Morton's Restaurant Group, Inc. (NYSE: MRT) Reports Results for Third Quarter 2006

Highlights for the third quarter of fiscal 2006 as compared to the third quarter of fiscal 2005

- Revenues increased 4.8% to $70.0 million.

- Comparable restaurant revenues increased 2.0%.

- Net loss was $(0.1) million, or $(0.01) per diluted share, compared to net loss of $(0.7) million, or $(0.07) per diluted share last year.

- Pro forma net income was $0.1 million, or $0.01 per diluted share, compared to pro forma net loss of $(0.3) million, or $(0.02) per diluted share last year (refer to the reconciliation of pro forma net income (loss) to generally accepted accounting principles ("GAAP") net income (loss) in the financial tables that follow).

Highlights for the nine month period ended October 1, 2006 as compared to the nine month period ended October 2, 2005

- Revenues increased 6.4% to $231.1 million.

- Comparable restaurant revenues increased 3.3%.

- After non-recurring items associated with the Company's February 2006 Initial Public Offering ("IPO"), the net loss reported in accordance with GAAP for the nine month period ended October 1, 2006 was $(19.2) million, or $(1.21) per diluted share, which compares to GAAP net loss of $(0.4) million, or $(0.04) per diluted share, for the nine month period ended October 2, 2005 (refer to the reconciliation of pro forma net income (loss) to GAAP net income (loss) in the financial tables that follow).

- Pro forma net income was $8.2 million, or $0.48 per diluted share, up 31.2% when compared to pro forma net income of $6.2 million, or $0.36 per diluted share last year (refer to the reconciliation of pro forma net income (loss) to GAAP net income (loss) in the financial tables that follow).

Morton's Restaurant Group, Inc. (NYSE:MRT) today reported unaudited financial results for its 2006 fiscal third quarter ended October 1, 2006.

"Our 2006 third quarter operating results, including record-setting third quarter revenues of $70 million and the increase in our comparable restaurant revenues, reflect the continuing solid execution of our strategic initiatives," said Thomas J. Baldwin, chairman, chief executive officer and president of Morton's Restaurant Group. He said these initiatives include expanding Morton's popular Bar 12-21 business, increasing Morton's Boardroom private dining business, broadening our appeal and opening new restaurants in both new and existing markets.

He noted that in September a new Morton's steakhouse opened in Northbrook, IL, the sixth in the Chicago metro area, and that leases have been executed to open new Morton's steakhouses in Anaheim, CA; Coral Gables, FL; Houston, TX; San Jose, CA and Woodland Hills, CA.

Mr. Baldwin added "As we had planned, during the third quarter we started the renovation of our Bertolini's Italian restaurant located at the Fountain of the Gods, at the Forum Shops at Caesars Palace in Las Vegas. We currently plan to open our new Italian restaurant, Trevi, at that location, as early as December 2006."

Third Quarter of Fiscal 2006 Results

Revenues for the third quarter of fiscal 2006 increased 4.8% to $70.0 million from $66.8 million for the third quarter of fiscal 2005. The growth in revenues is attributable to a 2.0% increase in comparable restaurant revenues (13 weeks to 13 weeks) and revenues from six new Morton's steakhouse restaurants, four of which opened in fiscal 2005, one of which opened in March 2006 and one of which opened in September 2006. During the quarter, the Bertolini's at the Forum Shops at Caesars Palace in Las Vegas was closed for renovation. Our new Italian restaurant, Trevi, is expected to open at that location, as early as December 2006.

The Company's net loss was $(0.1) million, or $(0.01) per diluted share, for the third quarter of fiscal 2006, compared to net loss of $(0.7) million, or $(0.07) per diluted share for the third quarter of fiscal 2005.

The Company's pro forma net income was $0.1 million, or $0.01 per diluted share, for the third quarter of fiscal 2006, compared to pro forma net loss of $(0.3) million, or $(0.02) per diluted share, for the third quarter of fiscal 2005 (refer to the reconciliation of pro forma net income (loss) to GAAP net income (loss) in the financial tables that follow).

Results for the Nine Month Period Ended October 1, 2006

Revenues for the nine month period ended October 1, 2006 increased 6.4% to $231.1 million from $217.1 million for the nine month period ended October 2, 2005. The growth in revenues is attributable to a 3.3% increase in comparable restaurant revenues (39 weeks to 39 weeks) and revenues from six new Morton's steakhouse restaurants, four of which opened in fiscal 2005, one of which opened in March 2006 and one of which opened in September 2006. During the third quarter, the Bertolini's at the Forum Shops at Caesars Palace in Las Vegas was closed for renovation. Our new Italian restaurant, Trevi, is expected to open at that location, as early as December 2006.

Management fee paid to related party was $0.4 million for the first quarter of fiscal 2006 and is included in the nine month period ended October 1, 2006, compared to $2.1 million in the nine month period ended October 2, 2005. The related management agreement was terminated in connection with the Company's IPO in February 2006 and the Company incurred an $8.4 million termination fee. (Refer to the reconciliation of pro forma net income (loss) 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 of $28.0 million associated with debt repayment, primarily consisting of prepayment penalties that were incurred with the early repayment of the then-outstanding 7.5% senior secured notes and 14.0% senior secured notes. The debt was refinanced in conjunction with the Company's IPO. Costs associated with the repayment of certain debt of approximately $0.2 million for the nine month period ended October 2, 2005 represents prepayment penalties that were incurred with the early repayment of certain mortgages. (Refer to the reconciliation of pro forma net income (loss) to GAAP net income (loss) in the financial tables that follow.)

Interest expense, net was $4.1 million for the nine month period ended October 1, 2006 compared to $12.9 million for the nine month period ended October 2, 2005. 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 new revolving credit facility. (Refer to the reconciliation of pro forma net income (loss) to GAAP net income (loss) in the financial tables that follow.)

After non-recurring items associated with the Company's February 2006 IPO, the net loss reported in accordance with GAAP for the nine month period ended October 1, 2006 was $(19.2) million, or $(1.21) per diluted share, which compares to GAAP net loss of $(0.4) million, or $(0.04) per diluted share for the nine month period ended October 2, 2005. (Refer to the reconciliation of pro forma net income (loss) to GAAP net income (loss) in the financial tables that follow.)

The Company's pro forma net income was $8.2 million, or $0.48 per diluted share, for the nine month period ended October 1, 2006, compared to pro forma net income of $6.2 million, or $0.36 per diluted share, for the nine month period ended October 2, 2005. (Refer to the reconciliation of pro forma net income (loss) to GAAP net income (loss) in the financial tables that follow.)

Morton's Restaurant Group completed its initial public offering on February 9, 2006. Its common stock is traded on the New York Stock Exchange under the symbol MRT.

Restaurant Development

On September 8, 2006, the Company opened a new Morton's steakhouse restaurant in Northbrook, Illinois. On March 29, 2006, the Company opened a new Morton's steakhouse restaurant in Troy, Michigan. The Company has executed leases to open new Morton's steakhouse restaurants in Anaheim, CA; Coral Gables, FL; Houston, TX; San Jose, CA and Woodland Hills, CA. During the third quarter, Bertolini's at the Forum Shops at Caesars Palace in Las Vegas was closed for renovation. Our new Italian restaurant, Trevi, is expected to open at that location, as early as December 2006.

Fourth Quarter 2006 and Full Year 2006 Financial Guidance

The Company expects fourth quarter 2006 revenues to range between $86 million and $89 million including increases in comparable restaurant revenues between 2% to 3%. Diluted net income per share is expected to approximate $0.29 to $0.30. This range includes estimated compensation expense, net of related income taxes, pursuant to Statement of Financial Accounting Standards No. 123R "Share Based Payment" (SFAS No. 123R), which requires the expensing of stock issued to employees (approximately $0.01 per diluted share). This range includes expectations that the Company's 2006 pro forma income tax rate will approximate 33.5%. During the fourth quarter, the Company expects to open new Morton's steakhouse restaurants in Houston, Texas and in Anaheim, California. During the third quarter, the Bertolini's at the Forum Shops at Caesars Palace in Las Vegas was closed for renovation. Our new Italian restaurant, Trevi, is expected to open at that location, as early as December 2006.

The Company expects fiscal year 2006 revenues to be between $317 million and $320 million including increases in comparable restaurant revenues of approximately 2% to 3%. Excluding all non-recurring items associated with the IPO and other costs associated with the early retirement of debt, pre-IPO management fees, management termination contract costs, the one-time compensation expense attributable to the vesting of the executive units previously granted to certain employees and adjusting the interest expense for the pro forma effects of the change in the debt structure, pro forma diluted net income per share is expected to approximate $0.76 to $0.78. This range includes estimated compensation expense, net of related income taxes, pursuant to SFAS No. 123R (approximately $0.03 per diluted share). This range includes expectations that the Company's 2006 pro forma income tax rate will approximate 33.5%. During the fourth quarter, the Company expects to open new Morton's steakhouse restaurants in Houston, Texas and in Anaheim, California. During the third quarter, the Bertolini's at the Forum Shops at Caesars Palace in Las Vegas was closed for renovation. Our new Italian restaurant, Trevi, is expected to open at that location, as early as December 2006.

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