UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2009~~2010

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

For the transition period from to .

* Commission file number 000-22150

LANDRY’S RESTAURANTS, INC.

(Exact Name of the Registrant as Specified in Its Charter)


DELAWARE		76-0405386
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

1510 WEST LOOP SOUTH HOUSTON, TX 77027		77027
(Address of Principal Executive Offices)		(Zip Code)

(713) 850-1010

(Registrant’s Telephone Number, Including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

Common Stock, par value $.01 per Share		New York Stock Exchange
(Title of Class)		(Name of Exchange on Which Registered)

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate ~~Web site~~Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ 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. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer” and “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

Aggregate market value of voting stock held by non-affiliates of the Registrant as of June 30, ~~2009~~2010 was $61175,~~704~~713,~~166~~374. For purposes of the determination of the above stated amount, only Directors and Executive Officers are presumed to be affiliates, but neither the registrant nor any such persons concedes they are affiliates of the registrant.

As of March 098, ~~2010~~2011, there were 161,~~236,435~~000 shares of the registrant’s common stock outstanding all of which were owned by an affiliate of Tilman J. Fertitta.

LANDRY’S RESTAURANTS, INC.

TABLE OF CONTENTS

		Page No.
PART I.		1
Item 1.	Business	1	1
Item 1A.	Risk Factors	13	9
Item 1B.	Unresolved Staff Comments	21	15
Item 2.	Properties	21	15
Item 3.	Legal Proceedings	21	15
Item 4.	Reserved	23	15
PART II.		24
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24	16
Item 6.	Selected Financial Data	25	16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28	18
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	40	29
Item 8.	Financial Statements and Supplementary Data	40	29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	40	29
Item 9A.	Controls and Procedures	41	29
Item 9B.	Other Information	41	30
PART III.		42
Item 10.	Directors, Executive Officers and Corporate Governance	42	30
Item 11.	Executive Compensation	42	33
Item 12.	Security Ownership of Certain Beneficial Holders and Management and Related Stockholder Matters	42	42
Item 13.	Certain Relationships and Related Transactions ~~and Director Independence~~	44	43
Item 14.	Principal Accountant Fees and Services	44	43
PART IV.		45
Item 15.	Exhibits and Financial Statement Schedules	45	45
SIGNATURES		94	86
EXHIBIT INDEX		95	87

FORWARD LOOKING STATEMENTS

This report includes certain forward-looking statements within the meaning of the federal securities laws. You can generally identify forward-looking statements by the appearance in such a statement of words like “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should” or “will” or other comparable words or the negative of these words. When you consider our forward-looking statements, you should keep in mind the risk factors we describe and other cautionary statements we make in this Form 10-K. Our forward-looking statements are only predictions based on expectations that we believe are reasonable. Our actual results could differ materially from those anticipated in, or implied by, these forward-looking statements as a result of known risks and uncertainties set forth below and elsewhere in this Form 10-K. These factors include or relate to the following:

• the ~~merger~~impact ~~agreement~~of ~~entered~~the ~~into~~merger bybetween us and Fertitta Holdings, ~~Inc. et al~~ on ~~November~~October 36, ~~2009 and whether it will be consummated~~2010;

•

our ability to implement our business strategy;

•

our ability to expand and grow our business and operations;

• the outcome of legal proceedings that have been, or may be, initiated against us related to the proposed merger with an affiliate in 2008 and its termination and the proposed merger in 2009 with an affiliate:

• risks that the termination of the 2009 merger agreement may disrupt current plans and operations and create employee retention difficulties;

•

the impact of future commodity prices;

•

the availability of food products, materials and employees;

•

consumer perceptions of food safety;

•

changes in local, regional and national economic conditions;

•

the effects of local and national economic, credit and capital market conditions on the economy in general and our business in particular;

•

the effectiveness of our marketing efforts;

•

changing demographics surrounding our restaurants, hotels and casinos;

•

the effect of changes in tax laws;

•

actions of regulatory, legislative, executive or judicial decisions at the federal, state or local level with regard to our business and the impact of any such actions;

•

our ability to maintain regulatory approvals for our existing businesses and our ability to receive regulatory approval for our new businesses;

•

the effects of the BP plc oil spill;

•

our expectations of the continued availability and cost of capital resources;

•

our ability to obtain long-term financing and the cost of such financing, if available;

•

the seasonality and cyclical nature of our business;

•

weather and acts of God;

• climate change

•

the ability to maintain existing management;

•

the impact of potential acquisitions of other restaurants, gaming operations and lines of businesses in other sectors of the hospitality and entertainment industries;

•

the impact of potential divestitures of restaurants, restaurant concepts and other operations or lines of business;

•

the effects of “climate change” on our operation;

•

food, labor, fuel and utilities costs; and

•

the other factors discussed under “Risk Factors.”

We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. To the extent these risks, uncertainties and assumptions give rise to events that vary from our expectations, the forward-looking events discussed herein may not occur. All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement. Some of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements are more fully described under Item 1A. “Risk Factors” and elsewhere in this report, or in the documents incorporated by reference herein. We assume no obligation to modify or revise any forward looking statements to reflect any subsequent events or circumstances arising after the date that the statement was made.

~~iii~~ii

LANDRY’S RESTAURANTS, INC.

PART I.

ITEM 1.

BUSINESS

General

We are a national, diversified restaurant, hospitality and entertainment company principally engaged in the ownership and operation of full-service, specialty location restaurants, with ~~174~~210 locations in 2731 states, the District of Columbia, Ontario, Canada and Hong Kong as of December 31, ~~2009~~2010. We are one of the largest full-service restaurant operators in the United States, operating primarily under the names of Rainforest Cafe, Saltgrass Steak House, Landry’s Seafood House, Charley’s Crab, ~~and~~ The Chart House, Oceanaire and Bubba Gump. Our concepts range from upscale steak and seafood restaurants to theme-based restaurants, and consist of a broad array of formats, menus and price-points that appeal to a wide range of markets and consumer tastes. We are also engaged in the ownership and operation of select hospitality and entertainment businesses, which include hotels, aquarium complexes and the Kemah Boardwalk, a 40-acre amusement, entertainment and retail complex in Kemah, Texas, among others. We believe these businesses complement our restaurant operations and provide our customers with unique dining, leisure and entertainment experiences.

We opened the first Landry’s Seafood House restaurant in 1980. In 1993, we became a public company. ~~Our stock is listed on the New York Stock Exchange under the symbol “LNY.”~~ We acquired Rainforest Cafe, Inc., a publicly traded restaurant company, in 2000. During 2001, we changed our name to Landry’s Restaurants, Inc. to reflect our expansion and broadening of operations. During 2002, we acquired 15 Charley’s Crab seafood restaurants located primarily in Michigan and Florida and 27 Chart House seafood restaurants, located primarily on the East and West Coasts of the United States. In October 2002, we purchased 27 Texas-based Saltgrass Steak House restaurants.

In September 2005, we acquired the Golden Nugget Hotels and Casinos located in Las Vegas and Laughlin, Nevada. The entities that own and operate the Golden Nugget Hotels and Casinos are separately financed, unrestricted subsidiaries of ours. We believe that the Golden Nugget brand name is one of the most recognized in the gaming industry and is highly complementary to our portfolio of leading restaurant, hospitality and entertainment operations. Both Golden Nugget locations offer extensive arrays of amenities and high degrees of hospitality, service and attention to detail. We expect to continue to capitalize on the strong name recognition and high level of quality and value associated with the brand.

In February 2006, we acquired 80% of T-Rex Cafe, Inc. (“T-Rex”) and ~~committed~~constructed tothree ~~the construction of at least four~~ restaurants, two of which are located at high profile Disney properties. ~~Three~~ ~~of the four restaurants have been completed and are operating.~~

During the third quarter of fiscal 2006, as part of a strategic review of our operations, we initiated a plan to divest certain restaurants, including 136 Joe’s units. In November 2006, we completed the sale of 120 Joe’s. Subsequently, several additional locations were added to our disposal plan.

Recent Developments

OnDuring ~~November 3~~2010, ~~2009,~~ we ~~entered~~completed ~~into~~ a ~~definitive~~ merger ~~agreement~~under ~~with~~which ~~a company wholly-owned by our Chairman and Chief Executive Officer,~~ Mr. Tilman J. Fertitta~~. Pursuant to the agreement~~, ~~the~~our ~~Fertitta~~Chairman ~~owned~~and ~~company~~Chief ~~has~~Executive ~~agreed~~Officer, toacquired ~~acquire~~ all of our outstanding common stock ~~not already owned by Mr. Fertitta~~ for $1424.7550 per share in cash. ~~The~~This acquisition ~~offer~~of ~~price~~our ~~represents~~common astock ~~premium~~and ofrelated ~~approximately~~transactions ~~37%~~are ~~over~~referred to in this report as the ~~closing~~Going ~~share price~~Private ofTransaction. ~~our~~As ~~common~~a ~~stock~~result onof ~~November 2,~~the ~~2009~~Going Private Transaction, ~~the~~we ~~last~~ceased ~~trading~~being ~~day~~a ~~before~~public ~~the~~company, ~~announcement~~our ofstock ~~the~~is ~~transaction.~~no ~~The~~longer ~~total~~traded ~~value~~on ofa ~~the~~stock exchange ~~transaction~~and isfollowing ~~approximately~~the ~~$1.2~~filings ~~billion.~~of Onthis ~~November 2,~~report ~~2009,~~we ~~Mr. Fertitta~~will ~~beneficially~~no ~~owned approximately~~longer ~~55.1%~~be ofrequired ~~our~~to ~~outstanding~~file ~~shares~~reports ofwith ~~common~~the ~~stock~~SEC.

On December 20, 2010, we completed the acquisition of Bubba Gump Shrimp Company Restaurants, Inc. (Bubba Gump), a casual dining seafood chain based on the motion picture ‘Forrest Gump’, for $112.5 million in cash, plus the assumption of certain additional working capital liabilities. Originating in California, Bubba Gump opened its first location in 1996. As of December 31, 2010, there are 34 Bubba Gump themed locations, 23 of which are owned with the remaining locations being foreign franchises or joint ventures and 5 ancillary restaurants. The Bubba Gump name and other intellectual property are used pursuant to a license agreement with Paramount Licensing, Inc. (the licensing entity for Paramount Pictures Corporation). Bubba Gump provides us with high volume restaurants in attractive tourist destination locations.

On December 5, 2010, an affiliate of ours acquired all of the capital stock of Claim Jumper Restaurants, LLC and all of its subsidiaries in accordance with a plan of reorganization in a U.S. Bankruptcy Court. We have entered into an agreement to manage these restaurants for our affiliate.

On April 30, 2010, we completed the acquisition of all the capital stock of The Oceanaire, Inc. (Oceanaire), and all of its subsidiaries in accordance with a plan of reorganization submitted by the unsecured creditors of Oceanaire in a U.S. Bankruptcy Court for $23.4 million in cash, plus the assumption of certain additional working capital liabilities. The acquisition of Oceanaire, a seafood restaurant company with 12 locations, provides additional growth within our high end seafood line, as well as a known brand with several excellent locations.

~~The~~Due ~~proposed~~to ~~merger~~a ~~transaction~~number isof ~~subject~~factors toaffecting ~~approval~~consumers, byincluding ~~our~~continued ~~stockholders~~high unemployment, ~~including~~home ~~approval~~foreclosures, byvolatile global economies, increasing commodity costs and constrained consumer credit markets, the ~~holders~~near ofterm aoutlook ~~majority~~for ofthe restaurant, hospitality, and entertainment industries is uncertain. In response to the current economic conditions, we have taken measures to increase our ~~common~~efficiencies ~~stock~~and ~~not~~reduce ~~owned~~our bycost Mrstructure across our businesses. ~~Fertitta.~~ ~~The~~In ~~transaction~~addition, iswe ~~subject~~expect to ~~regulatory~~continue ~~approvals~~on a reduced growth plan for new restaurants to conserve capital resources and ~~other~~to ~~customary~~make opportunistic ~~closing~~acquisitions ~~conditions~~of businesses where we can leverage our operating skills and size to improve results.

~~Under~~Significant events ~~the~~that ~~merger~~affected ~~agreement,~~our ~~there~~2010 ~~is a “go-shop” provision whereby the Special Committee~~results, ~~with~~as ~~the~~compared ~~assistance~~to ~~of its independent advisors~~2009, ~~actively~~or ~~solicited~~that ~~alternative~~may ~~acquisition~~affect ~~proposals~~our ~~from~~future ~~third parties until December 17~~results, ~~2009.~~are ~~Although~~described webelow: ~~received indications of interest during the go-shop period, no superior proposals were received.~~

On• ~~February 17,~~Two ~~2010,~~refinancings ~~the~~of ~~Golden Nugget, Inc.,~~ our ~~wholly~~debt ~~owned,~~in ~~unrestricted subsidiary, entered into Amendment No~~2010. 2 and Waiver to the First Lien Credit Agreement (First Lien Second Amendment) by and among the Golden Nugget, Inc., Wachovia Bank, National Association, as Administrative Agent, Collateral Agent, Swing Line Bank and Issuing Bank, and each of the Lender parties thereto, dated June 14, 2007.

~~The~~• ~~First~~Completing ~~Lien Second Amendment replaced~~ the ~~existing~~2010 ~~first~~Going ~~lien~~Private ~~financial~~Transaction ~~covenants with minimum EBITDA, minimum liquidity, minimum cage cash~~ and ~~maximum~~associated ~~capital~~transaction ~~expenditure (CAPEX) covenants~~costs. In addition, consenting First Lien lenders received a consent fee of 0.5% and all First Lien lenders will receive a 0.5% annual consent fee on outstanding commitments through maturity. First Lien Lenders will also receive additional interest in an amount equal to 1.00% per annum on unpaid Advances in the form of “PIK” interest, or at the option of the Golden Nugget, cash. The First Lien Second Amendment precludes dividends or other restricted payments, limits incurring additional debt, making investments and other cash distributions from Golden Nugget, increases the excess cash flow sweep to 75% from 50% if certain liquidity levels are reached and requires additional reporting of financial performance including cash flow reports. Certain potential defaults under the existing First Lien Credit Agreement were waived.

~~Concurrently~~• ~~with~~The ~~the~~purchase ~~First Lien Second Amendment, the Golden Nugget entered into Amendment No. 2~~ and ~~Waiver~~retirement toof ~~the Second Lien Credit Agreement (Second Lien Second Amendment) by and among~~ Golden Nugget, ~~Inc., Wachovia Bank, National Association and the other financial institutions parties thereto, dated June 14, 2007. The Second Lien Second Amendment replaced the existing~~ second lien ~~financial~~debt ~~covenants~~at ~~with~~a ~~minimum~~discount EBITDA, minimum liquidity, minimum cage cash and maximum CAPEX covenants and waived certain potential defaults under the existing Second Lien Credit Agreement. The Second Lien Second Amendment advances the maturity date on the second lien facility from December 31, 2014 to ~~November 2,~~face ~~2014~~value. ~~The maturity date on the existing $4.0 million Seller note was extended to November 2, 2014 from November 2, 2010.~~

In• ~~connection~~Construction ~~with the amendments, affiliates~~ of the ~~Golden~~new ~~Nugget~~hotel ~~will~~tower ~~provide~~at ~~$50.0 million in additional funds to~~ the Golden Nugget ~~in return~~Las ~~for~~Vegas ~~non-interest~~which ~~bearing subordinated notes. $20.0 million of these funds were used for operating liquidity and to pay fees and expenses associated with the amendments. $30.0 million~~ was ~~available~~completed toin ~~purchase~~late ~~second~~2009 ~~lien~~at ~~indebtedness~~a atcost ~~40%~~ of ~~face value. At closing,~~ approximately $62140.~~8 million of second lien indebtedness was acquired and retired. The remaining balance of the $30.~~0 million ~~not used to purchase second lien debt by December 31, 2010, if any, will be used to purchase first lien debt at par value~~. All such purchased debt shall be immediately retired. The Golden Nugget may also incur up to an additional $8.0 million in affiliate subordinated debt during the remaining term of the First Lien Credit Agreement to meet liquidity requirements.

~~Due~~• toThe aacquisition ~~number~~ of ~~factors~~Oceanaire ~~affecting consumers, including rising unemployment, home foreclosures, a slowdown in global economies, contracting credit markets,~~ and ~~reduced~~Bubba ~~consumer~~Gump ~~spending, the near term outlook for the restaurant, hospitality,~~ and ~~entertainment industries is uncertain. The economic slow down accelerated in~~ the ~~fourth~~associated ~~quarter~~transaction ~~of 2008 and has continued throughout 2009~~costs. In response to the current economic conditions, we have taken measures to increase our efficiencies and reduce our cost structure across our businesses. In addition, we have lowered our growth plans for new restaurants to conserve capital resources.

2• The impact of the Nashville, TN flood that resulted in closure of two restaurants in the Opry Mills Mall.

Significant events that affected our 2009 results, as compared to 2008, or that may affect our future results, are described below:

• Two refinancings of our debt in 2009, the first in February during the peak of the credit crisis resulting in significantly higher interest rates, substantial original issue discount, more restrictive covenants and a relatively short term followed by a refinancing in November with improved interest rates, less restrictive covenants and a longer term compared to the February financing.

• The entering into a 2009 merger agreement and associated transaction costs.

• The amending of our Golden Nugget credit facility and associated purchase and retirement of second lien debt at a discount to face value.

• The impact of Hurricane Ike which resulted in significant disruption to our Houston, Kemah and Galveston restaurants. We have reopened all restaurants and received insurance proceeds, including business interruption, sufficient to replace substantially all of our lost profits and damaged property. However, the long term impact of the storm, if any, is uncertain.

• Construction of the new hotel tower at the Golden Nugget Las Vegas which was completed in late 2009 at a cost of approximately $140.0 million, significantly increased our debt for the Golden Nugget Las Vegas at a time when the near term outlook for the gaming industry is uncertain.

• The termination of our 2008 merger agreement and associated transaction costs.

Core Restaurant Concepts

Our portfolio of restaurant concepts consists of a variety of formats, each providing our guests with a distinct dining experience.

We currently operate our restaurants through the following divisions:

•

Landry’s Division—our high-profile seafood and signature restaurants;

•

Rainforest Cafe Division—our rainforest-, Asian and prehistoric-themed restaurants;

• Saltgrass Steak House Division—our Texas-Western-themed restaurants; ~~and~~

• Chart House Division—our upscale seafood restaurants primarily at waterfront locations.;

~~Landry’s~~• ~~Division. The~~Bubba ~~Landry’s~~Gump Division—our is‘Forest ~~comprised of 65 Landry~~Gump’s-themed ~~Seafood~~seafood ~~House and C.A. Muer~~ restaurants ~~(which~~; ~~include restaurants that operate under several trade names, primarily Charley’s Crab), as well as our Signature Group restaurants, which together generated 24.8% of our restaurant~~ and ~~hospitality revenues for the year ended December 31, 2009. Alcoholic beverage sales accounted for approximately 18.8% of these revenues.~~

• ~~Landry’s~~Oceanaire ~~Seafood~~Division—our ~~House~~upscale ~~and Charley’s Crab. Landry’s Seafood House and Charley’s Crab are full-service~~ seafood restaurants. Each offers an extensive menu featuring fresh fish, shrimp, crab, lobster, scallops, other seafood, beef and chicken specialties in a comfortable, relaxed atmosphere. The Landry’s Seafood House restaurants feature 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. Charley’s Crab restaurants, the first of which was founded in 1964, are generally situated throughout Michigan and Florida, include numerous waterfront locations and have unique architectural details, with two restaurants located in renovated historical train stations. Landry’s Seafood House dinner entrée prices range from $8.99 to $28.99, with certain items offered at market price. Lunch entrées range from $5.99 to $18.99. Charley’s Crab dinner entrée prices range from $17.99 to $39.99, with lunch entrée prices ranging from $7.99 to $23.99.

Landry’s Division. The Landry’s Division is comprised of 58 Landry’s Seafood House and C.A. Muer restaurants (which include restaurants that operate under several trade names, primarily Charley’s Crab), as well as our Signature Group restaurants, which together generated 23.3% of our restaurant and hospitality revenues for the year ended December 31, 2010. Alcoholic beverage sales accounted for approximately 20.1% of these revenues.

~~Table~~• Landry’s Seafood House and Charley’s Crab. Landry’s Seafood House and Charley’s Crab are full-service seafood restaurants. Each offers an extensive menu featuring fresh fish, shrimp, crab, lobster, scallops, other seafood, beef and chicken specialties in a comfortable, relaxed atmosphere. The Landry’s Seafood House restaurants feature 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 ~~Contents~~a traditional old seafood house restaurant. Charley’s Crab restaurants, the first of which was founded in 1964, are generally situated throughout Michigan and Florida, include numerous waterfront locations and have unique architectural details, with two restaurants located in renovated historical train stations. Landry’s Seafood House dinner entrée prices range from $6.99 to $39.99, with certain items offered at market price. Lunch entrées range from $6.50 to $19.99. Charley’s Crab dinner entrée prices range from $17.75 to $47.95, with lunch entrée prices ranging from $7.99 to $25.95.

•

Signature Group. Landry’s Signature Group, initiated in 2003, includes fine dining and upscale concepts such as Vic & Anthony’s, a world-class steakhouse with locations in downtown Houston, Texas and in the Golden Nugget—Las Vegas, and the award-winning Pesce seafood restaurant. Both Vic & Anthony’s and Pesce are included in many “Top 10” lists in their respective categories. Grotto, one of Houston’s most popular upscale Italian eateries, has locations in Houston, Texas, The Woodlands, Texas and the Golden Nugget—Las Vegas. Brenner’s Steakhouse, a Houston tradition since 1936, has expanded to two locations. Willie G’s, one of Landry’s original concepts that features Louisiana style fresh seafood, has locations in Houston, Texas, Galveston, Texas and Denver, Colorado. The Signature Group accommodates the needs of the high-end consumer who we believe is less impacted by overall economic conditions.

~~Rainforest~~2 Cafe Division. The Rainforest Cafe Division comprised of 31 Rainforest Cafe, T-Rex Cafe and Yak & Yeti theme-based restaurants, generated 32.8% of our restaurant and hospitality revenues for the year ended December 31, 2009. Alcoholic beverage sales and retail sales accounted for approximately 20.3% of these revenues. These restaurants typically are larger units generating higher unit volumes than restaurants in our other concept, with operating profit margins that are comparable to our other restaurants. Five of these restaurants are located on high-profile Disney properties.

Rainforest Cafe Division. The Rainforest Cafe Division comprised of 32 Rainforest Cafe, T-Rex Cafe and Yak & Yeti theme-based restaurants, generated 31.0% of our restaurant and hospitality revenues for the year ended December 31, 2010. Alcoholic beverage sales and retail sales accounted for approximately 19.6% of these revenues. These restaurants typically are larger units generating higher unit volumes than restaurants in our other concept, with operating profit margins that are comparable to our other restaurants. Five of these restaurants are located on high-profile Disney properties.

•

Rainforest Cafe. Each Rainforest Cafe consists of a restaurant and a retail village. The Rainforest Cafe restaurants provide full-service dining in a visually and audibly stimulating and entertaining rainforest-themed environment that appeals to a broad range of customers. The restaurant provides an attractive value to customers by offering a full menu of high-quality food and beverage items served in a simulated rainforest complete with thunderstorms, waterfalls and active wildlife. Entrée prices range from $8.99 to $23.99. In the retail village, we sell complementary apparel, toys and gifts with the Rainforest Cafe logo in addition to other items reflecting the rainforest theme.

•

T-Rex Cafe. In February 2006, we acquired 80% of T-Rex Cafe, Inc. T-Rex Cafe is a unique concept that features an interactive prehistoric environment with life-size animatronic dinosaurs. Each T-Rex Cafe offers a full menu of high-quality food and beverage items and unique merchandise. Under the agreement, we guaranteed the funding for the construction, development and pre-opening of at least three T-Rex Cafes. The first T-Rex Cafe opened in July 2006 in Kansas City, Kansas and the second unit opened in October 2008 at Downtown Disney in Orlando, Florida.

•

Yak & Yeti. In February 2006, we also acquired the majority interest in Yak & Yeti, a new Asian themed restaurant that opened in November 2007 at Walt Disney World’s Animal Kingdom in Orlando, Florida. In a setting reminiscent of a rural Himalayan village, the Asian-Fusion concept offers both full-service table dining and quick service food, as well as a retail component offering traditional Asian dinnerware ranging from sushi plates to chopsticks to fine teapots.

Saltgrass Steak House Division. Our 44 Saltgrass Steak House restaurants generated 1918.5% of our restaurant and hospitality revenues for the year ended December 31, ~~2009~~2010. Alcoholic beverage sales accounted for approximately 12 11.28% of these revenues. The Saltgrass Steak House restaurants offer full-service dining in a Texas-Western theme which welcomes guests into a stone and wood beam ranch house complete with a fireplace and a saloon-style bar. Menu options extend from filet mignon to chicken fried steak to fresh fish to grilled chicken breast. Dinner entrée prices range from $8.99 to $29.99 and lunch entrée prices range from $7.99 to $15.99.

Chart House Division. The Chart House Division is comprised of 30 28 Chart House restaurants, which generated 12.78% of our restaurant and hospitality revenues for the year ended December 31, ~~2009~~2010. Alcoholic beverage sales accounted for approximately 21.29% of these revenues. The Chart House has a very long and successful history of providing an upscale full service dining experience. Founded in 1961, Chart House restaurants are located on some of the most scenic properties on the East and West coasts, including many prime waterfront venues. The Chart House restaurant menus offer an extensive variety of seasonal fresh fish, shrimp, beef and other daily seafood specialties and several restaurants also offer lunch seating and a Sunday brunch. Chart House dinner entrée prices range from $18.99 to $44.99.

4Bubba Gump Division. The Bubba Gump Division is comprised of 28 restaurants, including 23 Bubba Gump themed restaurants, which was acquired in December 2010 and generated 0.6% of our restaurant and hospitality revenues for the year ended December 31, 2010. Retail and alcoholic beverage sales accounted for approximately 26.6% of these revenues. Bubba Gump is a chain of seafood restaurants inspired by the 1994 film ‘Forrest Gump’ and its restaurants are located in some of the top tourist destinations across the United States. The menu consists mostly of shrimp and other seafood dishes, as well as Southern and Cajun cuisine. Bubba Gump entrée prices range from $11.50 to $24.50.

~~Table~~Oceanaire Division. The Oceanaire Division is comprised of ~~Contents~~12 Oceanaire Seafood restaurants, which was acquired in April 2010 and generated 4.1% of our restaurant and hospitality revenues for the year ended December 31, 2010. Alcoholic beverage sales accounted for approximately 27.8% of these revenues. The Oceanaire restaurant menus offer an extensive variety of seasonal fresh fish, shrimp, beef and other daily seafood specialties. Oceanaire dinner entrée prices range from $10.95 to $79.95.

Specialty Division

Our Specialty Division, which generated 109.25% of our restaurant and hospitality revenues, consists of hospitality and amusement properties that provide ancillary revenue streams and opportunities complementary to our core restaurant business. The Specialty Division includes the following properties:

•

Kemah Boardwalk. Our Specialty Division commenced operations with the 1999 opening of the Kemah Boardwalk, our owned amusement, entertainment and retail complex located on approximately 40 acres in Galveston, Texas. The Kemah Boardwalk has multiple attractions; including specialty retail shops, a boutique hotel, a marina, and carnival-style rides and games. In August 2007, the Boardwalk Bullet roller coaster opened, which is the largest wooden roller coaster on the Gulf Coast of Texas, towering over 96 feet tall overlooking Galveston Bay. The Kemah Boardwalk’s activities are based upon and complementary to the business and traffic generated at our nine wholly-owned and operated high-volume restaurants situated at that location, which include units from most of our core restaurant concepts described above as well as the original Aquarium Restaurant.

•

Aquariums. We currently operate two aquarium complexes featuring Aquarium Underwater Dining Adventure restaurants in Denver, Colorado and Houston, Texas. In addition, we operate two Aquarium Underwater Dining Adventure restaurants in Nashville, Tennessee and Kemah, Texas. In 1998, we opened the original Aquarium Restaurant in Kemah, Texas at the Kemah Boardwalk. We opened a second aquarium, the Downtown Aquarium in Houston, Texas, in 2003. In addition to a restaurant, the Downtown Aquarium features a public aquarium complex with over 200 species of fish, a giant acrylic shark tank, dancing water fountains, a mini-amusement park and a bar/lounge. Also in 2003, we acquired Ocean Journey, a 12-acre aquarium complex located adjacent to downtown Denver, Colorado. This world-class facility, which is wholly-owned and operated, is home to over 400 species of fish. In 2004, we opened an Aquarium Restaurant in Nashville, Tennessee featuring a 200,000 gallon aquarium. In 2005, we opened an up-scale Aquarium Restaurant in Denver, Colorado, which transformed the aquarium into a recreational destination and renamed the facility the Downtown Aquarium.

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Hotels. We currently own, operate and/or manage five hotel properties in Texas. Opened in 2004, the Inn at the Ballpark, located in downtown Houston, is a luxury hotel featuring over 200 rooms located directly across the street from Minute Maid Park, home of the Houston Astros baseball team. The hotel also offers easy access to all of downtown Houston’s amenities, including the newly expanded George R. Brown Convention Center, the new Toyota Center, home of the Houston Rockets basketball team, the theater district and our Downtown Aquarium. The Boardwalk Inn is a full service hotel located in the center of the Kemah Boardwalk. We manage the Galveston San Luis Resort Spa & Conference Center and the Galveston Island Hilton, which are owned by Fertitta Hospitality, L.L.C., and we own and operate the Galveston Holiday Inn on the Beach, which is owned by a separately financed, unrestricted subsidiary. See “Certain Relationships and Related Transactions—Management Agreement.”

•

Tower of the Americas. In 2004, we entered into a 15-year lease agreement with the City of San Antonio to renovate and operate the 750-foot landmark Tower of the Americas, a major tourist attraction in San Antonio which also includes a revolving Chart House restaurant, an open air observation deck at the top of the tower, and a Texas-themed 4-D “multi-sensory” theater on the ground level.

Gaming Division

In 2005, Landry’s Gaming, Inc., a separately financed, unrestricted subsidiary, acquired the Golden Nugget, Inc., owner of the Golden Nugget. The Golden Nugget—Las Vegas occupies approximately eight acres in downtown Las Vegas, Nevada, with approximately 55,000 square feet of gaming area. In November 2009, we completed the construction of a new hotel tower. As of December 31, ~~2009~~2010, the property featured four towers containing 2,345 rooms, the largest number of guestrooms in downtown Las Vegas, approximately 1,~~358~~331 slot machines and 7478 table games. The Golden Nugget—Laughlin has approximately 33,000 square feet of gaming space and as of December 31, 2010 had 1,009 slot machines, 15 table games and 300 hotel rooms in Laughlin, Nevada. For the year ended December 31, 2010, the Golden Nugget properties generated total revenues of $232.1 million. The subsidiaries that own and operate the Golden Nugget are separately financed, unrestricted subsidiaries with $439.3 million of debt as of December 31, 2010, which includes $116.5 million of funds used for the construction of the additional new hotel tower opened in November 2009.

space and as of December 31, 2009 had 1,027 slot machines, 16 table games and 300 hotel rooms in Laughlin, Nevada. For the year ended December 31, 2009, the Golden Nugget properties generated total revenues of $216.8 million. The subsidiaries that own and operate the Golden Nugget are separately financed, unrestricted subsidiaries with $506.1 million of debt as of December 31, 2009, which includes $116.5 million of funds used in the additional new hotel tower opened in November 2009.

We believe that the Golden Nugget brand name is one of the most recognized in the gaming industry and we expect to continue to capitalize on the strong name recognition and high level of quality and value associated with it. Demonstrating a long-standing commitment to quality and service, the Golden Nugget—Las Vegas has received the prestigious AAA Four Diamond Award for thirty-two consecutive years, which is a record for any lodging establishment in Nevada. Presented by the American Automobile Association, a North American motoring and leisure travel organization, the 2009 award was given to only 19 Nevada hotels of the approximately 50,000 eligible lodging establishments in the United States evaluated by the AAA. According to the AAA, establishments that receive the AAA Four Diamond Award are upscale in all areas and offer extensive arrays of amenities and high degrees of hospitality, service and attention to detail.

Our business strategy is to create the best possible gaming and entertainment experience for our customers by providing a combination of comfortable and attractive surroundings with attentive service from friendly, experienced employees. We target out-of-town customers at both of our properties while also catering to the local customer base. The Golden Nugget—Las Vegas offers the same complement of services as our Las Vegas Strip competitors, but we believe that our customers prefer the boutique experience we offer and the downtown environment. We emphasize the property’s wide selection of amenities to complement guests’ gaming experience and provide a luxury room product, exceptional dining alternatives and personalized services at an attractive value. At the Golden Nugget—Laughlin, we focus on providing a high level of customer service, a quality dining experience at an appealing value, a slot product with highly competitive pay tables and player rewards programs.

~~Our~~4 ~~Competitive Strengths~~

Stable and Diversified Cash Flows. Our nationwide system of 174 full-service restaurants consists of multiple formats and varied price points, from upscale fine dining to mid-scale casual dining, and offers a variety of menus that have both regional and national appeal. Many of our restaurant and hospitality locations are situated in high-profile, specialty locations in markets that provide a balanced mix of tourist, convention, business and residential clientele. We believe that this strategy results in a high volume of new and repeat customers and provides us with increased name recognition in new markets. Our menu diversification reduces our dependence on any particular seafood or commodity, and allows us to select from a variety of seafood species to best provide our guests with an attractive price-value relationship. Our experience operating multiple concepts in diverse geographic areas and types of locations enables us to select the most appropriate format for each property. In addition, we believe that our geographic diversification limits operational issues related to regional weather or economic conditions, and provides stability to our operations and cash flows.

Significant Base of Owned Assets in Prime Locations. We believe one of our core strengths is the identification, valuation, negotiation and purchase or lease of attractive locations for our restaurant and hospitality operations. Our portfolio of owned properties includes 53 restaurant properties and many properties in our Specialty Division. Out of our 174 restaurants, we operate 75 waterfront restaurants and restaurants at a number of high-profile locations (including five units at Disney theme parks), as well as restaurants at the MGM Grand Hotel and Casino in Las Vegas, Nevada, the Mall of America in Bloomington, Minnesota and Fisherman’s Wharf in San Francisco, California.

Experienced Management Team. Our management team has extensive experience in the restaurant industry and a history of operating, developing and acquiring hospitality businesses. Our senior management team, led by Tilman J. Fertitta, our founder and Chairman, President and Chief Executive Officer, has an average of 19 years

of experience with us and 27 years of industry experience. In addition to an experienced and committed senior management team, we also have an experienced operations organization at the regional and individual restaurant level, which we believe contributes significantly to our success. Our ~~management~~Competitive ~~team~~Strengths ~~has grown our revenues from approximately $400.0 million in 1998 to $1.1 billion for the year ended December 31, 2009, through both developing new properties and integrating acquisitions.~~

Stable and Diversified Cash Flows. Our nationwide system of 210 full-service restaurants consists of multiple formats and varied price points, from upscale fine dining to mid-scale casual dining, and offers a variety of menus that have both regional and national appeal. Many of our restaurant and hospitality locations are situated in high-profile, specialty locations in markets that provide a balanced mix of tourist, convention, business and residential clientele. We believe that this strategy results in a high volume of new and repeat customers and provides us with increased name recognition in new markets. Our menu diversification reduces our dependence on any particular seafood or commodity, and allows us to select from a variety of seafood species to best provide our guests with an attractive price-value relationship. Our experience operating multiple concepts in diverse geographic areas and types of locations enables us to select the most appropriate format for each property. In addition, we believe that our geographic diversification limits operational issues related to regional weather or economic conditions, and provides stability to our operations and cash flows.

Significant Base of Owned Assets in Prime Locations. We believe one of our core strengths is the identification, valuation, negotiation and purchase or lease of attractive locations for our restaurant and hospitality operations. Our portfolio of owned properties includes 53 restaurant properties and many properties in our Specialty Division. Out of our 210 restaurants, we operate 91 waterfront restaurants and restaurants at a number of high-profile locations (including five units at Disney theme parks), as well as restaurants at the MGM Grand Hotel and Casino in Las Vegas, Nevada, the Mall of America in Bloomington, Minnesota and Fisherman’s Wharf in San Francisco, California.

Experienced Management Team. Our management team has extensive experience in the restaurant industry and a history of operating, developing and acquiring hospitality businesses. Our senior management team, led by Tilman J. Fertitta, our founder and Chairman, President and Chief Executive Officer, has an average of 20 years of experience with us and 28 years of industry experience. In addition to an experienced and committed senior management team, we also have an experienced operations organization at the regional and individual restaurant level, which we believe contributes significantly to our success. Our management team has grown our revenues from approximately $400.0 million in 1998 to $1.1 billion for the year ended December 31, 2010, through both developing new properties and integrating acquisitions.

Our Business Strategy

Our objective is to develop and operate a diversified restaurant, hospitality and entertainment company offering customers unique dining, leisure and entertainment experiences. We believe that this strategy creates a loyal customer base, generates a high level of repeat business and provides consistent levels of profitability and cash flows. By focusing on high-quality food, superior value and service, and the ambiance of our locations, we strive to create an environment that fosters repeat patronage and encourages word-of-mouth recommendations.

Our operating strategy focuses on the following:

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Provide an Attractive Price-Value Entertainment and Dining Experience. Our restaurants provide customers an attractive price-value relationship by serving high quality meals featuring generous portions and fresh ingredients in comfortable and attractive surroundings with attentive service at reasonable prices. With a significant seafood component, our restaurants have flexibility in procuring alternative products based on price and availability, allowing us to promptly change menu items and prices to assure quality and value for our guests. In addition, our culinary experts conduct menu evaluations and reengineering to ensure our restaurants feature sought after core menu items along with bold, fresh offerings to attract new and repeat guests. We believe that the distinctive, visually stimulating design and décor of our restaurants makes us a destination for special occasion diners and travelers. We provide our customers prompt, friendly and efficient service, keeping table-to-wait staff ratios low. We strive to create a memorable dining experience for customers to ensure repeat and frequent patronage.

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Attract and Retain Quality Employees. We believe there is a high correlation between the quality of unit management and our long-term success. We provide extensive training and attractive compensation and focus on internal promotion to foster a strong corporate culture and create a sense of personal commitment from our employees. Through our cash bonus program, our restaurant managers typically earn bonuses equal to 15% to 25% of their total cash compensation. We believe this encourages attentive customer service and consistent food quality for our guests.

• Focus on Store-Level Operating Performance. We remain committed to improving store-level operating performance. WeOur ~~spent~~significant ~~$11.7~~investment ~~million~~in ~~during 2006 and 2007 on~~ corporate and store-based systems ~~which~~enables ~~enable~~ management to leverage point-of-sale data obtained on a daily basis for improved responsiveness to market and operating conditions. Additionally, we have aggressively maintained the condition of our restaurants. We will continue to maintain the condition of our restaurants in order to promote repeat and frequent patronage by our guests.

The following is a summary of our major acquisitions:

Rainforest Cafe (2000). Since our acquisition of Rainforest Cafe, we have focused on stabilizing this concept’s operations. We have closed unprofitable locations, renegotiated leases, reduced general and administrative expenses and refreshed the concept’s menu with proven menu items from our other concepts. We have also opened new units in high traffic tourist locations.

~~Chart~~5 House and C.A. Muer (2002). The Chart House and C.A. Muer restaurant acquisitions enabled us to purchase a collection of valuable restaurant locations, many of which are situated on premium waterfront properties on the Pacific and Atlantic Oceans. We have remodeled many of these units, freshening and updating the look of these venues. In addition, these restaurants have undergone menu evaluations and re-engineering in

Chart House and C.A. Muer (2002). The Chart House and C.A. Muer restaurant acquisitions enabled us to purchase a collection of valuable restaurant locations, many of which are situated on premium waterfront properties on the Pacific and Atlantic Oceans. We have remodeled many of these units, freshening and updating the look of these venues. In addition, these restaurants have undergone menu evaluations and re-engineering in order for us to feature successful dishes from previous menus side-by-side with bold, fresh ideas from our culinary experts. The remodeling and menu changes have been met with favorable results. No significant near-term expansion of these concepts is currently planned, and future growth will be dependent upon profitability and unit economics.

Saltgrass Steak House (2002). The nearly seamless integration of Saltgrass Steak House restaurants into our systems in late 2002 was highlighted by the conversion of all 27 restaurants to our financial tools within 60 days of acquisition. These tools include our point-of-sale system and also implementation of our profitability and labor/payroll programs. Since the acquisition, we have expanded the concept to 4244 units. We also opened our first unit outside of Texas in 2006. We will continue to evaluate potential sites for this concept in both existing and new markets in 2010.

Golden Nugget (2005). The Golden Nugget acquisition allowed us to enter the gaming business with one of the most recognized brands in the industry and in the preeminent gaming city, Las Vegas, Nevada. We also acquired the Golden Nugget property in Laughlin, Nevada.

T-Rex (2006). In February 2006, we acquired 80% of T-Rex Cafe, Inc. and ~~committed~~have toopened ~~the~~three ~~construction~~locations ~~of at least four restaurants~~ (including Yak & Yeti)., ~~Three of the locations have already opened~~ with two of them being at high profile Disney properties.

Oceanaire Seafood Room (2010). The Oceanaire acquisition provided us additional growth within our high end seafood line, as well as a known brand with several excellent locations.

Bubba Gump (2010). The Bubba Gump acquisition, completed in December 2010, gave us a group of high volume seafood restaurants in some of the top tourist destinations across the United States.

Restaurant Locations

Our restaurants generally range in size from 5,000 square feet to 16,000 square feet. The Rainforest Cafe and T-Rex Cafe restaurants are larger, generally ranging 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 and T-Rex restaurants have between 300 and 600 restaurant seats with an average of approximately 400 seats.

The following table enumerates ~~by state~~ the location of our restaurants as of December 31, ~~2009~~2010:

State	Numberof Units		~~State~~	~~Numberof Units~~State	Numberof Units
Alabama	2	2	~~Minnesota~~	1Missouri		2
Arizona	2	2	~~Missouri~~	2Nevada		9
California	13	22	~~Nevada~~	9New Jersey		5
Colorado	8	11	~~New Jersey~~	5New Mexico		1
Connecticut	1	1	~~New Mexico~~	1New York		1
Florida	23	29	~~Oklahoma~~	1North Carolina		1
Georgia	1	2	~~Oregon~~	1Oklahoma		1
Illinois	3		Pennsylvania	2
Hawaii		4		Oregon		1
Kansas	1		South Carolina	2
Illinois		5		Pennsylvania		2
Kentucky	1		Tennessee	2
Indiana		1		South Carolina		2
Louisiana	4		Texas	75
Kansas		1		Tennessee		3
Maryland	1		Virginia	1
Kentucky		1		Texas		77
Massachusetts	2		Washington	1
Louisiana		5		Virginia		1
Michigan	8		Ontario, Canada	1
Maryland		2		Washington		1
			Total	174
Massachusetts		3		District of Columbia		1
Michigan		6		Ontario, Canada		1
Minnesota		3		Hong Kong		1
				Total		210

Hotels and Other Properties

We own and operate the Golden Nugget—Las Vegas and Golden Nugget—Laughlin through wholly owned, separately financed, unrestricted subsidiaries. The Golden Nugget—Las Vegas occupies approximately eight acres in downtown Las Vegas. The Golden Nugget—Laughlin occupies approximately 13.5 acres, all of which is owned by us.

We currently own and/or operate a hotel property in each of Houston, Texas and Kemah, Texas. The Inn at the Ballpark is located in downtown Houston directly across the street from Minute Maid Park, home of the Houston Astros baseball team, and is wholly-owned and operated by us. The Boardwalk Inn is a full-service hotel located in the center of the Kemah Boardwalk. We also manage the Galveston San Luis Resort Spa & Conference Center and the Galveston Island Hilton, which are owned by Fertitta Hospitality, L.L.C., and own and operate the Holiday Inn Resort Galveston on the Beach, which is a wholly-owned, separately financed, unrestricted subsidiary. See “Certain Relationships and Related Transactions—Management Agreement.”

We are also the developer and operator of the Kemah Boardwalk located south of Houston, Texas. We own and operate substantially all of the 40-acre Kemah Boardwalk development, which includes nine restaurants (included in the table above), a hotel, retail shops, amusement attractions, and a marina.

Our corporate office in Houston, Texas is a multi-story building owned by us and includes meeting and training facilities, and a research and development test kitchen. We also own and operate approximately 75,000 square feet of warehouse facilities used primarily for construction activities and related storage and retail goods storage and distribution related activities. We own and operate several additional limited menu restaurants, hospitality venues and other properties which are excluded from the numerical counts due to materiality.

Menu

Our 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 many 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. We provide high quality beef, fowl, pastas, and other American food entrees as alternatives to seafood items. Our restaurants also feature a unique selection of desserts often made fresh on a daily basis at each location. Many of our restaurants offer complimentary salad 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. Saltgrass Steak House offers a variety of Certified Angus Beef, prime rib, pork ribs, fresh seafood, chicken and other Texas cuisine favorites at moderate prices.

Management and Employees

We staff our operating units with management that has experience in our industry. We believe our strong team-oriented culture helps us attract highly motivated employees who provide customers with a superior level of service. We train our kitchen employees, wait staff, hotel staff and casino employees to take great pride serving our customers in accordance with our high standards. Managers and staff are trained to be courteous and attentive to customer needs, and the managers, in particular, are instructed to regularly visit with customers. Senior corporate management hosts weekly meetings with our general managers to discuss individual unit performance and customer comments. Moreover, we require general managers to hold weekly meetings at their individual operating units. We monitor compliance with our quality requirements through periodic on-site visits and formal periodic inspections by regional field managers and supervisory personnel from our corporate offices.

Our typical ~~seafood~~restaurant unit has a general manager and several kitchen and floor managers. We have internally promoted many of the general managers after training them in all areas of restaurant management with a strong emphasis on kitchen operations. The general managers typically spend a portion of their time in the dining area of the restaurant, supervising the staff and providing service to customers.

The Rainforest Cafe and T-Rex Cafe unit management structure is more complex due generally to higher unit level sales, larger facilities, more sophisticated rainforest theming, including animatronics, aquariums, and complementary retail business activity. A management team consisting of floor, kitchen, retail, facility and outside sales managers supports the general manager.

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.

We have spent considerable effort in developing employee growth programs whereby a large number of promotions occur internally. We require each trainee to participate in a formal training program that utilizes departmental training manuals, examinations and a scheduled evaluation process. We require newly hired wait staff to spend from five to ten days in training before they serve our customers. We utilize a program of background checks for prospective management employees, such as criminal checks, credit checks, driving record and drug screening. Management training encompasses three general areas:

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all service positions;

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management, accounting, personnel management, and dining room and bar operations; and

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kitchen management, which entails food preparation and quality controls, cost controls, training, ordering and receiving and sanitation operations.

Due to our enhanced training program, management training customarily lasts approximately 8 to 12 weeks, depending upon the trainee’s prior experience and performance relative to our objectives. As we expand, we will need to hire additional management personnel, and our continued success will depend in large part on our ability to attract, train, and retain quality management employees. As a result of the enhanced training programs, we believe we attract and retain a greater proportion of management personnel through our existing base of employees and internal promotions and advancements.

