LRI HOLDINGS, INC. - FORM 10-Q

LRI HOLDINGS, INC. - FORM 10-Q - December 22, 2014

Attached files

Attached files

LRI HOLDINGS, INC. Reports

file	filename
EXCEL - IDEA: XBRL DOCUMENT - LRI HOLDINGS, INC.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - LRI HOLDINGS, INC.	exhibit321q1fy15.htm
EX-10.3 - EXHIBIT 10.3 - LRI HOLDINGS, INC.	exhibit103q1fy15.htm
EX-31.1 - EXHIBIT 31.1 - LRI HOLDINGS, INC.	exhibit311q1fy15.htm
EX-31.2 - EXHIBIT 31.2 - LRI HOLDINGS, INC.	exhibit312q1fy15.htm
EX-10.1 - EXHIBIT 10.1 - LRI HOLDINGS, INC.	exhibit101q1fy15.htm
EX-10.2 - EXHIBIT 10.2 - LRI HOLDINGS, INC.	exhibit102q1fy15.htm
EX-32.2 - EXHIBIT 32.2 - LRI HOLDINGS, INC.	exhibit322q1fy15.htm

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 November 2, 2014

- or -

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 333-173579

LRI Holdings, Inc.

(Exact name of registrant as specified in its charter)



Delaware		20-5894571
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

3011 Armory Drive, Suite 300, Nashville, Tennessee 37204
(Address of principal executive offices) (Zip Code)

(615) 885-9056

(Registrant's telephone number, including area code)

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. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of December 22, 2014, the registrant has 1 Common Unit, $0.01 par value, outstanding (which is owned by Roadhouse Parent Inc., the registrant’s direct owner), and is not publicly traded.



	PART I---FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Stockholder's Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26
	PART II---OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
	Signatures	28

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

LRI Holdings, Inc.

Condensed Consolidated Balance Sheets



(In thousands, except share data)	November 2, 2014			August 3, 2014
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	3,020		$	9,170
Receivables	12,216			9,734
Inventories	14,316			13,832
Prepaid expenses and other current assets	6,510			6,887
Income taxes receivable	117			115
Total current assets	36,179			39,738
Property and equipment, net	207,710			209,078
Other assets	12,565			13,273
Goodwill	163,368			163,368
Tradename	71,251			71,251
Other intangible assets, net	16,669			17,190
Total assets	$	507,742		$	513,898
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	15,947		$	17,414
Payable to RHI	2,384			2,721
Other current liabilities and accrued expenses	42,917			51,683
Total current liabilities	61,248			71,818
Long-term debt	372,000			355,000
Deferred income taxes	27,607			27,607
Other long-term obligations	46,995			46,599
Total liabilities	507,850			501,024
Commitments and contingencies (Note 5)	—			—
Stockholder’s equity:
Common stock ($0.01 par value; 100 shares authorized; 1 share issued and outstanding)	—			—
Additional paid-in capital	230,000			230,000
Retained deficit	(230,108		)	(217,126		)
Total stockholder’s equity	(108		)	12,874
Total liabilities and stockholder’s equity	$	507,742		$	513,898

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

LRI Holdings, Inc.

Condensed Consolidated Statements of Operations

(unaudited)



	Thirteen weeks ended
(In thousands)	November 2, 2014			October 27, 2013
Revenues:
Net sales	$	145,213		$	147,023
Franchise fees and royalties	529			507
Total revenues	145,742			147,530
Costs and expenses:
Restaurant operating costs:
Cost of goods sold	52,296			50,004
Labor and other related expenses	46,332			46,497
Occupancy costs	13,804			13,613
Other restaurant operating expenses	23,593			25,490
Depreciation and amortization	5,070			5,171
Pre-opening expenses	35			6
General and administrative	7,182			7,183
Restaurant impairment and closing charges	—			1,317
Total costs and expenses	148,312			149,281
Operating loss	(2,570		)	(1,751		)
Interest expense, net	10,412			10,319
Loss before income taxes	(12,982		)	(12,070		)
Income tax benefit	—			—
Net loss	$	(12,982	)	$	(12,070	)

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

LRI Holdings, Inc.

Condensed Consolidated Statements of Stockholder’s Equity

(unaudited)



	Common			Additional paid-in capital		Retained deficit			Total stockholder's equity
(In thousands, except share data)	Shares	Amount		Additional paid-in capital		Retained deficit			Total stockholder's equity
Balances at July 28, 2013	1	$	—	$	230,000	$	(154,353	)	$	75,647
Net loss	—	—		—		(12,070		)	(12,070		)
Balances at October 27, 2013	1	$	—	$	230,000	$	(166,423	)	$	63,577

Balances at August 3, 2014	1	$	—	$	230,000	$	(217,126	)	$	12,874
Net loss	—	—		—		(12,982		)	(12,982		)
Balances at November 2, 2014	1	$	—	$	230,000	$	(230,108	)	$	(108	)

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

LRI Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)



	Thirteen weeks ended
(In thousands)	November 2, 2014			October 27, 2013
Cash flows from operating activities:
Net loss	$	(12,982	)	$	(12,070	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,070			5,171
Other amortization	586			504
Loss on sale/disposal of property and equipment	868			500
Amortization of deferred gain on sale and leaseback transactions	(13		)	(12		)
Impairment charges for long-lived assets	—			1,317
Share-based compensation expense	(330		)	396
Changes in operating assets and liabilities:
Receivables	(2,482		)	259
Inventories	(484		)	(526		)
Prepaid expenses and other current assets	377			(1,136		)
Other non-current assets and intangibles	(40		)	(138		)
Accounts payable	(1,355		)	1,504
Payable to RHI	(7		)	(56		)
Income taxes payable/receivable	(2		)	—
Other current liabilities and accrued expenses	(8,766		)	(14,589		)
Other long-term obligations	708			919
Net cash used in operating activities	(18,852		)	(17,957		)
Cash flows from investing activities:
Purchase of property and equipment	(4,298		)	(3,105		)
Net cash used in investing activities	(4,298		)	(3,105		)
Cash flows from financing activities:
Payments on revolving credit facility	(3,900		)	(600		)
Borrowings on revolving credit facility	20,900			1,600
Net cash provided by financing activities	17,000			1,000
Decrease in cash and cash equivalents	(6,150		)	(20,062		)
Cash and cash equivalents, beginning of period	9,170			23,708
Cash and cash equivalents, end of period	$	3,020		$	3,646

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

LRI Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

(Tabular dollar amounts in thousands, except share data)

(unaudited)

1. Basis of Presentation and Recent Accounting Pronouncements

LRI Holdings, Inc. (“LRI Holdings”) and its subsidiaries (collectively the “Company”, “we”, “our” or “us”) are engaged in the operation and development of the Logan’s Roadhouse restaurant chain. As of November 2, 2014, our restaurants operate in 23 states and are comprised of 234 company-owned restaurants and 26 franchised restaurants. LRI Holdings operates its business as one operating and one reportable segment. The Company operates on a 52 or 53-week fiscal year ending on the Sunday nearest to July 31. The fiscal year ended August 3, 2014 was comprised of 53 weeks. The fiscal year ending August 2, 2015 will be comprised of 52 weeks.

On October 4, 2010, LRI Holdings was acquired by certain wholly owned subsidiaries of Roadhouse Holding Inc. (“RHI”), a Delaware corporation owned by affiliates of Kelso & Company, L.P. (the “Kelso Affiliates”) and certain members of management (the “Management Investors”). After the acquisition transactions (the “Transactions”), the Kelso Affiliates owned 97% and the Management Investors owned 3% of the outstanding capital stock of RHI. Because LRI Holdings is a wholly owned subsidiary of an indirect wholly owned subsidiary of RHI, RHI is the ultimate parent of LRI Holdings.

Basis of presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and all intercompany balances and transactions have been eliminated during consolidation.

Interim financial statements

We have prepared these condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the thirteen weeks ended November 2, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending August 2, 2015. These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 3, 2014 (the "Form 10-K"). The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in the Form 10-K.

Recent accounting pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), an amendment to the FASB Accounting Standards Codification. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update is effective for annual periods and interim periods within those periods beginning after December 15, 2016, which will require us to adopt these provisions in the first quarter of fiscal year 2018. The Company is currently evaluating the impact the guidance will have on our consolidated financial statements.

