From: Matthew J. Doherty
Media Training & Public Relations
541 6th Street - Suite D
Oakmont, PA 15139
(412) 828-7319
[LOGO OMITTED]
For: MORTON'S RESTAURANT GROUP, INC. FOR IMMEDIATE RELEASE
---------------------
325 North LaSalle Street
Chicago, Illinois 60610
(312) 923-0030
www.mortons.com
October 29, 2007
Contact: RONALD M. DINELLA, SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
MORTON'S RESTAURANT GROUP, INC.
MORTON'S RESTAURANT GROUP, INC. REPORTS RESULTS
FOR THIRD QUARTER 2007
- RECORD-SETTING THIRD QUARTER REVENUES -
- COMPARABLE RESTAURANT REVENUES UP 6.9% -
- COMPANY PROVIDES GUIDANCE FOR FOURTH QUARTER 2007 AND FULL YEAR 2007 -
Chicago, IL. October 29, 2007 - Morton's Restaurant Group, Inc. (NYSE:MRT) today
reported unaudited financial results for its 2007 fiscal third quarter ended
September 30, 2007.
THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2007 AS COMPARED TO THE THREE MONTH
PERIOD ENDED OCTOBER 1, 2006 (13 WEEKS TO 13 WEEKS)
o Revenues increased 12.6% to $78.9 million.
o Comparable restaurant revenues increased 6.9% (Morton's +7.3%,
Bertolini's - 7.4%).
o The growth in revenues is also attributable to revenues from four
Morton's steakhouses, which opened in fiscal 2006, and two Morton's
steakhouses, which opened during the first nine months of fiscal 2007.
o The Company's net loss reported in accordance with generally accepted
accounting principles ("GAAP") was $(0.7) million, or $(0.04) per
diluted share, for the three month period ended September 30, 2007,
which compares to GAAP net loss of $(0.1) million, or $(0.01) per
diluted share, for the three month period ended October 1, 2006.
o GAAP net loss of $(0.7) million, or $(0.04) per diluted share, for the
three month period ended September 30, 2007, compares to pro forma net
income of $0.1 million, or $0.01 per diluted share, for the three
month period ended October 1, 2006. (Please see the reconciliation of
pro forma net income (loss) to GAAP net income (loss) in the financial
tables that follow.)
o Due to the timing and concentration of new restaurant development,
pre-opening costs for the three month period ended September 30, 2007
increased $0.8 million compared to the three month period ended
October 1, 2006.
"We are working hard to build our business with our Morton's genuine
hospitality; one guest at a time," said Thomas J. Baldwin, Chairman, Chief
Executive Officer and President of Morton's Restaurant Group, Inc. "Our
strategic initiatives, development programs, and international expansion plans,
with the August opening of our Morton's steakhouse in Macau, are moving forward.
Further, during October, we opened our new Morton's steakhouse in Annapolis, MD
and expect to open our Boston Seaport and Los Angeles - Woodland Hills Morton's
steakhouses in November and December."
THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2007 AS COMPARED TO THE NINE MONTH
PERIOD ENDED OCTOBER 1, 2006 (39 WEEKS TO 39 WEEKS)
o Revenues increased 9.6% to $253.4 million.
o Comparable restaurant revenues increased 3.6% (Morton's + 3.8%,
Bertolini's - 3.9%).
o The growth in revenues is also attributable to revenues from four
Morton's steakhouses, which opened in fiscal 2006, and two Morton's
steakhouses, which opened during the first nine months of fiscal 2007.
o The Company's net income reported in accordance with GAAP was $6.6
million, or $0.39 per diluted share, for the nine month period ended
September 30, 2007, which compares to GAAP net loss of $(19.2)
million, or $(1.21) per diluted share, for the nine month period ended
October 1, 2006.
o GAAP net income of $6.6 million, or $0.39 per diluted share, for the
nine month period ended September 30, 2007, compares to pro forma net
income of $8.2 million, or $0.48 per diluted share, for the nine month
period ended October 1, 2006. (Please see the reconciliation of pro
forma net income (loss) to GAAP net income (loss) in the financial
tables that follow.)
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RESTAURANT DEVELOPMENT
During 2007, the Company opened Morton's steakhouses in San Jose, CA (February);
Macau, China (August); Annapolis, MD (October) and relocated its Morton's
steakhouse in Cincinnati, OH (August). The Company has entered into leases to
open new Morton's steakhouses in Boston (Seaport District), MA; Coral Gables,
FL; Leawood/Overland Park, KS; Naperville, IL and Woodland Hills, CA.
During 2007, the Company completed the introduction of Bar 12o21 in its Morton's
steakhouses in Atlanta (Buckhead), GA; Boca Raton, FL; Charlotte, NC;
Georgetown, D.C.; 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.
