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<SEC-DOCUMENT>0000897069-97-000507.txt : 19971230

<SEC-HEADER>0000897069-97-000507.hdr.sgml : 19971230

ACCESSION NUMBER:     0000897069-97-000507

CONFORMED SUBMISSION TYPE:   10-Q

PUBLIC DOCUMENT COUNT:       4

CONFORMED PERIOD OF REPORT:  19971113

FILED AS OF DATE:     19971229

SROS:         NYSE

 

FILER:

 

    COMPANY DATA:

       COMPANY CONFORMED NAME:          MARCUS CORP

       CENTRAL INDEX KEY:           0000062234

       STANDARD INDUSTRIAL CLASSIFICATION:    HOTELS & MOTELS [7011]

       IRS NUMBER:              391139844

       STATE OF INCORPORATION:         WI

       FISCAL YEAR END:         0531

 

    FILING VALUES:

       FORM TYPE:    10-Q

       SEC ACT:     

       SEC FILE NUMBER:  001-12604

       FILM NUMBER:      97745578

 

    BUSINESS ADDRESS:

       STREET 1:     250 EAST WISCONSIN AVE

       STREET 2:     SUITE 1700

       CITY:         MILWAUKEE

       STATE:        WI

       ZIP:          53202-4220

       BUSINESS PHONE:       4142726020

 

    MAIL ADDRESS:

       STREET 1:     250 EAST WISCONSIN AVENUE

       STREET 2:     STE 1700

       CITY:         MILWAUKEE

       STATE:        WI

       ZIP:          53202-4220

</SEC-HEADER>

<DOCUMENT>

<TYPE>10-Q

<SEQUENCE>1

<TEXT>

 

 

                                    FORM 10-Q

 

                       SECURITIES AND EXCHANGE COMMISSION

 

                             Washington, D.C.  20549

 

   (Mark One)

 

   [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

        EXCHANGE ACT OF 1934

 

                For the quarterly period ended November 13, 1997

 

   []   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.)

 

                250 EAST WISCONSIN AVENUE - MILWAUKEE, WISCONSIN      53202 

                    (Address of principal executive offices)       (Zip code)

 

 

        Registrant's telephone number, including area code (414) 272-6020

 

   Indicate by check mark whether the registrant (1) has filed all reports

   required to be filed by Sections 12, 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        

 

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

 

   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 DECEMBER 19, 1997 - 17,530,553

   CLASS B COMMON STOCK OUTSTANDING AT DECEMBER 19, 1997 - 12,741,031

 

   <PAGE>

                             THE MARCUS CORPORATION

 

                                      INDEX

 

 

 

                                                                  Page

                                                                  No.

 

    PART I - FINANCIAL INFORMATION

 

     Item 1.  Consolidated Financial Statements:

 

              Balance Sheets

              (November 13, 1997 and May 29, 1997)  . . . . . .       3

 

              Statements of Earnings

              (Twelve and twenty-four weeks ended November 13,

              1997 and November 14, 1996) . . . . . . . . . . .       5

 

              Statements of Cash Flows

              (Twenty-four weeks ended November 13, 1997 and

              November 14, 1996)  . . . . . . . . . . . . . . .       6

 

              Condensed Notes to Financial Statements . . . . .       7

 

     Item 2.  Management's Discussion and Analysis of

              Financial Condition and Results of Operations . .       8

 

 

    PART II - OTHER INFORMATION

 

     Item 2.  Changes in Securities and Use of Proceeds . . . .      14

 

     Item 4.  Submission of Matters to a Vote of Security

              Holders . . . . . . . . . . . . . . . . . . . . .      14

 

     Item 6.  Exhibits and Reports on Form 8-K  . . . . . . . .      16

 

     Signatures   . . . . . . . . . . . . . . . . . . . . . . .      17

 

 

   <PAGE>

 

                        PART I - FINANCIAL INFORMATION

 

    Item 1.  Financial Statements

 

    THE MARCUS CORPORATION

    Consolidated Balance Sheets

                                                     (in thousands)

                                                (Unaudited)      (Audited)

                                               November 13,       May 29,

    ASSETS                                         1997            1997    

    Current assets:

      Cash and cash equivalents                   $  7,436         $ 7,991

      Accounts and notes receivable                 10,595           5,531

      Receivables from joint ventures                1,217           1,066

      Other current assets                           4,108           3,591

                                                   -------         -------

        Total current assets                        23,356          18,179

 

    Property and equipment:

      Land and improvements                         81,313          70,313

      Buildings and improvements                   412,876         399,416

      Leasehold improvements                         8,096           8,059

      Furniture, fixtures and equipment            168,193         159,715

      Construction in progress                      19,095          12,019

                                                  --------        --------

        Total property and equipment               689,573         649,522

      Less accumulated depreciation and

        amortization                               175,158         162,470

                                                  --------        --------

        Net property and equipment                 514,415         487,052

 

 

    Other assets:

      Investments in joint ventures                  1,462           1,439

      Other                                         16,027          15,287

                                                  --------        --------

        Total other assets                          17,489          16,726

                                                  --------        --------

    TOTAL ASSETS                                  $555,260        $521,957

                                                  ========       ========

 

 

    See accompanying notes to consolidated financial statements.

 

   <PAGE>

 

    

    THE MARCUS CORPORATION

    Consolidated Balance Sheets                        (in thousands)

                                                 (Unaudited)      (Audited)

                                                 November 13,      May 29,

    LIABILITIES AND SHAREHOLDERS' EQUITY             1997           1997  

    Current liabilities:

      Notes payable                                $   4,658      $   5,625

 

      Accounts payable                                11,609         10,291

      Income taxes                                     4,067             52

      Taxes other than income taxes                   11,033          9,297

      Accrued compensation                             2,909          1,270

      Other accrued liabilities                       10,216         10,886

      Current maturities on long-term debt             9,327          9,327

                                                    --------       --------

        Total current liabilities                     53,819         46,748

 

 

    Long-term debt                                   170,214        168,065

 

    Deferred income taxes                             22,925         22,425

 

    Deferred compensation and other                    8,735          7,426

 

    Shareholders' equity:

      Preferred Stock, $1 par; authorized

        1,000,000 shares; none issued

 

      Common Stock, $1 par; authorized

        50,000,000 shares; issued 12,289,597

        shares at November 13, 1997,

        11,678,935 shares at May 29, 1997             12,289         11,679

 

      Class B Common Stock, $1 par;

        authorized 33,000,000 shares; issued

        and outstanding 8,503,752 shares at

        November 13, 1997, 8,707,632 shares

        at May 29, 1997                                8,504          8,708

 

      Capital in excess of par                        49,910         39,470

      Retained earnings                              232,009        220,860

                                                    --------       --------

                                                     302,712        280,717

 

      Less cost of Common Stock in treasury

        (613,843 shares at November 13, 1997

        and 668,272 shares at May 29, 1997)            3,145          3,424

                                                    --------       --------

 

        Total shareholders' equity                   299,567        277,293

                                                    --------       --------

    TOTAL LIABILITIES AND SHAREHOLDERS'

      EQUITY                                        $555,260       $521,957

                                                    ========       ========

 

 

    See accompanying notes to consolidated financial statements.

 

   <PAGE>

 

   <TABLE>

   <CAPTION>

    THE MARCUS CORPORATION

    Consolidated Statements of Earnings (Unaudited)

 

                                               (in thousands, except per share data)

                                           November 13, 1997        November 14, 1996

                                          12 Weeks    24 Weeks     12 Weeks     24 Weeks

 

    <S>                                  <C>         <C>           <C>         <C>

    Revenues:

      Rooms and telephone                $ 39,847    $ 86,895      $ 36,597    $ 77,150

      Food and beverage                    11,193      23,739        11,252      22,547

      Theatre operations                   14,299      37,879        11,878      32,364

      Other income                          5,845      12,724         5,101      10,591

                                          -------     -------       -------     -------

    Total revenues                         71,184     161,237        64,828     142,652

 

    Costs and expenses:

      Rooms and telephone                  15,288      31,029        13,081      26,381

      Food and beverage                     7,708      16,088         7,902      15,824

      Theatre operations                    8,392      22,675         7,727      20,152

      Advertising and marketing             5,328      10,743         5,212       9,106

      Administrative                        7,041      14,877         5,520      12,128

      Depreciation and amortization         7,347      14,573         6,528      12,868

      Rent                                    479       1,548           500       1,306

      Property taxes                        2,726       5,439         2,494       5,090

      Other operating expenses              3,201       6,386         2,377       4,892

                                          -------     -------       -------     -------

    Total costs and expenses               57,510     123,358        51,341     107,747

                                          -------     -------       -------     -------

    Operating income                       13,674      37,879        13,487      34,905

 

    Other income (expense):

      Investment income                       477         826           294         437

      Interest expense                     (2,872)     (5,637)       (2,489)     (4,668)

      Gain on disposition of property

        and equipment                         243         242            15          19

                                          -------    --------       -------     -------

                                           (2,152)     (4,569)       (2,180)     (4,212)

                                          -------    --------       -------     -------

    Earnings before income taxes           11,522      33,310        11,307      30,693

    Income taxes                            4,605      13,328         4,525      12,283

                                          -------    --------       -------     -------

    Net earnings                          $ 6,917    $ 19,982       $ 6,782    $ 18,410

                                          =======    ========       =======     =======

    Net earnings per share*                 $0.23       $0.67         $0.23       $0.62

                                            =====       =====         =====       =====

    Weighted Average Shares

      Outstanding*                         30,231      30,027        29,766      29,765

 

 

   * All per share and shares outstanding data have been adjusted to

     reflect the 50% stock dividend distributed on December 5, 1997.

 

   </TABLE>

 

   See accompanying notes to consolidated financial statements.

