SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Section240.14a-12
MORTON'S RESTAURANT GROUP, INC.
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July 17, 2002
From: SANFORD TELLER COMMUNICATIONS
1365 York Avenue
New York, NY 10021
(212) 717-0332
For: MORTON'S RESTAURANT GROUP, INC. FOR IMMEDIATE RELEASE
3333 New Hyde Park Road
New Hyde Park, NY 11042
(516) 627-1515
www.mortons.com
Contact: Thomas J. Baldwin, Executive Vice President, Chief Financial Officer,
Morton's Restaurant Group, Inc.
MORTON'S RESTAURANT GROUP REPORTS RESULTS FOR 2002 SECOND QUARTER
New Hyde Park, NY....Morton's Restaurant Group, Inc. (NYSE:MRG) today reported
2002 second quarter revenues of $57,800,000, up 1.4% versus 2001 second quarter
revenues of $57,006,000. Net income for the 2002 second quarter was $66,000, or
$0.02 per diluted share, which includes a pretax gain on insurance proceeds of
$125,000, or $0.02 after tax per diluted share; a pretax credit of $300,000, or
$0.05 after tax per diluted share, representing the recovery of write-down and
exit costs, which were less than initially anticipated, associated with the
Sydney, Australia restaurant closing; and pretax costs of $1,426,000, or $0.24
after tax per diluted share, associated with the company's merger and evaluation
of strategic alternatives. Due to fewer restaurant openings in the period,
pre-opening costs incurred and recorded as expense for the 2002 second quarter
were $363,000, or $0.06 after tax per diluted share compared to $1,762,000, or
$0.30 after tax per diluted share for the comparable period in 2001. The net
loss for the second quarter of 2001 was $1,535,000, or $0.37 per diluted share.
Morton's of Chicago comparable restaurant revenues declined 2.3% for the 2002
second quarter.
Revenues for the six months ended June 30, 2002 were $118,906,000, down
3.6%, versus $123,348,000 for the comparable 2001 period. For the six months
ended June 30, 2002, net income was $2,331,000, or $0.55 per diluted share,
which includes a pretax gain on insurance proceeds of $1,443,000, or $0.24 after
tax per diluted share; a pretax credit of $300,000, or $0.05 after tax per
diluted share, representing the recovery of write-down and exit costs, which
were less than initially anticipated, associated with the Sydney, Australia
restaurant closing; and pretax costs of $2,665,000, or $0.44 after tax per
diluted share, associated with the company's merger and evaluation of strategic
alternatives. Due to fewer restaurant openings in the period, pre-opening costs
incurred and recorded as expense for the 2002 six month period were $650,000, or
$0.11 after tax per diluted share compared to $2,376,000, or $0.39 after tax per
diluted share for the comparable period in 2001. Net income was $1,209,000, or
$0.28 per diluted share, for the six-month period ended July 1, 2001. Morton's
of Chicago comparable restaurant revenues declined 7.1% for the six-month period
ended June 30, 2002.
During 2002, in accordance with the adoption of SFAS 142, "Goodwill and
Intangible Assets", the company ceased amortizing goodwill. Included in the 2001
three month and six month periods ended July 1, 2001, is goodwill amortization
of approximately $101,000, or $0.02 per diluted share and approximately
$202,000, or $0.05 per diluted share respectively.
Consistent with its previous announcements, the company said that due to the
severe nationwide impact of the World Trade Center terrorist attacks, the
continuing impact of the troubled economy, unfavorable business conditions,
corporate spending cutbacks and reduced business travel, it has experienced, and
may continue to experience, weak revenue trends and negative comparable
restaurant revenues. These adverse operating conditions, weak revenue trends,
and investment banking, legal and other costs associated with the company's
merger and evaluation of strategic alternatives have, and are expected to
continue to negatively impact results.
The company believes that if such unfavorable conditions continue, or
worsen, future results will also be adversely affected, the full extent of which
cannot be determined or forecasted at this time.
On March 26, 2002, the company entered into a definitive merger agreement,
as amended, providing for the acquisition of Morton's by an affiliate of Castle
Harlan Partners III, L.P., a New York based private equity investor. The
aggregate purchase price (including assumed debt) is approximately
$168.4 million. Under the terms of the agreement, Morton's stockholders will
receive $17.00 in cash for each share of common stock. Consummation of the
merger is subject to customary closing conditions.
Allen J. Bernstein, chairman, president and chief executive officer said,
"The quarter was favorably impacted by our ongoing cost reduction programs which
continued to be effective during 2002, enabling the company to reduce general
and administrative expenses by over one million dollars in the quarter, compared
to the prior year. Additionally, due to fewer restaurant openings, pre-opening
costs were approximately $1.4 million lower than the comparable 2001 quarter."
During April 2002, the company opened a new Morton's in King of Prussia, PA.
The company has commenced construction to open new Morton's in Arlington, VA;
Burbank, CA; and Paramus, NJ. During January 2002, the Morton's of Chicago
steakhouse in Sydney, Australia was closed.
At June 30, 2002, Morton's Restaurant Group owned and operated 66
restaurants (62 Morton's of Chicago steakhouses and 4 Bertolini's Authentic
Trattorias) in 57 cities and 27 states, in the continental United States,
Hawaii, Puerto Rico, Canada, Hong Kong and Singapore.
