DELIVER GREAT EXPERIENCES ACHIEVE GREAT RESULTS DEAR SHAREHOLDERS, Deliver great experiences....

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  • DELIVER GREAT EXPERIENCES ACHIEVE GREAT RESULTS

    2016 Annual Report ® ®

    T h

    e M arcu

    s C orp

    oration 2

    0 1 6 A

    n n

    u al R

    ep ort

  • • Achieved record revenues and operating

    income; net earnings up 23%

    • Both divisions outperformed their industries

    and contributed to the record results

    • Total return to shareholders was 68%

    for fiscal 2016; quarterly cash dividend

    increased 11.1% in February 2017

    CORPORATE HIGHLIGHTS (unaudited)

    OPERATIONS 52 weeks ended 53 weeks ended Percent (in millions) December 29, 2016 December 31, 2015 Change

    Revenues $543.9 $531.7 2.3% Operating Income 70.0 61.0 14.6% Net Earnings 37.9 30.8 23.1%

    PER COMMON SHARE (diluted)

    Net Earnings $1.36 $1.10 23.6% Cash Dividends 0.45 0.41 9.8%

    FINANCIAL POSITION Percent (in millions) December 29, 2016 December 31, 2015 Change

    Shareholders’ Equity $390.1 $363.4 7.4% Total Assets $911.3 $804.7 13.2% Debt/Capitalization Ratio 0.42 0.38 –

    FINANCIAL HIGHLIGHTS

    • Achieved record revenues and operating income in fiscal 2016. Continued to outperform the industry, exceeding the change in national box office revenues by 6.4 percentage points.

    • Record performance due to strong leadership and operational excellence, ongoing major investments in existing theatres and deepened customer relationships through our popular customer loyalty program and innovative pricing strategies including the $5 Tuesday program and more.

    • Brought the Marcus Theatres experience to more moviegoers through the acquisition of 14 Wehrenberg Theatres® locations with 197 screens in four states and the purchase and renovation of the Marcus Country Club Hills Cinema in Country Club Hills, Ill.

    • Started construction on our first BistroPlexSM standalone, all in-theatre dining location in Greendale, Wis., and a 10-screen theatre in Shakopee, Minn.

    • Revenue per available room (RevPAR) for comparable company- owned properties increased 3% and operating income was up 12% in fiscal 2016. Focused on managing costs and increasing profitability, while providing an exceptional guest experience. Continued to outperform the competitive set in our markets.

    • Opened EscapeHouse Chicago in fiscal 2016 and SafeHouse®

    Chicago in March 2017. Reinvested in major businesses including the $4.3 million renovation of the historic Skirvin Hilton Hotel, a $2.3 million expansion of Wisconsin Hospitality Linen Service, and construction of 29 all-season villas at Grand Geneva® Resort & Spa. Manage the Omaha Marriott Downtown at The Capitol District, currently under construction in Omaha, Neb., opening in summer 2017.

    • Earned more than 40 awards for hotel, restaurant, spa and golf operations and service, including three properties ranked in the top five in their city and/or state in the U.S. News & World Report 2017 Best Hotels list; two properties recognized by Condé Nast Traveler, and 21 awards from TripAdvisor.

    MARCUS® HOTELS & RESORTSMARCUS THEATRES®

    DELIVER GREAT EXPERIENCES ACHIEVE GREAT RESULTS

    Marcus Country Club Hills Cinema, Country Club Hills, Illinois Omaha Marriott Downtown at

    The Capitol District, Omaha, Nebraska

  • DEAR SHAREHOLDERS, Deliver great experiences. Achieve great results. When you come right down to it, those two phrases not only summarize fi scal 2016, a record year for The Marcus Corporation, but our long-term mission as well.

    INVESTING IN GROWTH Across our movie theatres, hotels and restaurants, we are focused on providing an exceptional guest experience. Through strong leadership and solid operational execution, both divisions bring this commitment to life every day, with each and every customer.

    The acquisition of 14 Wehrenberg Theatres® locations in December 2016 added 197 screens to our circuit, increasing our theatre footprint by 29 percent. We plan to introduce our distinctive features and amenities at select Wehrenberg Theatres locations in 2017 to bring the Marcus Theatres experience to even more moviegoers.

    In addition to strategic acquisitions, we are also investing in our existing theatres. We’ve invested nearly $185 million over the past 3.5 years across the circuit to create exciting entertainment destinations. We believe our percentages of DreamLoungerSM recliner seating and premium large-format screens are among the highest in the industry. We further expanded our food and beverage concepts, which are a signifi cant revenue generator for us, adding 10 outlets at new and existing theatres in fi scal 2016. In summer 2017, we will introduce our newest concept, BistroPlexSM, a standalone all in-theatre dining experience.

