Morton's Restaurant Group, Inc. Reports Results For Second Quarter 2009

Morton's Restaurant Group, Inc. (NYSE:MRT) today reported unaudited financial results for its fiscal 2009 second quarter ended July 5, 2009.

The three month period ended July 5, 2009 as compared to the three month period ended June 29, 2008 (13 weeks to 13 weeks)

  --  Revenues decreased 19.8% to $68.7 million.

  --  Comparable restaurant revenues for Morton's steakhouses decreased

      26.1% for the second quarter of fiscal 2009 ended July 5, 2009.

  --  The decrease in revenues is primarily attributable to the decrease in

      comparable restaurant revenues.  A portion of the decrease was offset

      by an increase in revenues from four new Morton's steakhouses opened

      during fiscal 2008 and one new Morton's steakhouse opened during the

      first quarter of fiscal 2009.

  --  During fiscal June 2009, the Company closed its Morton's steakhouses

      in Southfield, Michigan; Westchester, Illinois; and Minneapolis,

      Minnesota. During fiscal 2008, the Company closed its Bertolini's

      restaurant in Indianapolis, Indiana, and its Morton's steakhouses in

      Kansas City, Missouri and in Charlotte (Southpark), North Carolina.

      During the second quarter of fiscal 2009, the Company determined that

      the closed restaurants should be accounted for as discontinued

      operations in accordance with SFAS No. 144, "Accounting for Impairment

      or Disposal of Long-Lived Assets," due to the fact that the Company

      does not expect any further direct or indirect cash inflows from these

      restaurants.  Accordingly, the results of operations for such closed

      restaurants listed above have been reclassified to discontinued

      operations in the statements of operations for all periods presented.

  --  The three month period ended July 5, 2009 included a charge of $10.6

      million pre-tax and $6.7 million after-tax, or $0.42 per diluted

      share, relating to the settlement of certain wage and hour and similar

      labor claims. The Company previously reported that it expected that

      this charge would be approximately $13.4M pre-tax and approximately

      $8.5M after-tax, or approximately $0.53 per diluted share; however,

      the charge recorded by the Company was reduced to reflect the

      calculation of the charge attributed to the equity component of the

      settlement as of the end of the 2009 fiscal second quarter.

  --  Including this unusual item, the Company's net loss from continuing

      operations was $(6.1) million, or $(0.38) per diluted share, for the

      three month period ended July 5, 2009 compared to net income from

      continuing operations of $1.9 million, or $0.12 per diluted share, for

      the three month period ended June 29, 2008. (Please refer to the

      reconciliation of adjusted net income (loss) to GAAP net income (loss)

      in the financial tables that follow.)



  --  Excluding this unusual item, the Company's adjusted net income from

      continuing operations was $0.6 million, or $0.04 per diluted share,

      for the three month period ended July 5, 2009, which compares to an

      adjusted net income from continuing operations of $1.9 million, or

      $0.12 per diluted share, for the three month period ended June 29,

      2008.

The six month period ended July 5, 2009 as compared to the six month period ended June 29, 2008 (26 weeks to 26 weeks)

  --  Revenues decreased 18.9% to $143.0 million.

  --  Comparable restaurant revenues for Morton's steakhouses decreased

      24.9% for the six month period ended July 5, 2009.

  --  The decrease in revenues is primarily attributable to the decrease in

      comparable restaurant revenues.  A portion of the decrease was offset

      by an increase in revenues from four new Morton's steakhouses opened

      during fiscal 2008 and one new Morton's steakhouse opened during the

      first quarter of fiscal 2009.

  --  The six month period ended July 5, 2009 included three unusual items:

      --  The Company incurred a second quarter charge of $10.6 million

          pre-tax and $6.7 million after-tax, or $0.42 per diluted share,

          relating to the settlement of certain wage and hour and similar

          labor claims.

      --  The Company incurred a first quarter charge of $0.2 million

          pre-tax and $0.1 million after-tax, or $0.01 per diluted share,

          for the partial write-off of deferred financing costs related to

          the amendment of the Company's senior revolving credit facility

          that was executed on March 4, 2009, pursuant to which the amount

          available under the credit facility was reduced from $115.0

          million to $75.0 million, with a further reduction to $70.0

          million effective December 31, 2009.

      --  The Company's effective tax rate for the six month period ended

          July 5, 2009 was negatively impacted by a non-cash charge of $0.7

          million, or $0.04 per diluted share, related to the tax treatment

          of the vesting of certain restricted stock awards, compared to a

          non-cash charge of $0.3 million, or $0.02 per diluted share,

          incurred in the six month period ended June 29, 2008.

