UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004. |
Commission file number 000-22150
LANDRY’S RESTAURANTS, INC.
(Exact name of the registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation of organization)
76-0405386
(I.R.S. Employer
Identification No.)
1510 West Loop South, Houston, TX 77027
(Address of principal executive offices)
(713) 850-1010
(Registrants telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12B-2 of the Act). Yes x No ¨
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
AS OF APRIL 28, 2004 THERE WERE
27,803,125 SHARES OF $0.01 PAR VALUE
COMMON STOCK OUTSTANDING
LANDRY’S RESTAURANTS, INC.
| Page Number | ||||
| PART I. |
FINANCIAL INFORMATION |
|||
| Item 1. |
3 | |||
| Condensed Consolidated Balance Sheets at March 31, 2004 (unaudited), and December 31, 2003 |
4 | |||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| Notes to Condensed Unaudited Consolidated Financial Statements |
8 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 3. |
16 | |||
| Item 4. |
17 | |||
| PART II. |
18 | |||
| Item 1. |
18 | |||
| Item 6. |
18 | |||
| 19 | ||||
2
LANDRY’S RESTAURANTS, INC.
PART I. FINANCIAL INFORMATION
| ITEM 1. | Financial Statements |
The accompanying condensed unaudited consolidated financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting only of normal recurring entries) necessary for a fair presentation of our results of operations, financial position and changes therein for the periods presented have been included.
In this report, we have made forward-looking statements. Our forward-looking statements are subject to risks and uncertainty, including without limitation, our ability to continue our expansion strategy, our ability to make projected capital expenditures, as well as general market conditions, competition, and pricing. Forward-looking statements include statements regarding:
| • | future capital expenditures (including the amount and nature thereof); |
| • | business strategy and measures to implement such strategy; |
| • | competitive strengths; |
| • | goals; |
| • | expansion and growth of our business and operations; |
| • | future food commodity prices; |
| • | availability and cost of food products, materials and employees; |
| • | consumer perceptions of food safety; |
| • | changes in local, regional and national economic conditions; |
| • | effectiveness of our marketing efforts; |
| • | same store sales; |
| • | the effect of tax laws, and any changes therein; |
| • | earnings guidance; |
| • | the seasonality of our business; |
| • | weather acts of God; |
| • | food, labor, fuel and utilities costs; |
| • | changes in demographics surrounding our restaurants; |
| • | plans; |
| • | references to future success as well as other statements which include words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend” and |
| • | other similar expressions. |
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, we cannot assure you that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved.
3
LANDRY’S RESTAURANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 10,764,132 | $ | 35,211,319 | ||||
| Accounts receivable—trade and other |
23,802,920 | 23,271,831 | ||||||
| Inventories |
48,038,370 | 47,772,298 | ||||||
| Deferred taxes |
7,384,552 | 6,858,350 | ||||||
| Other current assets |
8,254,007 | 7,490,383 | ||||||
| Total current assets |
98,243,981 | 120,604,181 | ||||||
| PROPERTY AND EQUIPMENT, net |
978,449,711 | 965,574,991 | ||||||
| GOODWILL, net |
7,527,547 | 7,527,547 | ||||||
| OTHER ASSETS, net |
10,815,970 | 9,078,787 | ||||||
| Total assets |
$ | 1,095,037,209 | $ | 1,102,785,506 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | 60,553,738 | 82,894,048 | |||||
| Accrued liabilities |
76,845,124 | 74,512,641 | ||||||
| Income taxes payable |
3,359,809 | 211,131 | ||||||
| Current portion of long-term debt |
1,949,283 | 1,963,189 | ||||||
| Total current liabilities |
142,707,954 | 159,581,009 | ||||||
| LONG-TERM DEBT, NET OF CURRENT PORTION |
297,486,725 | 299,735,906 | ||||||
| DEFERRED TAXES |
25,360,781 | 23,395,713 | ||||||
| OTHER LIABILITIES |
15,020,769 | 15,522,129 | ||||||
| Total liabilities |
480,576,229 | 498,234,757 | ||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Common stock, $ 0.01 par value, 60,000,000 shares authorized, 27,771,255 and 27,653,852, issued and outstanding, respectively |
277,713 | 276,539 | ||||||
| Additional paid-in capital |
442,066,513 | 439,616,066 | ||||||
| Deferred stock compensation |
(4,641,292 | ) | (1,868,750 | ) | ||||