 

 

   <PAGE>

 

    THE MARCUS CORPORATION

    Consolidated Statements of Cash Flows (Unaudited)

 

                                                      (in thousands)

                                                       24 Weeks Ended

                                                November 13,  November 14,

                                                     1997         1996 

    OPERATING ACTIVITIES:                                     

    Net earnings                                  $ 19,982      $ 18,410

      Adjustments to reconcile net earnings to

        net cash provided by operating

        activities:

          Earnings on investments in joint

              ventures, net of distributions           (23)         (189)

          Gain on disposition of property and

              equipment                               (242)          (19)

          Depreciation and amortization             14,573        12,868

          Deferred income taxes                        500           159

          Deferred compensation and other            1,309         3,648

          Changes in assets and liabilities:

              Accounts and notes receivable         (5,064)          342

              Other current assets                    (517)       (1,092)

              Accounts payable                       1,318        (1,063)

              Income taxes                           4,015         2,710

              Taxes other than income taxes          1,736         1,879

              Accrued compensation                   1,639           963

              Other accrued liabilities               (670)       (1,003)

                                                   -------       -------

    Total adjustments                               18,574        19,203

                                                   -------       -------

    Net cash provided by operating activities       38,556        37,613

 

    INVESTING ACTIVITIES:

    Capital expenditures                           (41,932)      (60,155)

    Net proceeds from disposals of property,

      equipment and other assets                       318         1,059

    Increase in other assets                          (820)       (2,300)

    Cash received from (advanced to) joint

      ventures                                        (151)        4,436

                                                   -------       -------

    Net cash used in investing activities          (42,585)      (56,960)

 

    FINANCING ACTIVITIES:

    Debt transactions:

      Net proceeds from issuance of notes

        payable and long-term debt                   7,000        97,875

      Principal payments on notes payable and

        long-term debt                              (5,818)      (52,435)

    Equity transactions:

      Treasury stock transactions, except for

        stock options                                 (376)         (117)

      Exercise of stock options                        973           140

      Issuance of stock, net of distribution         3,211

      Dividends paid                                (1,516)       (1,415)

                                                   -------       -------

    Net cash provided by financing activities        3,474        44,048

                                                   -------       -------

    Net increase (decrease) in cash and cash 

      equivalents                                     (555)       24,701

    Cash and cash equivalents at beginning of

      year                                           7,991        15,466

                                                   -------      --------

    Cash and cash equivalents at end of period      $7,436       $40,167

                                                   =======      ========

 

    See accompanying notes to consolidated financial statements.

 

 

 

   <PAGE>

 

                             THE MARCUS CORPORATION

                 CONDENSED NOTES TO FINANCIAL STATEMENTS FOR THE

                       TWELVE AND TWENTY-FOUR WEEKS ENDED

                                NOVEMBER 13, 1997

                                   (Unaudited)

 

 

   A.   Refer to the Company's audited financial statements (including

        footnotes) for the fiscal year ended May 29, 1997, contained in the

        Company's Form 10-K Annual Report for such fiscal year, for a

        description of the Company's accounting policies.

 

   B.   The consolidated financial statements for the twelve and twenty-four

        weeks ended November 13, 1997 and November 14, 1996 have been

        prepared by the Company without audit.  In the opinion of management,

        all adjustments consisting only of normal recurring accruals

        necessary to present fairly the unaudited interim financial

        information at November 13, 1997, and for all periods presented, have

        been made.

 

   C.   The Company's Board of Directors declared a three-for-two stock

        split, effected in the form of a 50% stock dividend, distributed on

        December 5, 1997, to all holders of Common Stock and Class B Common

        Stock.  All per share and weighted average shares outstanding data

        prior to December 5, 1997, have been adjusted to reflect this

        dividend.

 

   D.   Pursuant to an Agreement and Plan of Reorganization dated June 30,

        1997 between The Marcus Corporation and Guest House Inn, Inc.

        ("GHI"), the Company issued on October 1, 1997 610,173  Common Shares

        in exchange for the net operating assets of GHI and issued 499,320

        new Class B Shares in exchange for and cancellation of 449,320

        existing Class B Shares owned by GHI.  All share data has been

        adjusted to reflect the three-for-two stock split.  GHI is owned and

        controlled by certain officers, directors and/or principal shareholders

        of the Company.  For financial reporting purposes, the assets acquired

        from GHI were recorded at the historical book value of GHI rather than

        fair value because GHI and the Company were controlled by the same

        shareholders.  The Common Shares issued to complete the GHI

        Transaction were recorded at their fair value and the excess of this

        fair value over the historical book value of the assets was recorded

        as a distribution.

 

 

   Item 2.   Managements Discussion and Analysis of Results of Operations and

             Financial Condition

 

                Special Note Regarding Forward-Looking Statements

 

        Certain matters discussed in this Managements Discussion and Analysis

   of Results of Operations and Financial Condition 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 can generally be identified as such

   because the context of the statement will include words such as the

   company "believes," "anticipates," "expects" or words of similar import.

   Similarly, statements that describe the Company's future plans, objectives

   or goals are also forward-looking statements.  Such forward looking

   statements are subject to certain risks, assumptions and uncertainties

   which are described in close proximity to such statements and which may

   cause actual results to differ materially from those currently

   anticipated.  Shareholders, potential investors and other readers are

   urged to consider these risks, assumptions and uncertainties 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 only made as of the date of this Form 10-Q and

   the Company undertakes no obligation to publicly update such forward-

   looking statements to reflect subsequent events or circumstances.

 

   RESULTS OF OPERATIONS

 

   General

 

        The Company reports its results of operations on a 52-or 53-week

   fiscal year which ends on the last Thursday in May.  Each fiscal year is

   divided into three 12-week quarters and a final quarter consisting of 16

   or 17 weeks.  The final quarter of fiscal 1998 will consist of 17 weeks

   for the Company's restaurant division, while the Company and its other

   remaining divisions will report a 16-week fourth quarter.  Due to the

   relative size of the Company's restaurant division compared to the

   Company's other divisions, the additional week of results in fiscal 1998

   is not anticipated to materially impact the Company's consolidated results

   of operations for the fiscal year.  Fiscal 1997 was a 53-week fiscal year

   for the Company's motel and hotels/resorts divisions, while the Company

   and its remaining divisions reported a 52-week year in fiscal 1997.

 

        Revenues for the second quarter of fiscal 1998 ended November 13,

   1997, totaled $71.2 million, an increase of $6.4 million, or 9.8%, from

   revenues of $64.8 million for the second quarter of fiscal 1997.  For the

   first half of fiscal 1998, revenues were $161.2 million, an increase of

   $18.6 million, or 13.0%, from revenues of $142.6 million during the first

   half of fiscal 1997.  All four operating segments contributed to the

   increase in revenues for the fiscal 1998 second quarter.

 

        Net earnings for the second quarter of fiscal 1998 were $6.9 million,

   up 2.0% from net earnings of $6.8 million for the same quarter in the

   prior year.  Second quarter net earnings per share were $.23 in both

   fiscal years.  For the first half of fiscal 1998, net earnings were $20.0

   million, or $.67 per share.  This represented a respective 8.5% and 8.1%

   increase over net earnings of $18.4 million, or $.62 per share, for the

   first half of fiscal 1997. All earnings per share data have been adjusted

   to reflect the three-for-two stock split effected in the form of a 50%

   stock dividend on December 5, 1997.

 

        Operating income (earnings before other income/expense and income

   taxes) totaled $13.7 million during the second quarter of fiscal 1998, an

   increase of $200,000, or 1.4%, compared to the prior year same period.

   For the first half of fiscal 1998, operating income was $37.9 million, an

   increase of $3.0 million, or 8.5%, over operating income of $34.9 million

   for the first half of fiscal 1997. The Company's interest expense, net of

   investment income, totaled $2.4 million for the second quarter and $4.8

   million for the first half of fiscal 1998.  This represents increases of

   $200,000 and $600,000, respectively,  over the same periods last year and

   was the result of increased long-term debt levels necessary to help

   finance the Company's capital expansion program.

 

   Motels

 

        Total revenues for the second quarter of fiscal 1998 for the motel

   division were $33.4 million, an increase of $3.0 million, or 9.9%,

   compared to $30.4 million during the same period in fiscal 1997.  Total

   revenues for the first half of fiscal 1998 for the motel division were

   $72.2 million, an increase of $7.8 million, or 12.1%, compared to $64.4

   million during the first half of fiscal 1997.  The motel division's

   operating income for the fiscal 1998 second quarter totaled $8.4 million,

   a decrease of $450,000, or 5.2%, from the $8.8 million earned by the

   division during the same period of fiscal 1997.  The motel division's

   operating income for the first half of fiscal 1998 totaled $21.4 million,

   a decrease of $400,000, or 1.9%, from the $21.8 million earned by the

   division during the same period of fiscal 1997.

 

        Compared to the end of the second quarter of fiscal 1997, 7 new

   Company-owned or operated Budgetel Inns, 7 new franchised Budgetel Inns

   and 2 new Company-owned Woodfield Suites were in operation at the end of

   the fiscal 1998 second quarter.  The Company's newly opened motels

   contributed additional revenues of $2.6 million to the division's fiscal

   1998 second quarter revenues. The Company experienced slightly lower

   occupancy rates and slightly higher average daily room rates for

   comparable Budgetel Inns in the second quarter of fiscal 1998, compared to

   the same quarter last year.  The result of the occupancy decline and

   average daily rate increases was a 1.1% decrease in the division's revenue

   per available room (RevPAR), for comparable Budgetel Inns for the fiscal

   1998 second quarter.  For the first half of fiscal 1998, RevPAR for

   comparable Budgetel Inns increased 0.8% over the same period last year.

   The motel division's results continue to be impacted by the increasing

   limited service segment room supply, resulting in minimal RevPAR

   growth and pressure on the division's operating margins.  In addition, the

   Company has increased its marketing expenditures in fiscal 1998, as well

   as increased its administrative infrastructure to accommodate the motel

   division's recent and planned expansion program.  In some highly

   competitive markets, the Company has been unable to sufficiently raise

   rates to fully offset these and other rising costs. 