Table of Contents

2. Long-Term Debt

Long-term debt obligations at November 2, 2014 and August 3, 2014, consist of the following:



	November 2, 2014		August 3, 2014
Senior Secured Notes, bearing interest at 10.75%	$	355,000	$	355,000
Senior Secured Revolving Credit Facility	17,000		—
	372,000		355,000
Less: current maturities	—		—
Long-term debt, less current maturities	$	372,000	$	355,000

Senior Secured Revolving Credit Facility, as amended

In connection with the Transactions, Logan’s Roadhouse, Inc., a wholly owned subsidiary of LRI Holdings, entered into the Senior Secured Revolving Credit Facility which provides a $30.0 million revolving credit facility with a maturity date of October 4, 2015. The Senior Secured Revolving Credit Facility includes a $12.0 million letter of credit sub-facility and a $5.0 million swingline sub-facility. As of November 2, 2014, the Company had borrowings of $17.0 million drawn on the Senior Secured Revolving Credit Facility and $3.9 million of undrawn outstanding letters of credit resulting in available credit of $9.1 million. The Senior Secured Revolving Credit Facility is classified as a long-term liability due to the Company executing an amendment to the Senior Secured Revolving Credit Facility subsequent to November 2, 2014, but prior to filing which extended the maturity date to April 30, 2017.

The Senior Secured Revolving Credit Facility is collateralized on a first-priority basis by a security agreement, which includes the tangible and intangible assets of the borrower and those of LRI Holdings and all of its subsidiaries, and is guaranteed by LRI Holdings and the subsidiaries of Logan’s Roadhouse, Inc.

Senior Secured Notes

In connection with the Transactions, Logan’s Roadhouse, Inc. issued $355.0 million aggregate principal amount of Senior Secured Notes in a private placement to qualified institutional buyers. In July 2011, the Company completed an exchange offering which allowed the holders of those notes to exchange their notes for notes identical in all material respects except they are registered with the SEC and are not subject to transfer restrictions. The Senior Secured Notes bear interest at a rate of 10.75% per annum, payable semi-annually in arrears on April 15 and October 15. The Senior Secured Notes mature on October 15, 2017.

The Senior Secured Notes are secured on a second-priority basis by the collateral securing the Senior Secured Revolving Credit Facility and are guaranteed by LRI Holdings and the subsidiaries of Logan’s Roadhouse, Inc.

Subsequent to October 15, 2013, Logan’s Roadhouse, Inc. may redeem all or part of the Senior Secured Notes at redemption prices (expressed as a percentage of principal amount) ranging from 108.1% to 100.0%, plus accrued and unpaid interest. As of November 2, 2014, no portion of the Senior Secured Notes has been redeemed.

The Senior Secured Revolving Credit Facility and the Indenture that governs the Senior Secured Notes contain significant financial and operating covenants. The non-financial covenants include prohibitions on the Company and the Company’s guarantor subsidiaries’ ability to incur certain additional indebtedness or to pay dividends. Additionally, the Indenture subjects the Company to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as a non−accelerated filer, even if the Company is not specifically required to comply with such sections of the Exchange Act. Failure to comply with these covenants constitutes a default and may lead to the acceleration of the principal amount and accrued but unpaid interest on the Senior Secured Notes. On January 24, 2014 the Company executed an amendment to the Senior Secured Revolving Credit Facility which included: removing the previous consolidated leverage and consolidated interest coverage covenants; adding a consolidated first lien leverage covenant and amending the maximum capital expenditure limit in each of the remaining years. The terms of the amendment also included an increase in the applicable margin for borrowings; payment of a consent fee and a requirement to provide monthly unaudited preliminary financial statements to the lenders under the Senior Secured Revolving Credit Facility. As of November 2, 2014, the Company was in compliance with all material covenants.

Table of Contents

the maximum capital expenditure limit in each of the remaining years of the extended facility; amended the required consolidated first lien leverage ratio for the extended term of the facility; amended requirements for all or a portion of net cash proceeds of certain asset sales to include prepayment of any then outstanding borrowings; required an amendment to the advisory agreement with Kelso to restrict payment of deferred advisory fees until after the final maturity date of the Senior Secured Revolving Credit Facility; and required payment of a consent fee.

Although we expect to remain in compliance with all material debt covenants, our ability to do so and to service our debt requirements is dependent, in part, upon improving our operating performance trends. We have experienced declines in customer traffic trends over the past three fiscal years which has resulted in lower cash flow generated from operations and net losses in each of these periods. Additionally, our highly leveraged structure includes significant semi-annual interest payments which often require borrowing on our Senior Secured Revolving Credit Facility (see “Risk Factors” set forth in Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended August 3, 2014). If we later determine the adverse impact of these challenges does not allow us to remain in compliance with the financial covenants included in the Senior Secured Revolving Credit Facility, we believe we have sufficiently sound relationships with our lenders to secure an amendment or waiver prior to failing to meet these covenants. If we are unable to secure an amendment or waiver and fail the financial covenants or fail to make scheduled payments of interest on, to pay principal of or to refinance our indebtedness, an event of default would result and the lenders could declare outstanding borrowings due and payable.

Debt issuance costs

The Company incurred $19.2 million of debt issuance costs in connection with obtaining the financings described above. These costs were capitalized and will be amortized to interest expense over the lives of the respective debt instruments.

3. Restaurant Impairment and Closing Charges

The Company performs long-lived asset impairment analyses throughout the year. During the thirteen weeks ended November 2, 2014, the Company impaired no additional restaurants. During the thirteen weeks ended October 27, 2013, the Company determined that two restaurants were impaired and also wrote-off additional asset expenditures with respect to restaurants that had been previously impaired. The assessments compared the carrying amounts of each restaurant to the estimated future undiscounted net cash flows of that restaurant and an impairment charge was recorded based on the amount by which the carrying amount of the assets exceeded their fair value. Fair value was determined based on an assessment of individual site characteristics and local real estate market conditions along with estimates of future cash flows. Restaurant impairment charges were recorded as follows:



	Thirteen weeks ended
	November 2, 2014		October 27, 2013
Restaurant impairment charges	$	—	$	1,317

4. Fair Value Measurements

Fair value measurements are made under a three-tier fair value hierarchy, which prioritizes the inputs used in measuring the fair value:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, requiring the reporting entity to develop its

own assumptions.

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of November 2, 2014 and August 3, 2014:



	Level	November 2, 2014		August 3, 2014
Deferred compensation plan assets(1)	1	$	2,079	$	2,033


(1)	Represents plan assets established under a Rabbi Trust for the Company’s non-qualified savings plan. The assets of the Rabbi Trust are invested in mutual funds and are reported at fair value based on active market quotes.

The fair values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts because of their short-term nature.

The carrying value of the Senior Secured Notes as of November 2, 2014 and August 3, 2014 was $355.0 million. The fair value of the Senior Secured Notes as of November 2, 2014 and August 3, 2014 was $264.5 million and $279.6 million, respectively. The fair value of the Company’s publicly traded debt is based on quoted market prices which are considered a Level 1 input. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During the thirteen weeks ended November 2, 2014, the Company impaired no additional restaurants. The fair value of the restaurants was calculated using a cash flow model which included estimates for projected revenues, earnings and cash flows. The Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs, and thus, are considered Level 3 inputs. See Note 3 for further information on the impairment of these long-lived assets.

Table of Contents

5. Commitments and Contingencies

Litigation

Based upon information currently available, the Company is not a party to any litigation that management believes could have a material effect on the Company’s business or the Company’s condensed consolidated financial statements. The Company establishes reserves for litigation and similar matters when those matters present loss contingencies that we determine to be both probable and reasonably estimable in accordance with Accounting Standards Codification (“ASC”) 450, Contingencies. In the opinion of management, based on current knowledge and in part upon the advice of legal counsel, all matters are believed to be adequately covered by insurance or reserves, or, if not covered, the possibility of losses from such matters are believed to be remote or such matters are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company if disposed of unfavorably.

Guarantees

LRI Holdings has fully and unconditionally guaranteed both the Senior Secured Revolving Credit Facility and the Senior Secured Notes.

