<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998.
Commission file number 000-22150
------------
LANDRY'S SEAFOOD RESTAURANTS, INC.
----------------------------------------------------------
(Exact name of the registrant as specified in its charter)
Delaware 74-0405386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Post Oak Blvd., Suite 1010, Houston, Texas 77056
-------------------------------------------------------------
(Address of principal executive offices)
(713) 850-1010
-------------------------------------------------------------
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of April 28, 1998 there were
30,339,182 shares of $0.01 par value
common stock outstanding.
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
INDEX
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PAGE
PART I. FINANCIAL INFORMATION NUMBER
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Item 1. Financial Statements 2
Condensed Unaudited Consolidated Balance Sheets at March 31, 1998 and
December 31, 1997 3
Condensed Unaudited Consolidated Statements of Income for the Three
Months ended March 31, 1998 and March 31, 1997 4
Condensed Unaudited Consolidated Statements of Stockholders' Equity
for the Three Months Ended March 31, 1998 5
Condensed Unaudited Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1998 and March 31, 1997 6
Notes to Condensed Unaudited Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 10-14
- -------------------------------------------------------------------------------------------------
PART II. OTHER INFORMATION
- -------------------------------------------------------------------------------------------------
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
- -------------------------------------------------------------------------------------------------
Signatures 16
- -------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying condensed unaudited consolidated financial statements have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the Company, all
adjustments (consisting only of normal recurring entries) necessary for fair
presentation of the Company's results of operations, financial position and
changes therein for the periods presented have been included.
2
<PAGE>
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
------ ------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 87,078,213 $ 17,234,130
Accounts receivable--trade and other 9,830,768 8,381,965
Inventory 23,613,934 28,224,551
Other current assets 8,158,373 8,361,755
----------- -----------
Total current assets 128,681,288 62,202,401
PROPERTY AND EQUIPMENT, net 342,610,612 313,341,200
GOODWILL, net of amortization of $1,153,000
and $1,120,000, respectively 2,941,046 2,933,590
OTHER ASSETS, net 3,921,680 3,804,294
----------- -----------
Total assets $478,154,626 $382,281,485
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 15,640,788 $ 18,050,183
Accrued liabilities 11,383,464 9,022,274
Income taxes payable 1,385,214 ---
Current portion of long-term notes
and other obligations 74,178 71,819
----------- -----------
Total current liabilities 28,483,644 27,144,276
LONG-TERM NOTES AND OTHER OBLIGATIONS,
NON-CURRENT 25,715,123 50,234,528
DEFERRED INCOME TAXES & OTHER LIABILITIES 7,511,255 8,164,954
----------- -----------
Total liabilities 61,710,022 85,543,758
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 2,000,000 shares
authorized, 2,702 issued and outstanding 27 27
Common stock, $0.01 par value, 60,000,000 shares
authorized, 30,339,182 and 26,004,449 issued and
outstanding, respectively 303,391 260,044
Additional paid-in capital 362,848,421 250,935,805
Retained earnings 53,292,765 45,541,851
----------- -----------
Total stockholders' equity 416,444,604 296,737,727
----------- -----------
Total liabilities and stockholders' equity $478,154,626 $382,281,485
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed unaudited
consolidated financial statements.
3
<PAGE>
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1998 1997
------------- --------------
<S> <C> <C>
REVENUES $90,044,954 $64,300,777
OPERATING COSTS AND EXPENSES:
Cost of sales 27,488,230 19,655,180
Restaurant labor 22,917,819 16,444,821
Other restaurant operating expenses 19,285,812 13,937,725
Depreciation and amortization 6,203,360 3,383,298
General and administrative expenses 2,802,447 2,302,172
----------- -----------
Total operating costs and expenses 78,697,668 55,723,196
----------- -----------
OPERATING INCOME 11,347,286 8,577,581
OTHER (INCOME) EXPENSE:
Interest (income) expense, net (207,525) (491,800)
Other, net (278,332) 16,116
----------- -----------
Total other (income) expense (485,857) (475,684)
----------- -----------
INCOME BEFORE INCOME TAXES 11,833,143 9,053,265
PROVISION FOR INCOME TAXES 4,082,229 3,259,175
----------- -----------
NET INCOME $ 7,750,914 $ 5,794,090
=========== ===========
NET INCOME PER COMMON SHARE- BASIC $0.29 $0.23
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING-BASIC 26,700,000 25,300,000
=========== ===========
NET INCOME PER COMMON SHARE-DILUTED $0.28 $0.22
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND COMMON SHARE EQUIVALENTS
OUTSTANDING-DILUTED 27,700,000 26,000,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed unaudited
consolidated financial statements.
