From: SANFORD TELLER COMMUNICATIONS
1365 York Avenue
New York, New York 10021
(212) 717-0332
[GRAPHIC OMITTED][GRAPHIC OMITTED]
For: MORTON'S RESTAURANT GROUP, INC. FOR IMMEDIATE RELEASE
---------------------
325 North LaSalle Street
Chicago, Illinois 60610
(312) 923-0030
www.mortons.com
July 30, 2007
Contact: RONALD M. DINELLA, SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, MORTON'S RESTAURANT GROUP, INC.
MORTON'S RESTAURANT GROUP, INC. REPORTS RESULTS
FOR SECOND QUARTER 2007
- RECORD-SETTING SECOND QUARTER REVENUES -
- COMPARABLE RESTAURANT REVENUES UP 4.3% -
- COMPANY PROVIDES GUIDANCE FOR THIRD QUARTER 2007 AND FULL YEAR 2007 -
HIGHLIGHTS FOR THE THREE MONTH PERIOD ENDED JULY 1, 2007 AS COMPARED TO
THE THREE MONTH PERIOD ENDED JULY 2, 2006
o Revenues increased 9.8% to $85.6 million.
o Comparable restaurant revenues increased 4.3% (Morton's +4.4%,
Bertolini's - 1.2%).
o The Company's net income reported in accordance with generally
accepted accounting principles ("GAAP") was $2.3 million, or
$0.14 per diluted share, for the three month period ended July 1,
2007, which compares to GAAP net income of $2.5 million, or $0.15
per diluted share, for the three month period ended July 2, 2006.
o GAAP net income of $2.3 million, or $0.14 per diluted share, for
the three month period ended July 1, 2007, compares to pro forma
net income of $2.6 million, or $0.15 per diluted share, for the
three month period ended July 2, 2006. (Please see the
reconciliation of pro forma net income to GAAP net income (loss)
in the financial tables that follow.)
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HIGHLIGHTS FOR THE SIX MONTH PERIOD ENDED JULY 1, 2007 AS COMPARED TO
THE SIX MONTH PERIOD ENDED JULY 2, 2006
o Revenues increased 8.3% to $174.5 million.
o Comparable restaurant revenues increased 2.3% (Morton's + 2.4%,
Bertolini's - 2.3%).
o The Company's net income reported in accordance with GAAP was
$7.3 million, or $0.43 per diluted share, for the six month
period ended July 1, 2007, which compares to GAAP net loss of
$(19.1) million, or $(1.25) per diluted share, for the six month
period ended July 2, 2006.
o GAAP net income of $7.3 million, or $0.43 per diluted share, for
the six month period ended July 1, 2007, compares to pro forma
net income of $8.0 million, or $0.47 per diluted share, for the
six month period ended July 2, 2006. (Please see the
reconciliation of pro forma net income to GAAP net income (loss)
in the financial tables that follow.)
Chicago, IL. July 30, 2007... Morton's Restaurant Group, Inc. (NYSE:MRT)
today reported unaudited financial results for its 2007 fiscal second
quarter ended July 1, 2007.
"We are continuing to implement our strategic development and expansion
programs," said Thomas J. Baldwin, Chairman, Chief Executive Officer and
President of Morton's Restaurant Group, Inc. "Additionally, we are
increasing our international presence, with the planned August opening
of a Morton's in Macau, one of the five new Morton's steakhouses we
expect to open during the balance of the year."
RESULTS FOR THE THREE MONTH PERIOD ENDED JULY 1, 2007
Revenues for the three month period ended July 1, 2007 increased 9.8% to
$85.6 million, compared to $78.0 million for the three month period
ended July 2, 2006. The growth in revenues is attributable to revenues
from the four new Morton's steakhouses, which opened in fiscal 2006, and
one new Morton's steakhouse, which opened in February 2007, as well as a
4.3% (Morton's + 4.4%, Bertolini's - 1.2%) increase in comparable
restaurant revenues (13 weeks to 13 weeks).
