-----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, DE5/OrYP0RGBCVGVvZPCKTIARPiGn60DKjqX0fR8ZJ81IN7LsmPCqzM+Ncwbat+i 7eDouw1YeBgZkLd8b7d61A== 0001005477-96-000404.txt : 19961111 0001005477-96-000404.hdr.sgml : 19961111 ACCESSION NUMBER: 0001005477-96-000404 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961108 SROS: NONE 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: 96657339 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 September 29, 1996 ------------------------------------------------ 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 (I.R.S. employer identification no.) incorporation or organization) 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 November 6, 1996, the registrant had 6,428,673 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 September 29, 1996 and December 31, 1995 3-4 Consolidated Statements of Operations for the three and nine month periods ended September 29, 1996 and October 1, 1995 5 Consolidated Statements of Cash Flows for the nine month periods ended September 29, 1996 and October 1, 1995 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) September 29, December 31, 1996 1995 ---- ---- Assets (unaudited) Current assets: Cash and cash equivalents $ 1,254 $ 2,351 Accounts receivable 2,105 2,575 Inventories 3,919 3,465 Landlord construction receivables, prepaid expenses and other current assets 2,409 2,157 Deferred income taxes 2,620 2,280 Assets held for sale 21,205 22,583 -------- -------- Total current assets 33,512 35,411 Property and equipment, at cost: Furniture, fixtures and equipment 12,453 8,304 Leasehold improvements 12,972 7,050 Construction in progress 1,098 6,618 -------- -------- 26,523 21,972 -------- -------- Less accumulated depreciation and amortization 3,779 2,593 -------- -------- Net property and equipment 22,744 19,379 -------- -------- Intangible assets, net of accumulated amortization of $2,954 at September 29, 1996 and $2,654 at December 31, 1995 13,041 13,341 Other assets and deferred expenses, net of accumulated amortization of $4,008 at September 29, 1996 and $1,306 at December 31, 1995 6,172 5,057 -------- -------- $ 75,469 $ 73,188 ======== ======== (Continued) (3) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets, Continued (amounts in thousands, except share data) September 29, December 31, 1996 1995 ---- ---- (unaudited) Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 4,312 $ 6,904 Accrued expenses 5,439 4,499 Accrued income taxes 249 538 Current portion of note payable to related party - 483 Liabilities related to assets held for sale 9,902 13,995 -------- -------- Total current liabilities 19,902 26,419 Bank debt 27,400 23,650 Other liabilities 5,588 4,079 -------- -------- Total liabilities 52,890 54,148 -------- -------- 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 6,426,773 shares at September 29, 1996 and 6,367,093 shares at December 31, 1995 64 64 Nonvoting common stock, $.01 par value per share. Authorized 3,000,000 shares, no shares issued or outstanding - - Additional paid-in capital 61,472 61,350 Accumulated deficit (38,957) (42,374) -------- -------- Total stockholders' equity 22,579 19,040 -------- -------- $ 75,469 $ 73,188 ======== ======== See accompanying notes to consolidated financial statements. (4) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Operations (amounts in thousands, except per share data)
Three Months Ended Nine Months Ended Sept. 29, Oct. 1, Sept. 29, Oct. 1, 1996 1995 1996 1995 ---- ---- ---- ---- (unaudited) (unaudited) Revenues $45,459 38,716 140,804 124,266 Food and beverage costs 15,201 12,949 47,112 41,479 Restaurant operating expenses 22,834 20,330 69,070 62,391 Depreciation, amortization and other non-cash charges 1,657 1,346 4,557 4,776 General and administrative expenses 3,352 3,343 10,598 9,961 Marketing and promotional expenses 1,057 975 3,209 2,460 Interest expense, net 557 489 1,701 1,364 Litigation settlement and related expenses - 2,640 - 2,640 ------- ------ ------- ------- Income (loss) before income taxes 801 (3,356) 4,557 (805) Income tax expense (benefit) 200 (381) 1,140 (256) ------- ------ ------- ------- Net income (loss) $ 601 (2,975) 3,417 (549) ======= ====== ======= ======= Income (loss) per share $ 0.09 (0.47) 0.50 (0.09) ======= ====== ======= ======= Weighted average shares outstanding 6,827 6,367 6,793 6,367 ======= ====== ======= =======
See accompanying notes to consolidated financial statements. (5) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (amounts in thousands) Nine Months Ended Sept. 29, Oct. 1, 1996 1995 ---- ---- (unaudited) Cash flows from operating activities: Net income (loss) $ 3,417 $ (549) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and other non-cash charges 4,557 4,776 Accrued litigation settlement and related expenses - 2,640 Change in assets and liabilities: Accounts receivable 379 (1,243) Inventories (202) (73) Prepaid expenses and other assets (67) (577) Accounts payable, accrued expenses and other liabilities (5,855) (3,560) Accrued income taxes (52) (744) -------- -------- Net cash provided by operating activities 2,177 670 -------- -------- Cash flows from investing activities: Purchases of property and equipment, net (2,930) (3,580) Payments for start-up costs, licenses and other deferred expenses (3,733) (2,644) -------- -------- Net cash used by investing activities (6,663) (6,224) -------- -------- Cash flows from financing activities: Increase in bank overdraft - 1,619 Principal reduction on bank debt (2,250) (450) Proceeds from bank debt 6,000 5,975 Payments on note payable to related party (483) (521) Net proceeds from issuance of stock 122 - -------- -------- Net cash provided by financing activities 3,389 6,623 -------- -------- Net increase in cash and cash equivalents (1,097) 1,069 Cash and cash equivalents at beginning of period 2,351 4,031 -------- -------- Cash and cash equivalents at end of period $ 1,254 $ 5,100 ======== ======== See accompanying notes to consolidated financial statements. (6) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements September 29, 1996 and October 1, 1995 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 31, 1995, filed by the Company on Form 10-K with the Securities and Exchange Commission on March 29, 1996. 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 $1,563,000 and $1,370,000, and income taxes of approximately $800,000 and $950,000, for the nine months ended September 29, 1996 and October 1, 1995, respectively. During fiscal 1996 and 1995, the Company entered into capital lease arrangements of approximately $2,445,000 and $738,000, respectively, for restaurant equipment. 3) 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 Peasant Holding Corp. ("Peasant Holding"), the holding company for 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. The amount of such depreciation and amortization for the first three months of fiscal 1995 approximated $364,000. 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) Sept. 29, December 31, 1996 1995 -------- -------- (amounts in thousands, unaudited) Current assets $ 2,339 $ 2,686 Net property and equipment 10,624 13,851 Unamortized goodwill 8,077 8,077 Other assets 2,283 4,089 Deferred tax assets 1,490 2,180 Write-down of carrying values (3,608) (8,300) -------- -------- Assets held for sale 21,205 22,583 -------- -------- Current liabilities 4,131 3,470 Other liabilities 1,767 3,325 Lease exit costs 4,004 7,200 -------- -------- Liabilities related to assets held for sale 9,902 13,995 -------- -------- Net assets held for sale $ 11,303 $ 8,588 ======== ======== The following represents the combined results of Mick's and Peasant for the periods ended September 29, 1996 and October 1, 1995. Interest expense was not allocated. Nine Months Ended Sept. 29, 1996 Oct. 1, 1995 -------------- ------------ (amounts in thousands, unaudited) Revenues $ 41,839 $ 47,718 Food and beverage costs 12,293 13,953 Restaurant operating expense 26,089 28,837 Depreciation, amortization and other non-cash charges 138 2,397 General and administrative expenses 2,935 3,250 Marketing and promotional expenses 778 988 --------- ---------- Loss before income taxes $ (394) $ (1,707) ========= ========== 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. Interest received for the majority of the restaurants indicates that the related net assets at September 29, 1996 are recoverable. No meaningful offers were received for the remaining restaurants (the "Remaining Restaurants"). Cash flow analyses prepared by management for the Remaining 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, restaurant occupancy expense of approximately (8) $1,045,000 for the Remaining Restaurants has been charged against the accrual for lease exit costs. During the second quarter of fiscal 1996, three Mick's restaurants and one Peasant restaurant were closed. During the third quarter, four more Mick's restaurants were closed. During October 1996, one more Peasant was closed. Net assets held for sale at September 29, 1996 consist of net assets of $15,200,000 related to the majority of the restaurants and net liabilities of $3,900,000 related to the Remaining Restaurants. 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 increased $6.8 million, or 17%, to $45.5 million for the three month period ended September 29, 1996, from $38.7 million during the comparable 1995 period. Of the increase, $6.8 million was attributable to incremental restaurant revenues from eight new restaurants opened after January 1, 1995 and $2.0 million, or 5.7%, was attributable to additional comparable revenues from restaurants open all of both periods. Offsetting these increases was a reduction of $2.0 million from Mick's and Peasant restaurants closed during the period. Average revenues per restaurant open for a full period increased 16.0%. Revenues increased $16.5 million, or 13%, to $140.8 million for the nine month period ended September 29, 1996, from $124.3 million during the comparable 1995 period. Of the increase, $15.8 million was attributable to incremental restaurant revenues from eight new restaurants opened after January 1, 1995 and $3.7 million, or 3.2%, was attributable to additional comparable revenues from restaurants open all of both periods. Offsetting these increases was a reduction of $3.0 million from Mick's and Peasant restaurants closed during the period. Average revenues per restaurant open for a full period increased 