LRI Holdings, Inc., the Parent Company of Logan's Roadhouse, Inc., Announces Financial Results for the Third Quarter and Year-to-Date Periods of Fiscal Year 2014

NASHVILLE, Tenn., June 10, 2014 /PRNewswire/ -- LRI Holdings, Inc., the parent company of Logan's Roadhouse, Inc., today announced financial results for the third quarter and year-to-date periods of fiscal year 2014 ended April 27, 2014.

		Thirteen weeks ended								Thirty-nine weeks ended
(In thousands)		April 27, 2014				April 28, 2013				April 27, 2014				April 28, 2013
Net sales		$	169,126			$	174,924			$	469,210			$	485,749
Net loss		(1,728)				515				(22,789)				(4,031)
Adjusted EBITDA		17,239				21,381				33,736				48,105

Selected Highlights for the Third Quarter 2014 Compared to the Third Quarter 2013:

• Net sales decreased 3.3% to $169.1 million from $174.9 million.
• Comparable restaurant sales decreased 3.2%, average check increased by 3.9%, and customer traffic decreased by 6.8%.
• Net loss of $1.7 million compared to net income of $0.5 million.
• Adjusted EBITDA decreased 19.4% to $17.2 million from $21.4 million. (*)

Selected Highlights for Year-to-Date 2014 Compared to Year-to-Date 2013:

• Net sales decreased 3.4% to $469.2 million from $485.7 million.
• Comparable restaurant sales decreased 4.5%, average check increased by 2.8%, and customer traffic decreased by 7.1%.
• Net loss of $22.8 million compared to net loss of $4.0 million.
• Adjusted EBITDA decreased 29.9% to $33.7 million from $48.1 million. (*)

(*) Please see reconciliation table at the end of this release.

Additional discussion and analysis of the Company's financial condition and results of operations can be found in its Quarterly Report on Form 10-Q for the fiscal period ended April 27, 2014. It is available at www.logansroadhouse.com under the investor relations section.

Conference Call

The Company will host a conference call on Thursday, June 12, 2014 at 10:30 a.m. ET to discuss its financial results for the third quarter and year-to-date periods of fiscal year 2014. The conference call will be hosted by Mike Andres, President, Chief Executive Officer, and Chairman, and Amy Bertauski, Chief Financial Officer.

The domestic dial-in number for the call is 877-407-0784, and the international dial-in number is 201-689-8560. Please call approximately 10 minutes in advance to ensure that you are connected prior to the presentation. A telephone replay will be available beginning at 1:30 p.m. ET on Thursday, June 12, 2014 through 11:59 p.m. ET on Thursday, June 19, 2014 and may be accessed by using the domestic replay number 877-870-5176 or the international replay number 858-384-5517; the passcode is 13581999. The archived webcast may be accessed at http://public.viavid.com/index.php?id=109105 and will be available for one year.

About Logan's Roadhouse

Logan's opened its first restaurant in 1991 in Lexington, KY, and has grown as an affordable, full-service casual dining steakhouse offering specially seasoned aged steaks and sizzling southern-inspired dishes in a roadhouse atmosphere. Headquartered in Nashville, Tennessee, Logan's Roadhouse presently runs 234 company-operated and 26 franchised Logan's Roadhouse restaurants in 23 states. LRI Holdings, Inc. is the parent company of Logan's Roadhouse.

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LRI HOLDINGS, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Thirteen weeks ended								Thirty-nine weeks ended
(In thousands)	April 27, 2014				April 28, 2013				April 27, 2014				April 28, 2013
	(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues:
Net sales	$	169,126			$	174,924			$	469,210			$	485,749
Franchise fees and royalties	582				577				1,617				1,615
Total revenues	169,708				175,501				470,827				487,364
Costs and expenses:
Restaurant operating costs:
Cost of goods sold	57,716				59,656				159,511				163,538
Labor and other related expenses	49,887				50,246				143,631				143,497
Occupancy costs	13,675				13,095				41,503				39,459
Other restaurant operating expenses	25,389				26,388				76,661				77,880
Depreciation and amortization	5,039				5,265				15,171				15,679
Pre-opening expenses	255				849				281				2,523
General and administrative	8,685				9,053				23,408				23,096
Restaurant impairment and closing charges	238				2,442				2,043				3,143
Total costs and expenses	160,884				166,994				462,209				468,815
Operating income	8,824				8,507				8,618				18,549
Interest expense, net	10,552				10,371				31,407				30,632
Loss before income taxes	(1,728)				(1,864)				(22,789)				(12,083)
Income tax benefit	-				(2,379)				-				(8,052)
Net (loss) income	$	(1,728)			$	515			$	(22,789)			$	(4,031)