 

        At the end of the fiscal 1998 second quarter, the Company-owned or

   operated 105 Budgetel Inns and franchised an additional 42 Inns, bringing

   the total number of Budgetel Inns in operation to 147.  In addition, there

   are currently 1 Company-owned and 12 franchised Budgetel Inns under

   construction, all of which are scheduled to open before the end of fiscal

   1998 or shortly thereafter.  An additional 4 Company-owned and 17

   franchised Budgetel Inns are under development and should begin

   construction in the near future.  The Company also owns and operates 5

   Woodfield Suites all-suite motels.  Three company-owned Woodfield Suites

   are currently under development, with a new franchise program set to be

   launched later this fiscal year.

 

   Theatres

 

        The theatre division's fiscal 1998 second quarter revenues were $14.5

   million, an increase of $2.5 million, or 21.4%, over revenues of $11.9

   million during the same period in fiscal 1997.  Operating income for the

   second quarter in fiscal 1998 totaled $2.5 million, an increase of $1.6

   million, or 183.8%, over operating income of $880,000 during the same

   period last year.  The theatre division's fiscal 1998 first half revenues

   were $38.1 million, an increase of $5.6 million, or 17.3%, over revenues

   of $32.5 million during the first half of fiscal 1997.  Operating income

   for the first half of fiscal 1998 was $8.0 million, an increase of $2.2

   million, or 37.5%, over $5.8 million of operating income during the first

   half of fiscal 1997.  Consistent with the seasonality of the motion

   picture exhibition industry, the second quarter of the Company's fiscal

   year is typically the slowest period for its theatre division.

 

        Total box office receipts for the fiscal 1998 first half were $25.3

   million, an increase of $3.3 million, or 15.1%, over $22.0 million during

   the same period last year.  The increase in box office receipts for the

   first half of fiscal 1998 compared to the same period in the prior year

   was due to additional screens, a 4.2% increase in average ticket prices

   and more popular films distributed in the second quarter this year

   compared to the same period last year.  Vending revenues for the first

   half of the year were $11.3 million, an increase of 1.9 million, or 20.6%,

   over $9.4 million during the first half of fiscal 1997.  The increase in

   vending revenues can be attributed to an overall increase in attendance,

   including the new screens, and a 9.5% increase in vending revenues per

   person.    For the first half of fiscal 1998, theatre attendance at

   comparable screens has declined slightly.  Theatre attendance is largely

   dependent upon the audience appeal of available films, a factor over which

   the Company has limited control.  In addition, the Company experienced a

   fire loss early in the third quarter at its North Shore Cinema in Mequon,

   Wisconsin.  As a result of this loss, the theatre is expected to be

   closed for approximately 3 months, which will have a slight negative

   impact on the theatre division's third quarter fiscal 1998 results.

 

        The Company did not add any new screens during the second quarter of

   fiscal 1998, ending the second quarter with a total of 297 total screens

   in 40 theatres compared to 266 screens in 41 theatres at the end of the

   same period last year.  The Company currently has 45 additional screens

   under construction at three locations, including a 12-screen ultraplex in

   Menomonee Falls, Wisconsin and 16-screen and 17-screen ultraplexes in

   Columbus, Ohio with an IMAX/R/ 2D/3D large-screen theatre at one of the new

   Columbus complexes.  The Company is also adding 27 screens to nine

   existing locations.  In addition, the Company also began a recent capital

   program to retrofit approximately one-third of its existing screens to

   stadium seating and recently announced that it has signed a definitive

   purchase agreement for the acquisition of six suburban Minneapolis/St.

   Paul theatres with a total of 44 screens.

 

   Hotels and Resorts

 

        Total revenues from the hotels and resorts division during the second

   quarter of fiscal 1998 increased by $500,000, or 3.2%, to $16.6 million,

   compared to $16.1 million during the previous year's comparable period.

   Operating income decreased by $700,000, or 19.8%, to $2.8 million during

   the fiscal 1998 second quarter, compared to $3.5 million in the second

   quarter of fiscal 1997.  Total revenues from the hotels and resorts

   division during the first half of fiscal 1998 totaled $36.8 million, an

   increase of $4.3 million, or 13.4%, over total first half revenues of

   $32.5 million in fiscal 1997.  Operating income increased by $1.6 million

   during the first half of fiscal 1998, or 22.0%, to $8.8 million, compared

   to $7.2 million during the prior year's first half.

 

        For the first half of the year, occupancy rates and average daily

   rates have increased at all three of the Company's owned hotels and

   resorts, contributing to the increased revenues and operating income in

   the fiscal 1998 first half compared to the fiscal 1997 first half.  Second

   quarter results were impacted by approximately $300,000 of pre-opening

   costs at the Company's Miramonte Resort and reduced group occupancy and

   poor weather at the Grand Geneva Resort & Spa.  The division's total

   RevPAR increased 5.5% in fiscal 1998's second quarter compared to the same

   quarter last year and has increased 13.3% for the first half of fiscal

   1998 compared to the same period last year.

 

        The Company plans to open its second resort, the Miramonte Resort in

   Indian Wells, California, in January 1998.  Due to anticipated start-up

   expenses, this resort is expected to have a slightly negative impact on

   the division's fiscal 1998 third quarter operating income and an

   immaterial impact on the division's fiscal 1998 results.  Shortly after

   the end of the second quarter, the Company announced that it had

   entered into a management contract to operate its first property in

   Michigan, the Mission Point Resort on Mackinac Island.  This is the

   Company's third resort and fourth management contract, increasing the

   division's properties to eight.  The Mission Point Resort is a seasonal

   property and is not expected to materially impact the division's fiscal

   1998 operating income.  In addition, the Company expects to begin

   construction during the fourth quarter of fiscal 1998 on a 250-room

   expansion of the Milwaukee Hilton, which will create the largest hotel in

   Wisconsin.  The addition is currently scheduled to open in September 1999.

 

   Restaurants

 

        Restaurant division revenues totaled $6.6 million for the second

   quarter of fiscal 1998, an increase of $300,000, or 4.7%, over fiscal 1997

   second quarter revenues of $6.3 million.  The division's operating income

   for the fiscal 1998 second quarter totaled $810,000, an increase of

   $138,000, or 20.5%, over operating income of $672,000 during the second

   quarter of fiscal 1997.  Restaurant division revenues totaled $13.9

   million for the first half of fiscal 1998, an increase of $800,000, or

   6.1%, over first half fiscal 1997 revenues of $13.1 million.  The

   division's operating income for the first half of fiscal 1998 totaled $1.8

   million, an increase of $500,000, or 39.6%, over fiscal 1997 first half

   operating income of $1.3 million.

 

        The increases in revenues and operating income for both the second

   quarter and first half of fiscal 1998, compared to the same periods last

   year, were primarily the result of customer count and average guest check

   increases related to recent successful KFC product introductions,

   continued strong home delivery sales and results from the Company's first

   2-in-1 KFC/Taco Bell conversion, combined with reduced food costs. The

   Company operated 30 KFC restaurants and 1 KFC/Taco Bell 2-in-1 restaurant

   at the end of the second quarter of fiscal 1998, compared to 31 KFC

   restaurants at the end of the fiscal 1997 second quarter. 

 

   FINANCIAL CONDITION

 

        The Company's lodging, movie theatre and restaurant businesses each

   generate significant and consistent daily amounts of cash because each

   segment's revenue is derived predominantly from consumer cash purchases.

   The Company believes that these consistent and predictable cash sources,

   together with the availability to the Company of $47 million of unused

   credit lines at the end of the second quarter, should be adequate to

   support the ongoing operational liquidity needs of the Company's

   businesses.

 

        Net cash provided by operating activities increased by $943,000

   during the first half of fiscal 1998 to $38.6 million, compared to $37.6

   million during the prior year's first half. The increase over the same

   period last year was primarily the result of increased net earnings and

   depreciation/amortization, combined with timing differences in payments of

   accounts payable and receipts of accounts and notes receivable.

 

        Net cash used in investing activities during in the fiscal 1998 first

   half totaled $42.6 million, compared to $60.0 million during the fiscal

   1997 first half.  Capital expenditures to support the Company's continuing

   expansion program totaled $41.9 million during the first half of fiscal

   1998 compared to $60.1 million during the prior year's first half.  The

   timing of theatre screen additions accounts for the majority of the

   decrease in capital expenditures, as a total of 47 new theatre screens,

   including 27 acquired screens, were added during the fiscal 1997 first

   half, compared to none during the fiscal 1998 first half.  In addition,

   growth of Company-owned Budgetel Inns has slowed slightly compared to the

   previous year.  The Company currently anticipates that its total capital

   expenditures for fiscal 1998 will approximate fiscal 1997 amounts, but

   with the theatre division spending a greater portion of the total than in

   the past.

 

        Cash provided by financing activities during the fiscal 1998 first

   half totaled $3.5 million, compared to $44.0 million during the first half

   of fiscal 1997.  During the fiscal 1998 first half, the Company received

   $7.0 million of net proceeds from the issuance of notes payable and long-

   term debt, compared to $97.9 million during the first half of fiscal

   1997.  Included in the fiscal 1997 proceeds was $85 million of senior

   unsecured long-term notes privately placed with six institutional lenders.

   The Company used a portion of the fiscal 1997 proceeds from the senior

   notes to pay off existing debt, resulting in total principal payments on

   notes payable and long-term debt of $52.4 million during the first half of

   fiscal 1997, compared to only $5.8 million during the same period this

   year.  The Company has the ability to issue up to $115 million of

   additional senior notes under the private placement program through

   February 1999 and anticipates issuing additional long-term debt in fiscal

   1998 to help fund the Company's ongoing expansion plans.

 

        In addition to the changes in debt transactions noted above, net cash

   provided by financing activities also increased in fiscal 1998 due to the

   issuance of 610,173 shares of the Company's Common Stock (adjusted for the

   three-for-two stock split) in conjunction with the acquisition of operating

   assets of a related company, Guest House Inn, Inc. during the second

   quarter.  The issuance of the stock, which was recorded at its fair value,

   net of a distribution, calculated as the excess of the fair value over the

   historical book value of the assets acquired, resulted in an additional $3.2

   million of net cash provided by financing activities.