    On the lodging side, Marcus Hotels & Resorts is also investing in its existing assets, including a $4.3 million renovation of the Skirvin Hilton Hotel in Oklahoma City, Okla. Twenty-nine new all-season villas are being added at the Grand Geneva® Resort & Spa in Lake Geneva, Wis. In summer 2017, we will open the 333-room Omaha Marriott Downtown at The Capitol District in Omaha, Neb., where we are a minority investor and will manage the property. We are continuing to pursue additional high-quality management contracts and potential investment opportunities with the goal of further expanding the division’s total rooms under management.

    In addition to our hotel investments, we introduced two experiential concepts to guests. EscapeHouse Chicago, a 60-minute escape room experience, opened in November 2016 and our second spy-themed SafeHouse® restaurant and bar opened in March 2017, both located adjacent to our AC Hotel Chicago Downtown.

    A RECORD YEAR Revenues and operating income set new records in fi scal 2016 and net earnings increased 23.1 percent. While strong on their own, these results are even more signifi cant in view of the fact that the comparable 2015 period included an extra week of operations.

    Both divisions contributed to our excellent fi scal 2016 performance. Marcus Theatres also had a record year and has now outperformed the percentage change in national box offi ce revenues for 12 of the last 13 interim periods. Operating income for Marcus Hotels & Resorts increased 12 percent, refl ecting our focus on improving performance while continuing to maintain our high standards for customer service.

    By delivering great experiences and achieving great results, we are building value for our shareholders. In February 2017, we announced an 11.1 percent increase in the dividend rate. This is our third dividend increase in the last two years. Our total return to shareholders was 68 percent for fi scal 2016, and has grown at a compounded annual growth rate of more than 36 percent over the past three years and 22 percent over the last fi ve years, calculated on a dividend reinvested basis.

    Our strong balance sheet gives us the ability to return capital to our shareholders, while at the same time continuing to invest in our two businesses and pursue potential growth opportunities.

    Thank you to our associates, customers and shareholders for a record year. We also wish to thank Jack McKeithan and Jim Ericson, who will retire from our board at our annual meeting in May, for their sound advice and many years of service to our company.

    We look forward to all that we can accomplish by continuing to deliver great experiences and achieve great results.

    Gregory S. Marcus Stephen H. Marcus President and CEO Chairman

    March 28, 2017

    Gregory S. Marcus P id t d CEO

    Stephen H. Marcus

    90418 MARC8914 2016 ARƒ_bw pages.indd 1 3/17/17 11:53 AM

  • GREGORY S. MARCUS

    President and Chief Executive Offi cer

    THOMAS F. KISSINGER

    Senior Executive Vice President, General Counsel and Secretary

    RO� NDO B. RODRIGUEZ

    Executive Vice President, The Marcus Corporation and Chairman, President and CEO, Marcus Theatres Corporation

    DOUG� S A. NEIS

    Chief Financial Offi cer and Treasurer

    STEPHEN H. MARCUS (d)*

    Chairman, The Marcus Corporation

    BRONSON J. HAASE, LEAD DIRECTOR (c)*

    Retired President of Pabst Farms Equity Ventures, LLC, Retired President and Chief Executive Offi cer of Wisconsin Gas Company, and Vice President of WICOR, Inc., and former President and Chief Executive Offi cer of Ameritech Wisconsin

    DANIEL F. MCKEITHAN, JR. (a) (c)

    Chairman and Chief Executive Offi cer, Tamarack Petroleum Company, Inc.

    DIANE MARCUS GERSHOWITZ (d)

    Real Estate Management and Investments

    TIMOTHY E. HOEKSEMA (c)

    Retired Chairman, President and Chief Executive Offi cer, Midwest Air Group, Inc.

    AL� N H. (BUD) SELIG (b)* (d)

    Commissioner Emeritus of Major League Baseball

    BRUCE J. OLSON

    Retired Senior Vice President, The Marcus Corporation and Retired President, Marcus Theatres Corporation

    PHILIP L. MILSTEIN (a)* (b) (d)

    Principal, Ogden CAP Properties, LLC

    JAMES D. ERICSON (b) (d)

    Retired Chairman, President and Chief Executive Offi cer, Northwestern Mutual Life Insurance Company

    GREGORY S. MARCUS

    President and Chief Executive Offi cer, The Marcus Corporation

    BRIAN J. STARK (a) (c)

    Founding Principal, Chief Executive Offi cer and Chief Investment Offi cer, Stark Investments

    KATHERINE M. GEHL (a) (c)

    Former Chairman and President, Gehl Foods, Inc.

    DAVID M. BAUM

    President, Maven Marketing, LLC (d/b/a Revolution Golf), Former Partner, Goldman, S