Morton’s Restaurant Group, Inc. Reports Results For Fiscal 2009 Fourth Quarter And For The Fiscal Ye
CHICAGO, March 3 - Morton’s Restaurant Group, Inc. (NYSE: MRT) today reported unaudited financial results for its fiscal 2009 fourth quarter and its fiscal year ended January 3, 2010.
The three month period ended January 3, 2010 as compared to the three month period ended January 4, 2009 (13 weeks to 14 weeks)
— Revenues decreased 9.4% to $79.2 million.
— Comparable restaurant revenues for Morton’s steakhouses decreased
11.6% for the fourth quarter of fiscal 2009 ended January 3, 2010.
The fourth quarter of fiscal 2009 included 13 weeks as compared to 14
weeks in the fourth quarter of fiscal 2008. Comparable restaurant
revenues for Morton’s steakhouses would have decreased 5.3% for the
fourth quarter of fiscal 2009 when compared to the same 13 week period
in fiscal 2008.
— 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 fourth quarter of fiscal 2009 included several unusual items:
— During the fourth quarter of fiscal 2009, the Company determined a
full valuation allowance against its U.S. deferred tax assets was
necessary in order to reflect the Company’s assessment of its
ability to realize the benefits of those deferred tax assets. The
Company made this determination after weighing both negative and
positive evidence in accordance with Generally Accepted Accounting
Principles (“GAAP”). The evidence weighed included a three-year
cumulative loss related to earnings before taxes, sources of
taxable income, existing tax planning strategies, and future
projections of earnings. As a result, the Company recorded a
non-cash charge related to continuing operations of $52.9 million,
or $3.33 per diluted share, which is included in income tax
expense. This charge takes into account any tax benefits discussed
below.
— During the fourth quarter of fiscal 2009, the Company performed an
impairment analysis related to its intangible asset and certain
long-lived assets used in its restaurants in accordance with GAAP..
As a result, it was determined that the intangible asset and
certain long-lived restaurant assets were impaired and the Company
recorded a charge in continuing operations of $30.0 million
pre-tax and $18.3 million after-tax, or $1.15 per diluted share.
The three month period ended January 4, 2009 included a comparable
non-cash impairment charge in continuing operations of $10.4
million pre-tax and $9.3 million after-tax, or $0.59 per diluted
share.
— The three month period ended January 3, 2010 included a benefit of
$(1.8) million pre-tax and $(1.2) million after-tax, or $(0.08)
per diluted share, which represents the change in the fair value
of the preferred shares issued in connection with the settlement
of certain wage and hour claims that we announced in the second
quarter of fiscal 2009. We obtained court approval of the
settlement in January 2010 at which time a final adjustment was
recorded to the fair value of the preferred stock based on the
trading price of our common stock per share and other observable
inputs at the time of approval. A portion of these claims was
settled with the issuance of Company convertible preferred shares
in February 2010.
— The three month period ended January 3, 2010 included a charge of
$1.3 million pre-tax and $0.8 million after-tax, or $0.05 per
diluted share, related to an accrual for severance and other
post-employment benefits as a result of the resignation of our
former Chief Executive Officer, which was previously announced on
February 2, 2010.
— Including these unusual items, the Company’s GAAP net loss from
continuing operations was $(66.9) million, or $(4.21) per diluted
share, for the three month period ended January 3, 2010, compared
to a net loss from continuing operations of $(7.6) million, or
$(0.48) per diluted share, for the three month period ended
January 4, 2009.
— Excluding these unusual items, the Company’s adjusted net income
from continuing operations was $4.0 million, or $0.25 per diluted
share, for the three month period ended January 3, 2010 and $4.5
million, or $0.29 per diluted share, for the three month period
ended January 4, 2009. (Please refer to the reconciliation of
adjusted net income (loss) to GAAP net income (loss) in the
financial tables that follow.)
The twelve month period ended January 3, 2010 as compared to the twelve month period ended January 4, 2009 (52 weeks to 53 weeks)
— Revenues decreased 14.7% to $281.1 million.
— Comparable restaurant revenues for Morton’s steakhouses decreased
19.5% for the twelve month period ended January 3, 2010. The twelve
month period ended January 3, 2010 included 52 weeks as compared to 53
weeks for the twelve month period ended January 4, 2009. Furthermore,
due to a fiscal calendar shift, the first quarter of fiscal 2008
included revenue from New Year’s Eve (December 31, 2007) and the first
quarter of fiscal 2009 did not include revenue from New Year’s Eve.
Comparable restaurant revenues for Morton’s steakhouses would have
decreased 18.0% for fiscal 2009 when compared to the same 52 week
period in fiscal 2008.