| Retained earnings |
176,758,046 | 166,526,894 | ||||||
| Total stockholders’ equity |
614,460,980 | 604,550,749 | ||||||
| Total liabilities and stockholders’ equity |
$ | 1,095,037,209 | $ | 1,102,785,506 | ||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
4
LANDRY’S RESTAURANTS, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended March 31, | ||||||
| 2004 |
2003 | |||||
| REVENUES |
$ | 275,676,487 | $ | 249,582,044 | ||
| OPERATING COSTS AND EXPENSES: |
||||||
| Cost of revenues |
77,719,512 | 73,321,881 | ||||
| Restaurant labor |
80,932,363 | 74,547,562 | ||||
| Other restaurant operating expenses |
64,413,649 | 61,199,185 | ||||
| General and administrative expenses |
16,407,130 | 11,671,993 | ||||
| Depreciation and amortization |
12,937,027 | 11,195,042 | ||||
| Asset impairment expense |
1,708,654 | — | ||||
| Restaurant pre-opening expenses |
1,854,044 | 3,667,587 | ||||
| Total operating costs and expenses |
255,972,379 | 235,603,250 | ||||
| OPERATING INCOME |
19,704,108 | 13,978,794 | ||||
| OTHER EXPENSE (INCOME): |
||||||
| Interest expense, net |
3,073,796 | 1,815,836 | ||||
| Other, net |
162,753 | 393,607 | ||||
| Total other expense |
3,236,549 | 2,209,443 | ||||
| INCOME BEFORE INCOME TAXES |
16,467,559 | 11,769,351 | ||||
| PROVISION FOR INCOME TAXES |
5,104,943 | 3,648,499 | ||||
| NET INCOME |
$ | 11,362,616 | $ | 8,120,852 | ||
| EARNINGS PER SHARE INFORMATION: |
||||||
| BASIC— |
||||||
| Net income |
$ | 0.41 | $ | 0.29 | ||
| Weighted average number of common shares outstanding |
27,600,000 | 27,600,000 | ||||
| DILUTED— |
||||||
| Net income |
$ | 0.40 | $ | 0.29 | ||
| Weighted average number of common share equivalents outstanding |
28,500,000 | 28,200,000 | ||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
5
LANDRY’S RESTAURANTS, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
| Common Stock |
Additional Paid-in Capital |
Deferred Stock Compensation |
Retained Earnings |
Total |
|||||||||||||||||||
| Shares |
Amount |
||||||||||||||||||||||
| Balance, January 1, 2004 |
27,653,852 | $ | 276,539 | $ | 439,616,066 | $ | (1,868,750 | ) | $ | 166,526,894 | $ | 604,550,749 | |||||||||||
| Net income |
— | — | — | — | 11,362,616 | 11,362,616 | |||||||||||||||||
| Dividends paid |
— | — | — | — | (691,497 | ) | (691,497 | ) | |||||||||||||||
| Purchase of common stock held for treasury |
(53,000 | ) | (530 | ) | (1,097,616 | ) | — | (439,967 | ) | (1,538,113 | ) | ||||||||||||
| Exercise of stock options and income tax benefit |
70,403 | 704 | 704,063 | — | — | 704,767 | |||||||||||||||||
| Amortization of stock compensation |
— | — | — | 72,458 | — | 72,458 | |||||||||||||||||
| Issuance of restricted stock |
100,000 | 1,000 | 2,844,000 | (2,845,000 | ) | — | — | ||||||||||||||||
| Balance, March 31, 2004 |
27,771,255 | $ | 277,713 | $ | 442,066,513 | $ | (4,641,292 | ) | $ | 176,758,046 | $ | 614,460,980 | |||||||||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
6
LANDRY’S RESTAURANTS, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 11,362,616 | $ | 8,120,852 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities— |
||||||||
| Depreciation and amortization |
12,937,027 | 11,195,042 | ||||||
| Asset impairment expense |
1,708,654 | — | ||||||
| Change in assets and liabilities—net and other |
(15,976,911 | ) | (299,349 | ) | ||||
| Total adjustments |
(1,331,230 | ) | 10,895,693 | |||||
| Net cash provided by operating activities |
10,031,386 | 19,016,545 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Property and equipment additions |
(29,646,626 | ) | (50,516,225 | ) | ||||
| Proceeds from disposal of asset |
1,470,000 | — | ||||||
| Business acquisitions and related payments, net of cash acquired |
(179,857 | ) | (17,113,161 | ) | ||||
| Net cash used in investing activities |
(28,356,483 | ) | (67,629,386 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Proceeds from exercise of stock options |
628,402 | 392,489 | ||||||
| Borrowings (payment) of debt, net |
(4,520,882 | ) | 44,504,990 | |||||
| Dividends paid |
(691,497 | ) | (694,240 | ) | ||||
| Repurchase of common stock for treasury |
(1,538,113 | ) | (4,822,498 | ) | ||||
| Net cash provided by (used in) financing activities |
(6,122,090 | ) | 39,380,741 | |||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(24,447,187 | ) | (9,232,100 | ) | ||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
35,211,319 | 13,878,199 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 10,764,132 | $ | 4,646,099 | ||||