Landry's Restaurants, Inc. Reports Fourth Quarter 2007 and Year End Financial Results

Landry's Restaurants, Inc. (NYSE:LNY), announced its earnings for the fourth quarter and for the year ended December 31, 2007.

Revenues from continuing operations for the three months ended December 31, 2007, totaled $280.5 million, as compared to $272.0 million a year earlier. Net income (loss) from continuing operations for the quarter was ($1.9) million, compared to $3.2 million reported last year. Earnings (loss) per share from continuing operations for the quarter were ($0.12), compared to $0.15 diluted reported last year. During the third quarter of 2007, the Company entered into a settlement agreement with its note holders whereby the interest rate on $400.0 million Senior Notes increased from 7.5% to 9.5%, effective August 29, 2007, which increased pre-tax interest expense by $8.0 million annually. Furthermore, the Senior Note holders have an option to require the Company to redeem the Notes beginning February 28, 2009 at 101% of face value. In addition, as previously announced, the Company refinanced the Golden Nugget in June 2007, resulting in higher outstanding borrowings and associated interest expense. The impact of these items on the three months ended December 31, 2007 was approximately $3.8 million after tax or $0.24 per share -- diluted. The three months ended December 31, 2007 also includes a $1.6 million after tax non-cash expense for the change in fair value of interest rate swaps not designated as hedges partially offset by a $0.7 million recognized cash gain on settling two existing interest rate swaps for a net charge of $0.9 million or $0.06 per share-diluted. Same store sales for the Company's restaurants were negative 1% for the quarter.

Revenues from continuing operations for the year ended December 31, 2007, totaled $1,171.9 million, as compared to $1,114.2 million a year earlier. Net earnings from continuing operations for the year were $27.3 million, compared to $34.1 million reported last year. Earnings per share-diluted from continuing operations for the year were $1.41, compared to $1.55 in the prior year. Included in earnings from continuing operations for the year ended December 31, 2007, are gains on property sales and investments of approximately $13.0 million after-tax, offset by costs associated with refinancing the Golden Nugget and the Senior Notes of approximately $12.8 million and approximately $2.9 million after tax or $0.15 per share -- diluted related to interest rate swaps not designated as hedges. The interest expense for 2007 increased by approximately $10.0 million after-tax primarily due to the higher borrowings outstanding at the Golden Nugget and the 2% increase in the interest rate on the $400.0 million Senior Notes.

As a result of our 2006 sale of the Joe's Crab Shack concept and closure of certain additional locations, the results of operations for these restaurants are reflected as discontinued operations in the Company's financial statements. The loss from discontinued operations, net of taxes, for the quarter ended December 31, 2007 was $4.7 million or $0.29 per share compared to a loss of $11.6 million or $0.53 per share in the prior year. Therefore, the consolidated net loss for the quarter was $6.6 million or $0.41 per share, compared to a net loss of $8.4 million or $0.38 per share in 2006. The loss from discontinued operations, net of taxes, was $9.2 million for the year ended December 31, 2007 as compared to a loss of $55.8 million for the prior year and the consolidated net income (loss) for such periods was $18.1 million and ($21.8) million, or $0.93 per share -- diluted and ($0.99) per share, respectively.

Rick H. Liem, Executive Vice President and CFO stated, "Given our history of performance, we believe we will obtain long-term financing, despite the disrupted credit markets. However, the interest rates are likely to be substantially higher than our existing agreements. Due to the significance of the earnings impact our refinancing is expected to have, and the lack of visibility as to timing, we will not be providing earnings guidance for 2008 at this time."

The Company's continuing operations include restaurants primarily under the trade names Landry's Seafood House, Chart House, Rainforest Cafe, Saltgrass Steak House and the Signature Group as well as other businesses including hotels, marinas, amusements, retail and the Golden Nugget Hotels and Casinos in Las Vegas and Laughlin, Nevada at December 31, 2007.

                          LANDRY'S RESTAURANTS, INC.



       CONSOLIDATED INCOME STATEMENTS (000's except per share amounts)



                                        FOR THE QUARTER   FOR THE QUARTER

                                             ENDED             ENDED

                                       December 31, 2007 December 31, 2006



  REVENUES                              $280,479  100.0%  $271,976  100.0%

  COST OF REVENUES                        61,796   22.0%    61,158   22.5%

  LABOR                                   93,516   33.3%    90,471   33.3%

  OTHER OPERATING EXPENSES                74,599   26.7%    72,766   26.7%

  UNIT LEVEL PROFIT                       50,568   18.0%    47,581   17.5%

  GENERAL & ADMINISTRATIVE                11,844    4.2%    16,581    6.1%

  PRE-OPENING COSTS                        1,346    0.5%       954    0.4%

  DEPRECIATION & AMORTIZATION             16,791    6.0%    14,690    5.4%

  ASSET IMPAIRMENT EXPENSE                     -    0.0%         -    0.0%

  TOTAL OPERATING INCOME                  20,587    7.3%    15,356    5.6%

  OTHER EXPENSE (INCOME)                  21,564            11,178

  INCOME FROM CONTINUING OPERATIONS

   BEFORE TAXES                             (977)            4,178

  TAX PROVISION (BENEFIT)                    948               967

  INCOME FROM CONTINUING OPERATIONS       (1,925)            3,211

  INCOME (LOSS) FROM DISCONTINUED

   OPERATIONS, NET OF TAXES               (4,689)          (11,576)

  NET INCOME (LOSS)                      $(6,614)          $(8,365)

  EARNINGS (LOSS) PER SHARE - BASIC:

    INCOME FROM CONTINUING OPERATIONS     $(0.12)            $0.15

    INCOME (LOSS) FROM DISCONTINUED

     OPERATIONS                            (0.29)            (0.54)

    NET INCOME (LOSS)                     $(0.41)           $(0.39)

    AVERAGE SHARES                        15,950            21,300

  EARNINGS (LOSS) PER SHARE - DILUTED:

    INCOME FROM CONTINUING OPERATIONS     $(0.12)            $0.15

    INCOME (LOSS) FROM DISCONTINUED

     OPERATIONS                            (0.29)            (0.53)

    NET INCOME (LOSS)                     $(0.41)           $(0.38)

    AVERAGE SHARES                        15,950            21,900





  EBITDA from continuing operations (earnings before interest, taxes,

   depreciation and amortization):



  Net income (loss)                      $(6,614)          $(8,365)

  Add back:

  (Income) loss from discontinued

   operations                              4,689            11,576

  Tax provision (benefit)                    948               967

  Other expense (income)                  21,564            11,178

  Depreciation and amortization           16,791            14,690

  Asset impairment expense                     -                 -

  EBITDA                                 $37,378           $30,046





                                    FOR THE YEAR ENDED  FOR THE YEAR ENDED

                                    December 31, 2007   December 31, 2006



  REVENUES                          $1,171,923  100.0%  $1,114,213  100.0%

  COST OF REVENUES                     259,892   22.2%     253,213   22.7%

  LABOR                                379,445   32.4%     362,010   32.5%

  OTHER OPERATING EXPENSES             295,798   25.2%     281,955   25.3%

  UNIT LEVEL PROFIT                    236,788   20.2%     217,035   19.5%

  GENERAL & ADMINISTRATIVE              55,756    4.8%      57,977    5.2%

  PRE-OPENING COSTS                      3,951    0.3%       5,276    0.5%

  DEPRECIATION & AMORTIZATION           65,727    5.6%      56,267    5.1%

  ASSET IMPAIRMENT EXPENSE                   -    0.0%       3,519    0.3%

  TOTAL OPERATING INCOME               111,354    9.5%      93,996    8.4%

  OTHER EXPENSE (INCOME)                70,094              46,715

  INCOME FROM CONTINUING OPERATIONS

   BEFORE TAXES                         41,260              47,281

  TAX PROVISION (BENEFIT)               13,987              13,203

  INCOME FROM CONTINUING OPERATIONS     27,273              34,078

  INCOME (LOSS) FROM DISCONTINUED

   OPERATIONS, NET OF TAXES             (9,161)            (55,848)

  NET INCOME (LOSS)                    $18,112            $(21,770)

  EARNINGS (LOSS) PER SHARE - BASIC:

    INCOME FROM CONTINUING

     OPERATIONS                          $1.45               $1.60

    INCOME (LOSS) FROM DISCONTINUED

     OPERATIONS                          (0.49)              (2.62)

    NET INCOME (LOSS)                    $0.96              $(1.02)

    AVERAGE SHARES                      18,850              21,300

  EARNINGS (LOSS) PER SHARE - DILUTED:

    INCOME FROM CONTINUING

     OPERATIONS                          $1.41               $1.55

    INCOME (LOSS) FROM DISCONTINUED

     OPERATIONS                          (0.48)              (2.54)

    NET INCOME (LOSS)                    $0.93              $(0.99)

    AVERAGE SHARES                      19,400              22,000





  EBITDA from continuing operations (earnings before interest, taxes,

   depreciation and amortization):



  Net income (loss)                    $18,112             $(21,770)

  Add back:

  (Income) loss from discontinued

   operations                            9,161               55,848

  Tax provision (benefit)               13,987               13,203

  Other expense (income)                70,094               46,715

  Depreciation and amortization         65,727               56,267

  Asset impairment expense                   -                3,519

  EBITDA                              $177,081             $153,782

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