As7 of December 31, 2009, there were approximately 50 individuals involved in regional management functions generally performing on-site visits, formal inspections and similar responsibilities. As we grow, we plan to increase the number of regional managers, and to have each regional manager responsible for a limited number of restaurants within their geographic area. We plan to promote successful experienced restaurant level management personnel to serve as future regional managers. Regional management is continuously evaluated for performance and effectiveness.

AsTable of December 31, 2009, in the restaurant division, we employed approximately 17,000 persons, of whom 1,097 were restaurant managers or manager-trainees, 237 were salaried corporate and administrative employees, approximately 50 were operations regional management employees, 36 were development and construction employees and the rest were hourly employees. Typical restaurant employment for us is at a seasonal low at December 31, and may increase by 30% or more in the summer months. Our restaurants generally employ an average of approximately 60 to 100 people, depending on seasonal needs. The larger Rainforest Cafe restaurants generally have 160 to 200 employees on average, with certain larger volume units having in excess of 400 people. We believe that our management level employee turnover for 2009 was within industry standards. Contents

WeAs ~~employed~~of ~~approximately~~December 31, 22010,~~800~~ ~~persons~~there were approximately 75 individuals involved in ~~the~~regional management ~~gaming~~functions ~~division~~generally asperforming ofon-site ~~December 31~~visits, ~~2009,~~formal ofinspections ~~whom~~and ~~116~~similar ~~were~~responsibilities. ~~management~~As we grow, ~~122~~we ~~were salaried~~plan ~~employees~~to ~~and~~increase the ~~rest~~number ~~were~~of ~~hourly~~regional ~~employees.~~managers, ~~Approximately~~and ~~1,228~~to ~~employees~~have ~~are~~each ~~covered~~regional bymanager ~~collective~~responsible ~~bargaining~~for ~~agreements~~a atlimited ~~the~~number ~~Golden~~of restaurants ~~Nugget—Las~~within ~~Vegas~~their geographic area. We ~~consider~~plan ~~our~~to ~~relationship~~promote ~~with~~successful ~~employees~~experienced restaurant level management personnel to beserve ~~satisfactory~~as future regional managers. Regional management is continuously evaluated for performance and effectiveness.

As of December 31, 2010, in the restaurant division, we employed approximately 26,000 persons, of whom 1,593 were restaurant managers or manager-trainees, 327 were salaried corporate and administrative employees, approximately 75 were operations regional management employees, 40 were development and construction employees and the rest were hourly employees. Typical restaurant employment for us is at a seasonal low at December 31, and may increase by 30% or more in the summer months. Our restaurants generally employ an average of approximately 60 to 100 people, depending on seasonal needs. The larger Rainforest Cafe restaurants generally have 120 to 150 employees on average, with certain larger volume units having in excess of 400 people. We believe that our management level employee turnover for 2010 was within industry standards.

We also operate the Claim Jumper Restaurants under a management agreement for an affiliate of ours. We employed approximately 3,000 persons in the gaming division as of December 31, 2010, of whom 245 were management, 277 were salaried employees and the rest were hourly employees. Approximately 1,296 employees are covered by collective bargaining agreements at the Golden Nugget—Las Vegas. We consider our relationship with employees to be satisfactory.

Customer Satisfaction

We provide our customers prompt, friendly and efficient service by keeping table-to-wait staff ratios low and staffing each operating unit with an experienced management team to ensure attentive customer service and consistently high food quality as well as providing an excellent room and gaming experience. Through the use of comment cards, a toll-free telephone number, and a web-based customer response site, senior management receives valuable feedback from customers and demonstrates a continuing interest in customer satisfaction by responding promptly.

Purchasing

We strive to obtain consistent, quality items at competitive prices from reliable sources. We continually search for and test various product sizes, species, and origins, in order to serve 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 our 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 our primary distributors and major suppliers at prices negotiated primarily by our corporate office. We emphasize availability of the items on our menu, and if an item is in short supply, restaurant level management is expected to procure the item immediately.

We use many suppliers and obtain our seafood products from global 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, we believe that we have the ability to identify alternative seafood products and to adjust our menus as required. We routinely make bulk purchases of seafood products and retail goods for distribution to our restaurants to take advantage of buying opportunities, leverage our buying power, and hedge against price and supply fluctuations. As we continue to grow, we believe that our ability to improve our purchasing and distribution efficiencies will be enhanced.

We believe that our essential food products and retail goods are available, or can be made available upon relatively short notice, from alternative qualified suppliers and distributors. We primarily use one national distributor in order to achieve certain cost efficiencies, although such services are available from alternative qualified distributors. We have not experienced any significant delays in receiving our food and beverage products, restaurant supplies or equipment.

Advertising and Marketing

We employ a marketing strategy to attract new customers, to increase the frequency of visits by existing customers, and to establish a high level of name recognition through television and radio commercials, billboards, travel and hospitality magazines, print advertising and newspaper drops. Our advertising expenditures for ~~2009~~2010 were approximately 1.21% of revenues from continuing operations. We expect to cross market our restaurant, hospitality and gaming locations to leverage our advertising spend. In 2010, we completed the implementation of our loyalty program called the “Landry’s Select Club”. Members receive rewards based on their aggregate spend at our participating properties as well as exclusive offers to special events at our locations and from our vendor partners. We anticipate future advertising and marketing expenses to remain moderate.

Service Marks

Landry’s, Rainforest Cafe, Chart House, Charley’s Crab, Saltgrass, T-Rex and Golden Nugget are each registered as a federal ~~service~~ service mark on the Principal Register of the United States Patent and Trademark Office. The Crab House is a registered design mark. Bubba Gump is a registered service mark owned by Paramount Licensing, Inc. and is subject to a long term exclusive licensing agreement with us for restaurant operations worldwide. We pursue registration of our important service marks and trademarks and vigorously oppose any infringement upon them.

Competition

The restaurant, hospitality and entertainment industries are intensely competitive with respect to price, service, the type and quality of product offered, location and other factors. We compete with both locally owned facilities, as well as national and regional chains, some of which may be better established in our existing and future markets. Many of these competitors have a longer history of operations with substantially greater financial resources. We also compete with other restaurant, hospitality and gaming, and retail establishments for real estate sites, personnel and acquisition opportunities.

Changes in customer tastes, economic conditions, demographic trends and the location, number of, and type of food and amenities served by competing businesses could affect our business as could a shortage of experienced management and hourly employees.

We believe our business units enjoy a high level of repeat business and customer loyalty due to high food quality, good perceived price-value relationship, comfortable atmosphere, and friendly efficient service.

Rainforest and Bubba Gump International License Agreements and Units

Rainforest Cafe ~~has~~and Bubba Gump have entered into exclusive license arrangements relating to the operations and development of Rainforest Cafes and Bubba Gump restaurants in several foreign jurisdictions. Currently, there are ~~ten~~18 international units. We own a2 ~~small~~international ~~equity~~units ~~interest~~outright inand have an ~~international~~equity ~~location,~~interest ~~which~~in ~~was~~3 ~~included~~other ~~when~~international ~~we acquired Rainforest Cafe in 2000~~locations. We do not anticipate revenues from international franchises to be significant.

Environmental Matters

Our business is subject to federal, state and local environmental laws and regulations concerning the discharge, storage, handling, release and disposal of hazardous or toxic substances. These environmental laws provide for significant fines, penalties and liabilities, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of the hazardous or toxic substances. Third parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such substances. To date, neither our restaurants nor our facilities have been the subject of any material environmental matters.

Information as to Classes of Similar Products or Services

We operate in ~~only~~ two reportable industry segments: restaurant and hospitality and gaming operations.

ITEM 1A.

RISK FACTORS

The following information describes certain significant risks and uncertainties inherent in our business. You should take these risks into account in evaluating us. This section does not describe all risks applicable to us, our industry or our business, and it is intended only as a summary of certain material risks. You should carefully consider such risks and uncertainties together with the other information contained in this Form 10-K. If any of such risks or uncertainties actually occurs, our business, financial condition and operating results could be harmed substantially and could differ materially from the plans and other forward-looking statements included in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and elsewhere in this report.

Risks Related to Our Business

The restaurant, hospitality and gaming industries are particularly affected by trends and fluctuations in demand and are highly competitive. If we are unable to successfully surmount these challenges, our business and results of operations could be materially adversely affected.

Restaurant Industry

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:

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traffic patterns,

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demographic considerations,

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the amounts spent on, and the effectiveness of, our marketing efforts,

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weather conditions, and

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the type, number, and location of competing restaurants.

We have many well established competitors with greater financial resources and longer histories of operation than ours, including competitors already established in regions where we may expand, as well as competitors planning to expand in the same regions. Wein ~~face~~which ~~significant~~we ~~competition~~currently ~~from mid-priced, full-service, casual dining restaurants offering seafood and other types and varieties of cuisine~~operate. Our competitors include national, regional, and local chains as well as local owner-operated restaurants. We also compete with other restaurants and retail establishments for restaurant sites.

Gaming Industry

The United States gaming industry is intensely competitive and features many participants, including many world class destination resorts with greater name recognition and different attractions, amenities and entertainment options than our facilities. In a broader sense, gaming operations face competition from all manner of leisure and entertainment activities.

Our competitors have more gaming industry experience, and many are larger and have significantly greater financial, sales and marketing, technical and other resources. Our competitors include multinational corporations that enjoy widespread name recognition, established brand loyalty, decades of casino operation experience and a diverse portfolio of gaming assets.

We face ongoing competition as a result of the upgrading or expansion of facilities by existing market participants and the entrance of ~~new~~ new gaming participants. Certain states have recently legalized, and several other states are currently considering legalizing, casino gaming. Legalized casino gaming in these states and on Indian reservations would increase competition and could adversely affect our gaming operations.

General economic factors may adversely affect our results of operations.

National, regional and local economic conditions, such as recessionary economic cycles, a worsening economy and any increases in energy and fuel prices, could adversely affect disposable consumer income and consumer confidence. When gasoline, natural gas, electricity and other energy costs increase, and credit card, home mortgage and other borrowing costs increase, our guests may have lower disposable income and reduce the frequency with which they dine out or may choose more inexpensive restaurants when dining outside the home. The gaming activities we offer represent discretionary expenditures and participation in such activities may decline during economic downturns~~, during which consumers generally have less disposable income~~. Even an uncertain economic outlook may adversely affect consumer spending in our restaurant, hospitality and gaming operations, as consumers spend less in anticipation of a potential prolonged economic downturn. Unfavorable changes in these factors or in other business and economic conditions affecting our customers could reduce customer traffic in some or all of our restaurants, impose practical limits on our pricing and increase our costs. Any of these factors could lower our profit margins and have a material adverse affect on our results of operations.

The impact of inflation on food, beverages, labor, utilities and other aspects of our business can negatively affect our results of operations. We may not be able to offset inflation through menu price increases, cost controls and incremental improvement in operating margins, which could negatively affect our results of operations.

~~Current~~Difficult ~~difficult~~ conditions in the global financial markets and the economy generally may materially adversely affect our business and results of operations.

Our results of operations are materially affected by conditions in the global financial markets and the economy generally, both in the U.S. and elsewhere around the world. The stress experienced by global financial markets that began in the second half of 2007, substantially increased during the third and fourth quarter of 2008 and continued into a portion of 2009., ~~The~~during which time the volatility and disruption in the global financial markets reached unprecedented levels. ~~The~~As a result, the availability and cost of credit has been ~~materially affected~~impacted. ~~These~~Such factors, combined with volatile oil and gas prices, ~~sustained periods of high~~ unemployment ~~levels~~, depressed home prices and increasing foreclosures, declining business and consumer confidence, declines in consumer spending, and the ~~risks~~risk of increased inflation, have precipitated an economic slowdown ~~and a severe recession,~~ which could continue to adversely affect the demand for our products and, as a result, lead to declining revenues and profit margins. It is difficult to predict how long the current economic conditions will persist, whether they will deteriorate ~~further~~, and the extent to which our operations will be adversely affected.

~~Because~~10 ~~many of our restaurants are concentrated in single geographic areas, our results of operations could be materially adversely affected by regional events.~~

Many of our existing restaurants are concentrated in the southern half of the United States. This concentration in a particular region could affect our operating results in a number of ways. For example, our results of operations may be adversely affected by economic conditions in that region and other geographic areas into which we may expand. Also, given our present geographic concentration, adverse publicity relating to our restaurants could have a more pronounced adverse effect on our overall revenues than might be the case if our restaurants were more broadly dispersed. In addition, as many of our existing restaurants are in the Gulf Coast area from Texas to Florida, we are particularly susceptible to damage caused by hurricanes or other severe weather conditions the impact, frequency of which may be triggered by climate change. For example, on September 13, 2008, Hurricane Ike struck the Gulf Coast of the United States, causing considerable damage to the cities of Galveston, Kemah and Houston, Texas and surrounding areas. Several of our restaurants in Galveston and Kemah sustained significant damage, as did the amusement rides, the boardwalk itself and some infrastructure at the Kemah Boardwalk. The Kemah and Galveston properties had been a significant driver of our overall performance in 2008. The damage to the Kemah and Galveston properties may adversely affect both our business and near- and long-term prospects. Widespread power outages led to the closure of 31 Houston area restaurants until power was restored. All Houston, Galveston and Kemah restaurants have reopened.

Because many of our restaurants are concentrated in single geographic areas, our results of operations could be materially adversely affected by regional events.

Many of our existing restaurants are concentrated in the southern half of the United States. This concentration in a particular region could affect our operating results in a number of ways. For example, our results of operations may be adversely affected by economic conditions in that region which may differ from other regions. Also, given our present geographic concentration, adverse publicity relating to our restaurants could have a more pronounced adverse effect on our overall revenues than might be the case if our restaurants were more broadly dispersed. In addition, as many of our existing restaurants are in the Gulf Coast area from Texas to Florida, we are particularly susceptible to damage caused by hurricanes or other severe weather conditions, the impact of frequency of which may be triggered by climate change. For example, on September 13, 2008, Hurricane Ike struck the Gulf Coast of the United States, causing considerable damage to the cities of Galveston, Kemah and Houston, Texas and surrounding areas. Several of our restaurants in Galveston and Kemah sustained significant damage, as did the amusement rides, the boardwalk itself and some infrastructure at the Kemah Boardwalk. Similarly, our Nashville, TN restaurants experienced significant damage due to flooding in 2010.

While we maintain property and business interruption insurance, we carry large deductibles, and there can be no assurance that if a severe hurricane or other natural disaster should affect our geographical areas of operations, we would be able to maintain our current level of operations or profitability, or that property and business interruption insurance would adequately reimburse us for our losses.

Moreover, in response to continued high insurance costs for our property and casualty coverage due to our large concentration of coastal properties, we significantly reduced our aggregate insurance policy limits and purchased individual windstorm policies for the majority of our operating units located along the Texas ~~gulf~~Gulf ~~coast~~Coast. There is no assurance that we will have adequate insurance coverage to recover losses that may result from a catastrophic event.

Our gaming activities rely heavily on the Nevada gaming market, and changes adversely impacting that market could have a material adverse effect on our gaming business.

The Golden Nugget properties are both located in Nevada and, as a result, our gaming business is subject to greater risks than a more diversified gaming company. These risks include, but are not limited to, risks related to local economic and competitive conditions, changes in local and state governmental laws and regulations (including changes in laws and regulations affecting gaming operations and taxes) and natural and other disasters. Any economic downturn in Nevada or any terrorist activities or disasters in or around Nevada could have a significant adverse effect on our business, financial condition and results of operations. In addition, Nevada gaming industry revenues have declined significantly in 2008 ~~and~~through ~~2009~~2010, and there can be no assurance that gaming industry revenues will not continue to significantly decline.

We also draw a substantial number of customers from other geographic areas, including southern California, Hawaii and Texas. A recession or downturn in any region constituting a significant source of our customers could result in fewer customers visiting, or customers spending less at, the Golden Nugget properties, which would adversely affect our results of operations. Additionally, there is one principal interstate highway between Las Vegas and southern California, where a large number of our customers reside. Capacity restraints of that highway or any other traffic disruptions may affect the number of customers who visit our facilities.

If we are unable to anticipate and react to changes in food and other costs, or obtain a seafood supply in sufficient quality and quantity, our results of operations could be materially adversely affected.

Our profitability is dependent on our ability to anticipate and react to increases in food, labor, employee benefits, and similar costs over which we have limited or no control. Specifically, our dependence on frequent deliveries of fresh seafood and produce subjects us to the risk of possible shortages or interruptions in supply caused by adverse weather or other conditions that could adversely affect the availability and cost of such items. Our business may also be affected by inflation. There can be no assurance that we will be able to anticipate and avoid any adverse effect on our profitability from increasing costs.

Our business may also be affected by inflation. There can be no assurance that we will be able to anticipate and avoid any adverse effect on our profitability from increasing costs.

In the past, certain types of seafood have experienced fluctuations in availability. In addition, some types of seafood have been subject to adverse publicity due to certain levels of contamination at their source or a perceived scarcity in supply, which can adversely affect both supply and market demand. We can make no assurances that in the future either seafood contamination or inadequate supplies of seafood might not have a significant and materially adverse effect on our operating results.

Labor shortages or increases in labor costs could slow our growth or harm our business.

Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified employees, including regional operational managers and regional chefs, restaurant general managers, executive chefs and casino employees, necessary to continue our operations and keep pace with our growth. Qualified individuals that we need to fill these positions are in short supply and competition for these employees is intense. If we are unable to recruit and retain sufficient qualified individuals, our business and our growth could be adversely affected. Additionally, competition for qualified employees could require us to pay higher wages, which could result in higher labor costs. If our labor costs increase, our results of operations will be negatively affected.

1511

individuals that we need to fill these positions are in short supply and competition for these employees is intense. If we are unable to recruit and retain sufficient qualified individuals, our business and our growth could be adversely affected. Additionally, competition for qualified employees could require us to pay higher wages, which could result in higher labor costs. If our labor costs increase, our results of operations will be negatively affected.

We use significant amounts of electricity, natural gas and other forms of energy, and energy price increases may adversely affect our results of operations.

We use significant amounts of electricity, natural gas and other forms of energy. Any shortage or substantial increases in the cost of electricity and natural gas in the United States will increase our cost of operations, which would negatively affect our operating results. The extent of the impact is subject to the magnitude and duration of the energy price increases, but this impact could be significant. In addition, higher energy and gasoline prices affecting our customers may increase their cost of travel to our ~~hotel-casinos~~casino properties and result in reduced visits to our properties and a reduction in our revenues.

The cost of compliance with the significant governmental regulation to which we are subject or our failure to comply with such regulation could materially adversely affect our results of operations.

The restaurant industry is subject to extensive state and local government regulation relating to the sale of food and alcoholic beverages and to sanitation, public health, fire and building codes. Alcoholic beverage control regulations require each of our restaurants to apply for and obtain from state authorities a license or permit to sell alcohol on the premises. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations affect various aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages. In certain states, we may be subject to “dram shop” statutes, which generally provide a person injured by an intoxicated person the right to recover damages from the establishment which wrongfully served alcoholic beverages to the intoxicated person. We carry liquor liability coverage as part of our comprehensive general liability insurance.

Our 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 (i) the level of minimum wages, (ii) the deductibility of business and entertainment expenses, (iii) levels of disposable income and unemployment and (iv) national and regional economic growth.

Difficulties or failures in obtaining required licensing or other regulatory approvals could delay or prevent the opening of a new restaurant. The suspension of or inability to renew a license could interrupt operations at an existing restaurant, and the inability to retain or renew such licenses would adversely affect the operations of such restaurant. Our operations are also subject to requirements of local governmental entities with respect to zoning, land use and environmental factors which could delay or prevent the development of new restaurants in particular locations.

At the federal and state levels, there are from time to time various proposals and initiatives under consideration to further regulate various aspects of our business~~, employment regulations and climate change~~. ~~These~~For ~~and~~example ~~other~~new ~~initiatives could adversely affect us as well as the restaurant industry in general. In particular~~employment, ~~the~~healthcare ~~increased~~or ~~focus on~~ climate change ~~may~~regulations ~~lead~~could toincrease ~~new initiatives~~our ~~directed~~costs atand ~~regulating~~decrease aour ~~yet~~operating ~~unspecified array of environmental matters, such as greenhouse gas emissions~~profits. These ~~regulatory efforts could result in increase in the cost of raw materials, taxes, transportation,~~ and ~~utilities,~~other ~~which~~initiatives could ~~decrease~~ ~~our~~adversely ~~operating~~affect ~~profits~~us ~~and~~as ~~could~~well ~~necessitate~~as ~~future~~the ~~investments~~restaurant industry in ~~facilities and equipment~~general. In addition, seafood is harvested on a world-wide basis and, on occasion, imported seafood is subject to federally imposed import duties.

We conduct licensed gaming operations in Nevada, and various regulatory authorities, including the Nevada State Gaming Control Board and the Nevada Gaming Commission, require us to hold various licenses and registrations, findings of suitability, permits and approvals to engage in gaming operations and to meet requirements of suitability. These gaming authorities also control approval of ownership interests in gaming operations. In its discretion, the gaming authorities may require the holder of any of our debt instruments to file applications, be investigated and be deemed suitable to own debt if the gaming authorities have reason to believe that debt ownership would be inconsistent with the declared policies of the State of Nevada. These gaming authorities may deny, limit, condition, suspend or revoke our gaming licenses, registrations, findings of suitability or the approval of any of our ownership interests in any of the licensed gaming operations conducted in Nevada, any of which could have a significant adverse effect on our business, financial condition and results of operations, for any cause they may deem reasonable. If we violate gaming laws or regulations that are applicable to us, we may have to pay substantial fines or forfeit assets. If, in the future, we operate or have an ownership interest in casino gaming facilities located outside of Nevada, we also will be subject to the gaming laws and regulations of those other jurisdictions.

registrations, findings of suitability, permits and approvals to engage in gaming operations and to meet requirements of suitability. These gaming authorities also control approval of ownership interests in gaming operations. In its discretion, the gaming authorities may require the holder of any of our securities to file applications, be investigated and be deemed suitable to own our securities. These gaming authorities may deny, limit, condition, suspend or revoke our gaming licenses, registrations, findings of suitability or the approval of any of our ownership interests in any of the licensed gaming operations conducted in Nevada, any of which could have a significant adverse effect on our business, financial condition and results of operations, for any cause they may deem reasonable. If we violate gaming laws or regulations that are applicable to us, we may have to pay substantial fines or forfeit assets. If, in the future, we operate or have an ownership interest in casino gaming facilities located outside of Nevada, we also will be subject to the gaming laws and regulations of those other jurisdictions.

If additional gaming regulations are adopted or existing ones are modified in Nevada, those regulations could impose significant restrictions or costs that could have a significant adverse effect on us. From time to time, various proposals are introduced in the federal and Nevada state and local legislatures that, if enacted, could adversely affect the tax, regulatory, operational or other aspects of the gaming industry and our business. Legislation of this type may be enacted in the future. If there is a material increase in federal, state or local taxes and fees, our business, financial condition and results of operations could be adversely affected.

Our officers, directors and key employees are required to be licensed or found suitable by gaming authorities and the loss of, or inability to obtain, any licenses or findings of suitability may have a material adverse effect on us.

Our officers, directors and key employees are required to file applications with the gaming authorities in the State of Nevada, Clark County, Nevada and the City of Las Vegas and are required to be licensed or found suitable by these gaming authorities. If any of these gaming authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever all relationships with that person. Furthermore, the gaming authorities may require us to terminate the employment of any person who refuses to file the appropriate applications. Either result could significantly impair our gaming operations.

Our business is subject to seasonal fluctuations, and, as a result, our results of operations for any given quarter may not be indicative of the results that may be achieved for the full fiscal year.

Our business is subject to seasonal fluctuations. Historically, our highest earnings have occurred in the second and third quarters of the fiscal year, as our revenues in most of our restaurants have typically been higher during the second and third quarters of the fiscal year. As a result, results of operations for any single quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. Quarterly results have been, and in the future will continue to be, significantly impacted by the timing of new restaurant openings and their respective pre-opening costs.

Our international operations subject us to certain external business risks that do not apply to our domestic operations.

Rainforest Cafe ~~has~~and ~~license~~Bubba ~~arrangements~~Gump have license arrangements relating to the operations and development of ~~Rainforest~~their ~~Cafes~~concepts in several foreign jurisdictions. These agreements include a per unit development fee and/or restaurant royalties. ~~There are ten international units; one is owned outright, and nine are franchises.~~ Our international operations are subject to certain external business risks such as exchange rate fluctuations, import and export restrictions and tariffs, litigation in foreign jurisdictions, cultural differences, increased competition as a result of subsidies to local companies, increased expenses from inflation, political instability and the significant weakening of a local economy in which a foreign unit is located. In addition, it may be more difficult to register and protect our intellectual property rights in certain foreign countries.

If we are unable to protect our intellectual property rights, it could reduce our ability to capitalize on our brand names, which could have an adverse affect on our business and results of operations.

Landry’s, Rainforest Cafe, Chart House, Charley’s Crab, Saltgrass, ~~T-Rex Cafe~~ and Golden Nugget 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. We also license the name Bubba Gump from Paramount Licensing, Inc. There is no assurance that any of our rights in any of our intellectual property will be enforceable, even if registered, against any prior users of similar intellectual property or against any of our ~~competitors~~ competitors who seek to utilize similar intellectual property in areas where we operate or intend to conduct operations. The failure to enforce or the unenforceability of any of our intellectual property rights could have the effect of reducing our ability to capitalize on our efforts to establish brand equity.

We face the risk of adverse publicity and litigation, the cost or adverse results of which could have a material adverse effect on our business and results of operations.

We ~~are a multi-unit business and~~ may from time to time be the subject of complaints or litigation from customers alleging illness, injury or other food quality, health or operational concerns. Publicity resulting from these allegations may materially adversely affect us, regardless of whether the allegations are valid or whether we are liable. Negative publicity may also result from actual or alleged violations of “dram shop” laws which generally provide an injured party with recourse against an establishment that serves alcoholic beverages to an intoxicated party who then causes injury to himself or to a third party. In addition, employee claims against us based on, among other things, wage and hour violations, discrimination, harassment or wrongful termination may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. A significant increase in the number of these claims or an increase in the number of successful claims could materially adversely affect our business, prospects, financial condition, operating results and cash flows. Unfavorable publicity resulting from these claims relating to a limited number of our restaurants or only relating to a single restaurant could adversely affect the public perception of all our restaurants within that particular brand. Adverse publicly and its effect on overall consumer perceptions of food safety, or our failure to respond effectively to adverse publicity, could have a material affect on our financial condition.

In connection with certain of our discontinued operations, we remain the guarantor or assignor under a number of leased locations. In the event of future defaults under any of such leased locations we may be responsible for significant damages to landlords which may materially affect our financial condition, operating results and cash flows.

Health concerns relating to the consumption of seafood, beef and other food products could affect consumer preferences and could negatively impact our results of operations.

Consumer food preferences could be affected by health concerns about the consumption of various types of seafood, beef or chicken. In addition, negative publicity concerning food quality or possible illness and injury resulting from the consumption of certain types of food, such as negative publicity concerning the levels of mercury or other carcinogens in certain types of seafood, oil contaminations of seafood, e-coli, salmonella, “mad cow” and “foot-and-mouth” disease relating to the consumption of beef and other meat products, “avian flu” related to poultry products and the publication of government, academic or industry findings about health concerns relating to food products served by any of our restaurants could also affect consumer food preferences. These types of health concerns and negative publicity concerning the food products we serve at any of our restaurants may adversely affect the demand for our food and negatively impact our results of operations.

In13 addition, we cannot guarantee that our operational controls and employee training will be effective in preventing food-borne illnesses, such as hepatitis A, and other food safety issues that may affect our restaurants. Food-borne illness incidents could be caused by food suppliers and transporters and, therefore, could be outside of our control. Any publicity relating to health concerns or the perceived or specific outbreaks of food-borne illnesses or other food safety issues attributed to one or more of our restaurants could result in a significant decrease in guest traffic in all of our restaurants and could have a material adverse effect on our results of operations. We face the risk of litigation in connection with any outbreak of food-borne illnesses or other food

In addition, we cannot guarantee that our operational controls and employee training will be effective in preventing food-borne illnesses, such as hepatitis A, and other food safety issues that may affect our restaurants. Food-borne illness incidents could be caused by food suppliers and transporters and, therefore, could be outside of our control. Any publicity relating to health concerns or the perceived or specific outbreaks of food-borne illnesses or other food safety issues attributed to one or more of our restaurants could result in a significant decrease in guest traffic in all of our restaurants and could have a material adverse effect on our results of operations. We face the risk of litigation in connection with any outbreak of food-borne illnesses or other food safety issues at any of our restaurants. If a claim is successful, our insurance coverage may not be adequate to cover all liabilities or losses and we may not be able to continue to maintain such insurance, or to obtain comparable insurance at a reasonable cost, if at all. If we suffer losses, liabilities or loss of income in excess of our insurance coverage or if our insurance does not cover such loss, liability or loss of income, there could be a material adverse effect on our results of operations.

Restaurant companies have been the target of class actions and other lawsuits alleging, among other things, violation of federal and state law.

We are subject to a variety of claims arising in the ordinary course of our business brought by or on behalf of our customers or employees, including personal injury claims, contract claims, and employment-related claims. In recent years, a number of restaurant companies have been subject to lawsuits, including collective and class action lawsuits, alleging violations of federal and state law regarding workplace, employment and similar matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. We are currently defending purported collective action lawsuits alleging violations, among other things, of minimum wage and overtime provisions of federal and state labor laws. Regardless of whether any claims against us are valid or whether we are ultimately determined to be liable, claims may be expensive to defend and may divert time and money away from our operations and hurt our performance. A judgment for any claims could materially adversely affect our financial condition or results of operations ~~(especially if there is no insurance coverage),~~ and adverse publicity resulting from these allegations may materially adversely affect our business. We offer no assurance that we will not incur substantial damages and expenses resulting from lawsuits, which could have a material adverse effect on our business.

Rising interest rates would increase our borrowing costs, which could have a material adverse effect on our business and results of operations.

We currently have, and may incur, additional indebtedness that bears interest at variable rates. Accordingly, if interest rates increase, so will our interest costs, which may have an adverse effect on our business, results of operations and financial condition.

We may not be able to access capital markets when necessary.

We may find it necessary in the future to issue additional debt or equity to support ongoing operations, to undertake capital expenditures, or to undertake acquisitions or other business combination transactions. Disruptions, uncertainty or volatility in the financial markets may limit our access to capital required to operate our business. Additionally, since we no longer have public equity outstanding, our access to the public equity markets may be limited. These market conditions may limit our ability to replace, in a timely manner, maturing debt obligations, including the notes when they become due, and access the capital necessary to grow our business. As a result, we may be forced to delay raising capital, issue shorter tenor securities than would be optimal, bear an unattractive cost of capital or be unable to raise capital at any price, which could decrease our profitability and significantly reduce our financial flexibility. Actions we might take to access financing may in turn cause rating agencies to further reevaluate our ratings. In the event current resources do not satisfy our needs, we may have to seek additional financing. The availability of additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to the financial services industry, and our credit ratings and credit capacity. In addition, the indenture governing the notes and the credit agreement governing our amended and restated senior secured credit facility will contain certain covenants that restrict our ability to incur additional indebtedness. Our inability to raise financing to support ongoing operations or to fund capital expenditures or acquisitions could limit our growth and may have a material adverse effect on us.

The capital costs of our specialty and gaming divisions are extremely high. As a result, if any of these projects do not perform as expected, it could have a material adverse effect on our operations.

In connection with our specialty and gaming divisions, we may incur significant capital expenditures. We recently completed construction of a hotel tower at the Golden Nugget—Las Vegas, at a cost of approximately $140 million. As a result, the failure of one or more of these projects could have a significant affect on our financial condition and operations.

The loss of Tilman J. Fertitta, our Chairman, President and Chief Executive Officer, could have a material adverse effect on our business and development.

We believe that the development of our business has been, and will continue to be, dependent on Tilman J. Fertitta, our Chairman, President and Chief Executive Officer. The loss of Mr. Fertitta’s services could have a material adverse effect upon our business and development, and there can be no assurance that an adequate replacement could be found for Mr. Fertitta in the event of his unavailability.

~~Following~~14 Mr. Fertitta’s proposal to acquire all of our common stock in 2008, the termination of the 2008 merger agreement and in connection with his current proposal to acquire us, we have been named as a party in number of lawsuits, and we may be named in other lawsuits, which could harm our business and financial conditions.

FollowingTable the announcement of Mr. Fertitta’s offer to acquire us in 2008, the termination of the 2008 merger agreement and in connection with his current proposal to acquire us, we and each of our directors were named in a number of class action and derivative lawsuits alleging, among other things, breaches of fiduciary duties. In one of these lawsuits, brought in Delaware, the court denied a motion to dismiss and it is scheduled for trial in 2010. Our Amended and Restated Bylaws and our Certificate of Incorporation require us to indemnify our directors for braches of fiduciary duties, subject to certain limited exceptions. As a result of these lawsuits, we are obligated to pay for certain costs and expenses of each of our directors and may be liable for substantial damages, costs and expenses if the lawsuits are successful. Such litigation could also divert the attention of our management and our resources in general from day-to-day operations. Further, it is possible that additional claims will be brought against us in connection with the current transaction. Contents

There are inherent limitations in all control systems that may result in undetected errors.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls and disclosure controls will prevent all possible error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, in our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by the individual acts of some persons or by collusion of two or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may be inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, errors may not be detected.

WeTilman ~~identified~~J. aFertitta ~~material~~is ~~weakness in the design and operation of~~ our ~~internal~~Sole ~~controls over financial reporting as of December 31, 2009~~Shareholder.

~~Our~~Tilman ~~Chief~~J. ~~Executive~~Fertitta, ~~Officer~~our Chairman of the Board, President and Chief ~~Financial~~Executive Officer, ~~reevaluated~~owns ~~the~~100% ~~effectiveness~~ of the ~~design~~ ~~and~~Company’s ~~operation~~common ofstock and controls our ~~disclosure~~voting ~~controls~~power. ~~and~~As ~~procedures~~a asresult, ofMr. Fertitta ~~each~~controls the election of ~~March~~the 31Company’s ~~and~~Board ~~June~~of ~~30,~~Directors and ~~concluded~~controls ~~that~~the shareholder ~~our~~vote ~~disclosure~~on ~~controls~~all ~~and~~matters. ~~procedures~~We ~~were~~are not ~~effective~~required ~~due~~ to aand ~~material~~do ~~weakness~~not inhave ~~our~~any ~~internal~~independent ~~control~~board ~~over~~members ~~financial reporting~~or ~~solely~~an ~~related~~independent tocompensation, ~~our~~nominating ~~restatement~~or ofcorporate ~~net~~governance ~~income~~committee. ~~available~~Additionally, toas ~~our~~a ~~stockholders~~result ~~for~~of ~~the~~Mr. Fertitta’s ~~purpose~~ownership of our ~~calculating~~common ~~earnings~~stock, ~~per~~we ~~share.~~are ~~There~~no ~~can~~longer berequired noto ~~assurance~~and ~~that~~do ~~our~~not ~~controls~~expect ~~will~~to ~~effectively~~continue ~~prevent~~filing ~~material~~reports ~~misstatements~~with inthe ~~our consolidated~~SEC. ~~financial~~As ~~statements~~a inresult, ~~future~~publicly ~~periods~~available information about our business may be limited.

Tilman J. Fertitta is a Control Shareholder.

Tilman J. Fertitta, the Company’s Chairman of the Board, President and Chief Executive Officer controls a majority of the Company’s common stock and the Company’s voting power. As a result, Mr. Fertitta is able to control the election of the Company’s Board of Directors and controls the vote on virtually all matters which might be submitted to a vote of our stockholders. As a controlled company, we are not required to and do not have an independent compensation or monitoring and corporate governess committee.

Tilman J. Fertitta’s ownership of over 50% of our common stock could adversely affect our share price and make future equity offerings more difficult.

Tilman J. Fertitta’s ownership of over 50% of our common stock has reduced the number of shares held by unaffiliated stockholders and, as a result, our common stock may be more susceptible to market volatility. This ownership could adversely affect prevailing market prices for our common stock and limit our ability to raise capital through equity securities offerings due to the lower number of institutional investors a reduced public float generally attracts. Additionally, if Mr. Fertitta’s proposed acquisition of us is completed, our stock will no longer be publically traded and Mr. Fertitta will own all of our common stock.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

Restaurant Locations

For information concerning the location of our restaurants see “Business—Restaurant Locations.”

The Golden Nugget—Las Vegas (“GNLV”) occupies approximately eight acres and GNLV owns the buildings and approximately 90% of the land. GNLV leases the remaining land under three ground leases that expire (given effect to their options to renew) on dates ranging from 2025 to 2102. The Golden Nugget—Laughlin (“GNL”) occupies approximately 13.5 acres, all of which is owned by GNL.

ITEM 3.

LEGAL PROCEEDINGS

On ~~February~~November 56, ~~2009~~2007, a purported class action ~~and derivative~~ lawsuit ~~entitled~~against ~~Louisiana Municipal Police Employee~~Joe’s ~~Retirement~~Crab ~~System on behalf of itself and all other similarly situated shareholders of Landry’s Restaurant’s~~Shack, ~~Inc.~~ ~~and derivatively on behalf of nominal defendant Landry’s Restaurant’s,~~ Inc. was ~~brought~~filed ~~against~~in ~~all~~the ~~members~~Superior ofCourt ~~our Board~~ of ~~Directors,~~California ~~Fertitta~~in ~~Holdings,~~Los ~~Inc.,~~Angeles ~~and~~County ~~Fertitta~~by ~~Acquisition~~Roberto CoMartinez. inOn ~~the~~or ~~Court~~about atMarch 24, ~~Chancery of the State of Delaware. The lawsuit alleges~~2008, ~~among~~we ~~other~~were ~~things,~~was aalso ~~breach~~added ofas a Defendant ~~fiduciary~~as ~~duty~~we byowned the ~~directors~~Joe’s ~~for~~Crab ~~renegotiating~~Shack ~~the~~California ~~2008~~locations ~~merger~~during ~~agreement~~a ~~with~~portion ~~the Fertitta entities, allowing Mr. Fertitta to acquire shares~~ of ~~stock in~~ the ~~Company~~relevant ~~and~~time ~~gain majority~~period ~~control~~subject ~~thereof,~~to ~~and~~plaintiff’s ~~terminating~~purported ~~the~~class ~~2008~~action ~~merger agreement without requiring payment of the reverse termination fee~~lawsuit. The ~~suit~~lawsuit ~~seeks~~alleges, ~~consummation~~among ofother ~~the~~things, ~~merger~~that ~~buyout~~Joe’s atCrab ~~$21.00~~Shack violated athe ~~share~~California orLabor ~~damages~~Code ~~representing~~by ~~the~~misclassifying ~~difference~~managers ~~between~~as ~~$21.00 per~~exempt ~~share~~ and, ~~the~~therefore, ~~price~~not atproperly ~~which~~paying ~~class~~overtime ~~members sold their stock in the open market~~wages, orand ~~damages~~failing ~~for allowing Mr. Fertitta~~ to ~~acquire~~provide ~~control~~mandatory ofmeal ~~the~~or ~~Company~~rest ~~without~~breaks ~~paying a control premium,~~ or ~~alternatively~~payment ~~requiring~~in ~~payment~~lieu of the ~~reverse termination~~break. ~~fee~~We ordeny ~~damages for~~ the ~~devaluation~~claims ofin the ~~Company’s~~litigation and ~~stock.~~is Wevigorously ~~intend~~defending ~~to contest~~ this matter ~~vigorously~~.

On January 29, 2010, plaintiff in the foregoing action filed an amended complaint also naming Fertitta Group, Inc. and Fertitta Merger Co. as defendants and has further alleged that Mr. Fertitta’s latest proposal to acquire all of our outstanding stock on November 3, 2009 was unfair and that defendants breached their fiduciary duties in entering into a 2009 merger agreement at $14.75. Also, the amended complaint alleges that the Board approved an excessive golden parachute for Mr. Fertitta (albeit over seven (7) years ago) and requests that the Court invalidate same. In addition, plaintiff asserts that there has been inadequate disclosure in our preliminary proxy statement filed with the SEC in connection with the $14.75 merger transaction. In connection with the amended complaint, plaintiff also seeks an injunction of the $14.75 transaction unless curative disclosures are made, appointment of a Trustee to conduct a sale of us to maximize shareholder value, and the imposition of a constructive trust on shares acquired by Mr. Fertitta after June 2008 to be voted in favor of a transaction that provides the highest offer to our shareholders. We believe that the new claims asserted in the amended complaint are also without merit and intend to vigorously contest them as well.

Following Mr. Fertitta’s latest proposal to acquire all of our outstanding stock on November 3, 2009, the class action lawsuit styled Frederic Goldfein, Individually and on behalf of all others similarly situated v. Landry’s Restaurants, Inc., et al. was filed in the District Court of Harris County, 164th Judicial District. We are named in the Petition as a defendant along with all of our directors. Plaintiff has alleged that in connection with the proposed merger transaction, defendants have violated their fiduciary duties, duties of loyalty and good faith and fair dealing and have placed an artificial lid on the price of our stock by announcing a transaction at an inadequate price. Plaintiff seeks to enjoin the transaction until we adopt procedures and a process to obtain the highest price for shareholders, or alternatively to rescind the transaction. We believe this action is without merit and intend to vigorously contest this matter.

Ralph Biancalana, Individually and on behalf of all others similarly situated v. Tilman J. Fertitta, et al., a putative class action, was filed on November 10, 2009 in the District Court of Harris County, Texas, 165th Judicial District, following Mr. Fertitta’s latest proposal to acquire all of our outstanding stock. We are named in the Petition as a defendant along with all of our directors. Plaintiff has alleged, among other things, that in connection with the proposed merger transaction, our directors have knowingly and recklessly violated their fiduciary duty of care, have violated their fiduciary duties of loyalty, good faith, candor and independence, and that the transaction contains an inadequate and unfair price. Plaintiff also alleged that we aided and abetted our directors’ alleged breach of fiduciary duty. Plaintiff seeks to enjoin the transaction and the payment of a termination fee to Mr. Fertitta. Plaintiff also requests declarations from the Court that the termination fee is unfair, and that our directors have breached their fiduciary duties to our shareholders. Plaintiff seeds recovery of attorneys fees and costs. We believe this action is without merit and intend to vigorously contest this matter.

On November 17, 2009, Robert Caryer filed a class action petition in the District Court of Harris County, 125th Judicial District. The lawsuit is styled Robert Caryer, individually and on behalf of all other similarly situated v. Landry’s Restaurants, Inc., Tilman J. Fertitta, Steve L. Scheinthal, Kenneth Brimmer, Michael S. Chadwick, Joe Max Taylor and Richard H. Liem. Plaintiff has alleged that in connection with the proposed merger transaction, defendants have violated their fiduciary duties, duties of loyalty and good faith and fair dealing and have placed an artificial lid on the price of our stock by announcing a transaction at an inadequate price. Plaintiff seeks to enjoin the transaction until we adopt procedures and a process to obtain the highest price for shareholders, or alternatively to rescind the transaction. We believe this action is without merit and intend to vigorously contest this matter.

On January 15, 2010, Goldfein, Biancalana and Caryer were consolidated by Court order. Plaintiffs allege in the consolidated petition that in connection with the proposed merger transaction, defendants have violated their fiduciary duties, duties of loyalty and good faith and fair dealing and have placed an artificial lid on the price of our stock by announcing a transaction at an inadequate price. Plaintiffs seek to enjoin the transaction until we adopt procedures and a process to obtain the highest price for shareholders, or alternatively to rescind the transaction. We believe this action is without merit and intend to vigorously contest this matter.

General Litigation

We are 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 our financial position, results of operations or cash flows.

ITEM 4.

RESERVED

2315

PART II

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

Our common stock trades on the New York Stock Exchange under the symbol “LNY.” As of March 12, 2010, there were approximately 924 stockholders of record of the common stock.

The following table presents the quarterly high and low sales prices for our common stock, as reported on the New York Stock Exchange Composite Tape under the symbol “LNY” and dividends paid per common share for 2008 and 2009.

	High		Low		DividendsPaid
2008
First Quarter	$	21.89	$	14.18	$	0.05
Second Quarter	$	20.15	$	14.74	$	0.05
Third Quarter	$	19.47	$	10.33	$	—
Fourth Quarter	$	15.72	$	7.30	$	—
2009
First Quarter	$	12.87	$	3.60	$	—
Second Quarter	$	11.19	$	5.08	$	—
Third Quarter	$	11.71	$	7.75	$	—
Fourth Quarter	$	22.19	$	9.80	$	—

	01/01/05	01/01/06	01/01/07	01/01/08	01/01/09	01/01/10
Dow Jones Industrial Average	100	99	116	123	81	97
Dow Jones Restaurant Index	100	104	126	129	114	130
Landry’s Restaurants, Inc	100	92	104	68	40	73

Dividend Policy

Commencing in 2000, we began paying an annual $0.10 per share dividend, declared and paid in quarterly installments of $0.025 per share. In April 2004, the annual dividend was increased to $0.20 per share, declared and paid in quarterly installments of $0.05 per share. On June 16, 2008, we announced we were discontinuing dividend payments indefinitely. The indentures under which our 11 5/8% Senior Secured Notes were issued and our Credit Facility ~~Agreement~~ limit the payment of dividends on our common stock to specified levels.

Stock Repurchase

InOn ~~November 1998, we announced the authorization of an open market stock buy back program, which was renewed in April 2000, for an additional $36.0 million. In~~ October ~~2002~~ 6, ~~we authorized a $50.0 million open market stock buy back program and in September 2003~~2010, weall authorized another $60.0 million open market stock repurchase program. In October 2004, we authorized a $50.0 million open market stock repurchase program. In March 2005, we announced a $50.0 million authorization to repurchase common stock. In May 2005, we announced a $50.0 million authorization to repurchase common stock. In March, July and November 2007, we authorized an additional $50.0 million, $75.0 million and $1.5 million, respectively, of ~~open market stock repurchases. These programs have resulted in~~ our ~~aggregate~~outstanding ~~repurchasing of approximately 24.0 million shares of~~ common stock ~~for~~other ~~approximately~~than ~~$472.4~~that ~~million~~held ~~through~~by ~~December 31, 2009. In addition to our repurchases, during the fourth quarter of 2008,~~ Mr. Tilman J. Fertitta, ~~our~~was ~~Chairman,~~retired ~~Chief Executive Officer and~~pursuant ~~President,~~to ~~who~~the ~~owns~~Going ~~approximately~~Private ~~56%~~Transaction. ofAs ~~our~~a ~~stock~~result, ~~purchased approximately 2~~Mr.6 ~~million~~Fertitta ~~shares~~is onour ~~the~~sole ~~open~~stockholder ~~market~~and ~~without~~our ~~having~~stock ais not publicly ~~announced plan~~traded.

All repurchases of our common stock during the year ended December 31, 2009 were made pursuant to our open market stock repurchase program. We purchased 4,088 shares of our common stock during 2009, and have exhausted substantially all funds authorized for purchases under previously existing programs. No repurchases of our common stock were made during the quarter ended December 31, 2009.

ITEM 6.

SELECTED FINANCIAL DATA

The following table sets forth our selected consolidated financial data as of and for the years ended December 31, 2010, 2009, 2008, 2007, ~~2006,~~ and ~~2005~~2006 which are derived from our consolidated financial statements which have been audited by Grant Thornton LLP.

