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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

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

For the fiscal year ended December 31, 2000 Commission file number 000-22150

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LANDRY'S SEAFOOD RESTAURANTS, INC.
(Exact name of the registrant as specified in its charter)

DELAWARE 76-0405386
(I.R.S. Employer Identification No.)
(State of incorporation)

1400 POST OAK BLVD.,
SUITE 1010
HOUSTON, TX 77056 (713) 850-1010
(Address of principal executive (Registrant's telephone number)
offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON SHARES, PAR VALUE $.01 PER SHARE
(Title of Class)

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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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 [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

The aggregate market value of the registrant's voting Common Stock held by
non-affiliates of the registrant was approximately $185,141,000 as of March
30, 2001, based on the New York Stock Exchange closing price on that date. For
this purpose, all shares held by officers and directors of the registrant are
considered to be held by affiliates, but neither the registrant nor such
persons concede that they are affiliates of the registrant.

The number of shares outstanding of the registrant's common stock is
21,498,352 as of March 30, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

The Proxy Statement for the Registrant's 2001 Annual Meeting of
Stockholders, to be filed pursuant to regulation 14A under the Securities
Exchange Act of 1934, as amended, is incorporated by reference into Part III
of this Form 10-K. Although such Proxy Statement is not currently available,
it will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2000.

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LANDRY'S SEAFOOD RESTAURANTS, INC.

TABLE OF CONTENTS

Page No.
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PART I.

Item 1. Business.............................................. 2

Item 2. Properties............................................ 8

Item 3. Legal Proceedings..................................... 9

Item 4. Submission of Matters to a Vote of Security Holders... 9

PART II.

Item 5. Market For the Registrant's Common Stock and Related
Stockholder Matters................................... 10

Item 6. Selected Financial Data............................... 11

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 12

Item 7.A. Quantitative and Qualitative Disclosures about Market
Risk.................................................. 17

Item 8. Financial Statements and Supplementary Data........... 17

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................... 17

PART III.

Item 10. Directors and Executive Officers of the Registrant.... 18

Item 11. Executive Compensation................................ 18

Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................ 18

Item 13. Certain Relationships and Related Transactions........ 18

PART IV.

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K........................................... 18

SIGNATURES....................................................... 36

EXHIBIT INDEX.................................................... 37

EXHIBITS.........................................................

This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1993, as amended (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 safe harbors created
thereby. Stockholders are cautioned that all forward-looking statements
involve risks and uncertainty, including without limitation, the ability of
the Company to continue its expansion strategy, ability to make projected
capital expenditures, as well as general market conditions, competition, and
pricing. In addition, there is no assurance that Landry's management will be
able to smoothly integrate Rainforest Cafe operations and business, or whether
same store sales declines of Rainforest Cafe units can be mitigated or can
achieve projected financial results. All statements, other than statements of
historical facts, included or incorporated by reference in this report that
address activities, events or developments that the Company expects or
anticipates will or may occur in the future, including such things as future
capital expenditures (including the amount and nature thereof), business
strategy and measures to implement such strategy, competitive strengths,
goals, expansion and growth of the Company's business and operations, plans,
references to future success as well as other statements which include words
such as "anticipate," "believe," "plan," "estimate," "expect," and "intend"
and other similar expressions constitute forward-looking statements. 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.

LANDRY'S SEAFOOD RESTAURANTS, INC.

PART I

ITEM 1. BUSINESS

GENERAL

Landry's Seafood Restaurants, Inc. (the "Company") is principally engaged in
the ownership and operation of full service, casual dining restaurants
primarily under the names Joe's Crab Shack, Landry's Seafood House, The Crab
House, and Rainforest Cafe. As of December 31, 2000, the Company operated 188
full service restaurants including 105 Joe's Crab Shack restaurants, 41
Landry's Seafood House division restaurants, 27 Rainforest Cafe restaurants,
15 Crab House restaurants, and three limited menu take-out service
restaurants.

The first Landry's Seafood House restaurant was opened in 1980. The Company
acquired the first Joe's Crab Shack restaurant in 1994, and acquired The Crab
House chain of restaurants in 1996. On October 28, 2000, the Company, through
a wholly-owned subsidiary, acquired pursuant to a tender offer, approximately
60% of the outstanding common stock of Rainforest Cafe, Inc. ("Rainforest
Cafe"), a publicly traded restaurant company. On December 1, 2000, the Company
acquired the remaining outstanding shares of Rainforest Cafe.

The Company's common stock commenced public trading in August 1993. From
1993 through the third quarter of 1998 the Company maintained an expansion
program which resulted in the opening of approximately 150 restaurants.
Beginning in the fourth quarter of 1998, the Company reduced the pace of its
expansion and closed certain under-performing restaurants. During 1999, the
Company implemented certain changes at its restaurant concepts, which resulted
in positive revenue and profitability growth. These changes, which were
primarily implemented at Joe's Crab Shack restaurants, included new menus, a
new manager bonus program and new advertising and marketing campaigns
resulting in positive revenue and profitability growth.

RESTAURANT CONCEPTS AND STRATEGY

Management believes that the relatively small number of competitive national
and regional chain seafood restaurants provides the Company a significant
opportunity to capitalize on its high energy, casual dining seafood restaurant
concepts. Furthermore, management believes that the Rainforest Cafe concept
has excellent name recognition and can be well positioned to compete for
casual dining customers, primarily in tourism driven markets.

The key elements of the Company's restaurant concepts and strategies include
the following:

Variety and Value. The Company's restaurants provide customers an
attractive price-value relationship by serving generous portions with fresh
ingredients in high quality meals at moderate prices. The Company's seafood
restaurants feature a wide variety of broiled, grilled and fried seafood
items, including red snapper, shrimp, crawfish, crab and lump crabmeat,
lobster, oysters, scallops, flounder and other traditional seafood items,
many with a choice of unique seasonings, stuffings and toppings. These
items are complemented by unique side dishes, salads, garlic bread,
appetizers, and desserts presented in a visually appealing manner. Along
with inventive and exciting items, the Rainforest Cafe menu offers
traditional American fare, including beef, chicken and seafood.

Commitment to Customer Satisfaction. The Company is committed to
providing its customers prompt, friendly, efficient service, keeping table-
to-wait staff ratios low, and staffing each restaurant with an experienced
management team to ensure attentive customer service and consistent food
quality. Through the use of comment cards and a 1-800-telephone number,
senior management receives valuable feedback from customers and, through
prompt responses, demonstrates a continuing interest in customer
satisfaction.

Distinctive Design and Decor and Casual Atmosphere. Each restaurant
concept has a distinctive appearance and a flexible design, which can
accommodate a wide variety of available sites. The Joe's Crab Shack
restaurants are designed to appear like an old fishing camp with a wood
facade, tin roof and a raised

outside deck. Many of the Joe's Crab Shack facilities incorporate a small
playground area for children adjacent to family dining areas. For Landry's
Seafood House, the Company has developed a prototype look that is readily
identified by a large theater-style marquee over the entrance and by a
distinctive brick and wood facade, creating the feeling of a traditional
old seafood house restaurant. The Crab House restaurants feature a casual
nautical theme, and many include a fresh seafood salad bar. The Rainforest
Cafe restaurants create an exciting rainforest themed environment.

A casual, energetic dining atmosphere is created for all of the Company's
restaurants through the design and decor of the dining areas, which
generally display vibrant, colorful interiors. In many locations, the
Company's restaurants provide outdoor patio service for a more casual,
open-air dining experience and often feature waterfront views.

High Profile Restaurant Locations. The Company's site selection strategy
is to locate a substantial number of its restaurants in markets which
provide a balanced mix of tourist, convention, business, and residential
clientele. A variety of factors are analyzed in the site selection process,
including local market demographics, site visibility, aesthetics (including
waterfront views) and accessibility and proximity to significant generators
of potential customers such as major retail centers, office complexes,
hotel concentrations, convention and entertainment complexes, historical
areas and entertainment facilities (stadiums, arenas, theaters, etc.).
Management believes that this strategy results in a high volume of new and
repeat customers and provides the Company with increased name recognition
in new markets. The Company's current restaurants are located in areas that
satisfy the Company's site selection strategy.

Commitment to Attracting and Retaining Quality Employees. By providing
extensive training and attractive compensation, the Company fosters a
strong corporate culture and encourages a sense of personal commitment from
its employees. The Company has a monthly cash bonus program for each
restaurant's management team, pursuant to which, management believes,
restaurant managers typically earn bonuses equal to between 15% and 25% of
their total cash compensation. The Company has historically utilized a
program of extensive background checks for prospective management employees
(including criminal, credit and drug screening).

CORE RESTAURANT CONCEPTS

Joe's Crab Shack. Joe's Crab Shack is a full-service seafood restaurant,
featuring a varied seafood menu and offering many varieties of crab
specialties. The atmosphere of a Joe's Crab Shack has an energetic casual
feel, with a fun, eclectic decor influenced by weathered, old beach front fish
shacks. Dinner entree prices range from $7.99 to $13.99, with certain crab
items available at market price. Lunch entree prices range from $5.99 to
$8.99. During the year ended December 31, 2000, alcoholic beverage sales
accounted for approximately 16% of the concept's total restaurant revenues.

Landry's Seafood House. Landry's Seafood House is a full-service traditional
Gulf Coast seafood restaurant. It offers an extensive menu featuring fresh
fish, shrimp, crab, lobster, scallops, other seafood, beef and chicken
specialties in a comfortable, casual atmosphere. Dinner entree prices range
from $12.99 to $20.99, with certain items offered at market price. Lunch
entrees range from $5.99 to $9.99. During the year ended December 31, 2000,
alcoholic beverage sales accounted for approximately 16% of the concept's
total restaurant revenues.

The Crab House. The Crab House restaurant is a full service casual dining
seafood specialty restaurant with a casual nautical theme. Many of The Crab
House restaurants feature a fresh seafood salad bar. Dinner entree prices
range from $13.99 to $18.99, with certain items offered at market price. Lunch
entrees range from $6.99 to $9.99. During the year ended December 31, 2000,
alcoholic beverage sales accounted for approximately 14% of the concept's
total restaurant revenues.

Rainforest Cafe. The Rainforest Cafe restaurants are designed to provide
full service casual dining in a visually and audibly stimulating and
entertaining rainforest environment that appeals to a broad range of
customers. Each Rainforest Cafe consists of a restaurant and a retail village.
The restaurant provides an attractive

value to customers by offering a full menu of high quality food and beverages
items served in a simulated rainforest, complete with thunderstorms,
waterfalls and an active wildlife. In the retail village, Rainforest Cafe,
sells complementary apparel, toys, and gifts with the Rainforest Cafe logo in
addition to other items reflecting the rainforest theme. Dinner entree prices
range from $10.99 to $18.99. Lunch entree prices range from $7.99 to $9.99.
During the year ended December 31, 2000, retail sales and alcoholic beverage
sales accounted for approximately 17% and 7% of the concept's total restaurant
revenues, respectively.

RECENT AND PLANNED GROWTH

The Company's long-term objective is to continue expansion of its restaurant
concepts by opening units in strategically desirable markets. The Company
intends to concentrate on development of Joe's Crab Shack restaurants in
certain identified markets to increase the Company's competitive position and
obtain greater marketing and operational efficiencies. In addition, the
Company may pursue opportunistic purchases of other restaurant companies and
may pursue opportunities for investment in the hospitality, entertainment,
food service, facilities management or other industries.

The Company completed the acquisition of Rainforest Cafe in December 2000.
The Company's strategy for the Rainforest Cafe restaurants includes improved
menus, an increased operational focus, new manager incentive programs for
employee retention and revenue improvement and new advertising and marketing
campaigns. Similar changes were successfully implemented in the Joe's Crab
Shack restaurants in 1999. In addition, the Company anticipates certain
Rainforest Cafe restaurants that fail to meet minimum standards will be
closed. To date, the Company has closed four Rainforest Cafe restaurants and
is planning additional Rainforest Cafe restaurant closures, particularly in
certain mall locations.

The Company opened 13 restaurants in 2000. As a result of the Rainforest
Cafe acquisition, the Company expects to reduce new openings in 2001 to
approximately seven to ten restaurants. This reduced expansion is intended to
allow the Company's management to focus attention on the immediate integration
of Rainforest Cafe's business and operations.

The Company's primary growth will utilize the Joe's Crab Shack concept,
although additional Landry's Seafood House and The Crab House restaurants may
be built. The Company believes that the increased consumption of seafood due
to its taste, variety and perceived health advantages, combined with the
excellent unit economics of its restaurants, support the Company's decision to
concentrate its expansion efforts on quality seafood restaurants in
strategically targeted markets.