Indemnifications

The Company is party to certain indemnifications to third parties in the ordinary course of business. The probability of incurring an actual liability under such indemnifications is sufficiently remote, thus no liability has been recorded.

6. Share-Based Awards and Compensation Plans

On January 18, 2011, RHI adopted the Roadhouse Holding Inc. Stock Incentive Plan (the “2011 Plan”), pursuant to which options to purchase approximately 13%, or 345,000 shares, of the common stock of RHI on a fully diluted basis were available for grant to our directors, officers and key employees. On March 8, 2013, the 2011 Plan was amended to increase the number of shares authorized to 400,000 shares; and on October 4, 2014, the plan was further amended to increase the number of shares authorized to 640,000 shares. As of November 2, 2014, approximately 14% of the option pool remains available for future grants. Options granted under the 2011 Plan expire on the ten-year anniversary of the grant date.

Options granted under the 2011 Plan include time-based options, performance-based options and time-based options with performance requirements. Compensation expense for the time-based options is recognized over the requisite service period for the award. Upon a change in control of RHI, all time-based options will fully vest. Options with performance requirements do not become exercisable until the occurrence of a change in control of RHI. The Company recognizes compensation expense for options with performance requirements when the achievement of the performance goals is deemed probable.

The following table summarizes stock option activity under the 2011 Plan for the thirteen weeks ended November 2, 2014:



	Time-based options				Performance-based options
	Number		Weighted average exercise price		Number		Weighted average exercise price
Options outstanding as of August 3, 2014	201,086		$	86.85	131,631		$	100.00
Granted	—		—		360,000		83.33
Exercised	—		—		—		—
Forfeited	(127,666	)	88.02		(15,334	)	100.00
Options outstanding as of November 2, 2014	73,420		$	84.82	476,297		$	85.34
As of November 2, 2014
Options vested	44,131				—
Options exercisable	44,131				—

7. Income Taxes

Table of Contents

The Company routinely assesses whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. Based upon the Company’s level of historical taxable income and projections for future taxable income over the periods that the deferred tax assets are expected to be deductible, the Company had a recorded valuation allowance of $25.1 million as of August 3, 2014. The valuation allowance was increased in the thirteen weeks ended November 2, 2014 by the amount of income tax benefit that would have otherwise been recorded. Excluding the valuation allowance, the effective tax rates ("ETR") for the thirteen weeks ended November 2, 2014 and October 27, 2013 were 43.6% and 46.4%, respectively. Both periods were impacted by the reverse effect of wage based credits on a pre-tax loss. The Company's ETR is highly sensitive to estimates of income or loss due to relatively low pre-tax income (loss) and significant wage based credits. As a result, beginning in the second quarter of fiscal year 2013 we adopted the method of using the actual year-to-date rate as of each interim period, as we believe this provides the best estimate of our year-to-date income tax expense.

8. Related Party Transactions

In connection with the Transactions, Logan’s Roadhouse, Inc. entered into an advisory agreement (the "Advisory Agreement") with Kelso & Company, L.P. ("Kelso"). Pursuant to the Advisory Agreement, Kelso provides the Company with financial advisory and management consulting services in return for annual fees of $1.0 million to be paid quarterly. During the first quarter of fiscal year 2014, the Advisory Agreement was amended to defer payments of the advisory fee beginning with the quarterly payment due on October 1, 2013. The advisory fee will accrue on a daily basis and become payable at Kelso's sole discretion. The accrued advisory fee as of November 2, 2014, included within other current liabilities and accrued expenses, was $1.1 million.

RHI has incurred a liability to former officers related to the repurchase of shares of RHI common stock. Pursuant to the Roadhouse Holding Inc. Stockholders Agreement, the Board of Directors elected to defer payment of the purchase price of the RHI shares previously held by those officers resulting in a liability of $2.5 million. All past and future payments related to these share repurchases are funded by LRI Holdings and create a receivable from RHI.

9. Condensed Consolidating Financial Information

The Senior Secured Notes (described in Note 2) were issued by Logan’s Roadhouse, Inc. and guaranteed on a senior basis by its parent company, LRI Holdings, and each of its subsidiaries. The guarantees are full and unconditional and joint and several. The Company is providing condensed consolidating financial statements pursuant to SEC Regulation S-X Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.”

The condensed consolidating financial information of Logan’s Roadhouse, Inc. and the guarantors is presented below:

Table of Contents

Condensed Consolidated Balance Sheets



November 2, 2014	LRI Holdings, Inc.		Issuer and subsidiary guarantors		Consolidating adjustments			Consolidated
ASSETS
Current assets	$	—	$	36,179	$	—		$	36,179
Property and equipment, net	—		207,710		—			207,710
Other assets	—		136,058		(123,493		)	12,565
Investment in subsidiary	331,840		—		(331,840		)	—
Goodwill	—		163,368		—			163,368
Tradename	—		71,251		—			71,251
Other intangible assets, net	—		16,669		—			16,669
Total assets	$	331,840	$	631,235	$	(455,333	)	$	507,742
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities	$	—	$	61,248	$	—		$	61,248
Long-term debt	—		372,000		—			372,000
Deferred income taxes	—		27,607		—			27,607
Other long-term obligations	123,493		46,995		(123,493		)	46,995
Stockholder’s equity	208,347		123,385		(331,840		)	(108		)
Total liabilities and stockholder’s equity	$	331,840	$	631,235	$	(455,333	)	$	507,742
August 3, 2014	LRI Holdings, Inc.		Issuer and subsidiary guarantors		Consolidating adjustments			Consolidated
ASSETS
Current assets	$	—	$	39,738	$	—		$	39,738
Property and equipment, net	—		209,078		—			209,078
Other assets	—		136,233		(122,960		)	13,273
Investment in subsidiary	331,897		—		(331,897		)	—
Goodwill	—		163,368		—			163,368
Tradename	—		71,251		—			71,251
Other intangible assets, net	—		17,190		—			17,190
Total assets	$	331,897	$	636,858	$	(454,857	)	$	513,898
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities	$	—	$	71,818	$	—		$	71,818
Long-term debt	—		355,000		—			355,000
Deferred income taxes	—		27,607		—			27,607
Other long-term obligations	122,960		46,599		(122,960		)	46,599
Stockholder’s equity	208,937		135,834		(331,897		)	12,874
Total liabilities and stockholder’s equity	$	331,897	$	636,858	$	(454,857	)	$	513,898

Table of Contents

Condensed Consolidated Statements of Operations



Thirteen weeks ended November 2, 2014	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	—		$	145,742		$	—	$	145,742
Total costs and expenses	57			148,255			—		148,312
Operating loss	(57		)	(2,513		)	—		(2,570		)
Interest expense, net	533			9,879			—		10,412
Loss before income taxes	(590		)	(12,392		)	—		(12,982		)
Income tax benefit	—			—			—		—
Net loss	$	(590	)	$	(12,392	)	$	—	$	(12,982	)
Thirteen weeks ended October 27, 2013	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	—		$	147,530		$	—	$	147,530
Total costs and expenses	60			149,221			—		149,281
Operating loss	(60		)	(1,691		)	—		(1,751		)
Interest expense, net	523			9,796			—		10,319
Loss before income taxes	(583		)	(11,487		)	—		(12,070		)
Income tax benefit	—			—			—		—
Net loss	$	(583	)	$	(11,487	)	$	—	$	(12,070	)

Condensed Consolidated Statements of Cash Flows



Thirteen weeks ended November 2, 2014	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash used in operating activities	$	(57	)	$	(18,795	)	$	—	$	(18,852	)
Net cash provided by (used in) investing activities	57			(4,355		)	—		(4,298		)
Net cash provided by financing activities	—			17,000			—		17,000
Decrease in cash and cash equivalents	—			(6,150		)	—		(6,150		)
Cash and cash equivalents, beginning of period	—			9,170			—		9,170
Cash and cash equivalents, end of period	$	—		$	3,020		$	—	$	3,020
Thirteen weeks ended October 27, 2013	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash used in operating activities	$	(60	)	$	(17,897	)	$	—	$	(17,957	)
Net cash provided by (used in) investing activities	60			(3,165		)	—		(3,105		)
Net cash provided by financing activities	—			1,000			—		1,000
Decrease in cash and cash equivalents	—			(20,062		)	—		(20,062		)
Cash and cash equivalents, beginning of period	—			23,708			—		23,708
Cash and cash equivalents, end of period	$	—		$	3,646		$	—	$	3,646

Table of Contents

10. Supplemental Cash Flow Information

The following table presents supplemental cash flow information:



	Thirteen weeks ended
	November 2, 2014		October 27, 2013
Cash paid for:
Interest, excluding amounts capitalized	$	19,154	$	19,171
Income taxes	6		—

11. Subsequent Events

On December 19, 2014, Logan's Roadhouse, Inc. and Kelso entered into an amendment to the advisory agreement which defers payment of the advisory fee until after the maturity date of the Senior Secured Revolving Credit Facility.

