Mail Stop 3651
April 10, 2006
Via U.S. Mail and Facsimile
Tilman J. Fertitta
Chief Executive Officer
Landry`s Restaurants, Inc.
1510 West Loop South
Houston, TX 77027
RE: Landry`s Restaurants, Inc.
Form 10-K for the Fiscal Year Ended December 31,
2005
Report on Form 8-K/A dated September 27, 2005
File No. 001-05690
Dear Mr. Fertitta:
We have reviewed your filing and have the following
comments.
We have limited our review to only financial statements and
related
disclosures and do not intend to expand our review to other
portions
of your document. Where indicated, we think you should revise
your
document in response to these comments and comply with the
remaining
comments in all future filings. If you disagree, we will consider
your explanation as to why our comments are inapplicable or a
revision is unnecessary. Please be as detailed as necessary in
your
explanation. In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the fiscal year ended December 31, 2005
Selected Consolidated Financial Information, page 20
1. We note that you present the non-GAAP measure "EBITDA" in your
selected financial data and reconcile it to your operating
earnings.
Please note that we do not believe that operating earnings is the
most comparable GAAP measure since EBITDA makes adjustments for
items
that are not included in operating income. In future filings,
please
revise to reconcile this measure to your net income. Refer to the
guidance outlined in Question 15 of "Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures" included on the
Commission`s website. Also, revise future filings to explain any
additional purposes for which the Company`s management uses this
non-
GAAP financial measure. Refer to the requirements outlined in Item
10(e) of Regulation S-K.
Item 8. Financial Statements and Supplementary Data
Consolidated Balance Sheets, page 41
2. Reference is made to your Goodwill and Trademarks balance of
$46,716,151. In future filings, please provide all disclosures
required by paragraph 45(b) and (c) of SFAS No. 142. Also, revise
to
separately disclose goodwill in your consolidated balance sheets.
Refer to the requirements of paragraph 43 of SFAS No. 142.
Consolidated Statements of Cash Flows, page 44
3. As stated in paragraph 11 of SFAS No. 95, generally,
information
about the gross amounts of cash receipts and cash payments during
a
period is more relevant than information about the net amounts of
the
cash receipts and payments. In this regard, please revise your
consolidated statement of cash flows to disclose on a gross basis
the
proceeds and payments for your debt and related expenses, and your
credit facility.
Note 1. Nature of Business and Summary of Significant Accounting
Policies
Inventories, page 45
4. Given that your inventory balance is approximately 41% of your
total current assets and that your valuation of inventory requires
management to make estimates and assumptions that affect the
amounts
reported in the financial statements and accompanying notes, as
disclosed in the last paragraph of your critical accounting
policies
in MD&A, we believe you should consider expanding the critical
accounting policies section of your MD&A and your significant
accounting policies to include the amount of and a discussion of
the
material implications associated with the methods and assumptions
underlying how you arrived at the estimated inventory allowance.
Additionally, you should address the questions that arise once the
critical accounting estimate or assumption has been identified, by
analyzing, to the extent material, factors such as how accurate
the
estimate/ assumption has been in the past, how much the
estimate/assumption has changed in the past, and whether the
estimate/assumption is reasonably likely to change in the future.
Property and Equipment, page 46
5. We note from your disclosure that leasehold improvements are
depreciated over the shorter of the estimated life of the asset or
the lease term plus option periods where failure to renew results
in
economic penalty. Please tell us whether, under your lease
agreement(s), you have an asset retirement obligation related to
cost
associated with removing property or leasehold improvements
subject
to retirement from facilities on leased properties. If so, tell
us
how you considered paragraph 5(j) of SFAS No. 13 and SFAS No. 143
in
your accounting.
Note 8. Commitments and Contingencies
Litigation and Claims, page 59
6. We note from your disclosure on page 59 and 17 that in recent
years, a number of restaurant companies have been subject to law
suits, including class action lawsuits, alleging violations of
federal and state law regarding workplace, employment and similar
matters. You state that a number of these lawsuits have resulted
in
the payment of substantial damages by the defendants and that you
are
currently defending purported collective and class action lawsuits
alleging violations , among other things, of minimum wage and
overtime provisions of federal and state labor laws. In this
regard,
considering the potential for substantial damages, to the extent
that
you are exposed to material losses in excess of the amounts for
which
accruals have been established, please revise the notes to your
financial statements to include a discussion of the pending
matters
and the potential range of losses to which you are exposed in
connection with each of the lawsuits. Refer to the guidance
outlined
in paragraphs 9 and 10 of SFAS No. 5 and SAB Topic 5: Y, Question
2.
If no estimate of these amounts can be made, please explain why
and
state this in your revised disclosure. Also, disclose the amounts
of
any accruals that have been established as required by paragraph 9
of
SFAS No.5.
Note 10. Supplemental Guarantor Information, page 60
7. We note that your $400 million of Senior Notes due in 2014 are
guaranteed by certain of your subsidiaries. Please confirm and
revise
the notes to your financial statements to clarify whether all of
your
guarantor subsidiaries are 100% owned. If not, please explain why
audited financial statements have not been provided for your
subsidiary guarantors. Refer to the requirements of Rule 3-10(f)
of
Regulation S-X.
Note 12. Quarterly Financial Data (Unaudited), page 70
8. In accordance with Item 302(a)(3), please revise your
disclosure
to describe or cross-reference the effects of any unusual or
infrequently occurring items recognized in any of the quarters
that
have materially affected the comparability of the information
presented. For example, we note that you generated significantly
less net income in the 4th quarter of fiscal 2005 than in the
comparable 4th quarter of fiscal 2004 relative to the amount of
revenues recognized.
Exhibits
9. It appears from your disclosure on page 53 that you have notes
registered under the Securities Act of 1933. In this regard,
please
provide in your filing a ratio of earning to fixed charges as
required by Item 503(d) and 601(b)(12) of Regulation S-K.
Report on Form 8-K/A dated September 27, 2005
Pro Forma Financial Information
10. The pro forma financial information included in your Report on
Form 8-K does not comply with Article 11 of Regulation S-X in
certain
respects. In future filings, please revise the introductory
paragraph
to disclose the significant terms of the acquisition transaction
including the nature of the consideration issued in the
transaction
and the total purchase price paid. Also, please ensure that you
disclose all significant assumptions used to determine the various
pro forma adjustments included in the pro forma financial
information.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Jeff Jaramillo at (202) 551-3212 or Linda
Cvrkel, Branch Chief, at (202) 551-3813 if you have questions
regarding comments on the financial statements and related
matters.
Please contact Max Webb, Assistant Director, at (202) 551-3755
with
any other questions.
Sincerely,
Linda Cvrkel
Branch Chief
Via facsimile: Rick H . Liem, Chief Financial Officer
(713) 623-5296
Tilman J. Fertitta
Landry's Restaurants, Inc.
April 10, 2006
Page 1