The Company has internally developed a new restaurant concept called "The
Aquarium--An Underwater Dining Adventure". The Aquarium restaurant offers
seafood dining in an extraordinary setting. Guests dine amongst fish and coral
with the illusion of being at the bottom of the sea. Guests are seated around
a large centerpiece aquarium and numerous smaller aquariums with decor and
lighting that complement the overall dining experience. As of December 31,
2000, there was one Aquarium restaurant located at the Company's Kemah
Boardwalk development. The Company has entered into a long-term lease
agreement with the City of Houston to develop a second Aquarium restaurant,
along with a public exhibit, and complementary amusements and entertainment
facilities, on city-owned property. The proposed new Aquarium project will be
located in the downtown arts and business district of Houston, Texas. The
Company may open additional Aquarium restaurants as development opportunities
arise.

The Company has designated a team of employees that are responsible for
opening new restaurant locations, including kitchen personnel and other
individuals who are trained as hosts, waiters, floor managers and bartenders.
The Company's enhanced management-training program allows assistant general
managers to be promoted to general managers. The Company believes that this
program lowers the Company's turnover rates at the general manager level. The
Company believes that through its training program and the hiring of outside
personnel it will be able to support its expansion strategy.

RESTAURANT LOCATIONS

The Company's seafood restaurants range in size from 5,000 square feet to
16,000 square feet, with the average restaurant size approximating 8,000
square feet. The seafood restaurants generally have dining room floor seating
for approximately 215 customers, patio seating on a seasonal basis, and bar
seating for approximately 10 to 20 additional customers.

The Rainforest Cafe restaurants generally range in size from approximately
15,000 to 30,000 square feet with an average restaurant size of approximately
20,000 square feet. The Rainforest Cafe restaurants have between 300 and 600
restaurants seats with an average of approximately 400 seats. The growth
strategy of Rainforest Cafe implemented by predecessor management included the
development of Rainforest Cafe restaurants in both high-profile concentrated
tourist areas, and in shopping center mall locations. Most of the mall
locations have experienced high initial revenues followed by an unmitigated,
prolonged revenue decline. While these mall locations produce revenues well in
excess of typical casual dining restaurants, the Company anticipates that
certain Rainforest Cafe restaurants will fail to meet minimum standards and
will be closed due to high occupancy costs and fixed overhead costs. The
Company has initiated negotiations with various landlords to restructure
existing leases and has taken preliminary steps related to the possible
termination of certain Rainforest Cafe leases.

The following table enumerates by state the location of Company's full
service restaurants as of December 31, 2000:

NUMBER
OF
STATE UNITS
----- ------

Alabama................. 4
Arizona................. 5
California.............. 9
Colorado................ 7
Connecticut............. 1
Florida................. 20
Georgia................. 4
Illinois................ 9
Indiana................. 5
Kansas.................. 2
Kentucky................ 2
Louisiana............... 4
Maryland................ 3
Massachusetts........... 1
Michigan................ 5
Minnesota............... 3
Mississippi............. 1

NUMBER
OF
STATE UNITS
----- ------

Missouri................ 3
Nevada.................. 5
New Jersey.............. 3
New Mexico.............. 1
New York................ 1
North Carolina.......... 4
Ohio.................... 8
Oklahoma................ 2
Pennsylvania............ 1
South Carolina.......... 7
Tennessee............... 6
Texas................... 54
Utah.................... 1
Virginia................ 6
Washington.............. 1
---
Total................... 188
===

The Company is also the developer and operator of the Kemah Boardwalk south
of Houston, Texas. The Kemah Boardwalk is a forty acre development, which is
substantially owner-operated by the Company, and includes seven restaurants
(included in the table above), a boutique hotel, retail shops, amusement
attractions, and a marina.

The Company's seafood restaurants offer a wide variety of high quality,
broiled, grilled, and fried seafood items at moderate prices, including red
snapper, shrimp, crawfish, crab, lump crabmeat, lobster, oysters, scallops,
flounder, and other traditional seafood items, many with a choice of unique
seasonings, stuffings and toppings. Menus include a wide variety of seafood
appetizers, salads, soups and side dishes. In order to provide an

alternative to seafood items, high quality beef, fowl, pastas, and other
American food entrees are available. The Company's restaurants also feature a
unique selection of desserts made fresh on a daily basis at each location.
Many of the Company's restaurants offer complimentary salad and garlic bread
with each entree, as well as certain lunch specials and popularly priced
children's entrees. The Rainforest Cafe menu offers traditional American fare,
including beef, chicken and seafood at moderate prices.

MANAGEMENT AND EMPLOYEES

The Company's policy is to staff its restaurants with management that has
significant experience in the restaurant industry. The Company believes its
strong team-oriented culture helps it attract highly motivated employees who
provide customers with a superior level of service. The Company trains its
kitchen employees and wait staff to take great pride in preparing and serving
food in accordance with the high standards established by the Company.
Restaurant managers and staff are trained to be courteous and attentive to
customer needs, and the managers, in particular, are instructed to visit each
table. Senior corporate management hosts weekly meetings with restaurant
general managers to discuss individual restaurant performance and customer
comments. Moreover, the Company requires general managers to hold weekly staff
meetings at their individual restaurants. Compliance with the Company's strict
quality requirements is monitored through periodic on-site visits and formal
periodic inspections by regional field managers and supervisory personnel from
the Company's corporate offices.

The typical seafood unit has a general manager and several kitchen and floor
managers. Many of the general managers have been promoted from within the
Company after training in all areas of restaurant management with a strong
emphasis on kitchen operations. The general managers generally spend most of
their time in the dining area of the restaurant, supervising the staff and
providing service to customers.

The Rainforest Cafe unit management structure is more complex due to higher
unit level sales, larger facilities, rainforest theming including
animatronics, aquariums, and complementary retail business activity. The
typical Rainforest Cafe general manager has a multi-unit background.
Supporting the general manager is a management team consisting of floor,
kitchen, retail, facility and outside sales managers.

Each restaurant management team is eligible to receive monthly incentive
bonuses. These employees typically earn between 15% and 25% of their total
cash compensation under this program.

The Company has spent considerable effort in developing employee growth
programs whereby a large number of promotions occur internally. The Company
requires each trainee to participate in a formal training program that
utilizes departmental training manuals, examinations and a scheduled
evaluation process. Newly hired wait staff are required to spend from 5 to 10
days in training before they serve customers. The Company has historically
utilized a program of extensive background checks for prospective management
employees, such as criminal checks, credit checks, driving record and drug
screening. Management training encompasses three general areas: (i) all
service positions; (ii) management accounting, personnel management, and
dining room and bar operations; and (iii) kitchen management, which entails
food preparation and quality controls, cost controls, training, ordering and
receiving, and sanitation operations. Due to the Company's enhanced training
program, management training customarily lasts approximately 8 to 12 weeks,
depending upon the trainee's prior experience and performance relative to the
Company's objectives. As the Company expands, it will need to hire additional
management personnel, and its continued success will depend in large part on
its ability to attract, train, and retain quality management employees. As a
result of the enhanced training programs, the company attracts and retains a
greater proportion of management personnel through existing employees and
internal promotions and advancements.

As of December 31, 2000, there were approximately 72 individuals involved in
regional management functions. As the Company grows, it plans to increase the
number of regional managers, and to have each regional manager responsible for
a limited number of restaurants within their geographic area. The Company
plans to promote experienced restaurant level management personnel to serve as
future regional managers.

As of December 31, 2000, the Company employed approximately 16,000 persons,
of whom 1,150 were restaurant managers or manager-trainees, 242 were salaried
corporate and administrative employees, 72 were operations regional management
employees, 30 were development and construction employees and the rest were
hourly employees (all numbers approximate). Typical restaurant employment for
the Company is at a seasonal low at December 31, 2000. Each seafood restaurant
employs an average of approximately 60 to 100 people, depending on seasonal
needs. The largest Rainforest Cafe units have in excess of 400 employees. The
Company believes that its management level employee turnover for 2000 was
within industry standards. None of the Company's employees are covered by a
collective bargaining agreement. The Company considers its relationship with
employees to be satisfactory.

CUSTOMER SATISFACTION

The Company is committed to providing its customers prompt, friendly,
efficient service, keeping table-to-wait staff ratios low and staffing each
restaurant with an experienced management team to ensure attentive customer
service and consistently high food quality. Through the use of comment cards
and a 1-800-telephone number, senior management receives valuable feedback
from customers and through prompt responses demonstrates a continuing interest
in customer satisfaction.

PURCHASING

The Company strives to obtain consistent, quality items at competitive
prices from reliable sources. The Company continually researches and surveys
various products in an effort to obtain the highest quality products possible
and to be responsive to changing customer tastes. In order to maximize
operating efficiencies and to provide the freshest ingredients for its food
products, while obtaining the lowest possible prices for the required quality,
each restaurant's management team determines the daily quantities of food
items needed and orders such quantities from major suppliers at prices
negotiated primarily by the Company's corporate office. The Company emphasizes
availability of the items on its menu, and if an item is in short supply,
restaurant level management is expected to use its initiative to procure the
item immediately.

The Company uses many suppliers and procures its seafood products from
world-wide sources in order to ensure a consistent supply of high-quality food
and supplies at competitive prices. While the supply of certain seafood
species is volatile, the Company believes that it has the ability to identify
alternative seafood products and to adjust its menus as required. The Company
routinely inventories bulk purchases of seafood products and retail goods for
distribution to its restaurants to take advantage of buying opportunities and
hedge against price and supply fluctuations.

The Company believes that the essential food products and retail goods are
available, or can be made available upon relatively short notice, from
alternative qualified suppliers. The Company uses two national distributors in
order to achieve certain cost efficiencies, but such services are available
from alternative qualified distributors. The Company has not experienced any
significant delays in receiving its food and beverage products, restaurant
supplies or equipment.

ADVERTISING AND MARKETING

The Company employs a marketing strategy that utilizes frequent, high
profile advertising in order to attract new customers and establish a high
level of name recognition. The Company has historically relied primarily on
word-of-mouth publicity, billboards with distinctive graphics, travel and
hospitality magazines and print advertising. During 1999 and 2000, the Company
successfully expanded its use of television and radio commercials. The Company
uses multiple billboards on highways to direct potential customers from the
highways to the restaurants, as well as to build name recognition within each
market. The Company's advertising expenditures for 2000 were approximately
2.0% of revenues. The Company expects that future advertising and marketing
expenses will increase as a percentage of revenues and that the Company will
utilize more television and radio advertising.

RESTAURANT SECURITY

The Company takes precautions to protect individual restaurant locations
against theft, robbery and other breaches of security through security
procedures and alarm and surveillance systems. A component of the Company's
emphasis on restaurant security is the employment of a licensed peace officer
as Director of Security. The Director of Security, who reports directly to the
corporate office, provides consultation and supervision relating to theft
prevention, employee related security issues and restaurant facility
protection.

SERVICE MARKS

Landry's Seafood House, Joe's Crab Shack and Rainforest Cafe are each
registered as a federal service mark on the Principal Register of the United
States Patent and Trademark Office. The Crab House is a registered design
mark. The Company's policy is to pursue registration of its important service
marks and trademarks and to vigorously oppose any infringement upon them.

COMPETITION

The restaurant industry is intensely competitive with respect to price,
service, the type and quality of food offered, location and other factors. The
Company has many well-established competitors with substantially greater
financial resources and a longer history of operations than the Company. The
Company competes with both locally owned restaurants, as well as national and
regional restaurant chains, some of which may be better established in the
Company's existing and future markets. In particular, Red Lobster, a national
seafood restaurant chain, operates approximately 650 seafood restaurants
nationwide, many of which operate in the Company's existing and future
markets. The Company also competes with other restaurant and retail
establishments for sites.

Changes in customer tastes, economic conditions, demographic trends and the
location, number of, and type of food served by competing restaurants could
adversely affect the Company's business as could a shortage of experienced
management and hourly employees. Management believes its restaurants enjoy a
high level of repeat business and customer loyalty due to high food quality,
comfortable atmosphere, and friendly efficient service.

RAINFOREST INTERNATIONAL LICENSE AND JOINT VENTURE AGREEMENTS

Rainforest Cafe has eight separate exclusive license arrangements relating
to the operations and development of Rainforest Cafes in the United Kingdom,
Japan, France, Mexico, Canada and certain countries and cities in Asia. These
agreements include a per unit development fee and royalties ranging from 3% to
7% of sales. There are 11 international units in operation. One additional
franchised international unit is expected to open in Canada in 2001. The
Company owns various equity interests in several of the international
locations. Most of the international franchise locations are experiencing
sales declines. Revenues from international franchises are not expected to be
significant. The Company is not actively marketing new international
franchises.