 

        The actual timing and extent of the implementation of the Company's

   current expansion plans will depend in large part on continuing favorable

   industry and general economic conditions, the Company's financial

   performance and available capital, the competitive environment, evolving

   customer needs and trends and the availability of attractive

   opportunities.  It is likely that the Company's current expansion goals

   will continue to evolve and change in response to these and other factors.

 

 

   <PAGE>

 

                           PART II - OTHER INFORMATION

 

   Item 2.   Changes in Securities and Use of Proceeds

 

        On October 1, 1997 the Company issued (a) 610,173 shares of Common

   Stock to Guest House Inn, Inc. ("GHI") in exchange for all of the real

   estate and operating assets owned by GHI and (b) 449,320 new shares of

   Class B Common Stock to GHI in exchange for and cancellation of the

   existing 449,320 shares of Class B Common Stock owned by GHI.  All share

   data has been adjusted to reflect the three-for-two stock split effected

   in the form of a 50% stock dividend distributed on December 5, 1997.  The

   aggregate value of the shares of Common Stock issued was $10,528,871 and

   the aggregate value of the shares of Class B Common Stock issued was

   $7,753,265.  All of such shares received by GHI were distributed in a tax-

   free liquidation of GHI to GHI's shareholders pro rata with their GHI

   share ownership.  The shareholders of GHI were Ben Marcus, Stephen H.

   Marcus and Diane Marcus Gershowitz, who are officers, directors and/or

   principal shareholders of the Company, Ida Lowe (the sister of Ben

   Marcus), and certain trusts for the benefit of members of their families,

   all of whom are "accredited investors" for purposes of Rule 501 of

   Regulation D under the Securities Act of 1933, as amended ("Regulation

   D").  Such issuances were effected in reliance upon the exemption from

   registration provided by Rule 506 of Regulation D.  No underwriters were

   engaged in connection with the foregoing issuances.

 

   Item 4.   Submission of Matters to a Vote of Security Holders

 

        The Company's 1997 annual meeting of shareholders was held on Monday,

   September 29, 1997 ("Annual Meeting").  At the Annual Meeting, the

   following matters were voted on in person or by proxy, and approved by the

   Company's shareholders:

 

        1.   The shareholders voted to elect Stephen H. Marcus, Diane Marcus

             Gershowitz, Daniel F. McKeithan, Jr., Allan H. Selig, Timothy E.

             Hoeksema, Bruce J. Olson, Ulice Payne, Jr. and Philip L.

             Milstein to the Company's Board of Directors for one-year terms

             to expire at the Company's 1998 annual meeting of shareholders

             and until their successors are duly qualified and elected.

 

        2.   The shareholders approved and ratified the Agreement and Plan of

             Reorganization dated June 30, 1997 between The Marcus

             Corporation and GHI.

 

        3.   The shareholders approved the amendment to the Company's

             Articles of Incorporation to increase the number of authorized

             shares of Common Stock from 30,000,000 to 50,000,000 and the

             number of authorized shares of Class B Common Stock from

             20,000,000 to 33,000,000.

 

        As of the August 8, 1997 record date for the Annual Meeting ("Record

   Date"), 11,240,376 shares of Common Stock (pre-stock split) and 8,504,252

   shares of Class B Common Stock (pre-stock split) were outstanding and

   eligible to vote, with the Common Stock entitled to one vote per share and

   the Class B Common Stock entitled to ten votes per share.  Following are

   the final votes on the matters presented for shareholder approval at the

   Annual Meeting (all on a pre-stock split basis):

 

   Election of Directors

 

   <TABLE>

   <CAPTION>

                                              For                            Withheld        

    Name                             Votes      Percentage(1)         Votes     Percentage(1)

 

    <S>                             <C>                 <C>            <C>               <C>

    Stephen H. Marcus               89,698,734          99.95%         42,122            0.05%

    Diane Marcus Gershowitz         89,697,879          99.95%         42,977            0.05%

    Daniel F. McKeithan, Jr.        89,697,662          99.95%         43,194            0.05%

    Allan H. Selig                  89,691,513          99.95%         49,343            0.05%

    Timothy E. Hoeksema             89,701,930          99.96%         38,926            0.04%

    Bruce J. Olson                  89,698,720          99.95%         42,136            0.05%

    Ulice Payne, Jr.                89,698,533          99.95%         42,323            0.05%

    Philip L. Milstein              89,701,653          99.96%         39,203            0.04%

 

   </TABLE>

 

 

 

   Approval of the Agreement and Plan of Reorganization

 

   <TABLE>

   <CAPTION>

                  For                          Against                       Abstained                   Broker Non-Vote

        Votes       Percentage(1)      Votes      Percentage(1)      Votes       Percentage(1)        Votes       Percentage(1)

 

     <S>                  <C>         <C>                <C>        <C>                  <C>       <C>                  <C>

     87,491,846           97.50%      50,714             0.06%      39,420               0.04%     2,158,876            2.40%

 

   </TABLE>

 

 

   Approval of the Amendment to the Company's Articles of Incorporation

 

   <TABLE>

   <CAPTION>

                  For                         Against                     Abstained                Broker Non-Vote

       Votes       Percentage(1)       Votes      Percentage(1)     Votes     Percentage(1)     Votes    Percentage(1)

 

     <S>                  <C>        <C>                <C>        <C>               <C>           <C>          <C>

     88,840,350           99.00%     862,954            0.96%      37,552            0.04%         0            0.00%

 

 

   ----------------

   (1)  Based on a total of 89,740,856 votes represented by shares of Common

        Stock and Class B Common Stock actually voted in person or by proxy

        at the Annual Meeting.

   </TABLE>

 

   No other matters were brought before the Annual Meeting for a shareholder

   vote.

 

 

   <PAGE>

 

   Item 6.   Exhibits and Reports on Form 8-K

 

 

             a.   Exhibits

 

                  Exhibit 3.1    Form of Amendment to the Articles of

                                 Incorporation of the Marcus Corporation,

                                 effective September 29, 1997.

 

                  Exhibit 3.2    Restated Articles of Incorporation of The

                                 Marcus Corporation, effective October 2,

                                 1997.

 

                  Exhibit 27     Financial Data Schedule

 

 

             b.   Reports on Form 8-K

 

                  None.

 

 

   <PAGE>

 

 

                                   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

 

                                  (Registrant)

 

 

 

   DATE:  December 23, 1997           By:  \s\ Stephen H. Marcus

                                      Stephen H. Marcus,

                                      Chairman of the Board, President and

                                      Chief Executive Officer

 

 

 

   DATE:  December 23, 1997           By:  \s\ Douglas A. Neis              

                                      Douglas A. Neis

                                      Chief Financial Officer and Treasurer

 

 

   <PAGE>

 

 

                             THE MARCUS CORPORATION

                                    FORM 10-Q

                                     FOR THE

                       24 - WEEKS ENDED NOVEMBER 13, 1997

 

                                  EXHIBIT INDEX

 

 

   Exhibit             Description

 

     3.1               Form of Amendment to the Company's Articles of

                       Incorporation, effective September 29, 1997

 

     3.2               Restated Articles of Incorporation of the Company,

                       effective October 2, 1997.

 

     27                Financial Data Schedule

 

</TEXT>

</DOCUMENT>

<DOCUMENT>

<TYPE>EX-3.1

<SEQUENCE>2

<TEXT>

 

 

 

                                                                Exhibit (3.1)

 

                              ARTICLES OF AMENDMENT

                                       TO

                            ARTICLES OF INCORPORATION

                                       OF

                             THE MARCUS CORPORATION

 

 

             1.   The name of the corporation is The Marcus Corporation.

 

             2.   Article 2 of the corporation's Articles of Incorporation is

   hereby amended by deleting the introductory paragraph of such Article 2 in

   its entirety and inserting the following in lieu thereof:

 

             The total number of shares of all classes of capital stock which

   the Corporation shall be authorized to issue is eighty-four million

   (84,000,000) shares, consisting of (i) fifty million (50,000,000) shares

   of a class designated "Common Stock", with a par value of one dollar ($1)

   per share; thirty-three million (33,000,000) shares of a class designated

   "Class B Common Stock", with a par value of one dollar ($1) per share; and

   one million (1,000,000) shares of a class designated "Preferred Stock",

   with a par value of one dollar ($1) per share.

 

             3.   Section (B)(5) of Article 2 of the corporation's Articles

   of Incorporation is hereby amended in its entirety to provide as follows:

 

             (5)  Issuance of the Class B Common Stock.

 

             (a)  Initial Issuance.  One share of Class B Common Stock shall

        be initially issued for each outstanding share of Class B Common

        Stock, par value one dollar ($1) per share, of The Marcus

        Corporation, a Delaware corporation, pursuant to the Agreement and

        Plan of Merger, dated August 13, 1992, by and between the Corporation

        and The Marcus Corporation.

 

             (b)  Subsequent Issuance.  Following the initial issuance, the

        Board of Directors may only issue shares of the Class B Common Stock

        in the form of a distribution or distributions pursuant to a stock

        dividend on or split-up of the shares of the Class B Common Stock and

        only to the then holders of the outstanding shares of the Class B

        Common Stock in conjunction with and in the same ratio as a stock

        dividend on or split-up of the shares of the Common Stock.  Except as

        provided in this subparagraph (b), the Corporation shall not issue

        additional shares of Class B Common Stock after the initial issuance

        of Class B Common Stock, as described in Paragraph (B)(5)(a) of this

        Article, and all shares of Class B Common Stock surrendered for

        conversion shall be retired, unless otherwise approved by the

        affirmative vote of the holders of a majority of the outstanding

        shares of the Common Stock and Class B Common Stock entitled to vote,

        voting together as a single class, as provided in Paragraph (B)(1) of

        this Article.  Notwithstanding the foregoing, the Board of Directors

        and the Corporation shall be permitted to make a one-time issuance of

        299,547 shares of Class B Common Stock to Guest House Inn, Inc.

