LANDRYS RESTAURANTS INC - 10-Q Quarterly Report

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 SEPTEMBER 30, 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 NOVEMBER 1, 2004 THERE WERE

26,475,389 SHARES OF $0.01 PAR VALUE

COMMON STOCK OUTSTANDING

LANDRY’S RESTAURANTS, INC.

INDEX


		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets at September 30, 2004 (unaudited), and December 31, 2003	4
	Condensed Unaudited Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2004 and 2003	5
	Condensed Unaudited Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2004	6
	Condensed Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 and 2003	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.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17

PART II.	OTHER INFORMATION	18
Item 1.	Legal Proceedings	18
Item 6.	Exhibits and Reports on Form 8-K	18

Signatures		19

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 accounting principles generally accepted in the United States 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 commodity prices;

•

availability 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;

•

changing demographics surrounding our restaurants;

•

the effect of tax laws, and any changes therein;

•

earnings guidance;

•

the seasonality of our business;

•

weather and acts of God;

•

food, labor, fuel and utilities costs;

•

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.

LANDRY’S RESTAURANTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2004			December 31, 2003
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	21,683,876		$	35,211,319
Accounts receivable - trade and other		18,050,678			23,271,831
Inventories		54,847,396			47,772,298
Deferred taxes		5,872,861			6,858,350
Other current assets		10,885,055			7,490,383

Total current assets		111,339,866			120,604,181

PROPERTY AND EQUIPMENT, net		1,003,959,731			965,574,991
GOODWILL, net		18,527,547			7,527,547
OTHER ASSETS		9,156,538			9,078,787

Total assets	$	1,142,983,682		$	1,102,785,506

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	61,019,928		$	82,894,048
Accrued liabilities		83,062,676			74,512,641
Income taxes payable		1,841,897			211,131
Current portion of long-term debt		199,714			1,963,189

Total current liabilities		146,124,215			159,581,009

LONG-TERM DEBT, NET OF CURRENT PORTION		322,987,803			299,735,906
DEFERRED TAXES		37,717,991			23,395,713
OTHER LIABILITIES		15,229,317			15,522,129

Total liabilities		522,059,326			498,234,757

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value, 60,000,000 shares authorized, 26,564,589 and 27,653,852, issued and outstanding, respectively		265,646			276,539
Additional paid-in capital		419,475,880			439,616,066
Deferred stock compensation		(4,401,544	)		(1,868,750	)
Retained earnings		205,584,374			166,526,894

Total stockholders’ equity		620,924,356			604,550,749

Total liabilities and stockholders’ equity	$	1,142,983,682		$	1,102,785,506

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

LANDRY’S RESTAURANTS, INC.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended September 30,					Nine Months Ended September 30,
	2004			2003		2004			2003
REVENUES	$	314,377,703		$	302,162,069	$	907,670,545		$	851,634,589
OPERATING COSTS AND EXPENSES:
Cost of revenues		86,747,269			88,168,038		253,575,427			248,937,333
Restaurant labor		88,618,978			85,545,333		259,370,202			246,746,718
Other restaurant operating expenses		75,476,727			72,044,032		213,806,448			204,613,284
General and administrative expenses		14,073,767			12,676,743		45,420,665			36,358,293
Depreciation and amortization		15,810,148			12,510,085		42,434,392			35,871,933
Asset impairment expense		—			—		1,708,654			1,543,219
Restaurant pre-opening expenses		620,594			1,671,602		4,219,264			6,889,130

Total operating costs and expenses		281,347,483			272,615,833		820,535,052			780,959,910

OPERATING INCOME		33,030,220			29,546,236		87,135,493			70,674,679
OTHER EXPENSE (INCOME):
Interest expense, net		3,172,661			2,523,780		9,278,353			6,937,648
Other, net		(1,048,190	)		382,320		(1,108,361	)		826,608

Total other expense		2,124,471			2,906,100		8,169,992			7,764,256

INCOME BEFORE INCOME TAXES		30,905,749			26,640,136		78,965,501			62,910,423
PROVISION FOR INCOME TAXES		9,889,840			8,258,422		24,788,363			19,502,211

NET INCOME	$	21,015,909		$	18,381,714	$	54,177,138		$	43,408,212

EARNINGS PER SHARE INFORMATION:
BASIC -
Net income	$	0.77		$	0.67	$	1.97		$	1.57
Weighted average number of common shares outstanding		27,400,000			27,600,000		27,500,000			27,600,000
DILUTED -
Net income	$	0.75		$	0.65	$	1.91		$	1.53
Weighted average number of common shares outstanding		28,200,000			28,400,000		28,400,000			28,300,000

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

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			Additional Paid-in Capital			Deferred Stock Compensation			Retained Earnings			Total
Balance, January 1, 2004	27,653,852		$	276,539		$	439,616,066		$	(1,868,750	)	$	166,526,894		$	604,550,749
Net Income	—			—			—			—			54,177,138			54,177,138
Dividends paid	—			—			—			—			(3,459,734	)		(3,459,734	)
Purchase of common stock held for treasury	(1,322,800	)		(13,228	)		(24,439,671	)		—			(11,659,924	)		(36,112,823	)
Exercise of stock options and income tax benefit	133,537			1,335			1,455,485			—			—			1,456,820
Amortization of stock compensation	—			—			—			312,206			—			312,206
Deferred stock compensation	100,000			1,000			2,844,000			(2,845,000	)		—			—

Balance, September 30, 2004	26,564,589		$	265,646		$	419,475,880		$	(4,401,544	)	$	205,584,374		$	620,924,356

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

LANDRY’S RESTAURANTS, INC.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
	2004		2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	54,177,138	$	43,408,212
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		42,434,392

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