The Company has experienced delays in opening several restaurants this year
primarily due to delays in obtaining permits and in construction, resulting in
lower revenues and higher pre-opening costs than initially planned for the
period.
FOURTH QUARTER FISCAL 2007 AND FULL YEAR FISCAL 2007 FINANCIAL GUIDANCE
The Company expects fourth quarter of fiscal 2007 revenues to range between $101
million and $104 million, including increases in comparable restaurant revenues
of approximately 2% to 3% as compared to the fourth quarter of fiscal 2006.
Fourth quarter of fiscal 2007 will not include New Year's Eve's revenue, which
was included in the fourth quarter of fiscal 2006. Fourth quarter diluted net
income per share is expected to approximate $0.46 to $0.48. 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) and higher than initially
anticipated pre-opening costs. This range also includes expectations that the
Company's 2007 effective income tax rate will approximate 30%. The Company has
experienced delays in opening several restaurants this year primarily due to
delays in obtaining permits and in construction, resulting in lower revenues and
higher pre-opening costs than initially planned for the period. During the
fourth quarter of fiscal 2007, the Company opened a Morton's steakhouse
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in Annapolis, MD and expects to open two additional Morton's steakhouses, each
of which will include a Bar 12o21 and new temperature controlled display wine
rooms.
The Company expects fiscal year 2007 revenues to range between $354 million and
$357 million, including increases in comparable restaurant revenues of
approximately 2.5% to 3.5% as compared to fiscal 2006. Diluted net income per
share is expected to approximate $0.85 to $0.87. Fiscal 2007 will not include
New Year's Eve's revenue, which was included in fiscal 2006. 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 also
includes expectations that the Company's 2007 effective income tax rate will
approximate 30%. The Company has experienced delays in opening several
restaurants this year primarily due to delays in obtaining permits and in
construction, resulting in lower revenues and higher pre-opening costs than
initially planned for the period. In addition to the Morton's steakhouses in San
Jose, CA; Macau, China; Cincinnati, OH and Annapolis, MD that have opened, the
Company expects to open two additional Morton's steakhouses during the fourth
quarter of fiscal 2007, each of which will include a Bar 12o21 and new
temperature controlled display wine rooms. In addition the Company completed the
introduction of Bar 12o21 in seven steakhouses and expects to retrofit two
additional Morton's steakhouses to include Bar 12o21 during the remainder of
fiscal 2007.
CONFERENCE CALL
Morton's Restaurant Group, Inc. (NYSE: MRT) has scheduled a conference call and
Webcast for investors at 8:30 a.m. EDT today to discuss these results. Details
of the conference call are as follows:
Date: Monday, October 29, 2007
Time: 8:30 a.m. EDT (please dial in by 8:15 a.m.)
Dial-In #: (888) 396-2369 U.S. & Canada
(617) 847-8710 International
Confirmation code: 43182864
Alternatively, the conference call will be Webcast at WWW.MORTONS.COM under the
"Investor Relations" tab.
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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.
As of October 29, 2007, the Company owned and operated 76 Morton's steakhouses
located in 66 cities across 28 states, Puerto Rico and five international
locations (Toronto, Vancouver, Hong Kong, Macau and Singapore) 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 Nine Month Periods Ended
------------------------------ --------------------------------
September 30, October 1, September 30, October 1,
2007 2006 2007 2006
-------------- -------------- --------------- -------------
Revenues $ 78,872 $ 70,048 $ 253,372 $ 231,118
Food and beverage costs 26,240 23,359 84,748 76,388
Restaurant operating expenses 39,856 36,116 121,748 111,390
Pre-opening costs 1,823 1,039 3,638 1,971
Depreciation and amortization 2,733 1,980 7,640 5,593
General and administrative expenses 6,472 5,181 17,852 16,412
Marketing and promotional expenses 1,769 1,255 5,586 4,266
Stock compensation expense associated
with initial public offering - - - 488
Management fee paid to related party - - - 390
-------------- -------------- --------------- -------------
Operating (loss) income (21) 1,118 12,160 14,220
Costs associated with the repayment of
certain debt - - - 28,003
Costs associated with the termination of
management agreement - - - 8,400
Interest expense, net 922 952 2,764 4,074
-------------- -------------- --------------- -------------
(Loss) income before income taxes (943) 166 9,396 (26,257)
Income tax (benefit) expense (207) 264 2,836 (7,038)
-------------- -------------- --------------- -------------
Net (loss) income $ (736) $ (98) $ 6,560 $ (19,219)
============== ============== =============== =============
Net (loss) income per share:
Basic $ (0.04) $ (0.01) $ 0.39 $ (1.21)
Diluted $ (0.04) $ (0.01) $ 0.39 $ (1.21)
Shares used in computing net (loss)
income per share:
Basic 16,936.9 16,900.5 16,930.2 15,865.5
Diluted 16,936.9 16,900.5 16,980.5 15,865.5
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Morton's Restaurant Group, Inc.