4
<PAGE>
CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
------------------ --------------------- Paid-In Retained
Shares Amount Shares Amount Capital Earnings Total
------- --------- --------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 2,702 $27 26,004,449 $260,044 $250,935,805 $45,541,851 $296,737,727
Net income --- --- --- --- --- 7,750,914 7,750,914
Exercise of stock options
and income tax benefit --- --- 523,783 5,237 9,519,254 --- 9,524,491
Issuance of common stock,
net of offering costs --- --- 3,810,950 38,110 102,393,362 --- 102,431,472
------- -------- ---------- --------- ------------ ----------- -----------
Balance, March 31, 1998 2,702 $27 30,339,182 $303,391 $362,848,421 $53,292,765 $416,444,604
======= ======== ========== ========= ============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed unaudited
consolidated financial statements.
5
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------
1998 1997
---------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 7,750,914 $ 5,794,090
---------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization 6,203,360 3,383,298
Change in assets and liabilities-net and other 4,874,163 7,351,415
---------- -----------
Total adjustments 11,077,523 10,734,713
---------- -----------
Net cash provided by operating activities 18,828,437 16,528,803
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions (33,426,451) (36,630,748)
Other assets, including goodwill (161,329) (139,569)
---------- -----------
Net cash used in investing activities (33,587,780) (36,770,317)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable and other long-term obligations (24,517,046) (78,745)
Net proceeds from sale of common stock 102,431,472 ---
Proceeds from exercise of stock options 6,689,000 712,760
---------- -----------
Net cash provided by financing activities 84,603,426 634,015
---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 69,844,083 (19,607,499)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 17,234,130 57,267,986
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 87,078,213 $ 37,660,487
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash payments during the period for--
Income taxes $ 159,000 $ ---
Interest $ 730,000 $ 14,500
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
6
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements included herein have been prepared by the Company
without audit, except for the consolidated balance sheet as of December 31,
1997. The financial statements include all adjustments, consisting of normal,
recurring adjustments and accruals, which the Company considers necessary for
fair presentation of its financial position and results of operations. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. This information is contained in the Company's December
31, 1997, consolidated financial statements filed with the Securities and
Exchange Commission on Form 10-K.
Cash and Cash Equivalents
For purposes of the condensed statements of cash flows, the Company
considers all highly liquid investments with original maturities of three months
or less to be cash equivalents.
Goodwill and Non-Compete Agreements
Goodwill and non-compete agreements are amortized over 30 years and 15
years (or the life of the related agreement), respectively.
Earnings per Share
Net income per common share has been computed in accordance with Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS
No. 128 revised the historical methodology used in computing earnings per share
(EPS) such that the computations required for primary and fully diluted EPS were
replaced with basic and diluted EPS. Basic EPS is computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted EPS is computed in the same manner as fully diluted
EPS, except that, among other changes, the average share price for the period is
used in all cases when applying the treasury stock method to potentially
dilutive outstanding options. All earnings per share amounts presented herein
have been restated to reflect the adoption of SFAS No. 128.
7
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
New Accounting Principle
In April 1998 the American Institute of Certified Public Accountants issued
a new accounting standard under Statement of Position 98-5 "Reporting on the
Costs of Start-Up Activities". When adopted, this new accounting standard will
require entities to expense pre-opening costs as incurred and to expense
previously capitalized pre-opening costs as a cumulative effect of a change in
accounting principle. The Company is required to adopt this new accounting
standard by the first quarter of 1999; however, the new accounting standard
encourages earlier adoption. The Company has not determined when it will adopt
the new accounting standard. The Company may adopt the new accounting standard
in 1998, but will adopt no later than the first quarter of 1999. At March 31,
1998, unamortized pre-opening costs were $5,002,664, which balances at the date
of adoption will be expensed.
