-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GpJDWKkeM0bvxwpchi07tCQ7Nj5gOzHEsM6gSfFQA9U6A2attvszU2gvIN4fCVjb CrasPaFBFqvTtV6v9iK+Iw== 0000912057-97-016883.txt : 19970513 0000912057-97-016883.hdr.sgml : 19970513 ACCESSION NUMBER: 0000912057-97-016883 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970330 FILED AS OF DATE: 19970512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTONS RESTAURANT GROUP INC CENTRAL INDEX KEY: 0000883981 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133490149 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12692 FILM NUMBER: 97600849 BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PK RD STE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5166271515 MAIL ADDRESS: STREET 1: 3333 NEW HYDE PARK ROAD STREET 2: SUITE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 FORMER COMPANY: FORMER CONFORMED NAME: QUANTUM RESTAURANTS GROUP INC DATE OF NAME CHANGE: 19950315 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 30, 1997 ------------------------------------------------ OR [ ] 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 1-12692 ------------------------------------------------ MORTON'S RESTAURANT GROUP, INC. - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-3490149 - ------------------------------------------------------------------------------ (State or other jurisdiction of incorporation (I.R.S. employer or organization) identification no.) 3333 New Hyde Park Road, Suite 210, New Hyde Park, New York 11042 - ------------------------------------------------------------------------------ (Address of principal executive offices) (zip code) 516-627-1515 - ------------------------------------------------------------------------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 such filing requirements for the past 90 days. Yes X No ------- ------- As of May 5, 1997, the registrant had 6,472,053 Shares of its Common Stock, $.01 par value, issued and outstanding. 1 MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES INDEX Part I - Financial Information Page Item 1. Financial Statements Consolidated Balance Sheets as of March 30, 1997 and December 29, 1996 3-4 Consolidated Statements of Operations for the three month periods ended March 30, 1997 and March 31, 1996 5 Consolidated Statements of Cash Flows for the three month periods ended March 30, 1997 and March 31, 1996 6 Notes to Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-13 Part II - Other Information Item 1. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Stockholders 14 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 2 Item 1. Financial Statements MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (amounts in thousands) March 30, December 29, 1997 1996 --------- ------------ (unaudited) Assets Current assets: Cash and cash equivalents $ 2,088 $ 2,276 Accounts receivable 1,762 2,116 Inventories 4,701 4,254 Landlord construction receivables, prepaid expenses and other current assets 2,443 2,408 Deferred income taxes 3,996 3,808 Assets held for sale 348 12,474 -------- -------- Total current assets 15,338 27,336 Property and equipment, at cost: Furniture, fixtures and equipment 14,489 13,552 Leasehold improvements 15,842 14,188 Construction in progress 1,205 1,284 -------- -------- 31,536 29,024 Less accumulated depreciation and amortization 4,841 4,353 -------- -------- Net property and equipment 26,695 24,671 -------- -------- Intangible assets, net of accumulated amortization of $3,155 at March 30, 1997 and $3,054 at December 29, 1996 12,840 12,941 Other assets and deferred expenses, net of accumulated amortization of $5,250 at March 30, 1997 and $3,963 at December 29, 1996 7,259 5,909 Deferred income taxes 5,184 6,129 -------- -------- $ 67,316 $ 76,986 -------- -------- -------- -------- (Continued) 3 MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets, Continued (amounts in thousands, except share data) March 30, December 29, 1997 1996 -------- ----------- (unaudited) Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 5,044 $ 4,694 Accrued expenses 7,040 7,795 Accrued income taxes 452 700 Liabilities related to assets held for sale 4,234 12,134 -------- -------- Total current liabilities 16,770 25,323 Bank debt 21,697 24,900 Other liabilities 5,608 5,676 -------- -------- Total liabilities 44,075 55,899 -------- -------- Commitments and contingencies Stockholders' equity: 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 and outstanding 6,461,113 shares at March 30, 1997 and 6,443,673 shares at December 29, 1996 65 64 Nonvoting common stock, $.01 par value per share. Authorized 3,000,000 shares, no shares issued or outstanding - - Additional paid-in capital 61,684 61,632 Accumulated deficit (38,508) (40,609) -------- -------- Total stockholders' equity 23,241 21,087 -------- -------- $ 67,316 $ 76,986 -------- -------- -------- -------- See accompanying notes to consolidated financial statements. 