INFORMATION AS TO CLASSES OF SIMILAR PRODUCTS OR SERVICES.

The Company operates in only one industry segment. All significant revenues
and pre-tax earnings relate to retail sales of food, beverages and merchandise
to the general public through company-owned and company-operated restaurants,
substantially all located in the United States.

ITEM 2. PROPERTIES

RESTAURANT LOCATIONS

For information concerning the location of the Company's restaurants see
Item 1. Business--Restaurant Locations.

During the second quarter of 2001, the Company expects to complete
construction and move corporate offices into a Company owned multi-story
building designed for use as the Company's corporate headquarters, meeting and
training facilities, and research and development test kitchen in Houston,
Texas. The Company also owns and operates a 20,000 square foot warehouse
facility used primarily for development and construction related activities.
Construction has begun on an additional 55,000 square foot warehouse, situated
adjacent to the development warehouse with an expected completion date during
the fourth quarter of 2001. This new warehouse will also be owned and operated
by the Company.

ITEM 3. LEGAL PROCEEDINGS

Dissenters Rights Litigation

Eighty-one former shareholders (holding 4,406,655 shares) of Rainforest Cafe
common stock dissented to the merger between the Company and Rainforest Cafe.
On February 13, 2001, Rainforest Cafe sent each of the 81 dissenting
shareholders, Rainforest Cafe's estimate of fair value per share, along with a
check in the amount of $3.25 per share, which was the original acquisition
price. Subsequently, approximately 78 of the dissenting shareholders have made
a demand for supplemental payment based on their belief that the fair value of
each share of common stock in the former Rainforest Cafe was greater than
$3.25 per share. The Company believes that its estimate of fair value is
correct, and that the dissenting shareholders' estimate of fair value is
significantly inflated. The Company will vigorously pursue its determination
of fair value in an appraisal proceeding.

Class Action Litigation

Class action lawsuits were filed in June and July of 1999 against the
Company in the United States District Court for the Southern District of
Texas, Houston Division. These actions name as defendants the Company, all of
its current executive officers, directors and underwriters that participated
in the Company's offering of Common Stock in March 1998. Such lawsuits allege
that the defendants violated Federal securities laws during certain periods
while individually selling the Company's common stock. The plaintiffs in these
actions seek unspecified monetary damages. Although the ultimate outcome of
this matter cannot be determined at this time, the Company believes these
claims are without merit and intends to defend these claims vigorously.

General Litigation

The Company is subject to other legal proceedings and claims that arise in
the ordinary course of business. Management does not believe that the outcome
of any of those matters will have a material adverse effect on the Company's
financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders of the Company
during the fourth quarter of the fiscal year ended December 31, 2000.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

PRICE RANGE OF COMMON STOCK

The Company's common stock trades on the New York Stock Exchange under the
symbol "LNY." As of March 9, 2001, there were approximately 1,373 stockholders
of record of the Common Stock.

The table below sets forth, for the periods indicated, the high and low sale
prices as reported through December 13, 1999, on the NASDAQ National Market
for the Common Stock, and thereafter as reported on the New York Stock
Exchange.

High Low
------ -----

1999
First Quarter................................................. $ 8.06 $4.66
Second Quarter................................................ 10.88 6.06
Third Quarter................................................. 9.00 6.75
Fourth Quarter................................................ 9.50 7.88
2000
First Quarter................................................. $10.13 $6.13
Second Quarter................................................ 8.75 6.13
Third Quarter................................................. 8.50 6.81
Fourth Quarter................................................ 10.63 6.75

DIVIDEND POLICY

Commencing in 2000, the Company began to pay an annual $0.10 per share
dividend, declared and paid in quarterly installments of $0.025 per share. The
actual declaration and payment of cash dividends depends upon the Company's
actual earnings levels, capital requirements, financial condition, and other
factors deemed relevant by the Board of Directors. Pursuant to the Company's
revolving credit facility the Company is restricted from paying cash dividends
in excess of five million dollars per year.

STOCK REPURCHASE

On November 1998, the Company announced the authorization of an open market
stock buy back program. In April 2000, the Company authorized a renewal of the
Company's stock buy back program for $36.0 million. These programs have
resulted in the Company repurchasing approximately 9,750,000 shares of Common
Stock for approximately $78,700,000 through December 31, 2000, of which
approximately 3,325,000 shares were repurchased in 2000 for approximately
$25,700,000.

ITEM 6. SELECTED FINANCIAL DATA

The following table contains selected consolidated financial data for each
of the past five fiscal years. All numbers are in thousands, except per share
data.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------

INCOME STATEMENT DATA
Revenues:
Restaurant............. $520,980 $438,986 $399,548 $311,673 $232,597
Processing plant....... -- -- -- -- 3,510
-------- -------- -------- -------- --------
Total revenues....... 520,980 438,986 399,548 311,673 236,107
Operating costs and
expenses:
Cost of revenues....... 156,787 136,321 121,082 95,639 72,304
Restaurant labor....... 147,192 125,566 107,976 80,837 60,249
Other restaurant
operating expenses.... 122,099 101,563 86,319 66,227 51,077
General and
administrative
expenses.............. 26,652 21,354 15,222 10,517 9,447
Depreciation and
amortization.......... 33,392 (6) 22,230 18,687 17,080 12,978
Restaurant pre-opening
expenses.............. 3,402 3,764 10,439 (2) -- --
Store closings and
special charges....... 2,000 (7) 2,945 (4) 37,632 (3) -- --
Merger costs........... -- -- -- -- 25,971 (1)
Processing plant
expenses.............. -- -- -- -- 3,857
-------- -------- -------- -------- --------
Total operating costs
and expenses........ 491,524 413,743 397,357 270,300 235,883
Operating income........ 29,456 25,243 2,191 41,373 224
Other (income) expense:
Interest (income)
expense, net.......... 6,618 1,965 (1,625) (1,063) (2,379)
Other, net 887 (178) (843) (394) 318
-------- -------- -------- -------- --------
Total other (income)
expense............. 7,504 1,787 (2,468) (1,457) (2,061)
Income before income
taxes & cumulative
effect of accounting
change................. 21,952 23,456 4,659 42,830 2,285 (1)
Provision for income
taxes.................. 7,302 8,080 1,607 15,400 779
-------- -------- -------- -------- --------
Income before cumulative
effect of accounting
change................. 14,650 15,376 3,052 27,430 1,506 (1)
Cumulative effect of
accounting change, net
of tax................. -- -- 3,382 (2) -- --
-------- -------- -------- -------- --------
Net income (loss)....... $ 14,650 $ 15,376 $ (330) $ 27,430 $ 1,506 (1)
Net income before
special charges, merger
costs and accounting
change $ 20,301 $ 17,305 $ 27,701 $ 27,430 $ 18,647
======== ======== ======== ======== ========
Earnings (loss) per
share information:
Basic
Net income before
cumulative effect of
accounting change..... $ 0.63 $ 0.58 $ 0.10 $ 1.07 $ 0.06
Cumulative effect of
accounting change,
net of tax............ -- -- (0.11) -- --
-------- -------- -------- -------- --------
Net income (loss)...... $ 0.63 $ 0.58 $ (0.01) $ 1.07 $ 0.06 (1)
======== ======== ======== ======== ========
Net income before
special charges, merger
costs and accounting
change................. $ 0.87 $ 0.65 $ 0.94 $ 1.07 $ 0.80
======== ======== ======== ======== ========
Weighted average
number of common
shares outstanding.... 23,400 26,675 29,400 25,518 23,360
Diluted
Net income before
cumulative effect of
accounting change..... $ 0.62 $ 0.57 $ 0.10 $ 1.03 $ 0.06
Cumulative effect of
accounting change,
net of tax............ -- -- (0.11) -- --
-------- -------- -------- -------- --------
Net income (loss)...... $ 0.62 $ 0.57 $ (0.01) $ 1.03 $ 0.06 (1)
Net income before
special charges, merger
costs and accounting
change................. $ 0.86 $ 0.64 $ 0.93 $ 1.03 $ 0.77
======== ======== ======== ======== ========
Weighted average
number of common
shares and common
share equivalents
outstanding........... 23,600 27,025 29,900 26,600 24,100

BALANCE SHEET DATA (AT
END OF PERIOD)
Working capital......... $(39,657)(8) $ 17,430 (5) $ 43,960 $ 35,058 $ 64,377
Total assets............ 663,875 496,726 489,949 382,281 281,199
Short-term notes payable
and current portion of
long-term notes and
other obligations...... 60 93 (5) 82 72 492
Long-term notes and
other obligations,
noncurrent............. 155,000 68,060 (5) 35,153 50,235 221
Stockholders' equity.... $364,553 $377,348 $408,672 $296,738 $256,447

- --------
(1) On August 9, 1996, the Company acquired Bayport Restaurant Group, Inc.
("Bayport") pursuant to a merger transaction (the "Bayport Merger"). The
Bayport Merger was accounted for as a pooling of interests and,
accordingly, the consolidated financial statements of the Company include
the accounts and operations of Bayport for all of 1996. In connection with
the Bayport Merger, the Company

incurred certain merger costs. Without giving effect to such merger costs,
the Company's income before income taxes, net income, and net income per
share (diluted) would have been approximately $28,257, $18,647 and $0.77,
respectively.
(2) During 1998, the Company early adopted Statement of Position 98-5
"Reporting on the Costs of Start-Up Activities", requiring the expensing
of pre-opening costs as incurred. Additionally, pre-opening costs
capitalized at December 31, 1997, were required to be expensed effective
January 1, 1998, as a cumulative effect of a change in accounting
principle. The Company had previously capitalized pre-opening costs and
amortized such costs over the first 12 months the applicable restaurants
were open. Pre-opening amortization expense was approximately $3,244 and
$4,667 in 1996 and 1997, respectively.
(3) The Company incurred $37,632 in store closings and special charges in the
fourth quarter of 1998. These charges provided an estimated income tax
benefit of $13,000. These charges were the result of the Company's
decision during the fourth quarter of 1998 to close eleven underperforming
restaurants, the Company's decision not to renew a restaurant lease upon
option renewal and changes in the Company's strategic growth plan.
(4) The Company incurred $2,945 in store closings and special charges during
1999. The charges were the net result of $3,675 in transaction costs as
the result of a terminated merger agreement during the first quarter of
1999, and the reversal of an accrual (income) of $730 related to favorably
settling lease terminations during the second quarter of 1999.
(5) The Company's line of credit was renewed for a 3-year term in June 2000.
Outstanding amounts previously classified as a current liability at
December 31, 1999, have been reclassified to long-term.
(6) In December 2000, the Company recorded an asset impairment charge of $6.3
million ($4.3 million after tax) related to the write-down to estimated
fair value of certain restaurant properties.
(7) In the second quarter of 2000, the Company recorded a $2.0 million special
charge to expense merger costs for the Company's initial offer to acquire
Rainforest Cafe.
(8) Amount includes accrued costs of $44.4 million attributable to the
Company's acquisition of Rainforest Cafe.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

INTRODUCTION

The Company owns and operates full-service, casual dining restaurants. As of
December 31, 2000, the Company operated 188 restaurants. In addition, the
Company operates three limited menu take-out service units.

On October 28, 2000, the Company, acquired pursuant to a tender offer,
approximately 60% of the outstanding common stock of Rainforest Cafe, a
publicly traded restaurant company. On December 1, 2000, the Company completed
the 100% merger with Rainforest Cafe. The aggregate purchase price for all
outstanding shares was approximately $70.2 million. As of February 28, 2001,
there where 25 domestic Rainforest Cafes owned and operated by the Company and
11 international franchised units. The Company owns an equity interest in
certain international franchised units. Subsequent to the acquisition, four
Rainforest Cafe restaurants have been closed. It is probable that certain
additional Rainforest Cafe restaurants failing to meet certain minimum
standards will be closed.