The Company's net income was $2.3 million, or $0.14 per diluted share,
for the three month period ended July 1, 2007, compared to net income of
$2.5 million, or $0.15 per diluted share, for the three month period
ended July 2, 2006.
2
RESULTS FOR THE SIX MONTH PERIOD ENDED JULY 1, 2007
Revenues for the six month period ended July 1, 2007 increased 8.3% to
$174.5 million from $161.1 million for the six month period ended July
2, 2006. The growth in revenues is attributable to a 2.3% (Morton's +
2.4%, Bertolini's - 2.3%) increase in comparable restaurant revenues (26
weeks to 26 weeks) and revenues from four new Morton's steakhouses,
which opened in fiscal 2006, and one new Morton's steakhouse, which
opened in February 2007.
Management fee paid to related party was $0.4 million for the first
quarter of fiscal 2006. The management agreement was terminated in
conjunction with the initial public offering ("IPO") in February 2006.
Costs associated with the termination of the management agreement of
$8.4 million also were recorded during the first quarter of fiscal 2006.
(Please see the reconciliation of pro forma net income to GAAP net
income (loss) in the financial tables that follow.)
In connection with the IPO, during the first quarter of fiscal 2006, the
Company incurred costs associated with the repayment of certain debt of
$28.0 million, primarily consisting of prepayment penalties that were
incurred with the early repayment of the 7.5% senior secured notes and
the 14.0% senior secured notes. The debt was refinanced in conjunction
with the Company's IPO. (Please see the reconciliation of pro forma net
income to GAAP net income (loss) in the financial tables that follow.)
Interest expense, net was $1.8 million for the six month period ended
July 1, 2007, compared to $3.1 million for the six month period ended
July 2, 2006. The decrease is due to the repayment, in connection with
the IPO, of the then-outstanding 7.5% senior secured notes and 14.0%
senior secured notes partially offset by the interest relating to
borrowings under our revolving credit facility. (Please see the
reconciliation of pro forma net income to GAAP net income (loss) in the
financial tables that follow.)
The Company's net income for the six month period ended July 1, 2007 was
$7.3 million, or $0.43 per diluted share, which compares to GAAP net
loss of $(19.1) million, or $(1.25) per diluted share for the six month
period ended July 2, 2006.
The Company's net income was $7.3 million, or $0.43 per diluted share
for the six month period ended July 1, 2007, compared to pro forma net
income of $8.0 million, or $0.47 per diluted share,
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for the six month period ended July 2, 2006. (Please see the
reconciliation of pro forma net income to GAAP net income (loss) in the
financial tables that follow.)
RESTAURANT DEVELOPMENT
On February 2, 2007, the Company opened a Morton's steakhouse in San
Jose, CA. The Company also has entered into leases to open new Morton's
steakhouses in Annapolis, MD; Boston (Seaport District), MA; Cincinnati,
OH; Coral Gables, FL; Leawood/Overland Park, KS; Naperville, IL;
Woodland Hills, CA and Macau, China.
During 2007, the Company completed the introduction of Bar 12o21 in its
Morton's steakhouses in Atlanta (Buckhead), GA; Boca Raton, FL;
Charlotte, NC; Nashville, TN; Pittsburgh, PA and Toronto, Canada.
From mid September 2006 through early February 2007, the Bertolini's at
the Forum Shops at Caesars Palace in Las Vegas was closed for
renovation. The Company's new Italian restaurant, Trevi, opened at that
location on February 2, 2007.
Due to the timing and the concentration of anticipated new restaurant
development, the Company expects to incur higher pre-opening costs in
the third quarter and less in the fourth quarter of fiscal 2007, versus
the comparable fiscal quarters of 2006.