2. Accrued Liabilities
Accrued liabilities are comprised of the following:
March 31, 1998 December 31, 1997
-------------- -----------------
Payroll and related costs $ 4,224,130 $2,166,035
Deferred and state income taxes 974,279 974,279
Taxes, other than payroll and income
taxes 3,980,879 4,001,719
Other 2,204,176 1,880,241
----------- ----------
$11,383,464 $9,022,274
=========== ==========
3. Debt
The Company has a $125 million unsecured line of credit from a syndicate of
banks which matures in June 2000, and is available for expansion, acquisitions,
and other general corporate purposes. Interest on the credit facility is
generally payable quarterly at the Eurodollar rate plus 0.6% or the bank's base
rate. The credit facility is governed by certain financial covenants, including
minimum tangible net worth, a maximum leverage ratio and a minimum fixed charge
coverage ratio. At March 31, 1998 the Company had $25.5 million outstanding
under this credit facility at an approximate interest rate of 6.6%.
4. Stockholders' Equity
In March 1998, the Company completed a public offering of 3,810,950 shares of
the Company's Common Stock. Net proceeds of the common stock offering of
approximately $102,400,000, will be used to repay outstanding bank loans,
finance expansion and for general corporate purposes.
8
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the amounts used to compute net income per common share -
diluted is as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net Income...................................................................... $ 7,750,914 $ 5,794,090
=========== ===========
Weighted Average Common Shares Outstanding...................................... 26,700,000 25,300,000
Dilutive Common Stock Equivalents -- Stock Options.............................. 1,000,000 700,000
----------- -----------
Weighted Average Common and Common Equivalent
Shares Outstanding -- Diluted.................................................. 27,700,000 26,000,000
=========== ===========
Net Income Per Share -- Diluted................................................. $ 0.28 $ 0.22
=========== ===========
</TABLE>
5. Contingencies
The Company is subject to legal proceedings and claims which arise in
the ordinary course of its business. Management believes, based on discussions
with its legal counsel and in consideration of reserves recorded, that the
outcome of all legal actions will not have a material adverse effect upon the
consolidated financial position and results of operations of the Company.
9
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Introduction
The Company owns and operates full-service, casual dining seafood restaurants.
As of March 31, 1998 the Company operated approximately 126 restaurants. In
addition, the Company operates three limited-menu take-out service units.
The Company closed two restaurants during the three months ended March 31,
1998. A Houston area restaurant closed due to an electrical fire. The
restaurant will be rebuilt and the costs of construction are covered by
insurance. The proceeds from business interruption insurance will replace the
restaurant's lost profits during the construction period. Additionally, the
Company decided not to renew a lease for a Crab House restaurant located in a
hotel in Key West, Florida.
The Company's operations may be impacted by changes in federal and state taxes
and other federal and state governmental policies which include many possible
factors such as the level of minimum wages, the deductibility of business and
entertainment expenses, levels of disposable income and national and regional
economic growth. The enactment of staged increases to federally mandated
minimum wage has increased the Company's labor costs. Effective October 1,
1996, the federal minimum wage increased from $4.25/hour to $4.75/hour, and
further increased to $5.15/hour effective September 1, 1997. The new minimum
wage increases affected primarily initial entry-level wages of the least skilled
jobs in the Company's restaurant kitchens, as the federal law mandated an
offsetting increase in the tip-credit amounts for tipped employees (i.e.,
waitstaff). However, the increases in minimum wage have increased pressure for
further wage increases of the other restaurant staff.
The restaurant industry is intensely competitive and is affected by changes in
consumer tastes and by national, regional, and local economic conditions and
demographic trends. The performance of individual restaurants may be affected
by factors such as traffic patterns, demographic considerations, and the type,
number, and location of competing restaurants. The Company has many well
established competitors with greater financial resources and longer histories of
operation than the Company, including competitors already established in regions
into which the Company is planning to expand, as well as competitors planning to
expand in the same regions. The Company faces significant competition from mid-
priced, full-service, casual dining restaurants offering seafood and other types
and varieties of cuisine. The Company's competitors include national, regional,
and local chains as well as local owner-operated restaurants. The Company also
competes with other restaurants and retail establishments for restaurant sites.
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which are intended to be covered
by the safe harbors created thereby. Investors are cautioned that all forward-
looking statements involve risks and uncertainty, including without limitation,
the
10
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
ability of the Company to continue its accelerated expansion strategy,
changes in costs of food, labor, and employee benefits, the ability of the
Company to continue to acquire prime locations at acceptable lease or purchase
terms, as well as general market conditions, competition, and pricing. Although
the Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements included in this report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Revenues increased $25,744,177, or 40.0%, from $64,300,777 to $90,044,954 in
the three months ended March 31, 1998, compared to the three months ended March
31, 1997. The increase in revenues was primarily attributable to revenues from
new restaurant openings. There was a nominal change in revenues from units
opened prior to 1997.
