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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, 2008



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

For the transition period fromto.

* 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:



|                                       |  |                                       
|-------------------------------------- |  | --------------------------------------
|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 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, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer 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, 2008 was $166,046,664. 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 10, 2009,
there were 16,142,263 shares of the registrants common stock outstanding.









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LANDRYS RESTAURANTS, INC.

TABLE OF CONTENTS



|              |  |                                                                                                                  |  |         
|------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | --------
|              |  |                                                                                                                  |  | Page No.
|PART I.       |  | 1                                                                                                               
|              |  |                                                                                                                 
|Item 1.       |  | Business                                                                                                         |  | 1       
|              |  |                                                                                                                 
|Item 1A.      |  | Risk Factors                                                                                                     |  | 12      
|              |  |                                                                                                                 
|Item 1B.      |  | Unresolved Staff Comments                                                                                        |  | 19      
|              |  |                                                                                                                 
|Item 2.       |  | Properties                                                                                                       |  | 20      
|              |  |                                                                                                                 
|Item 3.       |  | Legal Proceedings                                                                                                |  | 20      
|              |  |                                                                                                                 
|Item 4.       |  | Submission of Matters to a Vote of Security Holders                                                              |  | 21      
|              | 
|PART II.      |  | 22                                                                                                              
|              |  |                                                                                                                 
|Item 5.       |  | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 22      
|              |  |                                                                                                                 
|Item 6.       |  | Selected Financial Data                                                                                          |  | 23      
|              |  |                                                                                                                 
|Item 7.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                            |  | 25      
|              |  |                                                                                                                 
|Item 7A.      |  | Quantitative and Qualitative Disclosures about Market Risk                                                       |  | 39      
|              |  |                                                                                                                 
|Item 8.       |  | Financial Statements and Supplementary Data                                                                      |  | 39      
|              |  |                                                                                                                 
|Item 9.       |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                             |  | 39      
|              |  |                                                                                                                 
|Item 9A.      |  | Controls and Procedures                                                                                          |  | 39      
|              |  |                                                                                                                 
|Item 9B.      |  | Other Information                                                                                                |  | 40      
|              | 
|PART III.     |  | 41                                                                                                              
|              |  |                                                                                                                 
|Item 10.      |  | Directors, Executive Officers and Corporate Governance                                                           |  | 41      
|              |  |                                                                                                                 
|Item 11.      |  | Executive Compensation                                                                                           |  | 41      
|              |  |                                                                                                                 
|Item 12.      |  | Security Ownership of Certain Beneficial Holders and Management and Related Stockholder Matters                  |  | 41      
|              |  |                                                                                                                 
|Item 13.      |  | Certain Relationships and Related Transactions and Director Independence                                         |  | 43      
|              |  |                                                                                                                 
|Item 14.      |  | Principal Accountant Fees and Services                                                                           |  | 43      
|              | 
|PART IV.      |  | 44                                                                                                              
|              |  |                                                                                                                 
|Item 15.      |  | Exhibits and Financial Statement Schedules                                                                       |  | 44      
|              | 
|SIGNATURES    |  | 90                                                                                                              
|              | 
|EXHIBIT INDEX |  | 91                                                                                                              



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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 offering circular. 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 offering circular. These factors include or relate to the following:



| |  |  | 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;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 businesses 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;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | ------------------------



| |  |  | whether the final property and business interruption losses resulting from Hurricane Ike will be in accordance with our current estimates;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | food, labor, fuel and utilities costs; and
| | - |  | ------------------------------------------



| |  |  | the other factors discussed under Risk Factors.
| | - |  | -------------------------------------------------



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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.



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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 175 locations in 27 states and Canada as of December 31, 2008. 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. 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, casino resorts, aquarium complexes and the Kemah Boardwalk, a
40-acre amusement, entertainment and retail complex in Kemah, Texas, among others. We also own and operate the Golden Nugget Hotels and Casinos in downtown Las Vegas and Laughlin, Nevada.

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 the Company. 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 to 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

On June 16,
2008, we entered into an Agreement and Plan of Merger, as amended on October 18, 2008 (the Merger Agreement), with Fertitta Holdings, Inc., a Delaware corporation (Parent), and Fertitta Acquisition Co., a Delaware
corporation and a wholly-owned subsidiary of Parent (Merger Sub), which are solely owned by Tilman J. Fertitta, our Chairman, President and Chief Executive Officer, to acquire all of our issued and outstanding capital stock (the
Proposed Acquisition). In order to finance the Proposed Acquisition in part, Mr. Fertitta entered into a debt commitment letter dated June 12, 2008 (the Initial Commitment Letter), as amended on October 17, 2008 (the
Commitment Letter Amendment and together with the Initial Commitment Letter, the Commitment Letter) with Jefferies Funding LLC, Jefferies & Company, Inc., Jefferies



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Finance LLC and Wells Fargo Foothill, LLC (the Lenders). In addition to the commitment to provide financing for the Proposed Acquisition, the
Commitment Letter also contained a commitment by the Lenders to provide alternative financing in the event the Proposed Acquisition was not consummated (the Alternative Commitment).

In connection with the proxy statement required to be provided to Company stockholders voting on the Proposed Acquisition, the Securities and Exchange
Commission (SEC) required the Company to disclose certain information from the Commitment Letter issued by the Lenders to Mr. Fertitta and the Company. The Commitment Letter issued by the Lenders required that such information not be
disclosed and be kept confidential and that disclosure of such information would be a basis for termination of such Commitment Letter. The Company informed Mr. Fertitta that the Company was not prepared to risk losing the Alternative Commitment and
was therefore unable to comply with a condition of the Merger Agreement which required distribution of an SEC approved proxy statement to Company stockholders to vote on the adoption of the merger proposal. As a result of the Companys
inability to provide a proxy statement to Company stockholders, the Company informed Mr. Fertitta that it would be unable to consummate the Proposed Acquisition. The Merger Agreement was terminated by agreement of the parties on January 11, 2009.

Due to a number of factors affecting consumers, including rising unemployment, home foreclosures, a slowdown in global economies,
contracting credit markets, and reduced consumer spending, the near term outlook for the restaurant, hospitality, and entertainment industries is uncertain. The economic slow down accelerated in the fourth quarter of 2008 and has continued into the
first quarter of 2009. 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.

Significant events that affected our 2008 results, as compared to 2007, or that may affect our future results,
are described below:



| |  |  | 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The refinancing of our credit facility and senior unsecured notes with a new bank agreement and senior secured notes that mature in May and August 2011,
respectively carry substantially higher interest rates. The new agreements also contain more restrictive covenants than our previous agreements.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Construction of the new hotel tower at the Golden Nugget Las Vegas with an estimated completion date in late 2009 at a cost of approximately $140.0 million will
significantly increase 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 merger agreement and associated non recurring 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.
| | - |  | ---------------------------------------------------------------------------------------



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Landrys Division.    The Landrys Division is comprised of 68
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 26.4% of our restaurant and
hospitality revenues for the year ended December 31, 2008. Alcoholic beverage sales accounted for approximately 19.0% of these revenues.



| |  |  | 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 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 $28.99, with certain items offered at market price. Lunch entrées range from $6.50 to $21.99. Charleys Crab dinner entrée prices range from $17.99 to $43.99, with lunch
entrée prices ranging from $8.50 to $22.99.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 Cafe Division.    The Rainforest Cafe Division comprised of 32 Rainforest Cafe, T-Rex Cafe and Yak & Yeti theme-based restaurants, generated 30.7% of our restaurant and hospitality revenues for
the year ended December 31, 2008. Alcoholic beverage sales and retail sales accounted for approximately 20.8% 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. In October 2008, the fifth restaurant was opened at Downtown Disney in Orlando, Florida.



| |  |  | 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
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 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 42 Saltgrass Steak House restaurants
generated 19.4% of our restaurant and hospitality revenues for the year ended December 31, 2008. Alcoholic beverage sales accounted for approximately 11.9% 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 $26.99 and lunch entrée prices range from $7.99 to $15.99.

Chart House
Division.The Chart House Division is comprised of 27 Chart House restaurants, which generated 13.4% of our restaurant and hospitality revenues for the year ended December 31, 2008. Alcoholic beverage sales accounted
for approximately 21.2% 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.

Specialty Division

Our Specialty Division, which generated 10.1% 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.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 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 53,400 square feet of gaming area. As of December 31, 2008, the property featured three towers containing 1,915 rooms, the largest number of guestrooms in downtown Las Vegas, approximately 1,358
slot machines and 66 table games. The Golden NuggetLaughlin has approximately 32,000 square feet of gaming space and as of December 31, 2008 had 1,028 slot machines, 17 table games and 300 hotel rooms in Laughlin, Nevada. For the year
ended December 31, 2008, the Golden Nugget properties generated total revenues of $253.3 million. The subsidiaries that own and operate the Golden Nugget are separately financed, unrestricted subsidiaries with $422.5 million of debt as of
December 31, 2008, which includes $39.5 million of funds used in the current development of an additional new hotel tower to have approximately 500 rooms.

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 Competitive Strengths

Stable and Diversified Cash Flows.    Our nationwide system of 175 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



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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 55 restaurant properties and many properties in our Specialty Division.
Out of our 175 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.    We have a talented management team with 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 18 years of experience with us and 26 years of industry experience. In addition to an experienced and committed senior management team, we also have a
talented operations organization at the regional and individual restaurant, 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, 2008, 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:



| |  |  | Provide an Attractive Price-Value Entertainment and Dining Experience.    Our restaurants provide customers an attractive price-value
relationship by serving generous portions with fresh ingredients in high-quality meals 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Focus on Store-Level Operating Performance.    We remain committed to improving store-level operating performance. We spent $11.7 million
during 2006 and 2007 on corporate and store-based systems which 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 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
as evidenced by strong sales trends. 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, opening two new steak houses in 2003, four in 2004, two in 2005, five in 2006 and five in 2007, three of which we converted from Joes Crab Shack restaurants into Saltgrass Steak Houses. 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 2009.

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 to the construction of at least four restaurants (including Yak & Yetis). Three of the locations have already opened with two of them being at high profile Disney properties.

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.



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The following table enumerates by state the location of our restaurants as of December 31, 2008:



|              |  |                |  |                 |  |               
|------------- |  | -------------- |  | --------------- |  | --------------
|State         |  | Numberof Units |  | State           |  | Numberof Units
|Alabama       |  | 2              |  | Minnesota       |  | 1             
|Arizona       |  | 2              |  | Missouri        |  | 2             
|California    |  | 13             |  | Nevada          |  | 8             
|Colorado      |  | 8              |  | New Jersey      |  | 5             
|Connecticut   |  | 1              |  | New Mexico      |  | 1             
|Florida       |  | 23             |  | Oklahoma        |  | 1             
|Georgia       |  | 1              |  | Oregon          |  | 1             
|Illinois      |  | 4              |  | Pennsylvania    |  | 2             
|Kansas        |  | 2              |  | South Carolina  |  | 2             
|Kentucky      |  | 1              |  | Tennessee       |  | 2             
|Louisiana     |  | 4              |  | Texas           |  | 74            
|Maryland      |  | 2              |  | Virginia        |  | 1             
|Massachusetts |  | 2              |  | Washington      |  | 1             
|Michigan      |  | 8              |  | Ontario, Canada |  | 1             
|              |  |                |  |                 |  |               
|              |  |                |  | Total           |  | 175           
|              |  |                |  |                 |  |               

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 eight 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



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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 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 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:



| |  |  | all service positions;
| | - |  | ----------------------



| |  |  | management, accounting, personnel management, and dining room and bar operations; and
| | - |  | -------------------------------------------------------------------------------------



| |  |  | 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 attract and retain a greater proportion of management personnel through our existing base of employees and internal promotions and advancements.

As of December 31, 2008, there were approximately 53 individuals involved in regional management functions generally performing on-site visits,
formal inspections and similar responsibilities. As we grow, we



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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.

As of December 31, 2008, in the restaurant division, we employed approximately 16,836 persons, of whom 1,087 were restaurant managers or
manager-trainees, 241 were salaried corporate and administrative employees, approximately 53 were operations regional management employees, 41 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 2008 was within industry standards.

We employed approximately 2,848 persons in the gaming division as of December 31, 2008, of whom 261 were management, 300 were salaried employees and
the rest were hourly employees. Approximately 1,242 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, secret shoppers, 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.



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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 2008 were approximately 1.1% of revenues from continuing operations. We expect to cross market our restaurant, hospitality and
gaming locations to leverage our advertising spend. We anticipate future advertising and marketing expenses to remain moderate.

Service Marks

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 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 International License Agreements

Rainforest Cafe has entered into exclusive license arrangements relating to the operations and development of Rainforest Cafes in several foreign
jurisdictions. There are nine international units. We have signed agreements for four additional units in the Middle East over the next four years. We own various equity interests in several of the international locations, which were included when
we acquired Rainforest Cafe in 2000. 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 segments: restaurant and hospitality and gaming operations.



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ITEM 1A.    RISK FACTORS

The following information describes certain significant risks and uncertainties inherent in our business and this offering. You should take these risks
into account in evaluating us and in deciding whether to purchase the notes offered hereby. 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 offering circular. 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:



| |  |  | traffic patterns,
| | - |  | -----------------



| |  |  | demographic considerations,
| | - |  | ---------------------------



| |  |  | the amounts spent on, and the effectiveness of, our marketing efforts,
| | - |  | ----------------------------------------------------------------------



| |  |  | weather conditions, and
| | - |  | -----------------------



| |  |  | 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. We face significant competition from mid-priced, full-service, casual dining restaurants offering 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.

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 gaming participants. Certain states have recently legalized, and several other



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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 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
continued in 2008 and substantially increased during the third and fourth quarter of 2008. The volatility and disruption in the global financial markets have reached unprecedented levels. The availability and cost of credit has been materially
affected. These factors, combined with volatile oil and gas prices, depressed home prices and increasing foreclosures, falling equity market values, declining business and consumer confidence, declines in consumer spending, and the risks of
increased inflation and unemployment, have precipitated an economic slowdown and fears of 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 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. 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



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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.

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 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 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.

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.



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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.

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 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 and employment regulations. These and other initiatives could adversely affect us as well as the restaurant industry in 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



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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. 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 license arrangements relating to the operations and development of Rainforest
Cafes in several foreign jurisdictions. These agreements include a per unit development fee and/or restaurant royalties ranging from 3% to 6.9% of revenues. There are nine international units; one is owned outright, and the rest are franchises. We
own various equity interests in several of the international franchise locations. 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.



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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. 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 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, 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.

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



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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. 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.



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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 incur significant capital expenditures. Currently we are constructing a new hotel tower at the Golden NuggetLas Vegas. The project is expected to continue through 2009 and is estimated to cost approximately $160.0 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.

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.

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.

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.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.



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ITEM 2.    PROPERTIES

Restaurant Locations

For information concerning the
location of our restaurants see BusinessRestaurant Locations.

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.

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 April 4, 2006, a purported class
action lawsuit was filed against Joes Crab ShackSan Diego, Inc. in the Superior Court of California in San Diego by Kyle Pietrzak and others similarly situated. The lawsuit alleges that the defendant violated wage and hour laws,
including the failure to pay hourly and overtime wages, failure to provide meal periods and rest periods, failing to provide minimum reporting time pay, failing to compensate employees for required expenses, including the expense to maintain
uniforms, and violations of the Unfair Competition Law. In June 2006, the lawsuit was amended to include Kristina Brask as a named plaintiff and named Crab Addison, Inc. and Landrys Seafood HouseArlington, Inc. as additional defendants.
We reached a settlement agreement which has been approved by the Court and paid the settlement amount in full in February 2009. As a result, this matter has been dismissed.

On February 18, 2005, and subsequently amended, a purported class action lawsuit against Rainforest Cafe, Inc. was filed in the Superior Court of
California in San Bernardino by Michael D. Harrison, et. al. Subsequently, on September 20, 2005, another purported class action lawsuit against Rainforest Cafe, Inc. was filed in the Superior Court of California in Los Angeles by Dustin
Steele, et. al. On January 26, 2006, both lawsuits were consolidated into one action by the state Superior Court in San Bernardino. The lawsuits allege that Rainforest Cafe violated wage and hour laws, including not providing meal and rest
breaks, uniform violations and failure to pay overtime. We reached a settlement agreement which has been approved by the Court and paid the settlement amount in full in February 2009. As a result, this matter has been dismissed.

Following Mr. Fertittas initial proposal on January 27, 2008 to acquire all of our
outstanding stock, five putative class action law suits were filed in state district courts in Harris County, Texas. On March 26, 2008, the five actions were consolidated for all purposes under Case No. 2008- 05211; Dennis Rice, on
behalf of himself and all others similarly situated v. Landrys Restaurants, Inc. et al.; in the 157thJudicial District of Harris County,
Texas (Rice). The Rice Consolidated action was voluntarily non-suited by the plaintiffs and the order of non-suit was signed by the court on February 4, 2009.

James F. Stuart, individually and on behalf of all others similarly situated v. Landrys Restaurants, Inc. et al., was filed on June 26,
2008 in the Court of Chancery of the State of Delaware (Stuart). We are named as a defendant along with our directors, Parent and Merger Sub. Stuart is a putative class action in which plaintiff alleges that the merger agreement
unduly hinders obtaining the highest value for shares of our stock. Plaintiff also alleges that the merger is unfair. Plaintiff seeks to enjoin or rescind the merger, an accounting and damages along with costs and fees.

David Barfield v. Landrys Restaurants, Inc. et al., was filed on June 27, 2008 in the Court of Chancery of the State of Delaware
(Barfield). We are named in this case along with our directors, Parent and Merger Sub.



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Barfield is a putative class action in which plaintiff alleges that our directors aided and abetted Parent and Merger Sub, and have breached their
fiduciary duties by failing to engage in a fair and reliable sales process leading up to the merger agreement. Plaintiff seeks to enjoin or rescind the transaction, an accounting and damages along with costs and fees.

Stuart and Barfield were consolidated by court order. The consolidated action is proceeding under Consolidated C.A. No. 3856-VCL; In re:
Landrys Restaurants, Inc. Shareholder Litigation. In their consolidated complaint, plaintiffs allege that our directors breached fiduciary duties to our stockholders and that the preliminary proxy statement filed on July 17, 2008
fails to disclose what plaintiffs contend are material facts. Plaintiffs also alleged that we, Parent and Merger Sub aided and abetted the alleged breach of fiduciary duty. We believe that this action is without merit and intend to contest the above
matter vigorously.

On February 5, 2009, a purported class action and derivative lawsuit entitled Louisiana Municipal Police
Employees Retirement System on behalf of itself and all other similarly situated shareholders of Landrys Restaurants, Inc. and derivatively on behalf of minimal defendant Landrys Restaurants, Inc. was brought
against all members of our Board of Directors, Fertitta Holdings, Inc., and Fertitta Acquisition Co. in the Court at Chancery of the State of Delaware. The lawsuit alleges, among other things, a breach of a fiduciary duty by the directors for
renegotiating the Merger Agreement with the Fertitta entities, allowing Mr. Fertitta to acquire shares of stock in the Company and gain majority control thereof, and terminating the Merger Agreement without requiring payment of the reverse
termination fee. The suit seeks consummation of the merger buyout at $21.00 a share or damages representing the difference between $21.00 per share and the price at which class members sold their stock in the open market, or damages for allowing
Mr. Fertitta to acquire control of the Company without paying a control premium, or alternately requiring payment of the reverse termination fee or damages for the devaluation of the Companys stock. We intend to contest this matter
vigorously.

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.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We did not submit any matters to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2008.



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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 10, 2009, there were approximately 941 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 2007 and 2008.



|               |  |      |       |     |   |               |  |   |     
|-------------- |  | ---- | ----- | --- | - | ------------- |  | - | ----
|               |  | High |       | Low |   | DividendsPaid
|2007           |  |      |       |     |   |               |  |   |     
|First Quarter  |  | $    | 31.55 |     | $ | 28.16         |  | $ | 0.05
|Second Quarter |  | $    | 30.30 |     | $ | 28.31         |  | $ | 0.05
|Third Quarter  |  | $    | 32.30 |     | $ | 24.65         |  | $ | 0.05
|Fourth Quarter |  | $    | 29.39 |     | $ | 19.54         |  | $ | 0.05
|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          |  |   |    

LOGO



|                             |  |          |  |          |  |          |  |          |  |          |  |         
|---------------------------- |  | -------- |  | -------- |  | -------- |  | -------- |  | -------- |  | --------
|                             |  | 01/01/04 |  | 01/01/05 |  | 01/01/06 |  | 01/01/07 |  | 01/01/08 |  | 01/01/09
|Dow Jones Industrial Average |  | 100      |  | 103      |  | 103      |  | 119      |  | 127      |  | 84      
|Dow Jones Restaurant Index   |  | 100      |  | 129      |  | 134      |  | 163      |  | 167      |  | 147     
|Landrys Restaurants, Inc.   |  | 100      |  | 113      |  | 104      |  | 117      |  | 77       |  | 45      

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 Notes were issued and our Bank Agreement prohibit the payment of
dividends on our common stock to specified levels.



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Stock Repurchase

In 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, we authorized a $50.0 million open market
stock buy back program and in September 2003, we 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 repurchasing of approximately 24.0 million shares of common stock for approximately $472.4 million through December 31, 2008.

All repurchases of our common stock during the quarter ended December 31, 2008 were made pursuant to our open market stock repurchase program. We
purchased 3,306 shares of our common stock during 2008, and have exhausted substantially all funds authorized for purchases under previously existing programs. The following table summarizes repurchases of our common stock during the quarter ended
December 31, 2008 pursuant to our open market stock repurchase program. In addition to our repurchases, during the fourth quarter of 2008, Mr. Tilman J. Fertitta, our Chairman, Chief Executive Officer and President, who owns approximately 56%
of our stock, purchased approximately 2.6 million shares on the open market without having a publicly announced plan.



|                       |  |                                              |  |                                         |       |                                                                                             |       |                                                                                                                        |   |        
|---------------------- |  | -------------------------------------------- |  | --------------------------------------- | ----- | ------------------------------------------------------------------------------------------- | ----- | ---------------------------------------------------------------------------------------------------------------------- | - | -------
|Landrys: Period       |  | (a) TotalNumber ofShares (or UnitsPurchased) |  | (b) AveragePrice paidper Share(or Unit) |       | (c) Total Number ofShares (or Units)Purchased as Part ofPublicly AnnouncedPlans or
Programs |       | (d) Maximum Number(or Approximate DollarValue) of Shares (orUnits) that May Yet
BePurchased Under thePlans or Programs
|October 1 - 31, 2008   |  |                                             |  | $                                       |      |                                                                                             |      |                                                                                                                        | $ | 129,124
|November 1 - 30, 2008  |  |                                             |  | $                                       |      |                                                                                             |      |                                                                                                                        | $ | 129,124
|December 1 - 31, 2008  |  | 2,500                                        |  | $                                       | 11.11 |                                                                                             | 2,500 |                                                                                                                        | $ | 101,349
|                       |  |                                              |  |                                         |       |                                                                                             |       |                                                                                                                        |   |        
|Total shares purchased |  | 2,500                                        |  | $                                       | 11.11 |                                                                                             | 2,500 |                                                                                                                        | $ | 101,349
|                       |  |                                              |  |                                         |       |                                                                                             |       |                                                                                                                        |   |        



|                           |  |                                              |  |                                         |       |  |  |  | 
|-------------------------- |  | -------------------------------------------- |  | --------------------------------------- | ----- |  |  |  | 
|Tilman J. Fertitta: Period |  | (a) TotalNumber ofShares (or UnitsPurchased) |  | (b) AveragePrice paidper Share(or Unit) |       |  |  | 
|October 1 - 31, 2008       |  | 1,427,623                                    |  | $                                       | 11.47 |  |  |  | 
|November 1 - 30, 2008      |  | 1,073,450                                    |  | $                                       | 10.99 |  |  |  | 
|December 1 - 31, 2008      |  | 126,301                                      |  | $                                       | 11.06 |  |  |  | 
|                           |  |                                              |  |                                         |       |  |  |  | 
|Total shares purchased     |  | 2,627,374                                    |  | $                                       | 11.23 |  |  |  | 
|                           |  |                                              |  |                                         |       |  |  |  | 

ITEM 6.    SELECTED FINANCIAL DATA

The following table sets forth our selected consolidated financial data as of and for the years ended December 31, 2008, 2007, 2006, 2005, and 2004
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.

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.