THIRD QUARTER 2007 AND FULL YEAR 2007 FINANCIAL GUIDANCE
The Company expects third quarter 2007 revenues to range between $77
million and $80 million, including increases in comparable restaurant
revenues of approximately 2% to 4% as compared to the third quarter of
fiscal 2006. Third quarter diluted net loss per share is expected to
approximate $(0.03) to $(0.05). This range includes estimated
compensation expense, net of related income taxes, pursuant to Statement
of Financial Accounting Standards ("SFAS") No. 123R "Share Based
Payment", which requires the expensing of stock issued to employees
(approximately $0.01 to $0.02 per diluted share). This range includes
expectations that the Company's 2007 effective income tax rate will
approximate 30%. This range also reflects higher pre-opening costs for
the third quarter of fiscal 2007 versus the third quarter of fiscal 2006
due to the timing and the concentration of anticipated new restaurant
development. During the third quarter of fiscal 2007, the Company
expects to open up to three new Morton's steakhouses, each of which will
include a Bar 12o21.
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The Company expects fiscal year 2007 revenues to range between $353
million and $358 million, including increases in comparable restaurant
revenues of approximately 2% to 3% as compared to fiscal 2006. Diluted
net income per share is expected to approximate $0.91 to $0.93. This
range includes estimated compensation expense, net of related income
taxes, pursuant to SFAS No. 123R (approximately $0.06 to $0.07 per
diluted share) and higher than initially anticipated depreciation and
pre-opening costs. This range includes expectations that the Company's
2007 effective income tax rate will approximate 30%. Due to the timing
and the concentration of anticipated new restaurant development, the
Company expects to incur higher pre-opening costs in the third quarter,
and less in the fourth quarter of fiscal 2007, versus the comparable
fiscal quarters of 2006. In addition to the Morton's steakhouse in San
Jose, CA that opened in February 2007, during fiscal 2007, the Company
expects to open up to five new Morton's steakhouses, each of which will
include a Bar 12o21. In addition, during fiscal 2007, the Company
expects to retrofit up to ten Morton's steakhouses to include Bar 12o21.
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: Monday, July 30, 2007
Time: 5:00 p.m. ET (please dial in by 4:45 p.m.)
Dial-In #: (866) 202-4683 U.S. & Canada
(617) 213-8846 International
Confirmation code: 92021382
Alternatively, the conference call will be Webcast at www.mortons.com
under the "Investor Relations" tab.
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 its founders' original vision of combining generous portions of
high quality food prepared to exacting standards with exceptional
service in an enjoyable dining environment.
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As of July 30, 2007, the Company owned and operated 74 Morton's
steakhouses located in 65 cities across 28 states and Puerto Rico and
four international locations (Toronto, Vancouver, Singapore and Hong
Kong) and 4 Italian restaurants.
FORWARD-LOOKING STATEMENTS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED IN THIS NEWS RELEASE,
THE MATTERS ADDRESSED ARE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS, WRITTEN, ORAL OR OTHERWISE MADE, REPRESENT THE COMPANY'S
EXPECTATION OR BELIEF CONCERNING FUTURE EVENTS. WITHOUT LIMITING THE
FOREGOING, THE WORDS "BELIEVES," "THINKS," "ANTICIPATES," "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,
OR OTHERWISE, FROM THOSE EXPRESSED OR IMPLIED IN THE FORWARD-LOOKING
STATEMENTS, INCLUDING, WITHOUT LIMITATION, RISKS OF THE RESTAURANT
INDUSTRY, INCLUDING A HIGHLY COMPETITIVE ENVIRONMENT AND INDUSTRY WITH
MANY WELL-ESTABLISHED COMPETITORS WITH GREATER FINANCIAL AND OTHER
RESOURCES THAN THE COMPANY, THE IMPACT OF CHANGES IN CONSUMER TASTES,
LOCAL, REGIONAL AND NATIONAL ECONOMIC AND MARKET CONDITIONS, RESTAURANT
PROFITABILITY LEVELS, EXPANSION PLANS, TIMELY CONSTRUCTION AND OPENING
OF NEW RESTAURANTS, DEMOGRAPHIC TRENDS, TRAFFIC PATTERNS, EMPLOYEE
AVAILABILITY, BENEFITS AND COST INCREASES, PRODUCT SAFETY AND
AVAILABILITY, GOVERNMENT REGULATION, THE COMPANY'S ABILITY TO MAINTAIN
ADEQUATE FINANCING FACILITIES AND 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. OTHER UNKNOWN OR
UNPREDICTABLE FACTORS ALSO COULD HARM THE COMPANY'S 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.