Effective December 19, 2014, the Company executed an amendment to the Senior Secured Revolving Credit Facility which extended the maturity date to April 30, 2017 and included adjustments to the terms of the Credit Agreement.

ITEM 2—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:


•	General


•	Overview


•	Key Measurements


•	Presentation of Results


•	Results of Operations


•	Other Non-GAAP Financial Measures


•	Liquidity and Capital Resources


•	Off Balance Sheet Arrangements


•	Seasonality


•	Segment Reporting


•	Impact of Inflation


•	Critical Accounting Policies


•	Recent Accounting Pronouncements


•	Cautionary Statement Regarding Forward-Looking Statements

This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes in Item 1 of this Quarterly Report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” below for factors that could cause or contribute to these differences. The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions in connection with our analysis of trends and expectations related to our results of operations and financial position taken as a whole.

General

Logan’s Roadhouse is a full-service casual dining steakhouse offering specially seasoned aged steaks and sizzling southern-inspired dishes in a roadhouse atmosphere offering customers value-oriented, high quality, craveable food with welcoming hospitality and an upbeat atmosphere. Our restaurants have a relaxed, come-as-you-are environment where we encourage our customers to enjoy “bottomless buckets” of roasted in-shell peanuts and our made-from-scratch yeast rolls. Our entrée portions are generous and generally include a choice of two side items, all at affordable prices. We are committed to serving a variety of fresh food from specially seasoned aged steaks to farm-fresh salads to our signature entrées. We believe the freshness and distinctive flavor profiles of our signature dishes, coupled with the variety of our menu, differentiates us from our competitors. Our restaurants, which are

Table of Contents

open for lunch and dinner seven days a week, serve a broad and diverse customer base. We opened our first restaurant in Lexington, Kentucky in 1991 and as of November 2, 2014 have grown to a total of 234 company-owned restaurants and 26 franchised restaurants located across 23 states.

Overview

The casual dining industry is intensely competitive and highly sensitive to economic trends, consumer preference and lifestyle trends and fluctuating costs. In addition, the casual dining segment faces competition from fast casual and other sectors of the restaurant industry looking to increase market share. Key economic indicators such as total employment, spending levels and consumer confidence have continued to improve steadily and have resulted in slight improvements for the industry. As our customers discretionary income has increased, low interest rates have diverted discretionary spending to bigger ticket items and housing purchases resulting in a slower than expected recovery of the industry.

We believe our roadhouse theme provides a differentiated dining experience as an authentic, casual steakhouse, which when combined with consistent execution of great food and service will allow us to outperform competitors within the broader casual dining segment. Our strategy for the future is centered on delivering great experiences to our customers, continually adapting our brand to best meet the needs of our current and future customers and opening successful new restaurants. We believe this focus will allow us to reverse our negative traffic trends by retaining our loyal customers and attracting new customers to our restaurants which will lead to sustainable, continually improving financial results. Our plan to accomplish this includes the following strategies and initiatives:


•	Concept and Brand Repositioning


•	Focus on Consistent Execution


•	Achieve Revenue Growth in Existing Restaurants


•	Disciplined Restaurant Growth

We have experienced comparable restaurant sales declines in each of the last three fiscal years driven by declines in customer traffic. Over the same period, our restaurant margins have been impacted by continued commodity inflation, specifically beef, and lost leverage on other costs due to declining sales. These trends continued in the first quarter of fiscal year 2015, as we continue to work through brand repositioning, addressing inconsistent restaurant execution and lowering our reliance on discounting. In fiscal year 2015, we expect the restaurant industry to remain highly competitive, but expect lower fuel prices and further increases in discretionary income to create opportunities for brands that are best able to address the needs of customers. We also expect continued commodity inflation in fiscal year 2015, both from market pressures and as we make decisions to improve the quality of our food offerings. Although the restaurant industry has faced pressures over recent years, our relative position versus our key competitors has continued to decline due to short-sighted decisions to rely on increased discount messaging and a lack of focus on and investment in core restaurant execution. In fiscal year 2015, we intend to focus with urgency on core restaurant execution, food quality and messages that are relevant to our existing and future customer base. We are focused on returning our brand to be known as a steakhouse committed to great food and great service every day. We believe this will allow us to reverse our negative traffic trends and retain lost market share.

Key Measurements

The key measures we use to evaluate our performance include:

Average unit volume. Average unit volume represents the average sales for company-owned restaurants over a specified period of time. It is typically measured on a 52-week basis but may also be applied to other periods. Average unit volume reflects total company-owned restaurant sales divided by total operating weeks, which is the aggregate number of weeks that company-owned restaurants are in operation over a specified period of time.

Change in comparable restaurant sales. Comparable restaurants for a reporting period include company-owned restaurants that have been open for six or more full quarters at the beginning of the later of the two reporting periods being compared. Change in comparable restaurant sales reflects changes in sales over the prior year for a comparable group of restaurants over a specified period of time.

Average check. Average check includes net sales for company-owned restaurants over a specified period of time divided by the total number of customers served during the period. Management uses this indicator to analyze the dollars spent in our restaurants per customer. This measure aids management in identifying trends in customer preferences, as well as the effectiveness of menu price increases and other menu changes. Unless otherwise noted, we report this metric for comparable restaurants.

Table of Contents

Customer traffic. Customer traffic is the total number of customers served over a specified period of time. Unless otherwise noted, we report this metric for comparable restaurants.

Adjusted EBITDA. We also evaluate our performance by using non-GAAP financial measures utilized by us and others in the restaurant industry. In particular, we regularly review our Adjusted EBITDA, which is described in more detail in the “Other Non-GAAP Financial Measures” section below.

Presentation of Results

Our fiscal year ends on the Sunday closest to July 31. Fiscal year 2015 is a 52 week year, while fiscal year 2014 was a 53 week year. Throughout this report all references to “Q1 2015” and “Q1 2014” relate to the thirteen week periods ended November 2, 2014 and October 27, 2013, respectively.

Results of Operations

Thirteen weeks ended November 2, 2014 (Q1 2015)


•	Comparable restaurant sales for Q1 2015 decreased 1.3%, average check increased by 4.7% and customer traffic decreased by 5.7% for company-owned restaurants.


•	Earnings decreased 7.6%, or $0.9 million, from a net loss of $12.1 million in Q1 2014 to a net loss of $13.0 million in Q1 2015.


•	Adjusted EBITDA decreased 33.5%, or $2.2 million, from $6.7 million in Q1 2014 to $4.5 million in Q1 2015.

•

Cash and cash equivalents decreased by $6.2 million from August 3, 2014. Primary uses include interest payments of $19.2 million and gross capital expenditures of $4.3 million as well as unfavorable working capital changes and negative cash flow from operations, which were funded by cash on hand and borrowings on the Senior Secured Revolving Credit Facility. As of November 2, 2014, we had spent $1.4 million in capital expenditures that will be reimbursed upon completion of planned sale and leaseback transactions.

Table of Contents

The following tables and discussion summarize key components of our operating results expressed as a dollar amount and as a percentage of total revenues or net sales.



	Thirteen weeks ended
(In thousands)	November 2, 2014					October 27, 2013
Statement of operations data:
Revenues:
Net sales	$	145,213		99.6	%	$	147,023		99.7	%
Franchise fees and royalties	529			0.4		507			0.3
Total revenues	145,742			100.0		147,530			100.0
Costs and expenses:
(As a percentage of net sales)
Restaurant operating costs:
Cost of goods sold	52,296			36.0		50,004			34.0
Labor and other related expenses	46,332			31.9		46,497			31.6
Occupancy costs	13,804			9.5		13,613			9.3
Other restaurant operating expenses	23,593			16.2		25,490			17.3
(As a percentage of total revenues)
Depreciation and amortization	5,070			3.5		5,171			3.5
Pre-opening expenses	35			—		6			—
General and administrative	7,182			4.9		7,183			4.9
Restaurant impairment and closing charges	—			—		1,317			0.9
Total costs and expenses	148,312			101.8		149,281			101.2
Operating loss	(2,570		)	(1.8	)	(1,751		)	(1.2	)
Interest expense, net	10,412			7.1		10,319			7.0
Loss before income taxes	(12,982		)	(8.9	)	(12,070		)	(8.2	)
Income tax benefit	—			—		—			—
Net loss	$	(12,982	)	(8.9	)%	$	(12,070	)	(8.2	)%

Restaurant Unit Activity



	Company	Franchise	Total
Restaurants at August 3, 2014	234	26	260
Openings	—	—	—
Closures	—	—	—
Restaurants at November 2, 2014	234	26	260

Q1 2015 (13 weeks) Compared to Q1 2014 (13 weeks)

TOTAL REVENUES

Net sales consist of food and beverage sales of company-owned restaurants and other miscellaneous income. Net sales decreased by $1.8 million, or 1.2%, to $145.2 million in Q1 2015 compared to Q1 2014.

The following table summarizes the period over period changes and key net sales drivers at company-owned restaurants for the periods presented:

Table of Contents



	Thirteen weeks ended
	November 2, 2014			October 27, 2013
Company-owned restaurants:
Increase in restaurant operating weeks	0.4		%	4.3		%
Decrease in average unit volume	(1.6		)%	(6.5		)%
Total decrease in restaurant sales	(1.2		)%	(2.2		)%

Comparable restaurants	228			215
Change in comparable restaurant sales	(1.3		)%	(5.2		)%
Restaurant operating weeks	3,042			3,029
Average check	$	14.48		$	13.78

The increase in restaurant operating weeks for the periods presented above was due to the opening of one new restaurant in the prior year. The decreases in average unit volume were primarily driven by customer traffic declines in both our comparable restaurant base and our newer restaurants. For our comparable restaurants, the decrease in customer traffic was 5.7% in Q1 2015. Also impacting comparable restaurant sales was an increase in average check of 4.7% in Q1 2015. The increase in average check in Q1 2015 was impacted by increased menu pricing of 1.6% in Q1 2015, improved alcohol sales and favorable mix shifts.

Franchise fees and royalties, for our two franchisees that operate 26 restaurants, remained relatively consistent for the periods presented.

TOTAL COSTS AND EXPENSES

Total costs and expenses decreased $1.0 million, or 0.6%, to $148.3 million in Q1 2015 compared to Q1 2014. As a percent of total revenues, total costs and expenses in Q1 2015 were 101.8%, which increased from 101.2% in Q1 2014. The primary drivers of the fluctuations in total costs and expenses are as follows:

Cost of goods sold

Cost of goods sold consists of food and beverage costs, along with related purchasing and distribution costs. Cost of goods sold, as a percentage of net sales, increased to 36.0% in Q1 2015 from 34.0% in Q1 2014. The increase in Q1 2015 is due primarily to commodity inflation with a lesser impact from unfavorable mix shifts partially offset by menu pricing. Commodity inflation was approximately 5.0% in Q1 2015.

Labor and other related expenses

Labor and other related expenses consists of all restaurant management and hourly labor costs, including salaries, wages, benefits, bonuses and other indirect labor costs. Labor and other related expenses, as a percentage of net sales, increased to 31.9% in Q1 2015 from 31.6% in Q1 2014. The primary driver of the increase is lost sales leverage on fixed labor components partially offset by a decrease in workers compensation claims cost.

Occupancy costs

Occupancy costs include rent, common area maintenance, property taxes, licenses and other related fees. Occupancy costs, as a percentage of net sales, increased to 9.5% in Q1 2015 from 9.3% in Q1 2014. The increase was driven primarily by lost sales leverage due to the fixed nature of these costs.

Other restaurant operating expenses

Other restaurant operating expenses include all other restaurant-level operating costs, the major components of which are operating supplies, utilities, repairs and maintenance, advertising, general liability and credit card fees. Other restaurant operating expenses, as a percentage of net sales, decreased to 16.2% in Q1 2015 from 17.3% in Q1 2014. The decrease in Q1 2015 resulted primarily from a reduction in broadcast media spend. Other decreases including restaurant uniform costs due to a new uniform rollout in Q1 2014 and lower repair and maintenance expenses were partially offset by an increase in general liability insurance due to a favorable reserve adjustment in Q1 2014.

Table of Contents

Depreciation and amortization

Depreciation and amortization includes the depreciation of fixed assets and capitalized leasehold improvements and the amortization of intangible assets. Depreciation and amortization, as a percentage of total revenues, remained consistent at 3.5% in Q1 2015 and Q1 2014, which includes lost sales leverage due to the fixed nature of these costs offset by the reduced number of new restaurant openings.

Pre-opening expenses

Pre-opening expenses consist of costs related to a new restaurant opening and primarily include manager salaries, employee payroll, travel, non-cash rent expense and other costs related to training and preparing new restaurants for opening. Pre-opening expenses will fluctuate from period to period based on the number and timing of restaurant openings. Our pre-opening costs (excluding rent) have remained constant at approximately $0.2 million per opening.

General and administrative

General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support restaurant operations and development. General and administrative expenses, as a percentage of total revenues, remained consistent at 4.9% in Q1 2015 and Q1 2014. Q1 2015 includes an increase in corporate salaries due to a reduction in termination benefits for our prior Chief Executive Officer per the terms of his employment agreement in Q1 2014; an increase in recruiting costs to source recently hired senior executive officers and an increase in consulting costs in the areas of culinary innovation and information technology; partially offset by a decrease in share based compensation expense due to the forfeiture of options by our most recent Chief Executive Officer.

Restaurant impairment and closing charges

Restaurant impairment and closing charges include long-lived asset impairment charges and restaurant closing charges. In Q1 2015,we recorded no restaurant impairment charges. In Q1 2014, we recorded $1.3 million of restaurant impairment charges related to the impairment of two additional restaurants and additional asset expenditures with respect to restaurants that had been previously impaired.

INTEREST EXPENSE, NET

Interest expense, net consists primarily of interest expense related to our debt, net of interest income, see the “Liquidity and Capital Resources” section for further detail. Interest expense, net increased to $10.4 million in Q1 2015 from $10.3 million in Q1 2014 due to higher average borrowings on the Senior Secured Revolving Credit Facility.

INCOME TAX EXPENSE

As of August 3, 2014, we had a recorded valuation allowance of $25.1 million which included all deferred tax assets. The valuation allowance was increased in Q1 2015 by the amount of income tax benefit that would have otherwise been recorded. Excluding the valuation allowance, the effective tax rates ("ETR") for Q1 2015 and Q1 2014 were 43.6% and 46.4%, respectively. Both periods were impacted by the reverse effect of wage based credits on a pre-tax loss.

Other Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

EBITDA represents net income (loss) before interest expense, net, income tax (benefit) expense and depreciation and amortization. Adjusted EBITDA is further adjusted to reflect the additions and eliminations described in the table below. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income or cash flow from operations as determined under GAAP, and our calculations thereof may not be comparable to those reported by other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations are:


•	EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for, capital expenditures or contractual commitments;


•	EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

Table of Contents


•	EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness;


•	EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;


•	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and


•	other companies in the restaurant industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. We further believe that our presentation of these non-GAAP financial measures provides information that is useful to analysts and investors because it is an important indicator of the strength of our operations and the performance of our core business.

Adjusted EBITDA excludes restaurant impairment charges, pre-opening expenses (excluding rent), sponsor management fees, losses on disposal of property and equipment and property sales, share-based compensation, and non-cash rent, among other items. It is reasonable to expect that these items will occur in future periods. However, we believe these adjustments are appropriate partly because the amounts recognized can vary significantly from period to period and complicate comparisons of our internal operating results and operating results of other restaurant companies over time. In addition, Adjusted EBITDA includes adjustments for other items that we do not expect to regularly record, including goodwill and tradename impairments, restructuring costs, transaction costs, certain litigation and settlement fees and expenses recorded pursuant to accounting for business combinations. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help to provide management with a measure of our core operating performance over time by removing items that are not related to day-to-day restaurant level operations.

Management uses Adjusted EBITDA:


•	as a measure of operating performance to assist us in comparing the operating performance of our restaurants on a consistent basis because it removes the impact of items not directly resulting from our core operations;


•	for planning purposes, including the preparation of our internal annual operating budgets and financial projections;


•	to evaluate the performance and effectiveness of our operational strategies; and


•	to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan.

Adjusted EBITDAR further excludes cash rent expense from Adjusted EBITDA. Cash rent expense represents actual cash payments required under our leases. We believe Adjusted EBITDAR is important to our analysts and investors because it allows us to measure the performance of our restaurants without regard to their financing structure. Our management uses Adjusted EBITDAR to better understand the cash generated by the operations of our restaurants excluding the impact of financing obligations such as lease and interest payments.

In addition, EBITDA, Adjusted EBITDA and Adjusted EBITDAR are used by investors as supplemental measures to evaluate the overall operating performance of companies in the restaurant industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as reasonable bases for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back items that are not part of normal day-to-day operations of our business. By providing these non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

We also present Adjusted EBITDA because it is substantially similar to “Consolidated EBITDA,” a defined measure which is used in calculating financial ratios in material debt covenants and other calculations in the Indenture and the Credit Agreement. We believe that presenting Adjusted EBITDA is appropriate to provide additional information to investors about how the covenants in the agreements governing our debt facilities operate. The Credit Agreement and the Indenture may permit us to exclude other non-cash charges and specified non-recurring expenses in calculating Consolidated EBITDA in future periods, which are not reflected in the Adjusted EBITDA data presented in this Quarterly Report in the table below.

Table of Contents

The following table sets forth a reconciliation of net income (loss), the most directly comparable GAAP financial measure, to EBITDA, Adjusted EBITDA and Adjusted EBITDAR.



	Thirteen weeks ended
(In thousands)	November 2, 2014			October 27, 2013
Net loss	$	(12,982	)	$	(12,070	)
Interest expense, net	10,412			10,319
Income tax benefit	—			—
Depreciation and amortization	5,070			5,171
EBITDA	2,500			3,420
Adjustments
Sponsor management fees(a)	250			250
Non-cash asset write-offs:
Restaurant impairment(b)	—			1,317
Loss on disposal of property and equipment(c)	868			498
Restructuring costs(d)	494			(460		)
Pre-opening expenses (excluding rent)(e)	15			2
Losses on sales of property(f)	1			4
Non-cash rent adjustment(g)	653			801
Non-cash stock-based compensation(h)	(330		)	396
Other adjustments(i)	1			467
Adjusted EBITDA	4,452			6,695
Cash rent expense(j)	10,621			10,420
Adjusted EBITDAR	$	15,073		$	17,115


(a)	Sponsor management fees consist of fees payable to the Kelso Affiliates under an advisory agreement.


(b)	Restaurant impairment charges were recorded in connection with the determination that the carrying value of certain of our restaurants exceeded their estimated fair value.


(c)	Loss on disposal of property and equipment consists of the loss on disposal or retirement of assets that are not fully depreciated.


(d)	Restructuring costs include severance, hiring replacement costs and other related charges, including the reversal of any such charges.


(e)	Pre-opening expenses (excluding rent) include expenses directly associated with the opening of a new restaurant.


(f)	We recognize losses in connection with the sale and leaseback of restaurants when the fair value of the property being sold is less than the undepreciated cost of the property.


(g)	Non-cash rent adjustments represent the non-cash rent expense calculated as the difference between GAAP rent expense and amounts payable in cash under the leases during such time period. In measuring our operational performance, we focus on our cash rent payments.


(h)	Non-cash stock-based compensation represents compensation expense recognized for time-based stock options issued by RHI.


(i)	Other adjustments include non-recurring expenses and professional fees and ongoing expenses of closed restaurants.


(j)	Cash rent expense represents actual cash payments required under our leases.

Our Q1 2015 Adjusted EBITDA was $4.5 million, a decrease of 33.5%, compared to Adjusted EBITDA of $6.7 million in Q1 2014. The decrease in Adjusted EBITDA for Q1 2015 compared to Q1 2014 was primarily driven by a decline in comparable restaurant sales and the resulting loss of sales leverage on fixed costs, as well as increased commodity inflation.

Liquidity and Capital Resources

Summary

Our primary requirements for liquidity and capital are maintenance of our existing facilities, new restaurant development and debt service requirements. Historically, our primary sources of liquidity and capital resources have been net cash provided

Table of Contents

from operating activities and operating lease financing. During fiscal year 2015, we anticipate that our cash position, our expected cash flows from operations and availability under the Senior Secured Revolving Credit Facility will be sufficient to finance our planned capital expenditures, operating activities and debt service requirements. However, our ability to fund future operating expenses and capital expenditures and our ability to make scheduled payments of interest on, to pay principal of or to refinance our indebtedness and to satisfy any other of our present or future debt obligations will depend on our future operating performance which will be affected by general economic, financial and other factors beyond our control. As of November 2, 2014, we had $3.0 million of cash and cash equivalents.

Consistent with many other restaurant and retail chain store operations, we utilize operating lease arrangements and sale and leaseback arrangements and believe that these financing methods provide a useful source of capital in a financially efficient manner.

As part of the Transactions, we entered into the Senior Secured Revolving Credit Facility, which provides for up to $30.0 million of borrowings. The Senior Secured Revolving Credit Facility is available to fund working capital and for general corporate purposes. As of November 2, 2014, we had $17.0 million of borrowings drawn on the Senior Secured Revolving Credit Facility and $3.9 million of undrawn outstanding letters of credit resulting in available credit of $9.1 million.

In connection with the Transactions, Logan’s Roadhouse, Inc. issued $355.0 million aggregate principal amount of Senior Secured Notes in a private placement to qualified institutional buyers. In July 2011, the Company completed an exchange offering which allowed the holders of those notes to exchange their notes for notes identical in all material respects except they are registered with the SEC and are not subject to transfer restrictions. The Senior Secured Notes bear interest at a rate of 10.75% per annum, payable semi−annually in arrears on April 15 and October 15. The Senior Secured Notes mature on October 15, 2017.

The Senior Secured Revolving Credit Facility and the Indenture that governs the Senior Secured Notes contain financial and operating covenants. The non-financial covenants include prohibitions on our ability to incur certain additional indebtedness or to pay dividends. Additionally, the Indenture subjects us to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, as a non-accelerated filer, even if we are not specifically required to comply with such sections otherwise. Failure to comply with these covenants constitutes a default and may lead to the acceleration of the principal amount and accrued and unpaid interest on the Senior Secured Notes. Effective January 24, 2014, we executed an amendment to the Senior Secured Revolving Credit Facility which included: removing the previous consolidated leverage and consolidated interest coverage covenants; adding a consolidated first lien leverage covenant and amending the maximum capital expenditure limit in each of the remaining years. The terms of the amendment also included an increase in the applicable margin for borrowings; payment of a consent fee and a requirement to provide monthly unaudited preliminary financial statements to the lenders under the Senior Secured Revolving Credit Facility. During the second quarter of fiscal year 2015, we filed with the SEC a Form 12b-25 related to the filing of our first quarter 10-Q Report to notify the SEC of our intent to utilize the 5 day extension period to complete an amendment to our Senior Secured Revolving Credit Facility and finalize our financial statements. As a result of this extension, we entered into a waiver to the Credit Agreement governing our Senior Secured Revolving Credit Facility pursuant to which the lenders agreed to waive the required delivery of the financial statements until the final day of the 5 day extension. As of November 2, 2014, and for the quarter then ended, we were in compliance with all material covenants and anticipate remaining in compliance with our amended covenants throughout fiscal year 2015, excluding the waiver discussed previously.