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SELECTED CONSOLIDATED FINANCIAL INFORMATION



|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|--------------------------------------------------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | - |  | ---- | --------- | - |  | - | --------- | -
|                                                                            |  | Year Ended December 31, |          
|                                                                            |  | 2008                    |           |   | 2007 |   |           | 2006 |  |   | 2005      |   |  | 2004 |          
|REVENUES                                                                    |  | $                       | 1,143,889 |   |      | $ | 1,160,368 |      |  | $ | 1,101,994 |   |  | $    | 864,156   |   |  | $ | 769,280   |  
|OPERATING COSTS AND EXPENSES:                                               |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Cost of revenues                                                            |  |                         | 245,381   |   |      |   | 256,336   |      |  |   | 249,575   |   |  |      | 223,864   |   |  |   | 214,966   |  
|Labor                                                                       |  |                         | 366,395   |   |      |   | 375,144   |      |  |   | 357,748   |   |  |      | 258,469   |   |  |   | 221,059   |  
|Other operating expenses                                                    |  |                         | 288,090   |   |      |   | 292,298   |      |  |   | 278,172   |   |  |      | 213,697   |   |  |   | 189,945   |  
|General and administrative expense                                          |  |                         | 51,294    |   |      |   | 55,756    |      |  |   | 57,977    |   |  |      | 47,443    |   |  |   | 48,446    |  
|Depreciation and amortization                                               |  |                         | 70,292    |   |      |   | 65,287    |      |  |   | 55,857    |   |  |      | 43,262    |   |  |   | 37,616    |  
|Asset impairment expense (1)                                                |  |                         | 2,409     |   |      |   |          |      |  |   | 2,966     |   |  |      |          |   |  |   | 1,709     |  
|Loss (gain) on disposal of assets                                           |  |                         | (59       | ) |      |   | (18,918   | )    |  |   | (2,295    | ) |  |      | (524      | ) |  |   | (100      | )
|Pre-opening expenses                                                        |  |                         | 2,266     |   |      |   | 3,477     |      |  |   | 5,214     |   |  |      | 3,030     |   |  |   | 2,990     |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Total operating costs and expenses                                          |  |                         | 1,026,068 |   |      |   | 1,029,380 |      |  |   | 1,005,214 |   |  |      | 789,241   |   |  |   | 716,631   |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|OPERATING INCOME                                                            |  |                         | 117,821   |   |      |   | 130,988   |      |  |   | 96,780    |   |  |      | 74,915    |   |  |   | 52,649    |  
|OTHER EXPENSE (INCOME):                                                     |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Interest expense, net (2)                                                   |  |                         | 79,817    |   |      |   | 72,322    |      |  |   | 49,139    |   |  |      | 31,208    |   |  |   | 10,482    |  
|Other, net (3)                                                              |  |                         | 17,300    |   |      |   | 16,690    |      |  |   | (128      | ) |  |      | 530       |   |  |   | 13,566    |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Total other expense                                                         |  |                         | 97,117    |   |      |   | 89,012    |      |  |   | 49,011    |   |  |      | 31,738    |   |  |   | 24,048    |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                       |  |                         | 20,704    |   |      |   | 41,976    |      |  |   | 47,769    |   |  |      | 43,177    |   |  |   | 28,601    |  
|PROVISION (BENEFIT) FOR INCOME TAXES (4)                                    |  |                         | 7,227     |   |      |   | 14,238    |      |  |   | 13,393    |   |  |      | 13,556    |   |  |   | (10,392   | )
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|INCOME FROM CONTINUING OPERATIONS                                           |  |                         | 13,477    |   |      |   | 27,738    |      |  |   | 34,376    |   |  |      | 29,621    |   |  |   | 38,993    |  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES (1)                |  |                         | (10,569   | ) |      |   | (9,626    | )    |  |   | (56,146   | ) |  |      | 15,194    |   |  |   | 27,528    |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|NET INCOME (LOSS)                                                           |  | $                       | 2,908     |   |      | $ | 18,112    |      |  | $ | (21,770   | ) |  | $    | 44,815    |   |  | $ | 66,521    |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|EARNINGS PER SHARE INFORMATION:                                             |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|BASIC                                                                       |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Income from continuing operations                                           |  | $                       | 0.88      |   |      | $ | 1.47      |      |  | $ | 1.61      |   |  | $    | 1.33      |   |  | $ | 1.44      |  
|Income (loss) from discontinued operations                                  |  |                         | (0.69     | ) |      |   | (0.51     | )    |  |   | (2.63     | ) |  |      | 0.68      |   |  |   | 1.02      |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income (loss)                                                           |  | $                       | 0.19      |   |      | $ | 0.96      |      |  | $ | (1.02     | ) |  | $    | 2.01      |   |  | $ | 2.46      |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Weighted average number of common shares outstanding                        |  |                         | 15,260    |   |      |   | 18,850    |      |  |   | 21,300    |   |  |      | 22,300    |   |  |   | 27,000    |  
|DILUTED                                                                     |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Income from continuing operations                                           |  | $                       | 0.87      |   |      | $ | 1.43      |      |  | $ | 1.56      |   |  | $    | 1.29      |   |  | $ | 1.40      |  
|Income (loss) from discontinued operations                                  |  |                         | (0.68     | ) |      |   | (0.50     | )    |  |   | (2.55     | ) |  |      | 0.66      |   |  |   | 0.99      |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income (loss)                                                           |  | $                       | 0.19      |   |      | $ | 0.93      |      |  | $ | (0.99     | ) |  | $    | 1.95      |   |  | $ | 2.39      |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Weighted average number of common and common share equivalents outstanding  |  |                         | 15,480    |   |      |   | 19,400    |      |  |   | 22,000    |   |  |      | 23,000    |   |  |   | 27,800    |  
|EBITDA                                                                      |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net Income (loss)                                                           |  | $                       | 2,908     |   |      | $ | 18,112    |      |  | $ | (21,770   | ) |  | $    | 44,815    |   |  | $ | 66,521    |  
|Add back:                                                                   |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Provision (benefit) for income tax                                          |  |                         | 7,227     |   |      |   | 14,238    |      |  |   | 13,393    |   |  |      | 13,556    |   |  |   | (10,392   | )
|Interest expense, net                                                       |  |                         | 79,817    |   |      |   | 72,322    |      |  |   | 49,139    |   |  |      | 31,208    |   |  |   | 10,482    |  
|Depreciation and amortization                                               |  |                         | 70,292    |   |      |   | 65,287    |      |  |   | 55,857    |   |  |      | 43,262    |   |  |   | 37,616    |  
|Asset impairment expense                                                    |  |                         | 2,409     |   |      |   |          |      |  |   | 2,966     |   |  |      |          |   |  |   | 1,709     |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|EBITDA                                                                      |  | $                       | 162,653   |   |      | $ | 169,959   |      |  | $ | 99,585    |   |  | $    | 132,841   |   |  | $ | 105,936   |  
|                                                                            |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|BALANCE SHEET DATA (AT END OF PERIOD)                                       |  |                         |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Working capital (deficit)                                                   |  | $                       | (86,036   | ) |      | $ | (149,883  | )    |  | $ | (50,056   | ) |  | $    | 217,461   |   |  | $ | 161,515   |  
|Total assets                                                                |  | $                       | 1,515,324 |   |      | $ | 1,502,983 |      |  | $ | 1,464,912 |   |  | $    | 1,612,579 |   |  | $ | 1,344,952 |  
|Short-term notes payable and current portion of notes and other obligations |  | $                       | 8,753     |   |      | $ | 87,243    |      |  | $ | 748       |   |  | $    | 1,852     |   |  | $ | 1,700     |  
|Long term notes and other obligations, net of current portion               |  | $                       | 862,375   |   |      | $ | 801,428   |      |  | $ | 710,456   |   |  | $    | 816,044   |   |  | $ | 559,545   |  
|Stockholders equity (1)                                                    |  | $                       | 294,477   |   |      | $ | 316,899   |      |  | $ | 494,707   |   |  | $    | 516,770   |   |  | $ | 600,897   |  



24



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|(1) | In 2008, 2006 and 2004, we recorded asset impairment charges related to continuing operations of $2.4 million ($1.6 million after tax), $3.0 million ($2.0 million after tax) and
$1.7 million ($1.2 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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In 2007, we recognized an $8.0 million ($5.3 million after-tax) charge for deferred loan costs previously being amortized over the term of the 7.5% Senior Notes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | 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. In 2004, we recorded prepayment penalty expense and other costs related to
the refinancing of our long-term debt of approximately $16.6 million ($11.3 million after tax).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | In 2004, we recognized $18.5 million in income tax benefits for a reduction of the valuation allowance and deferred tax liabilities attributable to tax benefits deemed realizable
and reduced accruals.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EBITDA 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. EBITDA is not intended to be viewed as a source of liquidity or as a cash flow measure as used in the statement of cash flows. EBITDA is simply
shown above as it is a commonly used non-GAAP valuation statistic. 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, 2008,
we operated 175 restaurants, 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.

Termination of Merger Agreement

On
June 16, 2008, we entered into an Agreement and Plan of Merger, as amended on October 18, 2008 (the Merger Agreement), with Fertitta Holdings, Inc (Parent)., a Delaware corporation, and Fertitta Acquisition Co., a Delaware corporation and
a wholly-owned subsidiary of Parent, which are solely owned by Tilman J. Fertitta, our Chairman, President and Chief Executive Officer, to acquire all of our issued and outstanding capital stock (the Proposed Acquisition). In order to finance the
Proposed Acquisition, in part, Mr. Fertitta entered into a debt commitment letter dated June 12, 2008, as amended on October 17, 2008 (the Commitment Letter) with Jefferies Funding LLC, Jefferies & Company, Inc., Jefferies
Finance LLC and Wells Fargo Foothill, LLC (the Lenders). In addition to the commitment to provide financing for the Proposed Acquisition, the Commitment Letter also contained a commitment by the Lenders to provide alternative financing in the event
the Proposed Acquisition was not consummated (the Alternative Commitment).



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In connection with the proxy statement required to be provided to our stockholders voting on the Proposed
Acquisition, the Securities and Exchange Commission (SEC) required that we disclose certain information from the Commitment Letter issued by the Lenders to Mr. Fertitta and the Company. The Commitment Letter required that such information not
be disclosed and be kept confidential and that disclosure of such information would be a basis for termination of the Commitment Letter. We informed Mr. Fertitta that we were not prepared to risk losing the Alternative Commitment and were
therefore unable to comply with a condition of the Merger which required distribution of an SEC approved proxy statement to our stockholders to vote on the adoption of the merger proposal. As a result of our inability to provide a proxy statement to
our stockholders, we informed Mr. Fertitta that we would be unable to consummate the Proposed Acquisition. The Merger Agreement was terminated by agreement of the parties on January 11, 2009.

No party to the Merger Agreement will be obligated to make any payments to each other as a result of the termination of the Merger Agreement.
Professional fees and other related expenses associated with the Proposed Acquisition totaling $4.7 million were expensed during the fourth quarter of 2008.

Interim Senior Secured Credit Facility

On December 22, 2008, we entered into an $81.0 million interim senior secured
credit facility. The interim senior secured credit facility provides 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.

Hurricane
Ike

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.

We also maintain business interruption insurance coverage and have recorded approximately $7.3 million in recoveries related to lost
profits at our affected locations in Galveston and the Kemah Boardwalk. This amount was recorded as revenue in our consolidated financial statements. We believe that the majority of our property losses and cash flow will be covered by property and
business interruption insurance.

Other Matters

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 to discontinued operations in the statements of income, balance sheets and segment information for all periods presented.

On November 17, 2006, we completed the sale of 120 Joes Crab Shack restaurants for approximately $192.0 million, including the assumption of
certain working capital liabilities. In connection with the sale, we recorded pre-tax impairment charges and other losses totaling $49.2 million.

We recorded additional pre-tax impairment charges totaling $10.3 million, $9.9 million and $30.6 million for the year ended December 31, 2008, 2007 and 2006, respectively, to write down carrying values of assets



26



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pertaining to the remaining stores included in our disposal plan. 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 our strategic review, we also identified certain restaurants that
we believe are suitable for conversion into other Landrys concepts. As a result of this review, we took a charge of $3.0 million during 2006 to impair certain assets relating to these conversion units to reflect our best estimates of their
fair market value. The results of operations for these restaurants are included in continuing operations. During 2008, we recorded impairment charges of $3.2 million to impair the leasehold improvements and equipment of three 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 under SFAS No. 131.

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.

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 offering circular. 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 offering circular. These factors include or relate to the following:



| |  |  | 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;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 businesses in particular;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | 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;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | ------------------------



| |  |  | whether the final property and business interruption losses resulting from Hurricane Ike will be in accordance with our current estimates;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | 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.



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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, |  
|                             |  | 2008                    |   |  | 2007  |   |  | 2006  |  
|Restaurant and hospitality:  |  |                         |   |  |       |   |  |       |  
|Revenues                     |  | 100.0                   | % |  | 100.0 | % |  | 100.0 | %
|Cost of revenues             |  | 25.9                    | % |  | 27.0  | % |  | 27.2  | %
|Labor                        |  | 29.0                    | % |  | 29.8  | % |  | 29.4  | %
|Other operating expenses (1) |  | 24.8                    | % |  | 23.9  | % |  | 24.1  | %
|                             |  |                         |   |  |       |   |  |       |  
|Unit Level Profit            |  | 20.3                    | % |  | 19.3  | % |  | 19.3  | %
|                             |  |                         |   |  |       |   |  |       |  
|Gaming:                      |  |                         |   |  |       |   |  |       |  
|Revenues                     |  | 100.0                   | % |  | 100.0 | % |  | 100.0 | %
|Casino costs                 |  | 30.9                    | % |  | 30.7  | % |  | 34.6  | %
|Rooms costs                  |  | 9.6                     | % |  | 8.9   | % |  | 8.0   | %
|Food and beverage costs      |  | 11.5                    | % |  | 11.2  | % |  | 10.7  | %
|Other operating expenses (1) |  | 23.2                    | % |  | 25.2  | % |  | 25.6  | %
|                             |  |                         |   |  |       |   |  |       |  
|Unit Level Profit (1)        |  | 24.8                    | % |  | 24.0  | % |  | 21.1  | %
|                             |  |                         |   |  |       |   |  |       |  



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

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; leap yeardecrease $2.8 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.



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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 increased $609,235, or 3.7%, from $16,690,585 to $17,299,820 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.



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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 34.9% compared to 33.9% 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.

Year ended December 31, 2007 Compared to the Year ended December 31, 2006

Restaurant and Hospitality

Restaurant
and hospitality revenues increased $23,818,824, or 2.7%, from $870,615,442 to $894,434,266 for the year ended December 31, 2007 compared to the year ended December 31, 2006. The change in revenue is comprised of the following approximate
amounts: 2007 restaurant openingsincrease of $31.1 million; 2007 restaurant closingsdecrease of $3.4 million; and the remainder of the difference is attributable to the change in sales for stores not open a full comparable period.
Revenues associated with locations open 2007 and 2006 including honeymoon periods was flat compared to 2006. The total number of units open as of December 31, 2007 and 2006 were 173 and 165, respectively.

Cost of revenues increased $4,672,145, or 2.0%, from $237,141,963 to $241,814,108 for the year ended December 31, 2007 as compared to the prior year
period as a result of the increase in revenues. Cost of revenues as a percentage of revenues for year ended December 31, 2007 decreased to 27.0% from 27.2% in 2006. This decrease is primarily the result of a menu price increase.

Labor expense increased $10,394,613, or 4.1%, from $256,308,480 to $266,703,093 for the year ended December 31, 2007 as compared to year ended
December 31, 2006. Labor expenses as a percentage of revenues for 2007 increased to 29.8% from 29.4% in 2006. The increase in labor resulted from increased revenues and increase in minimum wage rate.

Other operating expenses increased $3,875,596, or 1.9%, from $209,408,435 to $213,284,031 for the year ended December 31, 2007, as compared to the
prior year period as a result of increased revenue. Other operating expenses decreased as a percentage of revenues to 23.9% in 2007 from 24.1% in 2006. Higher rent and insurance costs were more than offset by reduced advertising expenses in 2007
compared to 2006.

Gaming

Casino revenues increased $13,507,937, or 8.9%, from $151,775,538 to $165,283,475 for the year ended December 31, 2007 as compared with the prior year as a result of improved table games activity and slot hold and win.

Room revenues increased $8,205,663, or 14.2%, from $57,736,048 to $65,941,711 for the year ended December 31, 2007 as compared to the prior year
period as a result of increased hotel occupancy.

Food and beverage and other revenues increased $6,226,960, or 15.8%, and 4,227,519, or
41.6%, respectively. This increase reflects the opening of new facilities that were largely under construction during 2006.

Casino
expenses and other expenses increased $1,568,852, or 2.0%, and $7,733,692, or 13.1%, respectively, for the year ended December 31, 2007. Casino expenses as a percentage of revenue decreased in 2007 from 34.6% to 30.7% primarily as the result of
reduced payroll costs for both Las Vegas and Laughlin.



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Consolidated

General and administrative expenses decreased $2,221,374, or 3.8%, from $57,977,359 to $55,755,985 for the year ended December 31, 2007, compared to the same period in the prior year. General and administrative
expenses decreased as a percentage of revenues to 4.8% in 2007 from 5.3% in 2006 due to reductions in corporate overhead associated with the sale of 120 Joes Crab Shack restaurants in November 2006. This was partially offset by professional
fees incurred in connection with our voluntary internal review of historical stock option granting practices, which was completed in the third quarter of 2007.

Depreciation and amortization expense increased $9,429,463, or 16.9%, from $55,857,237 to $65,286,700 for the year ended December 31, 2007, compared to the same period in the prior year. The increase for 2007 was
primarily due to the renovation of the Golden Nugget and the addition of new restaurants and equipment.

Gain on disposal of assets of
$18,918,088 during 2007 consisted primarily 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. According to the terms of the sale, we will pay the
buyer approximately $2.6 million over the next 27 months in return for continuing to operate the restaurant.

Restaurant pre-opening
expenses were $3,476,951 for the year ended December 31, 2007, compared to $5,214,011 for the same period in the prior year. Pre-opening expenses fluctuate based on both the number and type of openings completed each period.

The increase in net interest expense for the year ended December 31, 2007 as compared to the prior year is primarily due to higher average borrowing
rates and increased borrowings, as well as an $8.0 million charge 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.

Other expense, net for 2007 was $16,690,585 and consisted primarily of expenses associated with exchanging the 7.5%
Senior Notes for 9.5% Senior Notes, non-cash charges related to interest rate swaps not considered hedges and call premiums and expenses associated with refinancing the Golden Nugget debt.

Provision for income taxes increased by $844,555 to $14,237,950 in the year ended December 31, 2007. Our effective tax rate for 2007 was 33.9%
compared to 28.0% in 2006.

Liquidity and Capital Resources

On December 22, 2008, we entered into an $81.0 million interim senior secured credit facility. The interim senior secured credit facility provides
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.

On February 13, 2009, we completed the offering of $295.5
million in aggregate principal amount of 14.0% senior secured notes due 2011 (the Notes). The gross proceeds from the offering and sale of the Notes were $260.0 million. The 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 (each individually a Guarantor and collectively, the Guarantors) and are secured by a second lien position on substantially all of our and the
Guarantors assets. The 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 as Collateral Agent.

The Notes will mature on August 15, 2011. Interest on the Notes will accrue from February 13, 2009, at a fixed interest rate of 14.0% to be
paid twice a year, on each February 15th and August 15th, beginning



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August 15, 2009. We may redeem the Notes any time at par, plus accrued interest. We are required to offer to purchase the Notes at 101% of their
aggregate principal amount, plus accrued interest, if we experience a change in control as defined in the Indenture.

The Indenture under
which the Notes have been issued contains a maximum leverage ratio covenant as well as restrictions that limit our ability and the Guarantors to, among other things: incur or guarantee additional indebtedness; create liens; pay dividends on or
redeem or repurchase stock; make capital expenditures or certain types of investments; sell assets or merge with other companies.

We and
the Guarantors entered into a registration rights agreement, dated as of February 13, 2009 (Registration Rights Agreement) with Jefferies & Company, Inc. Under the Registration Rights Agreement, we and the Guarantors have agreed to use
our best efforts to file and cause to become effective a registration statement with respect to an offer to exchange the Notes for notes registered under the Securities Act of 1933, as amended (the Securities Act), having substantially identical
terms as the Notes (except that additional interest provisions and transfer restrictions pertaining to the Notes will be deleted). If we fail to cause the registration statement relating to the exchange offer to become effective within the time
periods specified in the Registration Rights Agreement, we will be required to pay additional interest on the Notes until the registration statement is declared effective.

We also entered into a $215.6 million Amended and Restated Credit Agreement dated as of February 13, 2009 (the Credit Agreement) which replaced the
interim senior secured credit facility. The Credit Agreement provides for a term loan of $165.6 million and a revolving credit line of $50.0 million. The obligations under the Credit Agreement are unconditionally guaranteed by the Guarantors and are
secured by a first lien position on substantially all of our assets and the Guarantors.

Interest on the Credit Agreement accrues at a base
rate (which is the greater of 5.50%, 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 3.5% plus a credit spread of 6.0%, and matures on
May 13, 2011.

The Credit Agreement 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 Credit Agreement contains financial covenants,
including a maximum leverage ratio, a maximum senior leverage ratio, and a minimum fixed charge coverage ratio.

We used the proceeds from
the Notes offering, together with borrowings under the Credit Agreement to refinance our existing $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 Existing Notes). In addition, we paid a redemption premium of approximately $4.0 million in connection with the repurchase of the Existing
Notes.

In connection with the planned refinancing of our Existing 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 such 9.5% Notes and 7.5% Notes to
eliminate most of the restrictive covenants and certain events of default and to amend certain other provisions contained in the indentures and notes related thereto. We executed supplemental indentures with U.S. Bank National Association, as
trustee, to effectuate the proposed amendments to the indentures governing the Existing Notes, which became operative upon the consummation of the Notes offering.



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With respect to any Existing Notes that were not tendered, we may, at our option, either (i) pay
such Existing 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 Existing Notes.

On August 29, 2007, we agreed to commence an
exchange offering on or before October 1, 2007 to exchange our $400.0 million 7.5% Senior Notes (the 7.5% Notes) for the 9.5% Notes with an interest rate of 9.5%, an option for us to redeem the 9.5% Notes at 1% above par from October 29,
2007 to February 28, 2009 and an option for the note holders to redeem the 9.5% Notes at 1% above par from February 28, 2009 to December 15, 2011, both options requiring at least 30 but not more than 60 days notice. The Exchange Offer
was completed on October 31, 2007 with all but $4.3 million of the 7.5% Notes being exchanged. In connection with issuing the 9.5% Notes, we amended our existing Bank Credit Facility to provide for an accelerated maturity should the 9.5% Notes
maturity date change, revised certain financial covenants to reflect the impact of the Exchange Offer and redeemed our outstanding Term Loan balance.

In June 2007, our wholly owned unrestricted subsidiary, the Golden Nugget, 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 financing spread, 2.0% and 0.75%,
respectively, at December 31, 2008. In addition, the credit facility requires a commitment fee on the unfunded portion for both the $50.0 million revolving credit facility and the $120.0 million delayed draw component of the first lien term
loan. The second lien term loan matures on December 31, 2014 and bears interest at Libor or the banks base rate, plus a financing spread, 3.25% and 2.0%, respectively, at December 31, 2008. The financing spreads and commitment fees
for the revolving credit facility increase or decrease depending on the leverage ratio as defined in the credit facility. The first lien term loan requires one percent of the outstanding principal balance due annually to be paid in equal quarterly
installments commencing on September 30, 2009 with the balance due on maturity. Principal of the second lien term loan is due at maturity. The Golden Nuggets subsidiaries have granted liens on substantially all real property and personal
property as collateral under the credit facility and are guarantors of the credit facility.

The proceeds from the new $545.0 million
credit facility were used to repay all of the Golden Nuggets outstanding debt, including its 8.75% Senior Secured Notes due 2011 totaling $155.0 million, plus the outstanding balance of approximately $10.0 million on its former $43.0 million
revolving credit facility with Wells Fargo Foothill, LLC. In addition, the proceeds were used to pay associated tender premiums of approximately $8.8 million due to the early redemption of the Senior Secured Notes, plus accrued interest and related
transaction fees and expenses. We expect to incur higher interest expense as a result of the increased borrowings associated with the Golden Nugget financing.

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 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 have designated $210.0 million of the first lien interest rate swaps and all of the second lien swaps as cash flow
hedging transactions as set forth in SFAS 133. These swaps mirror the terms of the underlying debt and reset using the same index and terms. The remaining interest rate swaps associated with the $120.0 million of first lien borrowings reflecting 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 expense of approximately $14.3 million and
$5.4 million associated with these swaps was recorded for the years ended December 31, 2008 and 2007, respectively.



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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. As of December 31, 2008, we were in compliance with all such covenants. As of December 31, 2008, our average
interest rate on floating-rate debt was 8.5%, we had approximately $20.3 million in letters of credit outstanding, and our available borrowing capacity was $67.5 million.

As a primary result of the Golden Nugget refinancing and the New Notes, we have incurred higher interest expense. We expect to incur additional interest expense in the future as we continue the Golden Nugget expansion
and due to higher interest costs arising from our refinancing. We are constructing a hotel tower at the Golden NuggetLas Vegas which we expect to complete by 2009 at an estimated cost of $140.0 million, funded primarily by the delayed draw
term loan and operating cash flow.

Working capital, excluding discontinued operations, increased from a deficit of $166.7 million as of
December 31, 2007 to a deficit of $83.9 million as of December 31, 2008 primarily due to the change in the classification of our bank credit facility to long term. 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.

Since April 2000, we have paid an annual $0.10 per common share dividend, declared and paid in quarterly amounts. We increased the annual dividend to
$0.20 per common share in April 2004. We paid dividends totaling $1.6 million during the year ended December 31, 2008. On June 16, 2008, we announced we were discontinuing dividend payments indefinitely.

In 2008, we incurred $123.0 million for capital expenditures including $61.2 million on the renovation and expansion of the Golden Nugget Hotel and
Casino in downtown Las Vegas, Nevada, and $28.6 million on the construction of a new T-Rex restaurant at Disney. In 2009, we expect to incur approximately $115.0 million, including completion of the new tower at the Golden NuggetLas Vegas.