FORWARD-LOOKING STATEMENTS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED IN THIS NEWS RELEASE, THE
MATTERS ADDRESSED ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO, GENERAL ECONOMIC CONDITIONS,
COMPETITIVE ACTIVITIES, THE COMPANY'S EXPANSION PLANS AND RESTAURANT
PROFITABILITY LEVELS AND OTHER MATTERS IDENTIFIED FROM TIME TO TIME IN THE
COMPANY'S PUBLIC REPORTS AND SEC FILINGS. ACTUAL RESULTS MAY VARY.
ADDITIONALLY, THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES RELATING TO THE PROPOSED MERGER AND OTHER FUTURE EVENTS,
INCLUDING WHETHER AND WHEN THE PROPOSED MERGER WILL BE CONSUMMATED. A VARIETY OF
FACTORS COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE
EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE,
BUT ARE NOT LIMITED TO, RISKS THAT STOCKHOLDER APPROVAL AND MATERIAL THIRD PARTY
CLEARANCES MAY NOT BE OBTAINED IN A TIMELY MANNER OR AT ALL, THAT AN ORDER OR
INJUNCTION MAY BE IMPOSED PROHIBITING OR DELAYING THE MERGER AND THAT ANY OTHER
CONDITIONS TO THE MERGER MAY NOT BE SATISFIED OR WAIVED. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE THE FORWARD-LOOKING INFORMATION.
2
MORTON'S RESTAURANT GROUP, INC.
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
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THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JUNE 30, JULY 1, JUNE 30, JULY 1,
2002 2001 2002 2001
-------- -------- -------- --------
Revenues.............................................. $57,800 $57,006 $118,906 $123,348
Food and beverage costs............................... 19,509 19,602 40,713 42,272
Restaurant operating expenses......................... 27,002 26,485 54,367 54,318
Pre-opening costs, depreciation, amortization and
non-cash charges.................................... 2,910 4,313 5,346 7,068
General and administrative expenses................... 3,727 4,846 7,485 9,778
Marketing and promotional expenses.................... 1,493 1,674 2,682 3,873
Gain on insurance proceeds............................ 125 -- 1,443 --
Restaurant closing costs (credit)..................... (300) -- (300) --
Costs associated with merger, strategic alternatives
and proxy contest................................... 1,426 370 2,665 370
Interest expense, net................................. 2,064 1,909 4,061 3,942
------- ------- -------- --------
Income (loss) before income taxes................... 94 (2,193) 3,330 1,727
Income tax expense (benefit).......................... 28 (658) 999 518
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Net income (loss)................................... $ 66 $(1,535) $ 2,331 $ 1,209
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Net income (loss) per share:
Basic............................................. $ 0.02 $ (0.37) $ 0.56 $ 0.29
------- ------- -------- --------
Diluted........................................... $ 0.02 $ (0.37) $ 0.55 $ 0.28
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Weighted average shares outstanding:
Basic............................................. 4,188 4,173 4,185 4,166
======= ======= ======== ========
Diluted........................................... 4,244 4,173 4,213 4,299
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Number of restaurants at:
Beginning of periods................................ 65 62 66 62
End of periods...................................... 66 64 66 64
3
MORTON'S RESTAURANT GROUP, INC.
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
CONSOLIDATED
BALANCE SHEETS
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JUNE 30, DECEMBER 30,
2002 2001
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Current assets:
Cash and cash equivalents................................. $ 5,163 $ 4,827
Accounts receivable....................................... 3,133 3,988
Income taxes receivable................................... 1,788 560
Inventories............................................... 7,497 8,061
Landlord construction receivables, prepaid expenses and
other current assets.................................... 1,557 2,632
Deferred income taxes..................................... 4,203 4,616
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Total current assets.................................... 23,341 24,684
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Property and equipment, net................................. 81,391 82,936
Intangible assets, net of accumulated amortization of $5,072
at June 30, 2002 and December 30, 2001.................... 10,923 10,923
Deferred income taxes....................................... 5,926 6,907
Insurance receivable........................................ -- 1,682
Other assets and deferred expenses, net of accumulated
amortization of $703 at June 30, 2002 and $649 at
December 30, 2001......................................... 8,029 7,582
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$129,610 $134,714
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Current liabilities:
Accounts payable and accrued expenses..................... $ 22,595 $ 26,097
Current portion of obligations to financial institutions
and capital leases...................................... 3,420 4,477
Accrued income taxes...................................... 659 --
-------- --------
Total current liabilities............................... 26,674 30,574
Obligations to financial institutions and capital leases,
less current maturities................................... 95,990 100,232
Other liabilities........................................... 4,510 4,118
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Total liabilities....................................... 127,174 134,924
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Stockholders' equity (deficit):
Preferred stock, $.01 par value per share. Authorized
3,000,000 shares, no shares issued or outstanding....... -- --
Common stock, $.01 par value per share. Authorized
25,000,000 shares, issued 6,808,801 at June 30, 2002 and
6,803,801 shares at December 30, 2001................... 68 68
Nonvoting common stock, $.01 par value per share.
Authorized 3,000,000 shares, no shares issued or
outstanding............................................. -- --
Additional paid-in capital................................ 63,528 63,478
Accumulated other comprehensive loss...................... (685) (907)
Accumulated deficit....................................... (13,764) (16,095)
Less treasury stock, at cost, 2,619,090 shares at
June 30, 2002 and 2,624,154 shares at December 30,
2001.................................................... (46,711) (46,754)
-------- --------
Total stockholders' equity (deficit).................... 2,436 (210)
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$129,610 $134,714
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