Discontinued Operations

During 2006, as part of a strategic review of our operations, we initiated a plan to divest certain restaurants, including 136 Joe’s Crab Shack units. Subsequently, several additional locations were added to our disposal plan. The results of operations for all units included in the disposal plan have been reclassified as discontinued operations in the statements of income for all periods presented.

Recent Accounting Pronouncements

In June 2008, the FASB issued new accounting guidance on determining whether instruments granted in share-based payment transactions are participating securities. In accordance with the new accounting guidance, unvested equity-based awards that contain non-forfeitable rights to dividends are considered to participate with common shareholders in undistributed earnings. As a result, our unvested awards of restricted stock are required to be included in the calculation of basic earnings per common share. These participating securities, prior to

application of the new accounting guidance, were excluded from weighted-average common shares outstanding in the calculation of basic earnings per common share. We applied the provisions of the new accounting guidance beginning on January 1, 2009, and have calculated and presented basic earnings per common share on this basis for all periods presented.

The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and our Consolidated Financial Statements and Notes. All amounts are in thousands, except per share data.

2616

SELECTED CONSOLIDATED FINANCIAL INFORMATION

	Year Ended December 31,
	2009			2008			2007			2006			2005
	2010			2009			2008			2007			2006
REVENUES	$	1,~~060~~123,~~234~~797		$	1,~~143~~060,~~889~~234		$	1,~~160~~143,~~368~~889		$	1,~~101~~160,~~994~~368		$	~~864~~1,~~156~~101,994
OPERATING COSTS AND EXPENSES:
Cost of revenues		~~218~~230,~~555~~637			~~245~~218,~~381~~555			~~256~~245,~~336~~381			~~249~~256,~~575~~336			~~223~~249,~~864~~575
Labor		~~340~~357,~~757~~601			~~366~~340,~~395~~757			~~375~~366,~~144~~395			~~357~~375,~~748~~144			~~258~~357,~~469~~748
Other operating expenses		~~264~~296,~~759~~557			~~288~~264,~~090~~759			~~292~~288,~~298~~090			~~278~~292,~~172~~298			~~213~~278,~~697~~172
General and administrative expense		4972,~~279~~972			5149,~~294~~279			5551,~~756~~294			5755,~~977~~756			4757,~~443~~977
Depreciation and amortization		7277,~~038~~617			7072,~~292~~038			6570,~~287~~292			5565,~~857~~287			4355,~~262~~857
Asset impairment expense (1)		23,~~888~~807			2,~~409~~888			—2,409			~~2,966~~—			—2,966
Gain on insurance claims		(41,~~851~~238	)		—(4,851	)		—			—			—
Loss (gain) on disposal of assets		(2,098	)		(59	)		(18,918	)		(2,295	)		(524	)
Loss (gain) on diposal of assets		(939	)		(2,098	)		(59	)		(18,918	)		(2,295	)
Pre-opening expenses		1,~~095~~132			21,~~266~~095			32,~~477~~266			53,~~214~~477			35,~~030~~214
Total operating costs and expenses		~~942~~1,~~422~~038,146			1942,~~026,068~~422			1,~~029~~026,~~380~~068			1,~~005~~029,~~214~~380			~~789~~1,~~241~~005,214
OPERATING INCOME		~~117~~85,~~812~~651			117,~~821~~812			~~130~~117,~~988~~821			96130,~~780~~988			7496,~~915~~780
OTHER EXPENSE (INCOME):
Interest expense, net (2)		~~150~~118,~~270~~344			79150,~~817~~270			7279,~~322~~817			4972,~~139~~322			3149,~~208~~139
Other, net (3)		(1525,~~372~~595	)		17(15,~~035~~372	)		17,~~119~~035			~~154~~17,119			~~530~~154
Total other expense		~~134~~92,~~898~~749			96134,~~852~~898			8996,~~441~~852			4989,~~293~~441			3149,~~738~~293
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(177,~~086~~098	)		20(17,~~969~~086	)		4120,~~547~~969			4741,~~487~~547			4347,~~177~~487
PROVISION (BENEFIT) FOR INCOME TAXES		(91,~~789~~547	)		7(9,~~227~~789	)		147,~~238~~227			1314,~~393~~238			13,~~556~~393
INCOME (LOSS) FROM CONTINUING OPERATIONS		(78,~~297~~645	)		13(7,~~742~~297	)		2713,~~309~~742			3427,~~094~~309			2934,~~621~~094
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES (1)		(206	)		(10,569	)		(9,626	)		(56,146	)		15,194
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES		(141	)		(206	)		(10,569	)		(9,626	)		(56,146	)
NET INCOME (LOSS)		(78,~~503~~786	)		3(7,~~173~~503	)		173,~~683~~173			~~(22~~17,~~052~~683	)		44(22,~~815~~052	)
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST		1,010			265			(429	)		(282	)		—
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		1,023			1,010			265			(429	)		(282	)
NET INCOME (LOSS) ATTRIBUTABLE TO LANDRY’S		(89,~~513~~809	)		2(8,~~908~~513	)		182,~~112~~908			~~(21~~18,~~770~~112	)		44(21,~~815~~770	)
LESS: ACCRETION OF REDEEMABLE NONCONTROLLING INTEREST		~~7,717~~—			—7,717			—			—			—
NET INCOME (LOSS) AVAILABLE TO LANDRY’S COMMON STOCKHOLDERS	$	(169,~~230~~809	)	$	2(16,~~908~~230	)	$	182,~~112~~908		$	~~(21~~18,~~770~~112	)	$	44(21,~~815~~770	)
EARNINGS PER SHARE INFORMATION:
Amounts available to Landry’s common stockholders:
BASIC
Income (loss) from continuing operations	$	(0.99	)	$	0.84		$	1.41		$	1.55		$	1.31
Income (loss) from discontinued operations		(0.01	)		(0.66	)		(0.49	)		(2.53	)		0.67
Net income (loss)	$	(1.00	)	$	0.18		$	0.92		$	(0.98	)	$	1.98
Weighted average number of common shares outstanding		16,150			16,140			19,735			22,115			22,600
DILUTED
Income (loss) from continuing operations	$	(0.99	)	$	0.82		$	1.37		$	1.51		$	1.27
Income (loss) from discontinued operations		(0.01	)		(0.64	)		(0.47	)		(2.47	)		0.65
Net income (loss)	$	(1.00	)	$	0.18		$	0.90		$	(0.96	)	$	1.92
Weighted average number of common and common share equivalents outstanding		16,150			16,345			20,235			22,785			23,285
Adjusted EBITDA
Net Income (loss)	$	(78,~~503~~786	)	$	3(7,~~173~~503	)	$	173,~~683~~173		$	~~(22~~17,~~052~~683	)	$	44(22,~~815~~052	)
Add back:
Provision (benefit) for income tax		(91,~~789~~547	)		7(9,~~227~~789	)		147,~~238~~227			1314,~~393~~238			13,~~556~~393
Interest expense, net		~~150~~118,~~270~~344			79150,~~817~~270			7279,~~322~~817			4972,~~139~~322			3149,~~208~~139
Depreciation and amortization		7277,~~038~~617			7072,~~292~~038			6570,~~287~~292			5565,~~857~~287			4355,~~262~~857
Asset impairment expense		23,~~888~~807			2,~~409~~888			—2,409			~~2,966~~—			—2,966
Adjusted EBITDA	$	~~207~~192,~~904~~529		$	~~162~~207,~~918~~904		$	~~169~~162,~~530~~918		$	99169,~~303~~530		$	~~132~~99,~~841~~303
	Year Ended December 31,
	2010			2009			2008			2007			2006
BALANCE SHEET DATA (AT END OF PERIOD)
Working capital (deficit)	$	13(86,~~306~~251	)	$	~~(86~~13,~~036~~306	)	$	(~~149~~86,~~883~~036	)	$	(50149,~~056~~883	)	$	~~217~~(50,~~461~~056	)
Total assets	$	1,~~700~~696,~~068~~845		$	1,~~515~~700,~~324~~068		$	1,~~502~~515,~~983~~324		$	1,~~464~~502,~~912~~983		$	1,~~612~~464,~~579~~912
Short-term notes payable and current portion of notes and other obligations	$	3015,~~181~~527		$	830,~~753~~181		$	878,~~243~~753		$	~~748~~87,243		$	~~1,852~~748
Long term notes and other obligations, net of current portion	$	1,~~064~~166,~~759~~234		$	~~862~~1,~~375~~064,759		$	~~801~~862,~~428~~375		$	~~710~~801,~~456~~428		$	~~816~~710,~~044~~456
Stockholders’ equity (1)	$	~~300~~180,~~554~~107		$	~~294~~300,~~477~~554		$	~~316~~294,~~899~~477		$	~~494~~316,~~707~~899		$	~~516~~494,~~770~~707

27(1) In 2010, 2009, 2008 and 2006, we recorded asset impairment charges related to continuing operations of $3.8 million ($2.5 million after tax), $2.9 million ($1.9 million after tax), $2.4 million ($1.6 million after tax) and $3.0 million ($2.0 million after tax), respectively, related to the adjustment to estimated fair value of certain restaurant properties and assets. In 2007 and 2006, we also recorded asset impairment charges and other losses totaling $9.9 million ($6.5 million after tax) and $79.8 million ($51.8 million after-tax), respectively, related to discontinued operations.

(12) In ~~2009~~2010, ~~2008~~we ~~and~~issued ~~2006,~~an weadditional ~~recorded~~$134.0 ~~asset~~million ~~impairment~~of ~~charges~~11 ~~related~~5/8 to% ~~continuing~~Senior ~~operations~~Secured ofNotes ~~$2.9~~and ~~million~~amended ~~($1.9~~and ~~million~~extended ~~after~~our ~~tax)~~credit facility. In 2009, we accelerated recognition of $226.40 million ($116.69 million after tax) in original issue discount and $39.06 million ($26.02 million after tax) in deferred loan costs, respectively, ~~related~~associated towith the ~~adjustment~~extinguishment ~~to estimated fair value~~ of ~~certain~~our ~~restaurant~~14.0% ~~properties~~Senior ~~and~~Secured ~~assets~~Notes. InThese ~~2007~~costs ~~and~~were ~~2006,~~previously webeing ~~also~~amortized ~~recorded~~over ~~asset~~the ~~impairment~~term ~~charges~~of ~~and~~the ~~other~~Notes. ~~losses~~We ~~totaling~~also issued $9406.95 million ~~($6.~~of 11 5/8 ~~million~~% ~~after~~Senior ~~tax~~Secured Notes (New Notes) and ~~$79~~amended and extended our credit facility. In 2007, we recognized an $8.0 million ($515.83 million after-tax), ~~respectively,~~charge ~~related~~for todeferred ~~discontinued~~loan ~~operations~~costs previously being amortized over the term of our 7.5% Senior Notes.

(23) In ~~2009~~2010, we ~~accelerated~~recognized ~~recognition~~a of $2633.0 million ($1621.95 million after tax) ingain ~~original~~related ~~issue~~to ~~discount~~the purchase and retirement of $962.68 million of Golden Nugget second lien debt, as well as a $5.9 million ($63.28 million after tax) ingain ~~deferred~~related ~~loan~~to ~~costs,~~the ~~respectively~~bargain purchase of Oceanaire, offset by $12.7 million in non-cash charges associated with ~~the~~interest ~~extinguishment~~rate ofswaps ~~our~~not 14designated as hedges.0% ~~Senior~~In ~~Secured~~2009, ~~Notes~~we recognized a $19.4 ~~These~~million ~~costs~~($12.6 ~~were~~million ~~previously~~after ~~being~~tax) ~~amortized~~gain ~~over~~related to the ~~term~~purchase ofand ~~the~~retirement ~~Notes~~of $33.2 Wemillion ~~also~~of ~~issued~~Golden Nugget second lien debt, offset by $~~406~~4.50 million ofin 11call premiums associated with refinancing our 7.5/8% and 9.5% Senior ~~Secured~~ Notes. ~~(New~~In ~~Notes)~~2008, ~~and~~we ~~amended~~recognized ~~and~~$14.3 ~~extended~~million ~~our~~in ~~credit~~non-cash ~~facility~~charges associated with interest rate swaps not designated as hedges. In 2007, we ~~recognized~~recorded anexpenses associated with exchanging the 7.5% Senior Notes for 9.5% Senior Notes of approximately $85.0 million ($53.3 million after- tax) ~~charge~~and ~~for~~incurred ~~deferred~~approximately ~~loan~~$6.3 ~~costs~~million ~~previously~~($4.2 ~~being~~million ~~amortized~~after ~~over~~tax) in call premiums and expenses associated with refinancing the ~~term~~Golden ofNugget ~~our~~debt. 7We also recorded $5.4 million ($3.5% ~~Senior~~million ~~Notes~~after tax) reflecting a non-cash expense for the change in fair value of interest rate swaps related to the new Golden Nugget financing.

(3) In 2009, we recognized a $19.4 million ($12.6 million after tax) gain related to the purchase and retirement of $33.2 million of Golden Nugget second lien debt, offset by $4.0 million in call premiums associated with refinancing our 7.5% and 9.5% Senior Notes. In 2008, we recognized $14.3 million in non-cash charges associated with interest rate swaps not designated as hedges. In 2007, we recorded expenses associated with exchanging the 7.5% Senior Notes for 9.5% Senior Notes of approximately $5.0 million ($3.3 million after tax) and incurred approximately $6.3 million ($4.2 million after tax) in call premiums and expenses associated with refinancing the Golden Nugget debt. We also recorded $5.4 million ($3.5 million after tax) reflecting a non-cash expense for the change in fair value of interest rate swaps related to the new Golden Nugget financing.

Adjusted EBITDA includes asset impairment expense as we consider asset impairment expense to be additional depreciation expense. Adjusted EBITDA has certain limitations and is not a generally accepted accounting principles (“GAAP”) measurement and is presented solely as a supplemental disclosure because we believe that it is a widely used measure of operating performance. Adjusted EBITDA is also not intended to be viewed as a source of liquidity or as a cash flow measure as used in the statement of cash flows. We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only supplementally as a valuation statistic. Adjusted EBITDA as shown differs from that used in our credit agreements primarily due to non-guarantor subsidiaries and other specifically defined calculations.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following presents an analysis of the results and financial condition of our continuing operations. Except where indicated otherwise, the results of discontinued operations are excluded from this discussion.

We are a national, diversified, restaurant, hospitality and entertainment company principally engaged in the ownership and operation of full service, casual dining restaurants and gaming facilities. We locate our restaurants in high-profile, specialty locations in markets that provide a balanced mix of tourist, convention, business and residential clientele. We focus on providing quality food at reasonable prices while offering a memorable atmosphere for our guests. As of December 31, ~~2009~~2010, we operated ~~174~~210 restaurants (excluding 37 Claim Jumper restaurants owned by an affiliate and operated by us under a management agreement), as well as several limited menu restaurants and other properties (as described in Item 1. Business), including the Golden Nugget Hotels and Casinos (Golden Nugget) in Las Vegas and Laughlin, Nevada.

~~Merger~~Going ~~Agreement~~ Private Transaction

OnIn ~~November 3,~~August 2009, we ~~entered~~established ~~into~~a anspecial ~~Agreement~~committee ~~and~~comprised ~~Plan~~entirely of ~~Merger~~independent ~~(Merger~~directors ~~Agreement)~~to ~~with~~review ~~Fertitta~~strategic ~~Group, Inc~~alternatives., aOn ~~Delaware~~November 3, ~~corporation~~2009, ~~(Parent)~~the ~~and~~special ~~Fertitta~~committee ~~Merger~~recommended ~~Co.,~~that aour ~~Delaware~~board accept ~~corporation and~~ a ~~wholly-owned~~proposal ~~subsidiary~~from ~~of Parent (Merger Sub) and for certain limited purposes, Tilman J. Fertitta (~~Mr. Fertitta). ~~Pursuant~~ to ~~the~~acquire ~~terms~~all of ~~the Merger Agreement, each of~~ our ~~outstanding~~stock ~~shares~~that ofhe ~~common~~does ~~stock,~~not ~~other~~already ~~than~~own ~~shares~~for ~~owned~~$14.75 byper usshare, ~~Parent~~in cash, ~~Merger~~and ~~Sub~~the orboard ~~any other subsidiary~~ of ~~Parent~~directors ~~and~~approved ~~stockholders~~the ~~who~~execution ~~perfected~~of ~~appraisal~~a ~~rights~~merger ~~under~~agreement ~~applicable~~with ~~law,~~companies ~~will~~wholly-owned beby ~~cancelled and converted into~~Mr. Fertitta ~~the~~(original ~~right~~merger ~~to receive $14~~agreement).75 ~~in cash, without interest.~~

~~The~~On ~~proposed~~May 23, ~~merger~~2010, ~~transaction~~we isentered ~~subject~~into an amendment to ~~approval~~the byoriginal ~~our~~merger agreement (first ~~stockholders,~~amended ~~including~~merger ~~approval~~agreement). byPursuant to the ~~holders~~first ofamended amerger ~~majority~~agreement, Mr. Fertitta agreed to acquire all of our ~~common~~ stock that he does not ~~owned~~already byown Mrfor $24. ~~Fertitta~~00 per share, in cash.

28On June 20, 2010, we entered into a second amendment to the original merger agreement (second amended merger agreement, and collectively with the original merger agreement and the first amended merger agreement, the merger agreement). Pursuant to the second amended merger agreement, Mr. Fertitta agreed to acquire all of our stock that he does not already own for $24.50 per share, in cash. In connection with the second amended merger agreement, we entered into voting agreements with Pershing Square Capital Management, L.P. and Pershing Square GP, LLC and with Richard T. McGuire (collectively, the Pershing Square Group), whereby the Pershing Square Group agreed to support the merger, subject to the terms and conditions set forth in the voting agreements.

On May 24, 2010, we announced that a partial settlement (the May Settlement) had been reached to settle derivative and certain other claims against Mr. Fertitta, affiliates of Mr. Fertitta and our directors in the lawsuit entitled Louisiana Municipal Police Employees’ Retirement System, on behalf of itself and all other similarly situated shareholders of Landry’s Restaurants, Inc. and derivatively on behalf of nominal defendant Landry’s Restaurants, Inc. v. Tilman J. Fertitta, et al., C.A. No. 4339-VCL, in the Court of Chancery of the State of Delaware (the Delaware litigation).

On July 15, 2010, we also reached an agreement (the July Settlement) with plaintiff’s attorneys to settle all remaining claims in the Delaware litigation for $14.5 million. Under the July Settlement, defendants deposited $14.5 million in escrow to pay the class claims and their attorney’s fees. The proceeds of the July Settlement were paid primarily from existing insurance policies. In addition, we reached an agreement on the July settlement to pay attorney’s fees of $8.0 million, which were paid during the fourth quarter of 2010.

~~Under~~On ~~the~~October 6, ~~Merger Agreement~~2010, ~~there~~we iscompleted a ~~“go-shop”~~merger ~~provision~~under ~~whereby~~which ~~the~~Mr. Tilman J. ~~Special Committee~~Fertitta, our ~~with~~Chairman ~~the~~and ~~assistance~~Chief ofExecutive ~~its independent advisors~~Officer, ~~actively~~acquired ~~solicited~~all ~~alternative~~of ~~acquisition~~our ~~proposals~~outstanding ~~from~~common ~~third~~stock ~~parties~~for ~~through December 17, 2009~~$24.50 ~~Although~~per ~~expressions~~share ofin ~~interest were made by two independent groups, a superior acquisition proposal was never submitted by either group~~cash.

Oceanaire Acquisition

On April 30, 2010, we completed the acquisition of all of the capital stock of The Oceanaire, Inc. (Oceanaire), and its wholly owned subsidiaries, a seafood restaurant company with 12 locations, in accordance with a plan of reorganization submitted by the unsecured creditors of Oceanaire in a U.S. Bankruptcy court for $23.4 million in cash, plus the assumption of certain additional working capital liabilities. The acquisition of Oceanaire provides additional growth within our high end seafood line, as well as a known brand.

Nashville Flood

In May 2010, Nashville, Tennessee experienced severe flooding that resulted in closing the Opry Mills Mall where we operated both a Rainforest Café and an Aquarium restaurant. These restaurants remain closed and cannot effectively reopen until the mall reopens. We cannot estimate the reopening date at this time, but believe it may not occur until 2012. We have sufficient insurance for reconstruction, and substantial business interruption coverage, enhanced by rent abatement during the mall closure. There is no assurance that the restaurants will reopen prior to exhausting such coverage.

Claim Jumper Acquisition

On December 5, 2010, an affiliate of ours acquired all of the capital stock of Claim Jumper Restaurants, LLC and all of its subsidiaries in accordance with a plan of reorganization in a US Bankruptcy Court. We have entered into an agreement to manage these restaurants for our affiliate.

Bubba Gump Acquisition

On December 20, 2010, we completed the acquisition of Bubba Gump, a casual dining seafood chain based on the motion picture ‘Forrest Gump’, for $112.5 million in cash, plus the assumption of certain additional working capital liabilities. Originating in California, Bubba Gump opened its first location in 1996. As of December 31, 2010, there are 34 Bubba Gump themed locations, 23 of which are owned with the remaining locations being foreign franchises or joint ventures. The Bubba Gump name and other intellectual property are used pursuant to a license agreement with Paramount Licensing, Inc.

Other Matters

On September 25, 2009, an unrestricted subsidiary of Landry’s completed the acquisition of $33.2 million face amount of Golden Nugget second lien term loan debt through a dutch tender and open market purchases at a weighted average cost approximating 41% of face value. In connection with the debt purchases, the unrestricted subsidiary agreed to forgive the face amount of the debt acquired and accordingly, a $19.4 million gain was recognized.

On February 17, 2010, the Golden Nugget entered into Amendment No. 2 and Waiver to the First Lien Credit Agreement (First Lien Second Amendment) by and among Golden Nugget, Inc., Wachovia Bank, National Association, as Administrative Agent, Collateral Agent, Swing Line Bank and Issuing Bank, and each of the Lender parties thereto, dated June 14, 2007.

The First Lien Second Amendment replaced the existing first lien financial covenants with minimum EBITDA, minimum liquidity, minimum cage cash and maximum capital expenditure (CAPEX) covenants. In addition, consenting First Lien lenders received a consent fee of 0.5% and all First Lien lenders ~~will~~ receive a 0.5% annual consent fee on outstanding commitments through maturity. First Lien Lenders ~~will~~ also receive additional interest in an amount equal to 1.00% per annum on unpaid Advances in the form of “PIK” interest, or at the option of the Golden Nugget, cash. The First Lien Second Amendment precludes dividends or other restricted payments, limits incurring additional debt, making investments and other cash distributions from Golden Nugget, increases the excess cash flow sweep to 75% from 50% if certain liquidity levels are reached and requires additional reporting of financial performance including cash flow reports. Certain potential defaults under the existing First Lien Credit Agreement were waived.

Concurrently with the First Lien Second Amendment, the Golden Nugget entered into Amendment No. 2 and Waiver to the Second Lien Credit Agreement (Second Lien Second Amendment) by and among Golden Nugget, Inc., Wachovia Bank, National Association and the other financial institutions parties thereto, dated June 14, 2007. The Second Lien Second Amendment replaced the existing second lien financial covenants with minimum EBITDA, minimum liquidity, minimum cage cash and maximum CAPEX covenants and waived certain potential defaults under the existing Second Lien Credit Agreement. The Second Lien Second Amendment advances the maturity date on the second lien facility from December 31, 2014 to November 2, 2014. The maturity date on the existing $4.0 million Seller note was extended to November 2, 2014 from November 2, 2010.

In connection with the amendments, affiliates of the Golden Nugget will provide $50.0 million in additional funds to the Golden Nugget in return for non-interest bearing subordinated notes. $20.0 million of these funds was used for operating liquidity and to pay fees and expenses associated with the amendments. $30.0 million was available to purchase second lien indebtedness at 40% of face value. At closing, approximately $62.8 million of second lien indebtedness was acquired and retired. The remaining balance of the $30.0 million not used to purchase second lien debt by December 31, 2010, if any, will be used to purchase first lien debt at par value. All such purchased debt shall be immediately retired. The Golden Nugget may also incur up to an additional $8.0 million in affiliate subordinated debt during the remaining term of the First Lien Credit Agreement to meet liquidity requirements.

~~During~~19 2006, as part of a strategic review of our operations, we initiated a plan to divest certain restaurants, including 136 Joe’s Crab Shack units. On November 17, 2006, we completed the sale of 120 Joe’s Crab Shack restaurants. The results of operations for all units included in the disposal plan have been reclassified to discontinued operations in the statements of income, balance sheets and segment information for all periods presented.

We value. ~~recorded~~At ~~additional~~closing, ~~pre-tax~~approximately ~~impairment charges totaling~~ $1062.38 million of second lien indebtedness was acquired and retired. The remaining $94.9 million ~~for~~ balance of the ~~year~~$30.0 ~~ended~~million ~~December 31,~~not ~~2008,~~used ~~2007,~~to ~~respectively,~~purchase second lien debt was used to ~~write~~repay ~~down~~outstanding ~~carrying~~revolver ~~values~~balances ofin ~~property~~January ~~and~~2011. ~~equipment~~All ~~pertaining~~such purchased debt was immediately retired. The Golden Nugget may also incur up to an additional $8.0 million in affiliate subordinated debt during the remaining ~~stores~~term ~~included~~of inthe First ~~our~~Lien ~~disposal~~Credit ~~plan~~Agreement to meet liquidity requirements.

During ~~2009~~2006, ~~and~~as ~~2008~~part of a strategic review of our operations, we initiated ~~recorded~~a ~~impairment~~plan ~~charges~~to ofdivest ~~$2.9~~certain ~~million~~restaurants, ~~and~~including $3136 Joe’s Crab Shack units.2 ~~million~~On November 17, ~~respectively~~2006, towe ~~impair~~completed the ~~leasehold~~sale ~~improvements~~of 120 Joe’s Crab Shack restaurants. The results of operations for all units included in the disposal ~~and~~plan ~~equipment~~have been reclassified to discontinued operations in the statements of ~~several~~income, ~~underperforming~~balance ~~restaurants~~sheets and segment information for all periods presented.

We recorded additional pre-tax impairment charges totaling $10.3 million for the year ended December 31, 2008, to write down carrying values of property and equipment pertaining to the remaining stores included in our disposal plan.

During 2010 and 2009, we recorded impairment charges of $3.8 million and $2.9 million, respectively, to impair the leasehold improvements and equipment of several underperforming restaurants.

The Specialty Division is primarily engaged in operating complementary entertainment and hospitality activities, such as miscellaneous beverage carts and various kiosks, amusement rides and games and some associated limited hotel properties, generally at locations in conjunction with our core restaurant operations. The total assets, revenues, and operating profits of these complementary “specialty” business activities are considered not material to the overall business and below the threshold of a separate reportable business segment.

The restaurant and gaming industries are intensely competitive and affected by changes in consumer tastes and by national, regional, and local economic conditions and demographic trends. The performance of individual restaurants or casinos may be affected by factors such as: traffic patterns, demographic considerations, marketing, weather conditions, and the type, number, and location of competing operations. We have many well established competitors with greater financial resources, larger marketing and advertising budgets, and longer histories of operation than ours, including competitors already established in regions where we are planning to expand, as well as competitors planning to expand in the same regions. We face significant competition from other casinos in the markets in which we operate and from other mid-priced, full-service, casual dining restaurants offering or promoting seafood and other types and varieties of cuisine. Our competitors include national, regional, and local chains as well as local owner-operated restaurants. We also compete with other restaurants and retail establishments for restaurant sites.

The current economic conditions in the United States have contributed to a continued difficult operating environment during 2010. Continued high unemployment, home foreclosures, volatile global economies, increasing commodity costs and other factors have impacted our customer’s level of spending on dining out, gaming, and tourism in general. Although recent trends have been more favorable, it is difficult to predict if the current economic conditions will persist, whether they will improve or deteriorate further, and the extent to which our operations will be affected.

Results of Operations

Profitability

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

	Year Ended December 31,
	2009			2008			2007
	2010				2009				2008
Restaurant and hospitality:
Revenues	~~100.0~~	%100.0	%	~~100.0~~	%	100.0	~~100.0~~%	%		100.0	%
Cost of revenues	~~24.4~~	%24.3	%	~~25.9~~	%	24.4	~~27.0~~%	%		25.9	%
Labor	~~29.0~~	%28.8	%	~~29.0~~	%	29.0	~~29.8~~%	%		29.0	%
Other operating expenses (1)	~~23.8~~	%25.5	%	~~24.8~~	%	23.8	~~23.9~~%	%		24.8	%
Unit Level Profit	22.8	%		20.3	%		19.3	%
Unit Level Profit (1)		21.4	%			22.8	%			20.3	%
Gaming:
Revenues	~~100.0~~	%100.0	%	~~100.0~~	%	100.0	~~100.0~~%	%		100.0	%
Casino costs	~~32.7~~	%31.0	%	~~30.9~~	%	32.7	~~30.7~~%	%		30.9	%
Rooms costs	~~10.8~~	%10.9	%	~~9.6~~	%	10.8	~~8.9~~%	%		9.6	%
Food and beverage costs	~~11.5~~	%11.6	%	~~11.5~~	%	11.5	~~11.2~~%	%		11.5	%
Other operating expenses (1)	~~24.9~~	%25.6	%	~~23.2~~	%	24.9	~~25.2~~%	%		23.2	%
Unit Level Profit	20.1	%		24.8	%		24.0	%
Unit Level Profit (1)		20.9	%			20.1	%			24.8	%

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

30Year ended December 31, 2010 Compared to the Year ended December 31, 2009

Restaurant and Hospitality

Restaurant and hospitality revenues increased $48,251,026, or 5.7%, from $843,462,026 to $891,713,052 for the year ended December 31, 2010 compared to the year ended December 31, 2009. The change in revenue is the result of the following approximate amounts: acquisition of Oceanaire and Bubba Gump—increase $43.2 million; new restaurant openings—increase $16.5 million; same store sales (restaurants open all of 2010 and 2009)—increase $6.0 million; closed or sold restaurants—decrease $20.9 million; and the remainder of the difference is attributable to the change in sales for stores not open a full comparable period or other sales. The total number of units open as of December 31, 2010 and 2009 was 210 and 174, respectively.

Cost of revenues increased $10,870,625, or 5.3%, from $205,573,220 to $216,443,845 for the year ended December 31, 2010 as compared to the prior year period primarily as a result of increased revenues. Cost of revenues as a percentage of revenues for the year ended December 31, 2010 decreased to 24.3% from 24.4% in 2009.

Labor expense increased $12,683,660, or 5.2%, from $244,294,936 to $256,978,596 for the year ended December 31, 2010 as compared to year ended December 31, 2009. Labor expenses as a percentage of revenues decreased to 28.8% for 2010 from 29.0% for 2009. The increase in labor expense was primarily associated with increased revenues.

Other operating expenses increased $26,903,084, or 13.4%, from $200,922,175 to $227,825,259 for the year ended December 31, 2010, as compared to the prior year period and such expenses increased as a percentage of revenues to 25.5% in 2010 from 23.8% in 2009. This increase primarily relates to decreased rent expense in 2009 associated with a $7.5 million lease termination payment received from a landlord, increased revenues in 2010 as compared to 2009 and increased marketing and promotion expenditures as compared to the comparable prior year period.

Gaming

Casino revenues increased $2,702,643, or 2.0%, from $133,648,248 to $136,350,891 for the year ended December 31, 2010 as compared to the year ended December 31, 2009. This increase is primarily the result of increased slot and table games activity.

Room revenues increased $9,143,709, or 18.6%, from $49,195,129 to $58,338,838 for the year ended December 31, 2010 as compared to the prior year period. This increase is the result of additional occupied rooms associated with the opening of Rush Tower in the fourth quarter of 2009, partially offset by reduced average daily room rates in Las Vegas as compared to the prior year period.

Food and beverage revenues increased $2,228,938, or 5.1%, from $43,813,962 to $46,042,900 for the year ended December 31, 2010 as compared to the comparable prior year period. This increase is a result of additional occupied rooms associated with the opening of Rush Tower in the fourth quarter of 2009, as well as the temporary closure of certain outlets in the first quarter of 2009 as a cost saving measure.

Other revenues increased $679,864, or 4.4%, from $15,445,505 to $16,125,369 for the year ended December 31, 2010 primarily as a result of increased retail and pool revenues in Las Vegas associated with the opening of Rush Tower.

Casino expenses increased $1,148,522, or 1.6%, from $70,839,003 to $71,987,525 for the year ended December 31, 2010. This increase is primarily the result of increased payroll costs and promotional expenses.

Room expenses increased $1,821,499, or 7.8%, from $23,395,605 to $25,217,104 for the year ended December 31, 2010. This increase is primarily the result of additional occupied rooms associated with the opening of Rush Tower in the fourth quarter of 2009.

Food and beverage expenses increased $1,870,613, or 7.5%, from $24,987,034 to $26,857,647 for the year ended December 31, 2010. This increase is primarily attributable to increased revenues.

Other expenses increased $5,426,561, or 10.0%, from $54,059,068 to $59,485,629 for the year ended December 31, 2010 as compared to the prior year. This increase resulted primarily from increased staffing levels, maintenance, and utilities associated with the opening of Rush Tower in the fourth quarter of 2009 and increased cost of additional retail sales.

Consolidated

General and administrative expenses increased $23,693,007 or 48.1%, from $49,279,435 to $72,972,442 for the year ended December 31, 2010 and increased as a percentage of revenues to 6.5% in 2010 from 4.6% in 2009. This increase is primarily the result of fees and expenses associated with the Going Private Transaction, the recognition of $9.8 million in non cash stock based compensation from unvested restricted stock granted to our CEO canceled in connection with the Going Private Transaction, as well as fees and expenses associated with our acquisitions.

Depreciation and amortization expense increased by $5,578,957, or 7.7%, from $72,037,824 to $77,616,781 for the year ended December 31, 2010 as compared to the prior year period largely as a result of increased depreciation expense associated with the opening of Rush Tower in the fourth quarter of 2009 and the Oceanaire acquisition.

Asset impairment expense was $3,806,778 for the year ended December 31, 2010 compared with an impairment expense of $2,887,842 for the same period in 2009. We continually monitor unfavorable cash flows, if any, related to underperforming restaurants. Periodically we may conclude that certain properties have become impaired based on the existing and anticipated future economic outlook for such properties in their respective market areas. During the year ended December 31, 2010, we impaired the leasehold improvements and equipment of two underperforming restaurants. During the year ended December 31, 2009, we impaired the leasehold improvements and equipment of three underperforming restaurants.

We recorded a $1,237,856 gain on insurance claims for the year ended December 31, 2010, as insurance proceeds associated with Hurricane Ike exceeded the recorded book value of the assets which were damaged. Gains recorded in 2009 amounted to $4,850,576.

Gains on disposals of fixed assets amounted to $939,473 for 2010 as a result of gains on the disposition of two restaurant properties. Gains on disposals of fixed assets amounted to $2,098,132 for 2009 as a result of a gain on the disposition of property as well as a gain realized on the sale of a single restaurant location.

Net interest expense for the year ended December 31, 2010 decreased by $31,925,387, or 21.2%, from $150,269,413 to $118,344,026. This decrease is due to charges incurred in 2009 of $26.0 million and $9.5 million for an original issue discount and deferred loan costs, respectively, previously being amortized over the term of our 14.0% Senior Notes. The 14.0% Senior Notes were retired in the fourth quarter of 2009 when we issued our 11 5/8% Senior Secured Notes.

Other income of $25,594,852 was recorded during the year ended December 31, 2010 as compared to other income totaling $15,371,615 for the year ended December 31, 2009. The 2010 amount primarily relates to a $33.0 million gain recognized in connection with the repurchase of an aggregate $62.8 million of the Golden Nugget’s second lien debt, as well as a $5.9 million bargain purchase gain associated with the Oceanaire acquisition, partially offset by non-cash charges of $12.7 million related to interest rate swaps not considered hedges. The 2009 amount is primarily comprised of a gain of $19.4 million recognized in connection with the repurchase of an aggregate $33.2 million face amount of the Golden Nugget’s second lien debt by an unrestricted subsidiary of Landry’s. This gain was partially offset by $4.0 million in call premiums associated with refinancing our 7.5% and 9.5% senior notes.

A tax provision of $1,546,442 was recorded for the year ended December 31, 2010 compared with a benefit of $9,788,822 for the year ended December 31, 2009. The effective tax rate for 2010 was a negative 21.8% compared to 57.3% for the prior year period. The 2010 rate relates to certain non-deductible costs associated with the acquisitions of Oceanaire and Bubba Gump and stock based compensation expenses.

Year ended December 31, 2009 Compared to the Year ended December 31, 2008

Restaurant and Hospitality

Restaurant and hospitality revenues decreased $47,143,393, or 5.3%, from $890,605,419 to $843,462,026 for the year ended December 31, 2009 compared to the year ended December 31, 2008. The revenue decline reflects the economic contraction and reduced consumer spending in 2009. The change in revenue is the result of the following approximate amounts: new restaurant openings—increase $28.3 million; same store sales (restaurants open all of 2009 and 2008)—decrease $60.9 million; closed or sold restaurants—decrease $9.7 million; and the remainder of the difference is attributable to the change in sales for stores not open a full comparable period or other sales. The total number of units open as of December 31, 2009 and 2008 was 174 and 175, respectively.

Cost of revenues decreased $24,945,963, or 10.8%, from $230,519,183 to $205,573,220 for the year ended December 31, 2009 as compared to the prior year period percentage. Cost of revenues as a percentage of revenues for year ended December 31, 2009 decreased to 24.4% from 25.9% in 2008. This decrease is primarily the result of favorable commodity prices and cost control measures implemented during the latter part of 2008.

Labor expense decreased $14,150,419, or 5.5%, from $258,445,355 to $244,294,936 for the year ended December 31, 2009 as compared to the year ended December 31, 2008. Labor expenses as a percentage of revenues remained constant at 29.0% for both 2009 and 2008. Increases in labor expense associated with a revised bonus plan and an increase in the minimum wage were offset by declines in hourly labor primarily due to reduced overtime and other cost control measures.

Other operating expenses decreased $19,518,911, or 8.9%, from $220,441,086 to $200,922,175 for the year ended December 31, 2009, as compared to the prior year period and such expenses decreased as a percentage of revenues to 23.8% in 2009 from 24.8% in 2008. The percentage decreases primarily relate to decreased rent expense associated with a $7.5 million lease termination payment from a landlord during the first quarter of 2009, as well as decreased energy costs in 2009 as compared to 2008.

Gaming

Casino revenues decreased $19,316,983, or 12.6%, from $152,965,231 to $133,648,248 for the year ended December 31, 2009 as compared to the year ended December 31, 2008 reflecting the impact of the economic contraction and reduction in consumer spending in 2009.

Room revenues decreased $14,035,142, or 22.2%, from $63,230,271 to $49,195,129 for 2009 as compared to 2008. This decrease is primarily the result of reduced occupancy and average daily room rates in Las Vegas.

Food and beverage revenues decreased $3,920,797, or 8.2%, from $47,734,759 to $43,813,962 for the year ended December 31, 2009 as compared to the comparable prior year period. This decrease resulted from reduced visitor traffic and the temporary closure of certain outlets as a cost saving measure during the first quarter of 2009.

Other revenues increased $1,075,398, or 7.5%, from $14,370,107 to $15,445,505 for the year ended December 31, 2009 as a result of increased ticket revenue from headliner entertainment when compared with the prior year period.

Casino expenses decreased $7,420,946, or 9.5%, from $78,259,949 to $70,839,003 for the year ended December 31, 2009. This decrease is primarily the result of reduced payroll costs and promotional expenses due to lower revenues.

Room expenses decreased $798,917, or 3.3%, from $24,194,522 to $23,395,605 for the year ended December 31, 2009. This decrease is primarily the result of reduced payroll costs, and other expenses associated with lower occupancies.

Food and beverage expenses decreased $4,125,281, or 14.2%, from $29,112,315 to $24,987,034 for the year ended December 31, 2009. This decrease resulted from lower revenues associated with reduced visitor traffic and the temporary closure of certain outlets as a cost saving measure during the first quarter.

Other expenses decreased $4,834,417, or 8.2%, from $58,893,485 to $54,059,068 for the year ended December 31, 2009 as compared to the prior year. This decrease resulted primarily from reduced payroll costs, operating supplies and utilities.

Consolidated

General and administrative expenses decreased $2,014,991 or 3.9%, from $51,294,426 to $49,279,435 for the year ended December 31, 2009 and increased slightly as a percentage of revenues to 4.6% in 2009 from 4.5% in 2008 due to the reduction in revenues. This decrease in expenses relates primarily to reduced supplies and utilities as compared to the prior year.

Depreciation and amortization expense increased by $1,746,342, or 2.5%, to $72,037,824 from $70,291,482 for the year ended December 31, 2009 as compared to the prior year period. The increase for 2009 was due to the renovation of the Golden Nugget and the addition of new restaurants and equipment.

Asset impairment expense was $2,887,842 for the year ended December 31, 2009 compared with an impairment expense of $2,408,625 for the same period in 2008. We continually monitor unfavorable cash flows, if any, related to underperforming restaurants. Periodically we may conclude that certain properties have become impaired based on the existing and anticipated future economic outlook for such properties in their respective market areas. During the year ended December 31, 2009, we impaired the leasehold improvements and equipment of several underperforming restaurants. During the year ended December 31, 2008, we impaired the leasehold improvements and equipment of three underperforming restaurants. The difference between impairments arising from Hurricane Ike damage and the associated insurance proceeds in 2008 was not material.

We recorded a $4,850,576 gain for the year ended December 31, 2009, representing insurance proceeds associated with Hurricane Ike that exceeded the recorded book value of the assets which were damaged.

Gains on disposals of fixed assets amounted to $2,098,132 for 2009 as a result of a gain on the disposition of property as well as a gain realized on the sale of a single restaurant location.

Pre-opening expenses decreased by $1,170,996, or 51.7%, from $2,266,004 to $1,095,008 for the year ended December 31, 2009. This decrease relates primarily to the opening of the T-Rex Café in 2008.

Net interest expense for the year ended December 31, 2009 increased by $70,452,079, or 88.3%, from $79,817,334 to $150,269,413. This increase is due to higher effective borrowing rates and increased borrowings in 2009 associated with our refinancing in February 2009, as well as accelerated amortization of $26.0 million and $9.6 million in original issue discount and deferred loan costs, respectively, previously being amortized over the term of the 14.0% Senior Secured Notes. The 14.0% Senior Secured Notes were retired and we issued 11 5/8 % Senior Notes in the fourth quarter of 2009.

Other income of $15,371,615 was recorded during the year ended December 31, 2009 as compared to other expenses totaling $17,034,705 for the year ended December 31, 2008. The 2009 amount is primarily comprised of a gain of $19.4 million recognized in connection with the repurchase of an aggregate $33.2 million face amount of the Golden Nugget’s second lien debt by an unrestricted subsidiary of Landry’s. This gain was partially offset by $4.0 million in call premiums associated with refinancing our Previous Notes (see Liquidity and Capital Resources). The 2008 expense primarily relates to $14.3 million in non-cash charges related to interest rate swaps not considered hedges.

partially offset by $4.0 million in call premiums associated with refinancing our 7.5% and 9.5% senior notes. The 2008 expense primarily relates to $14.3 million in non-cash charges related to interest rate swaps not considered hedges.

A tax benefit of $9,788,822 was recorded for the year ended December 31, 2009 compared with a provision of $7,226,574 for the year ended December 31, 2008. The effective tax rate for 2009 was 57.3% compared to 34.5% for the prior year period, as a result of pre-tax loss and the general business credits increasing the effective tax rate above the statutory benefit rate of 35%

The after tax loss from discontinued operations decreased $10,363,101, from $10,569,067 to $205,966 for the year ended December 31, 2009. The losses in both periods related primarily to impairments on assets held for sale or abandoned and lease terminations.

Year ended December 31, 2008 Compared to the Year ended December 31, 2007

Restaurant and Hospitality

Restaurant and hospitality revenues decreased $3,828,847, or 0.4%, from $894,434,266 to $890,605,419 for the year ended December 31, 2008 compared to the year ended December 31, 2007. The change in revenue is the result of the following approximate amounts: new restaurant openings—increase $34.5 million; same store sales (restaurants open all of 2008 and 2007)—decrease $18.5 million; hurricane closures—decrease $13.1 million; closed or sold restaurants—decrease $5.5 million and the remainder of the difference is attributable to the change in sales for stores not open a full comparable period or other sales. The total number of units open as of December 31, 2008 and 2007 was 175 and 173, respectively.

Cost of revenues decreased $11,294,925, or 4.7%, from $241,814,108 to $230,519,183 for the year ended December 31, 2008 as compared to the prior year period. Cost of revenues as a percentage of revenues for year ended December 31, 2008 decreased to 25.9% from 27.0% in 2007. This decrease is primarily the result of a shift in mix to higher margin hotel and amusement revenues with minimal cost of revenues, the impact of business interruption proceeds and cost control measures implemented in 2008.

Labor expense decreased $8,257,738, or 3.1%, from $266,703,093 to $258,445,355 for the year ended December 31, 2008 as compared to year ended December 31, 2007. Labor expenses as a percentage of revenues for 2008 decreased to 29.0% from 29.8% in 2007. The decrease in labor resulted in part from cost control measures implemented in 2008 and the impact of business interruption proceeds, partially offset by increases in the minimum wage.

Other operating expenses increased $7,157,055, or 3.4%, from $213,284,031 to $220,441,086 for the year ended December 31, 2008, as compared to the prior year period and such expenses increased as a percentage of revenues to 24.8% in 2008 from 23.9% in 2007. These increases primarily relate to increased energy costs, advertising expense and rent as compared to the comparable prior year period.

Gaming

Casino revenues decreased $12,318,244, or 7.5%, from $165,283,475 to $152,965,231 for the year ended December 31, 2008 as compared to the year ended December 31, 2007. This decrease is primarily the result of reduced slot activity in both Las Vegas and Laughlin.

Room revenues decreased $2,711,440, or 4.1%, from $65,941,711 to $63,230,271 for the year ended December 31, 2008 as compared to the prior year period. This decrease is the result of reduced occupancy and average daily room rates as compared to the prior year period.

Casino expenses and other expenses decreased $3,368,007, or 4.1%, and $8,079,086, or 12.1%, respectively, for the year ended December 31, 2008. These decreases are primarily the result of reduced payroll costs for both Las Vegas and Laughlin. Other expenses were further reduced by reduced marketing costs as compared to the prior year period.

Consolidated

General and administrative expenses decreased $4,461,559 or 8.0%, from $55,755,985 to $51,294,426 for the year ended December 31, 2008 and decreased as a percentage of revenues to 4.5% in 2008 from 4.8% in 2007. This decrease relates primarily to reduced corporate payroll costs, as well as lower legal and other professional fees as compared to the prior year.

Depreciation and amortization expense increased by $5,004,782, or 7.7%, from $65,286,700 to $70,291,482 for the year ended December 31, 2008 as compared to the prior year period. The increase for 2008 was due to the renovation of the Golden Nugget and the addition of new restaurants and equipment.

Asset impairment expense was $2,408,625 for the year ended December 31, 2008 compared with no impairment expense for the same period in 2007. We continually monitor unfavorable cash flows, if any, related to underperforming restaurants. Periodically we may conclude that certain properties have become impaired based on the existing and anticipated future economic outlook for such properties in their respective market areas. During the year ended December 31, 2008, we impaired the leasehold improvements and equipment of three underperforming restaurants. The difference between impairments arising from Hurricane Ike damage and the associated insurance proceeds was not material.

Gains on disposals of fixed assets amounted to $18,918,088 for 2007 as a result of gains on the disposition of property in Biloxi, Mississippi, as well as a $15.1 million gain realized on the sale of a single restaurant location.

Pre-opening expenses decreased by $1,210,947, or 34.8%, from $3,476,951 to $2,266,004 for the year ended December 31, 2008. This decrease relates to the reduced number of openings undertaken in 2008 compared with the prior year.

Net interest expense for the year ended December 31, 2008 increased by $7,495,382, or 10.4%, from $72,321,952 to $79,817,334. This increase is primarily due to higher average borrowing rates and increased borrowings in 2008 primarily associated with the Golden Nugget, partially offset by a 2007 charge of $8.0 million for deferred loan costs previously being amortized over the term of the 7.5% Senior Notes. The 7.5% Senior Notes were exchanged for 9.5% Senior Notes as a result of a settlement with the note holders in the third quarter of 2007.

Other expense decreased $84,971, or 0.5%, from $17,119,676 to $17,034,705 for the year ended December 31, 2008. The 2008 amount included $14.3 million in non-cash charges related to interest rate swaps not considered hedges and prior year amount included call premiums and expenses associated with refinancing the Golden Nugget debt.

A provision for income taxes of $7,226,574 was recorded for year ended December 31, 2008 compared with a provision of $14,237,950 for the year ended December 31, 2007. The effective tax rate for 2008 was 34.5% compared to 34.3% for the prior year period.

The after tax loss from discontinued operations increased $942,804, from $9,626,263 to $10,569,067 for the year ended December 31, 2008. The losses in both periods related primarily to impairments on assets held for sale or abandoned and lease terminations.

Liquidity and Capital Resources

On ~~November~~December 3020, ~~2009~~2010, we completed ~~the~~an offering of an additional $~~406~~87.50 million in aggregate principal amount of 11 5/8% senior secured notes due 2015 (~~New Notes). The gross proceeds from~~ the ~~offering~~“Additional ~~and sale of the New~~ Notes”) ~~were $400.1 million. The New Notes are~~ unconditionally guaranteed on a senior secured basis ~~as to principal, premium, if any, and interest~~ by all ~~of our~~ current and future domestic restricted subsidiaries of the Company (~~each~~the ~~individually~~“Guarantors”). aThe ~~Guarantor~~Additional ~~and~~Notes ~~collectively,~~were ~~the~~sold ~~Guarantors)~~in ~~and~~the ~~are~~United ~~secured~~States byto aqualified ~~second~~institutional ~~lien~~buyers ~~position~~pursuant onto ~~substantially~~Rule ~~all~~144A under ~~assets~~the ofSecurities ~~Landry’s~~Act and to non-U.S. persons in accordance with Regulation S under the ~~Guarantors~~Securities Act. The ~~New~~Additional Notes ~~were~~have ~~issued~~not ~~pursuant~~been toand anare ~~indenture,~~not ~~dated~~expected asto ~~of November 30,~~be ~~2009~~registered ~~(Indenture),~~under ~~among Landry’s,~~ the ~~Guarantors~~Securities Act and ~~Deutsche~~may ~~Bank~~not ~~Trust~~be ~~Company~~offered ~~Americas,~~or assold ~~Trustee~~in ~~and~~the asUnited States ~~Collateral~~absent ~~Agent.~~registration ~~Subsequent~~or toan ~~the~~applicable ~~closing,~~exemption ~~Wilmington~~from ~~Trust~~registration ~~became~~under ~~Trustee~~the Securities Act.

InThe ~~addition~~Additional toNotes have the ~~Indenture,~~same ~~Landry’s~~terms and ~~the~~are ~~Guarantors~~governed ~~entered~~by ~~into~~the asame ~~registration~~indenture ~~rights agreement, dated~~ as ofthe ~~November 30, 2009 (Registration Rights Agreement)~~$406.5 ~~Under~~million ~~the~~aggregate ~~Registration~~principal ~~Rights~~amount ~~Agreement,~~of ~~Landry’s~~11 ~~and~~5/8% ~~the~~senior ~~Guarantors~~secured ~~have~~notes ~~agreed~~due to2015 ~~use~~which ~~their~~were ~~best~~issued ~~efforts~~in ~~to file and cause to become effective~~ a ~~registration~~private ~~statement~~placement ~~with~~which ~~respect~~closed toon ~~an offer to exchange the New Notes for notes registered under the Securities Act of 1933~~November 30, as2009 ~~amended~~ (the ~~Securities Act~~“Initial Notes”), ~~having substantially identical terms as the New Notes (except that additional interest provisions~~ and ~~transfer~~which ~~restrictions~~were ~~pertaining~~increased toby ~~the New Notes will be deleted)~~$47.0 ~~If we fail to cause the registration statement relating to the exchange offer to become effective within the time periods specified~~ in ~~the~~a ~~Registration~~private ~~Rights~~placement ~~Agreement,~~which weclosed ~~will be required to pay liquidated damages~~ on ~~the New~~April 28, ~~Notes~~2010 ~~until~~(collectively “the ~~registration statement is declared effective~~Notes”).

On The ~~November~~Notes will mature on December 301, ~~2009~~2015. Interest on the Additional Notes will accrue from December 1, 2010 at a fixed interest rate of 11 5/8% and we ~~also~~will ~~amended~~pay interest twice a year, on each December 1st and ~~restated~~June 1st, ~~our Credit~~beginning ~~Agreement~~June 1, 2011 for the Additional Notes. At any time prior to ~~allow~~December 1, us2012, we may redeem up to ~~borrow~~35% ~~$235~~of the Notes at a redemption price of 111.6625% ~~million~~of (the ~~Amended~~principal ~~Credit~~amount ~~Facility).~~thereof, ~~The~~plus ~~Amended~~accrued ~~Credit~~and ~~Facility~~unpaid ~~provides~~interest, ~~for~~with athe ~~term~~net ~~loan~~cash proceeds of ~~$160~~certain equity offerings.6 ~~million~~Additionally, ~~and~~on aor ~~revolving~~after ~~credit~~December 1, ~~line~~2012, ofthe ~~$75.0~~Company ~~million.~~may ~~The~~redeem ~~obligations~~all ~~under~~or a part of the ~~Amended~~Notes ~~Credit~~at a premium that ~~Facility~~will ~~are~~decrease ~~unconditionally~~over ~~guaranteed~~time byas described in the Indenture dated November 30, 2009, as amended on April 22, 2010, July 13, 2010, December 14, 2010, and December 20, 2010 (the “Indenture”), among us, the Guarantors, Deutsche Bank Trust Company Americas, as collateral agent, and ~~are~~Wilmington ~~secured~~Trust byFSB, aas ~~first~~successor ~~lien~~trustee ~~position~~to onDeutsche ~~substantially~~Bank ~~all~~Trust ~~assets~~Company Americas. We are required to offer to purchase the Notes at 101% of ~~Landry’s~~their ~~and~~aggregate principal amount, plus accrued interest, if we experiences a change in control as defined in the ~~Guarantors~~Indenture.

~~Interest~~24 on the Amended Credit Facility accrues at a base rate (which is the greater of 4.0%, the Federal Funds Rate plus .50% or Wells Fargo’s prime rate) plus a credit spread of 5.0%, or at our option, at the Eurodollar base rate of at least 2.0% plus a credit spread of 6.0%, and matures on November 30, 2013.

The AmendedTable Credit Facility contains covenants that limit our ability and the Guarantors to, among other things, incur or guarantee additional indebtedness; create liens; make capital expenditures; pay dividends on or repurchase stock; make certain types of investments; sell assets or merge with other companies. The Amended Credit Facility contains financial covenants, including a maximum leverage ratio, a maximum senior leverage ratio, and a minimum fixed charge coverage ratio. Contents

~~Proceeds~~The ~~from~~obligations under the ~~New~~ Notes ~~and~~are ~~the~~unconditionally ~~Amended~~guaranteed ~~Credit~~by ~~Facility were used to repay all of~~ the ~~14.0% Senior Secured 2009 Notes due 2011~~Guarantors, ~~pay~~and ~~fees~~are ~~and~~secured ~~expenses~~by ~~and~~a ~~provide~~second ~~approximately~~lien ~~$73.0~~security ~~million~~interest in ~~restricted~~substantially ~~cash~~all ~~available~~of ~~to complete~~ the ~~proposed~~tangible ~~merger.~~and Inintangible ~~connection~~assets ~~with~~of the ~~repayment~~Company ofand the 14Guarantors.0% ~~Senior~~The ~~Secured~~obligations under the Notes, weare ~~expensed~~also ~~$35.6~~secured ~~million,~~by ~~primarily~~a ~~associated~~second ~~with~~lien ~~early recognition~~pledge of ~~unamortized~~the ~~discount~~capital ~~and~~stock ~~deferred~~of ~~loan~~all ~~costs~~of the Guarantors.

The Indenture under which the Notes have been issued contains covenants that will limit our ability and the Guarantors to, among other things: incur or guarantee additional indebtedness or issue disqualified capital stock; transfer or sell assets; pay dividends or distributions, redeem subordinated indebtedness, make certain types of investments or make other restricted payments; create or incur liens; incur dividend or other payment restrictions affecting certain subsidiaries; consummate a merger, consolidation or sale of all or substantially all assets; enter into transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; engage in business other than a business that is the same or similar to the current business and reasonably related businesses; take or omit to take any actions that would adversely affect or impair in any material respect the collateral securing the Notes.

Gross proceeds from the Additional Notes of approximately $90.7 million were used to pay for the acquisition of Bubba Gump Shrimp Co. Restaurants, Inc. (“Bubba Gump”), to repay outstanding revolver balances and for general corporate purposes.

In addition, we entered into a Third Amended and Restated Credit Agreement (“Credit Facility”) with Wells Fargo Capital Finance, as the Administrative Agent, Wells Fargo Capital Finance and Jefferies Finance LLC, as Co-Lead Arrangers and Co-Bookrunners, and Wells Fargo Capital Finance and Jefferies Finance LLC as Co-Syndication Agents on December 20, 2010 to allow us to borrow $287.0 million in an aggregate principal amount, on a senior secured basis, which is comprised of (a) a 4-year $100.0 million senior secured revolving credit facility, and (b) a 4-year $187.0 million senior secured term loan facility, plus an accordion feature which will allow for up to a $50.0 million increase in the term loan based on compliance with certain covenants.

The obligations under the Credit Facility are unconditionally guaranteed by the Guarantors and are secured by a first lien position on substantially all assets. We may elect that the Credit Facility bear interest at a rate per annum equal to (i) LIBOR with a floor of 1.75% plus 4.5%, or (ii) the greatest of (w) 3.5%, (x) the federal funds rate plus 0.5%, (y) Base Libor Rate plus 1% and (z) the prime rate.

The obligations under the Credit Facility are unconditionally guaranteed by the Guarantors, and are secured by a first lien security interest in substantially all of the tangible and intangible assets of the Company and the Guarantors. The obligations under the Credit Facility are also secured by a first lien pledge of the capital stock of all of the Guarantors.

The Credit Facility contains covenants that will limit our ability and the Guarantors to, among other things, incur or guarantee additional indebtedness; create liens; pay dividends on or repurchase stock; make certain types of investments; sell stock of certain of the Company’s subsidiaries; enter into transactions with affiliates; sell assets or merge with other companies. The Credit Facility also requires compliance with several financial covenants, including a maximum leverage ratio, a maximum first lien leverage ratio, and a minimum fixed charge coverage ratio.

Gross proceeds from the Credit Facility were used to refinance certain of the Company’s existing indebtedness, to pay in part for the acquisition of Bubba Gump and for general corporate purposes.

On February 17, 2010, the Golden Nugget, Inc., a wholly owned, unrestricted subsidiary of ours, entered into Amendment No. 2 and Waiver to the First Lien Credit Agreement (First Lien Second Amendment) by and among Golden Nugget, Inc., Wachovia Bank, National Association, as Administrative Agent, Collateral Agent, Swing Line Bank and Issuing Bank, and each of the Lender parties thereto, dated June 14, 2007.

The First Lien Second Amendment replaced the existing first lien financial covenants with minimum EBITDA, minimum liquidity, minimum cage cash and maximum capital expenditure (CAPEX) covenants. In addition, consenting ~~First~~first ~~Lien~~lien lenders received a consent fee of 0.5% and all ~~First~~first ~~Lien~~lien lenders ~~will~~ receive a 0.5% annual consent fee on outstanding commitments through maturity. First lien lenders also receive additional interest in an amount equal to 1.00% per annum on unpaid advances in the form of “PIK” interest, or at the option of Golden Nugget, cash. The First Lien ~~Lenders~~Second ~~will~~Amendment ~~also~~precludes ~~receive~~dividends or other restricted payments, limits incurring additional debt, making investments and other cash distributions from the Golden Nugget, increases the excess cash flow sweep to 75% from 50% if certain liquidity levels are reached and requires additional reporting of financial performance including cash flow reports. Certain potential defaults under the existing First Lien Credit Agreement were waived.

35Concurrently with the First Lien Second Amendment, the Golden Nugget entered into Amendment No. 2 and Waiver to the Second Lien Credit Agreement (Second Lien Second Amendment) by and among Golden Nugget, Inc., Wachovia Bank, National Association and the other financial institutions parties thereto, dated June 14, 2007. The Second Lien Second Amendment replaced the existing second lien financial covenants with minimum EBITDA, minimum liquidity, minimum cage cash and maximum CAPEX covenants and waived certain potential defaults under the existing Second Lien Credit Agreement. The Second Lien Second Amendment advances the maturity date on the second lien facility from December 31, 2014 to November 2, 2014. The maturity date on our existing $4.0 million seller note was also extended to November 2, 2014 from November 2, 2010.

~~additional~~In ~~interest~~connection inwith anthese ~~amount~~amendments, ~~equal~~affiliates of the Golden Nugget agreed to 1provide up to $50.~~00% per~~0 ~~annum~~million onin ~~unpaid~~additional ~~Advances~~funds into the ~~form~~Golden ofNugget ~~“PIK”~~in return for non-interest, orbearing atsubordinated ~~the~~notes. ~~option~~$20.0 million of ~~Golden~~these ~~Nugget,~~funds ~~cash.~~was ~~The~~used ~~First~~for ~~Lien~~operating ~~Second~~liquidity ~~Amendment~~and to pay fees and expenses associated with the amendments. $25.1 million ~~precludes~~was ~~dividends~~used orto ~~other~~purchase ~~restricted~~second ~~payments,~~lien ~~limits~~indebtedness ~~incurring~~at ~~additional~~40% ~~debt~~of face value. At closing, ~~making~~approximately ~~investments~~$62.8 million of second lien indebtedness was acquired and ~~other~~retired ~~cash~~at ~~distributions~~40% ~~from~~of ~~the~~face ~~Golden~~value ~~Nugget~~and accordingly, ~~increases~~a $33.0 million gain was recognized in other income, net during the ~~excess~~three ~~cash~~months ~~flow~~ended ~~sweep~~March 31, 2010. $2.1 million was used to ~~75%~~repay ~~from~~outstanding ~~50%~~revolver ifbalances ~~certain~~in ~~liquidity~~January ~~levels~~2011. ~~are~~All ~~reached and~~such ~~requires~~purchased ~~additional~~debt ~~reporting~~was ofimmediately ~~financial~~retired. ~~performance~~The ~~including~~Golden ~~cash~~Nugget ~~flow~~may ~~reports~~also incur up to an additional $8.0 million ~~Certain~~in ~~potential~~affiliate ~~defaults~~subordinated ~~under~~debt during the ~~existing~~remaining term of the First Lien Credit Agreement ~~were~~to ~~waived~~meet liquidity requirements.

~~Concurrently~~On ~~with~~September 25, ~~the~~2009, ~~First~~an ~~Lien~~unrestricted ~~Second~~subsidiary ~~Amendment,~~of ~~the~~Landry’s ~~Golden~~completed ~~Nugget~~the ~~entered~~acquisition ~~into~~of ~~Amendment No~~$33. 2 ~~and~~million ~~Waiver~~face toamount ~~the~~of ~~Second Lien Credit Agreement (Second Lien Second Amendment) by and among~~ Golden Nugget, ~~Inc.,~~second ~~Wachovia~~lien ~~Bank,~~term ~~National~~loan ~~Association~~debt ~~and~~through ~~the~~a ~~other~~dutch ~~financial~~tender ~~institutions~~and ~~parties~~open market ~~thereto,~~purchases ~~dated~~at ~~June 14,~~a ~~2007.~~weighted ~~The~~average ~~Second~~cost ~~Lien~~approximating ~~Second~~41% ~~Amendment~~of ~~replaced~~face ~~the~~value. ~~existing second~~In ~~lien~~connection ~~financial covenants~~ with ~~minimum~~the ~~EBITDA,~~debt ~~minimum liquidity~~purchases, ~~minimum cage cash and maximum CAPEX covenants and waived certain potential defaults under~~ the ~~existing~~unrestricted ~~Second~~subsidiary ~~Lien~~agreed ~~Credit~~to ~~Agreement.~~forgive ~~The Second Lien Second Amendment advances~~ the ~~maturity~~face ~~date~~amount onof the ~~second~~debt ~~lien~~acquired ~~facility~~and ~~from December 31~~accordingly, ~~2014~~a ~~to November 2, 2014. The maturity date on the existing~~ $419.04 million ~~Seller~~gain ~~note~~ was recognized ~~extended~~in toother ~~November 2~~income, ~~2014~~net ~~from~~during ~~November~~the year ended December 231, ~~2010~~2009.

In ~~connection~~acquiring ~~with~~Bubba ~~the Amendments~~Gump, ~~affiliates~~we ofassumed ~~the~~two ~~Golden~~loans; one ~~Nugget~~related ~~will~~to ~~provide~~a ~~$50.0~~restaurant ~~million~~ in ~~additional~~Hong ~~funds~~Kong, to the ~~Golden~~other ~~Nugget~~related ~~in return~~to ~~for~~a ~~non-interest~~restaurant ~~bearing~~in ~~subordinated~~Cancun, ~~notes~~Mexico. ~~$20.0~~The ~~million~~Hong ofKong ~~these~~debt ~~funds~~is ~~was~~a ~~used~~line ~~for~~of ~~operating~~credit ~~liquidity~~collateralized ~~and~~by tothe ~~pay~~assets ~~fees~~ and ~~expenses~~leasehold ~~associated~~interests ~~with~~of the ~~amendments.~~Hong ~~$30~~Kong restaurant.0 ~~million~~The ~~was~~loan ~~available~~bears tointerest ~~purchase second lien indebtedness~~ at 401.65% of ~~face~~plus ~~value.~~the AtHong ~~closing,~~Kong ~~approximately~~Interbank ~~$62.8~~Offered ~~million~~Rate of(0.33% ~~second~~at ~~lien~~December 31, ~~indebtedness~~2010) ~~was acquired~~ and ~~retired.~~matures ~~The~~in ~~remaining~~July ~~balance of the $30~~2011.0 ~~million~~There ~~not~~is ~~used~~no toadditional ~~purchase~~availability ~~second~~at ~~lien debt by~~ December 31, 2010,. ifThe ~~any,~~Mexico ~~will~~debt beis ~~used~~a toterm ~~purchase first~~loan ~~lien~~collateralized ~~debt~~by atthe ~~par~~assets ~~value.~~and ~~All~~the ~~such~~leasehold interests ~~purchased~~of ~~debt~~the ~~shall~~Cancun ~~be immediately retired~~restaurant. The ~~Golden~~loan ~~Nugget~~bears ~~may~~interest ~~also~~at ~~incur up to an additional $~~8.015%, ~~million~~with inprincipal ~~affiliate~~payments ~~subordinated debt during the remaining term~~ of ~~the~~$19,885 ~~First~~due ~~Lien~~monthly, ~~Credit~~and ~~Agreement~~matures toin ~~meet liquidity~~April ~~requirements~~2013.

OnConsistent ~~September 25,~~with ~~2009,~~our anpolicy ~~unrestricted~~to ~~subsidiary~~manage ofour ~~Landry’s~~exposure ~~completed~~to interest rate risk and in conformity with the ~~acquisition~~requirements of the first and second lien facilities, we entered into interest rate swaps for all of the first and second lien borrowings of the Golden Nugget that fix the interest rates at between 5.4% and 5.5%, plus the applicable margin. We designated $33210.20 million ~~face~~of ~~amount~~the first lien interest rate swaps and all of ~~Golden~~the ~~Nugget~~second lien swaps as cash flow hedges. The swaps mirror the terms of the underlying debt and reset using the same index and terms. As of December 31, 2010, an aggregate $96.0 million in second lien term loan debt ~~through~~has abeen ~~dutch~~repurchased ~~tender~~ and ~~open~~retired, ~~market~~and ~~purchases~~as atsuch a ~~weighted~~proportional share ~~average~~of ~~cost~~the ~~approximating~~second ~~41%~~lien ofswaps ~~face~~are ~~value~~no longer an effective cash flow hedge. InAccordingly, ~~connection~~a $10.3 million and $4.2 million non-cash expense associated with this portion of the ~~debt~~swaps ~~purchases~~was recorded as other expense for the years ended December 31, 2010 and 2009, respectively. At December 31, 2010, the ~~unrestricted~~remaining ~~subsidiary~~portion of these swaps were determined to be highly effective, and no ineffective portion was recognized in income. Included in accumulated other comprehensive loss at ~~agreed~~December 31, 2010 and December 31, 2009 are unrealized losses, net of income taxes, totaling $25.4 million and $27.0 million, respectively, related to ~~forgive~~these hedges. The interest rate swaps associated with the ~~face~~$120.0 ~~amount~~million of first lien borrowings representing the ~~debt~~delayed ~~acquired~~draw construction loan have not been designated as hedges and ~~accordingly~~the change in fair market value is reflected as other income/expense in the consolidated financial statements. Accordingly, a non-cash expense of approximately $192.4 million and $14.3 million was recorded for the years ended December 31, 2010 and 2008, respectively, whereas a non-cash gain of approximately $5.4 million was ~~recognized~~recorded for the year ended December 31, 2009. The impact of these interest rate swaps, including those not designated as hedges, was an increase to interest expense of $25.8 million, $24.1 million and $10.3 million for the years ended December 31, 2010, 2009 and 2008, respectively. Interest expense included $11.5 million, $7.4 million and $2.3 million for the years ended December 31, 2010, 2009 and 2008, respectively, related to swaps not designated as hedges.

InOur ~~June~~debt ~~2007, our~~agreements ~~wholly~~contain ~~owned~~various ~~unrestricted~~restrictive ~~subsidiary,~~covenants ~~Golden~~including ~~Nugget,~~minimum ~~Inc.~~EBITDA, ~~completed~~fixed ~~a new $545.0 million credit facility consisting of a $330.0 million first lien term loan~~charge, anet ~~$50.0 million revolving credit facility~~worth, and afinancial ~~$165.0~~leverage ~~million~~ratios ~~second~~as ~~lien~~well ~~term~~as ~~loan. The~~limitations ~~revolving credit facility expires~~ on ~~June 30~~dividend payments, ~~2013~~capital expenditures and ~~the~~other ~~first~~restricted ~~lien~~payments ~~term~~as ~~loan~~defined ~~matures~~in onthe ~~June 30, 2014~~agreements. ~~Both~~In ~~the~~addition, ~~first lien term loan and~~ the ~~revolving~~Golden ~~credit~~Nugget ~~facility~~debt ~~bear~~agreement ~~interest~~required ata ~~Libor~~parent orcontribution if the ~~bank’s~~leverage ~~base rate~~ratio, ~~plus~~as ~~a financing~~defined, ~~spread~~fell ofbelow ~~2.0%~~a ~~and~~predetermined ~~0.75%,~~level ~~respectively,~~through at December 31, 2009. InAs ~~addition,~~a ~~the~~result of ~~credit~~reduced ~~facility~~operating ~~requires~~results acombined ~~commitment~~with ~~fee~~additional onborrowings for construction of the ~~unfunded~~new ~~portion~~tower, ~~for~~we ~~both~~contributed ~~the~~approximately $5025.0 million ~~revolving~~in ~~credit~~cash ~~facility.~~to ~~The second lien term loan matures on November 2, 2014 and bears interest at Libor or~~ the ~~bank’s~~Golden ~~base~~Nugget ~~rate,~~in ~~plus~~2009. aAs ~~financing spread~~ of ~~3.25% and 2.0%, respectively, at~~ December 31, ~~2009.~~2010, ~~The~~we ~~financing~~were ~~spreads~~in ~~and~~compliance ~~commitment~~with ~~fees~~all ~~for the revolving credit facility~~such ~~increase~~covenants orand ~~decrease depending on~~ the ~~leverage~~restaurant ~~ratio~~group ashad ~~defined~~approximately ~~in the credit facility~~$21.0 ~~The~~million ~~first~~in ~~lien~~letters ~~term loan requires one percent~~ of ~~the~~credit outstanding ~~principal~~and ~~balance~~an ~~due~~available ~~annually~~borrowing tocapacity beof ~~paid~~approximately in$73.3 ~~equal quarterly installments commencing on September 30~~million, ~~2009,~~while ~~with~~ the ~~balance due on maturity. Principal of the second lien term loan is due at maturity. The~~ Golden Nugget’s ~~subsidiaries~~had ~~have~~approximately ~~granted~~$2.4 ~~liens~~million onin ~~substantially~~letters ~~all~~of ~~real~~credit outstanding ~~property~~ and ~~personal~~an ~~property~~available asborrowing ~~collateral under~~capacity ~~the credit facility and are guarantors~~ of ~~the~~approximately ~~credit~~$1.4 ~~facility~~million.

~~Consistent~~As ~~with~~a ~~our~~primary ~~policy~~result of the extraordinary disruption to ~~manage~~the credit markets in 2009, our ~~exposure~~2009 ~~to interest~~financing ~~rate~~carried ~~risk~~substantially ~~and~~higher ininterest ~~conformity~~rates ~~with~~and ~~the~~original ~~requirements~~issue ofdiscount than the ~~first~~previous ~~and~~debt ~~second~~instruments. ~~lien~~In ~~facilities~~addition, wethe ~~entered~~Golden ~~into~~Nugget amendments increase its cash interest rate ~~swaps~~by 0.5% ~~for~~annually ~~all~~and ofits ~~the~~total ~~first~~interest ~~and~~rate ~~second~~by ~~lien~~1.5% ~~borrowings~~annually ofon ~~the~~all ~~Golden~~first ~~Nugget~~lien ~~that~~debt. ~~fix~~These ~~the~~higher interest rates, atcombined ~~between~~with ~~5.4%~~ additional borrowing to provide liquidity and ~~5.5%,~~pay ~~plus~~fees and expenses for the ~~applicable~~financing ~~margin.~~as Wewell ~~designated~~as ~~$210.0~~to ~~million~~fund ofthe hotel tower at the ~~first~~Golden ~~lien~~Nugget, ~~interest~~will ~~rate~~result ~~swaps~~in ~~and~~substantially ~~all~~higher ofinterest expense over at least the ~~second~~next ~~lien~~ few years.

36Working capital decreased from $13.3 million as of December 31, 2009 to negative $86.3 million as of December 31, 2010. This decrease is primarily due to the decrease in cash resulting from the Going Private Transaction and the acquisitions of Oceanaire and Bubba Gump. Cash flow to fund future operations, new restaurant development and acquisitions will be generated from operations, available capacity under our credit facilities and additional financing, if appropriate.

swaps as cash flow hedges. These swaps mirror the terms of the underlying debt and reset using the same index and terms. On September 25, 2009, an unrestricted subsidiary of Landry’s repurchased an aggregate $33.2 million face amount of second lien term loan debt, and as such, a proportional share of the second lien swaps were no longer an effective cash flow hedge. Accordingly, a $4.2 million non-cash expense associated with these swaps was recorded for the year ended December 31, 2009. At December 31, 2009, the remaining swaps were determined to be highly effective, and no ineffective portion was recognized in income. Included in Accumulated other comprehensive loss at December 31, 2009 and December 31, 2008 are unrealized losses, net of income taxes, totaling $27.0 million and $44.3 million, respectively, related to these hedges. The impact of these interest rate swaps was an increase to interest expense by $24.1 million, $10.3 million and $0.6 million for the years ended December 31, 2009, 2008 and 2007, respectively. The interest rate swaps associated with the $120.0 million of first lien borrowings representing the delayed draw construction loan have not been designated as hedges and the change in fair market value is reflected as other income/expense in the consolidated financial statements. Accordingly, a non-cash gain of approximately $5.4 million was recorded for the year ended December 31, 2009 and a non-cash expense of approximately $14.3 million and $5.4 million for the years ended December 31, 2008 and 2007, respectively.

Our debt agreements contain various restrictive covenants including minimum EBITDA, fixed charge and financial leverage ratios, limitations on capital expenditures, and other restricted payments as defined in the agreements. In addition, the Golden Nugget debt agreement requires a parent contribution if the leverage ratio, as defined, falls below a predetermined level through December 31, 2009. As a result of reduced operating results combined with additional borrowings for construction of the new tower, Landry’s contributed approximately $25.0 million in cash to the Golden Nugget in 2009. As of December 31, 2009, we were in compliance with all such covenants and the restaurant group had approximately $17.0 million in letters of credit outstanding and available borrowing capacity of $34.0 while the Golden Nugget had approximately $2.0 million in letters of credit outstanding, and available borrowing capacity of less than $1.0 million.

As a primary result of the extraordinary disruption to the credit markets in 2009, our 2009 financing carried substantially higher interest rates and original issue discount than the previous debt instruments. In addition, the Golden Nugget Amendments increase its cash interest rate by 0.5% annually and its total interest rate by 1.5% annually on all first lien debt. These higher interest rates, combined with additional borrowing to provide liquidity and pay fees and expenses for the financing as well as to complete the hotel tower at the Golden Nugget, resulted in substantially higher interest expense in 2009. We expect to continue to incur high interest expense over the next few years.

Working capital increased from a deficit of $86.0 million as of December 31, 2008 to $13.3 million as of December 31, 2009 primarily due to the increase in cash in anticipation of the Golden Nugget amendment and merger. Cash flow to fund future operations, new restaurant development and acquisitions will be generated from operations, available capacity under our credit facilities and additional financing, if appropriate.

From time to time, we review opportunities for restaurant acquisitions and investments in the hospitality, gaming, entertainment, amusement, food service and facilities management and other industries. Our exercise of any such investment opportunity may impact our development plans and capital expenditures. We believe that adequate sources of capital are available to fund our business activities for the next twelve months.

In ~~2009~~2010, we incurred $~~153~~50.2 9 million for capital expenditures including $172.2 million in accounts payable at December 31, ~~2009~~2010 and excluding $2417.72 million in accounts payable at December 31, ~~2008~~2009. ~~We incurred $113.5 million on the renovation and expansion of the Golden Nugget Hotel and Casino in downtown Las Vegas, Nevada.~~ In ~~2010~~2011, we expect to incur approximately $2767.0 million in capital expenditures.

Contractual Obligations and Off Balance Sheet Arrangements

As of December 31, ~~2009~~2010, we had contractual obligations as described below. These obligations are expected to be funded primarily through cash on hand, cash flow from operations, working capital, the Credit Facility and additional financing sources in the normal course of business operations. Our obligations include off balance sheet arrangements whereby the liabilities associated with non-cancelable operating leases, unconditional purchase obligations and standby letters of credit are not fully reflected in our balance sheets.


Contractual Obligations	2011		2012-2013		2014-2015		2016+		Total
Long term debt and interest payments	$	141,311,209	$	247,984,245	$	1,232,061,296	$	—	$	1,621,356,750
Operating leases		42,428,914		75,068,000		67,943,398		239,655,421		425,095,733
Unconditional purchase obligations		67,895,930		4,108,719		469,262		—		72,473,911
Liability for uncertain tax positions (1)		—		—		—		—		15,302,424
Other long term obligations		29,341,781		—		—		—		29,341,781

Total cash obligations	$	280,977,834	$	327,160,964	$	1,300,473,956	$	239,655,421	$	2,163,570,599

Other Commercial Commitments
Line of credit	$	—	$	41,218,414	$	5,695,020	$	—	$	46,913,434
Standby letters of credit		23,351,466		—		—		—		23,351,466

Total commercial commitments		23,351,466		41,218,414		5,695,020		—		70,264,900

Total	$	304,329,300	$	368,379,378	$	1,306,168,976	$	239,655,421	$	2,233,835,499

~~Table~~(1) These liabilities appear in total only as we are unable to reasonably predict the timing of ~~Contents~~settlement of such liabilities.

~~Agreement~~In ~~and~~connection ~~additional~~with ~~financing~~certain ~~sources~~of inour discontinued operations, we remain the ~~normal~~guarantor ~~course~~or assignor of ~~business~~a ~~operations~~number of leased locations. ~~Our~~In ~~obligations~~the event ~~include~~of ~~off~~future ~~balance~~defaults ~~sheet~~under ~~arrangements~~any ~~whereby~~of ~~the~~such ~~liabilities~~leased ~~associated~~locations ~~with non-cancelable~~we ~~operating~~may ~~leases~~be responsible for significant damages to existing landlords which may materially affect our financial condition, ~~unconditional~~operating ~~purchase~~results and cash flows. We estimate that lessee rental payment obligations during the remaining terms of the assignments and ~~standby~~subleases ~~letters~~approximate $52.3 million as of ~~credit~~December 31, ~~are~~2010. ~~not~~We ~~fully~~have ~~reflected~~recorded ina ~~our~~liability ~~balance~~of ~~sheets~~$0.8 million with respect to these obligations, where we believe it is probable that we will make future cash payments. We believe the remaining obligations will be met by the third party.

Contractual Obligations	2010		2011-2012		2013-2014		2015+		Total
Long term debt and interest payments (1)	$	134,373,317	$	241,824,307	$	728,607,738	$	449,817,656	$	1,554,623,018
Operating leases		36,874,069		59,429,728		44,940,024		178,973,614		320,217,435
Unconditional purchase obligations		61,420,379		4,544,043		398,845		—		66,363,267
Liability for uncertain tax positions (2)		—		—		—		—		15,066,122
Other long term obligations		28,318,386		—		—		—		28,318,386
Total cash obligations	$	260,986,151	$	305,798,078	$	773,946,607	$	628,791,270	$	1,984,588,228
Other Commercial Commitments
Line of credit	$	—	$	—	$	68,755,040	$	—	$	68,755,040
Standby letters of credit		19,019,959		—		—		—		19,019,959
Total commercial commitments		19,019,959		—		68,755,040		—		87,774,999
Total	$	280,006,110	$	305,798,078	$	842,701,647	$	628,791,270	$	2,072,363,227

(1) Interest payments for our variable rate debt was computed using rates in effect at December 31, 2009.

(2) These liabilities appear in total only as we are unable to reasonably predict the timing of settlement of such liabilities.

In connection with certain of our discontinued operations, we remain the guarantor or assignor of a number of leased locations. In the event of future defaults under any of such leased locations we may be responsible for significant damages to existing landlords which may materially affect our financial condition, operating results and cash flows. We estimate that lessee rental payment obligations during the remaining terms of the assignments and subleases approximate $60.7 million as of December 31, 2009. We have recorded a liability of $2.6 million with respect to these obligations, where we believe it is probable that we will make future cash payments. We believe the remaining obligations will be met by the third party.

Seasonality and Quarterly Results

Our business is seasonal in nature. Our reduced winter volumes cause revenues and, to a greater degree, operating profits to be lower in the first and fourth quarters than in other quarters. We have and will continue to open restaurants in highly seasonal tourist markets. Periodically, our sales and profitability may be negatively affected by adverse weather. The timing of unit openings can and will affect quarterly results.

Critical Accounting Policies

Restaurant and other properties are reviewed on a property by property basis 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. Goodwill and other non-amortizing intangible assets are reviewed for impairment at least annually. Significant estimates used in these reviews include projected operating results and cash flows, discount rates, terminal value growth rates, capital expenditures, changes in future working capital requirements, cash flow multiples, control premiums and assumed royalty rates. 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 values, reduced for estimated disposal costs, and are included in other current assets.

3827

~~assumed~~We ~~royalty~~own ~~rates.~~and Ifoperate ~~such~~approximately ~~assets~~210 ~~are~~properties ~~considered~~and periodically we expect to beexperience unanticipated ~~impaired~~individual unit deterioration in revenues and profitability, anon ~~impairment~~a ~~charge~~short-term isand ~~recorded~~occasionally inlonger-term ~~the~~basis. ~~amount~~When bysuch ~~which~~events ~~the~~occur ~~carrying~~and ~~amount~~we ofdetermine that the associated assets ~~exceeds~~are ~~their~~impaired, ~~fair~~we ~~value.~~will ~~Properties~~record an asset impairment expense in the quarter such determination is made. Due to beour ~~disposed~~average ofrestaurant ~~are~~net ~~reported~~investment atcost, ~~the~~such ~~lower~~amounts ofcould ~~their~~be ~~carrying~~significant ~~amount~~when orand ~~fair~~if ~~values~~they occur. However, ~~reduced~~such ~~for~~asset ~~estimated~~impairment ~~disposal~~expense ~~costs~~does not affect our financial liquidity, and ~~are~~is usually ~~included~~excluded infrom ~~other~~many ~~current~~valuation ~~assets~~model calculations.

We operate approximately 174 properties and periodically we expect to experience unanticipated individual unit deterioration in revenues and profitability, on a short-term and occasionally longer-term basis. When such events occur and we determine that the associated assets are impaired, we will record an asset impairment expense in the quarter such determination is made. Due to our average restaurant net investment cost, such amounts could be significant when and if they occur. However, such asset impairment expense does not affect our financial liquidity, and is usually excluded from many valuation model calculations.

We maintain a large deductible insurance policy related to property, general liability and workers’ compensation coverage. Predetermined loss limits have been arranged with insurance companies to limit our per occurrence cash outlay. Accrued expenses and other liabilities include estimated costs to settle unpaid claims and estimated incurred but not reported claims using actuarial methodologies.

WeGAAP ~~account for income taxes in accordance with FASB accounting guidance which~~ requires the recognition of deferred tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be recognized. We regularly assess the likelihood of realizing the deferred tax assets based on forecasts of future taxable income and available tax planning strategies that could be implemented and adjust the related valuation allowance if necessary.

Our income tax returns are subject to examination by the Internal Revenue Service and other tax authorities. We regularly assess the potential outcomes of these examinations in determining the adequacy of our provision for income taxes and our income tax liabilities. Inherent in our determination of any necessary reserves are assumptions based on past experiences and judgments about potential actions by taxing authorities. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. We believe that we have adequately provided for any reasonable and foreseeable outcome related to uncertain tax matters.

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 amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived assets and costs to settle unpaid claims. Actual results may differ materially from those estimates.

Recent Accounting Pronouncements

In ~~June~~September 2009, the FASB ~~issued~~amended ~~new~~authoritative ~~accounting~~ guidance onassociated ~~accounting~~with ~~for~~multiple-deliverable ~~transfers~~revenue ofarrangements. ~~financial~~This ~~assets~~amended guidance ~~which~~addresses ~~removes~~ the ~~concept~~determination of ~~a qualifying~~when ~~special-purpose~~individual ~~entity~~deliverables ~~(QSPE)~~within ~~and~~an ~~clarifies~~arrangement ~~the~~may ~~requirements~~be ~~for~~treated ~~isolation~~as separate units of accounting and ~~limitations~~modifies onthe ~~portions~~manner ofin ~~financial~~which ~~assets~~consideration ~~that~~is ~~are~~allocated ~~eligible~~across ~~for~~the ~~sale~~separately ~~accounting~~identifiable deliverables. The ~~This~~amendments ~~new~~to authoritative guidance isassociated with multiple-deliverable revenue arrangements are effective for fiscal years beginning on or after ~~November~~ June 15, ~~2009~~2010, with early adoption permitted. We are currently evaluating the potential impact this guidance may have on our consolidated financial statements.

In ~~June~~January ~~2009~~2010, the FASB issued ~~new~~ASU ~~accounting~~No. 2010-06, ~~guidance~~Improving ~~which~~Disclosures ~~revises~~about ~~the~~Fair ~~approach~~Value toMeasurements ~~determining~~(“ASU ~~the~~No. 2010-06”). ~~primary~~The ~~beneficiary~~new ofstandard aaddresses, ~~variable~~among ~~interest~~other ~~entity~~things, ~~(VIE)~~guidance toregarding beactivity ~~more qualitative~~ in ~~nature~~Level ~~and requires~~3 ~~companies~~fair tovalue ~~more~~measurements. ~~frequently~~Portions ~~reassess~~of ASU ~~whether~~No. 2010-06 ~~they~~that ~~must~~relate ~~consolidate~~to athe ~~VIE.~~Level ~~This~~3 ~~new~~activity ~~guidance~~disclosures isare effective for ~~fiscal~~the ~~years~~annual reporting period beginning after ~~November~~December 15, ~~2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter~~2010. We are currently evaluating the potential impact this ~~new~~ guidance may have on our consolidated financial statements.

39In April 2010, the FASB issued ASU No. 2010-16, “Accruals for Casino Jackpot Liabilities”, which clarifies when a casino entity is required to accrue a jackpot liability. ASU No. 2010-16 will be effective for fiscal years beginning on or after December 15, 2010, with early adoption permitted. Adoption of this guidance will reduce jackpot liabilities by approximately $1.0 million in 2011.

In December 2010, the FASB issued ASU 2010-28, “Intangibles – Goodwill and Other (Topic 350).” This ASU modifies the first step of the goodwill impairment test to include reporting units with zero or negative carrying amounts. For these reporting units, the second step of the goodwill impairment test shall be performed to measure the amount of impairment loss, if any, when it is more likely than not that a goodwill impairment exists. This ASU is effective for fiscal years and interim periods beginning after December 15, 2010. The Company has evaluated the ASU and does not believe it will have a material impact on the consolidated financial statements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805).” This ASU specifies that if a company presents comparative financial statements, the company should disclose revenue and earnings of the combined entity as though the business combination that occurred during the year had occurred as of the beginning of the comparable prior annual reporting period only. The ASU also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the pro forma revenue and earnings. This ASU is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Effective January 1, 2011, the Company will adopt this ASU and include all required disclosures in the notes to its consolidated financial statements.

In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements, including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. The guidance is effective for reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures that are effective for periods beginning after December 15, 2010. We are currently evaluating the potential impact this new guidance may have on our consolidated financial statements.

Impact of Inflation

We do not believe that inflation has had a significant effect on our operations during the past several years. We believe we have historically been able to pass on increased costs through menu price increases, but there can be no assurance that we will be able to do so in the future. Future increases in commodity costs, labor costs, including expected future increases in federal and state minimum wages, energy costs, and land and construction costs could adversely affect our profitability and ability to expand.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a variety of market risks including risks related to potential adverse changes in interest rates and commodity prices. We actively monitor exposure to market risk and continue to develop and utilize appropriate risk management techniques. We do not use derivative financial instruments for trading or to speculate on changes in commodity prices.

Interest Rate Risk

Total debt at December 31, ~~2009~~2010 included $~~221~~233.84 million of floating-rate debt attributed to borrowings at an average interest rate of 75.1187%. As a result, our annual interest cost in ~~2009~~2011 will fluctuate based on short-term interest rates.

Consistent with our policy to manage our exposure to interest rate risk, and in conformity with the requirements of the first and second lien facilities, we entered into interest rate swaps with notional amounts covering all of the first and second lien term loan borrowings of the Golden Nugget. The hedges are designed to convert the lien facilities’ floating interest rates to fixed interest rates at between 5.4% and 5.5%, plus the applicable margin.

The impact on annual cash flow of a ten percent change in the floating-rate (approximately 0.76%) would be approximately $1.64 million annually based on the floating-rate debt and other obligations outstanding at December 31, ~~2009~~2010; however, there are no assurances that possible rate changes would be limited to such amounts.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statement schedule is set forth commencing on page 4556.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements with our accountants on any accounting or financial disclosures.

ITEM 9A.

CONTROLS AND PROCEDURES

Management’s Report on Internal Control Over Financial Reporting

~~Our~~We ~~Chief~~carried ~~Executive~~out ~~Officer~~an ~~and Chief~~evaluation, ~~Financial~~with ~~Officer have evaluated~~ the ~~effectiveness~~participation of ~~the design and operation of~~ our ~~disclosure~~principal ~~controls~~executive officer and ~~procedures~~principal ~~(as~~financial ~~defined~~officer, inof ~~Rule 13e-15(e) and 15d-15(e) under~~ the effectiveness ~~Securities Exchange Act~~ of ~~1934~~our ~~(the~~disclosure ~~“Exchange~~controls ~~Act~~and ))procedures as of ~~December~~ December 31, ~~2009, the end of the period covered by this report~~2010. Based ~~upon~~on this evaluation, ~~the~~our ~~Company’s~~principal ~~Chief~~executive ~~Executive~~officer ~~Officer~~ and ~~Chief~~principal ~~Financial~~financial ~~Officer~~officer concluded that, ~~the Company’s disclosure controls and procedures were not effective~~ as of December 31, ~~2009~~2010, ~~due to a material weakness in~~ our ~~internal~~disclosure ~~control~~controls ~~over financial reporting solely related to our restatement of net income available to Company stockholders for the purpose of calculating earnings per share~~and ~~resulting~~procedures, ~~from~~as ~~our~~defined ~~failure to consider all applicable accounting guidance~~ in ~~our~~Rule ~~Quarterly Reports on Form 10~~13a-Q15(e), ~~for~~were ~~the~~effective ~~quarters~~to ~~ended~~ensure ~~March~~that ~~31,~~information ~~2009~~required ~~and~~to ~~June~~be ~~30,~~disclosed ~~2009.~~by ~~Management, with oversight from~~ the ~~Audit~~issuer ~~Committee~~in of the ~~Board~~reports ~~of Directors, has concluded~~ that ~~given~~it ~~the~~files ~~nature~~or ofsubmits ~~the~~under ~~material weakness no remedial actions were necessary. However,~~ the ~~control~~Securities ~~weakness~~Exchange ~~will~~Act ~~not be considered effective until a sufficient period~~ of ~~time~~1934 ~~has~~(the ~~elapsed~~“Exchange toAct”) ~~allow~~are ~~for effective testing~~recorded, ~~and~~ ~~management~~processed, summarized and ~~its~~reported ~~independent~~within ~~registered certified public accounting firm conclude that these controls are operating effectively. During~~ the ~~year~~time ~~ended~~periods ~~December~~specified ~~31, 2009, there was no change~~ in ~~our internal control over financial reporting (as defined in Rule 13a-15 (f) under~~ the ~~exchange~~Securities ~~Act)~~and ~~that~~Exchange ~~has~~Commission’s ~~materially~~rules ~~affected,~~and ~~or is reasonably likely to materially affect, our internal control over financial reporting~~forms.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f). Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, ~~2009~~2010 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was ~~not~~ effective as of December 31, ~~2009 for the reasons discussed above~~2010. Grant Thornton LLP has issued ana ~~adverse~~ report on the effectiveness of internal control over financial reporting ~~as of December 31~~, ~~2009,~~ which is included on page 50 of this report.

Changes in Internal Control over Financial Reporting

Our management carried out an evaluation, with the participation of our principal executive officer and principal financial officer, of changes in our internal control over financial reporting, as defined in Rule 13a-15(f). Based on this evaluation, our management determined that no change in our internal control over financial reporting occurred during the fourth quarter of fiscal ~~2009~~2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~ITEM~~29 ~~9B. OTHER INFORMATION~~

We have disclosed all information required to be disclosed in a current report on Form 8-K during the fourth quarter of the year ended December 31, 2009.

ITEM 9B.

OTHER INFORMATION

We have disclosed all information required to be disclosed in a current report on Form 8-K during the fourth quarter of the year ended December 31, 2010 in previously filed reports on Form 8-K.

PART III

Pursuant to Instruction G to Form 10-K, we incorporate by reference into Items 10-14 below the information to be disclosed in our definitive Proxy Statement prepared in connection with the 2010 Annual Meeting of Shareholders, which will be filed within 120 days of December 31, 2009. We have adopted a code of ethics applicable to its chief executive officer, chief financial officer, controller and other financial officers, which is a “Code of Ethics” as defined by applicable rules of the Securities and Exchange Commission. A copy of our Code of Ethics has been previously filed and is incorporated by reference as an exhibit hereto. If the we make any amendments to this Code other than technical, administrative, or other non-substantive amendments, or grants any waivers, including implicit waivers, from a provision of this Code to our chief executive officer, chief financial officer or controller, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies on its website or in a report on Form 8-K filed with the Securities and Exchange Commission.

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

OnThe ~~May 21,~~following ~~2009~~information weis ~~filed~~set ~~with~~forth ~~the New York Stock Exchange the Annual CEO Certification regarding our compliance~~ with ~~the~~respect New York Stock Exchange’s Corporate Governance listing standards as required by Section 303A-12(a) of the New York Stock Exchange Listed Company Manual. The Annual CEO Certification was issued without qualification. In addition, we have filed as exhibits to ~~this Annual Report on Form 10-K for the year ended December 31, 2009 and to the Annual Reports on Form 10-K for the years ended December 31, 2008 and 2007, the applicable certifications of~~ our ~~Chief~~Directors: ~~Executive Officer and our Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002.~~


Name	Age	Positions	Director Since		Term Expires
Tilman J. Fertitta (2)	53	President, Chief Executive Officer and Director		1993		2011
Steven L. Scheinthal (2)	49	Executive Vice President and General Counsel, Secretary and Director		1993		2011
Kenneth Brimmer (1)	55	Director		2004		2011
Michael S. Chadwick (1)	59	Director		2001		2011
Richard H. Liem	57	Executive Vice President, Chief Financial Officer and Director		2009		2011
Joe Max Taylor (1)	78	Director		1993		2011

(1)	Member of Audit Committee

(2)	Member of Executive Committee

Mr. Fertitta has served as our President and Chief Executive Officer since 1987. In 1988, he became the controlling stockholder and assumed full responsibility for all of our operations. Prior to serving as our President and CEO, Mr. Fertitta devoted his full time to the control and operation of a hospitality and development company. Mr. Fertitta serves on numerous boards and charitable organizations.

Mr. Scheinthal has served as our Executive Vice President or Vice President of Administration, General Counsel and Secretary since September 1992. He devotes a substantial amount of time to lease and contract negotiations and is primarily responsible for our compliance with all federal, state and local ordinances. This experience provides the Board with valuable insight, skills and perspective. Prior to joining us, he was a partner in the law firm of Stumpf & Falgout in Houston, Texas. Mr. Scheinthal represented us for approximately five years before becoming part of our company. He has been licensed to practice law in the state of Texas since 1984.

Mr. Brimmer is the CEO and Chairman of the Board of STEN Corporation. Mr. Brimmer has been CEO of STEN Corporation since October 2003 and has been a director of STEN Corporation since February 1998. Mr. Brimmer has also been Chief Manager of Brimmer Company, LLC. a private investment company since December 2001. From April 2000 until June 2003, he served as Chairman and Director of Active IQ Technologies, Inc. and was CEO from April 2000 until December 2001. Previously, Mr. Brimmer was President of Rainforest Cafe, Inc. from April 1997 until April 2000 and was Treasurer from its inception in 1995 until April 2000. Prior to that, Mr. Brimmer was employed by Grand Casinos, Inc. and its predecessor from 1990 until April 1997. Mr. Brimmer also is a director and serves on both the Audit and Compensation Committees of Hypertension Diagnostics, Inc. He has a degree in accounting and worked as a CPA in the audit division of Arthur Andersen & Co. from 1977 through 1981. Mr. Brimmer was elected to our Board of Directors in 2004. Mr. Brimmer’s extensive restaurant and casino background, as well as his leadership abilities bring valuable skill and experience to our Board.

Mr. Chadwick has been engaged in the commercial and investment banking businesses since 1975. From 1988 to 1994, Mr. Chadwick was President of Chadwick, Chambers & Associates, Inc., a private merchant investment banking firm in Houston, Texas, which he founded in 1988. From 1994 to 2009, Mr. Chadwick was Senior Vice President and a Managing Director in the Corporate Finance Group of Sanders Morris Harris, an investment banking and financial advisory firm. Mr. Chadwick joined Growth Capital Partners, a boutique investment and merchant banking firm serving the middle market. Mr. Chadwick was elected to our Board of Directors in 2001. Mr. Chadwick’s extensive experience in the commercial and investment banking field provides a valuable resource to our Board.

Mr. Liem serves as Executive Vice President and Chief Financial Officer and has served as Senior Vice President of Finance since June 2004. He started with us in 1999 as the Vice President of Accounting and Corporate Controller. Mr. Liem joined us from Carrols Corporation, a restaurant company located in Syracuse, NY, where he was the Vice President of Financial Operations from 1994 to 1999. He was with the audit division of Price Waterhouse, L.L.P. from 1983 to 1994. Mr. Liem is a certified public accountant. Mr. Liem’s accounting experience is valuable to the Board’s discussion of these issues.

Mr. Taylor was formerly the chief law enforcement administrator for Galveston County, Texas. He has served as a Director and Executive Committee member of American National Insurance Company, a publicly-traded insurance company, for ten years and served on the Board of Directors of Moody Gardens, a hospitality and entertainment complex located in Galveston, Texas. Mr. Taylor was elected to our Board of Directors in 1993. He served on our Audit Committee from 1993 through 2004 and rejoined the Audit Committee in May 2009. Mr. Taylor’s leadership skills provide a critical skill set and resource to our Board.

EXECUTIVE OFFICERS

In addition to Messrs. Fertitta, Scheinthal and Liem, for which information is provided above, the following persons are executive officers:


Name	Age	Position	Officer Since
Jeffrey L. Cantwell	46	Senior Vice President of Development		2006
K. Kelly Roberts	52	Chief Administration Officer—Hospitality and Gaming Division		2007

Mr. Cantwell serves as Senior Vice President of Development and has served as Vice President of Development, and Director of Design and Construction. He was promoted to an executive officer in 2006. He has been employed by us since his graduation from Southwest Texas State University in June, 1992. While in college, he worked in many of our restaurants and developed a significant understanding of restaurant operations.

Mr. Roberts serves as Chief Administration Officer—Hospitality and Gaming Division and has served as Chief Financial Officer—Hotel Division and Controller—Hotel Division. He has been employed by the Company since 1996. He has over 25 years experience in the hospitality business in finance and operations working for various hotel chains and independent management companies. He also currently serves on the executive board of The Greater Houston Convention and Visitor’s Bureau.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and holders of more than 10% of our common stock to file with the Securities and Exchange Commission (“SEC”) initial reports of ownership and reports of changes in ownership of common stock. We believe, based solely on a review of the copies of such reports furnished to us and on representations from our existing directors and executive officers, that all existing directors and executive officers and holders of more than 10% of our common stock subject to the reporting requirements of Section 16(a) have filed on a timely basis all reports required during, or with respect to, the year ended December 31, 2010.

Board Leadership and its Roles in Risk Management

We are led by Mr. Fertitta. Mr. Fertitta has served as our Chairman and Chief Executive Officer since 1993. Our non-management directors meet regularly in executive session. Mr. Fertitta, as our CEO and sole stockholder, has a working knowledge of our day-to-day operations and issues that face us. As such, our Board believes that Mr. Fertitta is the best person to lead and guide the Board of Directors. We therefore believe this leadership structure, with a combined Chairman/CEO position and experienced independent directors, benefits us by providing a strong, unified leadership for our management team and Board and is the optimal structure for us.

While the full Board of Directors oversees our management of risks, our management team is responsible for the day-to-day risk management process. The Audit Committee reviews with management, as well as internal and external auditors, our business risk management process, including the adequacy of our overall control environment and controls in selected areas representing significant financial and business risk. The Audit Committee reviews reports from management at least quarterly regarding management’s assessment of various risks and considers the impact of risk on our financial position and the adequacy of our risk-related internal controls. Our Audit Committee also considers risks that could be implicated by our compensation programs, and our Board annually reviews the effectiveness of our leadership structure. In addition, our Audit Committee as well as senior management reports regularly to the full Board of Directors.

Codes of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that is applicable to all of our Directors, officers and other employees. The Code is posted under the Corporate Governance portion of the Investor Relations section on our website at www.LandrysRestaurants.com and is available to any security holder upon request. We have also adopted a Code of Ethics Statement by the CEO and senior financial officers, which is filed with the SEC as an exhibit to our 2003 Annual Report on Form 10-K. If there are any changes or waivers of the Code of Business Conduct and Ethics which applies to the CEO and senior financial officers, we will disclose it on our website in the same location. Our Code of Business Conduct and Ethics or Code of Ethics Statement can also be obtained free of charge by directing a written request to Steven L. Scheinthal, Secretary, Landry’s Restaurants, Inc., 1510 West Loop South, Houston, Texas, 77027.

Director Independence

For a director to be deemed “independent,” each independent director must meet the independence requirements of the NYSE and applicable state and federal law, including the rules and regulations of the SEC, including the following requirements:

•

No director who is an employee, or whose immediate family member is an executive officer of the Company is independent until three years after the end of such employment relationship.

•

No director who receives, or whose immediate family member receives, more than $120,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), is independent until three years after he or she ceases to receive more than $120,000 per year in such compensation.

•

No director who is affiliated with or employed by, or whose immediate family member is affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Company is independent until three years after the end of the affiliation or the employment of such auditing relationship.

•

No director who is employed, or whose immediate family member is employed, as an executive officer of another company where any of the Company’s present executives serve on that company’s Compensation Committee is independent until three years after the end of such service or the employment relationship.

•

No director who is an executive officer or an employer, or whose immediate family member is an executive officer, of a company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, is independent until three years after falling below such threshold.

The definition of independence and compliance with these guidelines will be reviewed periodically by the Board.

Our Board of Directors has affirmatively determined that the following majority of directors—Kenneth Brimmer, Michael S. Chadwick and Joe Max Taylor—qualified as independent directors.

Executive Sessions of the Board of Directors

Non-Employee Directors have the right to meet in executive sessions prior to or after scheduled meetings of the Board of Directors. Unless otherwise designated, Joe Max Taylor serves as the presiding director at each such executive session.

Communications with Directors

The Board of Directors has adopted corporate governance guidelines that provide that our security holders and other interested parties may communicate with one or more of our Directors, including the Non-Employee Directors, by mail in care of: Steven L. Scheinthal, Secretary, Landry’s Restaurants, Inc., 1510 West Loop South, Houston, Texas 77027. Such communications should specify the intended recipient or recipients. All such communications, other than unsolicited commercial solicitations, will be forwarded to the appropriate director or directors for review.

Controlled Company Exemption

Prior to the Going Private Transaction, our Board of Directors determined that the Company was a “Controlled Company” as defined by the New York Stock Exchange (“NYSE”) rules because Mr. Tilman J. Fertitta held more than 50% of our voting power. As a result, we did not require a majority of directors serving on our Board of Directors be composed of independent directors, and we no longer maintain a Nominating Committee and Compensation Committee. We still maintain an independent Audit Committee in order to fully satisfy the rules of the SEC.

COMMITTEES OF THE BOARD OF DIRECTORS

We have an Executive Committee, an Audit Committee and a Governance Committee. We have reviewed our Committee structures in order to fully satisfy the existing rules of the SEC and believe that they satisfy all of such rules. A copy of the Audit Committee Charter is available under the Corporate Governance portion of the Investor Relations section of our website at www.LandrysRestaurants.com.

There was four meetings of the Audit Committee and thirteen meetings of the Company’s Board of Directors held during 2010. All of the current Board members attended 100% of the meetings of the Board and of the committees of the Board on which they were members.

The Audit Committee consists of three independent Non-Employee Directors. The members of the Audit Committee are Michael Chadwick (Chairman), Kenneth Brimmer and Joe Max Taylor. The Audit Committee’s primary purpose is to assist the Board of Directors’ oversight of (a) the integrity of our financial statements and disclosures; (b) our compliance with legal and regulatory requirements; (c) the independent auditor’s qualifications and independence; and (d) the performance of our internal audit and independent auditors. The Audit Committee has the sole authority to appoint and terminate our independent auditors. Our Board of Directors has determined that Mr. Chadwick, Chairman of the Audit Committee, is an “audit committee financial expert” as described in Item 401(h) of the SEC’s Regulation S-K. In addition, the Board of Directors has determined that each member of the Audit Committee is independent, as independence for audit committee members is defined in the listing standards of the NYSE. The Corporate Governance Committee consists of one independent Non-Employee Director, Mr. Taylor. The Corporate Governance Committee is charged with identifying and making recommendations to the Board of Directors regarding the Company’s corporate governance.

Nomination Process

Tilman J. Fertitta, through wholly owned affiliates, owns 100% of our company. As a result, he controls the nomination of our Board of Directors.

ITEM 11.

EXECUTIVE COMPENSATION

~~Certain~~COMPENSATION ~~information~~DISCUSSION ~~relating~~AND toANALYSIS our directors and executive officers is incorporated by reference herein from our definitive Proxy Statement in connection with our 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 our fiscal year ended December 31, 2009.

~~ITEM~~This ~~12.~~Compensation ~~SECURITY~~Discussion ~~OWNERSHIP~~and OFAnalysis ~~CERTAIN~~explains ~~BENEFICIAL~~the ~~HOLDERS~~philosophy ~~AND~~underlying ~~MANAGEMENT~~our ~~AND~~compensation ~~RELATED~~strategy ~~STOCKHOLDER~~and ~~MATTERS~~the fundamental elements of compensation paid to our Chief Executive Officer, Chief Financial Officer, and other individuals, whom we refer to as “executive officers,” included in the Summary Compensation Table. Specifically, this Compensation Discussion and Analysis addresses the following:

~~Certain~~• ~~information~~Objectives ~~relating to our directors and executive officers is incorporated by reference herein from our definitive Proxy Statement in connection with our 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~~ our ~~fiscal~~compensation ~~year ended December 31, 2009.~~ programs;

~~Equity~~• ~~Compensation~~What ~~Plan~~our ~~Information~~compensation programs are designed to reward;

~~The~~• ~~following~~Elements ~~table provides information as~~ of ~~December 31,~~our ~~2009~~compensation ~~regarding~~program ~~the~~and ~~number~~why ofwe ~~shares~~pay ofeach ~~Common Stock that may be issued under our equity compensation plans.~~element;

Plan Category	Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights	Weighted averageexercise price ofoutstanding options,warrants and rights		Number of securitiesremaining available forfuture issuance under equitycompensation plans(excluding securitiesreflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by the stockholders (1)	310,644	$	11.12	800,000
Equity compensation plans not approved by the stockholders (2)	994,650	$	19.59	207,745
Total	1,305,294	$	17.57	1,007,745

•

How we determine each element of compensation; and

•

Other important compensation policies affecting the executive officers.

Objectives of Our Compensation Program. Our business strategy is to develop and operate a diversified restaurant, hospitality and entertainment company offering customers unique dining, leisure and entertainment experiences. We believe that this strategy creates a loyal customer base, generates a high level of repeat business. Our compensation program is designed to attract, retain and motivate employees in order to effectively execute our business strategy.

What Our Compensation Program Is Designed to Reward. Our compensation program is designed to reward performance of executive officers that contributes to the achievement of our business strategy on both a short-term and long-term basis. We reward qualities that we believe help achieve our strategy such as teamwork, individual performance in light of general economic and industry specific conditions, individual performance that supports our core values, resourcefulness, the ability to manage our business, level of job responsibility and tenure with us.

Elements of Our Compensation Program and Why We Pay Each Element. The Board believes that the compensation packages for executive officers should consist of the following components:

•

base salary;

•

discretionary annual incentive bonus;

•

deferred compensation;

•

perquisites; and

•

broad-based employee benefits.

We pay base salary in order to recognize each executive officer’s unique value and historical contributions to our success in light of salary norms in the industry and the general marketplace, to match competitors for executive talent, to provide executives with regularly-paid income, and to reflect position and level of responsibility.

We may include an annual cash bonus as part of our compensation program because we believe this element of compensation helps to motivate management to achieve key corporate objectives by rewarding the achievement of these objectives. We may also provide an annual cash bonus in order to be competitive from a total remuneration standpoint.

Deferred compensation benefits are intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis.

We provide perquisites to our executive officers, since we believe this compensation helps us achieve our compensation objectives of recruiting and retaining executive officers and generally allows our executives to work more efficiently and protects the well being of our executives.

We offer broad-based employee benefits such as payment of insurance premiums in order to provide a competitive remuneration package and as an essential component of recruiting and retaining executive talent.

How We Determine Each Element of Compensation

Role of Our Board and CEO. The Board reviews and approves our executive compensation strategy and principles to ensure that they are aligned with our business strategy and objectives, stockholder interests, desired behaviors and corporate culture. The primary responsibilities of the Board concerning its oversight of executive compensation are to:

•

conduct an annual review of all compensation elements for our executive officers;

•

review the performance of the CEO and meet to discuss the findings of the review; and

•

review and approve our management development and succession planning practices and strategies.

The Board considers multiple factors when it determines the amount of total direct compensation (the sum of base salary and discretionary incentive bonus) to award to executive officers each year. Among these factors are:

•

how proposed amounts of total direct compensation to our executives compare to amounts paid to similar executives both for the prior year and over a multi-year period;

•

internal pay equity considerations; and

•

broad trends in executive compensation generally.

The Board relies upon its judgment in making compensation decisions, after reviewing our performance and carefully evaluating an executive’s performance during the year. The Board generally does not adhere to rigid formulas or necessarily react to short-term changes in business performance in determining the amount and mix of compensation elements. We incorporate flexibility into our compensation programs and in the assessment process to respond to and adjust for the evolving business environment.

In addition, the CEO recommends to the Board annual pay increases and annual bonus amounts, if any. To assist it in carrying out its responsibilities, the Board may also receive reports and recommendations from outside compensation consultants, and may consult with its own legal, accounting or other advisors. However, to date the Board has not used independent legal or accounting advisors. The Board has the sole authority, to the extent deemed necessary and appropriate, to retain and terminate any compensation consultants, outside counsel or other advisors, including having the sole authority to approve the firm’s or advisor’s fees and other retention. During 2010, the Board did not retain a compensation consultant.

Benchmarking. The Board does not use benchmarking to set executive compensation. However, the Board does utilize survey data and publicly available information to evaluate compensation for specific positions when necessary.

Base Salary. Base salaries for executive officers are reviewed on an annual basis and at the time of promotion or other change in responsibilities. Increases in salary are based on cost of living adjustments as well as subjective evaluation of such factors as the level of responsibility, individual performance, our overall performance, level of pay both of the executive in question and other similarly situated executives pay levels within the Company.

The base salary for our CEO was established in an employment agreement we entered into with him in 2003 which was renewed in 2008. The initial base salary under the employment contract was based on a previous report prepared by Pearl Meyer & Partners (an independent compensation consultant) and factors taken into account in determining the CEO’s base salary were his leadership position with the Company, his level of responsibility and the integral, dynamic role he plays in guiding the Company. Since 2003, his base salary has increased based primarily on cost of living increases as well as the other factors set forth under “Base Salary” above. The CEO’s base salary was $1,500,000 for 2010. The CEO has not had an increase in his base salary in four years.

The Board discusses the executive officers’ base salaries with the CEO, who presents his suggestions for adjustment, if necessary. For 2010, the base salaries of the executive officers named in the Summary Compensation Table, whom we sometimes refer to as the “named executive officers,” were the same as was paid to the named executive officers in 2008, subject to a nominal cost of living increase. In addition, the Board has the discretion to periodically approve additional salary adjustments it feels are warranted based on general compensation changes within the industry, individual performance or significant changes in duties and responsibilities and input from the CEO.

Discretionary Annual Bonus. Executive officers, senior management and other personnel have the potential to receive a significant portion of their annual cash compensation as a cash bonus. Annual bonuses are generally granted based on each executive officer’s base salary, tenure, individual performance and our financial and market performance. The Board does not establish any particular guidelines or financial measures. Rather, the Board prefers to make a subjective determination after considering all measures collectively but bases much of its determination upon input from the CEO. The Board approves each annual bonus, if any. Typically, bonuses are awarded for prior year results in the following year, when actual results for the entire year are known. Bonuses, if any, paid after the Going Private Transaction are not reflected in the Summary Compensation Table.

When considering whether to award bonuses in 2010, in addition to the above factors, the Board in particular considered the executive officers’ continued performance and outstanding contribution with respect to the Company’s financial performance in 2009.

Deferred Compensation Plan. Executive officers and our most highly compensated senior management are eligible to participate in our deferred compensation plan, which provides an opportunity for eligible employees to defer up to 90% of their annual base salary and 100% of bonus compensation into an account that will be credited with earnings at the same rate as one or more investment indices chosen by the employees, which are similar to the investment funds available under our 401(k) plan. We also make a matching contribution of up to 30%, depending on the position of the employee with us.

Perquisites. We also provide certain personal benefits to executive officers, which are reflected in the All Other Compensation column of the Summary Compensation Table. These benefits include executive life and disability insurance and a car allowance. We believe these benefits are reasonable, competitive and consistent with our overall executive compensation program. Under a program to enhance the safety and effectiveness of management in support of our business and operations, corporate-owned aircraft is made available for essential business trips and other company

activities. The CEO and other members of management, with the approval of the CEO, are permitted limited personal use of the corporate-owned aircraft. Also, the CEO is provided security services, including home security systems and monitoring and personal security services. These security services are provided for our benefit, and the Board considers the related expenses to be appropriate business expenses rather than personal benefits. In general, the perquisites our CEO is entitled to receive are contained in his employment agreement and are described in more detail under “Employment Agreements and Potential Payments Upon Termination or Change of Control.”

Broad-Based Employee Benefits. Our executive officers are eligible to participate in company-sponsored benefit programs on the same terms and conditions as those generally provided to our employees. We believe that the offering of broad-based employee benefits to our executive officers is essential to achieving our goal of recruiting and retaining executive talent. These benefits include basic health benefits, dental benefits, disability protection, life insurance, and similar programs. The cost of company-sponsored benefit programs are negotiated by us with the providers of such benefits and the executive officers contribute to the cost of the benefits. We have a 401(k) plan and make annual matching contributions to the 401(k) plan on behalf of eligible employees. These contributions are discretionary and historically limited to 25% on up to 5% of contributed funds.

Other Compensation Policies Affecting the Executive Officers

Employment Agreements. In general, our executive officers do not have employment, severance or change-of-control agreements. Our executive officers serve at the will of the Board, which enables us to terminate their employment with discretion as to the terms of any severance arrangement. This is consistent with our compensation philosophy. However, in 2003, we determined that the loss of our CEO’s services could materially and adversely affect our business, financial condition and development. Accordingly, we entered into an employment agreement with our CEO. In 2007, neither the Board nor the CEO elected to terminate the employment agreement, and as a result, according to its terms, in 2008, it automatically renewed for another five (5) year term. The provisions of this employment agreement are discussed more under the caption “Employment Agreements and Potential Payments Upon Termination or Change of Control” below.

Assessment of Risk

The Board is aware of the need to take risk into account when making compensation decisions. By design, our compensation program for executive officers is designed to avoid excessive risk taking.

COMPENSATION REPORT

The Board of Directors oversees our executive compensation program in a manner that serves our interests and those of our shareholder. Our management has prepared the Compensation Discussion and Analysis of the compensation program for named executive officers. The Board has reviewed and discussed the Compensation Discussion and Analysis for fiscal year 2010 with our management. Based on this review and discussion, the Board approved the inclusion of this Compensation Discussion and Analysis in this Form 10-K for filing with the SEC.

Board of Directors

Tilman J. Fertitta, Chair

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth in summary, compensation paid by us and our subsidiaries for the years ended December 31, 2010, 2009 and 2008 to our CEO, CFO and our other most highly compensated executive officers whose cash compensation exceeded $100,000:


Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		All Other Compen- sation ($)(1)		Total ($)
Tilman J. Fertitta, President and Chief Executive Officer		2010 2009 2008		1,500,000 1,500,000 1,500,000		— — —		— — —		— — —		726,924 1,458,974 2,061,238		2,226,924 2,958,974 3,561,238

Richard H. Liem, Executive Vice President and Chief Financial Officer		2010 2009 2008		332,077 308,654 308,654		— — —		— — —		— — —		28,365 28,365 44,865		360,442 337,019 353,519

Steven L. Scheinthal, Executive Vice President, Secretary and General Counsel		2010 2009 2008		399,027 375,950 375,950		— — —		— — —		— — —		43,258 52,240 75,578		442,285 428,190 451,528

Jeffrey L. Cantwell, Senior Vice President of Development		2010 2009 2008		264,336 257,214 257,214		100,000 100,000 —		— — —		— — —		21,185 14,935 23,196		385,521 372,149 280,410

K. Kelly Roberts, Chief Administration Officer— Hospitality and Gaming Division		2010 2009 2008		222,040 216,058 216,058		100,000 100,000 —		— — —		— — —		27,115 12,115 19,526		349,155 328,173 235,584

(1)	See the 2010 All Other Compensation table below for additional information.

2010 All Other Compensation

The following table describes each component of the All Other Compensation column in the Summary Compensation Table. All numbers are in dollars.


Name of Executive	Deferred Compensation (1)		Life Insurance Premiums (2)		Personal Use of Corporate Aircraft (3)		Auto Expense (4)		Use of Company Personnel (5)		Security (6)		Other (7)
Tilman J. Fertitta	$	—	$	314,535	$	62,650		—	$	26,250	$	249,605	$	73,884

Richard H. Liem	$	—	$	4,365		—	$	24,000		—		—	$	—

Steven L. Scheinthal	$	—	$	22,350		—	$	17,708		—		—	$	3,200

Jeffery L. Cantwell	$	6,250	$	2,935		—	$	12,000		—		—	$	—

K. Kelly Roberts	$	15,000	$	3,115		—	$	9,000		—		—	$	—

(1)	This column reports our contribution under our deferred compensation plan.

(2)	This column reports the dollar value of any life insurance premium paid by the Company on behalf of the named executive officers.

(3)

This column includes the incremental cost for the executive officer’s personal use of our aircraft. The calculation includes the variable costs incurred as a result of personal flight activity such as: trip related maintenance, aircraft fuel, satellite communications, landing fees and any travel expenses for the flight crew. It excludes non-variable costs, such as hangar expense, ongoing maintenance, purchase and lease costs of the aircraft, exterior paint, interior refurbishment and regularly scheduled inspections, which would have been incurred regardless of whether there was any personal use of aircraft. The incremental cost incurred by us has been determined to be approximately $2,100 per flight hour based on the foregoing incremental costs. On certain occasions when Mr. Fertitta is traveling for business purposes family members will travel with him and there is no incremental cost to the Company.

(4)

This column reports the incremental cost to the Company for automobile expenses for the named executive officers. Although Mr. Fertitta’s employment agreement provides that the Company is to furnish him with an automobile, he did not have a Company car, and the Company did not pay any automobile related expenses on his behalf.

(5)	Represents the incremental cost to the Company with respect to use of Company personnel provided to Mr. Fertitta under his employment agreement.

(6)

This column reports the actual cost of providing security services to Mr. Fertitta as provided for in his employment agreement. Under our executive security program, Mr. Fertitta has been provided security services, including home security systems and monitoring and personal security services. We provide these security services for our benefit and consider the related expenses to be appropriate business expenses.

(7)

This column reports the total amount of other benefits provided, none of which individually exceeded the greater of $25,000 or 10% of the total amount of these benefits for the named executive (except as otherwise described herein). With respect to Mr. Fertitta, these amounts represent, among other things: (a) supplemental medical reimbursement, (b) dockage fees, (c) membership fees and dues for country clubs and (d) administrative support services and financial service fees for tax preparation, estate planning and legal or financial advice to which Mr. Fertitta is entitled under his employment agreement. “All Other Compensation” does not include contributions and matching contributions to charities in accordance with Mr. Fertitta’s employment agreement.

GRANTS OF PLAN-BASED AWARDS

There were no equity or stock option grants in 2010 to any of the executive officers named in the Summary Compensation Table.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2010

We are a privately held company. No equity awards were outstanding at our fiscal year end on December 31, 2010.

OPTION EXERCISES AND STOCK VESTED 2010

The following table contains information with respect to the options exercised by the executive officers named above during the fiscal year ended December 31, 2010.


	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($) (1)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
Tilman J. Fertitta		—		—		—		—
Richard H. Liem		—		—		6,000		147,000
Steven L. Scheinthal		—		—		8,000		195,120
Jeffery L. Cantwell		—		—		1,714		39,720
K. Kelly Roberts		5,000		43,500		1,713		41,968

(1)	Reflects the difference between the market value of the shares at the exercise date and the option exercise price multiplied by the number of shares acquired on exercise.

NON-QUALIFIED DEFERRED COMPENSATION

The following table contains information with respect to the non-qualified deferred compensation plan by the executive officers named above during the fiscal year ended December 31, 2010.


Name	Executive Contributions in 2010 ($) (1)		Aggregate Earnings in 2010 ($)		Aggregate Withdrawals/ Distributions ($)		Aggregate Balance at December 31, 2010 ($) (2)
Tilman J. Fertitta		—		8,025		10,082		58,287
Richard H. Liem		—		36,961		—		278,888
Steven L. Scheinthal		—		6,729		57,246		42,122
Jeffrey L. Cantwell		6,250		8,313		—		72,799
K. Kelly Roberts		38,738		19,366		—		164,234

(1)	Amounts in the “Executive Contributions in 2010” column are included in the “Salary” or “Bonus” column in Summary Compensation Table, as applicable.

(2)	All amounts shown were previously reported as compensation to each executive officer in the Summary Compensation Table for previous years, except Mr. Roberts who was not listed in the Summary Compensation Table prior to 2006. Total contributions to him prior to 2006 were $20,720.

The following describes the material features of our non-qualified deferred compensation plan in which the executive officers participate.

The deferred compensation plan went into effect in 2004. Executive contributions are made from base salary or bonus. Under the deferred compensation plan, a participant receives his prior deferrals and vested matching contributions, along with any accumulated earnings thereon, following his termination of employment, disability (as defined by the plan), death (in which case the designated beneficiary will receive the benefit), or, possibly, upon a change of control. The Participant may elect to defer a minimum of $2,000 of base salary and/or bonus, and is subject to a maximum contribution of 90% of the participant’s base salary and 100% of the bonus.

We have hired Clark Consulting to help manage the deferred compensation plan. Clark Consulting has set up an investment vehicle, similar to our 401(k) plan offered to non-executives. The deferred compensation plan allows the participants to allocate and/or reallocate the balance in their account daily among available measurement funds. Therefore, the annual earnings will be dependant upon the portfolio selections made by each participant. During 2010, there was a selection of 14 measurement funds available with a combined average return of 14.29%. During 2010, the best performing fund was Fidelity VIP Mid Cap Fund with an annual return of 28.57%. The worst performing fund in 2010 was the Janus Aspen Forty Institutional Fund with an annual return of 6.75%. The Maxim Money Market had a return of 0.00%.

We have the discretion to make matching contributions to a participant’s account. In 2010, we made a matching contribution totaling $158,603.35.

The deferred compensation plan allows participants to elect the form in which the retirement benefit will be paid (lump-sum or installments). The participant has the opportunity to change the form of the retirement benefit payment subject to certain requirements.

We have adopted a “rabbi trust” to protect the assets of the deferred compensation plan.

EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON

TERMINATION OR CHANGE OF CONTROL

Effective January 1, 2003, we entered into an employment agreement with Tilman Fertitta, our CEO, that sets forth the general terms and conditions of his employment for the term commencing January 1, 2003. The initial term of the contract expired at the end of 2007 and automatically renewed in 2008 for an additional period of five years.

Under the agreement, Mr. Fertitta agrees to serve as our President, CEO and Chairman of the Board for an annual base salary of not less than $1,250,000. The Board is required to review Mr. Fertitta’s salary at least annually to determine if any salary increases are warranted. The agreement provides that Mr. Fertitta shall be entitled to participate in any cash bonus programs established by the Company, and in the absence of a cash bonus program, to receive an annual bonus as determined by the Board and in the range of up to two times Mr. Fertitta’s base salary. The Agreement provides that:

•

Mr. Fertitta is eligible to participate in the Company’s deferred compensation plans,

•

Mr. Fertitta is entitled to an automobile and payment or reimbursement of all operating and maintenance costs,

•

the Company will provide an annual expense and/or administrative or support/personnel allowance and will pay or reimburse Mr. Fertitta for annual financial service fees for tax preparation, estate planning and legal or financial advice,

•

the Company will reimburse Mr. Fertitta for all reasonable business expenses, including travel, business entertainment and membership fees and dues for country clubs Mr. Fertitta deems necessary to carry out his duties under the employment agreement,

•

the Company will provide Mr. Fertitta with the use of Company transportation and dockage fees,

•

Mr. Fertitta is entitled to life insurance and other insurance benefits as approved by the Board and provided to other executive officers of the corporation as well as payment or reimbursement of medical expenses or charges not otherwise paid for by Company-provided insurance,

•

the Company shall provide for the security of Mr. Fertitta, and

•

for each year of the agreement, the Company shall make charitable contributions to charities of Mr. Fertitta’s choice of at least $500,000 as well as match Mr. Fertitta’s charitable contributions in an amount not to exceed $250,000 per year.

Mr. Fertitta owns 100% of the Company and all equity plans were terminated in connection with the Going Private Transaction. As a result, the change of control provision in his contract are no longer applicable. Moreover, no payments are due to any other executive upon a sale or change of control of the Company.

COMPENSATION OF DIRECTORS 2010

Our Directors who are not executive officers received Director’s fees of $36,000 for 2010, plus the expenses incurred by them on our behalf. Non-employee directors also receive $1,000 for each Audit Committee meeting attended. In addition, Messrs. Chadwick (Chairman) and Brimmer served on our Special Committee to review and consider Mr. Fertitta’s going private offer that was made in 2009 and were paid $60,000 each, for their service in 2010. In addition, Mr. Taylor earned compensation for serving on the Governance Committee. None of the directors have any perquisites over $10,000.


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Michael S. Chadwick		98,000		—		—		—		98,000
Joe Max Taylor		78,000		—		—		—		78,000
Kenneth Brimmer		98,000		—		—		—		98,000

COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to the Going Private Transaction, we were a Controlled Company as such term is defined under the rules of the NYSE and no longer had a compensation committee and our Board of Directors was responsible for establishing executive compensation. None of our executive officers served as a director of another corporation whose executive officers served on our Board of Directors. None of our executive officers served as a member of the compensation committee (or other board committee performing equivalent functions, or in the absence of any such committee, the entire Board of Directors) of another corporation whose executive officers served as one of our Directors.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT

The following table sets forth, as of March 15, 2011, certain information regarding the beneficial ownership of our common stock by (a) each person we know to own beneficially more than five percent of the outstanding shares of our common stock, (b) each of our directors, (c) each executive officer named in the Summary Compensation Table below, and (d) all of our executive officers and directors as a group. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned. As of March 15, 2011, there were 1,000 shares of common stock outstanding. The address of each of Messrs. Fertitta, Scheinthal, Liem, Chadwick, Taylor, Brimmer, Cantwell and Roberts is 1510 West Loop South, Houston, Texas 77027.


Name of Beneficial Owner	Shares Beneficially Owned
	Number		Percent
Executive Officers and Directors
Tilman J. Fertitta (1)		1,000		100	%
Richard H. Liem		—		—
Steven L. Scheinthal		—		—
Jeffrey L. Cantwell		—		—
Kenneth Brimmer		—		—
Michael S. Chadwick		—		—
Joe Max Taylor		—		—
K. Kelly Roberts		—		—
All executive officers and directors as a group (8 persons) (8)		1,000		100	%

(1)	Fertitta Group, Inc. (“FGI”) owns 100% of the Company. Landry’s Holdings, Inc. (“LHI”) owns 100% of FGI. Fertitta Entertainment, Inc. (“FEI”) owns 100% of LHI. Tilman J. Fertitta owns 100% of FHI.

~~(1)~~Equity WeCompensation ~~have~~Plan ~~the~~Information ~~following compensation plans under which awards have been issued or are authorized to be issued, which were adopted with stockholder approval:~~

(As a) ~~The~~result ~~Landry’s Restaurants, Inc. 2002 Employee/Rainforest Conversion Plan authorizes the issuance~~ of up to 2,162,500 shares. This plan allows awards of non-qualified stock options, which may include stock appreciation rights, to our consultants, employees and non-employee directors. The plan is administered by our Compensation Committee. Terms of the ~~award,~~Going ~~such~~Private ~~as vesting and exercise price~~Transaction, there are tono beequity ~~determined~~compensation ~~by the Compensation Committee and set forth in the grant agreement for each award~~plans.

~~(b)~~ITEM We maintain two stock option plans, which were originally adopted in 1993, (the Stock Option Plans), as amended, pursuant to which options were granted to our eligible employees and non-employee directors or our subsidiaries for the purchase of an aggregate of 2,750,000 shares of common stock13. ~~The~~CERTAIN ~~Stock~~RELATIONSHIPS ~~Option~~AND ~~Plans~~RELATED were administered by the Compensation Committee of the Board of Directors (the Committee), which determined at its’ discretion, the number of shares subject to each option granted and the related purchase price, vesting and option periods. Options are no longer issued under either plan, however, options previously issued under the stock option plans are still outstanding.TRANSACTIONS

~~(c)~~In We1996, ~~also~~we ~~maintain~~entered ~~the~~into ~~1995~~a ~~Flexible~~Consulting ~~Incentive~~Service ~~Plan,~~Agreement ~~which~~(the ~~was~~“Agreement”) ~~adopted~~with inFertitta ~~1995~~Hospitality, LLC (~~Flex~~“Fertitta ~~Plan~~Hospitality”), aswhich ~~amended,~~is ~~for~~jointly ~~key~~owned ~~employees~~by ofour ~~the~~Chairman ~~Company.~~and ~~Under~~Chief Executive ~~the~~Officer ~~Flex~~and ~~Plan~~his ~~eligible~~wife. ~~employees~~Pursuant ~~received~~to ~~stock~~the ~~options~~Agreement, ~~stock~~we ~~appreciation~~provided ~~rights,~~to ~~restricted~~Fertitta ~~stock,~~Hospitality ~~performance~~management ~~awards,~~and ~~performance~~administrative ~~stock~~services. ~~and~~Under ~~other~~the ~~awards~~Agreement, aswe ~~defined~~received bya ~~the~~fee ~~Board~~ of ~~Directors~~$2,500 orper anmonth ~~appointed~~plus ~~committee.~~the ~~The~~reimbursement ~~aggregate number~~ of ~~shares~~all out-of-pocket ~~common~~expenses and ~~stock~~such ~~issued~~additional ~~under~~compensation ~~the~~as ~~Flex~~agreed ~~Plan~~upon. ~~(or~~In ~~with~~2003, ~~respect~~a tonew ~~which~~agreement ~~awards~~was ~~may~~signed be(“Management ~~granted~~Agreement”). ~~were~~Pursuant ~~not~~to inthe ~~excess~~Management ~~of 2~~Agreement,~~000,000~~ ~~shares.~~we ~~Options~~receive ~~are~~a nomonthly ~~longer~~fee ~~issued~~of ~~under~~$7,500, ~~the~~plus ~~Flex~~reimbursement ~~Plan;~~of ~~however,~~expenses. ~~options~~The ~~previously~~Management Agreement ~~issued~~provides ~~are~~for ~~still~~a ~~outstanding~~renewable three-year term.

~~(2)~~In We1999, ~~have~~we entered into a ground lease with 610 Loop Venture, LLC, a company wholly owned by our Chairman and Chief Executive Officer, on land owned by us adjacent to our corporate headquarters. Under the ~~following~~terms ~~compensation~~of ~~plans~~the ~~under~~ground ~~which~~lease, ~~awards~~610 ~~have~~Loop ~~been~~Venture ~~issued~~pays orus ~~are~~base ~~authorized~~rent of $12,000 per month plus pro-rata real property taxes and insurance. 610 Loop Venture also has the option to bepurchase ~~issued~~certain property based upon a contractual agreement. In 2009, ~~which~~610 ~~were~~Loop ~~adopted~~Venture ~~without~~exercised ~~stockholder~~its ~~approval:~~purchase options and acquired the land from us for approximately $1.8 million.

~~(a)~~In ~~The Landry’s Restaurants~~2002, ~~Inc.~~we ~~2003~~entered ~~Equity~~into ~~Incentive~~an ~~Plan~~$8,000 ~~authorizes~~per ~~the~~month, ~~issuance~~20 ofyear, upwith tooption ~~700~~renewals,~~000~~ ~~shares.~~ground ~~This~~lease ~~plan~~agreement ~~allows~~with ~~awards~~Fertitta ofHospitality for ~~both~~a ~~qualified~~new ~~and~~Rainforest ~~non-qualified~~Cafe ~~stock~~on ~~options,~~prime ~~restricted~~waterfront ~~stock~~land in Galveston, ~~cash~~Texas. ~~equivalent~~The ~~values,~~annual ~~and~~rent ~~tandem~~is ~~awards~~equal to ~~employees.~~the ~~The~~greater ~~plan~~of isthe ~~administered~~base byrent ~~our~~or ~~compensation~~percentage ~~committee.~~rent ~~Terms~~up ofto ~~the~~six ~~award~~percent, ~~such~~plus astaxes ~~vesting~~ and ~~exercise~~insurance. ~~price~~In 2010, ~~are~~2009 toand be2008, ~~determined~~we bypaid ~~the~~base ~~compensation committee~~ and ~~set~~percentage ~~forth~~rent aggregating in$492,000, ~~the~~$434,000 ~~grant~~and ~~agreement~~$561,000, ~~for each award~~respectively.

~~(b)~~As Onpermitted ~~July~~by ~~22,~~the ~~2002,~~employment wecontract ~~issued~~between ~~options~~us toand ~~purchase~~the anChief Executive ~~aggregate of 437~~Officer,~~500~~ ~~shares~~charitable ~~under~~contributions ~~individual stock option agreements with individual members of senior management. Options under these agreements~~ were ~~granted~~made atby ~~market~~us ~~price~~to ~~and~~a ~~expire~~charitable ~~ten~~Foundation ~~years~~that ~~from~~ the ~~date~~Chief ofExecutive ~~grant.~~Officer ~~These~~served ~~options~~as ~~vest~~Trustee in ~~equal~~the ~~installments~~amount ~~over a period~~ of ~~five~~$125,000, ~~years~~$130,000 ~~provided~~and ~~that~~$98,000 ~~vesting~~in ~~may~~2010, ~~accelerate~~2009, onand ~~certain occurrences~~2008, ~~such~~respectively. asThe acontributions ~~change~~were made in ~~control~~addition ~~or,~~to in the ~~case~~normal ofsalary ~~options~~and ~~granted~~bonus topermitted ~~our~~under ~~CEO,~~the ifemployment ~~our stock hits certain price targets~~contract.

~~(c)~~We, Onon ~~July~~a ~~22,~~routine ~~2002~~basis, wehold ~~issued~~or ~~options~~host promotional toevents, ~~purchase~~training anseminars ~~aggregate~~and ofconferences ~~6,000~~for ~~shares to~~ our ~~non-employee directors~~personnel. ~~Options~~In ~~under~~connection ~~these~~therewith, ~~agreements~~we ~~were~~incurred ~~granted~~in at2010, ~~market~~2009 ~~price~~ and ~~expire~~2008 ~~ten~~expenses ~~years~~in ~~from~~ the ~~date~~amount of ~~grant.~~$38,389, ~~These~~$20,850 ~~options~~and ~~vest~~$29,000, inrespectively, ~~equal~~at ~~installments~~resort ~~over~~hotel aproperties ~~period~~owned ofby ~~five~~our ~~years~~Chief Executive Officer and managed by us.

~~(d)~~Landry’s Onand ~~March~~Fertitta ~~16,~~Hospitality ~~2001,~~jointly wesponsored ~~issued~~events options to purchase an aggregate of 387,500 shares to our senior management under individual stock option agreements with individual members of senior management. Options under these agreements were granted at $8.50 and ~~expire~~promotional activities ~~ten years from the date of grant. These options vest~~ in ~~equal installments over a period of five years~~2010, ~~provided~~2009 ~~that~~and ~~vesting~~2008 ~~may~~which ~~accelerate~~resulted ~~on certain occurrences, such as a change~~ in ~~control~~shared ~~or,~~costs inand ~~the~~use ~~case~~ of ~~options granted to~~ our ~~CEO,~~personnel ifor ~~our~~Fertitta ~~stock~~Hospitality ~~hits~~employees ~~certain~~and ~~price targets~~assets. ~~In December 2006, certain options to a member of senior management were increased to an exercise price of $9.65.~~

~~(e)~~In OnDecember ~~March 16 and September 13~~2010, ~~2001,~~we ~~options~~entered tointo ~~purchase~~ an ~~aggregate~~agreement ~~of 240,000 shares were issued~~ to ~~certain~~manage of37 ~~our~~Claim ~~individual~~Jumper ~~employees,~~restaurants ~~under~~acquired ~~individual~~by ~~option~~Fertitta ~~grant agreements. Options under these agreements were granted at $8.50 and $15.80~~Entertainment, ~~respectively, and expire ten years from the date of grant~~Inc. ~~These~~for ~~options vest in equal installments over~~ a ~~period~~management fee of ~~five years~~$458,333 ~~provided~~per ~~that vesting may accelerate on certain occurrences, such as a change in control~~month.

In December 2010, we made a $500,000 deposit and entered into a three year triple net operating lease agreement with Fertitta Entertainment, Inc. with rental payments of $138,000 per month. In addition, we agreed to share in the costs of certain improvements to the asset of approximately $2.1 million.

The foregoing agreements were entered into between related parties and were not the result of arm’s-length negotiations. Accordingly, the terms of the transactions may have been more or less favorable than might have been obtained from unaffiliated third parties.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

REPORT OF THE AUDIT COMMITTEE

FOR THE YEAR ENDED DECEMBER 31, 2010

The Audit Committee is composed of three Non-Employee Directors and acts under a written charter adopted by the Board of Directors. The Audit Committee has the sole responsibility for the appointment and retention of the Company’s independent registered public accounting firm (“independent auditors”) and the approval of all audit and engagement fees. The Audit Committee meets periodically with management, the internal auditors and the independent auditors regarding accounting policies and procedures, audit results and internal accounting controls. The internal auditors and the independent auditors have free access to the Audit Committee, without management’s presence to discuss the scope and results of their audit work. The Company’s management is primarily responsible for the Company’s financial statements and the quality and integrity of the reporting process, including establishing and maintaining the systems of internal controls over financial reporting and assessing the effectiveness of those controls. The independent auditors, Grant Thornton LLP (“GT”), are responsible for auditing those financial statements and internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for expressing an opinion on the conformity of the financial statements with accounting principles generally accepted in the United States as well as reporting on the effectiveness of the Company’s internal controls over financial reporting. On behalf of the Board of Directors, the Audit Committee monitors the Company’s financial reporting processes and systems of internal control, the independence and the performance of the independent accountants, and the performance of the internal auditors.