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Off Balance Sheet Arrangements

As of December 31, 2008, 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 Agreement 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                   |  | 2009 |             | 2010-2011 |   | 2012-2013   |  | 2014+ |             | Total
|Long term debt and interest payments      |  | $    | 456,182,742 |           | $ | 114,672,271 |  | $     | 71,225,249  |       | $ | 426,719,020 |  | $ | 1,068,799,282
|Operating leases                          |  |      | 38,629,049  |           |   | 63,040,245  |  |       | 48,002,487  |       |   | 195,400,671 |  |   | 345,072,452  
|Unconditional purchase obligations        |  |      | 160,885,741 |           |   | 4,679,190   |  |       | 599,119     |       |   |            |  |   | 166,164,050  
|Liability for uncertain tax positions (1) |  |      |            |           |   |            |  |       |            |       |   |            |  |   | 15,674,259   
|Other long term obligations               |  |      | 23,831,531  |           |   |            |  |       |            |       |   |            |  |   | 23,831,531   
|                                          |  |      |             |           |   |             |  |       |             |       |   |             |  |   |              
|Total cash obligations                    |  | $    | 679,529,063 |           | $ | 182,391,706 |  | $     | 119,826,855 |       | $ | 622,119,691 |  | $ | 1,619,541,574
|                                          |  |      |             |           |  
|Other Commercial Commitments              |  |      |             |           |   |             |  |       |             |      
|Line of credit                            |  | $    |            |           | $ | 4,182,803   |  | $     | 8,000,000   |       | $ |            |  | $ | 12,182,803   
|Standby letters of credit                 |  |      | 20,308,999  |           |   |            |  |       |            |       |   |            |  |   | 20,308,999   
|                                          |  |      |             |           |   |             |  |       |             |       |   |             |  |   |              
|Total commercial Commitments              |  |      | 20,308,999  |           |   | 4,182,803   |  |       | 8,000,000   |       |   |            |  |   | 32,491,802   
|                                          |  |      |             |           |   |             |  |       |             |       |   |             |  |   |              
|Total                                     |  | $    | 699,838,062 |           | $ | 186,574,509 |  | $     | 127,826,855 |       | $ | 622,119,691 |  | $ | 1,652,033,376
|                                          |  |      |             |           |   |             |  |       |             |       |   |             |  |   |              



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

After December 31, 2008, we completed the offering of the Notes, entered into the Credit Agreement and refinanced our Existing Notes. Considering these
events, the long term debt and interest payments under the contractual obligations would be $490.2 million, $657.0 million, $91.7 million and $504.0 million for 2009, 2010-2011, 2012-2013, 2014 and thereafter, respectively.

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 $71.5 million as of December 31, 2008. We have recorded a liability of $5.7 million with respect to these obligations.

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



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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.

We operate approximately 175 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.

We account for income taxes in accordance with SFAS No. 109, Accounting for Income
Taxes, as interpreted by FIN 48. SFAS No. 109 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

On January 1, 2008 we adopted FASB Statement No. 157, Fair Value Measurements(SFAS 157),which defines fair value, and FASB
Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115(SFAS 159), which permits entities to choose to measure many financial instruments and certain
other items at fair value. Neither of these statements had an impact on our consolidated financial statements for 2008. In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which
delayed the effective date of SFAS No. 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in



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the financial statements on a recurring basis, until January 1, 2009. We have not yet determined the impact that the implementation of SFAS 157, for
non-financial assets and liabilities, will have on our consolidated financial statements.

In June 2007, the FASB issued Emerging
Issues Task Force Issue 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF 06-11). EITF 06-11 requires that the tax benefit related to dividend equivalents paid on restricted stock, which are expected
to vest, be recorded as an increase to additional paid-in capital. We originally accounted for this tax benefit as a reduction to income tax expense. EITF 06-11 is to be applied prospectively for tax benefits on dividends declared in fiscal years
beginning after December 15, 2007. We adopted the provisions of EITF 06-11 on January 1, 2008. EITF 06-11 did not have a material effect on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), Implementation Issue
No. E23, HedgingGeneral: Issues Involving the Application of the Shortcut Method under Paragraph 68 (Issue E23). Issue E23 amends SFAS 133 to explicitly permit use of the shortcut method for hedging relationships in which
interest rate swaps have nonzero fair value at the inception of the hedging relationship, provided certain conditions are met. Issue E23 was effective for hedging relationships designated on or after January 1, 2008. The implementation of this
guidance did not have an impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised
2007), Business Combinations (SFAS 141R), 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 statement replaces SFAS No. 141 by requiring measurement at the acquisition date of the fair value of assets acquired, liabilities assumed and any non-controlling interest. Additionally, SFAS 141R requires that
acquisition-related costs, including restructuring costs, be recognized as expense separately from the acquisition. SFAS 141R 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 after its effective date only to the extent we complete business combinations and therefore the impact
cannot be determined at this time.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interest in Consolidated
Financial Statements, an amendment of ARB No. 51 (SFAS 160). SFAS 160 establishes the accounting and reporting standards for a non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a
non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests and applies prospectively to business combinations for fiscal years beginning after December 15, 2008. We will adopt SFAS 160 beginning January 1, 2009 and are currently evaluating the impact
that this pronouncement may have on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161,
Disclosures About Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 expands quarterly disclosure requirements in SFAS 133 about an entitys derivative instruments and
hedging activities. SFAS 161 is effective for fiscal years beginning after November 15, 2008. We are currently evaluating the impact that this pronouncement may have on our future footnote disclosures.

In June 2008, the FASB issued Staff Position No. EITF 03-6-1 (EITF 03-6-1). EITF 03-6-1 addresses whether instruments granted in
share-based payment arrangements are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in SFAS No. 128,
Earnings per Share. The provisions of EITF 03-6-1 are effective for financial statements issued for fiscal years beginning after December 15, 2008. All prior period EPS data



38



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presented will be adjusted retrospectively to conform with the provisions of EITF 03-6-1. Early application is not permitted. We are currently evaluating the
impact that EITF 03-6-1 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, 2008 included $42.2 million of floating-rate debt attributed to
borrowings at an average interest rate of 8.51%. As a result, our annual interest cost in 2009 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 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 0.9%) would be approximately $0.4 million annually based on
the floating-rate debt and other obligations outstanding at December 31, 2008; 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 44.

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

We carried out an evaluation, with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of December 31, 2008.
Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2008, our disclosure controls and procedures, as defined in Rule 13a-15(e), were effective to ensure that information
required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 (the Exchange Act) are recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms.



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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, 2008 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 effective as of December 31, 2008. Grant Thornton LLP has issued a report on the effectiveness of internal control over financial reporting, which is included on page
48 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 2008 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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, 2008 in previously filed reports on Form 8-K.



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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 2009 Annual Meeting of Shareholders, which will be filed within 120 days of December 31, 2008. The Company has 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 Company makes 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 the Companys chief executive officer, chief financial officer or controller, the Company 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

On January 6, 2009, we filed with the New York Stock Exchange the Annual CEO Certification regarding our compliance
with the 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, 2008 and to the Annual Reports on Form 10-K for the years ended December 31, 2007 and 2006, the applicable certifications of our Chief Executive
Officer and our Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002.

ITEM 11.    EXECUTIVE COMPENSATION

Certain information 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, 2008.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Certain information 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, 2008.



41



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Equity Compensation Plan Information

The following table provides information as of December 31, 2008 regarding the number of shares of Common Stock that may be issued under our equity compensation plans.



|                                                               |  |                                                                                         |  |                                                                          |       |                                                                                                                                        |          
|-------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ----- | -------------------------------------------------------------------------------------------------------------------------------------- | ---------
|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
|                                                               |  |                                                                                         |  |                                                                          |       |                                                                                                                                        |          



|(1) | We have the following compensation plans under which awards have been issued or are authorized to be issued, which were adopted with stockholder approval:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | The 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, such as vesting and exercise price, are to be determined by
the Compensation Committee and set forth in the grant agreement for each award.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | 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 stock. The Stock Option Plans 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.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | We also maintain the 1995 Flexible Incentive Plan, which was adopted in 1995, (Flex Plan), as amended, for key employees of the Company. Under the Flex Plan eligible employees
received stock options, stock appreciation rights, restricted stock, performance awards, performance stock and other awards, as defined by the Board of Directors or an appointed committee. The aggregate number of shares of common stock issued under
the Flex Plan (or with respect to which awards may be granted) were not in excess of 2,000,000 shares. Options are no longer issued under the Flex Plan; however, options previously issued are still outstanding.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We have the following compensation plans under which awards have been issued or are authorized to be issued, which were adopted without stockholder approval:
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | The Landrys Restaurants, Inc. 2003 Equity Incentive Plan authorizes the issuance of up to 700,000 shares. This plan allows awards of both qualified and non-qualified stock
options, restricted stock, cash equivalent values, and tandem awards to employees. The plan is administered by our compensation committee. Terms of the award, such as vesting and exercise price, are to be determined by the compensation committee and
set forth in the grant agreement for each award.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | On July 22, 2002, we issued options to purchase an aggregate of 437,500 shares under individual stock option agreements with individual members of senior management. Options
under these agreements were granted at market price and expire ten years from the date of grant. These options vest in equal installments over a period of five years, provided that vesting may accelerate on certain occurrences, such as a change in
control or, in the case of options granted to our CEO, if our stock hits certain price targets.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (c) | On July 22, 2002, we issued options to purchase an aggregate of 6,000 shares to our non-employee directors. Options under these agreements were granted at market price and
expire ten years from the date of grant. These options vest in equal installments over a period of five years.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | On March 16, 2001, we issued 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 ten years from the date of grant. These options vest in equal installments over a period of five years, provided that vesting may accelerate on certain occurrences,
such as a change in control or, in the case of options granted to our CEO, if our stock hits certain price targets. In December 2006, certain options to a member of senior management were increased to an exercise price of $9.65.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | On March 16 and September 13, 2001, options to purchase an aggregate of 240,000 shares were issued to certain of our individual employees, under individual option grant
agreements. Options under these agreements were granted at $8.50 and $15.80, respectively, and expire ten years from the date of grant. These options vest in equal installments over a period of five years, provided that vesting may accelerate on
certain occurrences, such as a change in control.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | In 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) | In April 2006, 102,000 restricted common shares were issued to key employees vesting ratably over five years and 8,000 restricted common shares were granted to non-employee
directors vesting ratably over two years.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (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-employee directors vesting ratably over two years.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Certain information 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, 2008.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

Certain information 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, 2008.



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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



|(a) | 1. Financial Statements
|--- | -----------------------

The following financial
statements are set forth herein commencing on page 48:

Reports of Independent Registered Public Accounting Firm
Grant Thornton LLP

Consolidated Balance Sheets as of December 31, 2008 and 2007

Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006

Consolidated Statements of Stockholders Equity for the years ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006.

Notes to Consolidated Financial Statements

2. 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s 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).                                                                                                                               
|            | 
|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).                                                                                          



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|            |  |                                                                                                                                                                                                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                                                                                                                                               
|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 Current Report on 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 Current Report on 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 Current Report on 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 Current Report on 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 Current Report on 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).                                                                                                                            



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|            |  |                                                                                                                                                                                                                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                                                                                                                                                            
|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 10-K for
the year ended December 31, 2005)                                                                                           
|            | 
|10.32       |  | Restricted Stock Agreement between Landrys Restaurants, Inc. and Tilman J. Fertitta (incorporated by reference to Exhibit of the Companys 10-K for the year ended December 31, 2005)                                                                                                                             
|            | 
|10.33       |  | T-Rex Cafe, Inc. Stockholders Agreement (incorporated by reference to Exhibit of the Companys 10-K for the year ended December 31, 2006)                                                                                                                                                                          
|            | 
|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 10-K for the year
ended December 31, 2006)                                                                                                       
|            | 
|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 10-K for the year ended December 31, 2007)  
|            | 
|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 10-K for the year ended December 31, 2007)
|            | 
|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 10-K for the year ended December 31, 2007)            



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|            |  |                                                                                                                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                                                                                                                                                          
|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 10-K for the year ended December 31, 2007)
|            | 
|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)     
|            | 
|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)    
|            | 
|*10.41      |  | Contract Agreement dated as of April 7, 2008 between Golden Nugget, Inc. and The Penta Building Group, Inc., General Corporation                                                                                                                                                                                 
|            | 
|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 8-K filing on June 17, 2008)                                                         
|            | 
|10.43       |  | First Amendment to Agreement and Plan of Merger dated as of October 18, 2008 by an 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 8-K filing on October 20, 2008)                            
|            | 
|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 8-K filing dated December 24, 2008)                                        
|            | 
|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 8-K filing on February 17, 2009)                                                                   
|            | 
|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 8-K filing on February 17, 2009)                                                       
|            | 
|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 8-K filing on February 17, 2009)                                     
|            | 
|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 8-K filing on February 17, 2009)                                                          
|            | 
|*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 Thornton LLP                                                                                                                                                                                                                                                                                    
|            | 
|*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(a)                                                                                                                                                                                                                



|* | Filed herewith
|- | --------------



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Landrys Restaurants, Inc.

We have audited Landrys Restaurants, Inc. and subsidiaries (a Delaware holding company) internal control over financial
reporting as of December 31, 2008, 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 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 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.

In our opinion, Landrys Restaurants,
Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework issued by COSO.

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, 2008 and 2007, and the related consolidated statements of income, stockholders equity, and cash flows for each of the three years ended December 31,
2008, and our report dated March 16, 2009 expressed an unqualified opinion.

/s/    Grant Thornton LLP

Houston, Texas

March 16, 2009



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Landrys Restaurants, Inc.

We have audited the accompanying consolidated balance sheets of Landrys Restaurants, Inc. and subsidiaries (a Delaware holding
company) as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders equity, and cash flows for each of the three years in the period ended December 31, 2008. 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, 2008
and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 10 to the consolidated financial statements, effective January 1, 2007, the Company adopted the provisions of Financial
Accounting Standards Interpretation No. 48, Accounting for Uncertainty in Income Taxes.

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, 2008, 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, 2009 expressed an unqualified opinion.

/s/    Grant Thornton LLP

Houston, Texas

March 16, 2009



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LANDRYS RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                   |  |              |               |   |      |   |               |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------------- | - | ---- | - | ------------- | -
|                                                                                                                                   |  | December 31, |              
|                                                                                                                                   |  | 2008         |               |   | 2007 |  
|ASSETS                                                                                                                             |  |              |               |   |      |   |               |  
|CURRENT ASSETS:                                                                                                                    |  |              |               |   |      |   |               |  
|Cash and cash equivalents                                                                                                          |  | $            | 51,066,805    |   |      | $ | 39,601,246    |  
|Accounts receivabletrade and other, net                                                                                           |  |              | 18,021,105    |   |      |   | 24,196,406    |  
|Inventories                                                                                                                        |  |              | 26,161,092    |   |      |   | 35,201,095    |  
|Deferred taxes                                                                                                                     |  |              | 28,001,267    |   |      |   | 21,647,642    |  
|Assets related to discontinued operations                                                                                          |  |              | 2,973,593     |   |      |   | 21,799,237    |  
|Other current assets                                                                                                               |  |              | 9,102,029     |   |      |   | 12,600,758    |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|Total current assets                                                                                                               |  |              | 135,325,891   |   |      |   | 155,046,384   |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|PROPERTY AND EQUIPMENT, net                                                                                                        |  |              | 1,259,186,463 |   |      |   | 1,238,552,287 |  
|GOODWILL                                                                                                                           |  |              | 18,527,547    |   |      |   | 18,527,547    |  
|OTHER INTANGIBLE ASSETS, net                                                                                                       |  |              | 38,872,873    |   |      |   | 39,146,222    |  
|OTHER ASSETS, net                                                                                                                  |  |              | 63,411,316    |   |      |   | 51,710,089    |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|Total assets                                                                                                                       |  | $            | 1,515,324,090 |   |      | $ | 1,502,982,529 |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                               |  |              |               |   |      |   |               |  
|CURRENT LIABILITIES:                                                                                                               |  |              |               |   |      |   |               |  
|Accounts payable                                                                                                                   |  | $            | 70,358,471    |   |      | $ | 74,557,108    |  
|Accrued liabilities                                                                                                                |  |              | 134,316,329   |   |      |   | 137,310,321   |  
|Income taxes payable                                                                                                               |  |              | 2,784,703     |   |      |   | 843,045       |  
|Current portion of long-term notes and other obligations                                                                           |  |              | 8,752,906     |   |      |   | 87,243,013    |  
|Liabilities related to discontinued operations                                                                                     |  |              | 5,149,365     |   |      |   | 4,976,322     |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|Total current liabilities                                                                                                          |  |              | 221,361,774   |   |      |   | 304,929,809   |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|LONG-TERM NOTES, NET OF CURRENT PORTION                                                                                            |  |              | 862,375,429   |   |      |   | 801,427,868   |  
|OTHER LIABILITIES                                                                                                                  |  |              | 137,109,782   |   |      |   | 79,725,779    |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|Total liabilities                                                                                                                  |  |              | 1,220,846,985 |   |      |   | 1,186,083,456 |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|COMMITMENTS AND CONTINGENCIES                                                                                                      |  |              |               |   |      |   |               |  
|STOCKHOLDERS EQUITY:                                                                                                              |  |              |               |   |      |   |               |  
|Common stock, $0.01 par value, 60,000,000 shares authorized, 16,142,263 and 16,147,745 shares issued and outstanding,
respectively |  |              | 161,423       |   |      |   | 161,478       |  
|Additional paid-in capital                                                                                                         |  |              | 222,410,106   |   |      |   | 218,350,471   |  
|Retained earnings                                                                                                                  |  |              | 116,244,708   |   |      |   | 114,965,728   |  
|Accumulated other comprehensive loss                                                                                               |  |              | (44,339,132   | ) |      |   | (16,578,604   | )
|                                                                                                                                   |  |              |               |   |      |   |               |  
|Total stockholders equity                                                                                                         |  |              | 294,477,105   |   |      |   | 316,899,073   |  
|                                                                                                                                   |  |              |               |   |      |   |               |  
|Total liabilities and stockholders equity                                                                                         |  | $            | 1,515,324,090 |   |      | $ | 1,502,982,529 |  
|                                                                                                                                   |  |              |               |   |      |   |               |  

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



50



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LANDRYS RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF INCOME



|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|-------------------------------------------------------------------------------- |  | ----------------------- | ------------- | - | ---- | - | ------------- | ---- |  | - | ------------- | -
|                                                                                 |  | Year Ended December 31, |              
|                                                                                 |  | 2008                    |               |   | 2007 |   |               | 2006 | 
|REVENUES                                                                         |  |                         |               |   |      |   |               |      |  |   |               |  
|Restaurant and hospitality                                                       |  | $                       | 890,605,419   |   |      | $ | 894,434,266   |      |  | $ | 870,615,442   |  
|Gaming:                                                                          |  |                         |               |   |      |   |               |      |  |   |               |  
|Casino                                                                           |  |                         | 152,965,231   |   |      |   | 165,283,475   |      |  |   | 151,775,538   |  
|Rooms                                                                            |  |                         | 63,230,271    |   |      |   | 65,941,711    |      |  |   | 57,736,048    |  
|Food and beverage                                                                |  |                         | 47,734,759    |   |      |   | 45,761,100    |      |  |   | 39,534,140    |  
|Other                                                                            |  |                         | 14,370,107    |   |      |   | 14,380,837    |      |  |   | 10,153,318    |  
|Promotional allowances                                                           |  |                         | (25,016,953   | ) |      |   | (25,433,137   | )    |  |   | (27,820,979   | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Net gaming revenue                                                               |  |                         | 253,283,415   |   |      |   | 265,933,986   |      |  |   | 231,378,065   |  
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Total revenue                                                                    |  |                         | 1,143,888,834 |   |      |   | 1,160,368,252 |      |  |   | 1,101,993,507 |  
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|OPERATING COSTS AND EXPENSES:                                                    |  |                         |               |   |      |   |               |      |  |   |               |  
|Restaurant and hospitality:                                                      |  |                         |               |   |      |   |               |      |  |   |               |  
|Cost of revenues                                                                 |  |                         | 230,519,183   |   |      |   | 241,814,108   |      |  |   | 237,141,963   |  
|Labor                                                                            |  |                         | 258,445,355   |   |      |   | 266,703,093   |      |  |   | 256,308,480   |  
|Other operating expenses                                                         |  |                         | 220,441,086   |   |      |   | 213,284,031   |      |  |   | 209,408,435   |  
|Gaming:                                                                          |  |                         |               |   |      |   |               |      |  |   |               |  
|Casino                                                                           |  |                         | 78,259,949    |   |      |   | 81,627,956    |      |  |   | 80,059,104    |  
|Rooms                                                                            |  |                         | 24,194,522    |   |      |   | 23,705,554    |      |  |   | 18,519,645    |  
|Food and beverage                                                                |  |                         | 29,112,315    |   |      |   | 29,670,847    |      |  |   | 24,818,009    |  
|Other                                                                            |  |                         | 58,893,485    |   |      |   | 66,972,571    |      |  |   | 59,238,879    |  
|General and administrative expense                                               |  |                         | 51,294,426    |   |      |   | 55,755,985    |      |  |   | 57,977,359    |  
|Depreciation and amortization                                                    |  |                         | 70,291,482    |   |      |   | 65,286,700    |      |  |   | 55,857,237    |  
|Asset impairment expense                                                         |  |                         | 2,408,625     |   |      |   |              |      |  |   | 2,965,509     |  
|Loss (gain) on disposal of assets                                                |  |                         | (58,580       | ) |      |   | (18,918,088   | )    |  |   | (2,294,532    | )
|Pre-opening expenses                                                             |  |                         | 2,266,004     |   |      |   | 3,476,951     |      |  |   | 5,214,011     |  
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Total operating costs and expenses                                               |  |                         | 1,026,067,852 |   |      |   | 1,029,379,708 |      |  |   | 1,005,214,099 |  
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|OPERATING INCOME                                                                 |  |                         | 117,820,982   |   |      |   | 130,988,544   |      |  |   | 96,779,408    |  
|OTHER EXPENSE (INCOME):                                                          |  |                         |               |   |      |   |               |      |  |   |               |  
|Interest expense, net                                                            |  |                         | 79,817,334    |   |      |   | 72,321,952    |      |  |   | 49,138,695    |  
|Other, net                                                                       |  |                         | 17,299,820    |   |      |   | 16,690,585    |      |  |   | (128,771      | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Total other expense                                                              |  |                         | 97,117,154    |   |      |   | 89,012,537    |      |  |   | 49,009,924    |  
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Income from continuing operations before income taxes                            |  |                         | 20,703,828    |   |      |   | 41,976,007    |      |  |   | 47,769,484    |  
|Provision (benefit) for income taxes                                             |  |                         | 7,226,574     |   |      |   | 14,237,950    |      |  |   | 13,393,395    |  
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Income from continuing operations                                                |  |                         | 13,477,254    |   |      |   | 27,738,057    |      |  |   | 34,376,089    |  
|Income (loss) from discontinued operations, net of taxes                         |  |                         | (10,569,067   | ) |      |   | (9,626,263    | )    |  |   | (56,145,812   | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Net income (loss)                                                                |  | $                       | 2,908,187     |   |      | $ | 18,111,794    |      |  | $ | (21,769,723   | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|EARNINGS (LOSS) PER SHARE INFORMATION:                                           |  |                         |               |   |      |   |               |      |  |   |               |  
|BASIC:                                                                           |  |                         |               |   |      |   |               |      |  |   |               |  
|Income from continuing operations                                                |  | $                       | 0.88          |   |      | $ | 1.47          |      |  | $ | 1.61          |  
|Income (loss) from discontinued operations                                       |  |                         | (0.69         | ) |      |   | (0.51         | )    |  |   | (2.63         | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Net income (loss)                                                                |  | $                       | 0.19          |   |      | $ | 0.96          |      |  | $ | (1.02         | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Weighted average number of common shares outstanding                             |  |                         | 15,260,000    |   |      |   | 18,850,000    |      |  |   | 21,300,000    |  
|DILUTED:                                                                         |  |                         |               |   |      |   |               |      |  |   |               |  
|Income from continuing operations                                                |  | $                       | 0.87          |   |      | $ | 1.43          |      |  | $ | 1.56          |  
|Income (loss) from discontinued operations                                       |  |                         | (0.68         | ) |      |   | (0.50         | )    |  |   | (2.55         | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Net income (loss)                                                                |  | $                       | 0.19          |   |      | $ | 0.93          |      |  | $ | (0.99         | )
|                                                                                 |  |                         |               |   |      |   |               |      |  |   |               |  
|Weighted average number of common share and common share equivalents outstanding |  |                         | 15,480,000    |   |      |   | 19,400,000    |      |  |   | 22,000,000    |  

