Landry's profit plummets in 1st-Q

HOUSTON Landry’s Restaurants Inc. reported that its first quarter net income fell more than 93 percent, as its interest expense soared and same-store sales remained flat.

Net income for the first quarter ended March 31 was $1.5 million, or 10 cents a year, compared with income of $22.1 million, or $1.04 a year, said the restaurant and casino-hotel operator. First quarter revenue rose 3.9 percent, to $294.8 million, which included $70.7 million from Leap Day, the company said. Results also reflect an additional eight restaurants, compared with the year-ago first quarter.

Same-store restaurant sales were flat for the quarter, Landry's said.

The company said pre-tax interest expenses for the quarter rose to $20.8 million, compared with $13.6 million in same period last year, because of a Golden Nugget refinancing last June and interest rate increases on senior notes that went into effect last August amid bond holder demands. The company also booked an after-tax charge of $3 million for a change in interest rate swaps not designated as hedges.

Landry’s board is considering a buyout bid by Tilman J. Fertitta, the company’s chairman and chief executive. In April, Fertitta lowered his buyout bid to reflect the “significantly worsened” credit markets that would make it more costly to obtain debt financing for the $1.3 billion deal. He revised the per-share buyout bid to $21 a share, down from $23.50 earlier in the year, a $40 million difference. Fertitta owns about 39 percent of Landry’s shares.

Rick H. Liem, Landry's chief financial officer, said: “The credit markets remain unsettled, in particular for casual-dining and other consumer discretionary sectors. Nevertheless, we continue to believe we will obtain long-term financing, although likely at a higher interest rate and with more restrictive terms than our existing agreements.”

Houston-based Landry’s operates 179 casual-dining or upscale restaurants under such brands as Landry's Seafood House, Chart House, Rainforest Cafe and Saltgrass Steak House. The company also owns hotels, marinas and two Golden Nugget Hotels and Casinos in Las Vegas and Laughlin, Nev.

The company said it signed a contract for a new hotel tower at the Golden Nugget, which it said would cost about $160 million and should be finished 2009 or early 2010.