Management has represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit Committee has discussed with the independent accountants their evaluation of the accounting principles, practices and judgments applied by management, and the Audit Committee has discussed any items required to be communicated to it by the independent accountants in accordance with standards established by the American Institute of Certified Public Accountants.

In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2010, and matters related to Section 404 of the Sarbanes-Oxley Act of 2002 with the Company’s management and representatives of GT. The Audit Committee discussed with GT the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. In addition, the Audit Committee discussed with GT their independence from the Company and its management, including the matters in the written disclosures required by Public Company Accounting Oversight Board (“PCAOB”) Rule 3526, Communication with Audit Committees Concerning Independence, and has received from GT the written disclosure required by the PCAOB.

Based on the reviews and discussions described above, the Audit Committee has recommended to the Company’s Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Audit Committee

Michael S. Chadwick, Chairman

Kenneth Brimmer

Joe Max Taylor

~~(f)~~Audit InFees addition, we have issued pursuant to an employment agreement, over its five year term, 775,000 shares of restricted stock, 500,000 shares which vest 10 years from the grant date, and 275,000 shares which vest 7 years from the grant date. In addition, 250,000 stock options have also been granted pursuant to the employment agreement.

~~(g)~~During Inthe ~~April~~years ~~2006~~ended December 31, ~~102~~2010 and December 31,~~000~~ ~~restricted~~2009 ~~common~~the ~~shares~~aggregate ~~were~~fees ~~issued~~billed toby ~~key~~GT ~~employees~~for ~~vesting~~the ~~ratably~~audit ~~over~~of ~~five~~the ~~years~~Company’s financial statements and ~~8,000~~for ~~restricted~~such ~~common~~year ~~shares~~and ~~were~~for ~~granted~~the toreviews ~~non-employee~~of the ~~directors~~Company’s ~~vesting~~interim ~~ratably~~financial ~~over~~statements ~~two~~were ~~years~~$996,951 and $950,547, respectively.

~~(h) In January 2007, 3,335 restricted common shares were issued to a key employee vesting ratably over five years and on September 27, 2007, 4,000 restricted common shares were granted to non~~Audit-~~employee~~Related ~~directors~~Fees ~~vesting ratably over two years.~~

~~ITEM~~The 13Company paid Audit-Related Fees for the fiscal year ended December 31, 2010 to GT in the amount of $125,697. ~~CERTAIN~~The ~~RELATIONSHIPS~~Company ~~AND~~paid Audit-Related ~~RELATED~~Fees ~~TRANSACTIONS~~for ~~AND~~the ~~DIRECTOR~~fiscal ~~INDEPENDENCE~~year ended December 31, 2009 to GT in the amount of $295,025.

~~Certain~~Tax ~~information~~Fees relating to our directors and executive officers is incorporated by reference herein from our definitive Proxy Statement in connection with our 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 our fiscal year ended December 31, 2009.

~~ITEM~~The ~~14.~~Company ~~PRINCIPAL~~did ~~ACCOUNTANT~~not ~~FEES~~pay ~~AND~~any ~~SERVICES~~fees for professional services rendered by GT for tax compliance, tax advice and tax planning for the fiscal years ended December 31, 2010 or 2009.

~~Certain~~All ~~information~~Other ~~regarding the fees we paid to our principal accountants, including Audit~~ Fees, Audit-Related Fees, Tax Fees and all other fees is incorporated by reference herein from our definitive Proxy Statement in connection with our 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 our fiscal year ended December 31, 2009.

The Company did not pay any fees for services rendered by GT not reportable as Audit Fees, Audit-Related Fees or Tax Fees for the fiscal years, ended December 31, 2010 or 2009.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee annually reviews and pre-approves the audit, review, attest and permitted non-audit services to be provided during the next audit cycle by the independent registered public accounting firm. To the extent practicable, at the same meeting the Audit Committee also reviews and approves a budget for each of such services. Services proposed to be provided by the independent registered public accounting firm that have not been pre-approved during the annual review and the fees for such proposed services must be pre-approved by the Audit Committee. Additionally, fees for previously approved services that are expected to exceed the previously approved budget must also be approved by the Audit Committee.

All requests or applications for the independent registered public accounting firm to provide services to the Company must be submitted to the Audit Committee by the independent registered public accounting firm and management and state as to whether, in their view, the request or application is consistent with applicable laws, rules and regulations relating to independent registered public accounting firm independence. In the event that any member of management or the independent registered public accounting firm becomes aware that any services are being, or have been, provided by the independent registered public accounting firm to the Company without the requisite pre-approval, such individual must immediately notify the Chief Financial Officer, who must promptly notify the Chairman of the Audit Committee and appropriate management so that prompt action may be taken to the extent deemed necessary or advisable.

All of the services provided by the Company’s independent registered public accounting firm during 2010 were pre-approved by the Audit Committee.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	1. Financial Statements

The following financial statements are set forth herein commencing on page 50:

—Reports of Independent Registered Public Accounting Firm ~~Grant Thornton LLP~~

—Consolidated Balance Sheets as of December 31, ~~2009~~2010 and ~~2008~~2009

—Consolidated Statements of Income for the years ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008

—Consolidated Statements of ~~Changes~~Stockholders’ in Equity for the years ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008

—Consolidated Statements of Cash Flows for the years ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008.

—Notes to Consolidated Financial Statements

Financial Statement Schedules—Not applicable.

(b)

Exhibits

Exhibit No.		Exhibit
2.1		Stock Purchase Agreement dated February 3, 2005 between Landry’s Restaurants, Inc. and Poster Financial Group, Inc. regarding the acquisition of Golden Nugget Casino (incorporated by reference to Exhibit 2.1 of the Company’ssForm ~~Form~~ 10-K for the year ended December 31, 2004, File No. 000-22150).
3.1		Certificate of Incorporation of Landry’s Seafood Restaurants, Inc., as amended (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
3.2		Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
3.3		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.3 of the Company’s Form 10-K for the year ended December 31, 2004, File No. 000-22150).
3.4		Bylaws of Landry’s Restaurants, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
3.5		Amendment to Bylaws (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004, File No. 001-15531).
3.6		Amendment to Bylaws (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K, filed on December 28, 2007, File No. 001-15531).
10.1		1993 Stock Option Plan (“Plan”) (incorporated by reference to Exhibit 10.60 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
10.2		Form of Incentive Stock Option Agreement under the Plan (incorporated by reference to Exhibit 10.61 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
10.3		Form of Non-Qualified Stock Option Agreement under the Plan (incorporated by reference to Exhibit 10.62 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
10.4		Non-Qualified Formula Stock Option Plan for Non-Employee Directors (“Directors’ Plan”) (incorporated by reference to Exhibit 10.63 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
10.5		First Amendment to Non-Qualified Formula Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit C of the Company’s Proxy Statement, filed on May 8, 1995, File No. 000-22150).
10.6		Form of Stock Option Agreement for Directors’ Plan (incorporated by reference to Exhibit 10.64 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).

Exhibit No.		Exhibit
10.5		First Amendment to Non-Qualified Formula Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit C of the Company’s Proxy Statement, filed on May 8, 1995, File No. 000-22150).
10.6		Form of Stock Option Agreement for Directors’ Plan (incorporated by reference to Exhibit 10.64 of the Company’s Registration Statement of Form S-1, filed on July 2, 1993, File No. 33-65498).
10.7		1995 Flexible Incentive Plan (incorporated by reference to Exhibit B of the Company’s Proxy Statement, filed May 8, 1995, File No. 000-22150).
10.8		2003 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 of the Company’s Form 10-K for the year ended December 31, 2003, filed March 9, 2004, File No. 001-15531).
10.9		Form of Stock Option Agreement between Landry’s Seafood Restaurants, Inc. and Tilman J. Fertitta (incorporated by reference to Exhibit 10.11 of the Company’s Form 10-K for the year ended December 31, 1995, File No. 000-22150).
10.10		Purchase Agreement dated December 15, 2004 between the Company and the initial purchasers (incorporated by reference to Exhibit 10.10 of the Company’s Form 10-K for the year ended December 31, 2004, File No. 000-22150).
10.11		Indenture Agreement dated as of December 28, 2004 by and among the Company, the Guarantors and Wachovia Securities, National Association (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K, filed December 28, 2004, File No. 000-22150).
10.12		Registration Rights Agreement date as of December 28, 2004 by and among the Company, the Guarantors and the initial purchasers party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K, filed December 28, 2004, File No. 000-22150).
10.13		Credit Agreement dated as of December 28, 2004 by and among the Company, Wachovia Bank, National Association, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K, filed December 28, 2004, File No. 000-22150).
10.14		Security Agreement dated as of December 28, 2004 by and among the Company, the additional grantors named therein and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K, filed December 28, 2004, File No. 000-22150).
10.15		Guaranty Agreement dated as of December 28, 2004 between the Company and the Guarantors (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K, filed December 28, 2004, File No. 000-22150).
10.16		Employment Agreement between Landry’s Restaurants, Inc. and Tilman J. Fertitta (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003, filed August 12, 2003, File No. 001-15531).
10.17		Landry’s Restaurants, Inc. 2002 Employee/Rainforest Conversion Plan (incorporated by reference to Exhibit 99.1 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.18		Landry’s Restaurants, Inc. 2002 Employee Agreement No. 1 (incorporated by reference to Exhibit 99.2 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.19		Landry’s Restaurants, Inc. 2002 Employee Agreement No. 2 (incorporated by reference to Exhibit 99.3 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.20		Landry’s Restaurants, Inc. 2002 Employee Agreement No. 4 (incorporated by reference to Exhibit 99.5 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.21		Landry’s Restaurants, Inc. 2001 Employee Agreement No. 1 (incorporated by reference to Exhibit 99.6 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.22		Landry’s Restaurants, Inc. 2001 Employee Agreement No. 2 (incorporated by reference to Exhibit 99.7 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.23		Landry’s Restaurants, Inc. 2001 Employee Agreement No. 4 (incorporated by reference to Exhibit 99.9 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.24		Form of Management Agreement between Landry’s Management, L.P. and Fertitta Hospitality (incorporated by reference to Exhibit 10.34 of the Company’s Form 10-K for the year ended December 31, 2003, File No. 001-15531).
10.25		Ground Lease between Landry’s Management, L.P. and 610 Loop Venture, L.L.C. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 1999, File No. 000-22150).
10.26		Amendment to Ground Lease between Landry’s Management, L.P. and 610 Loop Venture, L.L.C. (incorporated by reference to Exhibit 10.26 of the Company’s Form 10-K for the year ended December 31, 2004, File No. 000-22150).

Exhibit No.		Exhibit
10.22		Landry’s Restaurants, Inc. 2001 Employee Agreement No. 2 (incorporated by reference to Exhibit 99.7 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.23		Landry’s Restaurants, Inc. 2001 Employee Agreement No. 4 (incorporated by reference to Exhibit 99.9 of the Company’s Form S-8, filed March 31, 2003, File No. 333-104175).
10.24		Form of Management Agreement between Landry’s Management, L.P. and Fertitta Hospitality (incorporated by reference to Exhibit 10.34 of the Company’s Form 10-K for the year ended December 31, 2003, File No. 001-15531).
10.25		Ground Lease between Landry’s Management, L.P. and 610 Loop Venture, L.L.C. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 1999, File No. 000-22150).
10.26		Amendment to Ground Lease between Landry’s Management, L.P. and 610 Loop Venture, L.L.C. (incorporated by reference to Exhibit 10.26 of the Company’s Form 10-K for the year ended December 31, 2004, File No. 000-22150).
10.27		Second Amendment to Contract of Sale and Development Agreement between Landry’s Management, L.P. and 610 Loop Venture, LLC (incorporated by reference to Exhibit 10.27 of the Company’s Form 10-K for the year ended December 31, 2004, File No. 000-22150).
10.28		Form of Landry’s Restaurants, Inc. Nonqualified Stock Option Agreement for use in Landry’s Restaurants, Inc. 2001 Individual Stock Option Agreements (incorporated by reference to Exhibit 99.10 of the Company’s Form S-8, filed on March 31, 2003, File No. 333-104175).
10.29		Lease Agreement dated December 1, 2001 between Rainforest Cafe, Inc. and Fertitta Hospitality, LLC (incorporated by reference to Exhibit 10.29 of the Company’s Form 10-K for the year ended December 31, 2004, File No. 000-22150).
10.30		Form of Restricted Stock Agreement between Landry’s Restaurants, Inc. and Tilman J. Fertitta (incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K for the year ended December 31, 2004, File No. 000-22150).
10.31		First Amendment to Personal Service and Employment Agreement between Landry’s Restaurants, Inc. and Tilman J. Fertitta (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2005, File No. 001-15531).
10.32		Restricted Stock Agreement between Landry’s Restaurants, Inc. and Tilman J. Fertitta (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2005, File No. 001-15531).
10.33		T-Rex Cafe, Inc. Stockholders Agreement (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2006, File No. 001-15531).
10.34		Stock Purchase Agreement By and Among JCS Holdings, LLC, LSRI Holdings, Inc and Landry’s Restaurants, Inc. (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2006, File No. 001-15531).
10.35		First Supplemental Indenture, dated as of October 29, 2007 to Indenture dated as of December 28, 2004 for the 7.50% Senior Notes Due 2014 between Landry’s Restaurant’s Inc. and U.S. Bank National Association (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2007, File No. 001-15531).
10.36		Second Supplemental Indenture, dated as of November 19, 2007 to Indenture dated as of December 28, 2004 for the 7.50% Senior Notes Due 2014 between Landry’s Restaurant’s Inc. and U.S. Bank National Association (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2007, File No. 001-15531).
10.37		Indenture, dated as of October 29, 2007 for the 9.50% Senior Notes Due 2014 between Landry’s Restaurant’s Inc. as issuer, The Subsidiary Guarantors, as Guarantors and U.S. Bank National Association (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2007, File No. 001-15531).
10.38		First Supplemental Indenture, dated as of November 19, 2007 to Indenture dated as of October 29, 2007 for the 9.50% Senior Notes Due 2014 between Landry’s Restaurant’s Inc. and U.S. Bank National Association (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2007, File No. 001-15531).
10.39		First Lien Credit Agreement dated as of June 14, 2007 by and among Golden Nugget, Inc., Wachovia Bank, National Association and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2007, File No. 001-15531).
10.40		Second Lien Credit Agreement dated as of June 14, 2007 by and among Golden Nugget, Inc., Wachovia Bank, National Association and the other financial institutions party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2007, File No. 001-15531).
10.41		Contract Agreement dated as of April 7, 2008 between Golden Nugget, Inc. and The Penta Building Group, Inc., General Corporation. (incorporated by reference to Exhibit 14.41 of the Company’s Form 10-K for the year ended December 31, 2008, File No. 001-15531).
10.42		Agreement and Plan of Merger among Fertitta Holdings, Inc., Fertitta, Acquisition Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. dated as of June 16, 2008 (incorporated by reference to Exhibit 2 on the Company’s Form 8-K filing on June 17, 2008, File No. 001-15531).
10.43		First Amendment to Agreement and Plan of Merger dated as of October 18, 2008 by and among Fertitta Holdings, Inc, Fertitta Acquisition Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. (incorporated by reference to Exhibit 2 on the Company’s Form 8-K filing on October 20, 2008, File No. 001-15531).

Exhibit No.		Exhibit
10.37		Indenture, dated as of October 29, 2007 for the 9.50% Senior Notes Due 2014 between Landry’s Restaurant’s Inc. as issuer, The Subsidiary Guarantors, as Guarantors and U.S. Bank National Association (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2007, File No. 001-15531).
10.38		First Supplemental Indenture, dated as of November 19, 2007 to Indenture dated as of October 29, 2007 for the 9.50% Senior Notes Due 2014 between Landry’s Restaurant’s Inc. and U.S. Bank National Association (incorporated by reference to Exhibit of the Company’s Form 10-K for the year ended December 31, 2007, File No. 001-15531).
10.39		First Lien Credit Agreement dated as of June 14, 2007 by and among Golden Nugget, Inc., Wachovia Bank, National Association and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2007, File No. 001-15531).
10.40		Second Lien Credit Agreement dated as of June 14, 2007 by and among Golden Nugget, Inc., Wachovia Bank, National Association and the other financial institutions party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2007, File No. 001-15531).
10.41		Contract Agreement dated as of April 7, 2008 between Golden Nugget, Inc. and The Penta Building Group, Inc., General Corporation. (incorporated by reference to Exhibit 14.41 of the Company’s Form 10-K for the year ended December 31, 2008, File No. 001-15531).
10.42		Agreement and Plan of Merger among Fertitta Holdings, Inc., Fertitta, Acquisition Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. dated as of June 16, 2008 (incorporated by reference to Exhibit 2 on the Company’s Form 8-K filing on June 17, 2008, File No. 001-15531).
10.43		First Amendment to Agreement and Plan of Merger dated as of October 18, 2008 by and among Fertitta Holdings, Inc, Fertitta Acquisition Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. (incorporated by reference to Exhibit 2 on the Company’s Form 8-K filing on October 20, 2008, File No. 001-15531).
10.44		Credit Agreement by and among Landry’s Restaurants, Inc. and Wells Fargo, Foothill, LLC, Wells Fargo Foothill, LLC and Jefferies Finance, LLC dated as of December 22, 2008 (incorporated by reference to Exhibit 10 of the Company’s Form 8-K filing dated December 24, 2008, File No. 001-15531).
10.45		14% Senior Secured Notes due 2011 Purchase Agreement dated February 4, 2009 by and among Landry’s Restaurants, Inc. and Jefferies & Company, Inc. (incorporated by reference to Exhibit 10.4 on the Company’s Form 8-K filing on February 17, 2009, File No. 001-15531).
10.46		14% Senior Secured Notes due 2011 Registration Rights Agreement dated February 13, 2009 by and among Landry’s Restaurants, Inc. and Jefferies & Company, Inc. (incorporated by reference to Exhibit 10.2 on the Company’s Form 8-K filing on February 17, 2009, File No. 001-15531).
10.47		Amended and Restated Credit Agreement by and among Landry’s Restaurants, Inc. as borrower and Wells Fargo Foothill, LLC and Jefferies Finance LLC dated as of February 13, 2009 (incorporated by reference to Exhibit 10.3 on the Company’s Form 8-K filing on February 17, 2009, File No. 001-15531).
10.48		Indenture to the 14% Senior Secured Notes Due 2011 dated as of February 13, 2009 among Landry’s Restaurants, Inc. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.1 on the Company’s Form 8-K filing on February 17, 2009, File No. 001-15531).
*10.49		Termination of Agreement and Plan of Merger dated as of January 11, 2009 by and among Fertitta Holdings, Inc., Fertitta Acquisition Co., Tilman J. Fertitta and Landry’s Restaurants, Inc.
10.49		Termination of Agreement and Plan of Merger dated as of January 11, 2009 by and among Fertitta Holdings, Inc., Fertitta Acquisition Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. (incorporated by reference to Exhibit 10.1 on the Company’s Form 8-K filing on January 1, 2009, File No. 001-15531).
10.50		Amendment No. 1 to First Lien Credit Agreement dated August 10, 2009 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto (incorporated by reference to Exhibit 10.50 on the Company’s Form 10-K filing on December 31, 2009, File No. 001-15531).
10.51		Amendment No. 1 and Consent to Second Lien Credit Agreement dated August 10, 2009 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto (incorporated by reference to Exhibit 10.51 on the Company’s Form 10-K filing on December 31, 2009, File No. 001-15531).
10.52		Agreement and Plan of Merger among Fertitta Group, Inc. and Fertitta Merger Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. dated as of November 3, 2009 (incorporated by reference to Exhibit 2.1 on the Company’s Form 8-K filing on November 3, 2009, File No. 001-15531).
10.53		Second Amended and Restated Credit Agreement by and among Landry’s Restaurants, Inc. as borrower and Wells Fargo Foothill, LLC and Jefferies Finance LLC dated as of November 30, 2009 (incorporated by reference to Exhibit 10.53 on the Company’s Form 10-K filing on December 31, 2009, File No. 001-15531).
10.54		Indenture to the 11 5/8% Senior Secured Notes Due 2015 dated as of November 30, 2009 among Landry’s Restaurants, Inc. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement in Form S-4 filing on February 12, 2010, File No. 333-164887).
10.55		11 5/8% Senior Secured Notes Due 2015 Registration Rights Agreement dated November 30, 2009 by and among Landry’s Restaurants, Inc, Jefferies & Company, Inc., UBS Securities LLC and Deutsche Bank Securities Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Rights Agreement in Form S-4 filing on February 12, 2010, File No. 333-164887).
10.56		11 5/8% Senior Secured Notes Due 2015 Purchase Agreement dated November 17, 2009 by and among Landry’s Restaurants, Inc, Jefferies & Company, Inc., UBS Securities LLC and Deutsche Bank Securities Inc. (incorporated by reference to Exhibit 10.56 on the Company’s Form 10-K filing on December 31, 2009, File No. 001-15531).
10.57		Amendment No. 2 and Waiver to First Lien Credit Agreement dated February 17, 2010 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto (incorporated by reference to Exhibit 10.57 on the Company’s Form 10-K filing on December 31, 2009, File No. 001-15531).
10.58		Amendment No. 2 and Waiver to Second Lien Credit Agreement dated February 17, 2010 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto (incorporated by reference to Exhibit 10.58 on the Company’s Form 10-K filing on December 31, 2009, File No. 001-15531).
10.59		First Amendment to Agreement and Plan of Merger among Fertitta Group, Inc. and Fertitta Merger Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. dated as of November 3, 2009 (incorporated by reference to Exhibit 2.1 on the Company’s Form 8-K filing on May 27, 2010, File No. 001-15531).
10.60		Second Amendment to Agreement and Plan of Merger among Fertitta Group, Inc. and Fertitta Merger Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. dated as of November 3, 2009 (incorporated by reference to Exhibit 2.1 on the Company’s Form 8-K filing on June 20, 2010, File No. 001-15531).
10.61		Third Amended and Restated Credit Agreement by and among Landry’s Restaurants, Inc. as borrower and Wells Fargo Capital Finance, LLC as Agent dated as of December 20, 2010 (incorporated by reference on the Company’s Form 8-K filing on December 21, 2010, File No. 001-15531).

Exhibit No.		Exhibit
*10.50		Amendment No. 1 to First Lien Credit Agreement dated August 10, 2009 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto.
*10.51		Amendment No. 1 and Consent to Second Lien Credit Agreement dated August 10, 2009 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto.
10.52		Agreement and Plan of Merger among Fertitta Group, Inc. and Fertitta Merger Co., Tilman J. Fertitta and Landry’s Restaurants, Inc. dated as of November 3, 2009 (incorporated by reference to Exhibit 2.1 on the Company’s Form 8-K filing on November 3, 2009, File No. 001-15531).
*10.53		Second Amended and Restated Credit Agreement by and among Landry’s Restaurants, Inc. as borrower and Wells Fargo Foothill, LLC and Jefferies Finance LLC dated as of November 30, 2009.
10.54		Indenture to the 11 5/8% Senior Secured Notes Due 2015 dated as of November 30, 2009 among Landry’s Restaurants, Inc. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement in Form S-4 filing on February 12, 2010, File No. 333-164887).
10.55		11 5/8% Senior Secured Notes Due 2015 Registration Rights Agreement dated November 30, 2009 by and among Landry’s Restaurants, Inc, Jefferies & Company, Inc., UBS Securities LLC and Deutsche Bank Securities Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Rights Agreement in Form S-4 filing on February 12, 2010, File No. 333-164887).
*10.56		11 5/8% Senior Secured Notes Due 2015 Purchase Agreement dated November 17, 2009 by and among Landry’s Restaurants, Inc, Jefferies & Company, Inc., UBS Securities LLC and Deutsche Bank Securities Inc.
*10.57		Amendment No. 2 and Waiver to First Lien Credit Agreement dated February 17, 2010 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto.
*10.58		Amendment No. 2 and Waiver to Second Lien Credit Agreement dated February 17, 2010 by and among Golden Nugget, Inc., Landry’s Restaurants, Inc., Wachovia Bank, National Association and the other financial institution parties thereto.
*12.1		Ratio of Earnings to Fixed Charges
14		Code of Ethics (incorporated by reference to Exhibit 14 of the Company’s Form 10-K for the year ended December 31, 2003)
*21		Subsidiaries of Landry’s Restaurants, Inc.
*23.1		Consent of ~~Grant~~Independent ~~Thornton~~Registered ~~LLP~~Public Accounting Firm
*31.1		Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a)
*31.2		Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)
*32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13(a)-14(b)

*	Filed herewith

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and ~~Shareholders~~Stockholder

Landry’s Restaurants, Inc.

We have audited Landry’s Restaurants, Inc. ~~and subsidiaries~~’s (a Delaware holding company) internal control over financial reporting as of December 31, ~~2009~~2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Landry’s Restaurants, Inc. ~~and subsidiaries~~’ s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on Landry’s Restaurants, Inc. ~~and subsidiaries~~’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

AIn ~~material~~our ~~weakness~~opinion, isLandry’s ~~a deficiency~~Restaurants, orInc. ~~combination~~maintained, ofin ~~control~~all ~~deficiencies~~material respects, ineffective internal control over financial reporting~~, such that there~~ isas ~~a reasonable possibility that a material misstatement~~ of ~~the~~December 31, ~~company’s~~2010, ~~annual~~based ~~or interim financial statements will not be prevented or detected~~ on acriteria ~~timely~~established ~~basis. The following material weakness has been identified and included~~ in ~~management’s~~ ~~assessment.~~Internal AControl—Integrated ~~material~~Framework ~~weakness~~issued ~~was~~by ~~identified as management did not appropriately interpret all applicable accounting guidance when calculating and presenting earnings per share for net income available to Landry’s Restaurants, Inc~~COSO. ~~and subsidiaries.~~

InWe ~~our~~also ~~opinion~~have audited, ~~because~~in ofaccordance with the ~~effect~~standards of the ~~material~~Public ~~weakness~~Company ~~described~~Accounting ~~above~~Oversight onBoard ~~the achievement~~(United ofStates), the ~~objectives~~consolidated ofbalance ~~the~~sheets ~~control~~of ~~criteria,~~ Landry’s Restaurants, Inc. as of December 31, 2010 and ~~subsidiaries~~2009, ~~has~~and ~~not~~the ~~maintained~~related ~~effective~~consolidated ~~internal~~statements ~~control~~of ~~over~~income, ~~financial~~stockholder’s ~~reporting~~equity, asand cash flows for each of the three years in the period ended December 31, ~~2009~~2010, ~~based~~and onour ~~criteria~~report ~~established~~dated inMarch 16, ~~Internal~~2011 expressed ~~Control—Integrated~~an ~~Framework~~unqualified ~~issued by COSO~~opinion.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Landry’s Restaurants and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years ended December 31, 2009. The material weakness identified above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2009 financial statements, and this report does not affect our report dated March 16, 2010, which expressed unqualified opinion on those financial statements.

/s/ Grant Thornton LLP

Houston, Texas

March 16, ~~2010~~2011

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and ~~Shareholders~~Stockholder

Landry’s Restaurants, Inc.

We have audited the accompanying consolidated balance sheets of Landry’s Restaurants, Inc. ~~and subsidiaries~~’s (a Delaware holding company) as of December 31, ~~2009~~2010 and ~~2008~~2009, and the related consolidated statements of income, ~~changes~~stockholder’s in equity, and cash flows for each of the three years in the period ended December 31, ~~2009~~2010. 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 the standards of the Public Company Accounting Oversight Board (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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Landry’s Restaurants, Inc. ~~and subsidiaries~~ as of December 31, ~~2009~~2010 and ~~2008~~2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2009~~2010 in conformity with accounting principles generally accepted in the United States of America.

~~As discussed~~We inalso ~~Notes~~have 1audited, ~~and~~in 8accordance towith the ~~consolidated~~standards ~~financial~~of ~~statements,~~ the Public Company ~~adopted~~Accounting ~~new~~Oversight ~~accounting~~Board ~~guidance~~(United onStates), ~~January 1~~Landry’s Restaurants, ~~2009~~Inc.’s ~~related~~internal tocontrol ~~the~~over ~~inclusion~~financial ofreporting ~~certain~~as ~~instruments~~of ~~granted~~December 31, in2010, ~~share-~~based ~~payment~~on ~~transactions~~criteria established in ~~the~~Internal ~~calculation~~Control—Integrated Framework issued by the Committee of ~~basic~~Sponsoring ~~earnings~~Organizations ~~per~~of ~~common~~the ~~share~~Treadway Commission (COSO) and ~~retrospectively~~our ~~applied~~report ~~the~~dated ~~guidance~~March 16, 2011 expressed an unqualified opinion.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Landry’s Restaurants, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 16, 2010 expressed an adverse opinion on the effectiveness of internal control over financial reporting.

/s/ Grant Thornton LLP

Houston, Texas

March 16, ~~2010~~2011

LANDRY’S RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2009			2008
	2010			2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	7122,~~584~~683,~~322~~431		$	5171,~~066~~584,~~805~~322
Restricted cash and cash equivalents		73,076,532			—
Restricted cash		—			73,076,532
Accounts receivable—trade and other, net		2831,~~730~~355,~~944~~757			1828,~~021~~730,~~105~~944
Inventories		2735,~~558~~562,~~494~~454			2627,~~161~~558,~~092~~494
Deferred taxes		1525,~~658~~390,~~214~~192			2815,~~001~~658,~~267~~214
Assets related to discontinued operations		21,~~960~~958,~~514~~693			2,~~973~~960,~~593~~514
Other current assets		1314,~~364~~226,~~757~~652			913,~~102~~364,~~029~~757
Total current assets		~~232~~131,~~933~~177,~~777~~179			~~135~~232,~~325~~933,~~891~~777
PROPERTY AND EQUIPMENT, net		1,~~334~~383,~~334~~676,~~637~~618			1,~~259~~334,~~186~~334,~~463~~637
GOODWILL		1856,~~527~~709,~~547~~747			18,527,547
OTHER INTANGIBLE ASSETS, net		3844,~~719~~950,~~325~~873			38,~~872~~719,~~873~~325
OTHER ASSETS, net		7580,~~552~~330,~~531~~492			6375,~~411~~552,~~316~~531
Total assets	$	1,~~700~~696,~~067~~844,~~817~~909		$	1,~~515~~700,~~324~~067,~~090~~817
LIABILITIES AND EQUITY
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	6457,~~320~~772,~~097~~050		$	7064,~~358~~320,~~471~~097
Accrued liabilities		~~122~~142,~~275~~828,~~958~~130			~~134~~122,~~316~~275,~~329~~958
Income taxes payable		—194,877			~~2,784,703~~—
Current portion of long-term notes and other obligations		3015,~~181~~526,~~424~~853			830,~~752~~181,~~906~~424
Liabilities related to discontinued operations		21,~~850~~105,~~225~~869			52,~~149~~850,~~365~~225
Total current liabilities		~~219~~217,~~627~~427,~~704~~779			~~221~~219,~~361~~627,~~774~~704
LONG-TERM NOTES, NET OF CURRENT PORTION		1,~~064~~166,~~758~~233,~~656~~783			~~862~~1,~~375~~064,~~429~~758,656
OTHER LIABILITIES		~~103~~120,~~808~~199,~~585~~088			~~134~~103,~~518~~808,~~302~~585
Total liabilities		1,~~388~~503,~~194~~860,~~945~~650			1,~~218~~388,~~255~~194,~~505~~945
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES:
REDEEMABLE NONCONTROLLING INTEREST		10,318,386			1,591,480
Redeemable noncontrolling interest		11,341,783			10,318,386
EQUITY:
STOCKHOLDER’S EQUITY:
Common stock, $0.01 par value, 60,000,000 shares authorized, 16,237,851 and 16,142,263 shares issued and outstanding, respectively		162,379			161,423
Common stock, $0.01 par value, 60,000,000 shares authorized, 1,000 and 16,237,851 shares issued and outstanding, respectively		10			162,379
Additional paid-in capital		~~227~~115,~~386~~342,~~478~~961			~~222~~227,~~410~~386,~~106~~478
Retained earnings		9990,~~998~~145,~~441~~647			~~116~~99,~~244~~998,~~708~~441
Accumulated other comprehensive loss		(2625,~~992~~381,~~812~~704	)		(4426,~~339~~992,~~132~~812	)
Total stockholders’ equity		300,554,486			294,477,105
Total stockholder’s equity		180,106,914			300,554,486
Noncontrolling interest		1,000,000			1,000,000
Noncontrolling interests		1,535,562			1,000,000
Total equity		301,554,486			295,477,105
Total Equity		181,642,476			301,554,486
Total liabilities and equity	$	1,700,067,817		$	1,515,324,090
Total liabilities and stockholder’s equity	$	1,696,844,909		$	1,700,067,817

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

LANDRY’S RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended December 31,
	2009			2008			2007
	2010			2009			2008
REVENUES
Restaurant and hospitality	$	~~843~~891,~~462~~713,~~026~~052		$	~~890~~843,~~605~~462,~~419~~026		$	~~894~~890,~~434~~605,~~266~~419
Gaming:
Casino		~~133~~136,~~648~~350,~~248~~891			~~152~~133,~~965~~648,~~231~~248			~~165~~152,~~283~~965,~~475~~231
Rooms		4958,~~195~~338,~~129~~838			6349,~~230~~195,~~271~~129			6563,~~941~~230,~~711~~271
Food and beverage		4346,~~813~~042,~~962~~900			4743,~~734~~813,~~759~~962			4547,~~761~~734,~~100~~759
Other		1516,~~445~~125,~~505~~369			1415,~~370~~445,~~107~~505			14,~~380~~370,~~837~~107
Promotional allowances		(2524,~~330~~773,~~409~~656	)		(25,~~016~~330,~~953~~409	)		(25,~~433~~016,~~137~~953	)
Net gaming revenue		~~216~~232,~~772~~084,~~435~~342			~~253~~216,~~283~~772,~~415~~435			~~265~~253,~~933~~283,~~986~~415
Total revenue		1,~~060~~123,~~234~~797,~~461~~394			1,~~143~~060,~~888~~234,~~834~~461			1,~~160~~143,~~368~~888,~~252~~834
OPERATING COSTS AND EXPENSES:
Restaurant and hospitality:
Cost of revenues		~~205~~216,~~573~~443,~~220~~845			~~230~~205,~~519~~573,~~183~~220			~~241~~230,~~814~~519,~~108~~183
Labor		~~244~~256,~~294~~978,~~936~~596			~~258~~244,~~445~~294,~~355~~936			~~266~~258,~~703~~445,~~093~~355
Other operating expenses		~~200~~227,~~922~~825,~~175~~259			~~220~~200,~~441~~922,~~086~~175			~~213~~220,~~284~~441,~~031~~086
Gaming:
Casino		7071,~~839~~987,~~003~~525			7870,~~259~~839,~~949~~003			8178,~~627~~259,~~956~~949
Rooms		2325,~~395~~217,~~605~~104			2423,~~194~~395,~~522~~605			2324,~~705~~194,~~554~~522
Food and beverage		2426,~~987~~857,~~034~~647			2924,~~112~~987,~~315~~034			29,~~670~~112,~~847~~315
Other		5459,~~059~~485,~~068~~629			5854,~~893~~059,~~485~~068			6658,~~972~~893,~~571~~485
General and administrative expense		4972,~~279~~972,~~435~~442			5149,~~294~~279,~~426~~435			5551,~~755~~294,~~985~~426
Depreciation and amortization		7277,~~037~~616,~~824~~781			7072,~~291~~037,~~482~~824			6570,~~286~~291,~~700~~482
Asset impairment expense		23,~~887~~806,~~842~~778			2,~~408~~887,~~625~~842			—2,408,625
Gain on insurance claims		(41,~~850~~237,~~576~~856	)		—(4,850,576	)		—
Loss (gain) on disposal of assets		(2939,~~098,132~~473	)		(582,~~580~~098,132	)		(1858,~~918,088~~580	)
Pre-opening expenses		1,~~095~~132,~~008~~358			21,~~266~~095,~~004~~008			32,~~476~~266,~~951~~004
Total operating costs and expenses		~~942~~1,~~422~~038,~~442~~146,635			1942,~~026~~422,~~067,852~~442			1,~~029~~026,~~379~~067,~~708~~852
OPERATING INCOME		~~117~~85,~~812~~650,~~019~~759			117,~~820~~812,~~982~~019			~~130~~117,~~988~~820,~~544~~982
OTHER EXPENSE (INCOME):
Interest expense, net		~~150~~118,~~269~~344,~~413~~026			79150,~~817~~269,~~334~~413			7279,~~321~~817,~~952~~334
Other, net		(1525,~~371~~594,~~615~~852	)		17(15,~~034~~371,~~705~~615	)		17,~~119~~034,~~676~~705
Total other expense		~~134~~92,~~897~~749,~~798~~174			96134,~~852~~897,~~039~~798			8996,~~441~~852,~~628~~039
Income (loss) from continuing operations before income taxes		(177,~~085~~098,~~779~~415	)		20(17,~~968~~085,~~943~~779	)		4120,~~546~~968,~~916~~943
Provision (benefit) for income taxes		(91,~~788~~546,~~822~~442	)		7(9,~~226~~788,~~574~~822	)		147,~~237~~226,~~950~~574
Income (loss) from continuing operations		(78,~~296~~644,~~957~~857	)		13(7,~~742~~296,~~369~~957	)		2713,~~308~~742,~~966~~369
Income (loss) from discontinued operations, net of taxes		(~~205~~140,~~966~~733	)		(10205,~~569,067~~966	)		(910,~~626~~569,~~263~~067	)
Net income (loss)		(78,~~502~~785,~~923~~590	)		3(7,~~173~~502,~~302~~923	)		173,~~682~~173,~~703~~302
Less: Net income (loss) attributable to noncontrolling interest		1,009,572			265,115			(429,091	)
Less: Net income attributable to noncontrolling interests		1,023,397			1,009,572			265,115
Net income (loss) attributable to Landry’s		(89,~~512~~808,~~495~~987	)		2(8,~~908~~512,~~187~~495	)		182,~~111~~908,~~794~~187
Less: Accretion of redeemable noncontrolling interest		7,717,334			—			—
Less: Accretion of redeemable noncontrolling interests		—			7,717,334			—
Net income (loss) available to Landry’s common stockholders	$	(16,229,829	)	$	2,908,187		$	18,111,794
Net income (loss) available to Landry’s common stockholder	$	(9,808,987	)	$	(16,229,829	)	$	2,908,187
EARNINGS (LOSS) PER SHARE INFORMATION:
Amounts available to Landry’s common stockholders:
BASIC:
Income (loss) from continuing operations	$	(0.99	)	$	0.84		$	1.41
Income (loss) from discontinued operations		(0.01	)		(0.66	)		(0.49	)
Net income (loss)	$	(1.00	)	$	0.18		$	0.92
Weighted average number of common shares outstanding		16,150,000			16,140,000			19,735,000
DILUTED:
Income (loss) from continuing operations	$	(0.99	)	$	0.82		$	1.37
Income (loss) from discontinued operations		(0.01	)		(0.64	)		(0.47	)
Net income (loss)	$	(1.00	)	$	0.18		$	0.90
Weighted average number of common share and common share equivalents outstanding		16,150,000			16,345,000			20,235,000

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

LANDRY’S RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF ~~CHANGES~~STOCKHOLDER’S IN EQUITY

				Total Equity
				Equity
				Stockholder’s Equity
	RedeemableNoncontrollingInterest			Common Stock							AdditionalPaid-InCapital				RetainedEarnings				AccumulatedOtherComprehensiveIncome (Loss)				NoncontrollingInterest			Total				ComprehensiveIncome (Loss)
	RedeemableNoncontrolling Interest			Common Stock								Additional Paid-In				Retained				Accumulated Other Comprehensive				Noncontrolling								Comprehensive
				Shares			~~Amount~~	Amount				Capital				Earnings				Loss				Interests				Total				Income
BALANCE, December 31, 2006	$	1,755,456		22,132,795			$	221,328			$	331,320,290			$	163,165,845				—			$	1,000,000		$	495,707,463				—
BALANCE, December 31, 2007	$	1,326,365			16,147,745			$	161,478			$	218,350,471			$	114,965,728			$	(16,578,604	)		$	1,000,000			$	317,899,073			$	1,104,099
Cumulative effect of adopting uncertain tax positions		—		—				—				—				(982,880	)			—				—			(982,880	)			—
Net income (loss)		265,115			—				—				—				2,908,187				—				—				2,908,187				3,173,302
Net income (loss)		(429,091	)	—				—				—				18,111,794				—				—			18,111,794				17,682,703
Loss on interest rate swaps, net of tax benefit of $8,886,940		—			—				—				—				—				(27,760,528	)			—				(27,760,528	)			(27,760,528	)
Loss on interest rate swaps, net of tax benefit of $8,886,940		—		—				—				—				—				(16,578,604	)			—			(16,578,604	)			(16,578,604	)
Dividends paid		—			—				—				—				(1,614,370	)			—				—				(1,614,370	)			—
Dividends paid		—		—				—				—				(3,995,295	)			—				—			(3,995,295	)			—
Purchase of common stock held for treasury		—			(3,306	)			(33	)			(28,179	)			(14,837	)			—				—				(43,049	)			—
Purchase of common stock held for treasury		—		(6,317,400	)			(63,174	)			(120,487,247	)			(61,333,736	)			—				—			(181,884,157	)			—
Exercise of stock options		—			3,306				33				21,328				—				—				—				21,361				—
Exercise of stock options		—		228,955				2,290				2,721,122				—				—				—			2,723,412				—
Stock based compensation expense		—			—				—				4,066,431				—				—				—				4,066,431				—
Stock based compensation expense		—		—				—				4,797,340				—				—				—			4,797,340				—
Forfeiture of restricted stock		—			(5,482	)			(55	)			55				—				—				—				—				—
Issuance of restricted stock		—		107,335				1,073				(1,073	)			—				—				—			—				—
BALANCE, December 31, 2008		1,591,480			16,142,263				161,423				222,410,106				116,244,708				(44,339,132	)			1,000,000				295,477,105				(24,587,226	)
Forfeiture of restricted stock		—		(3,940	)			(39	)			39				—				—				—			—				—
Net income (loss)		1,009,572			—				—				—				(8,512,495	)			—				—				(8,512,495	)			(7,502,923	)
BALANCE, December 31, 2007		1,326,365		16,147,745				161,478				218,350,471				114,965,728				(16,578,604	)			1,000,000			317,899,073				1,104,099
Gain on interest rate swaps, net of taxes of $9,340,326		—			—				—				—				—				17,346,320				—				17,346,320				17,346,320
Net income (loss)		265,115		—				—				—				2,908,187				—				—			2,908,187				3,173,302
Accretion of redeemable noncontrolling interest		7,717,334			—				—				—				(7,717,334	)			—				—				(7,717,334	)			—
Loss on interest rate swaps, net of tax benefit of $14,947,977		—		—				—				—				—				(27,760,528	)			—			(27,760,528	)			(27,760,528	)
Issuance of restricted stock		—			3,000				30				(30	)			—				—				—				—				—
Dividends paid		—		—				—				—				(1,614,370	)			—				—			(1,614,370	)			—
Purchase of common stock held for treasury		—			(4,088	)			(41	)			(31,452	)			(16,438	)			—				—				(47,931	)			—
Purchase of common stock held for treasury		—		(3,306	)			(33	)			(28,179	)			(14,837	)			—				—			(43,049	)			—
Exercise of stock options		—			98,816				988				1,520,548				—				—				—				1,521,536				—
Exercise of stock options		—		3,306				33				21,328				—				—				—			21,361				—
Stock based compensation expense		—			—				—				3,487,285				—				—				—				3,487,285				—
Stock based compensation expense		—		—				—				4,066,431				—				—				—			4,066,431				—
Forfeiture of restricted stock		—			(2,140	)			(21	)			21				—				—				—				—				—
Forfeiture of restricted stock		—		(5,482	)			(55	)			55				—				—				—			—				—
BALANCE, December 31, 2009		10,318,386			16,237,851				162,379				227,386,478				99,998,441				(26,992,812	)			1,000,000				301,554,486				9,843,397
BALANCE, December 31, 2008		1,591,480		16,142,263				161,423				222,410,106				116,244,708				(44,339,132	)			1,000,000			295,477,105				(24,587,226	)
Net income (loss)		1,023,397			—				—				—				(9,808,987	)			—				—				(9,808,987	)			(8,785,590	)
Net income (loss)		1,009,572		—				—				—				(8,512,495	)			—				—			(8,512,495	)			(7,502,923	)
Gain on interest rate swaps, net of taxes of $867,520		—			—				—				—				—				1,611,108				—				1,611,108				1,611,108
Gain on interest rate swaps, net of taxes of $9,340,326		—		—				—				—				—				17,346,320				—			17,346,320				17,346,320
Purchase and cancellation of common stock		—			(16,236,851	)			(162,369	)			(179,718,940	)			(43,807	)			—				—				(179,925,116	)			—
Accretion of redeemable noncontrolling interest		7,717,334		—				—				—				(7,717,334	)			—				—			(7,717,334	)			—
Stock based compensation expense		—			—				—				12,146,265				—				—				—				12,146,265				—
Issuance of restricted stock		—		3,000				30				(30	)			—				—				—			—				—
Capital Contribution		—			—				—				55,529,158				—				—				—				55,529,158				—
Purchase of common stock held for treasury		—		(4,088	)			(41	)			(31,452	)			(16,438	)			—				—			(47,931	)			—
Acquisition of Bubba Gump minority interests		—			—				—				—				—				—				535,562				535,562				—
Exercise of stock options		—		98,816				988				1,520,548				—				—				—			1,521,536				—
BALANCE, December 31, 2010	$	11,341,783			1,000			$	10			$	115,342,961			$	90,145,647			$	(25,381,704	)		$	1,535,562			$	181,642,476			$	(7,174,482	)
Stock based compensation expense		—		—				—				3,487,285				—				—				—			3,487,285				—
Forfeiture of restricted stock		—		(2,140	)			(21	)			21				—				—				—			—				—
BALANCE, December 31, 2009	$	10,318,386		16,237,851			$	162,379			$	227,386,478			$	99,998,441			$	(26,992,812	)		$	1,000,000		$	301,554,486			$	9,843,397

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

LANDRY’S RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2009			2008			2007
	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(78,~~502~~785,~~923~~590	)	$	3(7,~~173~~502,~~302~~923	)	$	173,~~682~~173,~~703~~302
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		7277,~~037~~616,~~824~~781			7072,~~866~~037,~~386~~824			6670,~~614~~866,~~904~~386
Asset impairment expense		23,~~887~~806,~~842~~778			122,~~753~~887,~~432~~842			912,~~887~~753,~~752~~432
Deferred tax provision (benefit)		45,~~869~~275,~~622~~718			(34,~~894~~869,~~048~~622	)		4(3,~~052~~894,~~865~~048	)
Stock-based compensation expense		312,~~487~~146,~~285~~265			43,~~066~~487,~~431~~285			4,~~797~~066,~~340~~431
Amortization of debt issuance costs		208,~~186~~189,~~009~~420			520,~~501~~186,~~857~~009			115,~~535~~501,~~268~~857
Amortization of debt discounts		371,~~522~~461,~~097~~810			—37,522,097			—
Gain on sale of marketable securities		—			—			(1,278,204	)
Gain on business acquisition		(5,926,958	)		—			—
Gain on disposition of assets		(2,098,132	)		(316,537	)		(18,918,416	)
Gain on repurchase of debt		(32,998,237	)		(19,406,543	)		—
Gain on insurance claims		(4,850,576	)		—			—
Gain on disposition of assets		(939,473	)		(2,098,132	)		(316,537	)
Gain on repurchase of debt		(19,406,543	)		—			—
Gain on insurance claims		(1,237,856	)		(4,850,576	)		—
Non-cash (gain) loss on interest rate swaps		(112,~~179~~687,~~127~~637	)		14(1,~~293~~179,~~790~~127	)		514,~~374~~293,~~868~~790
Deferred rent and other charges (income), net		1(195,~~083,210~~546	)		21,~~432~~083,~~438~~210			~~521~~2,~~699~~432,438
Changes in assets and liabilities:
Changes in assets and liabilities, net of acquisitions:
(Increase) decrease in trade and other receivables		~~(11~~3,~~377~~986,~~075~~811	)		6(11,~~339~~377,~~551~~075	)		26,~~234~~339,~~777~~551
(Increase) decrease in inventories		(1379,~~397,402~~444	)		9(1,~~343~~397,~~617~~402	)		49,~~941~~343,~~143~~617
(Increase) decrease in other assets		(2979,~~873,532~~045	)		6(2,~~956~~873,~~211~~532	)		(46,~~382~~956,~~369~~211	)
Increase (decrease) in accounts payable and accrued liabilities and other		(18,970,874	)		(15,780,344	)		6,430,482
Increase (decrease) in accounts payable and accrued liabilities		865,929			(18,970,874	)		(15,780,344	)
Total adjustments		7986,~~920~~097,~~628~~568			~~112~~79,~~562~~920,~~784~~628			91112,~~812~~562,~~109~~784
Net cash provided by operating activities		7277,~~417~~311,~~705~~978			~~115~~72,~~736~~417,~~086~~705			~~109~~115,~~494~~736,~~812~~086
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions and other		(~~160~~50,~~699~~898,~~739~~470	)		(~~116~~160,~~078~~699,~~791~~739	)		(~~130~~116,~~538~~078,~~954~~791	)
Proceeds from disposition of property and equipment		115,~~368~~990,~~079~~571			3611,~~136~~368,~~768~~079			4736,~~408~~136,~~833~~768
Increase in restricted cash and cash equivalents		(73,076,532	)		—			—
Decrease (increase) in restricted cash and cash equivalents		73,076,532			(73,076,532	)		—
Purchase of marketable securities		—			—			(5,331,308	)
Business acquisitions, net of cash acquired		(135,307,092	)		—			—
Proceeds from the sale of securities		—			—			6,609,512
Net cash used in investing activities		(107,138,459	)		(222,408,192	)		(79,942,023	)
Net cash used in investing activities		(222,408,192	)		(79,942,023	)		(81,851,917	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of common stock for treasury		(47,931	)		(43,049	)		(181,884,157	)
Purchases of common stock		(179,925,116	)		(47,931	)		(43,049	)
Proceeds from exercise of stock options		~~1,521,536~~—			211,~~361~~521,536			221,~~723,412~~361
Proceeds from debt issuance		~~790~~182,~~145~~917,~~755~~500			39790,~~515~~145,~~152~~755			~~375~~39,~~000~~515,~~000~~152
Payments of debt		(714,557,406	)		(256,014	)		(193,217,934	)
Payments of debt and related expenses, net		(46,730,227	)		(714,557,406	)		(256,014	)
Debt issuance costs		(3611,~~661~~884,~~793~~178	)		(536,~~134~~661,~~387~~793	)		(155,~~362~~134,~~308~~387	)
Proceeds from credit facility		~~365~~230,~~248~~180,~~892~~212			~~343~~365,~~182~~248,~~803~~892			~~258~~343,~~815~~182,~~778~~803
Payments on credit facility		(~~235~~249,~~141~~161,~~049~~759	)		(~~400~~235,~~000~~141,~~000~~049	)		(~~261~~400,~~390~~000,~~087~~000	)
Dividends paid		—			(1,614,370	)		(3,995,295	)
Capital contribution		55,529,158			—			—
Net cash (used in) provided by financing activities		170,508,004			(24,328,504	)		(19,310,591	)
Dividends paid		—			—			(1,614,370	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		20,517,517			11,465,559			8,332,304
Net cash (used in) provided by financing activities		(19,074,410	)		170,508,004			(24,328,504	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		51,066,805			39,601,246			31,268,942
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(48,900,891	)		20,517,517			11,465,559
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	71,584,322		$	51,066,805		$	39,601,246
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		71,584,322			51,066,805			39,601,246
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	22,683,431		$	71,584,322		$	51,066,805
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	~~101~~110,~~666~~424,~~173~~267		$	79101,~~168~~666,~~034~~173		$	6879,~~943~~168,~~347~~034
Income taxes	$	3(12,~~069~~062,~~116~~299	)	$	(13,~~984~~069,~~133~~116	)	$	10(1,~~241~~984,~~380~~133	)
Non-cash investing activities:
Property and equipment additions in accounts payable	$	172,~~175~~209,~~546~~955		$	2417,~~656~~175,~~668~~546		$	1724,~~737~~656,~~948~~668

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

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

We are a national, diversified, restaurant, hospitality and entertainment company principally engaged in the ownership and operation of full service, casual dining restaurants, primarily under the names Landry’s Seafood House, Rainforest Café, Charley’s Crab, The Chart House, ~~and~~ Saltgrass Steak House., InThe ~~addition,~~Oceanaire weSeafood ~~own~~Room, and ~~operate domestic~~Bubba ~~and~~Gump ~~license~~Shrimp ~~international~~Company. ~~rainforest~~In ~~themed~~addition, we license international restaurants under the trade ~~name~~ names Rainforest ~~Cafe~~Café and Bubba Gump Shrimp Company.