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



51



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LANDRYS RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY



|                                                               |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|-------------------------------------------------------------- | ------ | ------------ | - | ------ | ------------------------ | ------- | - | ---------------- | - | ------------ | --------------------------------- |  | - | ----------- | - |  | - | ----------- | - |  | - | ------------ | -
|                                                               |        | Common Stock |   |        | AdditionalPaid-InCapital |         |   | RetainedEarnings |   |              | AccumulatedOtherComprehensiveLoss |  |   | Total       |  
|                                                               | Shares |              |   | Amount |                          |         |   |                  |  
|BALANCE, December 31, 2005                                     |        | 21,593,823   |   |        | $                        | 215,938 |   |                  | $ | 327,260,457  |                                   |  | $ | 189,294,066 |   |  | $ |            |   |  | $ | 516,770,461  |  
|Net income (loss)                                              |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   | (21,769,723 | ) |  |   |            |   |  |   | (21,769,723  | )
|Dividends paid                                                 |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   | (4,358,498  | ) |  |   |            |   |  |   | (4,358,498   | )
|Purchase of common stock held for treasury                     |        | (210,733     | ) |        |                          | (2,107  | ) |                  |   | (6,017,531   | )                                 |  |   |            |   |  |   |            |   |  |   | (6,019,638   | )
|Exercise of stock options                                      |        | 264,785      |   |        |                          | 2,648   |   |                  |   | 2,737,117    |                                   |  |   |            |   |  |   |            |   |  |   | 2,739,765    |  
|Tax benefit on stock option exercises                          |        |             |   |        |                          |        |   |                  |   | 64,808       |                                   |  |   |            |   |  |   |            |   |  |   | 64,808       |  
|Stock based compensation expense and income tax benefit        |        |             |   |        |                          |        |   |                  |   | 7,280,288    |                                   |  |   |            |   |  |   |            |   |  |   | 7,280,288    |  
|Issuance of restricted stock                                   |        | 484,920      |   |        |                          | 4,849   |   |                  |   | (4,849       | )                                 |  |   |            |   |  |   |            |   |  |   |             |  
|                                                               |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|BALANCE, December 31, 2006                                     |        | 22,132,795   |   |        |                          | 221,328 |   |                  |   | 331,320,290  |                                   |  |   | 163,165,845 |   |  |   |            |   |  |   | 494,707,463  |  
|Cumulative effect of adopting FIN 48                           |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   | (982,880    | ) |  |   |            |   |  |   | (982,880     | )
|Comprehensive income (loss):                                   |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|Net income (loss)                                              |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   | 18,111,794  |   |  |   |            |   |  |   | 18,111,794   |  
|Loss on interest rate swaps, net of tax benefit of $8,886,940  |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   |            |   |  |   | (16,578,604 | ) |  |   | (16,578,604  | )
|                                                               |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|Total comprehensive income (loss)                              |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   | 1,533,190    |  
|Dividends paid                                                 |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   | (3,995,295  | ) |  |   |            |   |  |   | (3,995,295   | )
|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                                      |        | 228,955      |   |        |                          | 2,290   |   |                  |   | 2,721,122    |                                   |  |   |            |   |  |   |            |   |  |   | 2,723,412    |  
|Stock based compensation expense                               |        |             |   |        |                          |        |   |                  |   | 4,797,340    |                                   |  |   |            |   |  |   |            |   |  |   | 4,797,340    |  
|Issuance of restricted stock                                   |        | 107,335      |   |        |                          | 1,073   |   |                  |   | (1,073       | )                                 |  |   |            |   |  |   |            |   |  |   |             |  
|Forfeiture of restricted stock                                 |        | (3,940       | ) |        |                          | (39     | ) |                  |   | 39           |                                   |  |   |            |   |  |   |            |   |  |   |             |  
|                                                               |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|BALANCE, December 31, 2007                                     |        | 16,147,745   |   |        |                          | 161,478 |   |                  |   | 218,350,471  |                                   |  |   | 114,965,728 |   |  |   | (16,578,604 | ) |  | $ | 316,899,073  |  
|Comprehensive income (loss):                                   |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|Net income (loss)                                              |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   | 2,908,187   |   |  |   |            |   |  |   | 2,908,187    |  
|Loss on interest rate swaps, net of tax benefit of $14,947,977 |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   |            |   |  |   | (27,760,528 | ) |  |   | (27,760,528  | )
|                                                               |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|Total comprehensive income (loss)                              |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   | (24,852,341  | )
|Dividends paid                                                 |        |             |   |        |                          |        |   |                  |   |             |                                   |  |   | (1,614,370  | ) |  |   |            |   |  |   | (1,614,370   | )
|Purchase of common stock held for treasury                     |        | (3,306       | ) |        |                          | (33     | ) |                  |   | (28,179      | )                                 |  |   | (14,837     | ) |  |   |            |   |  |   | (43,049      | )
|Exercise of stock options                                      |        | 3,306        |   |        |                          | 33      |   |                  |   | 21,328       |                                   |  |   |            |   |  |   |            |   |  |   | 21,361       |  
|Stock based compensation expense                               |        |             |   |        |                          |        |   |                  |   | 4,066,431    |                                   |  |   |            |   |  |   |            |   |  |   | 4,066,431    |  
|Forfeiture of restricted stock                                 |        | (5,482       | ) |        |                          | (55     | ) |                  |   | 55           |                                   |  |   |            |   |  |   |            |   |  |   |             |  
|                                                               |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  
|BALANCE, December 31, 2008                                     |        | 16,142,263   |   |        | $                        | 161,423 |   |                  | $ | 222,410,106  |                                   |  | $ | 116,244,708 |   |  | $ | (44,339,132 | ) |  | $ | 294,477,105  |  
|                                                               |        |              |   |        |                          |         |   |                  |   |              |                                   |  |   |             |   |  |   |             |   |  |   |              |  

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



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LANDRYS RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                         |  |                         |              |   |      |   |              |      |  |   |              |  
|---------------------------------------------------------------------------------------- |  | ----------------------- | ------------ | - | ---- | - | ------------ | ---- |  | - | ------------ | -
|                                                                                         |  | Year Ended December 31, |             
|                                                                                         |  | 2008                    |              |   | 2007 |   |              | 2006 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                         |              |   |      |   |              |      |  |   |              |  
|Net income (loss)                                                                        |  | $                       | 2,908,187    |   |      | $ | 18,111,794   |      |  | $ | (21,769,723  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                         |              |   |      |   |              |      |  |   |              |  
|Depreciation and amortization                                                            |  |                         | 70,866,386   |   |      |   | 66,614,904   |      |  |   | 73,263,258   |  
|Asset impairment expense                                                                 |  |                         | 12,753,432   |   |      |   | 9,887,752    |      |  |   | 80,077,544   |  
|Deferred tax provision (benefit)                                                         |  |                         | (3,894,048   | ) |      |   | 4,052,865    |      |  |   | (29,322,911  | )
|Stock-based compensation expense                                                         |  |                         | 4,066,431    |   |      |   | 4,797,340    |      |  |   | 7,609,674    |  
|Amortization of debt issuance costs                                                      |  |                         | 5,501,857    |   |      |   | 11,535,268   |      |  |   | 2,228,093    |  
|Gain on sale of marketable securities                                                    |  |                         |             |   |      |   | (1,278,204   | )    |  |   |             |  
|Gain on disposition of assets                                                            |  |                         | (316,537     | ) |      |   | (18,918,416  | )    |  |   | (431,713     | )
|Non-cash loss on interest rate swaps                                                     |  |                         | 14,293,790   |   |      |   | 5,374,868    |      |  |   |             |  
|Deferred rent and other charges (income), net                                            |  |                         | 2,432,438    |   |      |   | 521,699      |      |  |   | (2,505,917   | )
|Changes in assets and liabilities, net of acquisitions:                                  |  |                         |              |   |      |   |              |      |  |   |              |  
|(Increase) decrease in trade and other receivables                                       |  |                         | 6,339,551    |   |      |   | 2,234,777    |      |  |   | (5,014,349   | )
|(Increase) decrease in inventories                                                       |  |                         | 9,343,617    |   |      |   | 4,941,143    |      |  |   | 11,078,135   |  
|(Increase) decrease in other assets                                                      |  |                         | 6,956,211    |   |      |   | (4,382,369   | )    |  |   | (333,641     | )
|Increase (decrease) in accounts payable and accrued liabilities                          |  |                         | (8,596,509   | ) |      |   | 560,921      |      |  |   | 10,754,012   |  
|                                                                                         |  |                         |              |   |      |   |              |      |  |   |              |  
|Total adjustments                                                                        |  |                         | 119,746,619  |   |      |   | 85,942,548   |      |  |   | 147,402,185  |  
|                                                                                         |  |                         |              |   |      |   |              |      |  |   |              |  
|Net cash provided by operating activities                                                |  |                         | 122,654,806  |   |      |   | 104,054,342  |      |  |   | 125,632,462  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                         |              |   |      |   |              |      |  |   |              |  
|Property and equipment additions and other                                               |  |                         | (122,997,511 | ) |      |   | (125,098,484 | )    |  |   | (205,556,304 | )
|Proceeds from disposition of property and equipment                                      |  |                         | 36,136,768   |   |      |   | 47,408,833   |      |  |   | 189,911,436  |  
|Purchase of marketable securities                                                        |  |                         |             |   |      |   | (5,331,308   | )    |  |   |             |  
|Proceeds from the sale of securities                                                     |  |                         |             |   |      |   | 6,609,512    |      |  |   |             |  
|Business acquisitions, net of cash acquired                                              |  |                         |             |   |      |   |             |      |  |   | (7,860,857   | )
|                                                                                         |  |                         |              |   |      |   |              |      |  |   |              |  
|Net cash used in investing activities                                                    |  |                         | (86,860,743  | ) |      |   | (76,411,447  | )    |  |   | (23,505,725  | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                         |              |   |      |   |              |      |  |   |              |  
|Purchases of common stock for treasury                                                   |  |                         | (43,049      | ) |      |   | (181,884,157 | )    |  |   | (2,812,893   | )
|Proceeds from exercise of stock options                                                  |  |                         | 21,361       |   |      |   | 2,723,412    |      |  |   | 2,739,765    |  
|Proceeds from debt issuance                                                              |  |                         | 39,515,152   |   |      |   | 375,000,000  |      |  |   |             |  
|Payments of debt and related expenses, net                                               |  |                         | (256,014     | ) |      |   | (193,217,934 | )    |  |   | (111,214,325 | )
|Debt issuance costs                                                                      |  |                         | (5,134,387   | ) |      |   | (15,362,308  | )    |  |   |             |  
|Proceeds from credit facility                                                            |  |                         | 343,182,803  |   |      |   | 258,815,778  |      |  |   | 432,649,258  |  
|Payments on credit facility                                                              |  |                         | (400,000,000 | ) |      |   | (261,390,087 | )    |  |   | (427,076,664 | )
|Dividends paid                                                                           |  |                         | (1,614,370   | ) |      |   | (3,995,295   | )    |  |   | (4,358,498   | )
|                                                                                         |  |                         |              |   |      |   |              |      |  |   |              |  
|Net cash (used in) provided by financing activities                                      |  |                         | (24,328,504  | ) |      |   | (19,310,591  | )    |  |   | (110,073,357 | )
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |  |                         | 11,465,559   |   |      |   | 8,332,304    |      |  |   | (7,946,620   | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                           |  |                         | 39,601,246   |   |      |   | 31,268,942   |      |  |   | 39,215,562   |  
|                                                                                         |  |                         |              |   |      |   |              |      |  |   |              |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                 |  | $                       | 51,066,805   |   |      | $ | 39,601,246   |      |  | $ | 31,268,942   |  
|                                                                                         |  |                         |              |   |      |   |              |      |  |   |              |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                       |  |                         |              |   |      |   |              |      |  |   |              |  
|Cash paid (received) during the year for:                                                |  |                         |              |   |      |   |              |      |  |   |              |  
|Interest                                                                                 |  | $                       | 79,168,034   |   |      | $ | 68,943,347   |      |  | $ | 61,866,319   |  
|Income taxes                                                                             |  | $                       | (1,984,133   | ) |      | $ | 10,241,380   |      |  | $ | 11,381,720   |  

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



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##### Table of Contents

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, Charleys Crab, The Chart House and Saltgrass Steak House. In addition, we own and operate domestic and license international rainforest themed restaurants under the trade name Rainforest Cafe.

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.

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

In June 2006, the FASB ratified the
consensus reached on EITF Issue No. 06-03, How Sales Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (that is, Gross Versus Net Presentation) (EITF 06-3). The scope of
EITF 06-03 covers any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer. EITF 06-03 provides that a company may adopt a policy of presenting taxes either gross within
revenue or on a net basis. We adopted EITF 06-03 on January 1, 2007 with no impact on our financial position or results of operations. Except for gross receipts tax on liquor sales in certain jurisdictions, our policy is to present these taxes
net. The tax amounts included in revenues and expenses are not significant.



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 $1.8 million and $1.5 million as of December 31, 2008 and 2007, 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,
|                            |  | 2008         |            | 2007
|Food, beverage and supplies |  | $            | 12,167,787 |      | $ | 18,786,015
|Retail goods                |  |              | 13,993,305 |      |   | 16,415,080
|                            |  |              |            |      |   |           
|                            |  | $            | 26,161,092 |      | $ | 35,201,095
|                            |  |              |            |      |   |           

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 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 2008, 2007 and 2006, we capitalized interest expense of approximately
$3.1 million, $3.6 million and $3.9 million, respectively.

We account for long-lived assets in accordance with SFAS 144, Accounting for
the Impairment or Disposal of Long-lived Assets. Our properties are reviewed for impairment on a property by property basis whenever



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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

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.

Advertising

Advertising costs are expensed as
incurred during such year. Advertising expenses were $11.9 million, $11.9 million and $15.4 million, in 2008, 2007 and 2006, respectively.

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



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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, 2008 two 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 fair value of all of our reporting units utilizing the income approach described above to derive an enterprise value of the
Company. We reconciled the enterprise value to our overall estimated market capitalization. The estimated market capitalization considers recent trends in our market capitalization and an expected control premium. Based on the results of the step
one impairment test, no impairment charges for goodwill were required.

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, 2008.

Even though
we determined that there was no goodwill or indefinite-lived intangible asset impairment as of December 31, 2008, continued 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,
|                                              |  | 2008         |            | 2007
|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                                |  |              | 1,108,778  |      |   | 768,778   
|Other                                         |  |              | 661,805    |      |   | 616,805   
|                                              |  |              |            |      |   |           
|                                              |  |              | 1,770,583  |      |   | 1,385,583 
|                                              |  |              |            |      |   |           
|Net intangible assets subject to amortization |  |              | 2,304,417  |      |   | 2,689,417 
|Indefinite lived intangible assets:           |  |              |            |      |   |           
|Goodwill                                      |  |              | 18,527,547 |      |   | 18,527,547
|Trademarks                                    |  |              | 36,568,456 |      |   | 36,456,805
|                                              |  |              |            |      |   |           
|                                              |  |              | 55,096,003 |      |   | 54,984,352
|                                              |  |              |            |      |   |           
|Total                                         |  | $            | 57,400,420 |      | $ | 57,673,769
|                                              |  |              |            |      |   |           

Amortization expense relating to intangibles was $0.4 million for each of the years ended
December 31, 2008, 2007 and 2006.



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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.

Financial Instruments

Effective January 1, 2008, we
adopted the provisions of SFAS No. 157, Fair Value Measurements, which among other things, requires enhanced disclosures about financial assets and liabilities carried at fair value. SFAS No. 157 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, 2008 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, 2008 the fair value
of the interest rate swap liabilities totaled $87.9 million.



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The fair values of 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,  
|                                                      |  | 2008           |             | 2007      
|                                                      |  | Carrying Value |             | Fair Value |   | Carrying Value |  | Fair Value
|9.5% Senior Notes due December 2014                   |  | $              | 395,662,000 |            | $ | 367,965,660    |  | $          | 395,662,000 |  | $ | 391,499,301
|7.5% Senior Notes due December 2014                   |  |                | 4,338,000   |            |   | 3,261,482      |  |            | 4,338,000   |  |   | 3,928,059  
|Libor + 2.0% First Lien Term Loan due June 2014       |  |                | 249,515,152 |            |   | 72,359,394     |  |            | 210,000,000 |  |   | 198,450,000
|Libor + 3.25% Second Lien Term Loan due December 2014 |  |                | 165,000,000 |            |   | 17,325,000     |  |            | 165,000,000 |  |   | 150,150,000
|Libor + 6.0% Term Loan due March 2011                 |  |                | 30,015,514  |            |   | 30,015,514     |  |            |            |  |   |           
|Libor + 2.0% Revolving credit facility due June 2013  |  |                | 8,000,000   |            |   | 2,320,000      |  |            | 12,000,000  |  |   | 11,340,000 
|Libor + 2.0% Revolving credit facility due March 2011 |  |                | 4,182,803   |            |   | 4,182,803      |  |            |            |  |   |           
|7.0% Seller note due November 2010                    |  |                | 4,000,000   |            |   | 2,899,151      |  |            | 4,000,000   |  |   | 3,725,719  
|9.39% non-recourse note payable due May 2010          |  |                | 10,411,034  |            |   | 10,403,241     |  |            | 10,626,942  |  |   | 10,585,249 
|                                                      |  |                |             |            |   |                |  |            |             |  |   |            
|                                                      |  | $              | 871,124,503 |            | $ | 510,732,245    |  | $          | 801,626,942 |  | $ | 769,678,328
|                                                      |  |                |             |            |   |                |  |            |             |  |   |            

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended and interpreted, 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. The statement
also requires that changes in the derivatives fair value be recognized currently in earnings in either income (loss) from continuing operations or accumulated other 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 interest rate risk. Prior to 2007, all of
our interest rate swap agreements qualified as fair value hedges and were recorded at fair value. As such, the gains or losses on those swaps were offset by corresponding gains or losses on the related debt. During 2007, we entered into additional
interest rate swap agreements, some of which qualify as cash flow hedges. As such, any changes in the fair value of these hedges are 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 SFAS No. 109,
Accounting for Income Taxes. Under this method, deferred income taxes are recorded based upon differences



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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 Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB
Statement 109 (FIN 48). This statement 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. FIN 48 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 10 for additional
information.

Share-based Compensation

Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment (SFAS 123-R), using the modified prospective application method. Under this transition method, we record
compensation expense for all stock option awards granted after the date of adoption and for the unvested portion of previously granted stock option awards that remained outstanding at the date of adoption. See Note 9 for additional information.

Use of Estimates

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

Reclassifications

Certain prior year amounts have
been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

On January 1, 2008 we adopted FASB Statement No. 157, Fair Value Measurements(SFAS 157),which defines fair value, and FASB
Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115(SFAS 159), which permits entities to choose to measure many financial instruments and
certain other items at fair value. Neither of these statements had an impact on our consolidated financial statements for 2008. In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157,
which delayed the effective date of SFAS No. 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until January 1, 2009. We have not
yet determined the impact that the implementation of SFAS 157, for non-financial assets and liabilities, will have on our consolidated financial statements.

In June 2007, the FASB issued Emerging Issues Task Force Issue 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF 06-11). EITF 06-11 requires that the tax benefit



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related to dividend equivalents paid on restricted stock, which are expected to vest, be recorded as an increase to additional paid-in capital. We originally
accounted for this tax benefit as a reduction to income tax expense. EITF 06-11 is to be applied prospectively for tax benefits on dividends declared in fiscal years beginning after December 15, 2007. We adopted the provisions of EITF 06-11 on
January 1, 2008. EITF 06-11 did not have a material effect on our consolidated financial statements.

In December 2007, the FASB
issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), Implementation Issue No. E23, HedgingGeneral: Issues Involving the Application of the Shortcut Method under Paragraph 68
(Issue E23). Issue E23 amends SFAS 133 to explicitly permit use of the shortcut method for hedging relationships in which interest rate swaps have nonzero fair value at the inception of the hedging relationship, provided certain conditions are met.
Issue E23 was effective for hedging relationships designated on or after January 1, 2008. The implementation of this guidance did not have an impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R), 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 statement replaces SFAS No. 141 by requiring measurement at the
acquisition date of the fair value of assets acquired, liabilities assumed and any non-controlling interest. Additionally, SFAS 141R requires that acquisition-related costs, including restructuring costs, be recognized as expense separately from the
acquisition. SFAS 141R 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 after its effective date only to the extent we complete business combinations and therefore the impact cannot be determined at this time.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interest in Consolidated Financial Statements, an amendment of ARB
No. 51 (SFAS 160). SFAS 160 establishes the accounting and reporting standards for a non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a non-controlling interest in a subsidiary is
an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests and
applies prospectively to business combinations for fiscal years beginning after December 15, 2008. We will adopt SFAS 160 beginning January 1, 2009 and are currently evaluating the impact that this pronouncement may have on our
consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative Instruments and
Hedging Activitiesan amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 expands quarterly disclosure requirements in SFAS 133 about an entitys derivative instruments and hedging activities. SFAS 161 is effective for fiscal
years beginning after November 15, 2008. We are currently evaluating the impact that this pronouncement may have on our future footnote disclosures.

In June 2008, the FASB issued Staff Position No. EITF 03-6-1 (EITF 03-6-1). EITF 03-6-1 addresses whether instruments granted in share-based payment arrangements are participating securities prior to
vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in SFAS No. 128, Earnings per Share. The provisions of EITF 03-6-1 are effective for
financial statements issued for fiscal years beginning after December 15, 2008. All prior period EPS data presented will be adjusted retrospectively to conform with the provisions of EITF 03-6-1. Early application is not permitted. We are
currently evaluating the impact that EITF 03-6-1 may have on our consolidated financial statements.



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2.  HURRICANE IKE

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.

We also maintain business interruption insurance coverage and have recorded approximately $7.3 million in recoveries related to lost profits at our
affected locations in Galveston and the Kemah Boardwalk. This amount was recorded as revenue in our consolidated financial statements. We believe that the majority of our property losses and cash flow will be covered by property and business
interruption insurance.

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.

On November 17, 2006, we completed the sale of 120 Joes restaurants to an unaffiliated entity for approximately
$192.0 million, including the assumption of certain working capital liabilities to be finalized in 2009. In connection with the sale we recorded pre-tax impairment charges and a loss on disposal totaling $49.2 million.

We recorded additional pre-tax impairment charges totaling $10.3 million, $9.9 million and $30.6 million for the years ended December 31, 2008, 2007
and 2006, respectively, to write down carrying values of assets pertaining to the remaining stores included in our disposal plan. 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 and $1.7 million for the
years ended December 31, 2008 and 2006, respectively, for lease termination and other store closure costs. These charges are included in discontinued operations.

The results of discontinued operations for the years ended December 31, 2008, 2007 and 2006 were as follows:



|                                                               |  |                         |             |   |      |   |             |      |  |   |             |  
|-------------------------------------------------------------- |  | ----------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                               |  | Year Ended December 31, |            
|                                                               |  | 2008                    |             |   | 2007 |   |             | 2006 | 
|Revenues                                                       |  | $                       | 10,870,296  |   |      | $ | 22,796,338  |      |  | $ | 332,337,147 |  
|Income (loss) from discontinued operations before income taxes |  |                         | (16,419,382 | ) |      |   | (14,809,635 | )    |  |   | (92,042,315 | )
|Income tax (benefit) on discontinued operations                |  |                         | (5,850,315  | ) |      |   | (5,183,372  | )    |  |   | (35,896,503 | )
|                                                               |  |                         |             |   |      |   |             |      |  |   |             |  
|Net income (loss) from discontinued operations                 |  | $                       | (10,569,067 | ) |      | $ | (9,626,263  | )    |  | $ | (56,145,812 | )
|                                                               |  |                         |             |   |      |   |             |      |  |   |             |  



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Interest expense is allocated to discontinued operations based on the ratio of net assets to be
discontinued to consolidated net assets. For the years ended December 31, 2007 and 2006, respectively, interest expense related to discontinued operations was $0.1 million and $12.5 million. For the year ended December 31, 2008, no
interest expense was allocated to discontinued operations.

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,
|                                               |  | 2008                    |           | 2007
|Assets:                                        |  |                         |           |      |   |           
|Current assets                                 |  | $                       | 4,638     |      | $ | 7,567,244 
|Property, plant and equipment, net             |  |                         | 2,963,303 |      |   | 14,222,641
|Other assets                                   |  |                         | 5,652     |      |   | 9,352     
|                                               |  |                         |           |      |   |           
|Assets related to discontinued operations      |  | $                       | 2,973,593 |      | $ | 21,799,237
|                                               |  |                         |           |      |   |           
|Liabilities:                                   |  |                         |           |      |   |           
|Accounts payable and accrued expenses          |  | $                       | 4,868,199 |      | $ | 4,264,544 
|Other liabilities                              |  |                         | 281,166   |      |   | 711,778   
|                                               |  |                         |           |      |   |           
|Liabilities related to discontinued operations |  | $                       | 5,149,365 |      | $ | 4,976,322 
|                                               |  |                         |           |      |   |           

4.  ACQUISITIONS

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 25 months following the completion of the third restaurant. The purchase price will be calculated as the lesser of $35.0 million or a multiple of unit level profit, to be reduced by any amounts that may be owed to us by SCI in
connection with the construction of the restaurants or other matters.

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.

5.  PROPERTY AND EQUIPMENT AND OTHER CURRENT ASSETS

Property and equipment is comprised of the following:



|                                  |  |              |               |   |      |   |               |  
|--------------------------------- |  | ------------ | ------------- | - | ---- | - | ------------- | -
|                                  |  | December 31, |              
|                                  |  | 2008         |               |   | 2007 |  
|Land                              |  | $            | 262,616,115   |   |      | $ | 263,786,052   |  
|Buildings and improvements        |  |              | 545,809,802   |   |      |   | 546,978,716   |  
|Furniture, fixtures and equipment |  |              | 329,968,031   |   |      |   | 312,571,596   |  
|Leasehold improvements            |  |              | 424,143,044   |   |      |   | 402,248,312   |  
|Construction in progress          |  |              | 64,644,003    |   |      |   | 12,150,593    |  
|                                  |  |              |               |   |      |   |               |  
|                                  |  |              | 1,627,180,995 |   |      |   | 1,537,735,269 |  
|Lessaccumulated depreciation     |  |              | (367,994,532  | ) |      |   | (299,182,982  | )
|                                  |  |              |               |   |      |   |               |  
|Property and equipment, net       |  | $            | 1,259,186,463 |   |      | $ | 1,238,552,287 |  
|                                  |  |              |               |   |      |   |               |  



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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, 2008, we recorded impairment charges of $3.2
million to impair the leasehold improvements and equipment of three underperforming restaurants. As a result of our strategic review of operations in 2006, we identified certain Joes Crab Shack restaurants that we believed were suitable for
conversion into other Landrys concepts. Based on our review we recorded impairment charges of $3.0 million for the year ended December 31, 2006 to impair certain assets relating to these conversion units to reflect our best estimates of
their fair market value. We took no impairment charges in the year ended December 31, 2007.