        ("GHI") in connection with the Agreement and Plan of Reorganization

        dated June 30, 1997, by and among the Corporation, GHI and the

        shareholders of GHI, in exchange for and cancellation of 299,547

        shares of Class B Common Stock owned by GHI and, notwithstanding any

        other provision of these Articles of Incorporation (including

        particularly Section (B)(3) of this Article 2), the shareholders of

        GHI on June 30, 1997 shall be "Permitted Transferees" of the shares

        of Class B Common Stock issued to GHI.

 

             4.   The foregoing amendments to the corporation's Articles of

   Incorporation were submitted to the corporation's shareholders by the

   Board of Directors of the corporation and were adopted by such

   shareholders effective as September 29, 1997, in accordance with Section

   180.003 of the Wisconsin Business Corporation Law.

 

             Executed on behalf of the corporation as of this 29th day of

   September, 1997.

 

 

 

                                      /s/ Thomas F. Kissinger                

 

                                      Thomas F. Kissinger, Esq.

                                      General Counsel and Secretary

 

 

   ---------------

        This instrument was drafted by, and should be returned to, John K.

   Wilson, Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin

   53202.

 

</TEXT>

</DOCUMENT>

<DOCUMENT>

<TYPE>EX-3.2

<SEQUENCE>3

<TEXT>

 

 

 

                                                                Exhibit (3.2)

 

 

                                    RESTATED

                            ARTICLES OF INCORPORATION

                                       OF

                             THE MARCUS CORPORATION

                                                                 

 

             Pursuant to Section 180.1007 of the Wisconsin Business

   Corporation Law, these Restated Articles of Incorporation shall supersede

   and take the place of the Corporation's heretofore existing Articles of

   Incorporation and all amendments thereto.

 

                                    ARTICLE 1

 

                                      Name

 

             The name of the Corporation is The Marcus Corporation.

 

                                    ARTICLE 2

 

                                 Authorized Shares

 

             The total number of shares of all classes of capital stock which

   the Corporation shall be authorized to issue is eighty-four million

   (84,000,000) shares, consisting of (i) fifty million (50,000,000) shares

   of a class designated "Common Stock", with a par value of one dollar ($1)

   per share; thirty-three million (33,000,000) shares of a class designated

   "Class B Common Stock", with a par value of one dollar ($1) per share; and

   one million (1,000,000) shares of a class designated "Preferred Stock",

   with a par value of one dollar ($1) per share.

 

             Any and all such shares of Common Stock, Class B Common Stock

   and Preferred Stock may be issued for such consideration as shall be fixed

   from time to time by the Board of Directors.  Any and all such shares so

   issued, the full consideration for which has been paid or delivered, shall

   be deemed fully paid stock and shall not be liable to any further call or

   assessment thereon, except with respect to wage claims of employees as

   provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation

   Law ("WBCL"), and the holders of such shares shall not be liable for any

   further payments except as otherwise provided by applicable Wisconsin law.

   The preferences, limitations and relative rights of each class shall be as

   follows:

 

        (A)  POWERS, PREFERENCES AND LIMITATIONS OF THE PREFERRED STOCK.

 

             (1)  Series of Preferred Stock.

 

             The Board of Directors shall have authority, by resolution or

   resolutions, to divide the Preferred Stock into series, and to determine

   and fix the relative powers, preferences and rights, and the

   qualifications, limitations and restrictions thereof, in respect of the

   shares of any series so established prior to the issuance thereof, but

   only with respect to:

 

             (a)  The rate of dividend, whether or not such dividend

        shall be cumulative and, if cumulative, the date from which such

        dividend shall be cumulative;

 

             (b)  The price at and the terms and conditions on which

        shares may be redeemed;

 

             (c)  The amount payable upon shares in the event of

        voluntary or involuntary liquidation;

 

             (d)  Sinking fund provisions for the redemption or purchase

        of shares;

 

             (e)  The terms and conditions on which shares may be

        converted into shares of Common Stock, if the shares of any

        series are issued with the privilege of conversion; and

 

             (f)  Whether or not shares shall have voting powers, and

        the terms and conditions upon which any voting powers may be

        exercised.

 

             Except as to the matters expressly set forth above in this

   Paragraph (1), all series of the Preferred Stock of the Corporation,

   whenever designated and issued, shall have the same preferences,

   limitations and relative rights and shall rank equally, share ratably and

   be identical in all respects as to all matters.

 

             All shares of any one series of Preferred Stock hereinabove

   authorized shall be alike in every particular, and each series thereof

   shall be distinctly designated by letter or descriptive words or figures.

 

             (2)  Dividends.

 

             Before any dividends shall be paid or set apart for payment upon

   the Common Stock or the Class B Common Stock, the holders of Preferred

   Stock shall be entitled to receive dividends at the rate per annum

   specified as to each series pursuant to Paragraph (1), payable quarter-

   annually when and as declared by the Board of Directors.  Such dividends

   shall accrue on each share of Preferred Stock from the date of issuance,

   or from such other date as may be fixed by the Board of Directors pursuant

   to Paragraph (1).

 

             Any dividend paid upon the Preferred Stock entitled to

   cumulative dividends at a time when any accrued dividends for any prior

   period are delinquent, shall be expressly declared as a dividend in whole

   or partial payment of the accrued dividend for the earliest period for

   which dividends are then delinquent, and shall be so designated to each

   shareholder to whom payment is made.

 

             All shares of Preferred Stock whether cumulative or non-

   cumulative (but only after all dividend arrearages for all prior periods

   on cumulative shares have been paid or set aide for payment) shall rank

   equally and shall share ratably, in proportion to the rate of dividend

   fixed hereunder in respect to each such share, in all dividends paid or

   set aside for payment for any dividend period or part upon any such

   shares.

 

             (3)  Liquidation, Dissolution or Winding Up.

 

             In case of voluntary or involuntary liquidation, dissolution or

   winding up of the Corporation, the holders of each series of Preferred

   Stock shall be entitled to receive out of the assets of the Corporation in

   money or money's worth the amount specified pursuant to Paragraph (1) with

   respect to that series of Preferred Stock, together with all accrued but

   unpaid dividends thereon with respect to Preferred Stock entitled to

   cumulative dividends (whether or not earned or declared), before any of

   such assets shall be paid or distributed to holders of Common Stock or

   Class B Common Stock and if the assets of the Corporation shall be

   insufficient to pay the holders of all of the Preferred Stock then

   outstanding the entire amounts to which they may be entitled, the holders

   of each outstanding series of the Preferred Stock shall share ratably in

   such assets in proportion to the amounts which would be payable with

   respect to such series if all amounts payable thereon were paid in full.

 

             (4)  Redemption.

 

             Except as otherwise provided with respect to a particular series

   pursuant to Paragraph (1), the following general redemption provisions

   shall apply to each series of Preferred Stock (hereinafter in this

   Paragraph referred to as "Series").

 

             On or prior to the date fixed for redemption of a particular

   Series as specified in the notice of redemption for said Series, the

   Corporation shall deposit adequate funds for such redemption, in trust for

   the account of holders of the Series to be redeemed, with a bank having

   trust powers or a trust company in good standing, organized under the laws

   of the United States of America or any state of the United States of

   America and having capital, surplus and undivided profits aggregating at

   least $1,000,000, and if the name and address of such bank or trust

   company and the deposit of or intent to deposit the redemption funds in

   such trust account shall have been stated in such notice of redemption,

   then from and after the mailing of such notice and the making of such

   deposit the shares of the Series called for redemption shall no longer be

   deemed to be outstanding for any purpose whatsoever, and all rights of the

   holders of such shares in or with respect to the Corporation shall

   forthwith cease and terminate except only the right of the holders of such

   shares (a) to transfer such shares prior to the date fixed for redemption,

   (b) to receive out of said deposit the redemption price of such shares

   together with accrued but unpaid dividends with respect to Preferred Stock

   entitled to cumulative dividends to the date fixed for redemption, without

   interest, upon surrender of the certificate or certificates representing

   the shares to be redeemed, and (c) to exercise, on or before the date

   fixed for redemption, the privileges of conversion, if any, not

   theretofore expired.

 

             Such deposit in trust shall be irrevocable except that (1) any

   moneys so deposited by the Corporation which shall remain unclaimed by the

   holders of the Series called for redemption and not converted shall, at

   the end of six years after the date fixed for redemption, be paid to the

   Corporation upon its request, after which repayment the holders of the

   shares so called for redemption shall no longer look to the said bank or

   trust company for the payment of the redemption price but shall look only

   to the Corporation or to others, as may be, for the payment of any lawful

   claim for such moneys which holders of said shares may still have; and (2)

   any portion of the moneys so deposited by the Corporation, in respect of

   shares of the Series converted into Common Stock, shall be repaid to the

   Corporation upon its request.

 

             (5)  Conversion Rights.

 

             Except as otherwise provided with respect to a particular Series

   pursuant to Paragraph (1), the following general conversion provisions

   shall apply to each Series of Preferred Stock which is convertible into

   Common Stock (hereinafter, in this paragraph, referred to as "Convertible

   Series"):

 

             (i)  All shares of Common Stock issued upon conversion

        shall be fully paid and nonassessable, and shall be free of all

        taxes, liens and charges with respect to the issue thereof

        except taxes payable by reason of issuance in a name other than

        that of the holder of the share or shares converted and except

        with respect to wage claims of employees as provided by Section

        180.0622(2)(b) of the WBCL.