4 MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Income (amounts in thousands, except per share data) Three Months Ended March 30, March 31, 1997 1996 -------- -------- (unaudited) Revenues $ 46,534 $ 48,869 Food and beverage costs 15,945 16,271 Restaurant operating expenses 20,284 23,534 Depreciation, amortization and other non-cash charges 2,087 1,594 General and administrative expenses 3,690 3,702 Marketing and promotional expenses 1,107 1,139 Interest expense, net 620 570 -------- -------- Income before income taxes 2,801 2,059 Income tax expense 700 515 -------- -------- Net income $ 2,101 $ 1,544 -------- -------- -------- -------- Income per share $ 0.31 $ 0.23 -------- -------- -------- -------- Weighted average shares outstanding 6,827 6,743 -------- -------- -------- -------- See accompanying notes to consolidated financial statements. 5 MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (amounts in thousands) Three Months Ended March 30, March 31, 1997 1996 -------- -------- (unaudited) Cash flows from operating activities: Net income $ 2,101 $ 1,544 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other non-cash charges 2,087 1,594 Deferred income taxes 757 400 Change in assets and liabilities: Accounts receivable 354 1,277 Inventories (447) (60) Prepaid expenses and other assets (1,970) (152) Accounts payable, accrued expenses and other liabilities (855) (1,627) Accrued income taxes (248) (267) -------- -------- Net cash provided by operating activities 1,779 2,709 -------- -------- Cash flows from investing activities: Purchases of property and equipment, net (2,384) (361) Payments for start-up costs, licenses and other deferred expenses (741) (1,822) Proceeds from sale of Mick's and Peasant restaurants 4,308 - -------- -------- Net cash provided (used) by investing activities 1,183 (2,183) -------- -------- Cash flows from financing activities: Principal reduction on bank debt (7,600) (1,000) Proceeds from bank debt 4,397 1,550 Payments on note payable to related party - (483) Net proceeds from issuance of stock 53 - -------- -------- Net cash provided (used) by financing activities (3,150) 67 -------- -------- Net increase (decrease) in cash and cash equivalents (188) 593 Cash and cash equivalents at beginning of period 2,276 2,351 -------- -------- Cash and cash equivalents at end of period $ 2,088 $ 2,944 -------- -------- -------- -------- See accompanying notes to consolidated financial statements. 6 MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements March 30, 1997 and March 31, 1996 1) The accompanying unaudited, consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in conformity with generally accepted accounting principles. They should be read in conjunction with the consolidated financial statements of Morton's Restaurant Group, Inc., formerly known as Quantum Restaurant Group, Inc., (the "Company") for the fiscal year ended December 29, 1996, filed by the Company on Form 10-K with the Securities and Exchange Commission on March 27, 1997. The accompanying financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair presentation of its financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire year. On May 9, 1996, at the Company's Annual Meeting of Stockholders, the stockholders voted to change the name of the Company from Quantum Restaurant Group, Inc. to Morton's Restaurant Group, Inc. The Company uses a fiscal reporting period ending on the closest Sunday to December 31. The fiscal year consists of 52 weeks and approximately every six or seven years, a 53rd week will be added. 2) For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company paid cash interest and fees, net of amounts capitalized, of approximately $555,000 and $490,000, and income taxes of approximately $542,000 and $386,000, for the three months ended March 30, 1997 and March 31, 1996, respectively. During the first quarter of fiscal 1997 and 1996, the Company entered into capital lease arrangements of approximately $140,000 and $980,000, respectively, for restaurant equipment. 