As a primary result of increased revenues, cost of sales increased $7,833,050,
or 39.9%, from $19,655,180 to $27,488,230 in the three months ended March 31,
1998, compared to the same period in the prior year. Cost of sales as a
percentage of revenues for the three months ended March 31, 1998, remained
relatively flat, decreasing 0.1% to 30.5% from 30.6% in 1997. The decrease in
cost of sales as a percentage of revenues reflects slightly lower product costs
and better management cost controls in 1998. Product prices for shrimp, which
are a very high use product, are expected to be higher in 1998 than in 1997.
This cost increase may be partially offset by decreases in other product costs
and management measures, but the overall effect may increase restaurant cost of
sales as a percentage of revenues in 1998.
Restaurant labor expenses increased $6,472,998, or 39.4%, from $16,444,821 to
$22,917,819 in the three months ended March 31, 1998 compared to the same period
in the prior year. Restaurant labor expenses as a percentage of revenues for the
three months ended March 31, 1998 remained relatively flat, decreasing 0.1% to
25.5% from 25.6% in 1997. The Company continues to experience labor cost
pressures attributable in part to recent increases in federally mandated minimum
wages.
Other restaurant operating expenses increased $5,348,087, or 38.4%, from
$13,937,725 to $19,285,812 in the three months ended March 31, 1998, compared to
the same period in the prior year, as a result of increased revenues and the
opening of new restaurants since March 31, 1997. Such expenses decreased as a
percentage of revenues to 21.4% from 21.7% primarily due to revenue growth of
newly opened restaurants exceeding the increase in other restaurant operating
expenses.
11
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
Depreciation and amortization expenses increased $2,820,062 or 83.4% from
$3,383,298 to $6,203,360 in the three months ended March 31, 1998, compared to
the same period in the prior year. The dollar increase was primarily due to the
addition of new restaurants and purchases of new equipment. Depreciation and
amortization as a percentage of revenues for the three months ended March 31,
1998 increased to 6.9% from 5.3% during the same period in 1997 primarily due to
an increase in pre-opening amortization expense during the three months ended
March 31, 1998. The increase in pre-opening amortization expense is attributable
to an increase in the relative number of units subject to amortization and an
increase in the per unit pre-opening expenses.
General and administrative expenses increased $500,275, or 21.7%, from
$2,302,172 to $2,802,447 in the three months ended March 31, 1998 compared to
the same period of the prior year. General and administrative expenses decreased
as a percentage of revenues to 3.1% from 3.6% primarily due to revenue growth of
newly opened restaurants exceeding the increase in general and administrative
expenses. The dollar increase resulted primarily from increased personnel,
salaries and travel to support the Company's expansion plans.
The decrease in net interest income of $284,275 and the change in other income
of $294,448 in the three months ended March 31, 1998, as compared to the same
period in the prior year was not deemed significant.
The provision for income taxes increased $823,054 in the three months ended
March 31, 1998 primarily due to a change in the Company's income. The provision
for income taxes as a percentage of income before income taxes decreased to
34.5% from 36.0% due to the effect of FICA tax tip credits on reducing the
Company's effective tax rate.
Liquidity and Capital Resources
For the three months ended March 31, 1998 the capital expenditures of the
Company were approximately $33.4 million which were funded out of existing cash
balances, cash flow from operations and borrowings.
In March 1998, the Company completed a public offering of 3,810,950 shares of
the Company's common stock. Net proceeds of the common stock offering of
approximately $102,400,000 will be used to repay outstanding bank loans, finance
expansion and for general corporate purposes.
The Company has a $125 million line of credit from a syndicate of banks which
expires in September 2000. The line of credit is available for expansion,
acquisitions and general corporate purposes. At March 31, 1998, the Company had
$25.5 million outstanding under this credit facility at an approximate interest
rate of 6.6% and had cash balances aggregating approximately $87.1 million.
These borrowings were used to fund capital expenditures and working capital.
12
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
The Company's current development plans are to open approximately 45-48
restaurants during 1998.
During 1997 the Company commenced construction on a development plan for a
waterfront area in South Houston (the "Kemah Development"). The Kemah
Development includes up to eight restaurant sites, with additional light retail
and hotel/motel facilities in a master planned development. The Company
currently operates five restaurants in this development, and has not determined
which portions of the remaining development it will operate or sublease.