Excluding anticipated unit closures, the acquired Rainforest Cafe
restaurants incurred an 8% same store sales decline for the two months ended
December 31, 2000, as compared to the same period in the prior year. Revenues
for substantially all Rainforest Cafe restaurants have experienced same store
sales declines for an extended period of time. Correspondingly, restaurant
profitability has also declined. Management plans to address the sales
declines through improved menu development, a focused general manager
incentive plan similar to that implemented in the Company's other restaurants
in 1999, investment in improved ambiance, additional marketing initiatives and
selective unit closures of restaurants that do not meet the Company's minimum
standards. There is no assurance that management will successfully curtail the
same store sales decline of Rainforest Cafe restaurants or that its
operational and financial plans will improve operating margins, particularly
in situations where sales declines continue. Based on the Company's historical
experience, initial operating results for the Rainforest Cafe's units will be
adversely affected by the new menu rollout. Cost of sales will be subject to
inefficiencies during the learning process and labor expenses will be impacted
by additional training and staffing costs. Further inefficiencies may occur as
the Company implements its financial, management and operational systems in
these restaurants.

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. There are various federal, state and local
governmental initiatives to increase the level of minimum wages which would
increase the Company's labor costs.

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,
weather conditions, 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 where 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 Exchange Act,
which are intended to be covered by safe harbors created thereby. Stockholders
are cautioned that all forward-looking statements involve risks and
uncertainty, including without limitation, the ability of the Company to
continue its expansion strategy, ability to make projected capital
expenditures, as well as general market conditions, competition, and pricing.
In addition, there is no assurance that Landry's management will be able to
smoothly integrate Rainforest Cafe operations and business, or whether same
store sales declines of Rainforest Cafe units can be mitigated or can achieve
projected financial results. All statements, other than statements of
historical facts, included or incorporated by reference in this report that
address activities, events or developments that the Company expects or
anticipates will or may occur in the future, including such things as future
capital expenditures (including the amount and nature thereof), business
strategy and measures to implement such strategy, competitive strengths,
goals, expansion and growth of the Company's business and operations, plans,
references to future success as well as other statements which include words
such as "anticipate," "believe," "plan," "estimate," "expect," and "intend"
and other similar expressions constitute forward-looking statements. 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.

RESULTS OF OPERATIONS

Restaurant Profitability

The following table sets forth the percentage relationship to total restaurant
revenues of certain restaurant operating data for the periods indicated:

YEAR ENDED
DECEMBER 31,
-------------------
2000 1999 1998
----- ----- -----

Revenues................................................ 100.0% 100.0% 100.0%
Cost of revenues........................................ 30.1 31.1 30.3
Restaurant labor........................................ 28.3 28.6 27.0
Other restaurant operating expenses (1)................. 23.4 23.1 21.6
----- ----- -----
Restaurant level profit (1)............................. 18.2% 17.2% 21.1%
===== ===== =====

- --------
(1) Excludes depreciation, amortization and pre-opening expenses.

Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999

Revenues increased $81,993,553, or 18.7%, from $438,986,243 to $520,979,796
for the year ended December 31, 2000, compared to the year ended December 31,
1999. The increase in revenues was primarily attributable to revenues from new
restaurant openings, a same store sales increase of 1%, and the inclusion of
revenues from Rainforest Cafe restaurants for the last two months of 2000.

As a primary result of increased revenues, cost of revenues increased
$20,465,886, or 15.0%, from $136,321,031 to $156,786,917 in the year ended
December 31, 2000, compared to the prior year. Cost of revenues as a
percentage of revenues for the year ended December 31, 2000 decreased to 30.1%
from 31.1% in 1999. The decrease in cost of revenues as a percentage of
revenues primarily reflects menu changes and lower product costs in 2000 as
compared to 1999.

Restaurant labor expenses increased $21,626,074, or 17.2%, from $125,566,341
to $147,192,415 in the year ended December 31, 2000, compared to the prior
year. Restaurant labor expenses as a percentage of revenues for the year ended
December 31, 2000 decreased to 28.3% from 28.6% in 1999. The decrease reflects
productivity improvements partially offset by labor rate increases.

Other restaurant operating expenses increased $20,535,746, or 20.2%, from
$101,562,887 to $122,098,633 in the year ended December 31, 2000, compared to
the prior year, principally as a result of increased revenues. Such expenses
increased as a percentage of revenues to 23.4% in 2000 from 23.1% in 1999, as
a primary result of increased occupancy and utility costs. The Company
anticipates advertising and marketing expenses will increase as a percentage
of revenues in 2001.

General and administrative expenses increased $5,298,836, or 24.8%, from
$21,353,610 to $26,652,446 in the year ended December 31, 2000, compared to
the prior year, and increased as a percentage of revenues to 5.1% from 4.9%.
The dollar increase resulted primarily from increased personnel to support the
Company's operations and increased incentive bonus compensation and duplicate
corporate overhead costs for November and December 2000 associated with
Rainforest Cafe corporate headquarters in Minneapolis, Minnesota. The Company
expects that the future rate of increase of general and administrative
expenses will moderate in comparison to revenue increases and the duplicate
overhead costs, primarily salaries and rent, of the separate Rainforest Cafe
corporate headquarters will be eliminated in 2001.

Depreciation and amortization expense increased $11,162,026, or 50.2%, from
$22,229,762 to $33,391,788 in the year ended December 31, 2000, compared to
the prior year. The dollar increase was primarily due to an asset impairment
charge of $6,291,706, and the addition of new restaurants and equipment.

The increase in net interest expense for the year ended December 31, 2000,
as compared to the prior year, is substantially due to increased borrowings
from treasury stock repurchases and the Rainforest Cafe acquisition. The
decrease in other expense (income), net was attributable to an involuntary
gain recorded in 1999, which did not recur in 2000.

Provision for income taxes decreased by $778,404 to $7,301,828 in 2000 from
$8,080,232 in 1999 primarily due to the higher interest expense and a
reduction in the Company's income. The provision for income taxes as a
percentage of income before income taxes was reduced in the third and fourth
quarter of 2000 and prospectively from 34.5% to 31% to reflect continuing
favorable Federal tax credits for tipped employees.

For the year ended December 31, 2000, a special charge of $2,000,000
($1,310,000, net of tax) was incurred in connection with the termination of an
initial attempted acquisition of Rainforest Cafe. Store closings and special
charges in 1999 represent the net of a $730,000 reversal (income) of estimated
costs relating to favorably settling lease obligations of certain closed
stores recorded during the second quarter of 1999 and $3,675,000 of expenses
incurred related to an abandoned merger transaction during the first quarter
of 1999.

Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998

In the fourth quarter of 1998, the Company decided to close 11
underperforming restaurants, eight of which were closed in 1998, and three of
which were closed in 1999. Store closing costs related to the write-down of
associated property and equipment to estimated realizable value and
anticipated costs to be incurred related to lease terminations and employee
severance were recorded during the fourth quarter of 1998. In addition, the
Company re-evaluated its strategic growth plan which reduced future unit
growth and abandoned numerous potential restaurant sites. These strategic
changes resulted in a reduction in employees, the sale of a duplicate
corporate asset and the abandonment of a strategic corporate transaction. The
Company incurred a fourth quarter 1998 charge that aggregated $37,631,969
related to all such activities. During the second quarter of 1999, the Company
concluded its negotiations on certain restaurants included in the fourth
quarter special charge on a favorable basis compared to amounts previously
accrued. As a result, the Company recognized a $730,000 special credit during
the three months ended June 30, 1999. Store closing and special charges and
credits include management's estimate of costs which will be incurred in
future periods based on various factors. Such factors could change, resulting
in additional costs or credits in future periods.

Revenues increased $39,438,160, or 9.9%, from $399,548,083 to $438,986,243
for the year ended December 31, 1999, compared to the year ended December 31,
1998. The increase in revenues was primarily attributable to revenues from new
restaurant openings and increases in the Company's unit average weekly sales.
During the first quarter of 1999, the Company implemented a new menu for the
Joe's Crab Shack restaurants, a new manager bonus plan, and a new advertising
and marketing campaign. These programs created positive revenue growth. Same
store sales for the twelve months ended December 31, 1999 were up
approximately 3.6% from the same period in 1998. Average weekly sales for all
stores for the twelve months ended December 31, 1999 increased 2.8%, with
increases recorded in the second, third and fourth quarters of 1999,
offsetting a decline in the first quarter of 1999.

As a primary result of increased revenues, cost of revenues increased
$15,239,784, or 12.6%, from $121,081,247 to $136,321,031 in the year ended
December 31, 1999, compared to the prior year. Cost of revenues as a
percentage of revenues for the year ended December 31, 1999 increased to
31.1%, from 30.3% in 1998. The increase in cost of revenues as a percentage of
revenues primarily reflects menu changes, reduced menu pricing in certain
markets, and higher product costs in 1999 as compared to 1998.

Restaurant labor expenses increased $17,590,047, or 16.3%, from $107,976,294
to $125,566,341 in the year ended December 31, 1999, compared to the prior
year. Restaurant labor expenses as a percentage of revenues for the year ended
December 31, 1999 increased to 28.6% from 27.0% in 1998. In connection with
the new menu roll-out and a new advertising and promotional campaign, the
Company increased staffing levels and implemented additional training
programs. In addition, to counteract what the Company believed to be higher
general manager turnover than historically experienced, the Company raised the
base salary of substantially all of its general managers by approximately
$10,000 during the fourth quarter of 1998.

Other restaurant operating expenses increased $15,243,653, or 17.7%, from
$86,319,234 to $101,562,887 in the year ended December 31, 1999, compared to
the same period in the prior year, principally as a result of increased
revenues. Such expenses increased as a percentage of revenues to 23.1% in 1999
from 21.6% in 1998, as a primary result of increased advertising, marketing,
insurance, customer relations expenses, and the costs of the new menu roll-
out.

General and administrative expenses increased $6,131,226, or 40.3%, from
$15,222,384 to $21,353,610 in the year ended December 31, 1999, compared to
the prior year, and increased as a percentage of revenues to 4.9% from 3.8%.
The dollar increase resulted primarily from increased personnel, particularly
field operations support staff, salaries and travel to support the Company's
operations.

Depreciation and amortization expenses increased $3,543,254, or 19.0%, from
$18,686,508 to $22,229,762 in the year ended December 31, 1999, compared to
the year ended December 31, 1998. The dollar increase was primarily due to the
addition of new restaurants and purchases of new equipment.

The increase in net interest expense for the year ended December 31, 1999,
as compared to the same period in the prior year, is primarily attributable to
increased borrowings for capital expenditures, working capital and

treasury stock purchases, and increases in the weighted average borrowing
rates under the Company's revolving credit facility. The change in other
income was not deemed significant.

Provision for income taxes increased by $6,472,978 from $1,607,254 in 1998
to $8,080,232 in 1999 primarily due to the change in the Company's income. The
provision for income taxes as a percentage of income before income taxes
remained at 34.5%.

Liquidity and Capital Resources

The Company has a $200.0 million line of credit from a syndicate of banks
which expires in June 2003. The line of credit is available for expansion,
acquisitions stock repurchases and general corporate purposes. At December 31,
2000, the Company had $155.0 million outstanding (with availability of $45.0
million) under this credit facility at an average interest rate of 9.0% and
had cash and cash equivalent balances aggregating approximately $26.2 million.

For the year ended December 31, 2000, the capital expenditures of the
Company were $77.4 million, and the Company purchased $25.7 million of common
stock funded out of existing cash balances, cash flow from operations and
borrowings. On October 28, 2000 the Company completed the purchase of
approximately 60% of the outstanding common stock of Rainforest Cafe for
approximately $40.5 million through a cash tender offer. The funds were
provided by an existing bank credit facility. The shares not tendered as of
October 28, 2000 were subsequently acquired by a merger on December 1, 2000.
Approximately $12.0 million was paid in 2000 and $18.0 million was paid in
2001 for these shares, funded by available cash balances and borrowings on the
bank line of credit. These amounts exclude the dissenting shareholders demand
for supplemental payment in excess of $3.25 per share. The Company believes
that the Rainforest Cafe merger consideration of $3.25 per share was not below
fair value of Rainforest Cafe and will pursue its determination of fair value
in an appraisal proceeding.

A substantial portion of the increases in the Company's consolidated balance
sheet accounts including balance increases in accounts receivables,
inventories, property, and liabilities between December 31, 1999 and 2000 were
attributable to amounts included in the Rainforest Cafe acquisition.

The Company expects to expend approximately $65.0 to $70.0 million on
capital expenditures in 2001. Included in such amounts are the remaining costs
of opening seven Joe's Crab Shack restaurants and one Rainforest Cafe
restaurant for 2001, partial construction costs on an estimated 10 new seafood
restaurants and a new Aquarium restaurant, all expected to open in 2002,
remaining construction costs of the new corporate headquarters and additional
warehouse, further land acquisition costs and other capital expenditures. The
Company has entered into an agreement to construct and operate a convention
center in the City of Galveston, Texas. The Galveston convention center
estimated construction costs of approximately $25.0 million and subsequent
operating expenses will be funded by governmental agency bonds issued by the
City of Galveston and serviced by certain hotel occupancy taxes. In connection
with the convention center development and related management contract, the
Company is obligated to purchase and donate, with reversionary interest, land
required for use by the convention center, and to guarantee certain
construction cost overruns and operating losses, if any, subject to a certain
rights of reimbursement. Under the agreements, the Company will have the
rights to one-half of any profits generated by the operation of the convention
center.

The Company has entered into a contract to purchase property, including a
multi-story building, adjacent to the new Enron Field (professional baseball
park), close to the Convention Center, a new professional basketball arena and
other major venues under development and construction in the downtown area of
Houston, Texas. Subject to the availability of financing and certain tax
abatements, the Company plans to renovate the existing building into a 200-
room hotel. Renovation and construction costs are expected to be approximately
$30 million, which would be expended over 3 years.

At December 31, 2000, the Company has accrued approximately $44.4 million
for Rainforest Cafe acquisition related costs, of which the Company expects to
pay the majority of in 2001.

The Company plans to fund 2001 capital expenditures and remaining Rainforest
Cafe acquisition costs out of existing cash balances, cash flow from
operations and availability under the Company's existing credit facility.

As a result of the Company's tax carryforwards and deferred tax assets,
including amounts attributable to the acquisition of Rainforest Cafe, the
Company's cash flow from operations is expected to be subject to reduced
Federal income tax payments for the foreseeable future, and therefore provide
additional cash flow for funding the Company's business activities and debt
service.

During the fourth quarter of 1999, the Company's Board of Directors
authorized an annual $0.10 per share dividend, to be declared and paid
quarterly with anticipation that such dividends would be declared commencing
in 2000. During 2000, the Company declared and paid cash dividends of
$1,764,579. The Company is restricted from paying cash dividends in excess of
$5.0 million per year, and repurchases limited to an additional $6.0 million
of common stock repurchases until the Company's leverage ratios are reduced to
a prescribed amount.

The Company, from time to time, reviews opportunities for investment in the
hospitality, entertainment, food service and facilities management and other
industries. The Company's exercise of any such investment opportunity may
impact the Company's development plans and capital expenditures. The Company
believes that adequate sources of capital are available to fund the Company's
business activities through December 31, 2001.

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 even greater seasonality and sensitivity to weather than
the Company's other restaurant concepts. During the Company's 1998 third
quarter, the Company's restaurant operations, revenues and profitability were
negatively affected by a series of four tropical storms in the Gulf Coast and
Mid-Atlantic areas of the United States. The timing of unit openings can and
will affect quarterly results. The Company anticipates a decline in revenues
from the initial ("honeymoon") volumes of new units, and a decline in 2001
revenues of the majority of Rainforest Cafe restaurants, including the closure
of certain restaurant locations.

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 restaurant labor costs, including expected
future increase in federal minimum wages, land and construction costs could
adversely affect the Company's profitability and ability to expand.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk primarily related to potential adverse
changes in interest rates as discussed below. Management is actively involved
in monitoring exposure to market risk and continues to develop and utilize
appropriate risk management techniques. The Company is not exposed to any
other significant risks from the use of derivative financial instruments.
Management does not use derivative financial instruments for trading or to
speculate on changes in interest rates or commodity prices.

Interest Rate Risk

Total debt at December 31, 2000, included $155.0 million of floating-rate
debt attributed to a bank line of credit at an average interest rate of 9.0%.
The floating-rate debt will mature in June 2003. As a result, the Company's
annual interest cost in 2001 will fluctuate based on short-term interest
rates. The impact on annual cash flow of a ten percent change in the floating
rate (approximately 90 basis points) would be approximately $1.4 million
annually based on the floating-rate debt outstanding at December 31, 2000. The
Company's floating-rate debt had a book value and a fair market value of
$155.0 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are set forth herein commencing on page 20.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

During the fiscal years 1998, 1999, and 2000 and through the date of this
report, there have been no changes in the Company's independent public
accountants, nor have any disagreements with such accountants or reportable
events occurred.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Certain information relating to directors and executive officers of the
Company is incorporated by reference herein from the Company's definitive
Proxy Statement in connection with its Annual Meeting of Stockholders, which
proxy statement will be filed with the Securities and Exchange Commission not
later than 120 days after the close of the Company's fiscal year ended
December 31, 2000.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)1.Financial Statements

The following financial statements of the Company are set forth herein
commencing on page 20:

--Report of Independent Public Accountants
--Consolidated Balance Sheets as of December 31, 2000 and 1999
--Consolidated Statements of Income (Loss) for the years ended
December 31, 2000, 1999 and 1998
--Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2000, 1999 and 1998
--Consolidated Statements of Cash Flows for the years ended December
31, 2000, 1999 and 1998
--Notes to Consolidated Financial Statements

2. Financial Statement Schedules--Not applicable.

(1) Reports on Form 8-K

--No reports on Form 8-K were filed during the fourth quarter of 2000.

--All exhibits required by Item 601 of Regulation S-K are listed in the
accompanying "Exhibit Index" which immediately precedes such exhibits, and
is incorporated herein by reference.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Landry's Seafood Restaurants, Inc.:

We have audited the accompanying consolidated balance sheets of Landry's
Seafood Restaurants, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 2000 and 1999, and the related consolidated statements of income
(loss), stockholders' equity and cash flows for each of the three years in the
period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Landry's Seafood Restaurants,
Inc., and subsidiaries as of December 31, 2000 and 1999, and the results of
their operations and their cash flows for each of three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States.

Arthur Andersen LLP

Houston, Texas
February 16, 2001

LANDRY'S SEAFOOD RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

December 31,
-------------------------
2000 1999
------------ ------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 26,159,525 $ 22,977,666
Accounts receivable--trade and other............... 10,653,387 7,065,298
Inventories........................................ 34,752,119 18,409,523
Deferred taxes..................................... 2,671,766 1,228,000
Other current assets............................... 12,302,393 9,030,086
------------ ------------
Total current assets............................. 86,539,190 58,710,573
------------ ------------
PROPERTY AND EQUIPMENT, net.......................... 559,737,798 431,378,855
GOODWILL, net of accumulated amortization of
$1,523,000 and $1,386,000, respectively 2,575,625 2,707,988
DEFERRED TAXES....................................... 8,501,521 --
OTHER ASSETS, net.................................... 6,520,641 3,928,436
------------ ------------
Total assets..................................... $663,874,775 $496,725,852
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................... $ 40,192,661 $ 21,416,112
Accrued liabilities................................ 85,943,990 19,772,136
Current portion of long-term notes and other
obligations....................................... 59,963 92,714
------------ ------------
Total current liabilities........................ 126,196,614 41,280,962
------------ ------------
LONG-TERM NOTES, NET OF CURRENT PORTION.............. 155,000,000 68,060,166
DEFERRED TAXES....................................... -- 10,036,686
OTHER LIABILITIES.................................... 18,125,503 --
------------ ------------
Total liabilities................................ 299,322,117 119,377,814
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $0.01 par value, 60,000,000 shares
authorized, 21,498,352 and 24,823,125 issued and
outstanding, respectively......................... 214,984 248,231
Additional paid-in capital......................... 301,225,712 322,605,100
Retained earnings.................................. 63,111,962 54,494,707
------------ ------------
Total stockholders' equity....................... 364,552,658 377,348,038
------------ ------------
Total liabilities and stockholders' equity....... $663,874,775 $496,725,852
============ ============

The accompanying notes are an integral part of these consolidated financial
statements.

LANDRY'S SEAFOOD RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Year Ended December 31,
---------------------------------------
2000 1999 1998
------------ ------------ ------------

REVENUES.............................. $520,979,796 $438,986,243 $399,548,083
OPERATING COSTS AND EXPENSES:
Cost of revenues.................... 156,786,917 136,321,031 121,081,247
Restaurant labor.................... 147,192,415 125,566,341 107,976,294
Other restaurant operating
expenses........................... 122,098,633 101,562,887 86,319,234
General and administrative
expenses........................... 26,652,446 21,353,610 15,222,384
Depreciation and amortization....... 33,391,788 22,229,762 18,686,508
Restaurant pre-opening expenses..... 3,401,511 3,764,389 10,439,229
Store closings and special charges.. 2,000,000 2,945,000 37,631,969
------------ ------------ ------------
Total operating costs and
expenses.......................... 491,523,710 413,743,020 397,356,865
OPERATING INCOME...................... 29,456,086 25,243,223 2,191,218
OTHER EXPENSE (INCOME):
Interest expense (income), net...... 6,617,567 1,964,969 (1,624,569)
Other, net.......................... 886,573 (177,711) (843,389)
------------ ------------ ------------
7,504,140 1,787,258 (2,467,958)
INCOME BEFORE INCOME TAXES &
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE................. 21,951,946 23,455,965 4,659,176
PROVISION FOR INCOME TAXES............ 7,301,828 8,080,232 1,607,254
------------ ------------ ------------
NET INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN
ACCOUNTING PRINCIPLE................. 14,650,118 15,375,733 3,051,922
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX..... -- -- 3,381,500
------------ ------------ ------------
NET INCOME (LOSS)..................... $ 14,650,118 $ 15,375,733 $ (329,578)
============ ============ ============
EARNINGS (LOSS) PER SHARE INFORMATION:
BASIC
Net income before cumulative effect
of accounting change............... $ 0.63 $ 0.58 $ 0.10
Cumulative effect of accounting
change............................. -- -- (0.11)
------------ ------------ ------------
Net income (loss)................... $ 0.63 $ 0.58 $ (0.01)
============ ============ ============
Weighted average number of common
shares outstanding................. 23,400,000 26,675,000 29,400,000
DILUTED
Net income before cumulative effect
of accounting change............... $ 0.62 $ 0.57 $ 0.10
Cumulative effect of accounting
change............................. -- -- (0.11)
------------ ------------ ------------
Net income (loss)................... $ 0.62 $ 0.57 $ (0.01)
============ ============ ============
Weighted average number of common
and common share equivalents
outstanding........................ 23,600,000 27,025,000 29,900,000

The accompanying notes are an integral part of these consolidated financial
statements.

LANDRY'S SEAFOOD RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Preferred
Stock Common Stock Additional
-------------- -------------------- Paid-In Retained
Shares Amount Shares Amount Capital Earnings Total
------ ------ ---------- -------- ------------ ----------- ------------

BALANCE, January 1,
1998................... 2,702 $27 26,004,449 $260,044 $250,935,805 $45,541,851 $296,737,727
Net loss............... -- -- -- -- -- (329,578) (329,578)
Conversion of preferred
stock................. (2,702) (27) 2,702 27 -- -- --
Issuance of common
stock, net of offering
costs................. -- -- 3,810,950 38,110 102,273,091 -- 102,311,201
Exercises of stock
options and income tax
benefit............... -- -- 527,189 5,272 9,947,453 -- 9,952,725
------ --- ---------- -------- ------------ ----------- ------------
BALANCE, December 31,
1998................... -- -- 30,345,290 303,453 363,156,349 45,212,273 408,672,075
------ --- ---------- -------- ------------ ----------- ------------
Net income............. -- -- -- -- -- 15,375,733 15,375,733
Exercise of stock
options and income tax
benefit............... -- -- 900,000 9,000 6,294,105 -- 6,303,105
Purchase of common
stock held in
treasury.............. (6,422,165) (64,222) (46,845,354) (6,093,299) (53,002,875)
------ --- ---------- -------- ------------ ----------- ------------
BALANCE, December 31,
1999................... -- -- 24,823,125 248,231 322,605,100 54,494,707 377,348,038
------ --- ---------- -------- ------------ ----------- ------------
Net Income............. 14,650,118 14,650,118
Dividends paid......... (1,764,579) (1,764,579)
Purchase of common
stock held in
treasury.............. -- -- (3,324,773) (33,247) (21,379,388) (4,268,284) (25,680,919)
------ --- ---------- -------- ------------ ----------- ------------
BALANCE, December 31,
2000................... -- -- 21,498,352 $214,984 $301,225,712 $63,111,962 $364,552,658
====== === ========== ======== ============ =========== ============

The accompanying notes are an integral part of these consolidated financial
statements.