Other current assets are comprised of the
following:



|                 |  |              |           |      |   |           
|---------------- |  | ------------ | --------- | ---- | - | ----------
|                 |  | December 31,
|                 |  | 2008         |           | 2007
|Prepaid expenses |  | $            | 5,902,659 |      | $ | 9,210,580 
|Deposits         |  |              | 3,199,370 |      |   | 3,390,178 
|                 |  |              |           |      |   |           
|                 |  | $            | 9,102,029 |      | $ | 12,600,758
|                 |  |              |           |      |   |           

Other expense, net for 2008 was $17.3 million and includes $14.3 million in non-cash expenses
associated with the change in fair value of swaps which were not designated as hedges. Other expense, net for 2007 was $16.7 million and includes $3.0 million in expenses associated with exchanging the 7.5% Notes for 9.5% Notes, $8.8 million in call
premiums and expenses associated with refinancing the Golden Nugget debt, and $4.4 million in expenses associated with changes in the fair value of swaps which were not designated as hedges. Other (income) expense, net for 2006 was not material.

6.  ACCRUED LIABILITIES

Accrued liabilities are comprised of the following:



|                                                    |  |                         |             |      |   |            
|--------------------------------------------------- |  | ----------------------- | ----------- | ---- | - | -----------
|                                                    |  | Year Ended December 31,
|                                                    |  | 2008                    |             | 2007
|Payroll and related costs                           |  | $                       | 22,345,794  |      | $ | 32,788,521 
|Rent and insurance                                  |  |                         | 29,384,290  |      |   | 30,009,761 
|Taxes, other than payroll and income taxes          |  |                         | 20,214,428  |      |   | 18,888,026 
|Deferred revenue (gift cards and certificates)      |  |                         | 25,091,978  |      |   | 17,847,319 
|Accrued interest                                    |  |                         | 2,612,258   |      |   | 3,532,611  
|Casino deposits, outstanding chips and other gaming |  |                         | 10,237,310  |      |   | 9,578,075  
|Other                                               |  |                         | 24,430,271  |      |   | 24,666,008 
|                                                    |  |                         |             |      |   |            
|                                                    |  | $                       | 134,316,329 |      | $ | 137,310,321
|                                                    |  |                         |             |      |   |            

7.  DEBT

On December 22, 2008, we entered into an $81.0 million interim senior secured credit facility. The interim senior secured credit facility provides for a $31.0 million senior secured term loan facility and a $50.0
million



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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.

On February 13, 2009, we completed the offering
of $295.5 million in aggregate principal amount of 14.0% senior secured notes due 2011 (the Notes). The gross proceeds from the offering and sale of the Notes were $260.0 million. The 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 (each individually a Guarantor and collectively, the Guarantors) and are secured by a second lien position on substantially all of our and
the Guarantors assets. The 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 as Collateral Agent.

The Notes will mature on August 15, 2011. Interest on the Notes will accrue from February 13, 2009, at a fixed interest rate of 14.0% to be
paid twice a year, on each February 15th and August 15th, beginning August 15, 2009. We may redeem the Notes any time at par, plus accrued interest. We are required to offer to purchase the Notes at 101% of their aggregate principal
amount, plus accrued interest, if we experience a change in control as defined in the Indenture.

The Indenture under which the Notes have
been issued contains a maximum leverage ratio covenant as well as restrictions that limit our ability and the Guarantors to, among other things: incur or guarantee additional indebtedness; create liens; pay dividends on or redeem or repurchase
stock; make capital expenditures or certain types of investments; sell assets or merge with other companies.

We and the Guarantors entered
into a registration rights agreement, dated as of February 13, 2009 (Registration Rights Agreement) with Jefferies & Company, Inc. Under the Registration Rights Agreement, we and the Guarantors have agreed to use our best efforts to
file and cause to become effective a registration statement with respect to an offer to exchange the Notes for notes registered under the Securities Act of 1933, as amended (the Securities Act), having substantially identical terms as the Notes
(except that additional interest provisions and transfer restrictions pertaining to the Notes will be deleted). If we fail to cause the registration statement relating to the exchange offer to become effective within the time periods specified in
the Registration Rights Agreement, we will be required to pay additional interest on the Notes until the registration statement is declared effective.

We also entered into a $215.6 million Amended and Restated Credit Agreement dated as of February 13, 2009 (the Credit Agreement) which replaced the interim senior secured credit facility. The Credit Agreement
provides for a term loan of $165.6 million and a revolving credit line of $50.0 million. The obligations under the Credit Agreement are unconditionally guaranteed by the Guarantors and are secured by a first lien position on substantially all of our
assets and the Guarantors.

Interest on the Credit Agreement accrues at a base rate (which is the greater of 5.50%, 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 3.5% plus a credit spread of 6.0%, and matures on May 13, 2011.

The Credit Agreement 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 Credit Agreement contains financial covenants, including a maximum leverage ratio, a
maximum senior leverage ratio, and a minimum fixed charge coverage ratio.



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We used the proceeds from the Notes offering, together with borrowings under the Credit Agreement to
refinance our existing $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 Existing Notes). In addition, we paid a redemption premium of approximately $4.0 million in connection with the repurchase of the Existing Notes.

In connection with the refinancing of our Existing 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 such 9.5% Notes and 7.5% Notes to eliminate most of the restrictive
covenants and certain events of default and to amend certain other provisions contained in the indentures and notes related thereto. We executed supplemental indentures with U.S. Bank National Association, as trustee, to effectuate the proposed
amendments to the indentures governing the Existing Notes, which became operative upon the consummation of the Notes offering.

With
respect to any Existing Notes that were not tendered, we may, at our option, either (i) pay such Existing 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 Existing Notes.

On August 29, 2007, we agreed to commence an exchange offering on or before October 1, 2007 to exchange our $400.0 million 7.5% Senior Notes
(the 7.5% Notes) for the 9.5% Notes with an interest rate of 9.5%, an option for us to redeem the 9.5% Notes at 1% above par from October 29, 2007 to February 28, 2009 and an option for the note holders to redeem the 9.5% Notes at 1% above
par from February 28, 2009 to December 15, 2011, both options requiring at least 30 but not more than 60 days notice. The Exchange Offer was completed on October 31, 2007 with all but $4.3 million of the 7.5% Notes being exchanged. In
connection with issuing the 9.5% Notes, we amended our existing Bank Credit Facility to provide for an accelerated maturity should the 9.5% Notes maturity date change, revised certain financial covenants to reflect the impact of the Exchange Offer
and redeemed our outstanding Term Loan balance.

In June 2007, our wholly owned unrestricted subsidiary, the Golden Nugget, 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 financing spread, 2.0% and 0.75%, respectively, at December 31, 2008. In addition, the credit facility requires a commitment fee on the unfunded portion
for both the $50.0 million revolving credit facility and the $120.0 million delayed draw component of the first lien term loan. The second lien term loan matures on December 31, 2014 and bears interest at Libor or the banks base rate,
plus a financing spread, 3.25% and 2.0%, respectively, at December 31, 2008. The financing spreads and commitment fees for the revolving credit facility increase or decrease depending on the leverage ratio as defined in the credit facility. The
first lien term loan requires one percent of the outstanding principal balance due annually to be paid in equal quarterly installments commencing on September 30, 2009 with the balance due on maturity. Principal of the second lien term loan is
due at maturity. The Golden Nuggets subsidiaries have granted liens on substantially all real property and personal property as collateral under the credit facility and are guarantors of the credit facility.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The proceeds from the new $545.0 million credit facility were used to repay all of the Golden
Nuggets outstanding debt, including its 8.75% Senior Secured Notes due 2011 totaling $155.0 million, plus the outstanding balance of approximately $10.0 million on its former $43.0 million revolving credit facility with Wells Fargo Foothill,
LLC. In addition, the proceeds were used to pay associated tender premiums of approximately $8.8 million due to the early redemption of the Senior Secured Notes, plus accrued interest and related transaction fees and expenses. We expect to incur
higher interest expense as a result of the increased borrowings associated with the Golden Nugget financing. In 2008, the revolver commitment was reduced to $47.0 million and the delayed draw term loan commitment was reduced to $117.5 million as the
result of the failure of one of the lending banks.

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 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 have designated $210.0 million of the first lien interest rate swaps and all of the second lien swaps as cash flow hedging transactions as set forth in SFAS 133. These swaps mirror the terms of the underlying debt and reset
using the same index and terms. The remaining interest rate swaps associated with the $120.0 million of first lien borrowings reflecting 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 expense of approximately $14.3 million and $5.4 million associated with these swaps was recorded for the years ended December 31, 2008 and 2007,
respectively.

As a primary result of the Golden Nugget refinancing and the New Notes, we have incurred higher interest expense. We expect
to incur additional interest expense in the future as we continue the Golden Nugget expansion and due to higher interest costs arising from our refinancing. We are constructing a hotel tower at the Golden NuggetLas Vegas which we expect to
complete by the end of 2009 at an estimated cost of $140.0 million, funded primarily by the delayed draw term loan and operating cash flow.

In December 2004, we entered into a $450.0 million Bank Credit Facility and Term Loan consisting of a $300.0 million revolving credit facility and a $150.0 million term loan. In November 2006, we utilized proceeds
from the Joes sale to pay down approximately $109.5 million on the term loan, leaving a balance outstanding of approximately $37.8 million as of December 31, 2006. In September 2007, we repaid the term loan.

Concurrent with the $450.0 million Bank Credit Facility, 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.

In connection with the 7.5% Notes, we entered
into two interest swap agreements aggregating $100.0 million notional value with the objective of managing our exposure to interest rate risk and lowering interest expense. The swaps effectively converted $100.0 million of the fixed rate 7.5% senior
notes to a variable rate by entering into receive fixed/pay variable swaps. As a result of the Exchange Offer, these swaps were no longer considered effective hedges and the change in their fair value was recorded in other
income/expense. During the fourth quarter of 2007, we settled these swaps resulting in a $2.3 million gain recorded in other income/expense on our consolidated statements of income.

We assumed an $11.4 million, 9.39% non-recourse, long-term mortgage note payable, due May 2010, in connection with an asset purchase in March 2003.
Principal and interest payments aggregate $102,000 monthly.



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Our debt agreements contain various restrictive covenants including minimum 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. At December 31, 2008, we were in compliance with all such covenants. As of
December 31, 2008, our average interest rate on floating-rate debt was 8.5%, we had approximately $20.3 million in letters of credit outstanding, and our available borrowing capacity was $67.5 million.

Principal payments for all long-term debt aggregate $408.8 million in 2009, $30.7 million in 2010, $16.5 million in 2011, $2.5 million in 2012, $10.5
million in 2013 and $403.3 million thereafter.

Long-term debt is comprised of the following:



|                                                                                                                                                                   |  |              |             |   |      |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                   |  | December 31, |            
|                                                                                                                                                                   |  | 2008         |             |   | 2007 |  
|$300.0 million Bank Syndicate Credit Facility, Libor + 1.5% interest only, due December 2009                                                                       |  | $            |            |   |      | $ | 87,000,000  |  
|$50.0 million revolving credit facility, Libor + 2.0%, due March 2011                                                                                              |  |              | 4,182,803   |   |      |   |            |  
|$31.1 million Term loan, Libor + 6.0% with Libor no less than 3.5%, 9.5% interest paid quarterly, principal paid quarterly beginning
June 30, 2009, due March 2011 |  |              | 30,015,514  |   |      |   |            |  
|Senior Notes, 9.5% interest only, due December 2014                                                                                                                |  |              | 395,662,000 |   |      |   | 395,662,000 |  
|Senior Notes, 7.5% interest only, due December 2014                                                                                                                |  |              | 4,338,000   |   |      |   | 4,338,000   |  
|$47.0 million revolving credit facility, Libor + 2.0%, due June 2013                                                                                               |  |              | 8,000,000   |   |      |   | 12,000,000  |  
|$327.0 million First Lien Term Loan, Libor +2.0%, 1% of principal paid quarterly beginning September 30, 2009, due June
2014                                       |  |              | 249,515,152 |   |      |   | 210,000,000 |  
|$165.0 million Second Lien Term Loan, Libor +3.25%, interest only, due December 2014                                                                               |  |              | 165,000,000 |   |      |   | 165,000,000 |  
|Non-recourse long-term note payable, 9.39% interest, principal and interest aggregate $101,762 monthly, due May 2010                                               |  |              | 10,411,034  |   |      |   | 10,626,942  |  
|Other long-term notes payable with various interest rates, principal and interest paid monthly                                                                     |  |              | 3,832       |   |      |   | 43,939      |  
|$4.0 million seller note, 7.0%, interest paid monthly, due November 2010                                                                                           |  |              | 4,000,000   |   |      |   | 4,000,000   |  
|                                                                                                                                                                   |  |              |             |   |      |   |             |  
|Total debt                                                                                                                                                         |  |              | 871,128,335 |   |      |   | 888,670,881 |  
|Less current portion                                                                                                                                               |  |              | (8,752,906  | ) |      |   | (87,243,013 | )
|                                                                                                                                                                   |  |              |             |   |      |   |             |  
|Long-term portion                                                                                                                                                  |  | $            | 862,375,429 |   |      | $ | 801,427,868 |  
|                                                                                                                                                                   |  |              |             |   |      |   |             |  

8.  STOCKHOLDERS EQUITY AND EARNINGS PER SHARE

In connection with our stock buy back programs, we repurchased into treasury approximately 3,300 shares, 6,317,000 shares and 211,000 shares of common
stock for approximately $43,000, $181.9 million and $6.0 million in 2008, 2007 and 2006, respectively. Cumulative repurchases as of December 31, 2008 were 24.0 million shares at a cost of approximately $472.4 million.

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



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dividend payments indefinitely. The indentures under which our Notes were issued and our Bank Agreement prohibit the payment of dividends on our common stock
to specified levels.

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock
outstanding during the year. Diluted earnings per share reflects the potential dilution that could occur if contracts to issue common stock were exercised or converted into common stock. For purposes of this calculation, outstanding stock options
and restricted stock grants are considered common stock equivalents using the treasury stock method, and are the only such equivalents outstanding.

A reconciliation of the amounts used to compute earnings per share is as follows:



|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|------------------------------------------------------------------------ |  | ----------------------- | ----------- | - | ---- | - | ---------- | ---- |  | - | ----------- | -
|                                                                         |  | Year Ended December 31, |            
|                                                                         |  | 2008                    |             |   | 2007 |   |            | 2006 | 
|Income from continuing operations                                        |  | $                       | 13,477,254  |   |      | $ | 27,738,057 |      |  | $ | 34,376,089  |  
|Income (loss) from discontinued operations, net of taxes                 |  |                         | (10,569,067 | ) |      |   | (9,626,263 | )    |  |   | (56,145,812 | )
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|Net income (loss)                                                        |  | $                       | 2,908,187   |   |      | $ | 18,111,794 |      |  | $ | (21,769,723 | )
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|Weighted average common shares outstandingbasic                         |  |                         | 15,260,000  |   |      |   | 18,850,000 |      |  |   | 21,300,000  |  
|Dilutive common stock equivalents:                                       |  |                         |             |   |      |   |            |      |  |   |             |  
|Stock options                                                            |  |                         | 205,000     |   |      |   | 500,000    |      |  |   | 670,000     |  
|Restricted stock                                                         |  |                         | 15,000      |   |      |   | 50,000     |      |  |   | 30,000      |  
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|Weighted average common and common share equivalents outstandingdiluted |  |                         | 15,480,000  |   |      |   | 19,400,000 |      |  |   | 22,000,000  |  
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|Earnings (loss) per sharebasic                                          |  |                         |             |   |      |   |            |      |  |   |             |  
|Income from continuing operations                                        |  | $                       | 0.88        |   |      | $ | 1.47       |      |  | $ | 1.61        |  
|Income (loss) from discontinued operations, net of taxes                 |  |                         | (0.69       | ) |      |   | (0.51      | )    |  |   | (2.63       | )
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|Net income (loss)                                                        |  | $                       | 0.19        |   |      | $ | 0.96       |      |  | $ | (1.02       | )
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|Earnings (loss) per sharediluted                                        |  |                         |             |   |      |   |            |      |  |   |             |  
|Income from continuing operations                                        |  | $                       | 0.87        |   |      | $ | 1.43       |      |  | $ | 1.56        |  
|Income (loss) from discontinued operations, net of taxes                 |  |                         | (0.68       | ) |      |   | (0.50      | )    |  |   | (2.55       | )
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  
|Net income (loss)                                                        |  | $                       | 0.19        |   |      | $ | 0.93       |      |  | $ | (0.99       | )
|                                                                         |  |                         |             |   |      |   |            |      |  |   |             |  

9.  STOCK-BASED COMPENSATION

We have the following compensation plans under which awards have been issued or are authorized to be issued, which were adopted with stockholder approval:

The 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, such as vesting and
exercise price, are to be determined by the Compensation Committee and set forth in the grant agreement for each award.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 stock. The Stock Option Plans 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.

We also maintain the 1995
Flexible Incentive Plan, which was adopted in 1995, (Flex Plan), as amended, for key employees of the Company. Under the Flex Plan eligible employees received stock options, stock appreciation rights, restricted stock, performance awards,
performance stock and other awards, as defined by the Board of Directors or an appointed committee. The aggregate number of shares of common stock issued under the Flex Plan (or with respect to which awards may be granted) were not in excess of
2,000,000 shares. Options are no longer issued under the Flex Plan; however, options previously issued are still outstanding.

We have the
following compensation plans under which awards have been issued or are authorized to be issued, which were adopted without stockholder approval:

The Landrys Restaurants, Inc. 2003 Equity Incentive Plan authorizes the issuance of up to 700,000 shares. This plan allows awards of both qualified and non-qualified stock options, restricted stock, cash equivalent values, and tandem
awards to employees. The plan is administered by our compensation committee. Terms of the award, such as vesting and exercise price, are to be determined by the compensation committee and set forth in the grant agreement for each award.

On July 22, 2002, we issued options to purchase an aggregate of 437,500 shares under individual stock option agreements with individual members
of senior management. Options under these agreements were granted at market price and expire ten years from the date of grant. These options vest in equal installments over a period of five years, provided that vesting may accelerate on certain
occurrences, such as a change in control or, in the case of options granted to our CEO, if our stock hits certain price targets.

On
July 22, 2002, we issued options to purchase an aggregate of 6,000 shares to our non-employee directors. Options under these agreements were granted at market price and expire ten years from the date of grant. These options vest in equal
installments over a period of five years.

On March 16, 2001, we issued 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 ten years from the date of grant. These options vest in equal installments over
a period of five years, provided that vesting may accelerate on certain occurrences, such as a change in control or, in the case of options granted to our CEO, if our stock hits certain price targets. In December 2006, certain options to a member of
senior management were increased to an exercise price of $9.65.

On March 16 and September 13, 2001, options to purchase an
aggregate of 240,000 shares were issued to certain of our individual employees, under individual option grant agreements. Options under these agreements were granted at $8.50 and $15.80, respectively, and expire ten years from the date of grant.
These options vest in equal installments over a period of five years, provided that vesting may accelerate on certain occurrences, such as a change in control.



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In 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.

In April 2006, 102,000 restricted common shares were issued to key employees vesting ratably over five years and 8,000 restricted common
shares were granted to non-employee directors vesting ratably over two years.

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-employee directors vesting ratably over two years.

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, (SFAS 123R). SFAS 123R requires the recognition of the cost of
employee services received in exchange for awards of equity instruments, such as stock options and restricted stock, based on the fair value of those awards at the date of grant.

Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS 123R using the modified prospective application method.
Under this transition method, we record compensation expense for all stock option awards granted after the date of adoption and for the unvested portion of previously granted stock option awards that remained outstanding at the date of adoption. The
amount of compensation cost recognized was based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123.

For the years ended December 31, 2008, 2007 and 2006, total stock-based compensation expense recognized was $4.1 million, $4.8 million and $7.3 million, respectively. These charges are included in general and
administrative expense for the respective years. Stock-based compensation expense is not reported at the segment level as these amounts are not included in internal measurements of segment operating performance.

Stock option plan activity for the year ended December 31, 2008 is summarized below:



|                                      |  |           |   |  |                                |       |                                                      |      |                         |   |          
|------------------------------------- |  | --------- | - |  | ------------------------------ | ----- | ---------------------------------------------------- | ---- | ----------------------- | - | ---------
|                                      |  | Shares    |   |  | Weighted AverageExercise Price |       | Weighted AverageRemaining ContractualLife (in years) |      | AggregateIntrinsicValue
|                                      |  |           |  
|                                      |  |           |  
|                                      |  |           |  
|Options outstanding January 1, 2008   |  | 1,305,294 |   |  | $                              | 17.72 |                                                      |      |                         |   |          
|Granted                               |  |          |   |  |                                |      |                                                      |      |                         |   |          
|Exercised                             |  | (3,306    | ) |  | $                              | 7.12  |                                                      |      |                         |   |          
|Canceled or expired                   |  | (46,584   | ) |  | $                              | 13.02 |                                                      |      |                         |   |          
|                                      |  |           |   |  |                                |       |                                                      |      |                         |   |          
|Options outstanding December 31, 2008 |  | 1,255,404 |   |  | $                              | 17.92 |                                                      | 3.65 |                         | $ | 1,369,590
|                                      |  |           |   |  |                                |       |                                                      |      |                         |   |          
|Options exercisable December 31, 2008 |  | 1,209,404 |   |  | $                              | 17.67 |                                                      | 3.59 |                         | $ | 1,367,280
|                                      |  |           |   |  |                                |       |                                                      |      |                         |   |          

No options were granted during 2008, 2007 or 2006. The total intrinsic value of options exercised
during the years ended December 31, 2008, 2007 and 2006, was $21,688, $4.2 million and $3.7 million, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Restricted stock activity for the year ended December 31, 2008 is summarized below:



|                                   |  |         |   |  |                                       |      
|---------------------------------- |  | ------- | - |  | ------------------------------------- | -----
|                                   |  | Shares  |   |  | Weighted-Average GrantDate Fair Value
|                                   | 
|                                   | 
|Non-vested as of January 1, 2008   |  | 863,977 |   |  | $                                     | 29.01
|Granted                            |  |        |   |  |                                       |     
|Vested                             |  | (19,798 | ) |  | $                                     | 34.69
|Canceled or expired                |  | (1,855  | ) |  | $                                     | 35.00
|                                   |  |         |   |  |                                       |      
|Non-vested as of December 31, 2008 |  | 842,324 |   |  | $                                     | 28.86
|                                   |  |         |   |  |                                       |      

As of December 31, 2008, there was $15.4 million of unrecognized compensation expense related
to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 5.4 years.

Cash proceeds
received from options exercised was approximately $21,000 for the year ended December 31, 2008 and $2.7 million for both years ended December 31, 2007 and 2006.

10.  INCOME TAXES

An analysis of the provision for income taxes for continuing operations
for the years ended December 31, 2008, 2007, and 2006 is as follows:



|                      |  |      |            |   |      |   |            |  |   |           
|--------------------- |  | ---- | ---------- | - | ---- | - | ---------- |  | - | ----------
|                      |  | 2008 |            |   | 2007 |   | 2006      
|Tax provision:        |  |      |            |   |      |   |            |  |   |           
|Current income taxes  |  | $    | 10,703,124 |   |      | $ | 13,139,455 |  | $ | 6,548,665 
|Deferred income taxes |  |      | (3,476,550 | ) |      |   | 1,098,495  |  |   | 6,844,730 
|                      |  |      |            |   |      |   |            |  |   |           
|Total provision       |  | $    | 7,226,574  |   |      | $ | 14,237,950 |  | $ | 13,393,395
|                      |  |      |            |   |      |   |            |  |   |           

Our effective tax rate, for the years ended December 31, 2008, 2007, and 2006, differs from
the federal statutory rate as follows:



|                                                                |  |       |   |  |       |   |  |       |  
|--------------------------------------------------------------- |  | ----- | - |  | ----- | - |  | ----- | -
|                                                                |  | 2008  |   |  | 2007  |   |  | 2006  |  
|Statutory rate                                                  |  | 35.0  | % |  | 35.0  | % |  | 35.0  | %
|FICA tax credit                                                 |  | (22.0 | ) |  | (14.8 | ) |  | (12.6 | )
|State income tax, net of federal tax benefit                    |  | 9.4   |   |  | 7.0   |   |  | 3.9   |  
|Recognition of tax carryforward assets and other tax attributes |  | (1.0  | ) |  |      |   |  | (6.7  | )
|Meals, entertainment and other non-deductible expense           |  | 11.5  |   |  | 6.1   |   |  | 5.5   |  
|Other                                                           |  | 2.0   |   |  | 0.6   |   |  | 2.9   |  
|                                                                |  |       |   |  |       |   |  |       |  
|                                                                |  | 34.9  | % |  | 33.9  | % |  | 28.0  | %
|                                                                |  |       |   |  |       |   |  |       |  



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Deferred income tax assets and liabilities as of December 31, 2008 and 2007 are comprised of the
following:



|                                                  |  |      |             |   |      |   |             |  
|------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                  |  | 2008 |             |   | 2007 |  
|Deferred Income Taxes:                            |  |      |             |   |      |   |             |  
|Current assetsaccruals and other                 |  | $    | 28,001,000  |   |      | $ | 21,648,000  |  
|                                                  |  |      |             |   |      |   |             |  
|Non-current assets:                               |  |      |             |   |      |   |             |  
|AMT credit, FICA credit carryforwards, and other  |  | $    | 62,500,000  |   |      | $ | 46,721,000  |  
|Federal net operating loss carryforwards          |  |      | 20,379,000  |   |      |   | 22,880,000  |  
|Deferred rent and unfavorable leases              |  |      | 5,240,000   |   |      |   | 5,338,000   |  
|Valuation allowance                               |  |      | (5,708,000  | ) |      |   | (7,339,000  | )
|                                                  |  |      |             |   |      |   |             |  
|Non-current deferred tax asset                    |  |      | 82,411,000  |   |      |   | 67,600,000  |  
|Non-current liabilitiesproperty, swaps and other |  |      | (64,260,000 | ) |      |   | (62,674,000 | )
|                                                  |  |      |             |   |      |   |             |  
|Net non-current tax asset (liability)             |  | $    | 18,151,000  |   |      | $ | 4,926,000   |  
|                                                  |  |      |             |   |      |   |             |  
|Total net deferred tax asset (liability)          |  | $    | 46,152,000  |   |      | $ | 26,574,000  |  
|                                                  |  |      |             |   |      |   |             |  

At December 31, 2008 and 2007, we had operating loss carryovers for Federal Income Tax
purposes of $54.7 million and $61.5 million, respectively, which expire in 2019 through 2025. These operating loss carryovers, credits, and certain other deductible temporary differences, are related to the acquisitions of Rainforest Cafe and
Saltgrass Steak House, and their utilization is subject to Section 382 limits. Because of these limitations, we established a valuation allowance against a portion of these deferred tax assets to the extent it was more likely than not that
these tax benefits will not be realized. In 2008, there was a reduction of the valuation allowance and deferred tax liabilities aggregating $1.6 million. The valuation allowance and certain deferred tax liabilities were reduced for current year
projected NOL utilization or expiration.

