Landry's Restaurants, Inc. ('LNY'/NYSE) Reports Fourth Quarter 2008 and Year End Financial Results
Revenues from continuing operations for the three months ended December 31, 2008, totaled $253.7 million, as compared to $277.9 million a year earlier including $56.4 million and $66.0 million from the Golden Nugget, respectively.
Revenues from continuing operations for the three months ended December 31, 2008, totaled $253.7 million, as compared to $277.9 million a year earlier including $56.4 million and $66.0 million from the Golden Nugget, respectively. Net income (loss) from continuing operations for the quarter was $4.6 million, compared to ($1.6) million reported last year. Earnings (loss) per share from continuing operations for the quarter were $0.30, compared to ($0.10) diluted reported last year. Results for the fourth quarter of 2008 reflect a gain of $11.5 million after-tax from insurance proceeds received during the quarter that effectively offsets the impairment charges recorded in the third quarter of 2008 arising from Hurricane Ike and $3.0 million after-tax in non-recurring transaction costs associated with the terminated merger agreement. The Kemah Boardwalk has reopened as have all Houston, Galveston and Kemah restaurants. The three months ended December 31, 2008 also includes an $8.0 million after tax non-cash expense for the change in fair value of interest rate swaps compared to $0.9 million in the prior comparable period. Same store sales for the Company's restaurants were negative 4.7% for the quarter.
Revenues from continuing operations for the year ended December 31, 2008, totaled $1,143.9 million, as compared to $1,160.4 million a year earlier including $253.3 million and $265.9 million from the Golden Nugget, respectively. Net earnings from continuing operations for the year were $13.5 million, compared to $27.7 million reported last year. Earnings per share-diluted from continuing operations for the year were $0.87, compared to $1.43 in the prior year. Included in earnings from continuing operations for the year ended December 31, 2008 are non-cash charges associated with interest rate swaps not designated as hedges in the amount of $9.3 million after-tax or $0.60 per share diluted compared to $2.9 million after-tax or $0.15 in the prior year. In addition, included in results 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. Interest expense for 2008 increased by approximately $10.1 million after-tax primarily due to the higher borrowings outstanding at the Golden Nugget and a higher interest rate on our 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, 2008 was $0.1 million or $0.00 per share compared to a loss of $5.0 million or $0.31 per share in the prior year. Therefore, the consolidated net income for the quarter was $4.6 million or $0.30 per share, compared to a net loss of $6.6 million or $0.41 per share in 2007. The loss from discontinued operations, net of taxes was $10.6 million for the year ended December 31, 2008 as compared to a loss of $9.6 million for the prior year, and the consolidated net income for such periods was $2.9 million and $18.1 million, or $0.19 per share - diluted and $0.93 per share, respectively.
As previously announced, the Company entered in to a new $81.0 million Credit Agreement in December 2008, and in February 2009, entered into a $215.6 million Amended and Restated Credit Agreement and issued $295.5 million in Senior Secured Notes. The proceeds were used to repay substantially all of the Company's outstanding $400.0 million senior notes. The new financing will result in consolidated annual interest expense of approximately $112.0 million, with approximately $96.0 million in cash interest, and the remainder from amortization of financing costs and original issue discount.
Due to a number of factors affecting consumers, including rising unemployment, home foreclosures, a slowdown in global economies, contracting credit markets, and reduced consumer spending, the near term outlook for the restaurant, hospitality, entertainment and gaming industries is uncertain. The economic slow down accelerated in the fourth quarter of 2008 and continued into the first quarter of 2009. In response to the current economic conditions, the Company has taken measures to increase efficiencies and reduce its cost structure across its businesses. As a result of the higher interest costs, the need to refinance by 2011 and dramatic economic turmoil, the Company expects to reduce its unit growth and conserve capital for debt repayment.
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, 2008.
LANDRY'S RESTAURANTS, INC.
