January 13, 2006
By facsimile to (212) 593-5955 and U.S. Mail
Mr. Thomas J. Baldwin
Chairman, Chief Executive Officer, and President
Morton`s Restaurant Group, Inc.
3333 New Hyde Park Road, Suite 210
New Hyde Park, NY 11042
Re: Morton`s Restaurant Group, Inc.
Pre-effective Amendment 1 to Registration Statement on Form
S-1
Filed January 9, 2006
File No. 333-130072
Dear Mr. Baldwin:
We reviewed the filing and have the comments below.
1. We note that you intend to respond to prior comments 1, 2, 4,
23,
24, 32, 33, 34, and 36 in a subsequent pre-effective amendment to
the
registration statement. Allow us sufficient time to review the
amendment before requesting acceleration of the registration
statement`s effectiveness.
Table of Contents, page i
2. Refer to prior comment 5. As requested previously, move the
paragraph after the table of contents on page i so that it follows
the summary and risk factor sections. See Item 502 of Regulation
S-K
and section IV.B. of Release 33-7497.
Summary Financial Data, page 7
3. We note your revised presentation of the separate financial
statements of Morton`s Restaurant Group, Inc. (MRG) and MHCI.
Although you plan to merge MHCI into MRG prior to consummating
this
offering, for all practical purposes, MHCI, including its
subsidiary
MRG, is the entity you are offering. Therefore, please revise
your
summary and selected financial data to present MRG financial data
for
periods prior to the formation of MHCI, and MHCI consolidated
financial data thereafter. This will be consistent with the
audited
historical financial statements and representative of the entity
being offered. To facilitate this presentation, please label the
financial data columns as MRG through 2003 and MHCI thereafter and
include a footnote to explain the basis for this presentation. In
addition, please revise all other financial disclosures in the
filing, such as in the prospectus summary and in MD&A,
accordingly.
Risk Factors, page 10
4. Refer to prior comment 15. The ninth risk factor`s caption or
heading continues to state merely a fact and is too vague to
describe
adequately the risk that follows. Please revise.
Dilution, page 26
5. We note your response to prior comment 21. Include as part of
the
disclosure the reason for not including the options and restricted
stock grants in the table.
Value of Equity Compensation Issued in Fiscal 2005, page 49
6. We note the references to "a third party" and "the third party
valuation" here and in the financial statements` notes on pages F-
25
and F-79. If you refer to a third party, you must identify the
party
and obtain its consent. See Rule 436 of Regulation C under the
Securities Act. Otherwise, you should delete the references to a
third party.
Board Composition, page 69
7. Refer to prior comment 32. We are unable to locate disclosure
of
the three year term of each class. Thus, we reissue that portion
of
the comment to state the term of each class.
Principal and Selling Stockholders, page 73
8. Refer to prior comment 38. We note the revised disclosure in
footnote (5) that Mr. John K. Castle shares voting and investment
control over the securities held by Castle Harlan Partners III,
L.P.
As requested previously, identify the persons with whom Mr. Castle
shares voting and investment control.
Stock Purchase of Wilshire Restaurant Group, Inc., page 76
9. Quantify the number of preferred units of MHLLC that will be
cancelled, and tell us why you are engaging in this transaction.
Statements of Cash Flows, page F-86
10. We note from your response to our prior comment 62 that you
believe the redemption of PIK notes is properly classified as a
financing cash outflow, as it represents the repayment of PIK
notes
that were outstanding and were accruing interest. While the
unpaid
interest is legally converted to a note payable, in substance the
PIK
notes are simply an obligation for unpaid interest. Upon payment,
the cash outflow should be reflected as an operating outflow,
similar
to any other interest, as required by paragraph 23d of SFAS 95.
Question 22 of AICPA Technical Questions Section 1300 also says
negative amortization of debt should be treated as an adjustment
to
operating cash flows. Please revise your statements of cash flows
accordingly.
Note 4. Restaurant Closing Costs and Other (Benefit) Charges
(b) Morton`s - 90 West Street, NY, page F-16
11. We note that in response to our prior comment 64 you have
changed
the classification of the proceeds received from property
insurance
from operating activities to investing activities on the
statements
of cash flows. Please confirm to us that the buildings from which
you received insurance proceeds were owned by the Company or under
capital lease. Also, as previously requested, please tell us how
you
classified in your statement of cash flows, the $4.3 million of
insurance proceeds related to business interruption received in
2004,
specifically indicating whether you considered the proceeds
operating, investing, or financing activities and your basis for
such
classification.