 

             (ii) The number of shares of Common Stock issuable upon

        conversion of a particular Convertible Series at any time shall

        be the quotient obtained by dividing the aggregate conversion

        value, as herein provided, of the shares of that Convertible

        Series surrendered for conversion, by the conversion price per

        share of Common Stock then in effect for that Convertible Series

        as herein provided.  The Corporation shall not be required,

        however, upon any such conversion, to issue any fractional share

        of Common Stock, but in lieu thereof the Corporation may at its

        option issue scrip therefor or may pay to the shareholder who

        would otherwise be entitled to receive such fractional share if

        issued, a sum in cash equal to the value of such fractional

        share at the rate of the then market value per share of the

        Common Stock determined in such manner as the Board of Directors

        of the Corporation may provide.

 

             (iii)     The basic conversion price per share of Common

        Stock for a particular Convertible Series, as provided for

        herein under the detailed descriptions of the individual

        Convertible Series, shall be subject to adjustment as follows:

 

                  (aa) An increased conversion price per share of

             Common Stock shall become effective whenever the

             outstanding shares of Common Stock shall be combined

             into a smaller number of shares.  Such increased

             conversion price per share of Common Stock shall be

             computed as follows:  (1) separately, for each

             Convertible Series, multiply the total number of

             shares of Common Stock outstanding immediately prior

             to the decrease in the number of such shares through

             such combination, by the conversion price then in

             effect for each Convertible Series; (2) divide each of

             the resulting products by the total number of shares

             of Common Stock outstanding immediately after such

             decrease in the number of shares through such

             combination.  The quotients so obtained (if not evenly

             divisible by fifty cents then rounded up to the next

             full multiple of fifty cents) shall thereafter, until

             any further change is required under the provisions of

             this subparagraph (5) be respectively the conversion

             price per share of Common Stock for each Convertible

             Series;

 

                  (bb) A reduced conversion price per share of

             Common Stock shall become effective for any

             Convertible Series whenever the Corporation shall

             issue any "Additional Shares of Common Stock" (as

             defined in Paragraph (A)(5)(iii)(cc) of this Article)

             after the effective date of the amendment to the

             Articles of Incorporation which designated such

             Convertible Series (hereinafter in this subparagraph

             referred to as the "Effective Date"), which results in

             the Corporation having received in the aggregate a

             consideration per share of less than the conversion

             price for such Convertible Series for all of the

             shares of Common Stock issued after the Effective

             Date.  Such reduced conversion price per share of

             Common Stock shall be computed as follows: (1)

             separately, for each Convertible Series, multiply the

             total number of shares of Common Stock outstanding on

             the Effective Date by the conversion price for each

             Convertible Series then in effect; (2) to these

             products separately, for each Convertible Series, add

             the total amount of the consideration, if any,

             received for the issuance of all Additional Shares of

             Common Stock; (3) divide the resulting sums by the

             total number of shares of Common Stock outstanding

             immediately prior to any such determination.  The

             quotients so obtained shall thereafter, until any

             further change is required under the provisions of

             this subparagraph (5), be the respective conversion

             prices per share of Common Stock for each Convertible

             Series; provided, however, that no adjustment shall be

             made in the conversion price of any Convertible Series

             in effect immediately prior to such determination if

             the amount of such adjustment would be less than fifty

             cents, but, in any such case, any adjustment that

             would otherwise be required then to be made shall be

             carried forward and shall be made at the time of, and

             together with, the next subsequent adjustment which

             together with any other adjustment or adjustments so

             carried forward shall amount to not less than fifty

             cents.  No upward adjustment to the conversion price

             shall be made if the above-described quotients should

             be higher than the conversion price to be adjusted as

             a result of the Corporation having received a

             consideration per Additional Share of Common Stock on

             the aggregate of all Additional Shares of Common Stock

             which is higher than the conversion price to be

             adjusted.

 

                  (cc) The term "Additional Shares of Common Stock"

             as used in this subparagraph (A)(5) includes all

             shares of Common Stock which the Corporation shall in

             any manner issue after the Effective Date of a

             Convertible Series except shares of Common Stock

             issued (1) upon the conversion of any shares of such

             Convertible Series, or (2) upon the exercise of any

             warrants, options or conversion rights outstanding on

             the date of issuance of such Convertible Series

             whether at the initial conversion price, an adjusted

             conversion price or a voluntarily reduced conversion

             price pursuant to Paragraph (A)(5)(x) of this Article,

             or (3) pursuant to any employee stock bonus plan or

             employee stock purchase plan approved by the

             shareholders, or (4) upon the exercise of any employee

             stock option granted pursuant to any plan approved by

             the shareholders, or (5) upon the conversion of any

             Preferred Stock issued in connection with any such

             employee stock bonus, stock purchase and/or stock

             option, or by reason of the issuance or assumption by

             the Corporation of any such stock bonus, stock

             purchase and/or option, or (6) pursuant to a stock

             dividend authorized by the Board of Directors of not

             more than 5% per annum of the number of shares

             outstanding at the time such stock dividend is

             declared, or (7) upon the conversion of any shares of

             Class B Common Stock, or (8) in connection with the

             acquisition, or upon the exercise of, any warrants,

             options or conversion rights granted or assumed by the

             Corporation in connection with an acquisition.  As

             used herein, "acquisition" shall be construed as any

             transaction in which the Corporation acquires

             substantially all the assets of another business, or

             acquires 50% or more of the outstanding stock of

             another corporation or is the surviving corporation in

             a statutory merger.

 

             (iv) In the event that the Corporation shall give notice of

        redemption of any shares of a particular Convertible Series, an

        adjusted conversion price shall be determined in respect only to

        the shares so called for redemption, in accordance with the

        provisions of clause (iii), except that for the purpose of such

        determination, Common Stock shall be deemed to have been issued

        in accordance with the terms of all rights to purchase shares of

        Common Stock or securities convertible into shares of Common

        Stock which may be outstanding immediately prior to the close of

        business on the date next preceding the date upon which notice

        of redemption is given, but which were not outstanding on the

        date of issuance of the Convertible Series so called for

        redemption.  The conversion price so determined shall be stated

        in the notice of redemption and have no application to any

        shares other than the shares so called for redemption.

 

             (v)  For the purpose of making the computations prescribed

        above, the following rules shall apply:

 

                  (aa) In determining the consideration received

             for the issuance of any Additional Shares of Common

             Stock, no deductions shall be made for the amounts of

             any commissions or other expenses paid or incurred by

             the Corporation for any underwriting or otherwise in

             connection with the issuance of such Additional Shares

             of Common Stock.

 

                  (bb) In case Common Stock shall be issued by way

             of stock dividend or in subdivision or

             reclassification of Common Stock outstanding prior to

             such issue, the excess of the number of shares of

             Common Stock outstanding immediately thereafter over

             the number of shares of Common Stock outstanding

             immediately prior thereto (except such shares issued

             as stock dividends which do not in the aggregate

             during any fiscal year of the Corporation exceed 5% of

             the Common Stock outstanding at the beginning of such

             fiscal year) shall be deemed to be Additional Shares

             of Common Stock, and the Corporation shall be deemed

             to have received no consideration for the issuance

             thereof.

 

                  (cc) If the Corporation issues any shares

             convertible into Common Stock, or any obligations so

             convertible, or any warrants to purchase or subscribe

             for any shares of Common Stock and if any of such

             shares or obligations be converted into Common Stock

             or if any of such warrants be exercised and Common

             Stock be issued in connection with such exercise, the

             Corporation shall be deemed to have received for the

             Common Stock issued upon such conversion or exercise

             an aggregate consideration equal to the consideration

             received by the Corporation for the convertible shares

             or obligations so converted or for the warrants so

             exercised (before deducting any commissions or other

             expenses paid or incurred by the Corporation for any

             underwriting or otherwise in connection with the

             issuance of the convertible shares or obligations so

             converted or the warrants so exercised) plus, in the

             case of the issuance of Common Stock in connection

             with the exercise of warrants, the consideration

             received by the Corporation for the issuance of Common

             Stock upon such exercise; provided, however, that

             adjustments of the conversion price by reason of the

             conversion of such shares or obligations or by reason

             of the exercise of such warrants need not be made upon

             each such conversion or exercise but may be made from

             time to time under such reasonable regulations as

             shall be provided by the Board of Directors but at

             least once in each month immediately following any

             calendar month during which any such conversion or

             exercise shall occur, and provided further that no

             adjustment to any conversion price shall be required

             under the circumstances outlined under Paragraph

             (A)(5)(iii)(cc) above.

 

                  (dd) If the Corporation shall issue any

             Additional Shares of Common Stock, or any shares

             convertible into Common Stock, or any obligations, so

             convertible, or any warrants to purchase or subscribe

             for any shares of Common Stock for a consideration

             other than cash, the amount of the consideration

             received therefor by the Corporation shall be deemed

             to be the fair value of such consideration, which

             shall be determined by the Board of Directors at or

             before the time of issuance of such shares or

             obligations.

 

             (vi) If the Corporation shall be consolidated with or

        merged into, or sell or dispose of all or substantially all of

        its property and assets, to any other corporation, proper

        provision shall be made as part of the terms of such

        consolidation, merger or sale that the holder of any shares of a

        particular Convertible Series at the time outstanding shall

        thereafter be entitled to such conversion rights with respect to

        securities and other assets of the Corporation resulting from

        such consolidation, merger or sale as shall be substantially

        equivalent to the conversion rights herein granted.

 

             (vii)     No adjustment with respect to dividends upon any

        Convertible Series or with respect to dividends upon Common

        Stock shall be made in connection with any conversion.

 

             (viii)    Whenever there is an issue of Additional Shares

        of Common Stock of the Corporation requiring a change in the

        conversion price as provided above, and whenever there occurs

        any other event which results in a change in the existing

        conversion rights of the holders of shares of a Convertible

        Series, the Corporation shall file with its transfer agent or

        agents and at its principal office in Milwaukee, Wisconsin, a

        statement signed by the President or a Vice President and by the

        Treasurer or Assistant Treasurer of the Corporation, describing

        specifically such issue of Additional Shares of Common Stock or

        such other event (and, in the case of a consolidation or merger,

        the terms thereof) and the actual conversion prices or basis of

        conversion as changed by such issue or event and the change, if

        any, in the securities issuable upon conversion.  Whenever there

        are issued by the Corporation any options or rights to purchase

        shares of Common Stock or securities convertible into shares of

        Common Stock, and such issuance requires a change in the

        conversion price as above provided, the Corporation shall also

        file in like manner a statement describing the same and the

        consideration receivable by the Corporation therefrom.  The

        statement so filed shall be open to inspection by any holder of

        record of shares of any Convertible Series.  Upon the request of

        the Corporation, the transfer agent or agents shall mail copies

        of such statement, or brief summaries thereof, (first class and

        postage prepaid) to each holder of record of shares of all

        Convertible Securities affected by the statement at the last

        address of such holders appearing upon the books of the

        Corporation.  Upon failure of a holder to object to the

        statement and the computations therein within a period of 90

        days from the date of such mailing, the statement and the

        computations therein shall be conclusively presumed correct as

        to such holder and shall be binding upon the holder, his heirs,

        representatives and assigns.  Failure or delay of any holder of

        the Convertible Series so affected to receive such statement

        shall not extend the period within which objections thereto may

        be raised.

 

             (ix) The Corporation shall at all times have authorized and

        shall at all times reserve and set aside a sufficient number of

        duly authorized shares of Common Stock for the conversion of all

        stock of all Convertible Series then outstanding.  Upon or prior

        to the occurrence of any event which may give rise to a change

        in the conversion price per share of Common Stock, the

        Corporation shall make adequate provision so that shares of

        Common Stock thereafter issued on conversion of shares of each

        Convertible Series shall be validly issued, fully paid and

        nonassessable (except as provided in Section 180.0622(b)(2) of

        the WBCL); and the Corporation shall make appropriate provisions

        so that any issue of Common Stock or of any other class of

        shares of the Corporation as a dividend on, or in subdivision or

        reclassification of, Common Stock, shall be made applicable to

        shares of Common Stock held for conversion of each Convertible

        Series at the time such shares of Common Stock shall be issued

        upon such conversion.

 

             (x)  The Corporation shall have the right, at any time and

        from time to time, to reduce the conversion price of one or more

        Convertible Series then in effect by an amount not in excess of

        20% of the then conversion price for such period or periods of

        time of not less than 30 days nor more than 180 days as the

        Board of Directors of the Corporation may determine.  In each

        such event, an officer of the Corporation shall prepare and

        execute a certificate stating (aa) that the Corporation has

        elected to reduce the conversion price of one or more

        Convertible Series, (bb) that such election is irrevocable

        during the period referred to hereinafter in clause (cc), and

        (cc) the period during which such reduced conversion price or

        prices shall be in effect.  The certificate shall be filed with

        the transfer agent or agents and either a brief summary of the

        provisions of such certificate or a copy of such certificate

        shall be mailed by the Corporation, first class, postage

        prepaid, at least 10 days prior to the date fixed for the

        commencement of any period in which the reduced conversion price

        or prices is to be in effect, to the registered holders of the

        Convertible Series so affected at their last address as it shall

        appear upon the books of the Corporation.  Failure or delay of

        any holder of the Convertible Series so affected to receive such

        certificate by mail, or any defect therein, shall not affect the

        validity of, or the reduction of the conversion price nor extend

        the period thereof.

 

             (6)  Reissuance of Shares.

 

             Shares of Preferred Stock which have been redeemed or purchased

   or retired through the operation of a purchase, retirement or sinking fund

   or which have been converted into shares of any other class or classes of

   stock of the Company shall thereafter have the status of authorized but

   unissued shares of Preferred Stock of the Corporation and may thereafter

   be reissued as part of the same or any other series.

 

        (B)  POWERS, RIGHTS AND LIMITATIONS OF THE COMMON STOCK AND THE CLASS

             B COMMON STOCK.

 

             (1)  Voting Rights and Powers.

 

             With respect to all matters upon which shareholders are entitled

   to vote or to which shareholders are entitled to give consent, the holders

   of the outstanding shares of Common Stock and the holders of the

   outstanding shares of Class B Common Stock shall vote together as a single

   class, and every holder of any outstanding shares of Common Stock shall be

   entitled to cast thereon one (1) vote in person or by proxy for each share

   of Common Stock standing in the holder's name on the stock transfer

   records of the Corporation, and every holder of any outstanding shares of

   Class B Common Stock shall be entitled to cast thereon ten (10) votes in

   person or by proxy for each share of Class B Common Stock standing in his

   name on the stock transfer records of the Corporation; provided that, with

   respect to any proposed amendment to these Articles of Incorporation which

   would increase or decrease the number of authorized shares of either the

   Common Stock or the Class B Common Stock, increase or decrease the par

   value of the shares of the Common Stock or the Class B Common Stock, or

   alter or change the powers, preferences, relative voting power or special

   rights of the shares of the Common Stock or the Class B Common Stock so as

   to affect them adversely, the approval of a majority of the votes entitled

   to be cast by the holders of the class affected by the proposed amendment,

   voting separately as a class, shall be obtained in addition to the

   approval of a majority of the votes entitled to be cast by the holders of

   the Common Stock and the Class B Common Stock voting together as a single

   class as hereinbefore provided.

 

             (2)  Dividends and Distributions.

 

             (a)  Cash Dividends.  Subject to the rights of the holders

        of the Preferred Stock, as and when cash dividends may be

        declared from time to time by the Board of Directors, the cash

        dividend payable with respect to each share of the Common Stock

        shall in all cases, subject to rounding as hereinafter provided,

        be in an amount equal to one hundred ten percent (110%) of the

        amount of the cash dividend payable with respect to each share

        of the Class B Common Stock.  For purposes of calculating the

        cash dividend to be paid on the Common Stock, the amount of the

        cash dividend declared and payable with respect to the Class B

        Common Stock shall be determined first and thereafter the cash

        dividend payable with respect to the Common Stock shall be

        determined in accordance with the formula set forth above,

        provided that such dividend may be rounded up to the next

        highest half cent.  The premium accorded holders of Common Stock

        shall not extend to distributions declared by the Board of

        Directors to be in connection with the partial or complete

        liquidation of the Corporation or any of its subsidiaries.

 

             (b)  Other Dividends and Distributions.  Each share of

        Common Stock and Class B Common Stock shall be equal in respect

        of rights to dividends (other than those payable in cash) and

        distributions (including distributions declared by the Board of

        Directors to be in connection with the partial or complete

        liquidation of the Corporation or any of its subsidiaries) when

        and as declared, in the form of stock or other property of the

        Corporation, except that in the case of dividends or other

        distributions payable in stock of the Corporation other than the

        Preferred Stock, including distributions pursuant to stock

        split-ups or divisions, which occur after the initial issuance

        of the Class B Common Stock as described in Paragraph (B)(5)(a)

        of this Article, only shares of Common Stock shall be

        distributed with respect to the Common Stock and only shares of

        Class B Common Stock shall be distributed with respect to the

        Class B Common Stock.

 

             (3)  Restrictions on Transfer of the Class B Common Stock.

 

             (a)  No beneficial owner (as hereinafter defined) of shares of

        Class B Common Stock (hereinafter referred to as a "Class B

        Shareholder") may transfer, and the Corporation shall not register

        the transfer of, shares of Class B Common Stock, whether by sale,

        assignment, gift, bequest, appointment or otherwise, except to a

        "Permitted Transferee" of such Class B Shareholder.  A "Permitted

        Transferee" shall be defined as (i) the Class B Shareholder; (ii) the

        spouse of the Class B Shareholder; (iii) any parent and any lineal

        descendant (including any adopted child) of any parent of the Class B

        Shareholder or of the Class B Shareholder's spouse; (iv) any trustee,

        guardian or custodian for, or any executor, administrator or other

        legal representative of the estate of, any of the foregoing

        "Permitted Transferees"; (v) the trustee of a trust (including a

        voting trust) principally for the benefit of such Class B Shareholder

        and/or any of his or her Permitted Transferees; and (vi) any

        corporation, partnership or other entity if a majority of the

        beneficial ownership thereof is held by the Class B Shareholder

        and/or any of his or her Permitted Transferees.  For the purpose of

        this Paragraph (3) the term "beneficial owner(s)" of any shares of

        Class B Common Stock shall mean a person or persons who, or entity or

        entities which, have or share the power, either singly or jointly, to

        direct the voting or disposition of such shares.

 

             (b)  Notwithstanding anything to the contrary set forth herein,

        any Class B Shareholder may pledge his shares of Class B Common Stock

        to a pledgee pursuant to a bona fide pledge of such shares as

        collateral security for indebtedness due to the pledgee, provided

        that such shares shall not be transferred to or registered in the

        name of the pledgee and shall remain subject to the provisions of

        this Paragraph (3).  In the event of foreclosure or other similar

        action by the pledgee, such pledged shares of Class B Common Stock

        may only be transferred to a Permitted Transferee of the pledgor or

        converted into shares of Common Stock, as the pledgee may elect.

 

             (c)  Any purported transfer of shares of Class B Common Stock

        not permitted hereunder shall be void and of no effect.  The

        purported transferee shall have no rights as a shareholder of the

        Corporation and no other rights against, or with respect to, the

        Corporation, except the right to receive shares of Common Stock upon

        the conversion of his shares of Class B Common Stock into shares of

        Common Stock.  The Corporation may, as a condition to the transfer or

        the registration of a transfer of shares of Class B Common Stock to a

        purported Permitted Transferee, require the furnishing of such

        affidavits or other proof as it deems necessary to establish that

        such transferee is Permitted Transferee.

 

             (d)  The Corporation shall note on the certificates for

        shares of Class B Common Stock the restrictions on transfer and

        registration of transfer imposed by this Paragraph (3).

 

             (e)  Shares of Class B Common Stock shall be registered in

        the name(s) of the beneficial owner(s) thereof and not in

        "street" or nominee name.

 

             (4)  Conversion of the Class B Common Stock.