CONSOLIDATED INCOME STATEMENTS (000's except per share
amounts)
------------------------------------------------------
FOR THE QUARTER FOR THE QUARTER
ENDED ENDED
December 31, 2008 December 31, 2007
----------------- -----------------
REVENUES $253,729 100.0% $277,879 100.0%
-------- ----- -------- -----
COST OF REVENUES 53,739 21.2% 61,004 22.0%
LABOR 81,521 32.1% 92,464 33.3%
OTHER OPERATING
EXPENSES 63,997 25.2% 73,739 26.5%
------ ---- ------ ----
UNIT LEVEL PROFIT 54,472 21.5% 50,672 18.2%
GENERAL &
ADMINISTRATIVE 14,419 5.7% 11,844 4.3%
PRE-OPENING COSTS 874 0.3% 1,346 0.5%
DEPRECIATION &
AMORTIZATION 17,171 6.8% 16,651 6.0%
LOSS (GAIN) ON
DISPOSAL OF ASSETS (68) 0.0% (217) -0.1%
ASSET IMPAIRMENT
EXPENSE (17,676) -7.0% - 0.0%
------- ---- - ---
TOTAL OPERATING
INCOME 39,752 15.7% 21,048 7.6%
OTHER EXPENSE 33,075 21,781
------ ------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE TAXES 6,677 (733)
TAX PROVISION
(BENEFIT) 2,074 857
----- ---
INCOME (LOSS) FROM
CONTINUING
OPERATIONS 4,603 (1,590)
LOSS FROM DISCONTINUED
OPERATIONS, NET OF
TAXES (33) (5,024)
--- ------
NET INCOME (LOSS) $4,570 $(6,614)
====== =======
EARNINGS (LOSS) PER
SHARE - BASIC:
INCOME (LOSS) FROM
CONTINUING
OPERATIONS $0.30 $(0.10)
LOSS FROM
DISCONTINUED
OPERATIONS - (0.31)
- -----
NET INCOME (LOSS) $0.30 $(0.41)
===== ======
AVERAGE SHARES 15,260 15,950
EARNINGS (LOSS) PER
SHARE - DILUTED:
INCOME (LOSS) FROM
CONTINUING
OPERATIONS $0.30 $(0.10)
LOSS FROM
DISCONTINUED
OPERATIONS - (0.31)
- -----
NET INCOME (LOSS) $0.30 $(0.41)
===== ======
AVERAGE SHARES 15,390 15,950
EBITDA from continuing
operations (earnings
before interest,
taxes, depreciation
and amortization):
Net income (loss) $4,570 $(6,614)
Add back:
Loss from
discontinued
operations 33 5,024
Tax provision
(benefit) 2,074 857
Other expense 33,075 21,781
Depreciation and
amortization 17,171 16,651
Loss (gain) on
disposal of assets (68) (217)
Asset impairment
expense (17,676) -
EBITDA $39,179 $37,482
FOR THE TWELVE FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
December 31, 2008 December 31, 2007
----------------- -----------------
REVENUES $1,143,889 100.0% $1,160,368 100.0%
---------- ----- ---------- -----
COST OF REVENUES 245,381 21.5% 256,336 22.1%
LABOR 366,395 32.0% 375,144 32.3%
OTHER OPERATING
EXPENSES 288,090 25.2% 292,298 25.2%
------- ---- ------- ----
UNIT LEVEL PROFIT 244,023 21.3% 236,590 20.4%
GENERAL &
ADMINISTRATIVE 51,294 4.5% 55,756 4.8%
PRE-OPENING COSTS 2,266 0.2% 3,477 0.3%
DEPRECIATION &
AMORTIZATION 70,292 6.1% 65,287 5.6%
LOSS (GAIN) ON
DISPOSAL OF ASSETS (59) 0.0% (18,918) -1.6%
ASSET IMPAIRMENT
EXPENSE 2,409 0.2% - 0.0%
----- --- - ---
TOTAL OPERATING
INCOME 117,821 10.3% 130,988 11.3%
OTHER EXPENSE 97,117 89,012
------ ------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE TAXES 20,704 41,976
TAX PROVISION
(BENEFIT) 7,227 14,238
----- ------
INCOME (LOSS) FROM
CONTINUING
OPERATIONS 13,477 27,738
LOSS FROM DISCONTINUED
OPERATIONS, NET OF
TAXES (10,569) (9,626)
------- ------
NET INCOME (LOSS) $2,908 $18,112
====== =======
EARNINGS (LOSS) PER
SHARE - BASIC:
INCOME (LOSS) FROM
CONTINUING
OPERATIONS $0.88 $1.47
LOSS FROM
DISCONTINUED
OPERATIONS (0.69) (0.51)
----- -----
NET INCOME (LOSS) $0.19 $0.96
===== =====
AVERAGE SHARES 15,260 18,850
EARNINGS (LOSS) PER
SHARE - DILUTED:
INCOME (LOSS) FROM
CONTINUING
OPERATIONS $0.87 $1.43
LOSS FROM
DISCONTINUED
OPERATIONS (0.68) (0.50)
----- -----
NET INCOME (LOSS) $0.19 $0.93
===== =====
AVERAGE SHARES 15,480 19,400
EBITDA from continuing
operations (earnings
before interest,
taxes, depreciation
and amortization):
Net income (loss) $2,908 $18,112
Add back:
Loss from
discontinued
operations 10,569 9,626
Tax provision
(benefit) 7,227 14,238
Other expense 97,117 89,012
Depreciation and
amortization 70,292 65,287
Loss (gain) on
disposal of assets (59) (18,918)
Asset impairment
expense 2,409 -
EBITDA $190,463 $177,357
EBITDA is not a generally accepted accounting principles ("GAAP")
measurement and is presented solely as a supplemental disclosure because
the Company believes that it is a widely used measure of operating
performance in the restaurant industry. EBITDA is not intended to be
viewed as a source of liquidity or as a cash flow measure as used in the
statement of cash flows. EBITDA is simply shown above as it is a commonly
used non-GAAP valuation statistic.
LANDRY'S RESTAURANTS, INC.
CONDENSED BALANCE SHEETS
($ in Millions except per share amounts)
December 31,
------------
2008 2007
---- ----
Cash & equivalents $51.1 $39.6
Assets related to
discontinued
operations 2.9 21.8
Other current assets 81.3 93.6
---- ----
Total current
assets 135.3 155.0
Property &
equipment, net 1,259.2 1,238.6
Other assets 120.8 109.4
----- -----
Total assets $1,515.3 $1,503.0
======== ========
Current liabilities $216.2 $299.9
Liabilities related
to discontinued
operations 5.1 5.0
Long-term debt 862.4 801.4
Other non-current 137.1 79.8
----- ----
Total
liabilities 1,220.8 1,186.1
Total stockholders'
equity 294.5 316.9
----- -----
Total liabilities &
equity $1,515.3 $1,503.0
======== ========
Net book value per
share $18.24 $19.62
====== ======
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