10.9%. In addition, higher revenues for the first nine months of fiscal 1996 reflect the impact of price increases of approximately 2% in April, 1995 for Mick's and Peasant Restaurant Groups. The Company operated 67 and 68 restaurants as of September 29, 1996 and October 1, 1995, respectively. Mick's and Peasant restaurants have generated lower than anticipated revenues which are adversely impacting average restaurant revenues and earnings trends. Additionally, as reflected in the table below, the 1996 period was adversely impacted by declines in the comparable restaurant revenues in the Mick's and Peasant groups, offset by increases in the Morton's and Bertolini's groups. The Atlanta market, where 22 of the Company's restaurants are located, has become increasingly competitive and may continue to adversely impact comparable restaurant revenues and operating results. As discussed in Note 3 to the accompanying consolidated financial statements, the Company approved a plan for the sale of the Mick's and Peasant restaurant groups. Operating results for Mick's and Peasant during the period they are being held for sale may continue to be adversely impacted. Percentage changes in comparable restaurant revenues for the three and nine month periods ended September 29, 1996 versus October 1, 1995 for restaurants open all of both periods are as follows: Three Months Nine Months Ended Sept. 29, 1996 Ended Sept. 29, 1996 Percentage Change Percentage Change ----------------- ----------------- Morton's 9.1% 9.9% Bertolini's 1.1% 4.4% Mick's 0.8% -6.7% Peasant 2.5% -6.9% Total 5.7% 3.2% The Company believes that revenues for the first quarter of 1996 were adversely affected by severe winter storms in January 1996. The Company believes that the Olympic Games which were held in Atlanta in July 1996 had a favorable impact on Atlanta based restaurant revenues. (10) Food and beverage costs increased from $12.9 million for the three month period ended October 1, 1995 to $15.2 million for the three month period ended September 29, 1996 and increased from $41.5 million for the nine month period ended October 1, 1995 to $47.1 for the nine month period ended September 29, 1996. Offsetting these increases was a reduction of approximately $0.7 million and $1.0 million for the three and nine month periods, respectively, due to the Mick's and Peasant restaurants closed during fiscal 1996. These costs as a percentage of revenues remained flat for the three month period and increased 0.1% for the nine month period. Restaurant operating expenses which include labor, occupancy and other operating expenses increased from $20.3 million for the three month period ended October 1, 1995 to $22.8 million for the three month period ended September 29, 1996, an increase of $2.5 million. For the nine months ended September 29, 1996, these costs increased from $62.4 million during the 1995 period, to $69.1 million for the comparable 1996 period. Those costs as a percentage of revenues decreased 2.3% from 52.5% for the three month period ended October 1, 1995 to 50.2% for the three month period ended September 29, 1996 and decreased 1.1% from 50.2% for the nine month period ended October 1, 1995, to 49.1% for the comparable 1996 period. Offsetting these increases was a reduction of approximately $2.0 million and $2.7 million for the three and nine month periods, respectively, due to the Mick's and Peasant restaurants closed during fiscal 1996. During fiscal 1996, restaurant occupancy expense of approximately $1.0 for the Remaining Restaurants has been charged against the accrual for lease exit costs. The 1996 period increase in costs relates to the added costs of operating eight additional restaurants opened after January 1, 1995. Depreciation, amortization and other non-cash charges increased from $1.3 million for the three month period ended October 1, 1995 to $1.7 million for the three month period ended September 29, 1996, and increased from 3.5% of revenues to 3.6%, respectively. For the nine months ended September 29, 1996, such costs were $4.6 million verses $4.8 million for the comparable 1995 period. The 1996 nine month period increase is due to increased startup amortization offset by the exclusion of depreciation and amortization related to Mick's and Peasant of approximately $0.4 million recorded in the first quarter of 1995. Such depreciation and amortization was discontinued in the second quarter of 1995 pursuant to Statement 121 (see Note 3). General and administrative expenses for the three month period ended September 29, 1996 were $3.4 million, an increase of $0.1 million as compared with the three month period ended October 1, 1995. For the nine months ended September 29, 1996, such costs were $10.6 million versus $10.0 million for the comparable 1995 period. Such costs as a percentage of revenues were 7.4% for the three month period ended September 29, 1996, a decrease of 1.3% from the three month period ended October 1, 1995 and 7.5% of revenues for the nine months ended September 29, 1996, a decrease of 0.5% from the nine months ended October 1, 1995. The increase in such expense is driven by incremental costs associated with increased restaurant development. Marketing and