Morton's Restaurant Group Reports Third-Quarter Results
-- Restaurants & Institutions, November 6, 2009
(PRESS RELEASE) Chicago: Morton's Restaurant Group, Inc. (NYSE: MRT) today reported unaudited financial results for its fiscal 2009 third quarter ended Oct. 4, 2009.
The three month period ended Oct. 4, 2009 as compared to the three month period ended Sept. 28, 2008 (13 weeks to 13 weeks)
Revenues decreased 12.2% to $64.1 million.
Comparable restaurant revenues for Morton's steakhouses decreased 16.8% for the third quarter of fiscal 2009 ended Oct. 4, 2009.
The decrease in revenues is primarily attributable to the decrease in comparable restaurant revenues. A portion of the decrease was offset by an increase in revenues from four new Morton's steakhouses opened during fiscal 2008 and two new Morton's steakhouses opened during fiscal 2009.
The three month period ended Oct. 4, 2009 included a charge of $1.1 million pre-tax and $0.7 million after-tax, or $0.05 per diluted share, which represents the change in the fair value of the share-based component to be issued in connection with the settlement of certain wage and hour claims that we announced in the second quarter of fiscal 2009. The Company previously reported in the second quarter of fiscal 2009 that it had recorded a charge related to the settlement of certain wage and hour and similar labor claims of approximately $10.6 million pre-tax and approximately $6.7 million after-tax, or approximately $0.42 per diluted share. A portion of these claims will be settled with the issuance of Company shares and, as a result, the portion of the liability attributed to the share-based component will be adjusted to fair value at each quarter-end, with fair value estimated based on the trading price of our common stock per share and other observable inputs, until the settlement has been approved by the court at which time a final adjustment will be recorded.
The three month period ended Sept. 28, 2008 included a non-cash impairment charge of $66.2 million pre-tax and $57.6 million after-tax from continuing operations and $3.6 million pre-tax and $3.1 million after-tax from discontinued operations.
Including these unusual items, the Company's GAAP net loss from continuing operations was $(3.3) million, or $(0.21) per diluted share, for the three month period ended Oct. 4, 2009, compared to a net loss from continuing operations of $(60.1) million, or $(3.79) per diluted share, for the three month period ended Sept. 28, 2008.
Excluding these unusual items, the Company's adjusted net loss from continuing operations was $(2.6) million, or $(0.16) per diluted share, for both the three month periods ended Oct. 4, 2009 and Sept. 28, 2008. (Please refer to the reconciliation of adjusted net income (loss) to GAAP net income (loss) in the financial tables that follow.)
The nine month period ended Oct. 4, 2009 as compared to the nine month period ended Sept. 28, 2008 (39 weeks to 39 weeks).
Revenues decreased 16.8% to $203.3 million.
Comparable restaurant revenues for Morton's steakhouses decreased 22.4% for the nine-month period ended Oct. 4, 2009.
The decrease in revenues is primarily attributable to the decrease in comparable restaurant revenues. A portion of the decrease was offset by an increase in revenues from four new Morton's steakhouses opened during fiscal 2008 and two new Morton's steakhouses opened during fiscal 2009. The nine month period ended Oct. 4, 2009 included three unusual items:
* The Company incurred a charge of $11.7 million pre-tax and $7.4 million after-tax, or $(0.47) per diluted share, relating to the settlement of certain wage and hour claims and similar labor claims.
* The Company incurred a first quarter charge of $0.2 million pre-tax and $0.1 million after-tax, or $0.01 per diluted share, for the partial write-off of deferred financing costs related to the amendment of the Company's senior revolving credit facility that was executed on March 4, 2009, pursuant to which the amount available under the credit facility was reduced from $115.0 million to $75.0 million, with a further reduction to $70.0 million effective December 31, 2009.
* The Company's effective tax rate for the nine month period ended October 4, 2009 was negatively impacted by a non-cash charge of $0.7 million, or $0.04 per diluted share, related to the tax treatment of the vesting of certain restricted stock awards, compared to a similar non-cash charge of $0.3 million, or $0.02 per diluted share, incurred in the nine month period ended September 28, 2008.
The nine month period ended Sept. 28, 2008, included a non-cash impairment charge of $66.2 million pre-tax and $57.6 million after-tax from continuing operations and $3.6 million pre-tax and $3.1 million after-tax from discontinued operations.
Including these unusual items, the Company's GAAP net loss from continuing operations was $(10.8) million, or $(0.68) per diluted share, for the nine month period ended October 4, 2009 compared to a net loss from continuing operations of $(55.5) million, or $(3.43) per diluted share, for the nine month period ended Sept. 28, 2008.
Excluding these unusual items, the Company's adjusted net loss from continuing operations was $(2.6) million, or $(0.16) per diluted share, for the nine month period ended Oct. 4, 2009, which compares to adjusted net income from continuing operations of $2.3 million, or $0.14 per diluted share, for the nine month period ended Sept. 28, 2008.
As previously reported, Morton's revenues and results have been pressured by the continuing global recession, which has impacted guest traffic throughout the industry. Negative comparable restaurant revenues adversely impacted earnings due to the deleveraging effect on the fixed cost base.
"Over the past year we have seen unprecedented economic conditions which have impacted business travel, convention business, hotel occupancy and air travel, all of which have had a direct impact on our Morton's business," said Thomas J. Baldwin, chairman and chief executive officer of Morton's Restaurant Group, Inc. "Throughout this period, we have taken many action steps to drive our marketing initiatives, profit enhancements and cost management programs, meeting these economic challenges head on. These steps are fully aligned with our uncompromising commitment to our guests' experience and we believe that our strong Morton's brand continues to remain well positioned for long-term growth as the economy improves. At Morton's we offer 'The Best Steak Anywhere,' the best service and the best people in the fine dining steakhouse segment and believe the best is yet to come."
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