 

             (a)  Each share of Class B Common Stock may at any time or

        from time to time, at the option of the respective holder

        thereof, be converted into one (1) fully paid and nonassessable

        share of Common Stock (subject to Section 180.0622(2)(b) of the

        WBCL).  Such conversion right shall be exercised by the

        surrender of the certificate representing such share of Class B

        Common Stock to be converted to the Corporation at any time

        during normal business hours at the principal executive offices

        of the Corporation (to the attention of the Secretary of the

        Corporation), or if an agent for the registration or transfer of

        shares of Class B Common Stock is then duly appointed and acting

        (said agent being referred to in this Article as the "Transfer

        Agent") then at the office of the Transfer Agent, accompanied by

        a written notice of the election by the holder thereof to

        convert and (if so required by the Corporation or the Transfer

        Agent) by the instruments of transfer, in form satisfactory to

        the Corporation and to the Transfer Agent, duly executed by such

        holder or his duly authorized attorney, and transfer tax stamps

        or funds therefor, if required pursuant to Paragraph (4)(e),

        below.

 

             (b)  As promptly as practicable after the surrender for

        conversion of a certificate representing shares of Class B

        Common Stock in the manner provided in Paragraph (4)(a), above,

        and the payment in cash of any amount required by the provisions

        of Paragraphs (4)(a) and (4)(e), the Corporation will deliver or

        cause to be delivered at the office of the Transfer Agent to, or

        upon the written order of, the holder of such certificate, a

        certificate or certificates representing the number of full

        shares of Common Stock issuable upon such conversion, issued in

        such name or names as such holder may direct.  Such conversion

        shall be deemed to have been made immediately prior to the close

        of business on the date of the surrender of the certificate

        representing shares of Class B Common Stock, and all rights of

        the holder of such shares as such holder shall cease at such

        time and the person or persons in whose name or names the

        certificate or certificates representing the shares of Common

        Stock are to be issued shall be treated for all purposes as

        having become the record holder or holders of such shares of

        Common Stock at such time; provided, however, that any such

        surrender and payment on any date when the stock transfer

        records of the Corporation shall be closed shall constitute the

        person or persons in whose name or names the certificate or

        certificates representing shares of Common Stock are to be

        issued as the record holder or holders thereof for all purposes

        immediately prior to the close of business on the next

        succeeding day on which such stock transfer records are open.

 

             (c)  No adjustments in respect of dividends shall be made

        upon the conversion of any share of Class B Common Stock;

        provided, however, that if a share shall be converted subsequent

        to the record date for the payment of a dividend or other

        distribution on shares of Class B Common Stock but prior to such

        payment, the registered holder of such share at the close of

        business on such record date shall be entitled to receive the

        dividend or other distribution payable on such share on the date

        set for payment of such dividend or other distribution

        notwithstanding the conversion thereof or the Corporation's

        default in payment of the dividend or distribution due on such

        date.

 

             (d)  The Corporation covenants that it will at all times

        reserve and keep available, solely for the purpose of issuance

        upon conversion of the outstanding shares of Class B Common

        Stock, such number of shares of Common Stock as shall be

        issuable upon the conversion of all such outstanding shares;

        provided, that nothing contained herein shall be construed to

        preclude the Corporation from satisfying its obligations in

        respect of the conversion of the outstanding shares of Class B

        Common Stock by delivery of purchased shares of Common Stock

        which are held in the treasury of the Corporation.  The

        Corporation covenants that if any shares of Common Stock

        required to be reserved for purposes of conversion hereunder,

        require registration with or approval of any governmental

        authority under any Federal or state law before such shares of

        Common Stock may be issued upon conversion, the Corporation will

        cause such shares to be duly registered or approved, as the case

        may be.  The Corporation will endeavor to list the shares of

        Common Stock required to be delivered upon conversion prior to

        such delivery upon each national securities exchange, if any,

        upon which the outstanding Common Stock is listed at the time of

        such delivery.  The Corporation covenants that all shares of

        Common Stock which shall be issued upon conversion of the shares

        of Class B Common Stock, will, upon issue, be fully paid and

        nonassessable, except as provided in Section 180.0622(2)(b) of

        the WBCL, and not subject to any preemptive rights.

 

             (e)  The issuance of certificates for shares of Common

        Stock upon conversion of shares of Class B Common Stock shall be

        made without charge for any stamp or other similar tax in

        respect of such issuance.  However, if any such certificate is

        to be issued in a name other than that of the holder of the

        share or shares of Class B Common Stock converted, the person or

        persons requesting the issuance thereof shall pay to the

        Corporation the amount of any tax which may be payable in

        respect of any transfer involved in such issuance or shall

        establish to the satisfaction of the Corporation that such tax

        has been paid.

 

             (f)  When the number of outstanding shares of Class B

        Common Stock falls below two percent (2%) of the aggregate

        number of shares of Common Stock and Class B Common Stock then

        outstanding, the outstanding shares of Class B Common Stock

        shall be deemed without further act on anyone's part to be

        immediately and automatically converted into shares of Common

        Stock, and stock certificates formerly representing outstanding

        shares of Class B Common Stock shall thereupon and thereafter be

        deemed to represent a like number of shares of Common Stock.

 

             (5)  Issuance of the Class B Common Stock.

 

             (a)  Initial Issuance.  One share of Class B Common Stock

        shall be initially issued for each outstanding share of Class B

        Common Stock, par value one dollar ($1) per share, of The Marcus

        Corporation, a Delaware corporation, pursuant to the Agreement

        and Plan of Merger, dated August 13, 1992, by and between the

        Corporation and The Marcus Corporation.

 

             (b)  Subsequent Issuance.  Following the initial issuance,

        the Board of Directors may only issue shares of the Class B

        Common Stock in the form of a distribution or distributions

        pursuant to a stock dividend on or split-up of the shares of the

        Class B Common Stock and only to the then holders of the

        outstanding shares of the Class B Common Stock in conjunction

        with and in the same ratio as a stock dividend on or split-up of

        the shares of the Common Stock.  Except as provided in this

        subparagraph (b), the Corporation shall not issue additional

        shares of Class B Common Stock after the initial issuance of

        Class B Common Stock, as described in Paragraph (B)(5)(a) of

        this Article, and all shares of Class B Common Stock surrendered

        for conversion shall be retired, unless otherwise approved by

        the affirmative vote of the holders of a majority of the

        outstanding shares of the Common Stock and Class B Common Stock

        entitled to vote, voting together as a single class, as provided

        in Paragraph (B)(1) of this Article.  Notwithstanding the

        foregoing, the Board of Directors shall be permitted to make a

        one-time issuance of 299,547 shares of Class B Common Stock to

        Guest House Inn, Inc. ("GHI") in connection with the Agreement

        and Plan of Reorganization dated June 30, 1997, by and among the

        Corporation, GHI and the shareholders of GHI, in exchange for

        and cancellation of 299,547 shares of Class B Common Stock owned

        by GHI and, notwithstanding any other provision of these

        Articles of Incorporation (including particularly Section (B)(3)

        of this Article 2), the shareholders of GHI on June 30, 1997

        shall be "Permitted Transferees" of the shares of Class B Common

        Stock issued to GHI.

 

                                    ARTICLE 3

 

                               Board of Directors

 

             The number of initial directors constituting the Corporation's

   initial Board of Directors shall be seven (7) and thereafter such number

   as is fixed from time to time by, or in the manner provided in, the By-

   laws.  At each annual meeting of shareholders, directors shall be chosen

   for a term of one year.  Despite the expiration of a director's term, the

   director shall continue to serve until his or her successor is elected

   and, if necessary, qualifies or until there is a decrease in the number of

   directors. 

 

                                    ARTICLE 4

 

                           Registered Office and Agent

 

             The address of the registered office of the Corporation is 250

   East Wisconsin Avenue, Suite 1700, Milwaukee, Wisconsin 53203, and the

   name of its registered agent at such address is Thomas F. Kissinger.

 

</TEXT>

</DOCUMENT>

<DOCUMENT>

<TYPE>EX-27

<SEQUENCE>4

<TEXT>

 

<TABLE> <S> <C>

 

<ARTICLE> 5

<LEGEND>

THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCUS

CORPORATION'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE

TO SUCH FINANCIAL STATEMENTS.

</LEGEND>

<MULTIPLIER> 1000

      

<S>                             <C>

<PERIOD-TYPE>                   6-MOS

<FISCAL-YEAR-END>                          MAY-28-1998

<PERIOD-START>                             MAY-30-1997

<PERIOD-END>                               NOV-13-1997

<CASH>                                           7,436

<SECURITIES>                                         0

<RECEIVABLES>                                   10,595

<ALLOWANCES>                                         0

<INVENTORY>                                          0

<CURRENT-ASSETS>                                23,356

<PP&E>                                         689,573

<DEPRECIATION>                                 175,158

<TOTAL-ASSETS>                                 555,260

<CURRENT-LIABILITIES>                           53,819

<BONDS>                                        170,214

<PREFERRED-MANDATORY>                                0

<PREFERRED>                                          0

<COMMON>                                        20,793

<OTHER-SE>                                     278,774

<TOTAL-LIABILITY-AND-EQUITY>                   555,260

<SALES>                                        148,513

<TOTAL-REVENUES>                               161,237

<CGS>                                           69,792

<TOTAL-COSTS>                                  123,358

<OTHER-EXPENSES>                                     0

<LOSS-PROVISION>                                     0

<INTEREST-EXPENSE>                               5,637

<INCOME-PRETAX>                                 33,310

<INCOME-TAX>                                    13,328

<INCOME-CONTINUING>                             19,982

<DISCONTINUED>                                       0

<EXTRAORDINARY>                                      0

<CHANGES>                                            0

<NET-INCOME>                                    19,982

<EPS-PRIMARY>                                      .67

<EPS-DILUTED>                                      .67

       

 

</TABLE>

</TEXT>

</DOCUMENT>

</SEC-DOCUMENT>

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