— 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 twelve month period ended January 3, 2010 included several unusual
items:
— During the twelve month period ended January 3, 2010, the Company
recorded an impairment charge in continuing operations relating to
its intangible asset and certain long-lived assets used in its
restaurants of $30.0 million pre-tax and $18.3 million after-tax,
or $1.16 per diluted share. The twelve month period ended January
4, 2009 included a comparable non-cash impairment charge in
continuing operations of $74.5 million pre-tax and $65.7 million
after-tax, or $4.08 per diluted share.
— The Company incurred a charge in continuing operations of $9.9
million pre-tax and $6.2 million after-tax, or $0.39 per diluted
share, relating to the settlement of certain wage and hour and
similar labor claims. The twelve month period ended January 4,
2009 included a charge of $3.7 million pre-tax and $2.3 million
after-tax, or $0.15 per diluted share, related to wage and hour
and similar labor claims.
— The twelve month period ended January 3, 2010 included a charge of
$1.3 million pre-tax and $0.8 million after-tax, or $0.05 per
diluted share, related to an accrual for severance and other
post-employment benefits as a result of the resignation of our
former Chief Executive Officer, which was previously announced on
February 2, 2010.
— As discussed above in the results related to the fourth quarter of
fiscal 2009, the Company’s effective tax rate for the twelve month
period ended January 3, 2010 was primarily impacted by a non-cash
charge of $52.9 million, or $3.33 per diluted share, related to
establishing a full valuation allowance against its U.S. deferred
tax assets as of year-end and other miscellaneous charges.
— Including these unusual items, the Company’s GAAP net loss from
continuing operations was $(77.5) million, or $(4.87) per diluted
share, for the twelve month period ended January 3, 2010 compared to a
net loss from continuing operations of $(61.8) million, or $(3.84)
per diluted share, for the twelve month period ended January 4, 2009.
— Excluding these unusual items, the Company’s adjusted net income from
continuing operations was $1.6 million, or $0.10 per diluted share,
for the twelve month period ended January 3, 2010, which compares to
adjusted net income from continuing operations of $6.9 million, or
$0.43 per diluted share, for the twelve month period ended January 4,
2009.
“There is no question that 2009 presented one of the most challenging economies in our 31 year history. The weakened economy resulted in huge downturns in business travel, conventions, entertaining, and spending in general, which adversely impacted our industry. Despite comparable revenues decreasing in the fourth quarter, we are pleased to be seeing a modest increase in comparable revenues starting in December 2009 and continuing into January and February of 2010. We are very proud of the approach we have taken to manage our business in this challenging environment. While our management team has looked closely at each part of our business for ways to effectively manage costs, we have remained focused on ensuring that our standards of excellence have not been compromised. Morton’s serves the ‘Best Steak Anywhere’ and we are committed to continuing to exceed our guest’s expectations. We have undertaken numerous initiatives to ensure effective cost management and to enhance profits, without sacrificing the highest quality food, service, and hospitality. The Marketing and Public Relations teams have done an outstanding job in creating special events, brand awareness, and helping our restaurants cultivate relationships with our guests. The culture at Morton’s is our greatest asset. It embodies our people, our passion, and our commitment to exceeding the guest’s expectations. Morton’s is very proud of our brand, our people and what we have built over the past 31 years. With all of this, I believe we are well positioned to lead our industry as we climb through this economy as the ‘World’s Best Steakhouse’” said, Christopher J. Artinian, President and Chief Executive Officer of Morton’s Restaurant Group, Inc.
Restaurants
On March 3, 2009, the Company opened a Morton’s steakhouse in Mexico City, Mexico (through a joint venture) and, on October 2, 2009, opened a Morton’s steakhouse in Miami Beach, FL. The Company has entered into a lease to open a new Morton’s steakhouse in Indian Wells, CA.
During the twelve month period ended January 3, 2010, the Company closed six Morton’s steakhouses and one Bertolini’s restaurant in addition to selling the one remaining Bertolini’s restaurant. During the twelve month period ended January 4, 2009, the Company closed two Morton’s steakhouses and one Bertolini’s restaurant. The Company has determined that all closed or divested restaurants should be accounted for as discontinued operations due to the fact that the Company does not expect any further direct or indirect cash inflows from these restaurants. Accordingly, the results of operations for the closed restaurants have been reclassified to discontinued operations in the statements of operations for all periods presented.
First Quarter Fiscal 2010 and Full Year Fiscal 2010 Financial Guidance
The current economic environment significantly increases the inherent uncertainty of guidance. Actual results could differ materially from the guidance provided herein as a result of numerous factors, many of which are beyond the Company’s control and are highly dependent upon overall economic conditions. In particular, a further decrease in consumer and/or business spending in one or more of the geographic areas in which the Company operates could cause actual results to differ materially from the Company’s guidance. Refer to “Cautionary Note on Forward-Looking Statements” later in this press release.