Note 13. Employee Subscription Agreements, page F-24
12. We note your response to our prior comment 65. From your
disclosure, it appears that the valuation performed
contemporaneous
with the August 2003 grant was prepared internally by MHLLC`s
Board
of Advisors. Because this grant represents approximately 88% of
common units outstanding, we believe you should revise your
disclosure to also discuss the valuation method and assumptions
used
in that internal valuation.
13. With respect to the January 4, 2004 appraisal of enterprise
value, which was allocated first to the value of outstanding debt
and
preferred stock with no value remaining to be allocated to the
common
equity, please tell us the enterprise value computed under both
the
market and income approaches, the blended enterprise value, and
the
values of then outstanding debt and preferred stock. Please also
provide a summary of the calculations or the key assumptions used
(e.g., operating income, EBITDA multiple, etc.) so we can
understand
how the enterprise values were computed. Also, from your selected
financial data on page 32, it is not clear that preferred stock
was
outstanding during 2003.
Other
14. The financial statements should be updated, as necessary, to
comply with Rule 3-12 of Regulation S-X at the effective date of
the
registration statement.
15. Please include a currently dated consent of the Independent
Registered Public Accounting Firm in any future amendments to your
Form S-1 registration statement.
Exhibit 10.8
16. Absent an order granting confidential treatment, Item
601(b)(10)
of Regulation S-K requires the filing of material contracts,
including attachments, in their entirety. Attachments include,
for
example, annexes, appendices, exhibits, and schedules. Since you
did
not file the exhibit`s attachments, refile the exhibit in its
entirety.
Closing
File an amendment to the S-1 and in response to the comments.
To expedite our review, Morton`s may wish to provide us three
marked
courtesy copies of the amendment. Include with the filing any
supplemental information requested and a cover letter tagged as
correspondence that keys the responses to the comments. If
Morton`s
thinks that compliance with any of the comments is inappropriate,
provide the basis in the letter. We may have additional comments
after review of the amendment, the responses to the comments, and
any
supplemental information.
We urge all persons responsible for the accuracy and adequacy
of
the disclosure in the registration statement reviewed by us to
ensure
that they have provided all information investors require for an
informed decision. Since Morton`s and its management are in
possession of all facts relating to the disclosure in the
registration statement, they are responsible for the adequacy and
accuracy of the disclosures that they have made.
If Morton`s requests acceleration of the registration
statement`s effectiveness, Morton`s should furnish a letter at the
time of the request, acknowledging that:
* Should the Commission or the staff acting by delegated authority
declare the registration statement effective, it does not
foreclose
the Commission from taking any action on the filing.
* The action of the Commission or the staff acting by delegated
authority in declaring the registration statement effective does
not
relieve Morton`s from its full responsibility for the adequacy and
accuracy of the registration statement`s disclosures.
* Morton`s may not assert our comments or the declaration of the
registration statement`s effectiveness as a defense in any
proceedings initiated by the Commission or any person under the
United States` federal securities laws.
The Commission`s Division of Enforcement has access to all
information that Morton`s provides us in our review of the
registration statement or in response to our comments on the
registration statement.
We will consider a written request for acceleration of the
registration statement`s effectiveness under Rule 461 of
Regulation C
under the Securities Act as confirmation that those requesting
acceleration are aware of their responsibilities under the
Securities
Act and the Exchange Act as they relate to the proposed public
offering of the securities specified in the registration
statement.
We will act on the request and by delegated authority grant
acceleration of the registration statement`s effectiveness.
You may direct questions on accounting comments to Claire L.
Erlander, Staff Accountant, at (202) 551-3301 or Lynwood F. Shenk,
Assistant Chief Accountant, at (202) 551-3380. You may direct
questions on other comments and disclosure issues to Edward M.
Kelly,
Senior Counsel, at (202) 551- 3728 or Christopher B. Edwards,
Special
Counsel, at (202) 551-3742.
Very truly yours,
Pamela A. Long
Assistant Director
cc: Michael R. Littenberg, Esq.
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Eric S. Haueter, Esq.
James O`Connor, Esq.
Sidley Austin LLP
787 Seventh Avenue
New York, NY 10019
Mr. Thomas J. Baldwin
January 13, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE