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Landry’s logs annual loss in overdue fiscal 2006 report

HOUSTON After a months-long delay in filing financial results because of an internal investigation into stock option granting practices, Landry’s Restaurants Inc. filed on Friday its annual report for fiscal 2006 and posted a net loss of $21.8 million on asset impairment charges and losses from discontinued operations. A year earlier, the operator of 179 casual-dining restaurants and casino and entertainment properties had posted a net profit of $44.8 million.

For the full year ended Dec. 31, 2006, Landry’s per-share loss totaled 99 cents per share, compared with a year-earlier per-share profit of $1.95.

During fiscal 2006, Landry’s said it recorded after-tax charges of $6.3 million for asset impairments at continuing operations and $44.9 million for discontinued operations. Landry’s decided in 2006 to divest its 136-unit Joe’s Crab Shack, of which 120 outlets were sold in November for about $192 million to J.H. Whitney Capital Partners LLC. Landry’s now operates restaurants under the Rainforest Cafe, Saltgrass Steak House and Landry’s Seafood House brands, among others.

Fiscal 2006 total corporate revenue rose 26.4 percent to $1.13 billion, mainly on the full-year inclusion of Landry’s Golden Nugget casinos purchased in September 2005. Restaurant and hospitality revenue increased 8.5 percent to $902.9 million.

The company’s review into its stock option practices was voluntary and found no intentional misconduct. The aggregate impact of compensation expense for years prior to fiscal 2001 totaled $9.1 million, the company reported.

The filing of the annual report comes as Landry’s is awaiting a court hearing that will decide whether $400 million in 7.5-percent, senior, unsecured notes can be accelerated by the note holders and made immediately due. Note holders and the trustee, U.S. Bank, called the notes because Landry’s was not up to date in filing its financial statement for fiscal 2006. Landry’s has since received a temporary restraining order from the United States District Court for the Southern District of Texas that called for the immediate withdrawal of the acceleration. A hearing on the ruling is scheduled for Aug. 16.

In the meantime, Landry’s said on Thursday that it had set up a “stand-by” credit facility, though Rick H. Liem, executive vice president and chief financial officer, said use of the backup financing could cause “irreparable harm” to the company.

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