At December 31, 2008, we have general business tax credit carryovers and minimum tax credit
carryovers of $30.3 million. The general business carryover includes $1.5 million from Saltgrass Steak House, which is fully reserved. The general business credit carryovers expire in 2010 through 2026, while the minimum tax credit carryovers have
no expiration date. We believe it is more likely than not that we will generate sufficient income in future years to utilize the non-reserved credits.

We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. We have substantially concluded all U.S. federal income tax matters for years through 2005. Substantially all material
state and local income tax matters have been concluded for years through 2003. The Internal Revenue Service has substantially completed its audit of tax years ended December 31, 2004 and December 31, 2005 with no material issues identified
to date.



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Effective January 1, 2007, we adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN 48). As of December 31, 2008, we had approximately $15.7 million of unrecognized tax benefits, including $2.3 million of interest and penalties, which represents the amount of
unrecognized tax benefits that, if recognized, would favorably impact our effective income tax rate in future periods. We do not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next twelve months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



|                                                             |  |      |            |   |      |   |            |  
|------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                             |  | 2008 |            |   | 2007 |  
|Balance at beginning of the year                             |  | $    | 14,062,885 |   |      | $ | 10,323,575 |  
|Additions based on tax positions related to the current year |  |      | 1,495,469  |   |      |   | 1,299,027  |  
|Additions for tax positions of prior years                   |  |      | 2,609,533  |   |      |   | 3,460,957  |  
|Reductions for tax positions of prior years                  |  |      | (1,526,296 | ) |      |   | (1,020,674 | )
|Settlements                                                  |  |      | (967,332   | ) |      |   |           |  
|                                                             |  |      |            |   |      |   |            |  
|Balance at the end of the year                               |  | $    | 15,674,259 |   |      |   | 14,062,885 |  
|                                                             |  |      |            |   |      |   |            |  

Our practice is to recognize interest and/or penalties related to income tax matters in income tax
expense. During the year ended December 31, 2008, we released approximately $0.3 million in interest and/or penalties. We had approximately $2.3 million and $2.0 million accrued for the payment of interest and/or penalties at December 31,
2008 and 2007, respectively.

11.  COMMITMENTS AND CONTINGENCIES

Lease Commitments

We have entered into lease commitments for restaurant facilities as well as
certain fixtures, equipment and leasehold improvements. Under most of the facility lease agreements, we pay taxes, insurance and maintenance costs in addition to the rent payments. Certain facility leases also provide for additional contingent
rentals based on a percentage of sales in excess of a minimum amount. Rental expense under operating leases was approximately $60.5 million, $54.4 million and $61.3 million, during the years ended December 31, 2008, 2007, and 2006,
respectively. Percentage rent included in rent expense was $15.1 million, $15.4 million and $14.8 million, for 2008, 2007, and 2006, respectively. 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 $71.5 million at December 31, 2008. We have recorded a liability of $5.7 million with respect to these obligations.

In 2004, we entered into an aggregate $25.5 million equipment operating lease agreement replacing two existing agreements and including
additional equipment. The lease expires in 2014. We guarantee a minimum residual value related to the equipment of approximately 66% of the total amount funded under the agreement. We may purchase the leased equipment throughout the lease term for
an amount equal to the unamortized lease balance. In 2006, we sold one piece of equipment reducing the aggregate amount outstanding by $4.1 million. We believe that the remaining equipments fair value is sufficient such that no amounts will be
due under the residual value guarantee.

In connection with substantially all of the Rainforest Cafe leases, amounts are provided for
unfavorable leases, rent abatements, and scheduled increases in rent. Such amounts are recorded as other long-term liabilities in our consolidated balance sheets, and amortized or accrued as an adjustment to rent expense, included in other



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restaurant operating expenses, on a straight-line basis over the lease term, including options where failure to exercise such options would result in
economic penalty.

The aggregate amounts of minimum operating lease commitments maturing in each of the five years and thereafter
subsequent to December 31, 2008 are as follows:



|           |  |   |            
|---------- |  | - | -----------
|2009       |  | $ | 38,629,049 
|2010       |  |   | 34,147,075 
|2011       |  |   | 28,893,169 
|2012       |  |   | 26,190,752 
|2013       |  |   | 21,811,734 
|Thereafter |  |   | 195,400,671
|           |  |   |            
|           |  | $ | 345,072,450
|           |  |   |            

Building Commitments

As of December 31, 2008, we had future development, land purchases and construction commitments expected to be expended within the next twelve months of approximately $93.7 million, including completion of
construction of certain new restaurants. We expect to incur approximately $89.4 million related to expansion of the Golden Nugget Hotel and Casino in Las Vegas, Nevada during the next twelve months.

In 2003, we purchased the Flagship Hotel and Pier from the City of Galveston, Texas, subject to an
existing lease. Under this agreement, we have committed to spend $15.0 million to transform the hotel and pier into a 19thcentury style Inn and
entertainment complex complete with rides and carnival type games. The property was significantly damaged by Hurricane Ike in 2008. We are currently in litigation with the former tenant due to its failure to purchase adequate insurance and are
evaluating our options concerning the property.

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 25 months following the completion of the third restaurant. The purchase price will be calculated
as the lesser of $35.0 million or a multiple of unit level profit, to be reduced by any amounts that may be owed to us by SCI in connection with the construction of the restaurants or other matters.

Employee Benefits and Other

We sponsor qualified
defined contribution retirement plans (401(k) Plan) covering eligible salaried employees. The 401(k) Plans allows eligible employees to contribute, subject to Internal Revenue Service limitations on total annual contributions, up to 100%
of their base compensation as defined in the 401(k) Plans, to various investment funds. We match in cash at a discretionary rate which totaled $0.8 million in 2007 and $0.9 million in 2006. Employee contributions vest immediately while our
contributions vest 20% annually beginning in the participants second year of eligibility for restaurant and hospitality employees and in the participants first year of eligibility for casino employees.

We also initiated non-qualified defined contribution retirement plans (the Plans) covering certain management employees. The Plans allow eligible
employees to defer receipt of their base compensation and of their eligible bonuses, as defined in the Plans. We match in cash at a discretionary rate which totaled $0.5 million in 2007 and $0.3 million in 2006. Employee contributions vest
immediately while our contributions vest 20% annually. We established a Rabbi Trust to fund the Plans obligation for the restaurant and hospitality employees. The market value of the trust assets is included in other assets, and the liability
to the Plans participants is included in other liabilities.



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Our casino employees at the Golden Nugget in Las Vegas, Nevada that are members of various unions are
covered by union-sponsored, collective bargained, multi-employer health and welfare and defined benefit pension plans. Under our obligation to these plans we recorded expenses of $14.3 million, $12.4 million and $11.9 million for the years ended
2008, 2007 and 2006, respectively. The plans sponsors have not provided sufficient information to permit us to determine its share of unfunded vested benefits, if any. However, based on available information, we do not believe that unfunded
amounts attributable to our casino operations are material.

We are self-insured for most health care benefits for our non-union casino
employees. The liability for claims filed and estimates of claims incurred but not reported is included in accrued liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2008 and 2007.

We manage and operate the Galveston Island Convention Center in Galveston, Texas. In connection with the Galveston Island Convention Center Management
Contract (Contract), we agreed to fund operating losses, if any, subject to certain rights of reimbursement. Under the Contract, we have the right to one-half of any profits generated by the operation of the Convention Center.

Litigation and Claims

On
April 4, 2006, a purported class action lawsuit was filed against Joes Crab ShackSan Diego, Inc. in the Superior Court of California in San Diego by Kyle Pietrzak and others similarly situated. The lawsuit alleges that the defendant
violated wage and hour laws, including the failure to pay hourly and overtime wages, failure to provide meal periods and rest periods, failing to provide minimum reporting time pay, failing to compensate employees for required expenses, including
the expense to maintain uniforms, and violations of the Unfair Competition Law. In June 2006, the lawsuit was amended to include Kristina Brask as a named plaintiff and named Crab Addison, Inc. and Landrys Seafood HouseArlington, Inc. as
additional defendants. We reached a settlement agreement which has been approved by the Court and paid the settlement amount in full in February 2009. As a result, this matter has been dismissed.

On February 18, 2005, and subsequently amended, a purported class action lawsuit against Rainforest Cafe, Inc. was filed in the Superior Court of
California in San Bernardino by Michael D. Harrison, et. al. Subsequently, on September 20, 2005, another purported class action lawsuit against Rainforest Cafe, Inc. was filed in the Superior Court of California in Los Angeles by Dustin
Steele, et. al. On January 26, 2006, both lawsuits were consolidated into one action by the state Superior Court in San Bernardino. The lawsuits allege that Rainforest Cafe violated wage and hour laws, including not providing meal and rest
breaks, uniform violations and failure to pay overtime. We reached a settlement agreement which has been approved by the Court and paid the settlement amount in full in February 2009. As a result, this matter has been dismissed.

Following Mr. Fertittas initial proposal on January 27, 2008 to acquire all of our
outstanding stock, five putative class action law suits were filed in state district courts in Harris County, Texas. On March 26, 2008, the five actions were consolidated for all purposes under Case No. 2008- 05211; Dennis Rice, on
behalf of himself and all others similarly situated v. Landrys Restaurants, Inc. et al.; in the 157thJudicial District of Harris County,
Texas (Rice). The Rice Consolidated action was voluntarily non-suited by the plaintiffs and the order of non-suit was signed by the court on February 4, 2009.

James F. Stuart, individually and on behalf of all others similarly situated v. Landrys Restaurants, Inc. et al., was filed on June 26,
2008 in the Court of Chancery of the State of Delaware (Stuart). We are named as a defendant along with our directors, Parent and Merger Sub. Stuart is a putative class action in which plaintiff alleges that the merger agreement
unduly hinders obtaining the highest value for shares of our stock. Plaintiff also alleges that the merger is unfair. Plaintiff seeks to enjoin or rescind the merger, an accounting and damages along with costs and fees.



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David Barfield v. Landrys Restaurants, Inc. et al., was filed on June 27, 2008 in
the Court of Chancery of the State of Delaware (Barfield). We are named in this case along with our directors, Parent and Merger Sub. Barfield is a putative class action in which plaintiff alleges that our directors aided
and abetted Parent and Merger Sub, and have breached their fiduciary duties by failing to engage in a fair and reliable sales process leading up to the merger agreement. Plaintiff seeks to enjoin or rescind the transaction, an accounting and damages
along with costs and fees.

Stuart and Barfield were consolidated by court order. The consolidated action is proceeding under
Consolidated C.A. No. 3856-VCL; In re: Landrys Restaurants, Inc. Shareholder Litigation. In their consolidated complaint, plaintiffs allege that our directors breached fiduciary duties to our stockholders and that the preliminary
proxy statement filed on July 17, 2008 fails to disclose what plaintiffs contend are material facts. Plaintiffs also alleged that we, Parent and Merger Sub aided and abetted the alleged breach of fiduciary duty. We believe that this action is
without merit and intend to contest the above matter vigorously.

On February 5, 2009, a purported class action and derivative lawsuit
entitled Louisiana Municipal Police Employees Retirement System on behalf of itself and all other similarly situated shareholders of Landrys Restaurants, Inc. and derivatively on behalf of minimal defendant Landrys
Restaurants, Inc. was brought against all members of our Board of Directors, Fertitta Holdings, Inc., and Fertitta Acquisition Co. in the Court at Chancery of the State of Delaware. The lawsuit alleges, among other things, a breach of a
fiduciary duty by the directors for renegotiating the Merger Agreement with the Fertitta entities, allowing Mr. Fertitta to acquire shares of stock in the Company and gain majority control thereof, and terminating the Merger Agreement without
requiring payment of the reverse termination fee. The suit seeks consummation of the merger buyout at $21.00 a share or damages representing the difference between $21.00 per share and the price at which class members sold their stock in the open
market, or damages for allowing Mr. Fertitta to acquire control of the Company without paying a control premium, or alternately requiring payment of the reverse termination fee or damages for the devaluation of the Companys stock. We
intend to contest this matter vigorously.

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.

12.  SEGMENT INFORMATION

Our operating segments are aggregated into reportable business segments based primarily on the similarity of their economic characteristics, products,
services, and delivery methods. Following the acquisition of the Golden Nugget Hotels and Casinos on September 27, 2005, it was determined that we operate two reportable business segments as follows:

Restaurant and Hospitality

Our
restaurants operate primarily under the names of Rainforest Cafe, Saltgrass Steak House, Landrys Seafood House, Charleys Crab and The Chart House. As of December 31, 2008, we owned and operated 175 full-service and limited-service
restaurants in 27 states and Canada. We are also engaged in the ownership and operation of select hospitality and entertainment businesses that complement our restaurant operations and provide our customers with unique dining, leisure and
entertainment experiences.



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Gaming

We operate the Golden Nugget Hotels and Casinos in Las Vegas and Laughlin, Nevada. These locations emphasize the creation of the best possible gaming and entertainment experience for their customers by providing a
combination of comfortable and attractive surroundings. This is accomplished through luxury rooms and amenities coupled with competitive gaming tables and superior player rewards programs.

The accounting policies of the segments are the same as described in Note 1. We evaluate segment performance based on unit level profit, which excludes
general and administrative expense, depreciation expense, net interest expense and other non-operating income or expense. Financial information by reportable business segment is as follows:



|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|----------------------------------------------------------- |  | ----------------------- | ------------- | - | ---- | - | ------------- | ---- |  | - | ------------- | -
|                                                            |  | Year Ended December 31, |              
|                                                            |  | 2008                    |               |   | 2007 |   |               | 2006 | 
|Revenue:                                                    |  |                         |               |   |      |   |               |      |  |   |               |  
|Restaurant and Hospitality                                  |  | $                       | 890,605,419   |   |      | $ | 894,434,266   |      |  | $ | 870,615,442   |  
|Gaming                                                      |  |                         | 253,283,415   |   |      |   | 265,933,986   |      |  |   | 231,378,065   |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|                                                            |  | $                       | 1,143,888,834 |   |      | $ | 1,160,368,252 |      |  | $ | 1,101,993,507 |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|Unit level profit:                                          |  |                         |               |   |      |   |               |      |  |   |               |  
|Restaurant and Hospitality                                  |  | $                       | 181,199,795   |   |      | $ | 172,633,034   |      |  | $ | 167,756,564   |  
|Gaming                                                      |  |                         | 62,823,144    |   |      |   | 63,957,058    |      |  |   | 48,742,428    |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|                                                            |  | $                       | 244,022,939   |   |      | $ | 236,590,092   |      |  | $ | 216,498,992   |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|Depreciation, amortization and impairment:                  |  |                         |               |   |      |   |               |      |  |   |               |  
|Restaurant and Hospitality                                  |  | $                       | 51,545,240    |   |      | $ | 47,279,754    |      |  | $ | 46,604,986    |  
|Gaming                                                      |  |                         | 21,154,867    |   |      |   | 18,006,946    |      |  |   | 12,217,760    |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|                                                            |  | $                       | 72,700,107    |   |      | $ | 65,286,700    |      |  | $ | 58,822,746    |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|Segment assets:                                             |  |                         |               |   |      |   |               |      |  |   |               |  
|Restaurant and Hospitality                                  |  | $                       | 720,728,486   |   |      | $ | 749,201,750   |      |  | $ | 739,627,120   |  
|Gaming                                                      |  |                         | 601,475,227   |   |      |   | 564,686,113   |      |  |   | 495,962,913   |  
|Corporate and other (1)                                     |  |                         | 193,120,377   |   |      |   | 189,094,666   |      |  |   | 229,321,918   |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|                                                            |  | $                       | 1,515,324,090 |   |      | $ | 1,502,982,529 |      |  | $ | 1,464,911,951 |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|Capital expenditures:                                       |  |                         |               |   |      |   |               |      |  |   |               |  
|Restaurant and Hospitality                                  |  | $                       | 59,540,249    |   |      | $ | 62,274,670    |      |  | $ | 100,793,632   |  
|Gaming                                                      |  |                         | 61,169,141    |   |      |   | 59,954,345    |      |  |   | 94,922,458    |  
|Corporate and other                                         |  |                         | 2,288,121     |   |      |   | 2,869,469     |      |  |   | 9,840,214     |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|                                                            |  | $                       | 122,997,511   |   |      | $ | 125,098,484   |      |  | $ | 205,556,304   |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|Income before taxes:                                        |  |                         |               |   |      |   |               |      |  |   |               |  
|Unit level profit                                           |  | $                       | 244,022,939   |   |      | $ | 236,590,092   |      |  | $ | 216,498,992   |  
|Depreciation, amortization and impairment                   |  |                         | 72,700,107    |   |      |   | 65,286,700    |      |  |   | 58,822,746    |  
|General and administrative                                  |  |                         | 51,294,426    |   |      |   | 55,755,985    |      |  |   | 57,977,359    |  
|Pre opening expenses                                        |  |                         | 2,266,004     |   |      |   | 3,476,951     |      |  |   | 5,214,011     |  
|Loss (gain) on disposal of assets                           |  |                         | (58,580       | ) |      |   | (18,918,088   | )    |  |   | (2,294,532    | )
|Interest expense, net                                       |  |                         | 79,817,334    |   |      |   | 72,321,952    |      |  |   | 49,138,695    |  
|Other expenses (income)                                     |  |                         | 17,299,820    |   |      |   | 16,690,585    |      |  |   | (128,771      | )
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  
|Consolidated income from continuing operations before taxes |  | $                       | 20,703,828    |   |      | $ | 41,976,007    |      |  | $ | 47,769,484    |  
|                                                            |  |                         |               |   |      |   |               |      |  |   |               |  



|(1) | Includes inter-segment eliminations
|--- | -----------------------------------



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13.  SUPPLEMENTAL GUARANTOR INFORMATION

In December 2004, we issued, in a private offering, $400.0 million of 7.5% Notes due in 2014 (see Note 7). In June 2005, substantially all of these notes
were exchanged for substantially identical notes in an Exchange Offer registered under the Securities Act of 1933. These notes are fully and unconditionally guaranteed by us and certain of our 100% owned subsidiaries, Guarantor
Subsidiaries.

The following condensed consolidating financial statements present separately the financial position, results of
operations and cash flows of our Guarantor Subsidiaries and Non-guarantor Subsidiaries on a combined basis with eliminating entries.

Condensed Consolidating Financial Statements

Balance Sheet

December 31, 2008



|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|-------------------------------------------------------- |  | ------ | ----------- | --------------------- | - | ----------- | ------------------------- |  | - | ------------ | - |  | ------------------ | ------------ | - |  | - | -------------
|                                                         |  | Parent |             | GuarantorSubsidiaries |   |             | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity
|                                                         |  |        |             |                      
|ASSETS                                                   |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|CURRENT ASSETS:                                          |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|Cash and cash equivalents                                |  | $      |            |                       | $ | 3,595,510   |                           |  | $ | 48,705,532   |   |  | $                  | (1,234,237   | ) |  | $ | 51,066,805   
|Accounts receivabletrade and other, net                 |  |        | 1,809,894   |                       |   | 11,780,168  |                           |  |   | 4,431,043    |   |  |                    |             |   |  |   | 18,021,105   
|Inventories                                              |  |        | 9,704,247   |                       |   | 13,164,418  |                           |  |   | 3,292,427    |   |  |                    |             |   |  |   | 26,161,092   
|Deferred taxes                                           |  |        | 23,786,393  |                       |   | 1,107,582   |                           |  |   | 3,107,292    |   |  |                    |             |   |  |   | 28,001,267   
|Assets related to discontinued operations                |  |        | 2,509,248   |                       |   | 464,345     |                           |  |   |             |   |  |                    |             |   |  |   | 2,973,593    
|Other current assets                                     |  |        | 2,482,521   |                       |   | 2,329,993   |                           |  |   | 4,289,515    |   |  |                    |             |   |  |   | 9,102,029    
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total current assets                                     |  |        | 40,292,303  |                       |   | 32,442,016  |                           |  |   | 63,825,809   |   |  |                    | (1,234,237   | ) |  |   | 135,325,891  
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|PROPERTY AND EQUIPMENT, net                              |  |        | 42,381,745  |                       |   | 649,215,694 |                           |  |   | 567,589,024  |   |  |                    |             |   |  |   | 1,259,186,463
|GOODWILL                                                 |  |        |            |                       |   | 18,527,547  |                           |  |   |             |   |  |                    |             |   |  |   | 18,527,547   
|OTHER INTANGIBLE ASSETS, net                             |  |        | 1,880,275   |                       |   | 8,481,376   |                           |  |   | 28,511,222   |   |  |                    |             |   |  |   | 38,872,873   
|INVESTMENT IN AND ADVANCES TO SUBSIDIARIES               |  |        | 715,713,675 |                       |   | (69,247,685 | )                         |  |   | (123,504,463 | ) |  |                    | (522,961,527 | ) |  |   |             
|OTHER ASSETS, net                                        |  |        | 30,018,946  |                       |   | 1,969,120   |                           |  |   | 33,512,511   |   |  |                    | (2,089,261   | ) |  |   | 63,411,316   
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total assets                                             |  | $      | 830,286,944 |                       | $ | 641,388,068 |                           |  | $ | 569,934,103  |   |  | $                  | (526,285,025 | ) |  | $ | 1,515,324,090
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|LIABILITIES AND STOCKHOLDERS EQUITY                     |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|CURRENT LIABILITIES:                                     |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|Accounts payable                                         |  | $      | 25,079,676  |                       | $ | 20,560,543  |                           |  | $ | 24,718,252   |   |  | $                  |             |   |  | $ | 70,358,471   
|Accrued liabilities                                      |  |        | 48,074,063  |                       |   | 50,119,130  |                           |  |   | 37,357,373   |   |  |                    | (1,234,237   | ) |  |   | 134,316,329  
|Income taxes payable                                     |  |        | 2,615,388   |                       |   |            |                           |  |   | 169,315      |   |  |                    |             |   |  |   | 2,784,703    
|Current portion of long-term debt and other obligations  |  |        | 7,503,832   |                       |   |            |                           |  |   | 1,249,074    |   |  |                    |             |   |  |   | 8,752,906    
|Liabilities related to discontinued operations           |  |        |            |                       |   | 5,149,365   |                           |  |   |             |   |  |                    |             |   |  |   | 5,149,365    
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total current liabilities                                |  |        | 83,272,959  |                       |   | 75,829,038  |                           |  |   | 63,494,014   |   |  |                    | (1,234,237   | ) |  |   | 221,361,774  
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|LONG-TERM NOTES, NET OF CURRENT PORTION                  |  |        | 426,698,317 |                       |   |            |                           |  |   | 435,677,112  |   |  |                    |             |   |  |   | 862,375,429  
|DEFERRED TAXES                                           |  |        |            |                       |   | 2,089,261   |                           |  |   |             |   |  |                    | (2,089,261   | ) |  |   |             
|OTHER LIABILITIES                                        |  |        | 25,838,563  |                       |   | 21,368,682  |                           |  |   | 89,902,537   |   |  |                    |             |   |  |   | 137,109,782  
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total liabilities                                        |  |        | 535,809,839 |                       |   | 99,286,981  |                           |  |   | 589,073,663  |   |  |                    | (3,323,498   | ) |  |   | 1,220,846,985
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|COMMITMENTS AND CONTINGENCIES TOTAL STOCKHOLDERS EQUITY |  |        | 294,477,105 |                       |   | 542,101,087 |                           |  |   | (19,139,560  | ) |  |                    | (522,961,527 | ) |  |   | 294,477,105  
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total liabilities and stockholders equity               |  | $      | 830,286,944 |                       | $ | 641,388,068 |                           |  | $ | 569,934,103  |   |  | $                  | (526,285,025 | ) |  | $ | 1,515,324,090
|                                                         |  |        |             |                       |   |             |                           |  |   |              |   |  |                    |              |   |  |   |              



79



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##### Table of Contents

LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Condensed Consolidating Financial Statements