LANDRY'S SEAFOOD RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,
------------------------------------------
2000 1999 1998
------------- ------------ -------------

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)................. $ 14,650,118 $ 15,375,733 $ (329,578)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Store closings and special
charges......................... -- (730,000) 25,362,773
Gain on sales of assets.......... -- (287,894) --
Cumulative effect of change in
accounting principle............ -- -- 5,162,500
Gain on involuntary conversion of
assets.......................... -- (491,477) (1,229,043)
Depreciation and amortization.... 33,391,788 22,229,762 18,686,508
Deferred rent.................... (413,988) -- --
Changes in assets and
liabilities:
(Increase) decrease in trade and
other receivables.............. 4,364,595 6,612,899 (5,296,232)
(Increase) decrease in
inventories.................... (7,758,689) 4,429,497 5,385,531
(Increase) decrease in other
assets......................... 11,234,860 2,147,994 586,569
Increase (decrease) in accounts
payable and accrued
liabilities.................... 9,866,444 6,815,646 11,475,059
------------- ------------ -------------
Total adjustments................ 50,685,010 40,726,427 60,133,665
------------- ------------ -------------
Net cash provided by operating
activities....................... 65,335,128 56,102,160 59,804,087
CASH FLOWS FROM INVESTING
ACTIVITIES:
Property and equipment additions.. (77,399,028) (55,123,127) (137,950,072)
Proceeds from sale of property and
equipment........................ -- 1,499,995 1,850,000
Purchase of Rainforest Cafe, net
of cash acquired................. (44,562,492) -- --
Other............................. (170,000) -- 52,986
------------- ------------ -------------
Net cash used in investing
activities.................... (122,131,520) (53,623,132) (136,047,086)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Sale (purchases) of common stock.. (25,680,919) (53,002,875) 102,294,532
Proceeds from exercise of stock
options.......................... -- 5,400,000 6,969,317
Borrowings (payments) under credit
line, net........................ 86,907,083 32,918,108 (15,071,575)
Dividends paid.................... (1,764,579) -- --
Other............................. 516,666 -- --
------------- ------------ -------------
Net cash provided by (used in)
financing activities.......... 59,978,251 (14,684,767) 94,192,274
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS....................... 3,181,859 (12,205,739) 17,949,275
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR................. 22,977,666 35,183,405 17,234,130
------------- ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF
YEAR.............................. $ 26,159,525 $ 22,977,666 $ 35,183,405
============= ============ =============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest......................... $ 7,692,000 $ 4,093,000 $ 1,834,000
Income taxes..................... $ 2,312,000 $ 491,837 $ 2,074,000

The accompanying notes are an integral part of these consolidated financial
statements.

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Landry's Seafood Restaurants, Inc. (the "Company") owns and operates seafood
restaurants primarily under the trade names Landry's Seafood House, Joe's Crab
Shack and The Crab House. In addition, the Company owns and operates domestic
and licenses international rainforest themed restaurants under the trade name
Rainforest Cafe. Rainforest Cafe, Inc. ("Rainforest Cafe"), a casual dining
restaurant chain, was acquired in 2000.

The Company is also the developer and operator of the Kemah Boardwalk,
located near Houston, Texas. The Kemah Boardwalk is a forty acre waterfront
restaurant development including seven restaurants, a boutique hotel, retail
shops, amusement attractions, and a marina.

PRINCIPLES OF CONSOLIDATION

The accompanying financial statements include the consolidated accounts of
Landry's Seafood Restaurants, Inc., a Delaware holding company and its wholly
and majority owned subsidiaries and partnership.

INVENTORIES

Inventories consist of food and beverages used in restaurant operations and
complementary retail goods and are recorded at the lower of cost or market
value as determined by the average cost for food and beverages and by the
retail method on the first-in, first-out basis for retail goods. Inventories
consisted of the following:

December 31,
-----------------------
2000 1999
----------- -----------

Food and beverage.................................... $26,295,177 $17,517,197
Retail goods......................................... 8,456,942 892,326
----------- -----------
$34,752,119 $18,409,523
=========== ===========

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for major renewals
and betterments are capitalized while maintenance and repairs are expensed as
incurred.

Restaurant and other properties are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recovered. The recoverability of properties that are to be held and
used is measured by comparison of the estimated future undiscounted cash flows
associated with the asset to the carrying amount of the asset. If such assets
are considered to be impaired, an impairment charge is recorded in the amount
by which the carrying amount of the assets exceeds their fair value.
Properties to be disposed of are reported at the lower of their carrying
amount or fair value, reduced for estimated disposal costs.

Interest is capitalized in connection with restaurant construction and
development activities, and other real estate development projects. The
capitalized interest is recorded as part of the asset to which it relates and
is amortized over the asset's estimated useful life. During 2000 and 1999, the
Company capitalized approximately $1,650,000 and $1,285,000, respectively, of
interest costs.

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company computes depreciation using the straight-line method. The
estimated lives used in computing depreciation are as follows: buildings and
improvements--5 to 40 years; furniture, fixtures and equipment--4 to 10 years;
and leasehold improvements--shorter of 30 years or lease term, including
extensions where appropriate.

PRE-OPENING COSTS

Pre-opening costs include the direct and incremental costs incurred in
connection with the commencement of each restaurant's operations, which are
substantially comprised of training-related costs. Prior to 1998, pre-opening
costs were capitalized and amortized using the straight-line method over 12
months. During the fourth quarter of 1998, the Company adopted the American
Institute of Certified Public Accountants Statement of Position 98-5
"Reporting on the Costs of Start-Up Activities" (SOP 98-5). SOP 98-5 requires
companies to expense pre-opening costs as incurred and to expense previously
capitalized pre-opening costs as a cumulative effect of change in accounting
principle. In connection with Landry's early adoption of SOP 98-5 and the
related requirements of SOP 98-5, Landry's expensed $5,162,500 of pre-opening
costs capitalized as of December 31, 1997, effective January 1, 1998. The
expense of $5,162,500 is recorded net of a tax benefit of $1,781,000 as a
Cumulative Effect of Change in Accounting Principle in the amount of
$3,381,500.

DEVELOPMENT COSTS

Certain direct costs are capitalized in conjunction with site selection for
planned future restaurants, acquiring restaurant properties and other real
estate development projects. Direct and certain indirect costs, including
interest, are capitalized in conjunction with construction and development
projects. These costs are included in property and equipment in the
accompanying consolidated balance sheets and are amortized over the life of
the related building and leasehold interest. Costs related to abandoned site
selections and general site selection costs which cannot be identified with
specific restaurants are charged to operations.

GOODWILL

Goodwill is amortized over 30 years. Other intangible assets are amortized
over the life of the related agreement. These amounts are included in goodwill
and other assets in the accompanying consolidated balance sheets,
respectively.

EARNINGS PER SHARE

Net income (loss) per common share has been computed in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share". Basic earnings per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings per share reflects the potential dilution that could occur if
contracts to issue common stock were exercised or converted into common stock.
For purposes of this calculation, outstanding stock options are considered
common stock equivalents using the treasury stock method. Options to purchase
approximately 1,300,000 shares have been excluded from the calculation of
diluted earnings per share for 2000 and 1999, as they were anti-dilutive.

CASH FLOW REPORTING

For purposes of the consolidated financial statements, the Company considers
all highly liquid investments with original maturities of three months or less
to be cash equivalents.

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

SEGMENT REPORTING

As of December 31, 2000, the Company operated 188 casual full-service dining
restaurants which are a part of a single operating segment. The restaurants
operate principally in the United States and provide similar products to
similar customers. The restaurants generally possess similar pricing
structures resulting in the potential for similar long-term expected financial
performance characteristics. Revenues are from the sale of food, beverages and
complementary retail items.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates.

2. ACQUISITION OF RAINFOREST CAFE, INC.

On October 28, 2000, the Company accepted for purchase 12,455,011 shares of
the common stock, no par value (the "Shares"), of Rainforest Cafe that had
been tendered pursuant to a tender offer for all of the outstanding shares at
$3.25 per share. As of the closing of the tender offer, the Company owned
approximately 60% majority ownership in Rainforest Cafe. On December 1, 2000,
the Company completed the 100% merger of Purchaser with and into Rainforest
Cafe, with Rainforest Cafe, as the surviving corporation. The aggregate
purchase price for all outstanding shares was approximately $70.2 million,
which was provided primarily from the Company's existing bank credit facility.
The aggregate purchase price includes payments tendered to dissenting
shareholders on February 13, 2001.

The acquisition was accounted for by the purchase method of accounting and,
accordingly, the Company's financial statements include the Company's
ownership portion of the operating results of Rainforest Cafe for November and
December 2000. The assets acquired and liabilities assumed were recorded at
estimated fair values as determined by the Company's management based on
information currently available and on preliminary plans as to future
operations. The allocation of the purchase price is subject to revision based
on the final determination of fair values. A summary of the assets acquired
and liabilities assumed in the acquisition follows:

(Thousands)

Estimated fair values of
assets acquired........ $148,000
Liabilities assumed..... (68,594)
--------
Allocated purchase
price.................. 79,406
Less cash acquired and
amount payable for
outstanding shares..... (34,844)
--------
Net cash paid, as of
December 31, 2000...... $ 44,562
========

As a result of the acquisition, the Company has recorded acquisition
integration costs for the estimated incremental costs to exit and consolidate
activities at various locations, to involuntarily terminate employees, and for
other costs to integrate operating locations and other activities of
Rainforest Cafe with the Company. Accounting principles generally accepted in
the United States, provide that these acquisition integration expenses, which
are not associated with the generation of future revenues and have no future
economic benefit, be reflected as assumed liabilities in the allocation of the
purchase price. The components of the acquisition integration liabilities
included in the purchase price allocation for Rainforest Cafe are comprised of
involuntary

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
corporate terminations of $10.0 million, facility rationalization and exit
costs of $16.7 million and other miscellaneous costs of $4.0 million. Accrued
merger costs as of December 31, 2000, include remaining Rainforest Cafe common
stock acquisition costs of $16.0 million, involuntary corporate termination
costs of $8.2 million, restaurant exit costs of $16.7 million, and other
miscellaneous costs of $3.5 million. Certain aspects of the integration plan
are subject to finalization and may be refined as additional studies are
completed, including the evaluation of acquired facilities. Refinement of the
estimated acquisition integration liabilities will be included in the final
allocation of the purchase price, which will be completed during 2001.

Unaudited pro forma results of operations are prepared as if Landry's and
Rainforest had been combined as of the beginning of the year, and include
estimates and assumptions which management believes are reasonable. Unaudited
pro forma results for the years ended December 31, 2000 and 1999,
respectively, are as follows: revenues of $740.0 million and $702.0 million;
net income of $14.0 million and $25.0 million; and basic net income per share
of $0.60 and $0.93, respectively. Rainforest cafe operating results for 2000
include pre-tax special charges for approximately $7 million related to store
closings, write-off of development and transaction cost and loss on sale of
investments. Pro forma results do not include any anticipated cost savings or
other effects of the planned integration and are not necessarily indicative of
the results which would have occurred if the business combination had been in
effect on the dates indicated, or which may result in the future.

3. PROPERTY AND EQUIPMENT

Property and equipment is comprised of the following:

December 31,
--------------------------
2000 1999
------------ ------------

Land............................................. $ 93,838,270 $ 73,763,606
Buildings and improvements....................... 121,341,888 113,262,222
Furniture, fixtures and equipment................ 134,503,489 121,972,834
Leasehold improvements........................... 279,658,133 180,791,359
Construction in progress......................... 27,102,500 7,986,135
------------ ------------
$656,444,280 $497,776,156
Less--accumulated depreciation................... (96,706,482) (66,397,301)
------------ ------------
Property and equipment, net...................... $559,737,798 $431,378,855
============ ============

During the fourth quarter of 2000, the Company evaluated recent unfavorable
cash flows related to three low performing restaurants and concluded that
these properties were impaired based on the existing and anticipated future
economic outlook for such properties in their respective market areas. As a
result, the Company recorded an asset impairment charge of approximately
$6,292,000, representing the difference between the estimated fair value and
carrying value for those restaurant properties. The asset impairment charge is
classified as depreciation and amortization expense in the consolidated
statements of income (loss) for the year ended December 31, 2000.

Other current assets at December 31, 2000 and 1999 includes approximately
$5,961,000 and $5,667,000 of assets held for sale. Other income for the year
ended December 31, 1999 and 1998 includes a gain on the involuntary conversion
of assets of $491,000 and $1,229,000, respectively, as a result of an
insurance settlement.

