his legal representative shall file a written claim for such benefit with the Administrator no later than ninety (90) days following the date the distribution should have been made. The Administrator shall review the claim within 60 days following the date of receipt of the claim. If the claimant’s claim is denied in whole or part, the Administrator shall provide written notice to the claimant of such denial. The written notice shall include: the specific reason(s) for the denial; reference to specific Plan provisions upon which the denial is based; a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and a description of the Plan’s review procedures (as set forth in subsection (b)) and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse determination upon review.

(b) Request for Appeal . The claimant has the right to appeal the Administrator’s decision by filing a written appeal to the Administrator within 60 days after the claimant’s receipt of the decision or deemed denial; provided that to avoid penalties under Code Section 409A, the claimant’s appeal must be filed no later than 180 days after the latest date the payment that is in dispute should have been paid. The claimant will have the opportunity, upon request and free of charge, to have reasonable access to and copies of all documents, records and other information relevant to the claimant’s appeal. The claimant may submit with the appeal written comments, documents, records and other information relating to his appeal. The Administrator will review all comments, documents, records and other information submitted by the claimant relating to the claim, regardless of whether such information was submitted or considered in the initial claim determination. The Administrator shall make a determination on the appeal within 60 days after receiving the claimant’s written appeal; provided that the Administrator may determine that an additional 60-day extension is necessary due to circumstances beyond the Administrator’s control, in which event the Administrator shall notify the claimant prior to the end of the initial period that an extension is needed, the reason therefor and the date by which the Administrator expects to render a decision. If the claimant’s appeal is denied in whole or part, the Administrator shall provide written notice to the claimant of such denial. The written notice shall include: the specific reason(s) for the denial; reference to specific Plan provisions upon which the denial is based; a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claimant’s claim; and a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA. If the claimant does not receive a written decision within the time period(s) described above, the appeal shall be deemed denied on the last day of such period(s).

(c) ERISA Fiduciary . For purposes of ERISA, the Administrator shall be considered the named fiduciary and the plan administrator for the Plan.

Exhibit 31.1

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

I, Gregory S. Marcus, certify that:

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

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

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

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

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

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

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

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

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

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

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

DATE: October 8, 2013

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

Exhibit 31.2

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

I, Douglas A. Neis, certify that:

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

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

DATE: October 8, 2013

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

Exhibit 32

Written Statement of the Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. §1350

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

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

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

Date: October 8, 2013