promotional expenses were $1.1 million, or 2.3% of revenues, for the three month period ended September 29, 1996, compared to $1.0 million, or 2.5% of revenues for the three month period ended October 1, 1995. For the nine months ended September 29, 1996, these costs were $3.2 million, or 2.3% of revenues, as compared to $2.5 million, or 2.0% of revenues, for the comparable 1995 period. The increase is driven by incremental costs associated with increased restaurant development. During the third quarter of fiscal 1995, the Company recorded a one-time charge of approximately $2.6 million related to the settlement of a lawsuit, and associated legal and related costs, which had been pending in the United States District Court for the District of Nevada. There were no comparable charges during fiscal 1996. (11) Interest expense, net of interest income, increased to $0.6 million and $1.7 million, respectively for the three and nine month periods ended September 29, 1996 from $0.5 million and $1.4 million, respectively for the three and nine month periods ended October 1, 1995. The increase is a result of higher outstanding debt balances. Income tax expense of $1.1 million for the nine month period ended September 29, 1996 predominantly represents state income taxes as well as Federal income taxes, which were partially offset by the utilization of the Company's net operating loss carryforwards and the establishment of additional deferred tax assets relating to FICA and other tax credits that were generated during fiscal 1996. 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 The First National Bank of Boston (FNBB) entered into the Second Amended and Restated Revolving Credit and Term Loan Agreement dated as of June 19, 1995, as amended in February, March and June 1996 (collectively the "Credit Agreement"), pursuant to which the Company's then existing credit facility was restructured and amended to, among other things, increase the credit facility from $25,000,000 to $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") and to extend the final maturity date one year to 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) or, at the Company's option, the Eurodollar Rate (plus applicable margin). At September 29, 1996, the Company's applicable margin, calculated pursuant to the Credit Agreement, was 0.25% on base rate loans and 2.25% on Eurodollar Rate loans. The Company has no outstanding futures contracts or interest rate hedge agreements. As of September 29, 1996 and December 31, 1995, the Company had outstanding borrowings of $27,400,000 and $23,650,000, respectively, under the Credit Agreement. At September 29, 1996, $444,000 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 $2,156,000. The weighted average interest rate on all bank borrowings on September 29, 1996 was 7.8%. 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 September 29, 1996 amount to $0 in 1996, $1,600,000 in 1997, $3,200,000 in 1998, $3,200,000 in 1999, $3,200,000 in 2000 and $16,200,000 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 (12) Facility, including the Term Loan Principal payments due in September 1997. As stated in Note 3 to the accompanying consolidated financial statements, the Company approved a plan for the sale of Mick's and Peasant. Under the terms of the Company's Credit Agreement, net proceeds from such sale will be required to be used to reduce the Company's outstanding debt. 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 September 29, 1996, the Company believes it was in compliance with such covenants. During the first nine months of fiscal 1996, the Company's net investment in fixed assets and related investment costs, net of capitalized leases approximated $6.6 million. The Company estimates that it will expend up to an aggregate of $10.0 million in 1996 to finance pre-opening costs and capital expenditures net of landlord development and rent allowances and net of equipment lease financing for new restaurants and ordinary refurbishment of existing restaurants. The Company has entered into various equipment lease financing agreements with several financial institutions of which approximately $9.6 million in the aggregate has been funded through October 1996 and $4.5 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 affect 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 November 8, 1996 By: /s/ ALLEN J. BERNSTEIN -------------------- --------------------- Allen J. Bernstein Chairman of the Board and Chief Executive Officer Date November 8, 1996 By: /s/ THOMAS J. BALDWIN -------------------- --------------------- Thomas J. Baldwin Senior Vice President, Finance 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 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from September 29, 1996 Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-29-1996 JAN-01-1996 SEP-29-1996 1,254 0 2,105 0 3,919 33,512 26,523 3,779 75,469 19,902 27,400 0 0 64 22,515 75,469 140,804 140,804 47,112 120,739 13,807 0 1,701 4,557 1,140 3,417 0 0 0 3,417 0.50 0.50 15) Current assets include $21,205 of Assets Held for Sale. 19) Current liabilities include $9,902 of Liabilities Related to Assets Held for Sale.
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