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. ACCRUED LIABILITIES

Accrued liabilities are comprised of the following:

December 31,
-----------------------
2000 1999
----------- -----------

Payroll and related costs.......................... $10,898,420 $ 4,145,220
Rent, insurance and taxes, other than payroll and
income taxes...................................... 17,841,483 6,294,954
Federal and state income taxes..................... -- 1,198,998
Store closings and special charges (Note 9)........ 947,131 1,705,027
Accruals for Rainforest Cafe acquisition (Note 2).. 44,361,565 --
Other.............................................. 11,895,391 6,427,937
----------- -----------
$85,943,990 $19,772,136
=========== ===========

5. DEBT

As of December 31, 2000, the Company has a $200.0 million credit line from a
syndicate of banks which was renewed and increased from $125.0 million in June
2000. Amounts outstanding at December 31, 1999, under the credit line, which
were classified in 1999 as a current liability, have been reclassified as
long-term due to the renewal. The credit line matures in June 2003, and is
available for expansion, acquisitions, share repurchases, and other general
corporate purposes. Interest on the credit line is payable monthly or
quarterly at Libor or the banks' base rate plus a financing spread
(aggregating 9.0% at December 31, 2000). The Company's financing spread is
presently 2.25% for Libor, and 0.5% for base rate borrowings, and may be
decreased or increased by 25 basis points as the Company's leverage ratio
decreases or increases over predetermined percentages. The credit line is
governed by certain financial covenants, including maximum leverage ratio,
maximum indebtedness, tangible net worth and fixed charge coverage ratio
tests, limitations of capital expenditures to prescribed amounts, maximum
annual cash dividends of $5.0 million per year, and restrictions on
repurchases of common stock. In connection with the bank syndicate's approval
of the Rainforest Cafe acquisition, certain financial covenants were amended
or added, including a permitted increase in the maximum leverage ratio through
September 30, 2001, and an additional limitation of common stock repurchases
to $6.0 million until the Company's leverage ratio is below a prescribed
amount. As of December 31, 2000, the Company had $45.0 million available for
borrowing under the credit line.

Interest expense (income), net includes the following:

Year Ended December 31,
-----------------------------------
2000 1999 1998
---------- ---------- -----------

Interest expense........................ $7,180,597 $2,696,606 $ 40,924
Interest income......................... (563,030) (731,637) (1,665,493)
---------- ---------- -----------
$6,617,567 $1,964,969 $(1,624,569)
========== ========== ===========

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. INCOME TAXES

An analysis of the provision for income taxes for the years ended December 31,
2000, 1999, and 1998 is as follows:

2000 1999 1998
---------- ---------- -----------

Tax Provision (Benefit) on Income
Before Cumulative Effect of Change in
Accounting Principle:
Current income taxes................. $ 280,564 $2,184,218 $ 5,350,808
Deferred income taxes................ 7,021,264 5,896,014 (3,743,554)
---------- ---------- -----------
Total.............................. 7,301,828 8,080,232 1,607,254
Tax Provision (Benefit) on Cumulative
Effect of Change in Accounting
Principle:
Deferred income taxes................ -- -- (1,781,000)
---------- ---------- -----------
Total provision (benefit).......... $7,301,828 $8,080,232 $ (173,746)
========== ========== ===========

The Company's effective tax rate, for the years ended December 31, 2000,
1999 and 1998, differs from the federal statutory rate as follows:

2000 1999 1998
---- ---- -----

Statutory rate............................................ 35.0% 35.0% 35.0%
FICA tax credit........................................... (7.7) (5.5) (25.4)
State income tax, net of federal tax benefit.............. 1.1 0.9 9.5
Other..................................................... 4.9 4.1 15.4
---- ---- -----
33.3% 34.5% 34.5%
==== ==== =====

The provision for income taxes as a percentage of income before income taxes
was reduced to 31.0% from 34.5% effective July 1, 2000, as a result of
continuing favorable Federal income tax credits for tipped employees. The
Company's actual cash payments for annual income taxes due are currently lower
than the financial accrual rate due to significant differences between book
and tax accounting and tax credit and loss carryforwards.

Deferred income tax assets and liabilities as of December 31 are comprised
of the following:

2000 1999
----------- ------------

Deferred Income Taxes:
Current assets - accruals and other........... $ 2,672,000 $ 1,228,000
=========== ============
Non-current assets:
AMT credit, FICA credit carryforwards....... 12,882,000 5,080,000
Net operating loss carryforwards............ 5,755,000 400,000
Valuation allowance for credit
carryforwards.............................. (5,000,000) --
----------- ------------
Non-current deferred tax asset.............. 13,637,000 5,480,000
Non-current liabilities-property and other.... (5,136,000) $(15,517,000)
----------- ------------
Net deferred tax asset (liability).......... $ 8,501,000 $(10,037,000)
=========== ============

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A valuation allowance for deferred tax assets is provided when it is more
likely than not that some portion or all of the deferred tax assets will not
be realized. Realization is dependent upon the generation of future taxable
income or the reversal of deferred tax liabilities during the periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable
income and tax planning strategies in making this assessment. In connection
with the acquisition of Rainforest Cafe, the Company recorded a $32.0 million
non-current deferred income tax asset, net of a $5.0 million valuation
allowance as of December 31, 2000. No valuation allowance was required in 1999
or 1998.

7. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company has entered into lease commitments for restaurant facilities as
well as certain fixtures, equipment and leasehold improvements. Under most of
the facility lease agreements, the Company pays taxes, insurance and
maintenance costs in addition to the rent payments. Certain facility leases
also provide for additional contingent rentals based on a percentage of sales
in excess of a minimum amount. Rental expense under operating leases was
approximately $23,000,000, $17,423,000 and $17,010,000 during the years ended
December 31, 2000, 1999, and 1998, respectively. Contingent rent included in
rent expense was $1,756,000, $1,157,000 and $1,004,000 for 2000, 1999 and
1998.

In 2000, the Company entered into a $9.8 million equipment operating lease
agreement. The lease expires in 2004 and may be renewed. The Company
guarantees a minimum residual value related to the equipment of approximately
66% of the total amount funded under the agreement. The Company may purchase
the leased equipment throughout the lease term for an amount equal to the
unamortized lease balance. The Company believes that the equipment's fair
value is sufficient that no amounts will be due under the residual value
guarantee.

In connection with substantially all of the Rainforest Cafe leases, amounts
are provided for tenant inducements rent abatements, and scheduled increases
in rent. Such amounts are recorded as other long-term liabilities on the
Company's consolidated balance sheet, and amortized or accrued as an
adjustment to rent expense, included in other restaurant operating expenses,
on a straight-line basis over the lease term.

The aggregate amounts of minimum operating lease commitments maturing in
each of the five years and thereafter subsequent to December 31, 2000, are as
follows:

2001.......................................................... $ 34,460,000
2002.......................................................... 34,584,000
2003.......................................................... 34,202,000
2004.......................................................... 38,935,000
2005.......................................................... 31,671,000
Thereafter.................................................... 197,981,000
------------
Total minimum rentals....................................... $371,833,000
============

BUILDING COMMITMENTS

As of December 31, 2000, the Company had future development and construction
commitments of approximately $17.0 million, including completion of
construction on certain new restaurants and the Company's corporate office
building. In addition, the Company has entered into a long-term lease
agreement to develop and operate an Aquarium restaurant, public exhibit, and
entertainment project on city-owned property in Houston, Texas. Development
costs for the Aquarium restaurant project are expected to be approximately
$20.0 million.

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company has also entered into an agreement to construct and operate a
convention center in the City of Galveston, Texas. The Galveston convention
center estimated construction costs of approximately $25.0 million and
subsequent operating expenses will be funded by governmental agency bonds
issued by the City of Galveston and serviced by certain hotel occupancy taxes.
In connection with the convention center development and related management
contract, the Company is obligated to purchase and donate, with reversionary
interest, land required for use by the convention center and to guarantee
certain construction cost overruns and operating losses, if any, subject to
certain rights of reimbursement. Under the agreements, the Company will have
the rights to one-half of any profits generated by the operation of the
convention center.

LOAN GUARANTEE

Rainforest Cafe, a wholly-owned subsidiary of the Company, has guaranteed
the borrowings of one of its foreign affiliates in which the Company owns a
20% interest. The amount of the guaranty is limited to approximately $1.2
million.

LITIGATION AND CLAIMS

Dissenters Rights

Eighty-one former shareholders (holding 4,406,655 shares) of Rainforest
Cafe, Inc. dissented to the merger between the Company and Rainforest Cafe. On
February 13, 2001, Rainforest Cafe sent each of the 81 dissenting
shareholders, Rainforest Cafe's per share estimate of fair value, along with a
check in the amount of $3.25 per share, which was the original acquisition
price per share. Subsequently, seventy-eight of the dissenting shareholders
have made a demand for supplemental payment based on their belief that the
fair value per share of common stock of the former Rainforest Cafe was greater
than $3.25 per share. The Company believes that its estimate of fair value is
correct and that the dissenting shareholders' estimate of fair value is
inflated. The Company will vigorously pursue its determination of fair value
in an appraisal proceeding.

Class Action Litigation

General Litigation

The Company is subject to other legal proceedings and claims that arise in
the ordinary course of business. Management does not believe that the outcome
of any of these matters will have a material adverse effect on the Company's
financial position, results of operations or cash flows.

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. STOCKHOLDERS' EQUITY

On November 19, 1998, the Company authorized an open market stock buy back
program. In April 2000, the Company authorized a renewal of the stock buy back
program for $36.0 million. These stock buy back programs resulted in the
Company repurchasing into treasury approximately 3,300,000 and 6,400,000
shares of common stock for approximately $26,000,000 and $53,000,000, in 2000
and 1999, respectively.

Commencing in 2000, the Company began to pay an annual $0.10 per share
dividend, declared and paid in quarterly installments of $0.025 per share.

The Company maintains two stock option plans, which were originally adopted
in 1993, (the Stock Option Plans), as amended, pursuant to which options may
be granted to eligible employees and non-employee directors of the Company or
its subsidiaries for the purchase of an aggregate of 2,750,000 shares of
common stock of the Company. The Stock Option Plans are administered by the
Stock Option Committee of the Board of Directors (the Committee), which
determines at its discretion, the number of shares subject to each option
granted and the related purchase price, vesting and option periods. The
Committee may grant either non-qualified stock options or incentive stock
options, as defined by the Internal Revenue Code of 1986, as amended.

The Company also maintains the 1995 Flexible Incentive Plan, which was
adopted in 1995, (Flex Plan), as amended, for key employees of the Company.
Under the Flex Plan eligible employees may receive stock options, stock
appreciation rights, restricted stock, performance awards, performance stock
and other awards, as defined by the Board of Directors or an appointed
committee. The aggregate number of shares of common stock which may be issued
under the Flex Plan (or with respect to which awards may be granted) may not
exceed 2,000,000 shares.

The stock option plans are accounted for using APB Opinion No. 25, under
which no compensation expense has been recorded. If compensation costs for the
Company had been determined using the alternative accounting method based on
the fair value prescribed by SFAS 123, the Company's pro forma net income
(loss) for 2000, 1999 and 1998 would have been approximately $12,700,000,
$12,239,000 and $(4,386,000) respectively, and the Company's pro forma
earnings (loss) per share--basic would have been $0.54, $0.46 and $(0.15) and
per share-diluted would have been $0.54, $0.45 and $(0.15), respectively. The
fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model; amortization over the respective vesting
periods; no dividends; expected lives of 4, 6 and 5 years for 2000, 1999 and
1998, respectively; expected stock price volatility of approximately 40% and
an interest rate of approximately 6% for 2000 and 1999 and 5% for 1998. The
weighted average fair value per share of options granted during 2000, 1999 and
1998 was $3.08, $4.40 and $6.37, respectively.

In connection with the acquisition of Rainforest Cafe, the Company issued
approximately 500,000 vested stock options to employees of Rainforest Cafe as
replacement for existing options outstanding at the date of the merger, as
required by the merger agreement. The fair value of these options was included
in the purchase price of Rainforest Cafe.

At December 31, 2000, options for 3,169,803 shares were outstanding
(1,827,959 of which were exercisable) at prices ranging from $6.00 to $22.24
per share. As of December 31, 2000, all options have been granted at the stock
price on the grant date and are generally exercisable beginning one year from
the date of grant with annual vesting periods over three to five years.