Effective December 19, 2014, the Company executed an amendment to the Senior Secured Revolving Credit Facility which in addition to extending the maturity date to April 30, 2017, included the following: removal of the swingline subfacility; reduced the maximum capital expenditure limit in each of the remaining years of the extended facility; amended the required consolidated first lien leverage ratio to 0.50:1.00 for the extended term of the facility; amended requirements for all or a portion of net cash proceeds of certain asset sales to include prepayment of any then outstanding borrowings; required an amendment to the advisory agreement with Kelso to restrict payment of deferred advisory fees until after the final maturity date of the Senior Secured Revolving Credit Facility; and required payment of a 1.0% consent fee.

Table of Contents

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities:



	Thirteen weeks ended
(In thousands)	November 2, 2014			October 27, 2013
Total cash (used in) provided by:
Operating activities	$	(18,852	)	$	(17,957	)
Investing activities	(4,298		)	(3,105		)
Financing activities	17,000			1,000
Decrease in cash and cash equivalents	$	(6,150	)	$	(20,062	)

Operating activities

Cash flows from operating activities in Q1 2015 and Q1 2014 were each impacted by $19.2 million of cash paid for interest, offset by cash flows generated from operations. Additionally, the two periods were impacted by declining revenues, restaurant margins and working capital changes.

We had negative working capital of $25.1 million and $27.4 million at November 2, 2014 and October 27, 2013, respectively. Like many other restaurant companies, we are able, and expect to operate with negative working capital. Restaurant operations do not require significant inventories and substantially all sales are for cash or paid by third-party credit cards.

Investing activities

Cash used in investing activities primarily represents capital expenditures for new restaurant growth and ongoing capital expenditures for restaurant maintenance. Net capital expenditures increased to $4.3 million in Q1 2015 from $3.1 million in Q1 2014. The increase was due to the timing of new restaurants under construction.

Financing activities

Cash provided by financing activities includes borrowings and repayments on the Senior Secured Revolving Credit Facility. Q1 2015 and Q1 2014 included draws of $20.9 million and $1.6 million, respectively, and repayments of $3.9 million and $0.6 million, respectively. Continuing declines in cash provided by operating activities resulted in larger draws on our Senior Secured Revolving Credit Facility to fund our semi-annual interest payment in Q1 2015 compared to Q1 2014.

Off Balance Sheet Arrangements

Other than operating leases, we do not have any off-balance sheet arrangements.

Seasonality

Our business is subject to minor seasonal fluctuations. Historically, sales are typically lowest in the fall. Holidays and severe weather and similar conditions may impact sales volumes seasonally in some operating regions. Because of these factors, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Segment Reporting

We aggregate our operations into a single reportable segment within the restaurant industry, providing similar products to similar customers, exclusively in the United States. Our restaurants also possess similar pricing structures, resulting in similar long-term expected financial performance characteristics. Accordingly, no further segment reporting beyond the unaudited condensed consolidated financial statements is presented.

Impact of Inflation

Table of Contents

Our operating margins depend on, among other things, our ability to anticipate and react to changes in the costs of key operating resources, including food and other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our restaurant customers. While we have taken steps to qualify multiple suppliers and enter into fixed price agreements for many of the commodities used in our restaurant operations, there can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather and other market conditions outside of our control. Certain of our commodities are not contracted and remain subject to fluctuating market prices. Consequently, these commodities can be subject to unforeseen supply and cost fluctuations.

Our staff members are subject to various minimum wage requirements. There have been and may be additional minimum wage increases in excess of the federal minimum wage implemented in various jurisdictions in which we operate or seek to operate. Minimum wage increases may have a material adverse effect on our labor costs. Certain operating costs, such as taxes, insurance and other outside services continue to increase and may also be subject to other cost and supply fluctuations outside of our control. While we have been able to partially offset inflation and other changes in the costs of key operating resources by gradually increasing prices for our menu items, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future. From time to time, competitive conditions could limit our menu pricing ability. In addition, macroeconomic conditions could make additional menu price increases imprudent. There can be no assurance that all future cost increases can be offset by increased menu prices or that increased menu prices will be fully absorbed by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns. There can be no assurance that we will be able to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures.

Critical Accounting Policies

We prepare our unaudited condensed consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Our critical accounting policies, excluding those listed below, have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended August 3, 2014.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included within Note 1 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this report.

Cautionary Statement Regarding Forward-Looking Statements

This report contains forward−looking statements based on our current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward−looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward−looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward−looking statements as a result of various factors. The section entitled “Risk Factors” in our Annual Report on Form 10−K for the fiscal year ended August 3, 2014, filed with the SEC, discusses some of the important risk factors that may affect our business, results of operations, or financial condition. These risks and uncertainties include, but are not limited to:


•	our ability to execute the strategies to reposition our brand;


•	the acceptability of terms for future capital;


•	changes in food and supply costs;


•	macroeconomic conditions;


•	our ability to compete with many other restaurants;


•	potential negative publicity regarding food safety and health concerns;


•	health concerns arising from the outbreak of viruses or food-borne illness;


•	the effects of seasonality and weather conditions on sales;


•	our reliance on certain vendors, suppliers and distributors;

Table of Contents


•	impairment charges on certain long-lived or intangible assets;


•	our ability to attract and retain qualified executive officers and employees while also controlling labor costs;


•	our ability to adapt to escalating labor costs;


•	our ability to maintain insurance that provides adequate levels of coverage against claims;


•	legal complaints or litigation;


•	our ability to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations;


•	the reliability of our information systems;


•	our ability to successfully execute our strategy and open new restaurants that are profitable;


•	costs resulting from breaches of security of confidential information;


•	our ability to protect and enforce our intellectual property rights;


•	our franchisees’ actions;


•	the cost of compliance with federal, state and local laws;


•	any potential strategic transactions;


•	control of us by the Kelso Affiliates;


•	our ability to maintain effective internal controls over financial reporting and the resources and management oversight required to comply with the requirements of the Sarbanes-Oxley Act of 2002;


•	our reduced disclosure due to our status as an emerging growth company;


•	our substantial indebtedness;


•	our ability to generate sufficient cash to service our indebtedness; and


•	our ability to incur additional debt.

We undertake no obligation to revise or update publicly any forward−looking statements for any reason. The information contained in this Form 10−Q is not a complete description of our business or the risks associated with our business. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that discuss our business in greater detail and advise interested parties of certain risks, uncertainties and other factors that may affect our business, results of operations or financial condition.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to the risks inherent in our operations, we are exposed to certain market risks, including adverse changes in commodity prices and interest rates.

Commodity price risk

Many of the ingredients used in the products sold in our restaurants are commodities subject to price volatility caused by limited supply, weather, production problems, delivery difficulties, economic factors, and other conditions which are outside our control and may be unpredictable. In order to minimize risk, we employ various purchasing and pricing techniques including negotiating fixed price contracts with vendors, generally over one year periods, and securing supply contracts with vendors that remain subject to fluctuating market prices. We do not currently utilize financial instruments to hedge commodity prices, but we will continue to evaluate their effectiveness.

Four food categories (beef, produce, seafood and chicken) account for the largest share of our cost of goods sold (at 36%, 11%, 8% and 7%, respectively, in the thirteen weeks ended November 2, 2014). Other categories affected by commodity price fluctuations, such as pork, cheese and dairy, may each account for 4-6%, individually, of our purchases. With respect to our commodity outlook for fiscal year 2015, we have fixed price contracts on approximately 50% of our commodity needs. We expect commodity inflation to be approximately 3-5% for fiscal year 2015. We will continue to monitor the commodity markets and may enter into additional fixed price contracts depending on market conditions.

We recognize that commodity pricing may be extremely volatile and can change unpredictably and over short periods. Changes in commodity prices will generally affect us and our competitors similarly, depending upon the terms and duration of supply contracts. In many cases, or over the longer term, we believe we will be able to pass through some or all of the increased commodity costs by adjusting menu pricing. However, competitive circumstances or judgments about consumer acceptance of price increases, may limit price flexibility and, in those circumstances, increases in commodity prices may have an adverse affect on restaurant operating margins.