On September 27, 2005, Landry’s Gaming Inc., an unrestricted subsidiary of Landry’s Restaurants, Inc., completed the acquisition of Golden Nugget, Inc. (GN, formerly Poster Financial Group, Inc.), owner of the Golden Nugget Hotels and Casinos in downtown Las Vegas and Laughlin, Nevada.

On October 6, 2010, we completed a merger under which Mr. Tilman J. Fertitta, our Chairman and Chief Executive Officer, acquired all of our outstanding common stock for $24.50 per share in cash. This acquisition of our common stock and related transactions are referred to in this report as the Going Private Transaction. Our board of directors, on the unanimous recommendation of a special committee composed entirely of non-employee directors, approved the agreement and recommended that our stockholders approve the merger. Our stockholders, including those stockholders holding a majority of the common stock not held by Mr. Fertitta, voted to approve the merger agreement at a special meeting held on October 4, 2010.

Discontinued Operations

During 2006 as part of a strategic review of our operations, we initiated a plan to divest certain restaurants, including 136 Joe’s Crab Shack units. Subsequently, several additional locations were added to our disposal plan. The results of operations, assets and liabilities for all units included in the disposal plan have been reclassified to discontinued operations in the statements of income, balance sheets and segment information for all periods presented.

Principles of Consolidation

The accompanying financial statements include the consolidated accounts of Landry’s Restaurants, Inc., a Delaware holding company, and it’s wholly and majority owned subsidiaries and partnerships. All significant inter-company accounts and transactions have been eliminated in consolidation.

Revenue Recognition

Restaurant and hospitality revenues are recognized when the goods and services are delivered. Casino revenue is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs (“casino front money”) and for chips in the customers possession (“outstanding chip liability”). Revenues are recognized net of certain sales incentives as well as accruals for the cost of points earned in point-loyalty programs. The retail value of accommodations, food and beverage, and other services furnished to hotel-casino guests without charge is deducted from revenue as promotional allowances. Proceeds from the sale of gift cards are deferred and recognized as revenue when redeemed by the holder.

Sales Taxes

Except for gross receipts tax on liquor sales in certain jurisdictions, our policy is to present sales taxes net. The tax amounts included in revenues and expenses are not significant.

Accounts Receivable

Accounts receivable is comprised primarily of amounts due from our credit card processor, receivables from national storage and distribution companies and, casino and hotel receivables. The receivables from national storage and distribution companies arise when certain of our inventory items are conveyed to these companies at cost (including freight and holding charges but without any general overhead costs). These conveyance transactions do not impact the consolidated statements of income as there is no revenue or expenses recognized in the financial statements since they are without economic substance other than drayage. We reacquire these items, although not obligated to, when subsequently delivered to the restaurants at cost plus the distribution company’s contractual mark-up. Accounts receivable are reduced to reflect estimated realizable values by an allowance for doubtful accounts based on historical collection experience and specific review of individual accounts. Receivables are written off when they are deemed to be uncollectible. The allowance for doubtful accounts totaled $1.6 million and $2.0 million as of December 31, 2010 and 2009, respectively.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

in the financial statements since they are without economic substance other than drayage. We reacquire these items, although not obligated to, when subsequently delivered to the restaurants at cost plus the distribution company’s contractual mark-up. Accounts receivable are reduced to reflect estimated realizable values by an allowance for doubtful accounts based on historical collection experience and specific review of individual accounts. Receivables are written off when they are deemed to be uncollectible. The allowance for doubtful accounts totaled $2.0 million and $1.8 million as of December 31, 2009 and 2008, respectively.

Inventories

Inventories consist primarily 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 consist of the following:

	December 31,
	2009		2008
	2010			2009
Food, beverage and supplies	$	1217,~~620~~545,~~509~~092	$	~~12,167,787~~$	12,620,509
Retail goods		1418,~~937~~017,~~985~~362		~~13,993,305~~	14,937,985
	$	2735,~~558~~562,~~494~~454	$	~~26,161,092~~$	27,558,494

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.

We compute depreciation using the straight-line method. The estimated lives used in computing depreciation are generally as follows: buildings and improvements—5 to 40 years; furniture, fixtures and equipment—5 to 15 years; and leasehold improvements—shorter of 40 years or lease term, including ~~extensions~~option periods where such are reasonably assured of renewal.

Leasehold improvements are depreciated over the shorter of the estimated life of the asset or the lease term plus option periods where failure to renew results in economic penalty. Any contributions made by landlords or tenant allowances with economic value are recorded as a long-term liability and amortized as a reduction to rent expense over the life of the lease plus option periods where failure to renew results in economic penalty.

Interest is capitalized in connection with 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 ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008, we capitalized interest expense of approximately $80.25 million, $38.12 million and $3.61 million, respectively.

Our properties are reviewed for impairment on a property by property basis 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 using Level 3 measurements. Properties to be disposed of are reported at the lower of their carrying amount or fair value determined by management’s estimates of expected proceeds supplemented by third party offers or sales contracts, reduced for estimated disposal costs, and amounted to $1.5 million and $2.5 million as of December 31, 2010 and 2009, ~~included~~respectively, included in assets related to discontinued operations and $0.7 million as of both December 31, 2010 and 2009, included in other current assets on our consolidated balance sheets.

Non-recurring fair value measurements related to impaired property and equipment consisted of the following:


Description	Year Ended December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
Long-lived assets held and used	$	568,976	$	—	$	—	$	568,976	$	(3,806,778	)

									$	(3,806,778	)

Description	Year Ended December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
Long-lived assets held and used	$	—	$	—	$	—	$	—	$	(2,760,805	)
Long-lived assets held for sale	$	739,639	$	—	$	—	$	739,639		(127,037	)

									$	(2,887,842	)

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Non-recurring fair value measurements related to impaired property and equipment consisted of the following:

Description	Year EndedDecember 31, 2009		Quoted Prices inActive Marketsfor Identical Assets(Level 1)		Significant OtherObservable Inputs(Level 2)		SignificantUnobservableInputs(Level 3)		TotalImpairments
Long-lived assets held and used	$	—	$	—	$	—	$	—	$	(2,760,805	)
Long-lived assets held for sale	$	739,639	$	—	$	—	$	739,639		(127,037	)
									$	(2,887,842	)
Description	Year EndedDecember 31, 2008		Quoted Prices inActive Marketsfor Identical Assets(Level 1)		Significant OtherObservable Inputs(Level 2)		SignificantUnobservableInputs(Level 3)		TotalImpairments
Long-lived assets held and used	$	2,737,793	$	—	$	—	$	2,737,793	$	(3,214,625	)
Long-lived assets related to discontinued operations	$	—	$	—	$	—	$	—		(10,344,807	)
									$	(13,559,432	)

Software

Software, including capitalized implementation costs, is stated at cost, less accumulated amortization and is included in other assets in our consolidated balance sheets. Amortization expense is provided on the straight-line basis over estimated useful lives, which do not exceed 10 years.

Pre-Opening Costs

Pre-opening costs are expensed as incurred and include the direct and incremental costs incurred in connection with the commencement of each restaurant’s operations, which are substantially comprised of rent expense and training-related costs.

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 related indirect costs of the construction department, 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, projects, and general site selection costs which cannot be identified with specific restaurants are expensed.

Comprehensive Income (Loss)

Comprehensive income (loss) includes only comprehensive income (loss) attributable Landry’s stockholder’s. Income (loss) attributable to noncontrolling interests are shown separately in the Statement of Changes in Equity.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Advertising

Advertising costs are expensed as incurred during such year. Advertising expenses were $12.47 million, $1112.94 million and $11.9 million, in ~~2009~~ 2010, ~~2008~~2009 and ~~2007~~2008, respectively.

Loyalty Program

We have a loyalty program called the Landry’s Select Club, that allows participants to earn points when they dine in our restaurants. These points may be converted into rewards that are redeemable at any of our restaurant locations. We estimate the cost of redemption and accrue a redemption liability as points are earned under this program.

Goodwill and Other Intangible Assets

Goodwill and trademarks are not amortized, but instead tested for impairment at least annually. Other intangible assets are amortized over their expected useful life or the life of the related agreement.

The goodwill impairment test involves a two-step process. The first step is a comparison of each reporting unit’s fair value to its carrying value. We estimate fair value using both market information and discounted cash flow projections also referred to as the income approach. The income approach uses a reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs and number of units, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. We validate our estimates of fair value under the income approach by comparing the values to fair value estimates using a market approach. A market approach estimates fair value by applying cash flow multiples to the reporting unit’s operating performance. The multiples are derived from comparable publicly traded companies. If the carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss.

At December 31, ~~2009~~2010, ~~two~~three reporting units had goodwill;: Saltgrass Steakhouse, ~~and~~ Landry’s ~~divisions. As part of our process for performing the step one impairment test of goodwill, we estimated~~ ~~the~~and ~~fair~~Bubba ~~value~~Gump ~~of all of our reporting units utilizing the income approach described above to derive an enterprise value of the Company~~divisions. ~~We reconciled the enterprise value to our overall estimated market capitalization.~~ The ~~estimated~~provisional ~~market capitalization~~goodwill ~~considers~~associated ~~recent~~with ~~trends in our market capitalization and an expected control premium. Based on~~ the ~~results~~acquisition of ~~the~~Bubba ~~step~~Gump ~~one~~on ~~impairment test~~December 20, ~~step~~2010 ~~two~~(see Note 2) was not ~~required~~tested asfor an impairment ~~was not identified~~.

The fair value of other indefinite-lived intangible assets, primarily trademarks, are estimated and compared to their carrying value. We estimate the fair value of these intangible assets using the relief-from-royalty method, which requires assumptions related to projected revenues from our annual long-range plan; assumed royalty rates that could be payable if we did not own the trademarks; and a discount rate. We recognize an impairment loss when the estimated fair value of the indefinite-lived intangible asset is less than its carrying value. We completed our impairment test of our indefinite-lived intangibles and concluded there was no impairment at December 31, ~~2009~~2010.

59 Even though we determined that there was no goodwill or indefinite-lived intangible asset impairment as of December 31, 2010, declines in sales at our restaurants, changes in circumstances existing at the measurement date or at other times in the future, or in the numerous estimates associated with management’s judgments, assumptions and estimates made in assessing the fair value of our goodwill and significant adverse changes in the operating environment for the restaurant industry may result in a future impairment charge.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Even though we determined that there was no goodwill or indefinite-lived intangible asset impairment as of December 31, 2009, declines in the value of our stock price as well as values of others in the restaurant industry, declines in sales at our restaurants beyond our current forecasts, changes in circumstances, existing at the measurement date or at other times in the future, or in the numerous estimates associated with management’s judgments, assumptions and estimates made in assessing the fair value of our goodwill and significant adverse changes in the operating environment for the restaurant industry may result in a future impairment charge.


	December 31,
	2010		2009
Intangible assets subject to amortization:
Customer lists	$	3,400,000	$	3,400,000

Accumulated amortization:
Customer lists		1,788,778		1,448,778

Net intangible assets subject to amortization		1,611,222		1,951,222
Indefinite lived intangible assets :
Goodwill		56,709,747		18,527,547
Trademarks		43,339,651		36,768,103

		100,049,398		55,295,650

Total	$	101,660,620	$	57,246,872

	December 31,
	2009		2008
Intangible assets subject to amortization:
Customer lists	$	3,400,000	$	3,400,000
Other		675,000		675,000
		4,075,000		4,075,000
Accumulated amortization:
Customer lists		1,448,778		1,108,778
Other		675,000		661,805
		2,123,778		1,770,583
Net intangible assets subject to amortization		1,951,222		2,304,417
Indefinite lived intangible assets :
Goodwill		18,527,547		18,527,547
Trademarks		36,768,103		36,568,456
		55,295,650		55,096,003
Total	$	57,246,872	$	57,400,420

Amortization expense relating to intangibles was $0.3 million for the year ended December 31, 2010 and $0.4 million for each of the years ended December 31, 2009 and 2008.

Amortization expense relating to intangibles was $0.4 million for each of the years ended December 31, 2009, 2008 and 2007.

Deferred Rent

Rent expense under operating leases is calculated using the straight-line method whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. Rent expense generally begins on the date we obtained possession under the lease and includes option periods where failure to renew results in economic penalty. Generally, this results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years.

The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in other long term liabilities.

Insurance

We maintain large deductible insurance policies related to property, general liability and workers’ compensation coverage. Predetermined loss limits have been arranged with insurance companies to limit our per occurrence cash outlay. Accrued liabilities include the estimated costs to settle unpaid claims and estimated incurred but not reported claims using actuarial methodologies.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Instruments

Generally ~~Accepted~~accepted ~~Accounting~~accounting ~~Principles~~principles in the United States of American (U.S. GAAP) establishes a hierarchy for fair value measurements, such that Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market, Level 2 measurements include quoted market prices for identical assets or liabilities in an active market which have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets, and Level 3 measurements include those that are unobservable and of a highly subjective measure.

Our financial assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, ~~2009~~2010, consist of interest rate swaps (Note 7), for which the lowest level of input significant to their fair value measurement is Level 2. As of December 31, ~~2009~~2010, the fair value of the interest rate swap liabilities totaled $6070.02 million, of which $4139.50 million are designated and qualify as hedges and the remaining $1831.52 million do not qualify as hedges. These amounts, net of taxes, are recorded as other long term liabilities in our consolidated balance sheets. In connection with a non-qualified deferred compensation plan, we use a Rabbi Trust to fund obligations of the plan. The market value of the trust assets as of December 31, ~~2009~~2010 and ~~2008~~2009 was $4.04 million and $34.50 million respectively, as determined using Level 1 inputs, and is included in other assets, net and the liability to plan participants is included in other liabilities in our consolidated balance sheets.

~~The~~59 fair values of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate the carrying amounts due to their short maturities. The fair value of our long-term debt instruments are estimated based on quoted market prices, where available, or on the amount of future cash flows associated with each instrument, discounted using our current borrowing rate for comparable debt instruments. The estimated fair values of our significant long-term debt, including the current portions, are as follows:

	December 31,
	2009				2008
	Carrying Value		Fair Value		Carrying Value		Fair Value
11 5/8% Senior Notes due December 2015	$	400,168,809	$	424,178,938	$	—	$	—
9.5% Senior Notes due December 2014		735,000		665,175		395,662,000		367,965,660
7.5% Senior Notes due December 2014		783,000		588,973		4,338,000		3,261,482
Libor + 2.0% First Lien Term Loan due June 2014		325,495,365		225,202,106		249,515,152		72,359,394
Libor + 3.25% Second Lien Term Loan due November 2014		131,817,628		53,386,139		165,000,000		17,325,000
Libor + 6.0% Term Loan due November 2013		153,014,556		154,735,970		30,015,514		30,015,514
Libor + 2.0% Revolving credit facility due June 2013		44,755,040		30,964,893		8,000,000		2,320,000
Libor + 2.0% Revolving credit facility due November 2013		24,000,000		24,270,000		4,182,803		4,182,803
7.0% Seller note due November 2014		4,000,000		4,033,937		4,000,000		2,899,151
9.39% non-recourse note payable due May 2010		10,170,682		10,471,319		10,411,034		10,403,241
	$	1,094,940,080	$	928,497,450	$	871,124,503	$	510,732,245

GAAP requires that each derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or a liability and measured at its fair value. These

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~guidelines~~The ~~also require that changes in the derivative’s~~ fair ~~value~~values beof ~~recognized~~cash ~~currently~~and incash ~~earnings~~equivalents, inaccounts ~~either~~receivable, ~~income~~accounts ~~(loss)~~payable ~~from continuing operations or accumulated other comprehensive~~and ~~income~~accrued ~~(loss),~~liabilities ~~depending~~approximate ~~on whether~~ the ~~derivative~~carrying ~~qualifies~~amounts ~~for~~due ~~fair~~to ~~value~~their orshort ~~cash flow accounting treatment~~maturities. WeThe ~~utilize~~fair ~~interest~~value ~~rate~~of ~~swap~~our ~~agreements~~long-term todebt ~~manage~~instruments ~~our~~are ~~exposure~~estimated tobased ~~interest~~on ~~rate~~quoted ~~risk.~~market ~~During 2007~~prices, wewhere ~~entered~~available, ~~into~~or ~~additional~~on ~~interest rate~~the ~~swap~~amount ~~agreements, some~~ of ~~which~~future ~~qualify as~~ cash ~~flow~~flows ~~hedges.~~associated Aswith each ~~such~~instrument, ~~any~~discounted ~~changes~~using inour ~~the~~current ~~fair~~borrowing ~~value~~rate offor ~~these~~comparable ~~hedges~~debt ~~that are considered highly effective, are recognized in other comprehensive income (loss)~~instruments. The ~~remaining~~estimated ~~swaps~~fair ~~have~~values ~~not~~of ~~been designated~~our assignificant ~~hedges.~~long-term ~~See~~debt, ~~Note~~including 7the ~~for~~current aportions, ~~detailed~~are ~~discussion~~as offollows: ~~our hedging activities.~~

Cash Equivalents and Restricted Cash


	December 31,
	2010				2009
	Carrying Value		Fair Value		Carrying Value		Fair Value
Libor + 3.0% (1.0% PIK) Revolving credit facility due June 2013	$	41,218,414	$	33,799,099	$	44,755,040	$	30,964,893
Libor + 4.5% (1.75% floor) Revolving credit facility due December 2014		5,695,020		5,737,733		24,000,000		24,270,000
Libor + 4.5% (1.75% floor) Term Loan due December 2014		183,889,950		187,931,494		153,014,556		154,735,970
Libor + 3.0% (1.0% PIK) First Lien Term Loan due June 2014		325,066,207		266,554,290		325,495,365		225,202,106
Libor + 3.25% Second Lien Term Loan due November 2014		68,987,232		35,183,488		131,817,628		53,386,139
7.0% Seller note due November 2014		4,000,000		3,743,545		4,000,000		4,033,937
9.5% Senior Notes due December 2014		691,000		677,180		735,000		665,175
7.5% Senior Notes due December 2014		783,000		783,000		783,000		588,973
11 5/8% Senior Notes due December 2015		541,205,225		575,632,500		400,168,809		424,178,938
11.39% non-recourse note payable due May 2025		9,073,331		13,432,272		10,170,682		10,471,319
Hong Kong Interbank Offered Rate + 1.65% Line of credit due July 2011		520,000		520,000		—		—
8.15% Term loan due April 2013		631,257		631,257		—		—

	$	1,181,760,636	$	1,124,625,858	$	1,094,940,080	$	928,497,450

WeU.S. ~~consider~~GAAP ~~investments~~requires ~~with~~that aeach ~~maturity~~derivative ofinstrument ~~three~~(including ~~months~~certain orderivative ~~less~~instruments ~~when~~embedded ~~purchased~~in other tocontracts) be ~~cash~~recorded ~~equivalents.~~in ~~We maintain~~the ~~balances~~balance atsheet ~~financial~~as ~~institutions~~either ~~which~~an ~~may~~asset ~~exceed~~or ~~Federal~~a ~~Deposit~~liability ~~Insurance~~and ~~Corporation~~measured ~~limits~~at its fair value. WeThese ~~have~~guidelines ~~not~~also ~~experienced~~require ~~any~~that ~~losses~~changes in ~~such~~the ~~accounts~~derivative’s ~~and~~fair ~~believe~~value webe ~~are~~recognized ~~not~~currently ~~exposed~~in toearnings ~~any~~in ~~significant~~either ~~risks~~income (loss) onfrom ~~our~~continuing ~~cash~~operations or accumulated other ~~investments~~comprehensive income (loss), depending on whether the derivative qualifies for fair value or cash flow accounting treatment. We utilize interest rate swap agreements to manage our exposure to ininterest ~~bank~~rate ~~accounts~~risk. AsDuring ~~described~~2007, inwe ~~Note~~entered 7into additional interest rate swap agreements, ~~certain~~some of which qualify as cash ~~balances~~flow athedges. ~~December~~As 31such, ~~2009~~any changes in the fair value of these hedges are ~~restricted~~recognized in other comprehensive income (loss). The remaining swaps have not been designated as hedges. See Note 7 for a detailed discussion of our hedging activities.

Cash Equivalents

We consider investments with a maturity of three months or less when purchased to be cash equivalents. We maintain balances at financial institutions which may exceed Federal Deposit Insurance Corporation limits. We have not experienced any losses in such accounts and believe we are not exposed to any significant risks on our cash or other investments in bank accounts.

Income Taxes

We follow the liability method of accounting for income taxes ~~in accordance with GAAP~~. Under this method, deferred income taxes are recorded based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the underlying assets are realized or liabilities are settled. A valuation allowance reduces deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized.

Effective January 1, 2007, we adopted FASB accounting guidance which clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. The guidance prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order to be recognized in the financial statements. Accordingly, we report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. See Note 109 for additional information.

Earnings Per Share

We include our unvested participating securities in determining weighted-average common shares outstanding in the calculation of basic earnings per common share.

Share-based Compensation

We record compensation expense ~~for~~over ~~all~~the vesting ~~stock~~period ~~option~~for ~~awards~~stock ~~granted~~based compensation based on the grant date fair value.

Redeemable Noncontrolling Interest

We have accreted the adjustments to the ~~fair~~redempton value of our redeemable noncontrolling interest through the earliest date of redemption. As described in Note 114, we have a noncontrolling interest that includes a redemption provision that is not solely within our control, commonly referred to as redeemable noncontrolling interest. Accounting guidance requires that ~~noncontrolling~~ noncontrolling interests that are redeemable at the option of the holder be recorded outside of permanent equity ~~at fair value~~, and the redeemable noncontrolling interests should be adjusted to their ~~fair~~redemption value at each balance sheet date through retained earnings.

62Use 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.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Use~~Recently ofAdopted ~~Estimates~~Accounting Standards

~~The~~In ~~preparation~~June of2009, ~~financial~~the ~~statements~~Financial inAccounting ~~conformity~~Standards ~~with~~Board ~~accounting~~(FASB) ~~principles~~issued ~~generally~~new ~~accepted~~accounting inguidance ~~the~~on ~~United~~accounting ~~States~~for ~~requires~~transfers ~~management~~of financial toassets ~~make~~which ~~estimates~~removes ~~and~~the ~~assumptions~~concept ~~that~~of ~~affect~~a ~~the~~qualifying ~~reported~~special-purpose ~~amounts~~entity of(QSPE) ~~assets~~ and ~~liabilities~~clarifies the requirements for isolation and ~~disclosures~~limitations on portions of ~~contingent~~financial assets ~~and~~that ~~liabilities~~are ateligible ~~the~~for ~~date~~sale ofaccounting. We adopted the ~~financial~~new ~~statements~~accounting ~~and~~guidance beginning ~~the~~January 1, ~~reported~~2010. ~~amounts~~This ofnew ~~revenues~~accounting ~~and~~guidance ~~expenses~~did ~~during~~not ~~the reporting~~impact ~~period.~~our ~~Actual~~financial ~~results~~position, ~~may~~cash ~~differ~~flows ~~from~~or ~~those~~results ~~estimates~~of operations.

~~Reclassifications~~In June 2009, the FASB issued new accounting guidance which revises the approach to determining the primary beneficiary of a variable interest entity (VIE) to be more qualitative in nature and requires companies to more frequently reassess whether they must consolidate a VIE. We adopted the new accounting guidance beginning January 1, 2010. This new accounting guidance did not impact our financial position, cash flows or results of operations.

~~Certain~~In ~~prior~~July ~~year~~2010, ~~amounts~~the ~~have~~FASB ~~been~~issued ~~reclassified~~Accounting toStandards ~~conform~~Update toNo. 2010-20, Receivables (Topic 310): Disclosures about the ~~current~~Credit ~~year~~Quality ~~presentation~~of Financing Receivables and the Allowance for Credit Losses (“ASU 2010-20”). This ASU requires enhanced disclosures with disaggregated information regarding the credit quality of an entity’s financing receivables and its allowance for credit losses. The update also requires disclosure of credit quality indicators, past due information, and modifications of financing receivables. This ASU is effective for interim and annual reporting periods ending after December 15, 2010. We adopted this ASU beginning with our annual reporting period ended December 31, 2010. This new accounting guidance did not impact our financial position, cash flows or results of operations.

~~Recent~~In ~~Accounting~~January ~~Pronouncements~~2010, the FASB issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements, including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. We adopted the new accounting guidance beginning January 1, 2010. This update had no impact on our financial position, cash flows or results of operations.

In61 December 2007, the FASB issued new accounting guidance on business combinations which expands the use of the acquisition method of accounting used in business combinations to all transactions and other events in which one entity obtains control over one or more other businesses or assets. This new accounting guidance requires measurement at the acquisition date of the fair value of assets acquired, liabilities assumed and any non-controlling interest. Additionally, the guidance requires that acquisition-related costs, including restructuring costs, be recognized as expense separately from the acquisition. This new accounting guidance applies prospectively to business combinations for which the acquisition date is on or after the first fiscal period beginning on or after December 15, 2008. The implementation of this guidance will affect our consolidated financial statements only to the extent we complete business combinations in the future.

In December 2007, the FASB issued new accounting guidance on non-controlling interests in consolidated financial statements. This new guidance applies to the accounting for non-controlling interests (previously referred to as minority interest) in a subsidiary and for the deconsolidation of a subsidiary. We adopted the new accounting guidance on January 1, 2009.

In March 2008, the FASB issued new accounting guidance requiring expanded quarterly disclosure requirements about an entity’s derivative instruments and hedging activities. The new accounting guidance is effective for fiscal years beginning after November 15, 2008. We adopted the guidance on January 1, 2009 and have included the required expanded disclosures within this report.

In April 2008, the FASB issued new accounting guidance on determining the useful life of intangible assets which removed the requirement for an entity to consider, when determining the useful life of an acquired intangible asset, whether the intangible asset can be renewed without substantial cost or material modification to the existing terms and conditions associated with the intangible asset. The new guidance replaces the previous useful life assessment criteria with a requirement that an entity considers its own experience in renewing similar arrangements. If the entity has no relevant experience, it would consider market participant assumptions regarding renewal. This new accounting guidance is being applied prospectively beginning January 1, 2009, and the adoption has not had a material impact on our consolidated financial statements.

In June 2008, the FASB issued new accounting guidance on determining whether instruments granted in share-based payment transactions are participating securities. In accordance with the new guidance, unvested equity-based awards that contain non-forfeitable rights to dividends are considered to participate with common shareholders in undistributed earnings. As a result, our unvested awards of restricted stock are required to be included in the calculation of basic earnings per common share. These participating securities, prior to application of the new accounting guidance, were excluded from weighted-average common shares outstanding

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~in the calculation of basic earnings per common share~~2. ~~We applied the provisions of the new accounting guidance beginning on January~~ 1,ACQUISITIONS 2009, and have calculated and presented basic earnings per common share on this basis for all periods presented. The impact of the inclusion of participating securities in the calculation of basic earnings per common share for prior periods was not material.

InOceanaire ~~April~~Acquisition 2009, the FASB issued new accounting guidance on interim disclosures about fair value of financial instruments. This new accounting guidance was effective for our reporting periods beginning with our June 30, 2009 interim financial statements. The new accounting guidance expanded the previous disclosure requirements about how an entity reports on fair value to be included in the summarized, interim financial statements. This new accounting guidance did not impact our consolidated financial position, cash flows or results of operations, and we have included the required disclosures within these December 31, 2009 financial statements.

InOn April 30, ~~2009~~2010, ~~the~~we ~~FASB~~completed ~~issued~~the ~~new~~acquisition of ~~accounting~~all ~~guidance on~~ the ~~recognition~~capital ~~and~~stock ~~presentation~~ of ~~other-than~~ ~~temporary~~The ~~impairments~~Oceanaire, ~~which~~Inc. ~~provides~~(Oceanaire), ~~guidance~~and ~~for~~all ~~measuring~~of ~~and~~its ~~expands~~subsidiaries ~~the~~in ~~presentation~~accordance ~~and~~with ~~disclosure~~a ~~requirements~~plan of ~~other-than-temporary~~reorganization ~~impairments~~submitted onby ~~debt~~the ~~and~~unsecured ~~equity~~creditors ~~securities~~of Oceanaire in ~~interim~~a ~~and~~U.S. ~~annual~~Bankruptcy ~~financial~~court ~~statements~~for $23.4 Asmillion wein cash, plus the ~~currently~~assumption doof ~~not~~certain ~~own~~additional ~~any~~working ~~debt~~capital orliabilities. ~~equity~~The ~~securities~~acquisition of Oceanaire, ~~this~~a ~~new~~seafood ~~accounting~~restaurant ~~guidance~~company ~~did~~with ~~not~~12 ~~impact~~locations, provides additional growth within our ~~financial~~high ~~position~~end seafood line, ~~cash~~as ~~flows~~well oras ~~results~~a ofknown ~~operations~~brand with several excellent locations.

InA ~~April~~summary ~~2009, the FASB issued new accounting guidance on the estimation~~ of ~~fair~~assets ~~value~~acquired ~~when the volume~~ and ~~level of activity for assets or~~ liabilities ~~have~~assumed ~~significantly decreased, the identification of transactions that are not orderly, and the use of judgment~~ in ~~evaluating~~ the ~~relevance~~acquisition ofis ~~inputs~~set ~~such~~forth asbelow: transaction prices. This new accounting guidance became effective with our second quarter of 2009 interim financial statements. The implementation of this new accounting guidance did not significantly change our valuation or disclosure of financial and nonfinancial assets and liabilities.

In April 2009, the FASB issued new accounting guidance on accounting for assets acquired and liabilities assumed in a business combination. This new accounting guidance, which became effective for business combinations having an acquisition date on or after January 1, 2009, requires an asset or liability arising from a contingency in a business combination to be recognized at fair value if fair value can be reasonably determined. If it cannot, the asset or liability must be recognized in accordance with accounting guidance related to accounting for contingencies and reasonably estimating the amount of a loss. The implementation of this guidance will affect our consolidated financial statements only to the extent we complete business combinations in the future.


Estimated fair value of assets acquired
Current assets	$	3,675,997
Property and equipment		24,516,828
Other long term assets		11,146,898

Total assets acquired		39,339,723

Estimated fair value of liabilities assumed
Current liabilities		(5,777,222	)
Other long term liabilities		(4,223,370	)

Total liabilities assumed		(10,000,592	)

Gain on purchase		(5,926,958	)
Allocated purchase price		23,412,173
Less: Cash acquired		(1,369,051	)

Net cash paid	$	22,043,122

InBased ~~May 2009,~~on the ~~FASB~~purchase ~~issued new~~price ~~accounting~~allocation ~~guidance~~it onwas ~~subsequent~~determined ~~events.~~that ~~This~~the ~~new~~fair ~~guidance~~values ~~establishes~~of ~~general~~the ~~standards~~net ofassets ~~accounting~~acquired exceeded ~~for,~~the ~~and~~purchase ~~disclosure~~price ofby $5.9 million, ~~events~~which ~~that~~we ~~occur~~have ~~after~~recorded ~~the~~as ~~balance~~a ~~sheet~~bargain ~~date~~purchase ~~but~~gain ~~before~~included ~~financial~~in other, net within our consolidated statements ~~are~~of ~~issued~~income orfor ~~are~~the ~~available~~year toended ~~be issued~~December 31, 2010. ~~This~~The ~~new~~results ~~accounting~~of ~~guidance~~operations isof ~~effective~~Oceanaire ~~for~~have been ~~interim~~included ~~and~~in ~~annual~~our ~~periods~~consolidated ~~ending~~financial ~~after~~statements ~~June 15,~~since ~~2009~~the date of acquisition.

~~In June 2009,~~Bubba ~~the~~Gump ~~FASB~~Acquisition issued new accounting guidance on the FASB Accounting Standards Codification (Codification) and the hierarchy of generally accepted accounting principles, which establishes the Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles. This new guidance explicitly recognizes rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under federal securities laws as authoritative GAAP for SEC registrants. This new accounting guidance is effective for financial statements issued for interim and annual reporting periods ending after September 15, 2009. The adoption of this new guidance did not have an impact on our consolidated financial statements.

64On December 20, 2010, we completed the acquisition of 100% of the capital stock of Bubba Gump, a casual dining seafood chain based on the motion picture ‘Forrest Gump’, for $112.5 million in cash, plus assumption of working capital. Originating in California, Bubba Gump opened its first location in 1996. As of December 31, 2010, there are 34 Bubba Gump themed locations, 23 of which are owned with the remaining locations being foreign franchises or joint ventures and five ancillary restaurants. The Bubba Gump name and other intellectual property are used pursuant to a license agreement with Paramount Licensing, Inc. The acquisition of Bubba Gump provides us with additional growth within our high volume line of restaurants in attractive tourist destination locations.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2.A ~~HURRICANE~~summary ~~IKE~~of assets acquired and liabilities assumed in the acquisition is set forth below:

On September 13, 2008, Hurricane Ike struck the Gulf Coast of the United States, causing considerable damage to the cities of Galveston, Kemah and Houston, Texas and surrounding areas. Several of our restaurants in Galveston and Kemah sustained significant damage, as did the amusement rides, the boardwalk itself and some infrastructure at the Kemah Boardwalk. The Kemah and Galveston properties had been a significant driver of our overall performance in 2008. The damage to the Kemah and Galveston properties may adversely affect both our business and near and long-term prospects. Widespread power outages led to the closure of 31 Houston area restaurants until power was restored. All Houston, Galveston and Kemah restaurants have reopened. The difference between impairments arising from Hurricane Ike damage and the associated insurance proceeds was not material. During the year ended December 31, 2009, the difference between these recorded impairments and the associated insurance proceeds resulted in the recognition of a $4.9 million gain.


Estimated fair value of assets acquired
Current assets	$	16,091,177
Property and equipment		75,629,789
Other long term assets		11,498,003

Total assets acquired		103,218,969

Estimated fair value of liabilities assumed
Current liabilities		(17,325,588	)
Other long term liabilities		(7,737,156	)

Total liabilities assumed		(25,062,744	)

Noncontrolling interest acquired		(535,562	)
Goodwill		38,182,200
Allocated purchase price		115,802,863
Less: Cash acquired		(2,538,893	)

Net cash paid	$	113,263,970

WeBased ~~also maintain~~on ~~business~~the ~~interruption~~initial ~~insurance~~purchase ~~coverage~~price ~~and~~allocation ~~recorded~~it ~~approximately~~was ~~$0.2~~determined ~~and~~that ~~$7.3~~the ~~million~~fair invalues ~~recoveries~~of ~~related~~the tonet ~~lost~~assets acquired ~~profits~~were atless ~~our~~that ~~affected~~the ~~locations~~purchase inprice ~~Galveston~~resulting ~~and~~in the ~~Kemah~~recording ~~Boardwalk~~of ~~during~~$38.2 ~~the~~million ~~years~~in ~~ended~~goodwill. ~~December 31,~~The ~~2009~~results ~~and 2008,~~of ~~respectively.~~operations ~~This~~of ~~amount~~Bubba ~~was~~Gump ~~recorded~~have asbeen ~~revenue~~included in our consolidated financial statements since the date of acquisition and were not material for 2010.

These acquisitions were accounted for in accordance with ASC Topic 805, Business Combinations (“ASC 805”). Accordingly, the purchase price was allocated to assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. The allocations reflect various provisional estimates that were available at the time and are subject to change during the purchase price allocation period as valuations are finalized. The Bubba Gump acquisition is subject to a working capital adjustment.

Under ASC 805, acquisition related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred. As of December 31, 2010, we have incurred approximately $1.4 million in acquisition related costs. These amounts are included in general and administrative expense in our consolidated financial statements.

The following unaudited pro forma financial information presents the consolidated results of operations as if the acquisition of Bubba Gump had occurred January 1, 2009, after including certain pro forma adjustments for staff reduction, depreciation and amortization expense, rent expense, and income taxes. The unaudited pro forma financial information does not include the acquisition of Oceanaire as it was not significant.


	Year Ended December 31,
	2010			2009
Revenue	$	1,309,406,709		$	1,242,323,461
Net loss	$	(1,070,972	)	$	(3,853,989	)

The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have actually occurred or the future results of operations for the consolidated company.

3. DISCONTINUED OPERATIONS

During the third quarter of 2006, as part of a strategic review of our operations, we initiated a plan to divest certain restaurants including 136 Joe’s Crab Shack units. Subsequently, several additional locations were added to our disposal plan. The results of operations for all stores included in our disposal plan have been reclassified as discontinued operations in our statements of income, balance sheets and segment information for all periods presented.

We recorded additional pre-tax impairment charges of $10.3 million ~~and $9.9 million~~ for the ~~years~~year ended December 31, 2008 ~~and 2007~~, ~~respectively,~~ to write down carrying values of property and equipment pertaining to the remaining stores included in our disposal plan based on the expected net sales proceeds determined through analysis of the respective markets or sales contracts. No impairment charge was recorded for the ~~year~~years ended December 31, 2010 and 2009, respectively. We expect to sell the land and improvements belonging to these remaining restaurants, or abandon those locations, within the next 12 months.

In connection with the disposal plan, we recorded pre-tax charges of $4.2 million for the year ended December 31, 2008, for lease termination and other store closure costs. These charges are included in discontinued operations.

~~The~~63 ~~results of discontinued operations for the years ended December 31, 2009, 2008 and 2007 were as follows:~~

	Year Ended December 31,
	2009			2008			2007
Revenues	$	—		$	10,870,296		$	22,796,338
Income (loss) from discontinued operations before income taxes		(330,073	)		(16,419,382	)		(14,809,635	)
Income tax (benefit) on discontinued operations		(124,107	)		(5,850,315	)		(5,183,372	)
Net income (loss) from discontinued operations	$	(205,966	)	$	(10,569,067	)	$	(9,626,263	)

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Interest~~The ~~expense~~results ~~is allocated to discontinued operations based on the ratio~~ of ~~net assets to be~~ discontinued ~~to consolidated net assets. For the year ended December 31, 2007 interest expense related to discontinued~~ operations ~~was~~for ~~$0.1 million. For~~ the years ended December 31, ~~2008 and 2009~~2010, ~~no interest expense was~~2009 ~~allocated~~and to2008 ~~discontinued~~were ~~operations.~~as follows:

The assets and liabilities of the discontinued operations are presented separately in the consolidated balance sheets and consist of the following:


	Year Ended December 31,
	2010			2009			2008
Revenues	$	—		$	—		$	10,870,296
Income (loss) from discontinued operations before income taxes		(225,534	)		(330,073	)		(16,419,382	)
Income tax (benefit) on discontinued operations		(84,801	)		(124,107	)		(5,850,315	)

Net income (loss) from discontinued operations	$	(140,733	)	$	(205,966	)	$	(10,569,067	)

	Year Ended December 31,
	2009		2008
Assets:
Current assets	$	170	$	4,638
Property and equipment, net		2,958,693		2,963,303
Other assets		1,651		5,652
Assets related to discontinued operations	$	2,960,514	$	2,973,593
Liabilities:
Accounts payable and accrued expenses	$	2,850,225	$	4,868,199
Other liabilities		—		281,166
Liabilities related to discontinued operations	$	2,850,225	$	5,149,365

The assets and liabilities of the discontinued operations are presented separately in the Consolidated Balance Sheets and consist of the following:

4. NONCONTROLLING INTEREST AND REDEEMABLE NONCONTROLLING INTEREST


	Year Ended December 31,
	2010		2009
Assets:
Current assets	$	—	$	170
Property, plant and equipment, net		1,958,693		2,958,693
Other assets		—		1,651

Assets related to discontinued operations	$	1,958,693	$	2,960,514

Liabilities:
Accounts payable and accrued expenses	$	1,105,869	$	2,850,225

Liabilities related to discontinued operations	$	1,105,869	$	2,850,225

~~On February 24, 2006, we acquired 80% of T-Rex Cafe, Inc~~4. ~~from~~NONCONTROLLING ~~Schussler~~INTERESTS ~~Creative,~~AND ~~Inc.~~REDEEMABLE ~~(SCI).~~NONCONTROLLING ~~The~~INTEREST agreement with SCI provides that we can acquire SCI’s 20% interest for up to $35.0 million or that SCI can put its interest to us at a calculated amount as determined in the agreement no earlier than January 2010. During the first quarter of 2009, we determined that the redemption was probable and began accreting to the expected redemption value on the expected redemption date. We are recording the estimated amount as an increase to noncontrolling interest in temporary equity and a decrease to retained earnings in our consolidated balance sheets as of December 31, 2009.

On February 24, 2006, we acquired 80% of T-Rex Cafe, Inc. from Schussler Creative, Inc. (SCI). The agreement with SCI provides that we can acquire SCI’s 20% interest for up to $35.0 million or that SCI can put its interest to us at a calculated amount as determined in the agreement no earlier than January 2010. During the first quarter of 2009, we determined that the redemption was probable and began accreting to the expected redemption value on the expected redemption date as an increase to noncontrolling interest in temporary equity and a decrease to retained earnings in our consolidated balance sheets. As of December 31, 2010, the total expected redemption value had been fully accreted.

T-Rex, through a wholly-owned subsidiary, on February 24, 2006, signed two lease agreements with Walt Disney World Hospitality and Recreation Corporation, one for T-Rex at Downtown Disney World, which opened in October 2008, and the other for Yak and Yeti, an Asian themed eatery at Disney’s Animal Kingdom Theme Park that opened in November 2007.

We present the noncontrolling ~~interest~~interests in ~~an additional~~ ~~restaurant~~additional restaurants as a separate component of equity.