# # #
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Morton's Restaurant Group, Inc.
Consolidated Statements of Operations - Unaudited
(Amounts in thousands, except per share data)
Three Month Periods Ended Six Month Periods Ended
---------------------------- ----------------------------
July 1, 2007 July 2, 2006 July 1, 2007 July 2, 2006
------------ ------------ ------------ ------------
Revenues $ 85,613 $ 77,980 $ 174,500 $ 161,070
Food and beverage costs 28,399 25,384 58,508 53,029
Restaurant operating expenses 41,175 37,462 81,892 75,274
Pre-opening costs 829 303 1,815 932
Depreciation and amortization 2,574 1,896 4,907 3,613
General and administrative expenses 6,092 6,155 11,380 11,231
Marketing and promotional expenses 2,359 1,834 3,817 3,011
Stock compensation expense associated
with initial public offering - - - 488
Management fee paid to related party - - - 390
------------ ------------ ------------ ------------
Operating income 4,185 4,946 12,181 13,102
Costs associated with the repayment of
certain debt - - - 28,003
Costs associated with the termination of
management agreement - - - 8,400
Interest expense, net 961 937 1,842 3,122
------------ ------------ ------------ ------------
Income (loss) before income taxes 3,224 4,009 10,339 (26,423)
Income tax expense (benefit) 926 1,504 3,043 (7,302)
------------ ------------ ------------ ------------
Net income (loss) $ 2,298 $ 2,505 $ 7,296 $ (19,121)
============ ============ ============ ============
Net income (loss) per share:
Basic $0.14 $0.15 $0.43 $(1.25)
Diluted $0.14 $0.15 $0.43 $(1.25)
Shares used in computing net income
(loss) per share:
Basic 16,936.7 16,900.5 16,926.9 15,348.1
Diluted 16,952.2 16,906.1 16,967.1 15,348.1
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Morton's Restaurant Group, Inc.
Margin Analysis - Unaudited
(In thousands)
Three Month Periods Ended Six Month Periods Ended
--------------------------------------- -----------------------------------------
July 1, 2007 July 2, 2006 July 1, 2007 July 2, 2006
------------------ ------------------- ------------------ --------------------
Revenues $ 85,613 100.0% $ 77,980 100.0% $174,500 100.0% $ 161,070 100.0%
Food and beverage costs 28,399 33.2% 25,384 32.6% 58,508 33.5% 53,029 32.9%
Restaurant operating expenses 41,175 48.1% 37,462 48.0% 81,892 46.9% 75,274 46.7%
Pre-opening costs 829 1.0% 303 0.4% 1,815 1.0% 932 0.6%
Depreciation and amortization 2,574 3.0% 1,896 2.4% 4,907 2.8% 3,613 2.2%
General and administrative expenses 6,092 7.1% 6,155 7.9% 11,380 6.5% 11,231 7.0%
Marketing and promotional expenses 2,359 2.8% 1,834 2.4% 3,817 2.2% 3,011 1.9%
Stock compensation expense
associated with initial public offering - - - - - - 488 0.3%
Management fee paid to related party - - - - - - 390 0.2%
---------- ---------- ---------- -----------
Operating income 4,185 4.9% 4,946 6.3% 12,181 7.0% 13,102 8.1%
Costs associated with the repayment
of certain debt - - - - - - 28,003 17.4%
Costs associated with the termination
of management agreement - - - - - - 8,400 5.2%
Interest expense, net 961 1.1% 937 1.2% 1,842 1.1% 3,122 1.9%
---------- ---------- ---------- -----------
Income (loss) before income taxes 3,224 3.8% 4,009 5.1% 10,339 5.9% (26,423) (16.4%)
Income tax expense (benefit) 926 1.1% 1,504 1.9% 3,043 1.7% (7,302) (4.5%)
---------- ---------- ---------- -----------
Net income (loss) $ 2,298 2.7% $2,505 3.2% $ 7,296 4.2% $ (19,121) (11.9%)
========== ========== ========== ===========
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Morton's Restaurant Group, Inc.