3) As described below, on February 6, 1997, the Company completed the sale of its Atlanta-based Mick's and Peasant restaurants. Effective January 2, 1995, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of " ("Statement 121"). During the second quarter of fiscal 1995, the Company approved a plan for the sale of Mick's Restaurants, Inc. ("Mick's") and The Peasant Restaurants, Inc. ("Peasant"). Pursuant to Statement 121, the Company discontinued depreciating fixed assets and amortizing goodwill relating to Mick's and Peasant in April 1995. Coincident with the Company's approval of the plan of sale, the assets held for sale and related liabilities for Mick's and Peasant have been reclassified as "Assets held for sale" and "Liabilities related to assets held for sale" when the Company reports its financial position. The accompanying consolidated balance sheets include the following components: 7 March 30, December 29, 1997 (1) 1996 --------- ------------ (amounts in thousands, unaudited) Current assets $ 348 $ 2,166 Net property and equipment 2,028 10,704 Unamortized goodwill - 8,077 Other assets 928 2,143 Write-down of carrying values (2,956) (10,616) --------- --------- Assets held for sale 348 12,474 --------- --------- Current liabilities 462 3,495 Other liabilities - 1,612 Lease exit and other transaction costs 3,772 7,027 --------- --------- Liabilities related to assets held for sale 4,234 12,134 --------- --------- Net assets (liabilities related to assets) held for sale $ (3,886) $ 340 --------- --------- --------- --------- (1) Includes the five remaining non-Atlanta Mick's restaurants. The following represents the combined results of Mick's and Peasant for the periods ended March 30, 1997 and March 31, 1996. Interest expense was not allocated. Three Months Ended March 30, 1997 (2) March 31, 1996 ------------------ --------------- (amounts in thousands,unaudited) Revenues $ 5,723 $ 15,301 Food and beverage costs 1,702 4,477 Restaurant operating expense 3,449 9,623 Depreciation, amortization and other non-cash charges 6 65 General and administrative expenses 432 1,044 Marketing and promotional expenses 101 287 --------- --------- Income (loss) before income taxes $ 33 $ (195) --------- --------- --------- --------- (2) Includes the Atlanta-based Mick's and Peasant restaurants through February 6, 1997, the date of sale, as discussed below, and the five remaining non-Atlanta Mick's restaurants which the Company intends to sell or otherwise dispose of. Management had been actively seeking potential buyers for the sale of all Mick's and Peasant restaurants and in the fourth quarter of fiscal 1995 engaged an investment banking firm to assist with the sale. Although marketing efforts concentrated on selling all of the Mick's and Peasant restaurants, sales materials indicated that a partial sale would be considered. Most of the interest received related to the majority of the restaurants located mainly in the Atlanta area. No meaningful offers were received for the remaining restaurants (the "Remaining Restaurants"). Cash flow analyses prepared by management for the Remaining 8 Restaurants indicated that it would be less costly to close such restaurants in an orderly fashion, rather than continue to operate them through the end of their respective lease terms. Accordingly, assets of $8,300,000 related to the Remaining Restaurants were written off and expenses of $7,200,000, representing management's estimate of the expected costs to terminate related leases, were accrued at December 31, 1995. During fiscal 1996 and the first quarter of 1997, restaurant occupancy expense of approximately $1,498,000 and $343,000 for the Remaining Restaurants has been charged against the accrual for lease exit costs, respectively. During fiscal 1996, seven Mick's restaurants and two Peasant restaurants were closed. During January 1997, two more Mick's restaurants were closed. On February 6, 1997, the Company completed the sale of its Atlanta-based Mick's and Peasant restaurants. In connection with the sale, the Remaining Restaurants were transferred to another subsidiary of the Company. Pursuant to these agreements, MRI Acquisition Corporation acquired an 80.1% interest in Mick's and PRI Acquisition Corporation acquired an 80.1% interest in Peasant for an aggregate of $6,800,000, consisting of $4,300,000 in cash and $2,500,000 in the form of two unsecured promissory notes. The Company retained a 19.9% interest in Mick's and Peasant. In conjunction with the sale, the Company had recorded a fiscal 1996 fourth quarter charge of $11,500,000 to write-down the Atlanta-based restaurants to their net realizable values based on the fair value of the consideration received, accrue for the various expenses related to the closing of such sale and to write-off two restaurants which are not part of the sale, one of which was closed in January 1997. As of April 1997, the Company continues to operate five Mick's restaurants which the Company intends to sell or otherwise dispose of. The write-down and related charges for net assets held for sale reflect management's best estimate of the costs expected to be incurred in connection with the disposition of Mick's and Peasant. As a result of the numerous uncertainties which may impact the actual costs to be incurred by the Company, such costs may differ from the current estimates used by management. 