5.64 ~~PROPERTY AND EQUIPMENT AND OTHER CURRENT ASSETS~~

Property and equipment is comprised of the following:

	December 31,
	2009			2008
Land	$	258,323,523		$	262,616,115
Buildings and improvements		703,256,348			545,809,802
Furniture, fixtures and equipment		374,022,496			329,968,031
Leasehold improvements		433,060,051			424,143,044
Construction in progress		3,748,932			64,644,003
		1,772,411,350			1,627,180,995
Less—accumulated depreciation		(438,076,713	)		(367,994,532	)
Property and equipment, net	$	1,334,334,637		$	1,259,186,463

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~We continually evaluate unfavorable cash flows, if any, related to underperforming restaurants~~5. PROPERTY ~~Periodically~~AND itEQUIPMENT isAND ~~concluded~~OTHER ~~that~~CURRENT ~~certain~~ASSETS properties have become impaired based on their existing and anticipated future economic outlook in their respective market areas. In such instances, we may impair assets to reduce their carrying values to fair values. We consider the asset impairment expense as additional depreciation and amortization, although shown as a separate line item in the consolidated statements of income. Estimated fair values of impaired properties are based on comparable valuations, cash flows and management judgment.

~~During~~Property ~~the year ended December 31, 2009, we recorded impairment charges of $2.9 million to impair the leasehold improvements~~ and equipment ofis ~~several~~comprised ~~underperforming restaurants. During the year ended December 31, 2008, we recorded impairment charges~~ of ~~$3.2 million to impair~~ the ~~leasehold improvements~~following: ~~and equipment of three underperforming restaurants. We took no impairment charges in the year ended December 31, 2007.~~


	December 31,
	2010			2009
Land	$	261,359,597		$	258,323,523
Buildings and improvements		707,175,510			703,256,348
Furniture, fixtures and equipment		405,611,466			374,022,496
Leasehold improvements		505,535,161			433,060,051
Construction in progress		9,229,237			3,748,932

		1,888,910,971			1,772,411,350
Less—accumulated depreciation		(505,234,353	)		(438,076,713	)

Property and equipment, net	$	1,383,676,618		$	1,334,334,637

We continually evaluate unfavorable cash flows, if any, related to underperforming restaurants. Periodically it is concluded that certain properties have become impaired based on their existing and anticipated future economic outlook in their respective market areas. In such instances, we may impair assets to reduce their carrying values to fair values. We consider the asset impairment expense as additional depreciation and amortization, although shown as a separate line item in the Consolidated Statements of Income. Estimated fair values of impaired properties are based on comparable valuations, cash flows and management judgment.

During the year ended December 31, 2010, we recorded impairment charges of $3.8 million to impair the leasehold improvements and equipment of two underperforming restaurants. During the year ended December 31, 2009, we recorded impairment charges of $2.9 million to impair the leasehold improvements and equipment of several underperforming restaurants. During the year ended December 31, 2008 we recorded $3.2 million to impair the leasehold improvements and equipment of three underperforming restaurants.

Other current assets are comprised of the following:

	December 31,
	2009		2008
	2010			2009
Prepaid expenses	$	7,~~479~~838,~~508~~969	$	~~5,902,659~~$	7,479,508
Assets held for sale		747,069		—
Assets held for sale (expected to be sold within one year)		749,270			747,069
Deposits		5,~~138~~638,~~180~~413		~~3,199,370~~	5,138,180
	$	1314,~~364~~226,~~757~~652	$	~~9,102,029~~$	13,364,757

Other income, net for ~~2009~~2010 was $1525.46 million and includes a $1933.40 million gain related to the acquisition of a portion of our outstanding debt and a $15.29 million bargain purchase gain associated with the Oceanaire acquisition, offset by $12.7 million in non-cash expenses associated with the change in fair value of swaps not designated as hedges. Other income, ~~offset~~net byfor ~~approximately~~2009 was $515.04 million inand ~~expenses related~~includes toa ~~call~~$19.4 ~~premiums~~million ~~and~~gain ~~refinancing~~related ~~costs.~~to ~~Other~~the ~~expense,~~acquisition ~~net~~of ~~for~~a ~~2008~~portion ~~was~~of ~~$17.0~~our ~~million~~outstanding debt and ~~includes~~a $141.32 million ingain ~~non-cash expenses~~ associated with the change in fair value of swaps ~~which were~~ not designated as hedges~~. Other expense~~, ~~net~~offset by ~~for~~approximately ~~2007 was~~ $175.~~1 million and includes $3.~~0 million in expenses ~~associated~~related ~~with~~to ~~exchanging~~call ~~the~~premiums 7and refinancing costs.5% ~~Notes~~Other expense, net for ~~9.5%~~2008 ~~Notes,~~was $817.80 million ~~in call premiums~~ and ~~expenses~~includes ~~associated with refinancing the Golden Nugget debt, and~~ $414.43 million in non-cash expenses associated with ~~changes~~the change in ~~the~~ fair value of swaps which were not designated as hedges.

6.65 ~~ACCRUED LIABILITIES~~

Accrued liabilities are comprised of the following:

	Year Ended December 31,
	2009		2008
Payroll and related costs	$	22,120,315	$	22,345,794
Rent and insurance		28,605,202		29,384,290
Taxes, other than payroll and income taxes		19,717,328		20,214,428
Deferred revenue		17,537,349		25,091,978
Accrued interest		7,268,622		2,612,258
Casino deposits, outstanding chips and other gaming		10,120,470		10,237,310
Other		16,906,672		24,430,271
	$	122,275,958	$	134,316,329

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6. ACCRUED LIABILITIES

Accrued liabilities are comprised of the following:


	Year Ended December 31,
	2010		2009
Payroll and related costs	$	35,602,392	$	22,120,315
Rent and insurance		30,330,434		28,605,202
Taxes, other than payroll and income taxes		21,443,054		19,717,328
Deferred revenue		19,966,821		17,537,349
Accrued interest		7,741,573		7,268,622
Casino deposits, outstanding chips and other gaming		10,508,949		10,120,470
Other		17,234,907		16,906,672

	$	142,828,130	$	122,275,958

7. DEBT

On ~~November~~December 3020, ~~2009~~2010, we completed ~~the~~an offering of an additional $~~406~~87.50 million in aggregate principal amount of 11 5/8% senior secured notes due 2015 (the “Additional ~~New~~ Notes”). ~~The gross proceeds from the offering and sale of the New Notes were $400.1 million. The New Notes are~~ unconditionally guaranteed on a senior secured basis ~~as to principal, premium, if any, and interest~~ by all ~~of our~~ current and future domestic restricted subsidiaries of the Company (~~each~~the ~~individually~~“Guarantors”). aThe ~~Guarantor~~Additional ~~and~~Notes ~~collectively,~~were ~~the~~sold ~~Guarantors)~~in ~~and~~the ~~are~~United ~~secured~~States byto qualified ainstitutional ~~second~~buyers ~~lien~~pursuant ~~position~~to onRule ~~substantially~~144A ~~all~~under ~~assets~~the ofSecurities ~~Landry’s~~Act and ~~the~~to ~~Guarantors~~non-U.S. ~~The~~persons ~~New~~in ~~Notes~~accordance ~~were~~with ~~issued~~Regulation ~~pursuant~~S tounder anthe ~~indenture, dated~~Securities asAct. ofThe ~~November 30,~~Notes ~~2009~~have ~~(Indenture),~~not ~~among~~been ~~Landry’s,~~and are not expected to be registered under the ~~Guarantors~~Securities Act and ~~Deutsche~~may ~~Bank~~not ~~Trust~~be ~~Company~~offered ~~Americas,~~or assold ~~Trustee~~in ~~and~~the asUnited ~~Collateral~~States ~~Agent.~~absent ~~Subsequent~~registration toor ~~the~~an ~~closing,~~applicable ~~Wilmington~~exemption ~~Trust~~from ~~became~~registration ~~Trustee~~under the Securities Act.

InThe ~~addition~~Additional toNotes ~~the~~will ~~Indenture,~~have ~~Landry’s and~~ the ~~Guarantors~~same ~~entered~~terms ~~into~~and awill ~~registration~~be ~~rights~~governed ~~agreement,~~by ~~dated as of November 30, 2009 (Registration Rights Agreement). Under~~ the ~~Registration~~same ~~Rights~~indenture ~~Agreement,~~as ~~Landry’s and~~ the ~~Guarantors~~$406.5 ~~have~~million ~~agreed~~aggregate toprincipal ~~use~~amount ~~their~~of ~~best~~11 5/8% ~~efforts~~senior tosecured ~~file~~notes ~~and~~due ~~cause~~2015 towhich ~~become~~were ~~effective~~issued in a ~~registration statement with respect to an offer to exchange~~private ~~the~~placement ~~New~~which ~~Notes~~closed ~~for~~on ~~notes registered under the Securities Act of 1933~~November 30, ~~as amended (the Securities Act)~~2009, ~~having substantially identical terms as the New Notes (except that additional interest provisions~~ and ~~transfer~~which ~~restrictions~~were ~~pertaining~~increased toby ~~the New Notes will be deleted)~~$47.0 ~~If we fail to cause the registration statement relating to the exchange offer to become effective within the time periods specified~~ in ~~the~~a ~~Registration~~private ~~Rights~~placement ~~Agreement,~~which weclosed ~~will be required to pay liquidated damages~~ on ~~the New~~April 28, ~~Notes~~2010 ~~until~~(collectively “the ~~registration statement is declared effective~~Notes”).

OnThe ~~November~~Notes will mature on December 301, ~~2009~~2015. Interest on the Additional Notes will accrue from December 1, 2010 weat ~~also~~a ~~amended~~fixed ~~and~~interest ~~restated~~rate ~~our~~of 11 5/8% and the ~~Credit~~Company ~~Agreement~~will topay ~~allow~~interest ustwice toa ~~borrow~~year, ~~$235~~on each December 1st and June 1st, beginning June 1, 2011 for the Additional Notes.6 ~~million~~At (any time prior to December 1, 2012, the ~~Amended~~Company ~~Credit~~may ~~Facility).~~redeem ~~The~~up ~~Amended~~to ~~Credit~~35% ~~Facility~~of ~~provides~~the ~~for~~Notes at a ~~term~~redemption price ~~loan~~ of ~~$160~~111.6625% ~~million~~of the principal amount thereof, plus accrued and aunpaid ~~revolving~~interest, ~~credit~~with ~~line~~the net cash proceeds of ~~$75.0~~certain ~~million~~equity offerings. ~~The~~Additionally, ~~obligations~~on ~~under~~or after December 1, 2012, the ~~Amended~~Company ~~Credit~~may redeem all or a part of the Notes at a ~~Facility~~premium ~~are~~that ~~unconditionally~~will ~~guaranteed~~decrease byover time as described in the Indenture dated November 30, 2009, as amended (the “Indenture”), among the Company, the Guarantors, Deutsche Bank Trust Company Americas, as collateral agent, and ~~are~~Wilmington Trust ~~secured~~FSB, byas asuccessor ~~first~~trustee ~~lien~~to ~~position~~Deutsche onBank ~~substantially~~Trust ~~all~~Company ~~assets~~Americas. The Company is required to offer to purchase the Notes at 101% of ~~Landry’s~~their ~~and~~aggregate principal amount, plus accrued interest, if it experiences a change in control as defined in the ~~Guarantors~~Indenture.

~~Interest~~The onobligations under the ~~Amended~~Notes ~~Credit~~are ~~Facility~~unconditionally ~~accrues~~guaranteed atby athe ~~base~~Guarantors, ~~rate~~and ~~(which~~are issecured ~~the~~by ~~greater~~a second oflien ~~4.0%,~~security ~~the~~interest ~~Federal~~in ~~Funds~~substantially ~~Rate~~all ~~plus~~of ~~.50%~~the ortangible ~~Wells~~and ~~Fargo’s~~intangible ~~prime~~assets ~~rate)~~of ~~plus~~the aCompany ~~credit~~and ~~spread~~the ~~of 5~~Guarantors.~~0%,~~ orThe atobligations ~~our option,~~under at the ~~Eurodollar~~Notes ~~base~~are ~~rate~~also ~~but~~secured noby ~~less~~a ~~than~~second ~~2.0%,~~lien ~~plus~~pledge aof ~~credit~~the ~~spread~~capital stock of ~~6.0%,~~all ~~and~~of ~~matures~~the ~~on November 30, 2013~~Guarantors.

The ~~Amended~~Indenture ~~Credit~~under ~~Facility~~which the Notes have been issued contains covenants that will limit ~~our~~the ability ~~and~~of the Company and the Guarantors to, among other things,: incur or guarantee additional indebtedness; ~~create~~or ~~liens;~~issue ~~make~~disqualified capital ~~expenditures~~stock; transfer or sell assets; pay dividends on or ~~repurchase~~distributions, ~~stock;~~redeem subordinated indebtedness, make certain types of investments; ~~sell~~or ~~assets~~make other restricted payments; create or ~~merge~~incur ~~with~~liens; incur dividend or other ~~companies.~~payment ~~The~~restrictions ~~Amended~~affecting ~~Credit~~certain ~~Facility~~subsidiaries; ~~contains~~consummate ~~financial~~a ~~covenants~~merger, ~~including~~consolidation aor ~~maximum~~sale ~~leverage~~of ~~ratio,~~all or substantially all assets; enter into transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; engage in business other than a ~~maximum~~business ~~senior~~that ~~leverage~~is ~~ratio,~~the same or similar to the current business and areasonably ~~minimum~~related ~~fixed~~businesses; ~~charge~~take ~~coverage~~or ~~ratio.~~omit to take any actions that would adversely affect or impair in any material respect the collateral securing the Notes.

~~Proceeds~~Gross proceeds from the ~~New~~Additional Notes ~~and the Amended Credit Facility were used to repay all~~ of ~~our outstanding 14.0% Senior Secured Notes due 2011, pay fees and expenses and provide~~ approximately $7390.07 million inwere ~~restricted~~used ~~cash available~~ to ~~complete~~pay afor ~~proposed~~the ~~merger~~acquisition of anBubba ~~affiliate~~Gump ofShrimp ~~Tilman Fertitta and us~~Co. ~~In connection with the repayment of the 14.0% Senior Secured Notes~~Restaurants, we ~~expensed $35~~Inc.6 ~~million~~(“Bubba ~~in interest expense~~Gump”), ~~primarily~~to ~~associated~~repay ~~with~~outstanding ~~early~~revolver ~~recognition~~balances ~~of unamortized discount~~ and ~~deferred~~for ~~loan~~general ~~costs~~corporate purposes.

~~During~~ In ~~2008~~addition, wethe ~~obtained~~Company and certain of the Company’s subsidiaries entered into a ~~fully~~Third ~~funded~~Amended ~~financing~~and Restated ~~commitment~~Credit ~~which~~Agreement ~~included~~(“Credit upFacility”) towith ~~$250.0~~Wells ~~million~~Fargo inCapital ~~term~~Finance, ~~loans.~~as Onthe ~~December 19~~Administrative Agent, ~~2008~~Wells Fargo Capital Finance and Jefferies Finance LLC, weas ~~entered~~Co-Lead ~~into~~Arrangers anand ~~$81.0~~Co-Bookrunners, ~~million~~and ~~interim~~Wells ~~senior~~Fargo ~~secured~~Capital ~~credit~~Finance ~~facility~~and toJefferies ~~fund~~Finance aLLC ~~portion~~as ofCo-Syndication Agents on December 20, 2010 to allow the ~~commitment~~Company to borrow $287.0 ~~The~~million ~~interim~~in an aggregate principal amount, on a senior secured ~~credit~~basis, ~~facility~~which ~~provided~~will ~~for~~be comprised of (a) a 4-year $31100.0 million senior secured ~~term~~revolving ~~loan~~credit facility, and (b) a 4-year $50187.0 million senior secured ~~revolving~~term ~~credit~~loan facility, ~~the~~plus ~~proceeds~~provides offor ~~which~~an ~~were~~accordion ~~used~~feature ~~to refinance~~which ~~the~~will ~~remaining~~allow ~~outstanding~~for ~~indebtedness~~up ~~under~~to ~~our~~a ~~previously~~$50.0 ~~issued~~million ~~and~~increase ~~outstanding~~in ~~senior~~the ~~credit~~term ~~facility~~loan ~~and~~based toon ~~pay~~compliance ~~related~~with certain ~~transaction fees and expenses~~covenants.

6866

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

WeThe ~~subsequently~~obligations ~~funded~~under anthe ~~additional~~Credit ~~$135.0~~Facility ~~million~~are ~~under~~unconditionally ~~the~~guaranteed ~~commitment~~ by ~~entering~~the ~~into~~Guarantors aand ~~$215.6~~are ~~million~~secured ~~Amended~~by ~~and~~a ~~Restated~~first ~~Credit~~lien ~~Agreement~~position ~~dated~~on assubstantially ofall ~~February 13,~~assets ~~2009~~of (the ~~Credit~~Company ~~Agreement)~~and ~~which included~~ the ~~$81~~Guarantors.0 ~~million~~The ~~interim~~Company ~~senior~~may ~~secured~~elect ~~credit~~that ~~facility.~~the ~~The~~ Credit ~~Agreement~~Facility ~~provided~~bear ~~for~~interest at a ~~term~~rate ~~loan~~per ofannum ~~$165.6 million,~~equal ~~which~~to ~~included~~(i) LIBOR ~~the~~with ~~$31.0~~a ~~million~~floor ~~term loan, and the revolving credit line~~ of ~~$50~~1.075% ~~million that was previously funded~~plus 4.5%, ~~The~~or ~~obligations under~~ (ii) the ~~Credit~~greatest ~~Agreement~~of ~~were~~(w) 3.5%, ~~unconditionally guaranteed by~~ (x) the ~~Guarantors~~federal ~~and~~funds ~~were~~rate ~~secured~~plus by0.5%, a(y) Base ~~first lien~~Libor ~~position~~Rate onplus ~~substantially~~1% ~~all~~and of(z) the ~~our~~prime ~~assets~~rate.

~~On February 13, 2009, we completed an offering of $295.5 million in aggregate principal amount of 14.0% Senior Secured Notes due 2011 (Series A Notes).~~ The ~~gross~~obligations ~~proceeds~~under ~~from~~ the ~~offering~~Credit ~~and~~Facility ~~sale~~are ~~of the Series A Notes were $260.0 million. The Series A Notes were~~ unconditionally guaranteed ~~on a senior secured basis as to principal, premium, if any, and interest~~ by ~~all of our current and future domestic restricted subsidiaries (each individually a Guarantor and collectively,~~ the Guarantors), and ~~were~~are secured by a ~~second~~first lien ~~position~~security oninterest in substantially all of ~~our and~~ the ~~Guarantors’~~tangible ~~assets.~~and ~~The~~intangible ~~Series~~assets ~~A Notes were issued pursuant to an indenture, dated as~~ of ~~February 13, 2009 (Indenture), among us,~~ the ~~Guarantors and Deutsche Bank Trust~~ Company ~~America, as Trustee~~ and asthe ~~Collateral Agent~~Guarantors. ~~On July 10,~~The ~~2009,~~obligations weunder ~~and~~ the ~~Guarantors~~Credit ~~filed~~Facility aare ~~registration~~also ~~statement~~secured ~~with~~by ~~respect~~a tofirst anlien ~~offer~~pledge toof ~~exchange~~ the ~~Series~~capital Astock ~~Notes~~of ~~for~~all ~~notes~~of ~~registered under~~ the ~~Securities Act, having substantially identical terms as the Series A Notes~~Guarantors.

OnThe ~~August 14,~~Credit ~~2009,~~Facility wecontains ~~completed~~covenants ~~our~~that ~~offer~~will tolimit ~~exchange~~the ~~$295.5~~ability ~~million~~of inthe ~~aggregate~~Company ~~principal~~and ~~amount~~the ofGuarantors ~~14.0%~~to, ~~Senior~~among ~~Secured~~other ~~Notes due~~things, ~~2011~~incur ~~(Series~~or Bguarantee ~~Notes),~~additional ~~that~~indebtedness; ~~have~~create ~~been~~liens; ~~registered~~pay ~~under~~dividends ~~the~~on ~~Securities~~or repurchase ~~Act,~~stock; ~~for~~make ~~the~~certain ~~Series~~types Aof ~~Notes.~~investments; Ansell ~~aggregated~~stock ~~principal amount~~ of ~~$260.5~~certain ~~million~~ of ~~Series~~the ACompany’s ~~Notes~~subsidiaries; ~~were~~enter ~~exchanged~~into ~~for~~transactions ~~Series~~with Baffiliates; ~~Notes~~sell ~~pursuant~~assets toor ~~the~~merge ~~offer~~with ~~and~~other ancompanies. ~~aggregate principal~~The ~~amount~~Credit ofFacility ~~$27.0~~also ~~million~~requires ~~Series~~compliance Awith several ~~Notes~~financial ~~were~~covenants, ~~exchanged~~including ~~for~~a ~~Series~~maximum Bleverage ~~Notes~~ratio, ~~pursuant~~a tomaximum ~~private~~first ~~exchange.~~lien ~~The~~leverage ~~total~~ratio, ~~principal~~and ~~amount~~a ofminimum ~~notes~~fixed ~~exchanged~~charge ~~was~~coverage ~~$287~~ratio.5 ~~million.~~

WeGross ~~used the~~ proceeds from the ~~Notes~~Credit ~~offering,~~Facility ~~together~~were ~~with~~used ~~borrowings under the Credit Agreement~~ to refinance ~~our~~certain ~~previous $395.7 million aggregate principal amount~~ of ~~9.5% senior notes due 2014 (~~the ~~“9.5%~~Company’s ~~Notes”)~~existing ~~and $4.3 million aggregate principal amount of 7.5% senior notes due 2014 (the “7.5% Notes” and~~indebtedness, ~~together~~to ~~with~~pay ~~the~~in ~~9.5%~~part ~~Notes,~~for the ~~“Previous Notes”).~~acquisition As of ~~December 31,~~Bubba ~~2009,~~Gump ~~$0.8 million of our 7.5% Notes~~ and ~~$0.7~~for ~~million~~general ofcorporate ~~our 9~~purposes.~~5% Notes remained outstanding. In addition, we paid a redemption premium of approximately $4.0 million in connection with the repurchase of the~~ ~~Previous Notes.~~

InOn ~~connection with the refinancing of our Previous Notes~~April 26, on2010 ~~December~~and July 23, ~~2008~~2010, we ~~commenced~~and ~~separate cash~~the ~~tender~~Guarantors ~~offers~~commenced ~~(each~~an aoffer ~~“tender~~to ~~offer”~~exchange ~~and~~the ~~together~~Notes, including the $47.0 ~~“tender~~million ~~offers”)~~increase to ~~purchase~~the ~~any and all of our outstanding 9.5%~~ Notes, ~~and~~respectively, ~~7.5% Notes~~ for anotes ~~purchase~~registered ~~price~~under ~~of 101% of~~ the ~~principal~~Securities ~~amount thereof. In conjunction with the tender offers~~Act, wehaving ~~solicited~~substantially ~~consents~~identical ofterms atas ~~least a majority of~~ the ~~aggregate~~Notes. ~~principal~~The ~~amount~~offer ofto ~~each~~exchange of the ~~outstanding~~Initial ~~9.5%~~ Notes ~~and~~was ~~7.5%~~completed ~~Notes~~on toMay 28, ~~certain~~2010 ~~proposed~~and ~~amendments~~all ~~to each of the indentures governing the 9~~$406.5% ~~Notes~~million ~~and 7.5% Notes to eliminate most~~ of the ~~restrictive~~Initial ~~covenants~~Notes ~~and~~Series ~~certain~~A ~~events~~were ofexchanged ~~default~~for ~~and~~registered toInitial ~~amend~~Notes ~~certain~~Series ~~other provisions contained in the indentures and notes related thereto~~B. WeThe ~~executed~~exchange ~~supplemental~~offer ~~indentures~~for ~~with~~the U$47.S.0 ~~Bank~~million ~~National~~increase ~~Association, as trustee,~~ to ~~effectuate~~ the ~~proposed amendments to the indentures governing the Existing~~ Notes, ~~which~~was ~~became~~completed ~~operative~~in ~~upon~~October ~~the consummation of the Notes offering~~2010.

~~With~~The ~~respect~~Indenture tounder ~~any~~which ~~Previous~~the Notes have been issued contains covenants that ~~were~~will ~~not~~limit ~~tendered~~our ability of the Company and the ability of the Guarantors to, weamong ~~may~~other things: incur or guarantee additional indebtedness or issue disqualified capital stock; transfer or sell assets; pay dividends or distributions, atredeem ~~our~~subordinated ~~option~~indebtedness, ~~either~~make ~~(i) pay~~certain ~~such~~types ~~Previous~~of ~~Notes~~investments inor ~~accordance~~make ~~with~~other ~~their~~restricted ~~terms~~payments; ~~through~~create ~~maturity,~~or ~~(ii) repurchase~~incur ~~any~~liens; ~~9.5%~~incur dividend ~~Notes~~or ifother ~~the~~payment ~~holders~~restrictions ~~exercise~~affecting ~~their~~certain ~~option~~subsidiaries; toconsummate ~~require~~a usmerger, toconsolidate door ~~so,~~sell atof ~~101%~~all or substantially all of ~~the~~our ~~principal~~assets; ~~amount~~enter ~~plus~~into ~~accrued~~transactions ~~but~~with ~~unpaid~~affiliates; ~~interest,~~designate ifsubsidiaries ~~any,~~as ~~through~~unrestricted subsidiaries; engage in business other than a business that is the ~~payment~~same ~~date~~or similar to the current business and reasonably related businesses; take or ~~(iii) defease~~omit to take any actions that would adversely affect or ~~all~~impair ofin any material respect the ~~remaining~~collateral ~~Previous~~securing the Notes.

69On November 30, 2009, we also amended and restated our Credit Agreement to allow us to borrow $235.6 million (the Amended Credit Facility). The Amended Credit Facility provided for a term loan of $160.6 million and a revolving credit line of $75.0 million. The obligations under the Amended Credit Facility are unconditionally guaranteed by the Guarantors and are secured by a first lien position on substantially all assets of Landry’s and the Guarantors. On April 27, 2010, we also amended the Amended Credit Facility to allow for the issuance of the Additional Notes and the acquisition of Oceanaire.

Proceeds from the Notes and the Amended Credit Facility were used to repay all of our outstanding 14.0% Senior Secured Notes due 2011, pay fees and expenses and provide approximately $73.0 million in restricted cash available to complete a proposed merger of an affiliate of Tilman Fertitta and us. In connection with the repayment of the 14.0% Senior Secured Notes, we expensed $35.6 million in interest expense during the fourth quarter of 2009, primarily associated with early recognition of unamortized discount and deferred loan costs.

During 2008, there was a fully funded financing commitment which included up to $250.0 million in term loans. On December 19, 2008, we entered into an $81.0 million interim senior secured credit facility to fund a portion of the commitment. The interim senior secured credit facility provided for a $31.0 million senior secured term loan facility and a $50.0 million senior secured revolving credit facility, the proceeds of which were used to refinance the remaining outstanding indebtedness under our previously issued and outstanding senior credit facility and to pay related transaction fees and expenses.

We subsequently funded an additional $135.0 million under the commitment by entering into a $215.6 million Amended and Restated Credit Agreement dated as of February 13, 2009 (the “Credit Agreement”) which included the $81.0 million interim senior secured credit facility. The Credit Agreement provided for a term loan of $165.6 million, which included the $31.0 million term loan, and the revolving credit line of $50.0 million that was previously funded. The obligations under the Credit Agreement were unconditionally guaranteed by the Guarantors and were secured by a first lien position on substantially all of our assets.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On February 13, 2009, we completed an offering of $295.5 million in aggregate principal amount of 14.0% Senior Secured Notes due 2011 (the “Series A Notes”). The gross proceeds from the offering and sale of the Series A Notes were $260.0 million. The Series A Notes were unconditionally guaranteed on a senior secured basis as to principal, premium by the Guarantors and were secured by a second lien position on substantially all of our and the Guarantors’ assets. The Series A Notes were issued pursuant to an indenture, dated as of February 13, 2009 among us, the Guarantors and Deutsche Bank Trust Company America, as Trustee and as Collateral Agent. On July 10, 2009, we and the Guarantors filed a registration statement with respect to an offer to exchange the Series A Notes for notes registered under the Securities Act, having substantially identical terms as the Series A Notes.

On August 14, 2009, we completed our offer to exchange $295.5 million in aggregate principal amount of 14.0% Senior Secured Notes due 2011 (the “Series B Notes”), that have been registered under the Securities Act, for the Series A Notes. An aggregated principal amount of $260.5 million of Series A Notes were exchanged for Series B Notes pursuant to the offer and an aggregate principal amount of $27.0 million Series A Notes were exchanged for Series B Notes pursuant to private exchange. The total principal amount of notes exchanged was $287.5 million.

We used the proceeds from the 2009 Notes offering, together with borrowings under the Credit Agreement to refinance our previous $395.7 million aggregate principal amount of 9.5% senior notes due 2014 (the “9.5% Notes”) and $4.3 million aggregate principal amount of 7.5% senior notes due 2014 (the “7.5% Notes” and, together with the 9.5% Notes, the “Previous Notes”). As of March 31, 2010, $0.8 million of our 7.5% Notes and $0.7 million of our 9.5% Notes remained outstanding. In addition, we paid a redemption premium of approximately $4.0 million in connection with the repurchase of the Previous Notes.

In connection with the refinancing of our Previous Notes, on December 23, 2008, we commenced separate cash tender offers (each a “tender offer” and together, the “tender offers”) to purchase any and all of our outstanding 9.5% Notes and 7.5% Notes for a purchase price of 101% of the principal amount thereof. In conjunction with the tender offers, we solicited consents of at least a majority of the aggregate principal amount of each of the outstanding 9.5% Notes and 7.5% Notes to certain proposed amendments to each of the indentures governing Previous Notes to eliminate most of the restrictive covenants and certain events of default and to amend certain other provisions contained in the indentures and related notes. We executed supplemental indentures with U.S. Bank National Association, as trustee, to effectuate the amendments to the indentures governing the Previous Notes, which became operative upon the consummation of the tender offers.

With respect to any Previous Notes that were not tendered, we may, at our option, either (i) pay such Previous Notes in accordance with their terms through maturity, (ii) repurchase any 9.5% Notes if the holders exercise their option to require us to do so, at 101% of the principal amount plus accrued but unpaid interest, if any, through the payment date or (iii) defease any or all of the remaining Previous Notes.

The First Lien Second Amendment replaced the existing first lien financial covenants with minimum EBITDA, minimum liquidity, minimum cage cash and maximum capital expenditure (CAPEX) covenants. In addition, consenting ~~First~~first ~~Lien~~lien lenders received a consent fee of 0.5% and all ~~First Lien~~first lien lenders will receive a 0.5% annual consent fee on outstanding commitments through maturity. First ~~Lien~~lien ~~Lenders~~lenders will also receive additional interest in an amount equal to 1.00% per annum on unpaid ~~Advances~~ advances in the form of “PIK” interest, or at the option of Golden Nugget, cash. The First Lien Second Amendment precludes dividends or other restricted payments, limits incurring additional debt, making investments and other cash distributions from the Golden Nugget, increases the excess cash flow sweep to 75% from 50% if certain liquidity levels are reached and requires additional reporting of financial performance including cash flow reports. Certain potential defaults under the existing First Lien Credit Agreement were waived.

Concurrently with the First Lien Second Amendment, the Golden Nugget entered into Amendment No. 2 and Waiver to the Second Lien Credit Agreement (Second Lien Second Amendment) by and among Golden Nugget, Inc., Wachovia Bank, National Association and the other financial institutions parties thereto, dated June 14, 2007. The Second Lien Second Amendment replaced the existing second lien financial covenants with minimum EBITDA, minimum liquidity, minimum cage cash and maximum CAPEX covenants and waived certain potential defaults under the existing Second Lien Credit Agreement. The Second Lien Second Amendment advances the maturity date on the second lien facility from December 31, 2014 to November 2, 2014. The maturity date on ~~the~~our existing $4.0 million ~~Seller~~seller note was extended to November 2, 2014 from November 2, 2010.

In connection with ~~the~~these ~~Amendments~~amendments, affiliates of the Golden Nugget ~~will~~agreed to provide up to $50.0 million in additional funds to the Golden Nugget in return for non-interest bearing subordinated notes. $20.0 million of these funds was used for operating liquidity and to pay fees and expenses associated with the amendments. $3025.01 million was ~~available~~used to purchase second lien ~~indebtedness~~ ~~at 40% of face value. At closing, approximately $62.8 million of second lien~~ indebtedness was acquired and retired. The remaining balance of the $30.0 million not used to purchase second lien debt by December 31, 2010, if any, will be used to purchase first lien debt at par value. All such purchased debt shall be immediately retired. The Golden Nugget may also incur up to an additional $8.0 million in affiliate subordinated debt during the remaining term of the First Lien Credit Agreement to meet liquidity requirements.

On68 September 25, 2009, an unrestricted subsidiary of Landry’s completed the acquisition of $33.2 million face amount of Golden Nugget second lien term loan debt through a dutch tender and open market purchases at a weighted average cost approximating 41% of face value. In connection with the debt purchases, the unrestricted subsidiary agreed to forgive the face amount of the debt acquired and accordingly, a $19.4 million gain was recognized in other income, net.

In June 2007, our wholly owned unrestricted subsidiary, Golden Nugget, Inc., completed a new $545.0 million credit facility consisting of a $330.0 million first lien term loan, a $50.0 million revolving credit facility, and a $165.0 million second lien term loan. The $330.0 million first lien term loan includes a $120.0 million delayed draw component to finance the expansion at the Golden Nugget Hotel and Casino in Las Vegas, Nevada. The revolving credit facility expires on June 30, 2013 and the first lien term loan matures on June 30, 2014. Both the first lien term loan and the revolving credit facility bear interest at Libor or the bank’s base rate, plus a

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~financing~~at ~~spread~~40% of ~~2.0%~~face ~~and 0~~value.~~75%,~~ ~~respectively,~~At ~~at December 31~~closing, ~~2009.~~approximately ~~In addition, the credit facility requires a commitment fee on the unfunded portion for both the~~ $5062.08 million ~~revolving~~ ~~credit facility and the $120.0 million delayed draw component~~ of ~~the first lien term loan. The~~ second lien ~~term~~indebtedness ~~loan~~was ~~matures~~acquired ~~on November 2, 2014~~ and ~~bears~~retired ~~interest~~ at ~~Libor~~40% orof ~~the~~face ~~bank’s~~value ~~base~~and ~~rate~~accordingly, ~~plus~~ a ~~financing spread of 3~~$33.~~25% and 2.~~0%, ~~respectively,~~million atgain ~~December 31,~~was ~~2009.~~recognized ~~The~~in other ~~financing~~income, ~~spreads~~net ~~and~~during ~~commitment fees for~~ the ~~revolving~~three ~~credit~~months ~~facility~~ended ~~increase~~March 31, or2010. ~~decrease depending on the leverage ratio as defined in the credit facility~~$2.1 ~~The~~million ~~first~~was ~~lien~~used ~~term~~to ~~loan requires~~repay ~~one percent of the~~ outstanding ~~principal~~revolver ~~balance~~balances ~~due annually to be paid~~ in ~~equal~~January ~~quarterly installments commencing on September 30, 2009, with the balance due on maturity~~2011. ~~Principal~~All ofsuch ~~the~~purchased ~~second~~debt ~~lien~~was ~~term~~immediately ~~loan is due at maturity~~retired. The Golden Nugget’s ~~subsidiaries~~may ~~have~~also ~~granted~~incur ~~liens~~up onto ~~substantially~~an ~~all~~additional $8.0 ~~real~~million ~~property~~in ~~and~~affiliate ~~personal~~subordinated ~~property~~debt asduring ~~collateral~~the ~~under~~remaining ~~the~~term ~~credit~~of ~~facility~~the ~~and~~First ~~are~~Lien ~~guarantors~~Credit ofAgreement ~~the~~to ~~credit~~meet ~~facility~~liquidity requirements.

~~The~~On ~~proceeds~~September 25, ~~from~~2009, ~~the~~an ~~$545.0~~unrestricted ~~million~~subsidiary ~~credit facility were used to repay all~~ of ~~the Golden Nugget~~Landry’s ~~outstanding~~completed ~~debt, including its 8.75% Senior Secured Notes due 2011 totaling $155.0 million, plus~~ the ~~outstanding~~acquisition ~~balance~~ of ~~approximately~~ $1033.02 million onface ~~its~~amount ~~former~~of ~~$43.0~~Golden ~~million~~Nugget ~~revolving~~second ~~credit~~lien ~~facility~~term ~~with~~loan ~~Wells~~debt ~~Fargo~~through ~~Foothill,~~a ~~Inc.~~dutch Intender ~~addition,~~and ~~the~~open market ~~proceeds~~purchases ~~were~~at ~~used~~a toweighted ~~pay associated~~average ~~tender~~cost ~~premiums~~approximating 41% of ~~approximately~~face $8value.8 ~~million~~In ~~due~~connection towith the ~~early~~debt ~~redemption~~purchases, of the ~~Senior~~unrestricted ~~Secured~~subsidiary ~~Notes,~~agreed ~~plus accrued interest and related transaction fees and expenses. We expect~~ to ~~incur~~forgive ~~higher~~the ~~interest~~face ~~expense~~amount ~~as a result~~ of the ~~increased~~ ~~borrowings~~debt ~~associated~~acquired ~~with~~and ~~the Golden Nugget financing. In 2008~~accordingly, ~~the~~a ~~revolver commitment was reduced to~~ $4719.04 million ~~and~~gain ~~the delayed draw term loan commitment~~ was recognized ~~reduced~~in toother ~~$117.5~~income, ~~million~~net asduring ~~a result of~~ the ~~failure~~year ofended ~~one~~December 31, ~~of the lending banks~~2009.

~~Consistent~~In ~~with~~acquiring ~~our~~Bubba ~~policy~~Gump, towe ~~manage~~assumed ~~our~~two ~~exposure~~loans; one related to ~~interest~~a ~~rate~~restaurant ~~risk and~~ in ~~conformity~~Hong ~~with the requirements of the first and second lien facilities~~Kong, ~~we entered into interest rate swaps for all of~~ the ~~first~~other ~~and~~related ~~second~~to ~~lien~~a ~~borrowings~~restaurant ofin ~~the Golden Nugget that fix the interest rates at between 5.4% and 5.5%~~Cancun, ~~plus the applicable margin~~Mexico. WeThe ~~designated~~ $~~210.~~0.5 million of ~~the~~Hong ~~first~~Kong ~~lien~~debt ~~interest~~is ~~rate~~a ~~swaps~~line ~~and all~~ of ~~the~~credit ~~second~~collateralized ~~lien~~by ~~swaps~~the asassets ~~cash~~and ~~flow~~leasehold ~~hedges.~~interests ~~These swaps mirror the terms~~ of the ~~underlying~~Hong ~~debt~~Kong ~~and reset using the same index and terms~~restaurant. OnThe ~~September 25,~~loan ~~2009, an unrestricted subsidiary of~~bears ~~Landry’s~~interest ~~repurchased~~at ~~an aggregate $33~~1.265% ~~million~~plus ~~face amount of second lien term loan debt, and as such, a proportional share of~~ the ~~second~~Hong ~~lien~~Kong ~~swaps~~Interbank ~~were~~Offered noRate ~~longer an effective cash flow hedge~~(0.33% ~~Accordingly,~~at ~~a $4.2 million non-cash expense associated with these swaps was recorded as other expense for the year ended~~ December 31, ~~2009.~~2010) ~~At December 31, 2009, the remaining swaps were determined to be highly effective,~~ and nomatures ~~ineffective portion was recognized~~ in ~~income~~July 2011. ~~Included in~~There ~~Accumulated~~is ~~other~~no ~~comprehensive~~additional ~~loss~~availability at December 31, ~~2009 and December 31, 2008 are unrealized losses, net of income taxes, totaling $27~~2010.0 ~~million and $44.3 million, respectively, related to these hedges.~~ The ~~impact of these interest rate swaps was an increase to interest expense of~~ $~~24.1 million, $10.3 million and $~~0.6 million ~~for~~Mexico ~~the~~debt ~~years~~is ~~ended~~a ~~December 31,~~term ~~2009,~~loan ~~2008~~collateralized ~~and~~by ~~2007,~~the assets ~~respectively.~~and ~~The interest rate swaps associated with~~ the ~~$120.0~~leasehold ~~million~~interests of ~~first lien borrowings representing~~ the ~~delayed~~Cancun ~~draw~~restaurant. ~~construction~~The loan ~~have~~bears ~~not~~interest ~~been~~at ~~designated as hedges and the change in fair market value is reflected as other income/expense in the consolidated financial statements~~8. ~~Accordingly~~15%, awith ~~non-cash~~principal ~~gain~~payments of ~~approximately~~ $~~5.4~~19,885 ~~million~~due ~~was recorded for the year ended December 31~~monthly, ~~2009~~ and amatures ~~non-cash~~in ~~expense~~April ~~of approximately $14~~2013.3 ~~million and $5.4 million for the years ended December 31, 2008 and 2007, respectively.~~

~~Our~~Consistent ~~debt~~with ~~agreements~~our ~~contain~~policy ~~various~~to ~~restrictive~~manage ~~covenants~~our ~~including~~exposure ~~minimum~~to ~~EBITDA,~~interest ~~fixed~~rate ~~charge~~risk and ~~financial~~in ~~leverage~~conformity ~~ratios~~with the requirements of the first and second lien facilities, ~~limitations~~we entered into interest rate swaps for all of the onfirst ~~capital~~and ~~expenditures~~second lien borrowings of the Golden Nugget that fix the interest rates at between 5.4% and 5.5%, plus the applicable margin. We designated $210.0 million of the first lien interest rate swaps and ~~other~~all ~~restricted~~of ~~payments~~the second lien swaps as ~~defined~~cash inflow hedges. The swaps mirror the ~~agreements~~terms of the underlying debt and reset using the same index and terms. InAs ~~addition~~of December 31, ~~the~~2010, ~~Golden~~an ~~Nugget~~aggregate $96.0 million in second lien term loan debt ~~agreement~~has ~~requires~~been arepurchased ~~parent~~and ~~contribution~~retired, ifand as such a proportional share of the ~~leverage~~second ~~ratio~~lien swaps are no longer an effective cash flow hedge. Accordingly, a $10.3 million and $4.2 million non-cash expense associated with this portion of the swaps was recorded as ~~defined~~other expense for the years ended December 31, 2010 ~~falls~~and ~~below~~2009, arespectively. ~~predetermined~~At ~~level~~December 31, ~~through~~2010, the remaining portion of these swaps were determined to be highly effective, and no ineffective portion was recognized in income. Included in accumulated other comprehensive loss at December 31, 2010 and December 31, 2009 are unrealized losses, net of income taxes, totaling $25.4 ~~The~~million ~~contribution~~and is$27.0 ~~required~~million, respectively, related to bethese ~~made~~hedges. ~~within~~The 10interest ~~days~~rate swaps associated with the $120.0 million of ~~reporting~~first lien borrowings representing the ~~Golden~~delayed ~~Nugget~~draw ~~quarterly~~construction ~~results~~loan tohave not been designated as hedges and the ~~lenders~~change in fair market value is reflected as other income/expense in the consolidated financial statements. AsAccordingly, a ~~result~~non-cash expense of approximately ~~reduced~~$2.4 ~~operating~~million ~~results~~and ~~combined~~$14.3 ~~with~~million ~~additional~~was ~~borrowings~~recorded for ~~construction~~the years ended December 31, 2010 and 2008, respectively, whereas a non-cash gain of approximately $5.4 million was recorded for the ~~new~~year ended December 31, 2009. The impact of ~~tower~~these interest rate swaps, ~~Landry’s~~including ~~contributed~~those ~~approximately~~not designated as hedges, was an increase to interest expense of $25.08 million, in$24.1 ~~cash~~million toand $10.3 million for the ~~Golden~~years ~~Nugget~~ended inDecember 31, 2010, 2009 and 2008, respectively. AsInterest ofexpense included $11.5 million, $7.4 million and $2.3 million for the years ended December 31, 2010, 2009 and 2008, werespectively, ~~were~~related in to swaps not designated as hedges.

71Our debt agreements contain various restrictive covenants including minimum EBITDA, fixed charge, net worth, and financial leverage ratios as well as limitations on dividend payments, capital expenditures and other restricted payments as defined in the agreements. In addition, the Golden Nugget debt agreement required a parent contribution if the leverage ratio, as defined, fell below a predetermined level through December 31, 2009. As a result of reduced operating results combined with additional borrowings for construction of the new tower, Landry’s contributed approximately $25.0 million in cash to the Golden Nugget in 2009. As of December 31, 2010, we were in compliance with all such covenants and the restaurant group had approximately $21.0 million in letters of credit outstanding and an available borrowing capacity of approximately $73.3 million, while the Golden Nugget had approximately $2.4 million in letters of credit outstanding and an available borrowing capacity of approximately $1.4 million.

As a primary result of the extraordinary disruption to the credit markets in 2009, our 2009 financing carried substantially higher interest rates and original issue discount than the previous debt instruments. In addition, the Golden Nugget amendments increase its cash interest rate by 0.5% annually and its total interest rate by 1.5% annually on all first lien debt. These higher interest rates, combined with additional borrowing to provide liquidity and pay fees and expenses for the financing as well as to fund the hotel tower at the Golden Nugget, will result in substantially higher interest expense over at least the next few years.

In December 2004, we issued $400.0 million in 7.5% Notes through a private placement which were originally due in December 2014. The 7.5% Notes were general unsecured obligations and required semi-annual interest payments in June and December. On June 16, 2005, we completed an Exchange Offering whereby substantially all of the senior notes issued under the private placement were exchanged for 7.5% Notes registered under the Securities Act of 1933.

LANDRY’S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~compliance~~We ~~with~~assumed ~~all~~an ~~such covenants and the restaurant group had approximately~~ $1711.04 million, in11.39% ~~letters~~non-recourse, oflong-term ~~credit~~mortgage ~~outstanding~~note ~~and~~payable, ~~available~~due May ~~borrowing~~2025, ~~capacity~~in ofconnection ~~$34.0~~with ~~while~~an ~~the~~asset ~~Golden~~purchase ~~Nugget~~in ~~had approximately~~March $22003.0 ~~million~~Principal inand ~~letters~~Interest ofpayments ~~credit~~are ~~outstanding~~due monthly, and ~~available~~all ~~borrowing~~excess ~~capacity~~cash offlow ~~less~~reduces ~~than~~the ~~$1.0~~principal ~~million~~balance monthly.

AsOur ~~a primary~~debt ~~result~~agreements ofcontain ~~the~~various ~~extraordinary~~restrictive ~~disruption~~covenants toincluding ~~the~~minimum ~~credit~~fixed ~~markets~~charge, innet ~~2009~~worth, ~~our 2009 financing carried substantially higher interest rates~~ and ~~original~~financial ~~issue~~leverage ~~discount~~ratios ~~than~~as ~~the~~well ~~previous~~as ~~debt~~limitations ~~instruments.~~on Individend ~~addition~~payments, ~~the~~capital ~~Golden~~expenditures ~~Nugget Amendments~~and ~~increase~~other ~~its~~restricted ~~cash~~payments ~~interest~~as ~~rate~~defined byin 0the agreements.5% ~~annually~~At ~~and~~

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Filing Compare · LANDRYS RESTAURANTS INC