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2000 1999 1998
------------------- ------------------- --------------------
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- -------- --------- -------- ---------- --------

Options outstanding,
beginning of year...... 2,810,575 $ 9.97 3,646,741 $ 9.22 3,095,619 $13.30
Granted................. 913,500 $11.44 105,500 $ 7.01 2,211,951 $ 6.37
Exercised............... -- -- (900,000) $ 6.00 (564,223) $12.57
Terminated.............. (554,272) $12.73 (41,666) $21.79 (1,096,606) $13.28
--------- --------- ----------
Options outstanding, end
of year................ 3,169,803 $ 9.92 2,810,575 $ 9.97 3,646,741 $ 9.22
========= ========= ==========
Options exercisable, end
of year................ 1,827,959 $12.07 1,087,839 $12.58 883,151 $14.10
========= ========= ==========

9. STORE CLOSINGS AND SPECIAL CHARGES

During the fourth quarter of 1998, the Company recorded approximately
$37,632,000 in estimated store closings and special charges. These special
charges provided an estimated income tax benefit of $13,000,000. These
expenses were the result of the Company's decision in the fourth quarter of
1998 to close eleven underperforming restaurants, eight of which were closed
in 1998 and three of which were closed in 1999, the Company's decision not to
renew a restaurant lease upon option renewal and changes in the Company's
strategic growth plan. As a result of changes in the Company's strategic
growth plan, the Company reduced planned future unit growth, abandoned
potential restaurant sites, and abandoned efforts to build a stand-alone
office complex in Houston, Texas. These strategic changes resulted in a
reduction in employees, the sale of a duplicate corporate asset and the
abandonment of a strategic corporate transaction. The store closing and
special charges consist of the following items:

CHARGE IN
4TH
QUARTER
1998
-----------

Restaurant closures and lease terminations:
Write down of property, equipment, leasehold interests and other
assets to estimated net realizable value........................ $25,815,000
Estimated lease termination costs and employee severance on
closed restaurants.............................................. 7,634,000
Charges associated with the changes in the Company's strategic
growth plan:
Abandonment of development sites................................. 2,910,000
Employee severance and separation costs related to a reduction in
planned future restaurant unit growth........................... 303,000
Loss on sale of a duplicate corporate asset...................... 400,000
Costs associated with abandoned corporate transaction............ 570,000
-----------
Total.......................................................... $37,632,000
===========

Significant estimates are included in the special charge relate to estimated
lease exit costs such as rent and lease buyout costs through final
disposition, and estimated proceeds associated with certain owned properties.
These costs were estimated by management based upon information from internal
and external real estate advisors and discussions and negotiations with third
parties. During 2000, the balance of accrued 1998 store closing costs
decreased from approximately $1,705,000, to approximately $947,000 as a result
of payments for costs, lease rentals and other expenses related to exiting the
properties. The Company expects remaining cash payments to occur during 2001.

For the year ended December 31, 2000 and 1999, the Company incurred
$2,000,000 and $2,945,000 of store closings and special charges, respectively.
In the second quarter of 2000 the Company expensed costs associated

LANDRY'S SEAFOOD RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
with a proposed initial acquisition of Rainforest Cafe that was terminated. On
March 2, 1999, the Company announced the signing of a definitive merger
agreement. The merger agreement was subsequently terminated on March 8, 1999
with no further discussions. The Company incurred $3,675,000 in transaction
costs in connection with the definitive merger agreement which were expensed
in the first quarter of 1999. Additionally, the Company successfully exited
seven of the underperforming restaurants included in the 1998 store closings
charge and recorded a special credit of $730,000, during the second quarter of
1999, due to the reversal of amounts originally recorded, since five lease
terminations were resolved favorably relative to amounts accrued at December
31, 1998.

10. RELATED PARTY TRANSACTIONS

During 2000, in connection with the Company's initial attempt to acquire
Rainforest Cafe and the concurrent bank syndicate loan approval and renewal
negotiation, the Company obtained a commitment and funding for an unsecured
bridge loan of $10.0 million from the Chairman and Chief Executive Officer of
the Company. The Company paid a commitment fee of $125,000 and interest of
$172,000 related to the bridge loan, which were lower than the amounts
requested by the Company's lead syndicate bank for such a facility. The loan
was fully repaid after the Company's initial merger agreement was terminated.

Effective January 1, 1996, the Company entered into a Consulting Service
Agreement (the "Agreement") with Fertitta Hospitality, LLC ("Fertitta
Hospitality"), which is jointly owned by the Chairman and Chief Executive
Officer of the Company and his wife. Pursuant to the Agreement, the Company
provides limited consulting services to Fertitta Hospitality with respect to
management and operational matters, administrative and personnel matters. The
Company receives a consulting fee of $2,500 per month under the Agreement plus
the reimbursement of all out-of-pocket expenses and such additional
compensation as may be agreed upon. The Agreement provides for a one-year
term, was renewed in 2000, and is automatically renewed unless either party
terminates the Agreement upon 30 days' written notice to the other party. The
Agreement was entered into between related parties and was not the result of
arm's-length negotiations. Accordingly, the terms of this transaction may have
been more or less favorable to the Company than might have been obtained from
unaffiliated third parties. The Company believes that the terms of the
transaction were at least as favorable to the Company as that which could have
been obtained in arm's-length transactions with an unaffiliated party.

In 1998, the Company entered into an agreement with 610 Loop Venture, LLC, a
company wholly owned by the Chairman and Chief Executive Officer of the
Company, whereby, the Company would sell to 610 Loop Venture, a 4-acre
undeveloped land tract at a third-party appraised value of $5,400,000
(approximately $700,000 more than the original purchase price paid by the
Company), and 610 Loop Venture would construct a condominium hotel/office
project on the land. In 1999, the agreement was amended and the Company
entered into a ground lease agreement with 610 Loop Venture for approximately
one-third of the undeveloped tract. The ground lease is for a term of five
years with one option renewal period. Under the terms of the ground lease, 610
Loop Venture pays the Company base rent of $12,000 per month plus pro-rata
real property taxes and insurance. During 2000, at the request of the Company,
610 Loop Venture and the Company reached an agreement terminating the
condominium hotel/office project to permit the Company to build its own office
building. 610 Loop Venture has retained the option to purchase certain
property based upon an appraised value.

11. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of unaudited quarterly consolidated results of
operations (in thousands, except per share data).

March June 30, September 30, December 31,
31, 2000 2000 2000 2000
-------- -------- ------------- ------------

Quarter Ended:
Revenues........................ $110,951 $134,042 $133,108 $142,879
Asset impairment, store closings
and special charges............ $ -- $ 2,000 -- $ 6,292
Operating income (loss)......... $ 5,867 $ 11,010 $ 13,150 $ (571)
Net income (loss)............... $ 3,022 $ 6,278 $ 7,845 $(2,495)
Net income per share (basic).... $ 0.12 $ 0.26 $ 0.34 $ (0.12)
Net income per share (diluted).. $ 0.12 $ 0.26 $ 0.34 $ (0.12)
Net income per share before
special charges (diluted)...... $ 0.12 $ 0.31 $ 0.34 $ .08

March June 30, September 30, December 31,
31, 1999 1999 1999 1999
-------- -------- ------------- ------------

Quarter Ended:
Revenues........................ $101,266 $123,607 $116,510 $ 97,603
Store closings and special
charges (credit)............... $ 3,675 $ (730) $ -- $ --
Operating income................ $ 482 $ 10,945 $ 10,822 $ 2,994
Net income...................... $ 238 $ 7,068 $ 6,592 $ 1,478
Net income per share (basic).... $ 0.01 $ 0.25 $ 0.26 $ 0.06
Net income per share (diluted).. $ 0.01 $ 0.25 $ 0.25 $ 0.06
Net income per share before
special charges (credit)
(diluted)...................... $ 0.09 $ 0.24 $ 0.25 $ 0.06

Note: Amounts rounded where applicable so that the sum of the quarters equal
the year to date information.

LANDRY'S SEAFOOD RESTAURANTS, INC.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized in the City of Houston, State of Texas, on the 30th
day of March, 2001.

Landry's Seafood Restaurants, Inc.

/s/ Tilman J. Fertitta
-------------------------------------
Tilman J. Fertitta
Chairman of the Board/President and
Chief Executive Officer

Each person whose signature appears below constitutes and appoints Tilman J.
Fertitta, Steven L. Scheinthal and Paul S. West, and each of them (with full
power to each of them to act alone), his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities to sign on his behalf
individually and in each capacity stated below any amendment to this Annual
Report on Form 10-K and any amendment thereto and to file the same, with all
exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to
be done by virtue hereof. Pursuant to the requirements of the Securities Act
of 1934, this report has been signed by the following persons on behalf of the
registrants and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Tilman J. Fertitta Chairman, President and March 30, 2001
______________________________________ Chief Executive Officer,
Tilman J. Fertitta Principal Executive
Officer and Director

/s/ Paul S. West Vice President, Principal March 30, 2001
______________________________________ Financial Officer,
Paul S. West Principal Accounting
Officer and Director

/s/ Steven L. Scheinthal Vice President, Secretary, March 30, 2001
______________________________________ General Counsel and
Steven L. Scheinthal Director

/s/ James E. Masucci Director March 30, 2001
______________________________________
James E. Masucci

/s/ Joe Max Taylor Director March 30, 2001
______________________________________
Joe Max Taylor

EXHIBIT INDEX

Certain of the exhibits to this report on Form 10-K are hereby incorporated
by reference to the Company's Registration Statement on Form S-1 No. 33-65498
and all amendments thereto ("A") and the Company's Form 10-Q for the quarterly
period ended June 30, 1995 ("B"), May 9, 1995 Proxy Statement ("C"), the June
25, 1997 Form 8-K ("D"), the 1995 Form 10-K ("E"), the May 1996 Form S-4
("F"), the Form 10-Q for the quarterly period ended September 30, 1999 ("G"),
the March 9, 1999 Form 8-K ("H"), the July 13, 2000 Form 8-K ("I"), the
September 29, 2000 Schedule TO ("J"), and the Form 10-Q for the quarterly
period ended September 30, 2000 ("K"). Such exhibits are denoted with the
letter. Exhibits denoted by * are filed herewith.

Exhibit
No. Exhibit
------- -------

3.1 Certificate of Incorporation of Landry's Seafood Restaurants, Inc. as
filed with the Delaware Secretary of State on June 23, 1993, as
amended -A-(See Exhibit 3.1) and -B-

3.2 Amendment to Certificate of Incorporation -A-

3.3 Bylaws of Landry's Seafood Restaurants, Inc. -A- (See Exhibit 3.2)

4 Specimen Common Stock Certificate, $.01 par value of Landry's Seafood
Restaurants, Inc. -A-

10.1 1993 Stock Option Plan ("Plan") -C-

10.2 Form of Incentive Stock Option Agreement under the Plan -A- (See
Exhibit 10.61)

10.3 Form of Non-Qualified Stock Option Agreement under the Plan -A- (See
Exhibit 10.62)

10.4 Non-Qualified Formula Stock Option Plan for Non-Employee Directors
("Directors' Plan") -A-

10.5 First Amendment to Non-Qualified Formula Stock Option Plan for Non-
Employee Directors -C-

10.6 Form of Stock Option Agreement for Directors' Plan -A- (See Exhibit
10.64)

10.7 Form of Personal Service and Employment Agreement of Tilman J.
Fertitta -A- (See Exhibit 10.65)

10.8 1995 Flexible Incentive Plan -C-

10.9 Form of Consulting Services Agreement between Landry's Management,
L.P. and Fertitta Hospitality -E-

10.10 Form of Stock Option Agreement between Landry's Seafood Restaurants,
Inc. and Tilman J. Fertitta -E-

10.11 Contract of Sale and Development Agreement -G-

10.12 Executive Employment Agreements -G-

10.13 Termination Agreement by and among Landry's Seafood Restaurants, Inc.
and Consolidated Restaurant Corporation the Cracken Trust, the Katemcy
Trust, Street, and Hartnett -H-

10.14 First Amended and Restated Credit Agreement date June 28, 2000, by and
among Landry's Seafood Restaurants, Inc. and Bank of America, N.A., as
Agent, and certain other financial institutions -I-

10.15 Amendment No. 1 and Consent as of October 17, 2000 to the First
Amended and Restated Credit Agreement dated June 28, 2000 by and among
Landry's Seafood Restaurants Inc., the lenders from time to time party
to the Credit Agreement, and Bank of America, N.A., as administrative
agent for the Banks-K-

10.16 Agreement and Plan of Merger, dated September 26, 2000, by and among
Landry's Seafood Restaurants, Inc., LSR Acquisition Corp. and
Rainforest Cafe, Inc. and related agreements -J-

*11 Statement regarding computation of per share earnings--fully diluted -

*21 Subsidiaries of Landry's Seafood Restaurants, Inc.

*23 Consent of Arthur Andersen LLP

*24 Power of Attorney--(See page 35)