4) The Company is involved in various legal actions. See "Part II - Other Information, Item 1. Legal Proceedings" on page 14 of this Form 10-Q for a discussion of these legal actions. 9 MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Revenues decreased $2.3 million, or 4.8%, to $46.5 million for the three month period ended March 30, 1997, from $48.9 million during the comparable 1996 period. Revenues from Morton's and Bertolini's increased $7.2 million, or 21.6%, to $40.8 million for the three month period ended March 30, 1997, from $33.6 million during the comparable 1996 period. Of the increase in Morton's and Bertolini's revenues, $5.0 million was attributable to incremental restaurant revenues from six new restaurants opened after January 1, 1996 and $1.7 million, or 5.6%, was attributable to additional comparable revenues from restaurants open all of both periods. Average Morton's and Bertolini's revenues per restaurant open for a full period increased 7.2%. Included in 1997 first quarter revenues is approximately $0.5 million of investment income. As stated in Note 3, the Company completed the sale of its Atlanta-based Mick's and Peasant restaurants on February 6, 1997, and eleven other Mick's and Peasant restaurants have been closed during fiscal 1996 and January 1997. As a result, revenues for the Mick's and Peasant restaurants decreased approximately $9.5 million in the first quarter of fiscal 1997 verses the comparable period of 1996. As of April 1997, the Company continues to operate five Mick's restaurants which the Company intends to sell or otherwise dispose of. Percentage changes in comparable restaurant revenues for the three month period ended March 30, 1997 versus March 31, 1996 for restaurants open all of both periods are as follows: Three Months Ended March 30, 1997 Percentage Change --------------------- Morton's 7.7% Bertolini's -4.1% Total 5.6% The Company believes that revenues for the first quarter of 1996 were adversely affected by severe winter storms in January 1996. Food and beverage costs decreased from $16.3 million for the three month period ended March 31, 1996 to $15.9 million for the three month period ended March 30, 1997. Food and beverage costs excluding all Mick's and Peasant restaurants increased by $2.4 million to $14.2 million for the three month period ended March 30, 1997 from $11.8 million recorded for the three month period ended March 31, 1996. These costs as a percentage of revenues decreased 0.2% for the three month period. As a result of the sale and closings of the Mick's and Peasant restaurants as discussed in Note 3, there was a reduction of approximately $2.8 million in the three month period ended March 30, 1997 compared to the corresponding 1996 period. Restaurant operating expenses which include labor, occupancy and other operating expenses decreased from $23.5 million for the three month period ended March 31, 1996 to $20.3 million for the three month period ended March 30, 1997, a decrease of $3.2 million. Restaurant operating expenses excluding all Mick's and Peasant restaurants increased from $13.9 million for the three month period ended March 31, 1996 to $16.8 million for the comparable 1997 period. Those costs as a percentage of revenues decreased 10 0.2% from 41.4% for the three month period ended March 31, 1996 to 41.2% for the three month period ended March 30, 1997. Offsetting the increase in total restaurant operating expenses was a reduction of approximately $6.1 million during the three month period ended March 30, 1997 verses the comparable 1996 period due to the sale and closings of Mick's and Peasant restaurants as discussed in Note 3. Depreciation, amortization and other non-cash charges increased from $1.6 million for the three month period ended March 31, 1996 to $2.1 million for the three month period ended March 30, 1997 and increased from 3.3% of revenues to 4.5%, respectively. The 1997 period increase is due to increased startup amortization. General and administrative expenses for the three month period ended March 30, 1997 were $3.7 million, which remained flat as compared with the three month period ended March 31, 1996. General and administrative expenses excluding all Mick's and Peasant restaurants increased $0.6 million from $2.7 million for the three month period ended March 31, 1996 to $3.3 million for the comparable 1997 period. Such costs as a percentage of revenues were 8.0% for the three month period ended March 31, 1997, an increase of 0.1% from the three month period ended March 30, 1996. The increase in such expense is driven by incremental costs associated with increased restaurant development. General and administrative expenses relating to the Mick's and Peasant restaurant groups