Balance Sheet

December 31, 2007



|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|------------------------------------------------------- |  | ------ | ----------- | --------------------- | - | ------------ | ------------------------- |  | - | ------------ | - |  | ------------------ | ------------ | - |  | - | -------------
|                                                        |  | Parent |             | GuarantorSubsidiaries |   |              | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity
|                                                        |  |        |             |                      
|ASSETS                                                  |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|CURRENT ASSETS:                                         |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|Cash and cash equivalents                               |  | $      | 4,265,460   |                       | $ | 9,249,286    |                           |  | $ | 26,086,500   |   |  | $                  |             |   |  | $ | 39,601,246   
|Accounts receivabletrade and other, net                |  |        | 9,328,511   |                       |   | 9,296,733    |                           |  |   | 5,571,162    |   |  |                    |             |   |  |   | 24,196,406   
|Inventories                                             |  |        | 16,868,200  |                       |   | 14,091,690   |                           |  |   | 4,241,205    |   |  |                    |             |   |  |   | 35,201,095   
|Deferred taxes                                          |  |        | 17,812,916  |                       |   | 439,191      |                           |  |   | 3,395,535    |   |  |                    |             |   |  |   | 21,647,642   
|Assets related to discontinued operations               |  |        | 7,099,380   |                       |   | 14,699,398   |                           |  |   | 459          |   |  |                    |             |   |  |   | 21,799,237   
|Other current assets                                    |  |        | 3,813,548   |                       |   | 3,490,855    |                           |  |   | 5,296,355    |   |  |                    |             |   |  |   | 12,600,758   
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total current assets                                    |  |        | 59,188,015  |                       |   | 51,267,153   |                           |  |   | 44,591,216   |   |  |                    |             |   |  |   | 155,046,384  
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|PROPERTY AND EQUIPMENT, net                             |  |        | 43,323,410  |                       |   | 661,539,857  |                           |  |   | 533,689,020  |   |  |                    |             |   |  |   | 1,238,552,287
|GOODWILL                                                |  |        |            |                       |   | 18,527,547   |                           |  |   |             |   |  |                    |             |   |  |   | 18,527,547   
|OTHER INTANGIBLE ASSETS, net                            |  |        | 1,501,733   |                       |   | 58,195       |                           |  |   | 37,586,294   |   |  |                    |             |   |  |   | 39,146,222   
|INVESTMENT IN AND ADVANCES TO SUBSIDIARIES              |  |        | 761,917,690 |                       |   | (154,241,240 | )                         |  |   | (118,527,534 | ) |  |                    | (489,148,916 | ) |  |   |             
|OTHER ASSETS, net                                       |  |        | 19,720,148  |                       |   | 10,434,351   |                           |  |   | 21,555,590   |   |  |                    |             |   |  |   | 51,710,089   
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total assets                                            |  | $      | 885,650,996 |                       | $ | 587,585,863  |                           |  | $ | 518,894,586  |   |  | $                  | (489,148,916 | ) |  | $ | 1,502,982,529
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|LIABILITIES AND STOCKHOLDERS EQUITY                    |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|CURRENT LIABILITIES:                                    |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|Accounts payable                                        |  | $      | 31,359,170  |                       | $ | 26,301,025   |                           |  | $ | 16,896,913   |   |  | $                  |             |   |  | $ | 74,557,108   
|Accrued liabilities                                     |  |        | 25,118,966  |                       |   | 71,382,173   |                           |  |   | 40,809,182   |   |  |                    |             |   |  |   | 137,310,321  
|Income taxes payable                                    |  |        | 843,045     |                       |   |             |                           |  |   |             |   |  |                    |             |   |  |   | 843,045      
|Current portion of long-term debt and other obligations |  |        | 87,043,940  |                       |   |             |                           |  |   | 199,073      |   |  |                    |             |   |  |   | 87,243,013   
|Liabilities related to discontinued operations          |  |        |            |                       |   | 4,909,863    |                           |  |   | 66,459       |   |  |                    |             |   |  |   | 4,976,322    
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total current liabilities                               |  |        | 144,365,121 |                       |   | 102,593,061  |                           |  |   | 57,971,627   |   |  |                    |             |   |  |   | 304,929,809  
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|LONG-TERM NOTES, NET OF CURRENT PORTION                 |  |        | 400,000,000 |                       |   |             |                           |  |   | 401,427,868  |   |  |                    |             |   |  |   | 801,427,868  
|DEFERRED TAXES                                          |  |        |            |                       |   | 422,207      |                           |  |   | 12,966,073   |   |  |                    | (13,388,280  | ) |  |   |             
|OTHER LIABILITIES                                       |  |        | 24,386,802  |                       |   | 22,730,740   |                           |  |   | 32,608,237   |   |  |                    |             |   |  |   | 79,725,779   
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total liabilities                                       |  |        | 568,751,923 |                       |   | 125,746,008  |                           |  |   | 504,973,805  |   |  |                    | (13,388,280  | ) |  |   | 1,186,083,456
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|COMMITMENTS AND CONTINGENCIES                           |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|TOTAL STOCKHOLDERS EQUITY                              |  |        | 316,899,073 |                       |   | 461,839,855  |                           |  |   | 13,920,781   |   |  |                    | (475,760,636 | ) |  |   | 316,899,073  
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              
|Total liabilities and stockholders equity              |  | $      | 885,650,996 |                       | $ | 587,585,863  |                           |  | $ | 518,894,586  |   |  | $                  | (489,148,916 | ) |  | $ | 1,502,982,529
|                                                        |  |        |             |                       |   |              |                           |  |   |              |   |  |                    |              |   |  |   |              



80



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##### Table of Contents

LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Condensed Consolidating Financial Statements

Income Statement

Year Ended
December 31, 2008



|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|-------------------------------------------------------------- |  | ------ | ----------- | - | --------------------- | - | ----------- | ------------------------- |  | - | ------------ | - |  | ------------------ | ----------- | - |  | - | ------------- | -
|                                                               |  | Parent |             |   | GuarantorSubsidiaries |   |             | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity |            
|                                                               |  |        |             |  
|REVENUES                                                       |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Restaurant and hospitality                                     |  | $      | 3,870,667   |   |                       | $ | 865,212,490 |                           |  | $ | 25,033,136   |   |  | $                  | (3,510,874  | ) |  | $ | 890,605,419   |  
|Gaming:                                                        |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Casino                                                         |  |        |            |   |                       |   |            |                           |  |   | 152,965,231  |   |  |                    |            |   |  |   | 152,965,231   |  
|Rooms                                                          |  |        |            |   |                       |   |            |                           |  |   | 63,230,271   |   |  |                    |            |   |  |   | 63,230,271    |  
|Food and beverage                                              |  |        |            |   |                       |   |            |                           |  |   | 47,734,759   |   |  |                    |            |   |  |   | 47,734,759    |  
|Other                                                          |  |        |            |   |                       |   |            |                           |  |   | 14,370,107   |   |  |                    |            |   |  |   | 14,370,107    |  
|Promotional allowances                                         |  |        |            |   |                       |   |            |                           |  |   | (25,016,953  | ) |  |                    |            |   |  |   | (25,016,953   | )
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Net gaming revenue                                             |  |        |            |   |                       |   |            |                           |  |   | 253,283,415  |   |  |                    |            |   |  |   | 253,283,415   |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total revenue                                                  |  |        | 3,870,667   |   |                       |   | 865,212,490 |                           |  |   | 278,316,551  |   |  |                    | (3,510,874  | ) |  |   | 1,143,888,834 |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|OPERATING COSTS AND EXPENSES:                                  |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Restaurant and hospitality:                                    |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Cost of revenues                                               |  |        |            |   |                       |   | 225,642,884 |                           |  |   | 4,876,299    |   |  |                    |            |   |  |   | 230,519,183   |  
|Labor                                                          |  |        |            |   |                       |   | 251,754,135 |                           |  |   | 6,691,220    |   |  |                    |            |   |  |   | 258,445,355   |  
|Other operating expenses                                       |  |        | 839,442     |   |                       |   | 214,877,901 |                           |  |   | 8,234,617    |   |  |                    | (3,510,874  | ) |  |   | 220,441,086   |  
|Gaming:                                                        |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Casino                                                         |  |        |            |   |                       |   |            |                           |  |   | 78,259,949   |   |  |                    |            |   |  |   | 78,259,949    |  
|Rooms                                                          |  |        |            |   |                       |   |            |                           |  |   | 24,194,522   |   |  |                    |            |   |  |   | 24,194,522    |  
|Food and beverage                                              |  |        |            |   |                       |   |            |                           |  |   | 29,112,315   |   |  |                    |            |   |  |   | 29,112,315    |  
|Other                                                          |  |        |            |   |                       |   |            |                           |  |   | 58,893,485   |   |  |                    |            |   |  |   | 58,893,485    |  
|General and administrative expense                             |  |        | 51,294,426  |   |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | 51,294,426    |  
|Depreciation and amortization                                  |  |        | 4,603,422   |   |                       |   | 43,187,252  |                           |  |   | 22,500,808   |   |  |                    |            |   |  |   | 70,291,482    |  
|Asset impairment expense                                       |  |        |            |   |                       |   | 815,484     |                           |  |   | 1,593,141    |   |  |                    |            |   |  |   | 2,408,625     |  
|Loss (gain) on disposal of assets                              |  |        |            |   |                       |   |            |                           |  |   | (58,580      | ) |  |                    |            |   |  |   | (58,580       | )
|Pre-opening expenses                                           |  |        |            |   |                       |   | 2,266,004   |                           |  |   |             |   |  |                    |            |   |  |   | 2,266,004     |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total operating costs and expenses                             |  |        | 56,737,290  |   |                       |   | 738,543,660 |                           |  |   | 234,297,776  |   |  |                    | (3,510,874  | ) |  |   | 1,026,067,852 |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|OPERATING INCOME                                               |  |        | (52,866,623 | ) |                       |   | 126,668,830 |                           |  |   | 44,018,775   |   |  |                    |            |   |  |   | 117,820,982   |  
|OTHER EXPENSES (INCOME):                                       |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Interest expense, net                                          |  |        | 43,796,466  |   |                       |   |            |                           |  |   | 36,020,868   |   |  |                    |            |   |  |   | 79,817,334    |  
|Other, net                                                     |  |        | 2,085,772   |   |                       |   | 1,857       |                           |  |   | 15,212,191   |   |  |                    |            |   |  |   | 17,299,820    |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total other expense                                            |  |        | 45,882,238  |   |                       |   | 1,857       |                           |  |   | 51,233,059   |   |  |                    |            |   |  |   | 97,117,154    |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   |  |        | (98,748,861 | ) |                       |   | 126,666,973 |                           |  |   | (7,214,284   | ) |  |                    |            |   |  |   | 20,703,828    |  
|PROVISION (BENEFIT) FOR INCOME TAXES                           |  |        | (26,695,632 | ) |                       |   | 35,731,094  |                           |  |   | (1,808,888   | ) |  |                    |            |   |  |   | 7,226,574     |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS AFTER INCOME TAXES    |  |        | (72,053,229 | ) |                       |   | 90,935,879  |                           |  |   | (5,405,396   | ) |  |                    |            |   |  |   | 13,477,254    |  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS NET OF INCOME TAXES |  |        |            |   |                       |   | (10,674,648 | )                         |  |   | 105,581      |   |  |                    |            |   |  |   | (10,569,067   | )
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|EQUITY IN EARNINGS OF SUBSIDIARIES                             |  |        | 74,961,416  |   |                       |   |            |                           |  |   |             |   |  |                    | (74,961,416 | ) |  |   |              |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|NET INCOME (LOSS)                                              |  | $      | 2,908,187   |   |                       | $ | 80,261,231  |                           |  | $ | (5,299,815   | ) |  | $                  | (74,961,416 | ) |  | $ | 2,908,187     |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  



81



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##### Table of Contents

LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Condensed Consolidating Financial Statements

Income Statement

Year Ended
December 31, 2007



|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|-------------------------------------------------------------- |  | ------ | ------------ | - | --------------------- | - | ----------- | ------------------------- |  | - | ------------ | - |  | ------------------ | ----------- | - |  | - | ------------- | -
|                                                               |  | Parent |              |   | GuarantorSubsidiaries |   |             | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity |            
|                                                               |  |        |              |  
|REVENUES                                                       |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Restaurant and hospitality                                     |  | $      | 4,782,987    |   |                       | $ | 867,747,099 |                           |  | $ | 26,030,059   |   |  | $                  | (4,125,879  | ) |  | $ | 894,434,266   |  
|Gaming:                                                        |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Casino                                                         |  |        |             |   |                       |   |            |                           |  |   | 165,283,475  |   |  |                    |            |   |  |   | 165,283,475   |  
|Rooms                                                          |  |        |             |   |                       |   |            |                           |  |   | 65,941,711   |   |  |                    |            |   |  |   | 65,941,711    |  
|Food and beverage                                              |  |        |             |   |                       |   |            |                           |  |   | 45,761,100   |   |  |                    |            |   |  |   | 45,761,100    |  
|Other                                                          |  |        |             |   |                       |   |            |                           |  |   | 14,380,837   |   |  |                    |            |   |  |   | 14,380,837    |  
|Promotional allowances                                         |  |        |             |   |                       |   |            |                           |  |   | (25,433,137  | ) |  |                    |            |   |  |   | (25,433,137   | )
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Net gaming revenue                                             |  |        |             |   |                       |   |            |                           |  |   | 265,933,986  |   |  |                    |            |   |  |   | 265,933,986   |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total revenue                                                  |  |        | 4,782,987    |   |                       |   | 867,747,099 |                           |  |   | 291,964,045  |   |  |                    | (4,125,879  | ) |  |   | 1,160,368,252 |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|OPERATING COSTS AND EXPENSES:                                  |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Restaurant and hospitality:                                    |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Cost of revenues                                               |  |        |             |   |                       |   | 236,317,594 |                           |  |   | 5,496,514    |   |  |                    |            |   |  |   | 241,814,108   |  
|Labor                                                          |  |        |             |   |                       |   | 259,615,299 |                           |  |   | 7,087,794    |   |  |                    |            |   |  |   | 266,703,093   |  
|Other operating expenses                                       |  |        | 2,712,884    |   |                       |   | 205,600,353 |                           |  |   | 9,096,673    |   |  |                    | (4,125,879  | ) |  |   | 213,284,031   |  
|Gaming:                                                        |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Casino                                                         |  |        |             |   |                       |   |            |                           |  |   | 81,627,956   |   |  |                    |            |   |  |   | 81,627,956    |  
|Rooms                                                          |  |        |             |   |                       |   |            |                           |  |   | 23,705,554   |   |  |                    |            |   |  |   | 23,705,554    |  
|Food and beverage                                              |  |        |             |   |                       |   |            |                           |  |   | 29,670,847   |   |  |                    |            |   |  |   | 29,670,847    |  
|Other                                                          |  |        |             |   |                       |   |            |                           |  |   | 66,972,571   |   |  |                    |            |   |  |   | 66,972,571    |  
|General and administrative expense                             |  |        | 55,755,985   |   |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | 55,755,985    |  
|Depreciation and amortization                                  |  |        | 4,625,295    |   |                       |   | 41,419,360  |                           |  |   | 19,242,045   |   |  |                    |            |   |  |   | 65,286,700    |  
|Asset impairment expense                                       |  |        |             |   |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   |              |  
|Loss (gain) on disposal of assets                              |  |        | (92,613      | ) |                       |   | (15,135,387 | )                         |  |   | (3,690,088   | ) |  |                    |             |   |  |   | (18,918,088   | )
|Pre-opening expenses                                           |  |        |             |   |                       |   | 3,476,951   |                           |  |   |             |   |  |                    |            |   |  |   | 3,476,951     |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total operating costs and expenses                             |  |        | 63,001,551   |   |                       |   | 731,294,170 |                           |  |   | 239,209,866  |   |  |                    | (4,125,879  | ) |  |   | 1,029,379,708 |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|OPERATING INCOME                                               |  |        | (58,218,564  | ) |                       |   | 136,452,929 |                           |  |   | 52,754,179   |   |  |                    |            |   |  |   | 130,988,544   |  
|OTHER EXPENSES (INCOME):                                       |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Interest expense, net                                          |  |        | 47,965,179   |   |                       |   | (506        | )                         |  |   | 24,357,279   |   |  |                    |            |   |  |   | 72,321,952    |  
|Other, net                                                     |  |        | 3,991,848    |   |                       |   | (205,245    | )                         |  |   | 12,903,982   |   |  |                    |            |   |  |   | 16,690,585    |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total other expense                                            |  |        | 51,957,027   |   |                       |   | (205,751    | )                         |  |   | 37,261,261   |   |  |                    |            |   |  |   | 89,012,537    |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   |  |        | (110,175,591 | ) |                       |   | 136,658,680 |                           |  |   | 15,492,918   |   |  |                    |            |   |  |   | 41,976,007    |  
|PROVISION (BENEFIT) FOR INCOME TAXES                           |  |        | (33,146,001  | ) |                       |   | 42,639,359  |                           |  |   | 4,744,592    |   |  |                    |            |   |  |   | 14,237,950    |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS AFTER INCOME TAXES    |  |        | (77,029,590  | ) |                       |   | 94,019,321  |                           |  |   | 10,748,326   |   |  |                    |            |   |  |   | 27,738,057    |  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS NET OF INCOME TAXES |  |        | (119,204     | ) |                       |   | (9,684,437  | )                         |  |   | 177,378      |   |  |                    |            |   |  |   | (9,626,263    | )
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|EQUITY IN EARNINGS OF SUBSIDIARIES                             |  |        | 95,260,588   |   |                       |   |            |                           |  |   |             |   |  |                    | (95,260,588 | ) |  |   |              |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|NET INCOME (LOSS)                                              |  | $      | 18,111,794   |   |                       | $ | 84,334,884  |                           |  | $ | 10,925,704   |   |  | $                  | (95,260,588 | ) |  | $ | 18,111,794    |  
|                                                               |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  



82



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##### Table of Contents

LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Condensed Consolidating Financial Statements

Income Statement

Year Ended
December 31, 2006



|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|-------------------------------------------------------------- |  | ------ | ----------- | - | --------------------- | - | ----------- | ------------------------- |  | - | ------------ | - |  | ------------------ | ----------- | - |  | - | ------------- | -
|                                                               |  | Parent |             |   | GuarantorSubsidiaries |   |             | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity |            
|REVENUES                                                       |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Restaurant and hospitality                                     |  | $      | 4,150,695   |   |                       | $ | 835,516,336 |                           |  | $ | 30,948,411   |   |  | $                  |            |   |  | $ | 870,615,442   |  
|Gaming:                                                        |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Casino                                                         |  |        |            |   |                       |   |            |                           |  |   | 151,775,538  |   |  |                    |            |   |  |   | 151,775,538   |  
|Rooms                                                          |  |        |            |   |                       |   |            |                           |  |   | 57,736,048   |   |  |                    |            |   |  |   | 57,736,048    |  
|Food and beverage                                              |  |        |            |   |                       |   |            |                           |  |   | 39,534,140   |   |  |                    |            |   |  |   | 39,534,140    |  
|Other                                                          |  |        |            |   |                       |   |            |                           |  |   | 10,153,318   |   |  |                    |            |   |  |   | 10,153,318    |  
|Promotional allowances                                         |  |        |            |   |                       |   |            |                           |  |   | (27,820,979  | ) |  |                    |            |   |  |   | (27,820,979   | )
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Net gaming revenue                                             |  |        |            |   |                       |   |            |                           |  |   | 231,378,065  |   |  |                    |            |   |  |   | 231,378,065   |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total revenue                                                  |  |        | 4,150,695   |   |                       |   | 835,516,336 |                           |  |   | 262,326,476  |   |  |                    |            |   |  |   | 1,101,993,507 |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|OPERATING COSTS AND EXPENSES:                                  |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Restaurant and hospitality:                                    |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Cost of revenues                                               |  |        |            |   |                       |   | 230,315,915 |                           |  |   | 6,826,048    |   |  |                    |            |   |  |   | 237,141,963   |  
|Labor                                                          |  |        |            |   |                       |   | 247,808,392 |                           |  |   | 8,500,088    |   |  |                    |            |   |  |   | 256,308,480   |  
|Other operating expenses                                       |  |        | 2,602,937   |   |                       |   | 195,768,592 |                           |  |   | 11,036,906   |   |  |                    |            |   |  |   | 209,408,435   |  
|Gaming:                                                        |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Casino                                                         |  |        |            |   |                       |   |            |                           |  |   | 80,059,104   |   |  |                    |            |   |  |   | 80,059,104    |  
|Rooms                                                          |  |        |            |   |                       |   |            |                           |  |   | 18,519,645   |   |  |                    |            |   |  |   | 18,519,645    |  
|Food and beverage                                              |  |        |            |   |                       |   |            |                           |  |   | 24,818,009   |   |  |                    |            |   |  |   | 24,818,009    |  
|Other                                                          |  |        |            |   |                       |   |            |                           |  |   | 59,238,879   |   |  |                    |            |   |  |   | 59,238,879    |  
|General and administrative expense                             |  |        | 56,723,235  |   |                       |   | 1,254,124   |                           |  |   |             |   |  |                    |            |   |  |   | 57,977,359    |  
|Depreciation and amortization                                  |  |        | 3,636,677   |   |                       |   | 38,282,462  |                           |  |   | 13,938,098   |   |  |                    |            |   |  |   | 55,857,237    |  
|Asset impairment expense                                       |  |        | 145,409     |   |                       |   | 2,820,100   |                           |  |   |             |   |  |                    |            |   |  |   | 2,965,509     |  
|Loss (gain) on disposal of assets                              |  |        | (47,123     | ) |                       |   | (2,252,688  | )                         |  |   | 5,279        |   |  |                    |            |   |  |   | (2,294,532    | )
|Pre-opening expenses                                           |  |        | (3,334      | ) |                       |   | 3,736,615   |                           |  |   | 1,480,730    |   |  |                    |            |   |  |   | 5,214,011     |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total operating costs and expenses                             |  |        | 63,057,801  |   |                       |   | 717,733,512 |                           |  |   | 224,422,786  |   |  |                    |            |   |  |   | 1,005,214,099 |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|OPERATING INCOME                                               |  |        | (58,907,106 | ) |                       |   | 117,782,824 |                           |  |   | 37,903,690   |   |  |                    |            |   |  |   | 96,779,408    |  
|OTHER EXPENSES (INCOME):                                       |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Interest expense, net                                          |  |        | 33,346,728  |   |                       |   | 399,324     |                           |  |   | 15,392,643   |   |  |                    |            |   |  |   | 49,138,695    |  
|Other, net                                                     |  |        | (1,126,595  | ) |                       |   | 44,551      |                           |  |   | 953,273      |   |  |                    |            |   |  |   | (128,771      | )
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|Total other expense                                            |  |        | 32,220,133  |   |                       |   | 443,875     |                           |  |   | 16,345,916   |   |  |                    |            |   |  |   | 49,009,924    |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   |  |        | (91,127,239 | ) |                       |   | 117,338,949 |                           |  |   | 21,557,774   |   |  |                    |            |   |  |   | 47,769,484    |  
|PROVISION (BENEFIT) FOR INCOME TAXES                           |  |        | (29,678,480 | ) |                       |   | 36,116,534  |                           |  |   | 6,955,341    |   |  |                    |            |   |  |   | 13,393,395    |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS AFTER INCOME TAXES    |  |        | (61,448,759 | ) |                       |   | 81,222,415  |                           |  |   | 14,602,433   |   |  |                    |            |   |  |   | 34,376,089    |  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS NET OF INCOME TAXES |  |        | (31,578,280 | ) |                       |   | (24,638,014 | )                         |  |   | 70,482       |   |  |                    |            |   |  |   | (56,145,812   | )
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|EQUITY IN EARNINGS OF SUBSIDIARIES                             |  |        | 71,257,316  |   |                       |   |            |                           |  |   |             |   |  |                    | (71,257,316 | ) |  |   |              |  
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  
|NET INCOME (LOSS)                                              |  | $      | (21,769,723 | ) |                       | $ | 56,584,401  |                           |  | $ | 14,672,915   |   |  | $                  | (71,257,316 | ) |  | $ | (21,769,723   | )
|                                                               |  |        |             |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |               |  



83



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##### Table of Contents

LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Condensed Consolidating Financial Statements