Further, the Company is evaluating the feasibility of building a multi-story
office building for the Company's corporate headquarters. Due to the Company's
rapid growth and increasing office needs, the Company has experienced difficulty
in obtaining adequate office space within the desired immediate area of its
existing office. To this end, in July 1997 the Company acquired a 4 acre
undeveloped land parcel in Houston. Exclusive of any acquisitions or large real
estate purchases, the Company currently expects to incur capital expenditures of
up to $125 million in 1998 (based upon approximately 45 new restaurants),
depending upon the actual number and timing of restaurant construction, the
number of land purchases, the amount of expenditures spent on remodels, and the
mix of leased, owned or conversion type locations. The Company expects that its
average per unit investment, excluding real estate costs, capitalized interest
costs and pre-opening expenses, to approximate $1.9 million. However, individual
unit investment costs can vary from management's expectations due to a variety
of factors. Moreover, average unit investment costs are dependent upon many
factors, including competition for sites, location, construction costs, unit
size and the mix of conversions, build-to-suit, leased and fee-owned locations.
The Company currently anticipates that it will continue to purchase a portion of
its new restaurant locations, which are expected to be more costly than leased
locations. Separately, the Company may spend up to $12-$15 million on the Kemah
Development and up to $10 million on the Corporate headquarters development,
both of which will be spread over the next several fiscal years. The Company
believes that existing cash balances, cash generated from operations and
potential financing sources will be sufficient to satisfy the Company's working
capital and planned capital expenditures through 1999.
Seasonality and Quarterly Results
The Company's business is seasonal in nature, with revenues and, to a greater
degree, operating profits being lower in the first and fourth quarters than in
other quarters due to the Company's reduced winter volumes. The Company has and
continues to open restaurants in highly seasonal tourist markets and has further
noted that the Joe's Crab Shack concept restaurants tend to experience an even
greater seasonality and sensitivity to weather. The timing of unit openings can
and will affect quarterly results. The Company anticipates some moderation in
revenues from the initial volumes of new units.
13
<PAGE>
LANDRY'S SEAFOOD RESTAURANTS, INC.
Impact of Inflation
Management does not believe that inflation has had a significant effect on the
Company's operations during the past several years. Management believes the
Company has historically been able to pass on increased costs through menu price
increases, but there can be no assurance that it will be able to do so in the
future. Future increases in labor, land and construction costs could adversely
affect the Company's ability to expand.
14
<PAGE>
LANDRY'S SEAFOOD RESTARUANTS, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which registrant is a
party or of which any of the property of the registrant is the subject, except
for claims in the ordinary course of business, none of which are considered
material.
ITEM 2. CHANGES IN SECURITIES Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable
ITEM 5. OTHER INFORMATION Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS - NONE
(B) REPORTS ON FORM 8-K -- NONE
15
<PAGE>
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 thereunto duly authorized.
Landry's Seafood Restaurants, Inc.
(Registrant)
/s/ Tilman J. Fertitta
___________________________
Tilman J. Fertitta
Chairman of the Board of Directors
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Paul S. West
___________________________
Paul S. West
Vice President-Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: May 14, 1998
-------------
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 87,078,213 37,660,487
<SECURITIES> 0 0
<RECEIVABLES> 9,830,768 9,949,152
<ALLOWANCES> 0 0
<INVENTORY> 23,613,934 10,651,892
<CURRENT-ASSETS> 128,681,288 63,882,706
<PP&E> 378,081,620 245,395,191
<DEPRECIATION> (35,471,008) (21,440,420)
<TOTAL-ASSETS> 478,154,626 293,761,549
<CURRENT-LIABILITIES> 28,483,644 26,579,649
<BONDS> 0 0
0 0
27 284
<COMMON> 303,391 253,286
<OTHER-SE> 416,141,186 263,212,793
<TOTAL-LIABILITY-AND-EQUITY> 478,154,626 293,761,549
<SALES> 90,044,954 64,300,777
<TOTAL-REVENUES> 90,044,954 64,300,777
<CGS> 27,488,230 19,655,180
<TOTAL-COSTS> 78,697,668 55,723,196
<OTHER-EXPENSES> (485,857) (475,684)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 11,833,143 9,053,265
<INCOME-TAX> 4,082,229 3,259,175
<INCOME-CONTINUING> 7,750,914 5,794,090
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 7,750,914 5,794,090
<EPS-PRIMARY> 0.29 0.23
<EPS-DILUTED> 0.28 0.22
</TABLE>