decreased $0.6 million during the three month period ended March 31, 1997 verses the comparable 1996 period as a result of the sale and closings of Mick's and Peasant restaurants as discussed in Note 3. Marketing and promotional expenses were $1.1 million for the three month periods ended March 30, 1997 and March 31, 1996. Marketing and promotional expenses excluding Mick's and Peasant were $1.0 million, or 2.5% of revenues for the three months ended March 31, 1997, as compared to $0.9 million, or 2.5% of revenues, for the comparable 1996 period. The increase is driven by incremental costs associated with increased restaurant development. Mick's and Peasant marketing and promotional expenses decreased $0.2 million during the three month period ended March 30, 1997 verses the comparable 1996 period. Interest expense, net of interest income, remained constant at $0.6 million for the three month periods ended March 30, 1997 and March 31, 1996. Income tax expense of $0.7 million for the three month period ended March 30, 1997 represents Federal income taxes, which were partially offset by the establishment of additional deferred tax assets relating to FICA and other tax credits that were generated during fiscal 1997, as well as state income taxes. Liquidity and Capital Resources In the past, the Company has had, and may have in the future, negative working capital balances. The Company does not have significant receivables or inventories and receives trade credit based upon negotiated terms in purchasing food and supplies. Funds available from cash sales not needed immediately to pay for food and supplies or to finance receivables or inventories were used for noncurrent capital expenditures and/or payments of long-term debt balances under revolving credit agreements. The Company and BankBoston, N.A. (formerly The First National Bank of Boston) entered into the Second Amended and Restated Revolving Credit and Term Loan Agreement dated as of June 19, 1995, as amended from time to time (collectively the "Credit Agreement"), pursuant to which the Company's credit facility is $30,000,000, consisting of a $15,000,000 term loan (the "Term Loan") and a $15,000,000 revolving credit facility (the "Revolving Credit Facility"). The final maturity date is December 31, 2001. Loans made pursuant to the Credit Agreement bear interest at a rate equal to the lender's base rate (plus applicable margin) 11 or, at the Company's option, the Eurodollar Rate (plus applicable margin). At March 30, 1997, the Company's applicable margin, calculated pursuant to the Credit Agreement, was 0.00% on base rate loans and 2.0% on Eurodollar Rate loans. The Company has no outstanding futures contracts or interest rate hedge agreements. During fiscal 1996, BankBoston syndicated portions of the Term Loan and Revolving Credit Facility of the Credit Agreement to two additional lenders, Imperial Bank and Heller Financial. BankBoston, as agent for the Lenders, receives an annual fee of $10,000 paid by the Company. As of March 30, 1997 and December 29, 1996, the Company had outstanding borrowings of $19,350,000 and $24,900,000, respectively, under the Credit Agreement. At March 30, 1997 $221,000 was restricted for letters of credit issued by the lender on behalf of the Company. Unrestricted and undrawn funds available to the Company under the Credit Agreement were $10,429,000. The weighted average interest rate on all bank borrowings on March 30, 1997 was 7.51%. In addition, the Company is obligated to pay fees of 0.25% on unused loan commitments less than $10,000,000, 0.375% on unused loan commitments greater than $10,000,000 and a per annum letter of credit fee (based on the face amount thereof) equal to the applicable margin on the Eurodollar Rate loans. The availability under the Credit Agreement is scheduled to reduce by $800,000 on September 30, 1997 and thereafter principal installments on the Term Loan of $800,000 each will be due at the end of each calendar quarter through December 31, 2001. The Revolving Credit Facility will be payable in full on December 31, 2001. Borrowings under the Credit Agreement are secured by all tangible and intangible assets of the Company. Total amounts of principal payable by the Company under the Credit Agreement during the five years subsequent to March 30, 1997 amount to $1,600,000 in 1997, $3,200,000 in 1998, $3,200,000 in 1999, $3,200,000 in 2000 and $8,150,000 in 2001. The borrowings under the Company's Credit Agreement have been classified as long-term on the Company's consolidated balance sheet since the Company may borrow amounts due under the Term Loan from the Revolving Credit Facility, including the Term Loan Principal payments due in September 1997. As stated in Note 3 to the accompanying consolidated financial