Statement of Cash Flows

Year Ended
December 31, 2008



|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|---------------------------------------------------------------------------------------- |  | ------ | ------------ | - | --------------------- | - | ------------ | ------------------------- |  | - | ------------ | - |  | ------------------ | ----------- | - |  | - | ------------ | -
|                                                                                         |  | Parent |              |   | GuarantorSubsidiaries |   |              | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net income (loss)                                                                        |  | $      | 2,908,187    |   |                       | $ | 80,261,231   |                           |  | $ | (5,299,815   | ) |  | $                  | (74,961,416 | ) |  | $ | 2,908,187    |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Depreciation and amortization                                                            |  |        | 4,648,423    |   |                       |   | 42,089,812   |                           |  |   | 24,128,151   |   |  |                    |            |   |  |   | 70,866,386   |  
|Asset impairment expense                                                                 |  |        |             |   |                       |   | 12,753,432   |                           |  |   |             |   |  |                    |            |   |  |   | 12,753,432   |  
|Deferred tax provision (benefit)                                                         |  |        | (11,703,200  | ) |                       |   | 10,519,505   |                           |  |   | (2,710,353   | ) |  |                    |            |   |  |   | (3,894,048   | )
|Gain on disposition of assets                                                            |  |        |             |   |                       |   | (316,537     | )                         |  |   |             |   |  |                    |            |   |  |   | (316,537     | )
|Deferred rent and other charges (income), net                                            |  |        | 4,013,716    |   |                       |   | 2,414,849    |                           |  |   | 15,799,520   |   |  |                    |            |   |  |   | 22,228,085   |  
|Stock-based compensation expense                                                         |  |        | 4,066,431    |   |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | 4,066,431    |  
|Change in assets and liabilities, net and other                                          |  |        | 55,459,500   |   |                       |   | (128,234,248 | )                         |  |   | 13,090,439   |   |  |                    | 73,727,179  |   |  |   | 14,042,870   |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Total adjustments                                                                        |  |        | 56,484,870   |   |                       |   | (60,773,187  | )                         |  |   | 50,307,757   |   |  |                    | 73,727,179  |   |  |   | 119,746,619  |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) by operating activities                                         |  |        | 59,393,057   |   |                       |   | 19,488,044   |                           |  |   | 45,007,942   |   |  |                    | (1,234,237  | ) |  |   | 122,654,806  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Property and equipment additions and/or transfers                                        |  |        | (4,030,768   | ) |                       |   | (61,278,588  | )                         |  |   | (57,688,155  | ) |  |                    |            |   |  |   | (122,997,511 | )
|Proceeds from disposition of property and equipment                                      |  |        |             |   |                       |   | 36,136,768   |                           |  |   |             |   |  |                    |            |   |  |   | 36,136,768   |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) in investing activities                                         |  |        | (4,030,768   | ) |                       |   | (25,141,820  | )                         |  |   | (57,688,155  | ) |  |                    |            |   |  |   | (86,860,743  | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Purchase of common stock for treasury                                                    |  |        | (43,049      | ) |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | (43,049      | )
|Proceeds from exercise of stock options                                                  |  |        | 21,361       |   |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | 21,361       |  
|Payments of debt and related expenses, net                                               |  |        | (40,107      | ) |                       |   |             |                           |  |   | (215,907     | ) |  |                    |            |   |  |   | (256,014     | )
|Proceeds from term loans                                                                 |  |        |             |   |                       |   |             |                           |  |   | 39,515,152   |   |  |                    |            |   |  |   | 39,515,152   |  
|Debt issuance costs                                                                      |  |        | (5,134,387   | ) |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | (5,134,387   | )
|Proceeds from credit facility                                                            |  |        | 239,182,803  |   |                       |   |             |                           |  |   | 104,000,000  |   |  |                    |            |   |  |   | 343,182,803  |  
|Payments on credit facility                                                              |  |        | (292,000,000 | ) |                       |   |             |                           |  |   | (108,000,000 | ) |  |                    |            |   |  |   | (400,000,000 | )
|Dividends paid                                                                           |  |        | (1,614,370   | ) |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | (1,614,370   | )
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) in financing activities                                         |  |        | (59,627,749  | ) |                       |   |             |                           |  |   | 35,299,245   |   |  |                    |            |   |  |   | (24,328,504  | )
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |  |        | (4,265,460   | ) |                       |   | (5,653,776   | )                         |  |   | 22,619,032   |   |  |                    | (1,234,237  | ) |  |   | 11,465,559   |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                           |  |        | 4,265,460    |   |                       |   | 9,249,286    |                           |  |   | 26,086,500   |   |  |                    |            |   |  |   | 39,601,246   |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                 |  | $      |             |   |                       | $ | 3,595,510    |                           |  | $ | 48,705,532   |   |  | $                  | (1,234,237  | ) |  | $ | 51,066,805   |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  



84



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##### Table of Contents

LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Condensed Consolidating Financial Statements

Statement of Cash Flows

Year Ended
December 31, 2007



|                                                                                         |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|---------------------------------------------------------------------------------------- |  | ------ | ------------ | - | --------------------- | - | ----------- | ------------------------- |  | - | ------------ | - |  | ------------------ | ----------- | - |  | - | ------------ | -
|                                                                                         |  | Parent |              |   | GuarantorSubsidiaries |   |             | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net income (loss)                                                                        |  | $      | 18,111,794   |   |                       | $ | 84,334,884  |                           |  | $ | 10,925,704   |   |  | $                  | (95,260,588 | ) |  | $ | 18,111,794   |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Depreciation and amortization                                                            |  |        | 4,625,295    |   |                       |   | 42,625,302  |                           |  |   | 19,364,307   |   |  |                    |            |   |  |   | 66,614,904   |  
|Asset impairment expense                                                                 |  |        | 375,000      |   |                       |   | 9,512,752   |                           |  |   |             |   |  |                    |            |   |  |   | 9,887,752    |  
|Deferred tax provision (benefit)                                                         |  |        | 2,678,159    |   |                       |   | (1,151,352  | )                         |  |   | 2,526,058    |   |  |                    |            |   |  |   | 4,052,865    |  
|Gain on disposition of assets                                                            |  |        | 39,402       |   |                       |   | (23,467,270 | )                         |  |   | 4,509,452    |   |  |                    |            |   |  |   | (18,918,416  | )
|Deferred rent and other charges (income), net                                            |  |        | 10,632,798   |   |                       |   | 3,951,627   |                           |  |   | 2,847,410    |   |  |                    |            |   |  |   | 17,431,835   |  
|Stock-based compensation expense                                                         |  |        | 4,797,340    |   |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | 4,797,340    |  
|Change in assets and liabilities, net and other                                          |  |        | 169,248,427  |   |                       |   | (81,233,164 | )                         |  |   | (183,316,947 | ) |  |                    | 97,377,952  |   |  |   | 2,076,268    |  
|                                                                                         |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Total adjustments                                                                        |  |        | 192,396,421  |   |                       |   | (49,762,105 | )                         |  |   | (154,069,720 | ) |  |                    | 97,377,952  |   |  |   | 85,942,548   |  
|                                                                                         |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) by operating activities                                         |  |        | 210,508,215  |   |                       |   | 34,572,779  |                           |  |   | (143,144,016 | ) |  |                    | 2,117,364   |   |  |   | 104,054,342  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Property and equipment additions and/or transfers                                        |  |        | (2,149,403   | ) |                       |   | (56,450,022 | )                         |  |   | (66,499,059  | ) |  |                    |            |   |  |   | (125,098,484 | )
|Proceeds from disposition of property and equipment                                      |  |        | 5,227,850    |   |                       |   | 21,143,609  |                           |  |   | 21,037,374   |   |  |                    |            |   |  |   | 47,408,833   |  
|Purchase of marketable securities                                                        |  |        | (5,331,308   | ) |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | (5,331,308   | )
|Sale of marketable securities                                                            |  |        | 6,609,512    |   |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | 6,609,512    |  
|                                                                                         |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) in investing activities                                         |  |        | 4,356,651    |   |                       |   | (35,306,413 | )                         |  |   | (45,461,685  | ) |  |                    |            |   |  |   | (76,411,447  | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Purchase of common stock for treasury                                                    |  |        | (181,884,157 | ) |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | (181,884,157 | )
|Proceeds from exercise of stock options                                                  |  |        | 2,723,412    |   |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | 2,723,412    |  
|Payments of debt and related expenses, net                                               |  |        | (37,877,128  | ) |                       |   |            |                           |  |   | (155,340,806 | ) |  |                    |            |   |  |   | (193,217,934 | )
|Proceeds from term loans                                                                 |  |        |             |   |                       |   |            |                           |  |   | 375,000,000  |   |  |                    |            |   |  |   | 375,000,000  |  
|Debt issuance costs                                                                      |  |        | (4,794,260   | ) |                       |   |            |                           |  |   | (10,568,048  | ) |  |                    |            |   |  |   | (15,362,308  | )
|Proceeds from credit facility                                                            |  |        | 223,000,000  |   |                       |   |            |                           |  |   | 35,815,778   |   |  |                    |            |   |  |   | 258,815,778  |  
|Payments on credit facility                                                              |  |        | (207,771,978 | ) |                       |   |            |                           |  |   | (53,618,109  | ) |  |                    |            |   |  |   | (261,390,087 | )
|Dividends paid                                                                           |  |        | (3,995,295   | ) |                       |   |            |                           |  |   |             |   |  |                    |            |   |  |   | (3,995,295   | )
|                                                                                         |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) in financing activities                                         |  |        | (210,599,406 | ) |                       |   |            |                           |  |   | 191,288,815  |   |  |                    |            |   |  |   | (19,310,591  | )
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |  |        | 4,265,460    |   |                       |   | (733,634    | )                         |  |   | 2,683,114    |   |  |                    | 2,117,364   |   |  |   | 8,332,304    |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                           |  |        |             |   |                       |   | 9,982,920   |                           |  |   | 23,403,386   |   |  |                    | (2,117,364  | ) |  |   | 31,268,942   |  
|                                                                                         |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                 |  | $      | 4,265,460    |   |                       | $ | 9,249,286   |                           |  | $ | 26,086,500   |   |  | $                  |            |   |  | $ | 39,601,246   |  
|                                                                                         |  |        |              |   |                       |   |             |                           |  |   |              |   |  |                    |             |   |  |   |              |  



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Condensed Consolidating Financial Statements

Statement of Cash Flows

Year Ended
December 31, 2006



|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|---------------------------------------------------------------------------------------- |  | ------ | ------------ | - | --------------------- | - | ------------ | ------------------------- |  | - | ------------ | - |  | ------------------ | ----------- | - |  | - | ------------ | -
|                                                                                         |  | Parent |              |   | GuarantorSubsidiaries |   |              | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedEntity |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net income (loss)                                                                        |  | $      | (21,769,723  | ) |                       | $ | 56,584,401   |                           |  | $ | 14,672,915   |   |  | $                  | (71,257,316 | ) |  | $ | (21,769,723  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Depreciation and amortization                                                            |  |        | 3,634,607    |   |                       |   | 55,236,584   |                           |  |   | 14,392,067   |   |  |                    |            |   |  |   | 73,263,258   |  
|Asset impairment expense                                                                 |  |        | 145,409      |   |                       |   | 79,932,135   |                           |  |   |             |   |  |                    |            |   |  |   | 80,077,544   |  
|Deferred tax provision (benefit)                                                         |  |        | (27,856,094  | ) |                       |   |             |                           |  |   | (1,466,817   | ) |  |                    |            |   |  |   | (29,322,911  | )
|Deferred rent and other charges (income), net                                            |  |        | 643,647      |   |                       |   | (1,514,252   | )                         |  |   | 161,068      |   |  |                    |            |   |  |   | (709,537     | )
|Stock-based compensation expense                                                         |  |        | 7,369,292    |   |                       |   |             |                           |  |   | 240,382      |   |  |                    |            |   |  |   | 7,609,674    |  
|Change in assets and liabilities, net and other                                          |  |        | 133,881,060  |   |                       |   | (296,689,470 | )                         |  |   | 110,152,615  |   |  |                    | 69,139,952  |   |  |   | 16,484,157   |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Total adjustments                                                                        |  |        | 117,817,921  |   |                       |   | (163,035,003 | )                         |  |   | 123,479,315  |   |  |                    | 69,139,952  |   |  |   | 147,402,185  |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) by operating activities                                         |  |        | 96,048,198   |   |                       |   | (106,450,602 | )                         |  |   | 138,152,230  |   |  |                    | (2,117,364  | ) |  |   | 125,632,462  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Property and equipment additions and/or transfers                                        |  |        | 16,047,795   |   |                       |   | (79,098,267  | )                         |  |   | (142,505,832 | ) |  |                    |            |   |  |   | (205,556,304 | )
|Proceeds from disposition of property and equipment                                      |  |        | 1,811,516    |   |                       |   | 185,158,024  |                           |  |   | 2,941,896    |   |  |                    |            |   |  |   | 189,911,436  |  
|Business acquisition, net of cash acquired                                               |  |        |             |   |                       |   |             |                           |  |   | (7,860,857   | ) |  |                    |            |   |  |   | (7,860,857   | )
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) in investing activities                                         |  |        | 17,859,311   |   |                       |   | 106,059,757  |                           |  |   | (147,424,793 | ) |  |                    |            |   |  |   | (23,505,725  | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Purchase of common stock for treasury                                                    |  |        | (2,812,893   | ) |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | (2,812,893   | )
|Proceeds from exercise of stock options                                                  |  |        | 2,739,765    |   |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | 2,739,765    |  
|Payments of debt and related expenses, net                                               |  |        | (110,903,232 | ) |                       |   |             |                           |  |   | (311,093     | ) |  |                    |            |   |  |   | (111,214,325 | )
|Proceeds from credit facility                                                            |  |        | 333,000,000  |   |                       |   |             |                           |  |   | 99,649,258   |   |  |                    |            |   |  |   | 432,649,258  |  
|Payments on credit facility                                                              |  |        | (335,228,018 | ) |                       |   |             |                           |  |   | (91,848,646  | ) |  |                    |            |   |  |   | (427,076,664 | )
|Dividends paid                                                                           |  |        | (4,358,498   | ) |                       |   |             |                           |  |   |             |   |  |                    |            |   |  |   | (4,358,498   | )
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|Net cash provided (used) in financing activities                                         |  |        | (117,562,876 | ) |                       |   |             |                           |  |   | 7,489,519    |   |  |                    |            |   |  |   | (110,073,357 | )
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |  |        | (3,655,367   | ) |                       |   | (390,845     | )                         |  |   | (1,783,044   | ) |  |                    | (2,117,364  | ) |  |   | (7,946,620   | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                           |  |        | 3,655,367    |   |                       |   | 10,373,765   |                           |  |   | 25,186,430   |   |  |                    |            |   |  |   | 39,215,562   |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                 |  | $      |             |   |                       | $ | 9,982,920    |                           |  | $ | 23,403,386   |   |  | $                  | (2,117,364  | ) |  | $ | 31,268,942   |  
|                                                                                         |  |        |              |   |                       |   |              |                           |  |   |              |   |  |                    |             |   |  |   |              |  



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



14.  CERTAIN TRANSACTIONS

In 1996, we entered into a Consulting Service Agreement (the Agreement) with Fertitta Hospitality, LLC (Fertitta Hospitality),
which is jointly owned by our Chairman and Chief Executive Officer and his wife. Pursuant to the Agreement, we provided to Fertitta Hospitality management and administrative services. Under the Agreement, we received a fee of $2,500 per month plus
the reimbursement of all out-of-pocket expenses and such additional compensation as agreed upon. In 2003, a new agreement was signed (Management Agreement). Pursuant to the Management Agreement, we receive a monthly fee of $7,500, plus
reimbursement of expenses. The Management Agreement provides for a renewable three-year term.

In 1999, 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 terms of the ground lease, 610 Loop Venture pays us base rent of $12,000 per month plus
pro-rata real property taxes and insurance. 610 Loop Venture also has the option to purchase certain property based upon a contractual agreement. In 2004, the ground lease was extended for a 5 year term.

In 2002, we entered into an $8,000 per month, 20 year, with option renewals, ground lease agreement with Fertitta Hospitality for a new Rainforest Cafe
on prime waterfront land in Galveston, Texas. The annual rent is equal to the greater of the base rent or percentage rent up to six percent, plus taxes and insurance. In 2008, 2007 and 2006, we paid base and percentage rent aggregating $561,000,
$573,000 and $567,000, respectively.

As permitted by the employment contract between us and the Chief Executive Officer, charitable
contributions were made by us to a charitable Foundation that the Chief Executive Officer served as Trustee in the amount of $98,000, $99,000 and $91,000 in 2008, 2007, and 2006, respectively. The contributions were made in addition to the normal
salary and bonus permitted under the employment contract.

We, on a routine basis, hold or host promotional events, training seminars and
conferences for our personnel. In connection therewith, we incurred in 2008, 2007 and 2006 expenses in the amount of $29,000, $47,432 and $50,000, respectively, at resort hotel properties owned by our Chief Executive Officer and managed by us.

Landrys and Fertitta Hospitality jointly sponsored events and promotional activities in 2008, 2007 and 2006 which resulted in shared
costs and use of our personnel or Fertitta Hospitality employees and assets.

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.



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



15.  QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of unaudited quarterly consolidated results of operations.



|                                      |  |                |             |               |   |                    |  |   |                   |   |  |   |             |  
|------------------------------------- |  | -------------- | ----------- | ------------- | - | ------------------ |  | - | ----------------- | - |  | - | ----------- | -
|                                      |  | March 31, 2008 |             | June 30, 2008 |   | September 30, 2008 |  |   | December 31, 2008 |  
|Quarter Ended:                        |  |                |             |               |   |                    |  |   |                   |   |  |   |             |  
|Revenues                              |  | $              | 292,321,308 |               | $ | 308,102,274        |  | $ | 289,736,230       |   |  | $ | 253,729,022 |  
|Cost of revenues                      |  |                | 62,663,314  |               |   | 66,709,459         |  |   | 62,268,979        |   |  |   | 53,739,440  |  
|Operating income                      |  |                | 29,639,648  |               |   | 35,989,510         |  |   | 12,439,924        |   |  |   | 39,751,900  |  
|Net income (loss)                     |  |                | 1,521,756   |               |   | 13,871,586         |  |   | (17,055,162       | ) |  |   | 4,570,007   |  
|Net income (loss) per share (basic)   |  | $              | 0.10        |               | $ | 0.91               |  | $ | (1.12             | ) |  | $ | 0.30        |  
|Net income (loss) per share (diluted) |  | $              | 0.10        |               | $ | 0.89               |  | $ | (1.12             | ) |  | $ | 0.30        |  
|                                      |  |                |             |              
|                                      |  | March 31, 2007 |             | June 30, 2007 |   | September 30, 2007 |  |   | December 31, 2007 |  
|Quarter Ended:                        |  |                |             |               |   |                    |  |   |                   |   |  |   |             |  
|Revenues                              |  | $              | 281,944,339 |               | $ | 304,779,607        |  | $ | 295,765,187       |   |  | $ | 277,879,119 |  
|Cost of revenues                      |  |                | 61,250,505  |               |   | 68,069,968         |  |   | 66,011,991        |   |  |   | 61,003,881  |  
|Operating income                      |  |                | 49,025,321  |               |   | 33,894,553         |  |   | 27,238,138        |   |  |   | 20,830,532  |  
|Net income (loss)                     |  |                | 22,116,282  |               |   | 6,942,607          |  |   | (4,332,660        | ) |  |   | (6,614,436  | )
|Net income (loss) per share (basic)   |  | $              | 1.04        |               | $ | 0.34               |  | $ | (0.25             | ) |  | $ | (0.41       | )
|Net income (loss) per share (diluted) |  | $              | 1.01        |               | $ | 0.33               |  | $ | (0.25             | ) |  | $ | (0.40       | )

The third quarter of 2008 included impairment charges related to damage to our Galveston and
Kemah, Texas properties sustained in Hurricane Ike. The fourth quarter of 2008 included a reduction in impairment charges associated with insurance proceeds collected. The fourth quarter of 2008 also included $12.2 million in non-cash charges
associated with interest rate swaps not designated as hedges. As disclosed in Note 3, we initiated a plan to divest certain restaurants including 136 Joes Crab Shack units in the third quarter of 2006 and several additional units subsequently.
The results of operations for all units included in the disposal plan have been reclassified as discontinued operations for all periods presented. The 2008 results include asset impairment charges related to discontinued operations of $0.1 million
and $10.2 million for the quarters ended March 31, 2008 and September 30, 2008, respectively. The 2007 results included asset impairment charges related to discontinued operations of $2.3 million, $1.0 million and $6.6 million for the
quarters ended June 30, 2007, September 30, 2007 and December 31, 2007, respectively. In the quarter ended March 31, 2007, we recognized gains totaling $20.0 million on property and investment sales. We recorded expenses of
$6.3 million and $13.0 million in the second and third quarters of 2007, respectively, associated with refinancing the Golden Nugget Debt and exchanging the 7.5% Notes for 9.5% Notes, respectively.

16.  SUBSEQUENT EVENTS

In connection with
the refinancing of our Existing 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 such 9.5% Notes and 7.5% Notes to eliminate most of the restrictive covenants and certain events of default and to amend certain other provisions contained in the indentures and notes related
thereto. We executed supplemental indentures with U.S. Bank National Association, as trustee, to effectuate the proposed amendments to the indentures governing the Existing Notes, which became operative upon the consummation of the Notes offering.



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LANDRYS RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



With respect to any Existing Notes that were not tendered, we may, at our option, either (i) pay
such Existing 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 Existing Notes.

On February 13, 2009, we completed the offering of
$295.5 million in aggregate principal amount of 14.0% senior secured notes due 2011 (the Notes). The gross proceeds from the offering and sale of the Notes were $260.0 million. The 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 (each individually a Guarantor and collectively, the Guarantors) and are secured by a second lien position on substantially all of our and the
Guarantors assets. The 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 as Collateral Agent.

We also entered into a $215.6 million Amended and Restated Credit Agreement dated as of February 13, 2009 (the Credit Agreement) which replaced the
interim senior secured credit facility. The Credit Agreement provides for a term loan of $165.6 million and a revolving credit line of $50.0 million. The obligations under the Credit Agreement are unconditionally guaranteed by the Guarantors and are
secured by a first lien position on substantially all of our assets and the Guarantors.

On June 16, 2008, we entered into an Agreement and
Plan of Merger, as amended on October 18, 2008 (the Merger Agreement), with Fertitta Holdings, Inc., a Delaware corporation (Parent), and Fertitta Acquisition Co., a Delaware corporation and a wholly-owned subsidiary of
Parent (Merger Sub), which are solely owned by Tilman J. Fertitta, our Chairman, President and Chief Executive Officer, to acquire all of our issued and outstanding capital stock (the Proposed Acquisition). In order to
finance the Proposed Acquisition in part, Mr. Fertitta entered into a debt commitment letter dated June 12, 2008 (the Initial Commitment Letter), as amended on October 17, 2008 (the Commitment Letter Amendment and together
with the Initial Commitment Letter, the Commitment Letter) with Jefferies Funding LLC, Jefferies & Company, Inc., Jefferies Finance LLC and Wells Fargo Foothill, LLC (the Lenders). In addition to the commitment to provide
financing for the Proposed Acquisition, the Commitment Letter also contained a commitment by the Lenders to provide alternative financing in the event the Proposed Acquisition was not consummated (the Alternative Commitment).

In connection with the proxy statement required to be provided to Company stockholders voting on the Proposed Acquisition, the Securities and Exchange
Commission (SEC) required the Company to disclose certain information from the Commitment Letter issued by the Lenders to Mr. Fertitta and the Company. The Commitment Letter issued by the Lenders required that such information not be
disclosed and be kept confidential and that disclosure of such information would be a basis for termination of such Commitment Letter. The Company informed Mr. Fertitta that the Company was not prepared to risk losing the Alternative Commitment and
was therefore unable to comply with a condition of the Merger Agreement which required distribution of an SEC approved proxy statement to Company stockholders to vote on the adoption of the merger proposal. As a result of the Companys
inability to provide a proxy statement to Company stockholders, the Company informed Mr. Fertitta that it would be unable to consummate the Proposed Acquisition. The Merger Agreement was terminated by agreement of the parties on January 11, 2009.



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LANDRYS RESTAURANTS, INC.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized in the City of Houston, State of Texas, on
the 16thday of March, 2009.



LANDRYS RESTAURANTS, INC./s/    Tilman J. FertittaTilman J. Fertitta Chairman of the Board,
President and Chief Executive Officer


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



|                                                 |  |                                                                                                |  |               
|------------------------------------------------ |  | ---------------------------------------------------------------------------------------------- |  | --------------
|Name                                             |  | Title                                                                                          |  | Date          
|                                                 |  |                                                                                               
|/s/    Tilman J.
Fertitta Tilman J. Fertitta     |  | Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)        |  | March 16, 2009
|                                                 |  |                                                                                               
|/s/    Rick H. Liem Rick H. Liem                 |  | Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) |  | March 16, 2009
|                                                 |  |                                                                                               
|/s/    Steven L.
Scheinthal Steven L. Scheinthal |  | Executive Vice President, Secretary, General Counsel and Director                              |  | March 16, 2009
|                                                 |  |                                                                                               
|/s/    Michael S.
Chadwick Michael S. Chadwick   |  | Director                                                                                       |  | March 16, 2009
|                                                 |  |                                                                                               
|/s/    Michael Richmond
Michael Richmond         |  | Director                                                                                       |  | March 16, 2009
|                                                 |  |                                                                                               
|/s/    Joe Max Taylor
Joe Max Taylor             |  | Director                                                                                       |  | March 16, 2009
|                                                 |  |                                                                                               
|/s/    Kenneth Brimmer
Kenneth Brimmer           |  | Director                                                                                       |  | March 16, 2009



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##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                     
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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s 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).                                                                                                                               
|            | 
|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).                                                                                                      
|            | 
|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)                                                                          



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|            |  |                                                                                                                                                                                                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                                                                                                                                               
|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 Current Report on 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 Current Report on 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 Current Report on 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 Current Report on 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 Current Report on 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)                                                                             



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|            |  |                                                                                                                                                                                                                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                                                                                                                                                            
|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 10-K for
the year ended December 31, 2005)                                                                                           
|            | 
|10.32       |  | Restricted Stock Agreement between Landrys Restaurants, Inc. and Tilman J. Fertitta (incorporated by reference to Exhibit of the Companys 10-K for the year ended December 31,
2005)                                                                                                                             
|            | 
|10.33       |  | T-Rex Cafe, Inc. Stockholders Agreement (incorporated by reference to Exhibit of the Companys 10-K for the year ended December 31, 2006)                                                                                                                                                                          
|            | 
|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 10-K for the year
ended December 31, 2006)                                                                                                       
|            | 
|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 10-K for the year ended December 31, 2007)  
|            | 
|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 10-K for the year ended December 31, 2007)
|            | 
|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 10-K for the year ended December 31, 2007)            
|            | 
|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 10-K for the year ended December 31, 2007)  
|            | 
|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)       
|            | 
|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)      
|            | 
|*10.41      |  | Contract Agreement dated as of April 7, 2008 between Golden Nugget, Inc. and The Penta Building Group, Inc., General Corporation                                                                                                                                                                                   



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|            |  |                                                                                                                                                                                                                                                                                      
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                                                                                                                              
|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 8-K filing on June 17, 2008)                             
|            | 
|10.43       |  | First Amendment to Agreement and Plan of Merger dated as of October 18, 2008 by an 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 8-K filing on October 20, 2008)
|            | 
|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 8-K filing dated December 24, 2008)            
|            | 
|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 8-K filing on February 17, 2009)                                       
|            | 
|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 8-K filing on February 17, 2009)                           
|            | 
|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 8-K filing on February 17, 2009)         
|            | 
|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 8-K filing on February 17, 2009)                              
|            | 
|*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 Thornton LLP                                                                                                                                                                                                                                                        
|            | 
|*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(a)                                                                                                                                                                                    



|* | filed herewith
|- | --------------



94