Margin Analysis - Unaudited
(In thousands)
Three Month Periods Ended Nine Month Periods Ended
---------------------------------------- ---------------------------------------------
September 30, 2007 October 1, 2006 September 30, 2007 October 1, 2006
-------------------- ------------------ ----------------------- --------------------
Revenues $ 78,872 100.0% $ 70,048 100.0% $ 253,372 100.0% $ 231,118 100.0%
Food and beverage costs 26,240 33.3% 23,359 33.3% 84,748 33.4% 76,388 33.1%
Restaurant operating expenses 39,856 50.5% 36,116 51.6% 121,748 48.1% 111,390 48.2%
Pre-opening costs 1,823 2.3% 1,039 1.5% 3,638 1.4% 1,971 0.9%
Depreciation and amortization 2,733 3.5% 1,980 2.8% 7,640 3.0% 5,593 2.4%
General and administrative expenses 6,472 8.2% 5,181 7.4% 17,852 7.0% 16,412 7.1%
Marketing and promotional expenses 1,769 2.2% 1,255 1.8% 5,586 2.2% 4,266 1.8%
Stock compensation expense
associated with initial public offering - - - - - - 488 0.2%
Management fee paid to related party - - - - - - 390 0.2%
----------- ----------- ---------- -----------
Operating (loss) income (21) (0.0%) 1,118 1.6% 12,160 4.8% 14,220 6.2%
Costs associated with the repayment
of certain debt - - - - - - 28,003 12.1%
Costs associated with the
termination of management
agreement - - - - - - 8,400 3.6%
Interest expense, net 922 1.2% 952 1.4% 2,764 1.1% 4,074 1.8%
----------- ----------- ---------- -----------
(Loss) income before income taxes (943) (1.2%) 166 0.2% 9,396 3.7% (26,257) (11.4%)
Income tax (benefit) expense (207) (0.3%) 264 0.4% 2,836 1.1% (7,038) (3.0%)
----------- ----------- ---------- -----------
Net (loss) income $ (736) (0.9%) $ (98) (0.1%) $ 6,560 2.6% $ (19,219) (8.3%)
=========== =========== ========== ===========
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Morton's Restaurant Group, Inc.
Pro Forma Net Income (Loss) and Pro Forma Diluted Net Income (Loss) Per Share (Note 1)
(In thousands, except per share data)
Three Month Periods Ended Nine Month Periods Ended
---------------------------- ---------------------------
September 30, October 1, September 30, October 1,
PRO FORMA ANALYSIS 2007 2006 2007 2006
- ------------------ ------------ ------------ ------------ ------------
Net (loss) income, as reported $ (736) $ (98) $ 6,560 $ (19,219)
Income tax (benefit) expense (207) 264 2,836 (7,038)
-------------- ----------- ----------- ------------
(Loss) income before income taxes, as reported (943) 166 9,396 (26,257)
Pro forma adjustments (1):
Costs associated with the repayment
of certain debt - - - 28,003 (2)
Stock compensation expense associated with IPO - - - 488 (3)
Management fee paid to related party - - - 390 (4)
Costs associated with the termination of
management agreement - - - 8,400 (5)
Interest expense - - - 1,239 (6)
-------------- ----------- ----------- ------------
Pro forma (loss) income before income taxes (943) 166 9,396 12,263
Income tax (benefit) expense (207)(7) 18 2,836(7) 4,108
-------------- ----------- ----------- ------------
Pro forma net (loss) income $ (736) $ 148 $ 6,560 $ 8,155
============== =========== =========== ============
Pro forma diluted net (loss) income per share $ (0.04) $ 0.01 $ 0.39 $ 0.48
Shares used in computing pro forma
diluted net (loss) income per share (8) 16,936.9 16,906.9 16,980.5 16,906.3
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 nine month periods
ended September 30, 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.
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(5) Represents the fee paid to terminate the management agreement.
(6) Interest expense for the nine month period ended October 1, 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) For the three month period ended September 30, 2007, potentially dilutive
unvested restricted shares would decrease the loss per share and therefore
are not added to the weighted average number of common shares outstanding.
Fully diluted shares include dilutive unvested restricted shares of 6.5 for
the three month period ended October 1, 2006. Fully diluted shares include
dilutive unvested restricted shares of 50.2 and 5.9 for the nine month
periods ended September 30, 2007 and October 1, 2006, respectively.
9