Pro Forma Net Income and Pro Forma Diluted Net Income Per Share (Note 1)
(In thousands, except per share data)
Three Month Periods Ended Six Month Periods Ended
--------------------------- ---------------------------
PRO FORMA ANALYSIS July 1, 2007 July 2, 2006 July 1, 2007 July 2, 2006
------------ ------------ ------------ ------------
Net income (loss), as reported $ 2,298 $ 2,505 $ 7,296 $ (19,121)
Income tax expense (benefit) 926 1,504 3,043 (7,302)
------------ ------------ ------------ ------------
Income (loss) before income taxes, as reported 3,224 4,009 10,339 (26,423)
Pro forma adjustments(1):
Costs associated with the early repayment
of certain debt - - - 28,003(2)
Stock compensation expense associated with IPO - - - 488(3)
Management fee paid to a related party - - - 390(4)
Costs associated with the termination of
management agreement - - - 8,400(5)
Interest expense - - - 1,239(6)
------------ ------------ ------------ ------------
Pro forma income before income taxes 3,224 4,009 10,339 12,097
Income tax expense 926(7) 1,446 3,043(7) 4,089
------------ ------------ ------------ ------------
Pro forma net income $ 2,298 $ 2,563 $ 7,296 $ 8,008
============ ============ ============ ============
Pro forma diluted net income per share $ 0.14 $0.15 $ 0.43 $ 0.47
Shares used in computing pro forma
diluted net income per share(8) 16,952.2 16,906.1 16,967.1 16,906.1
NOTES:
(1) There are no pro forma adjustments for fiscal 2007. As a result, the
amounts included in the table above for the three and six month periods
ended July 1, 2007 are reported amounts. The Company believes the pro
forma calculations for fiscal 2006 provide meaningful supplemental
information to the Company's operating results on a basis comparable with
that of future periods by eliminating the effects of unusual or other
infrequent charges that are not directly attributable to the Company's
underlying operating performance.
Accordingly, the Company believes that the presentation of the pro forma
analysis, when used in conjunction with GAAP financial measures, is a
useful financial analysis tool which can assist investors in assessing
the Company's financial condition, operating performance and underlying
strength. The pro forma analysis should not be considered in isolation or
as a substitute for net income (loss) prepared in accordance with GAAP.
The pro forma analysis, as well as the other information in this press
release, should be read in conjunction with the Company's financial
statements and footnotes contained in the documents that the Company
files with the U.S. Securities and Exchange Commission.
(2) Includes prepayment penalties relating to the repayment of the 7.5%
senior secured notes and the 14.0% senior secured notes, investment
banking and legal fees in connection with the tender offer for the 7.5%
senior secured notes and the repurchase of the 14.0% senior secured
notes, fees in connection with the termination of the prior working
capital facility and the write-off of deferred financing fees relating to
the 7.5% senior secured notes and the 14.0% senior secured notes and the
prior working capital facility.
(3) Represents the non-recurring stock compensation expense attributable to
the vesting of the executive units previously granted to certain
employees. The vesting occurred in conjunction with the Company's IPO in
February 2006.
(4) The related management agreement was terminated in conjunction with the
Company's IPO in February 2006.
(5) Represents the fee paid to terminate the management agreement.
(6) Interest expense for the six month period ended July 2, 2006 was adjusted
to eliminate interest expense related to the 7.5% senior secured notes
and the 14.0% senior secured notes which were repaid in February 2006 and
to reflect borrowings under our senior revolving credit facility.
(7) The Company expects the 2007 income tax rate to approximate 30%.
(8) Fully diluted shares include dilutive unvested restricted shares of 15.5
and 5.6 for the three month periods ended July 1, 2007 and July 2, 2006,
respectively. Fully diluted shares include dilutive unvested restricted
shares of 40.2 and 5.7 for the six month periods ended July 1, 2007 and
July 2, 2006, respectively.
9