  --  Including these unusual items, the Company's GAAP net loss from

      continuing operations was $(7.8) million, or $(0.49) per diluted

      share, for the six month period ended July 5, 2009 compared to net

      income from continuing operations of $4.6 million, or $0.28 per

      diluted share, for the six month period ended June 29, 2008.



  --  Excluding these unusual items, the Company's adjusted net loss from

      continuing operations was $(0.2) million, or $(0.02) per diluted

      share, for the six month period ended July 5, 2009, which compares to

      an adjusted net income from continuing operations of $4.8 million, or

      $0.30 per diluted share, for the six month period ended June 29, 2008.

As previously reported, Morton's revenues and results have been pressured by the continuing global recession, which has impacted guest traffic throughout the industry. Negative comparable restaurant revenues adversely impacted earnings due to the deleveraging on the fixed cost base.

"The global economic slowdown represents a challenging environment for the entire hospitality industry. This recession has impacted business travel, convention business, hotel occupancy and air travel all of which have a direct effect on our Morton's businesses," said Thomas J. Baldwin, Chairman and Chief Executive Officer of Morton's Restaurant Group, Inc. "We have made great strides with our marketing initiatives, profit enhancements and cost management programs. We fully believe that Morton's, with our uncompromising commitment to our guests' experience and quality, and our strong Morton's brand, remains well positioned for long-term growth when the economy improves. We have managed through several tough economic periods over the past few decades and that experience has helped us focus on the things we need to do to meet these economic challenges straight on. We believe Morton's offers 'The Best Steak Anywhere,' the best service and the best people in the fine dining steakhouse segment and that we will emerge from this recession with a significantly stronger brand and company."

Restaurant Development

On March 3, 2009, the Company opened a Morton's steakhouse in Mexico City, Mexico (through a joint venture). The Company has entered into leases to open new Morton's steakhouses in Miami Beach, FL, which is expected to open in the fourth quarter of fiscal 2009, and in Indian Wells, CA.

Third Quarter Fiscal 2009 and Revised Full Year Fiscal 2009 Financial Guidance

The current economic environment significantly increases the inherent uncertainty of guidance. Actual results could differ materially from the guidance provided herein as a result of numerous factors, many of which are beyond the Company's control and are highly dependent upon overall economic conditions. In particular, a further decrease in consumer and/or business spending in one or more of the geographic areas in which the Company operates could cause actual results to differ materially from the Company's guidance. Refer to "Cautionary Note on Forward-Looking Statements" later in this press release.

The Company currently expects third quarter of fiscal 2009 revenues to range between $71.0 million and $73.0 million, including decreases in comparable restaurant revenues for Morton's steakhouses of approximately 10% to 12% as compared to the third quarter of fiscal 2008. Third quarter diluted net loss from continuing operations per share is expected to approximate $(0.04) to $(0.07). This range assumes an expected effective income tax rate for the third quarter of fiscal 2009 not exceeding 47%.

The Company has revised its fiscal 2009 guidance and now expects fiscal year 2009 revenues to range between $300.0 million and $305.0 million, which reflects a decrease in comparable restaurant revenues for Morton's steakhouses of approximately 16% to 18% as compared to fiscal 2008. The Company's revenue guidance takes into account a 52 week year for fiscal 2009 compared to a 53 week year for fiscal 2008. Furthermore, fiscal 2009 will include revenue from one New Year's Eve (December 31, 2009) whereas fiscal 2008 included revenue from two New Year's Eves (December 31, 2007 in the first quarter and December 31, 2008 in the fourth quarter). Diluted net income from continuing operations per share for fiscal 2009 is expected to approximate $0.11 to $0.15. This range includes the full year impact of the additional interest expense of approximately $0.7 million, or $0.04 per diluted share, and the partial write-off of deferred financing costs of $0.2 million recorded during the first quarter of fiscal 2009, both of which related to the amendment of the Company's senior revolving credit facility that was executed on March 4, 2009. This range assumes an expected effective income tax rate not exceeding 39% and the negative impact of the fiscal 2009 first quarter non-cash charge of $0.7 million, or $0.04 per diluted share, related to the tax treatment of the vesting of certain restricted stock awards. This range excludes the aforementioned charge related to legal settlements and similar labor claims of $10.6 million pre-tax and $6.7 million after-tax, or $0.42 per diluted share. During fiscal 2009, the Company opened a Morton's steakhouse in Mexico City and expects to open one additional Morton's steakhouse, which will include a Bar 12-21 and a new temperature controlled display wine room. In addition, during fiscal 2009, the Company has retrofit one Morton's steakhouse to include Bar 12-21.

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