The Company currently expects first quarter of fiscal 2010 revenues to range between $72.0 million and $74.0 million, including increases in comparable restaurant revenues for Morton’s steakhouses of approximately 0% to 2% as compared to the first quarter of fiscal 2009. First quarter diluted net income per share from continuing operations is expected to approximate $0.06 to $0.09. This range excludes an additional charge of approximately $0.5 million related to the Company’s convertible preferred shares issued in connection with the settlement of certain wage and hour litigation for which court approval was granted in January 2010. The expected effective tax rate for the first quarter of fiscal 2010 is not expected to exceed 23%.
The Company currently expects fiscal year 2010 revenues to range between $291.0 million and $296.0 million, which reflects an increase in comparable restaurant revenues for Morton’s steakhouses of approximately 2% to 4% as compared to fiscal 2009. Diluted net income per share from continuing operations for fiscal 2010 is expected to approximate $0.25 to $0.30. This range excludes an additional charge of approximately $0.5 million related to the Company’s convertible preferred shares issued in connection with the settlement of certain wage and hour litigation for which court approval was granted in January 2010. The expected effective tax rate for fiscal 2010 is not expected to exceed 23%.
Conference Call
Morton’s Restaurant Group, Inc. (NYSE:MRT) has scheduled a conference call and webcast for investors at 5:00 p.m. ET today to discuss these results. Details of the conference call are as follows:
Date: Wednesday, March 3, 2010
Time: 5:00 p.m. ET (please dial in by 4:45 p.m.)
Dial-In #: 866-783-2138 U.S. & Canada
857-350-1597 International
Confirmation code: 42194210
Alternatively, the conference call will be available via webcast at http://www.mortons.com under the “Investor Relations” tab. For those unable to participate, an audio replay will be available from 8:00 p.m. ET on Wednesday, March 3, 2010, through midnight Wednesday, March 17, 2010. To access the replay, please call 888-286-8010 (U.S. & Canada) or 617-801-6888 (International) and enter confirmation code 62619953. A web-based archive of the conference call will also be available at the above website.
About the Company
Morton’s Restaurant Group, Inc. is the world’s largest operator of company-owned upscale steakhouses. Morton’s steakhouses have remained true to our founders’ original vision of combining generous portions of high quality food prepared to exacting standards with exceptional service in an enjoyable dining environment. As of March 3, 2010, the Company owned and operated 76 Morton’s steakhouses located in 64 cities across 27 states, Puerto Rico and five international locations (Hong Kong, Macau, Mexico City, Singapore and Toronto) and one Italian restaurant. Please visit our Morton’s website at http://www.mortons.com.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Except for the historical information contained in this news release, the matters addressed are forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, written, oral or otherwise made, represent the Company’s expectations or beliefs concerning future events. Without limiting the foregoing, the words “believes,” “thinks,” “anticipates,” “estimates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements. The Company cautions that forward-looking statements are subject to risks, uncertainties, assumptions and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, without limitation, (i) a reduction in consumer and/or business spending in one or more of the Company’s markets due to business layoffs or budget reductions, negative consumer sentiment, access to consumer credit, commodity and other prices, events or occurrences affecting the securities and/or financial markets, occurrences affecting the Company’s common stock, housing values, changes in federal, state, foreign and/or local tax levels or other factors, (ii) risks relating to the restaurant industry and the Company’s business, including competition, changes in consumer tastes and preferences, risks associated with opening new locations, increases in food and other raw materials costs, increases in energy costs, demographic trends, traffic patterns, weather conditions, employee availability, benefits and cost increases, perceived product safety issues, supply interruptions, litigation, judgments or settlements in pending litigation, government regulation, the Company’s ability to maintain adequate financing facilities, the Company’s liquidity and capital resources, prevailing interest rates and legal and regulatory matters, (iii) public health issues, including, without limitation risks relating to the spread of pandemic diseases and (iv) other risks detailed from time to time in the Company’s most recent Form 10-K, Forms 10-Q and other reports filed with the Securities and Exchange Commission. In addition, the Company’s ability to open new restaurants is dependent upon various factors, such as the availability of attractive sites for new restaurants, the ability to negotiate suitable lease terms, the ability to generate or borrow funds to develop new restaurants, the ability to obtain various government permits and licenses, limitations on permitted capital expenditures under the Company’s credit facility and the recruitment and training of skilled management and restaurant employees. Other unknown or unpredictable factors also could harm the Company’s business, financial condition and results. Consequently, there can be no assurance that actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws.
Source: Morton’s Restaurant Group, Inc.
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