statements, the Company has completed the sale of its Atlanta-based Mick's and Peasant restaurants. Net cash proceeds from the sale were used to reduce the Company's Revolving Credit Facility. The Credit Agreement contains certain restrictive covenants with respect to the Company that, among other things, create limitations (subject to certain exceptions) on: (i) the incurrence or existence of additional indebtedness or the granting of liens on assets or contingent obligations; (ii) the making of investments in any person; (iii) mergers, dispositions of assets or consolidations; (iv) prepayment of certain other indebtedness; (v) making capital expenditures above specified amounts; and (vi) the ability to make certain fundamental changes or to change materially the present method of conducting the Company's business. The Credit Agreement also requires the Company to satisfy certain financial ratios and tests. As of March 30, 1997, the Company believes it was in compliance with such covenants. In March 1997, a subsidiary of the Company and CNL Financial I, Inc. ("CNL") entered into a $2,500,000 loan agreement (the "CNL Loan"), which matures on April 1, 2007 and has a 10.02% per annum interest rate. Principle and interest payments will be made over the term of the loan. Proceeds from the CNL loan were used to reduce the Company's Revolving Credit Facility. During the first three months of fiscal 1997, the Company's net investment in fixed assets and related investment costs, net of capitalized leases approximated $3.1 million. The Company estimates that it will expend up to an aggregate of $12.0 million in 1997 to finance ordinary refurbishment of existing restaurants and pre-opening costs and capital expenditures, net of landlord development and rent allowances and net of 12 equipment lease financing, for new restaurants. The Company has entered into various equipment lease financing agreements with several financial institutions of which approximately $8.5 million in the aggregate has been funded from February 1994 through April 1997 and $5.6 million in the aggregate is available for future fundings. The Company anticipates that funds generated through operations and funds available through equipment lease commitments as well as those available under the Credit Agreement will be sufficient to fund planned expansion. Forward-Looking Statements Except for the historical information contained in this Form 10-Q, certain statements made herein are forward-looking statements that involve risks and uncertainties and are subject to important factors that could cause actual results to differ materially from these forward-looking statements, including without limitation, the effect of economic and market conditions, the impact of competitive activities, the Company's expansion plans, restaurant profitability levels and other risks detailed in the Company's public reports and SEC filings. 13 MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Part II - Other Information Item 1. Legal Proceedings The Company is involved in various legal actions incidental to the normal conduct of its business. Management does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company's consolidated financial position, equity, results of operations, liquidity and capital resources. Item 4. Submission of Matters to a Vote of Stockholders No matters were submitted to a vote of stockholders during the quarter for which this report was filed. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 27.00 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter for which this report was filed. 14 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. MORTON'S RESTAURANT GROUP, INC. ---------------------------------------- (Registrant) Date May 12, 1997 -------------------- By: /s/ ALLEN J. BERNSTEIN ------------------------------------ Allen J. Bernstein Chairman of the Board and Chief Executive Officer Date May 12, 1997 By: /s/ THOMAS J. BALDWIN -------------------- ------------------------------------ Thomas J. Baldwin Executive Vice President and Chief Financial Officer 15 INDEX TO EXHIBITS The following is a list of all exhibits filed as part of this report. Exhibit Number Page Document - ------- ---- --------- 27.00 Financial Data Schedule 16 EX-27 2 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 30, 1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-28-1997 DEC-30-1996 MAR-30-1997 2,088 0 1,762 0 4,701 15,338 31,536 4,841 67,316 16,770 21,697 0 0 65 23,176 67,316 46,534 46,534 15,945 38,316 4,797 0 620 2,801 700 2,101 0 0 0 2,101 0.31 0.31 15.) Current assets include $348 of assets held for sale. 19.) Current liabilities include $4,234 of liabilities related to assets held for sale.
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