We are subject to additional risk due to our reliance on single suppliers for many of our commodity purchases, including beef. However, our menu items are based on generally available products, and if any existing suppliers fail, or are unable, to deliver in quantities we require, we believe that there are sufficient alternative suppliers in the marketplace so that our sources of supply can be replaced as necessary. Furthermore, we believe the supply could be replaced by alternative suppliers, but we may encounter temporary supply shortages or incur higher supply costs which could have an adverse affect on our results of operations.

Our restaurants are also impacted by changes in fuel prices. Our third party distributor charges us for the diesel fuel used to deliver inventory to our restaurants. During the first quarter of fiscal year 2015, we entered into a forward contract to procure certain amounts of diesel fuel from our third party distributor at set prices in order to mitigate our exposure to unpredictable fuel prices beginning in November 2014. The effect of the fuel derivative instrument is immaterial to our consolidated financial statements and this contract terminates in July 2015.

Interest rate risk

We are subject to interest rate risk in connection with borrowings under the Senior Secured Revolving Credit Facility, which bears interest at variable rates. As of November 2, 2014, we had outstanding borrowings of $17.0 million on our Senior Secured Revolving Credit Facility which will be exposed to interest rate fluctuations on the balance outstanding until repayment. Based on our current outstanding borrowings on the Senior Secured Revolving Credit Facility, a hypothetical one percentage point

Table of Contents

increase in the interest rate would result in an increase in our annual interest expense of approximately $0.2 million. There is no interest rate risk associated with our Senior Secured Notes, as the interest rate is fixed at 10.75% per annum.

ITEM 4—CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the design and operation of its “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, due to the material weakness in our internal control over financial reporting in the design of our controls of non-routine accounting processes relating to our annual evaluation of the recoverability of goodwill as disclosed in the Form 10-K for the year ended August 3, 2014, our disclosure controls and procedures were not effective as of November 2, 2014.

Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II—OTHER INFORMATION

ITEM 1—LEGAL PROCEEDINGS

Information regarding legal proceedings is included within Note 5 to our unaudited condensed consolidated financial statements included within Part I, Item 1 of this report.

ITEM 1A—RISK FACTORS

There have been no material changes in the risk factors set forth in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended August 3, 2014.

ITEM 5—OTHER INFORMATION

On November 24, 2014, the Company amended the Employment Agreement with Samuel N. Borgese to extend his share purchase option to May 31, 2015.

On December 19, 2014, Logan's Roadhouse, Inc. and Kelso executed Amendment No. 2 to the Advisory agreement which defers payment of the advisory fee until after the maturity date of the Senior Secured Revolving Credit Facility. Under the terms of the amendment, the annual advisory fee will accrue on a daily basis beginning with the quarterly payment due on October 1, 2013, but will not be payable until after the final maturity date of the Senior Secured Revolving Credit Facility. Thereafter it shall not be payable until such time as Kelso determines, in its sole discretion.

Effective December 19, 2014, LRI Holdings, Inc., its wholly-owned subsidiary, Logan’s Roadhouse, Inc., and its subsidiary guarantors executed Amendment No. 4 (the “Amendment”) to the Credit Agreement by and among the Company, JPMorgan Chase Bank, N.A. as administrative agent, and Credit Suisse AG (“Lenders”). The Amendment:


•	amends the termination date from October 4, 2015 to April 30, 2017;


•	removes the swingline subfacility;


•	reduces the cash and cash equivalents offset in the definition of consolidated total debt from $15.0 million to $7.5 million;


•	amends requirements for net cash proceeds from the sale of certain assets to include prepayment of any then outstanding borrowings, which includes 50% of sale and leaseback net cash proceeds and 100% of net cash proceeds for certain other asset sales;


•	adds a requirement that the terms of any permitted refinancing debt are materially no less favorable to the Lenders than the terms of the Senior Secured Notes;


•	adds a requirement to calculate and be in compliance with the consolidated first lien leverage ratio at each request for the extension of credit;


•	amends the accepted transactions with affiliates to restrict payment of deferred advisory fees to Kelso until after the final scheduled maturity date of the revolving credit facility under the Credit Agreement and requires execution of an amendment to such agreement stating the same;


•	amends the maximum capital expenditure limit under the Credit Agreement to $15 million for fiscal year 2015, $20 million for fiscal year 2016 and $25 million for fiscal year 2017;


•	amends the required consolidated first lien leverage ratio to 0.50:1.00 for the extended term of the revolving facility; and


•	includes payment of a 1.0% consent fee.

The Amendment is filed as Exhibit 10.3 to this report on Form 10-Q. The foregoing description of this Amendment is qualified in its entirety by reference to Exhibit 10.3.

Table of Contents

ITEM 6—EXHIBITS



Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of LRI Holdings, Inc.*
3.2	Amended and Restated By-Laws of LRI Holdings, Inc.*
4.2	First Lien Guarantee and Collateral Agreement, dated as of October 4, 2010, made by LRI Holdings, Inc. and Logan’s Roadhouse, Inc. and the Guarantors Identified Therein, in favor of JPMorgan Chase Bank, N.A., as Administrative Agent, together with the Assumption Agreement to the First lien Guarantee and the Collateral Agreement, dated October 4, 2010, made by LRI Holdings, Inc., Logan’s Roadhouse, Inc., Logan’s Roadhouse of Texas, Inc. and Logan’s Roadhouse of Kansas, Inc. in favor of JPMorgan Chase Bank N.A., as Administrative Agent under the Credit Agreement.*
4.3	Security Agreement, dated as of October 4, 2010, made by LRI Holdings, Inc. and Logan’s Roadhouse, Inc., in favor of Wells Fargo Bank, National Association, as Collateral Agent, together with the Joinder Agreement to Security Agreement dated as of October 4, 2010 made by LRI Holdings, Inc., Logan’s Roadhouse, Inc., Logan’s Roadhouse of Texas, Inc., Logan’s Roadhouse of Kansas, Inc., in favor of Wells Fargo Bank, National Association, as Collateral Agent under the Security Agreement.*
4.4	Intercreditor Agreement, dated as of October 4, 2010, among JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, National Association, as Collateral Agent, Logan’s Roadhouse, Inc., and each of the other Loan Parties party thereto, together with the Joinder to Intercreditor Agreement dated as of October 4, 2010 by LRI Holdings, Inc., Logan’s Roadhouse, Inc., Logan’s Roadhouse of Texas, Inc., Logan’s Roadhouse of Kansas, Inc., in favor of JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association.*
4.5	Indenture, dated as of October 4, 2010, among Logan’s Roadhouse, Inc., LRI Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee and Wells Fargo Bank, National Association, as Collateral Agent, relating to the 10.75% Senior Secured Notes due 2017, together with the Supplemental Indenture for Merger entered into as of October 4, 2010 by and among Logan’s Roadhouse, Inc., LRI Holdings, Inc., Logan’s Roadhouse of Texas, Inc., Logan’s Roadhouse of Kansas, Inc., Wells Fargo Bank, National Association, as Trustee and Wells Fargo Bank, National Association, as Collateral Agent under the Indenture.*
4.6	Form of 10.75% Senior Secured Note due 2017 (included in Exhibit 4.5 hereto).*
10.1	Amendment No. 1 to the Employment Agreement with Samuel N. Borgese.
10.2	Amendment No. 2 to the Advisory Agreement, by and between Logan's Roadhouse, Inc. and Kelso & Company, L.P., dated December 19, 2014.
10.3	Amendment No. 4 to Credit Agreement, dated as of December 19, 2014, among Logan's Roadhouse, Inc., LRI Holdings, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders a party thereto.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following unaudited financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 2, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholder’s Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.**



*	Filed previously by the Company as an exhibit to Registration Statement on Form S-4 (File No. 333-173579) filed on April 18, 2011 and incorporated herein by reference.
**	Furnished electronically herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		LRI Holdings, Inc.


Date:	December 22, 2014	By:	/s/ Amy L. Bertauski
			Amy L. Bertauski
			Chief Financial Officer, Treasurer and Secretary
			(Duly Authorized Officer)

Date:	December 22, 2014	By:	/s/ Nicole A. Williams
			Nicole A. Williams
			Vice President - Controller
			(Principal Accounting Officer)

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer x

Smaller reporting company ¨

(Do not check if a smaller reporting company)