Morton’s Restaurant Group has reported a 7.9% drop in Q1 revenues year on year, to US$61.1m.
Net income for Q1 was US$2.2m, which includes a pretax gain on insurance proceeds of US$1.3m and pretax costs of US$1.2m, associated with the company’s evaluation of strategic alternatives. This is down on the net income posted in Q1 2001, which was US$2.7m.
The company said that due to the severe nationwide impact of the World Trade Center terrorist attacks, the continuing impact of the troubled economy, unfavourable 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 and other costs associated with the company’s evaluation of strategic alternatives are expected to negatively impact results.
Morton’s believes that if such unfavourable conditions continue or worsen, future results will also be adversely affected, the full extent of which cannot be determined at this time.
On 26 March 2002, the company entered into a definitive merger agreement 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 US$153.5m. Under the terms of the agreement, Morton’s stockholders will receive US$12.60 in cash for each share of common stock.
Allen J. Bernstein, chairman, president and CEO said: “We continue to implement our cost reduction programs to offset the decline in revenues and we were able to reduce general and administrative expenses by over US$1m in the Q1, compared to the prior year.”