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)	April 27, 2014				July 28, 2013
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	3,493			$	23,708
Receivables	9,609				9,583
Inventories	14,203				12,887
Prepaid expenses and other current assets	5,742				4,337
Income taxes receivable	729				432
Total current assets	33,776				50,947
Property and equipment, net	216,978				223,724
Other assets	14,022				16,085
Goodwill	192,590				192,590
Tradename	71,694				71,694
Other intangible assets, net	17,710				19,272
Total assets	$	546,770			$	574,312
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	18,546			$	18,770
Payable to RHI	2,362				1,118
Other current liabilities and accrued expenses	43,791				52,383
Total current liabilities	64,699				72,271
Long-term debt	355,500				355,000
Deferred income taxes	27,745				27,745
Other long-term obligations	45,968				43,649
Total liabilities	493,912				498,665
Stockholder's equity:
Common stock ($0.01 par value; 100 shares authorized; 1 share issued and outstanding)	-				-
Additional paid-in capital	230,000				230,000
Retained deficit	(177,142)				(154,353)
Total stockholder's equity	52,858				75,647
Total liabilities and stockholder's equity	$	546,770			$	574,312

LRI HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Thirty-nine weeks ended
(In thousands)	April 27, 2014				April 28, 2013
Cash flows from operating activities:	(unaudited)				(unaudited)
Net loss	$	(22,789)			$	(4,031)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	15,171				15,679
Other amortization	1,574				1,375
Loss on sale/disposal of property and equipment	1,533				1,410
Amortization of deferred gain on sale and leaseback transactions	(37)				(30)
Impairment charges for long-lived assets	2,043				3,143
Share-based compensation expense	1,354				714
Deferred income taxes	-				(266)
Changes in operating assets and liabilities:
Receivables	(26)				(1,520)
Inventories	(1,509)				(553)
Prepaid expenses and other current assets	(1,405)				(661)
Other non-current assets and intangibles	3				41
Accounts payable	(360)				(2,357)
Payable to RHI	(110)				(23)
Income taxes payable/receivable	(297)				(4,301)
Other current liabilities and accrued expenses	(8,592)				(15,236)
Other long-term obligations	3,255				3,514
Net cash used in operating activities	(10,192)				(3,102)
Cash flows from investing activities:
Purchase of property and equipment	(10,523)				(22,574)
Proceeds from sale and leaseback transactions, net of expenses	-				10,097
Net cash used in investing activities	(10,523)				(12,477)
Cash flows from financing activities:
Payments on revolving credit facility	(24,500)				(12,600)
Borrowings on revolving credit facility	25,000				12,600
Net cash provided by financing activities	500				-
Decrease in cash and cash equivalents	(20,215)				(15,579)
Cash and cash equivalents, beginning of period	23,708				21,732
Cash and cash equivalents, end of period	$	3,493			$	6,153

Forward-Looking Statements

This press release contains statements about future events and expectations that constitute forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "plan," "seek," "will," "expect," "intend," "estimate," "anticipate," "believe" or the negative thereof or similar terminology. These statements are based on management's beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause the Company's actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements and you should not place undue reliance on such statements. Please refer to our Annual Report on Form 10-K for the fiscal year ended July 28, 2013, and other reports that we have filed with the Securities and Exchange Commission, for a discussion of risk factors that may contribute to these differences. Any forward-looking information presented herein is made only as of the date of this supplemental report, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events or otherwise.

Non-GAAP Financial Measures

This press release also contains non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and Adjusted EBITDAR. The Company believes that these measures, together with reconciliations to the most comparable GAAP measure, are helpful to both management and investors in understanding and analyzing financial performance. However, the Company's non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures used by other companies. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP financial measures.

To the extent we discuss any non-GAAP financial measures on the earnings call, a reconciliation of each measure to the most directly comparable GAAP measure is available in this press release. In addition, the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.

EBITDA, Adjusted EBITDA and Adjusted EBITDAR

The following table sets forth a reconciliation of net (loss) income, the most directly comparable GAAP financial measure to EBITDA, Adjusted EBITDA and Adjusted EBITDAR.

		Thirteen weeks ended								Thirty-nine weeks ended
(In thousands)		April 27, 2014				April 28, 2013				April 27, 2014				April 28, 2013
Net (loss) income		$	(1,728)			$	515			$	(22,789)			$	(4,031)
Interest expense, net		10,552				10,371				31,407				30,632
Income tax benefit		-				(2,379)				-				(8,052)
Depreciation and amortization		5,039				5,265				15,171				15,679
EBITDA		13,863				13,772				23,789				34,228
Adjustments
Sponsor management fees(a)		250				250				750				750
Non-cash asset write-offs:
Restaurant impairment(b)		238				2,442				2,043				3,143
Loss on disposal of property and equipment(c)		469				1,235				1,533				1,766
Restructuring costs(d)		302				1,659				(147)				1,826
Pre-opening expenses (excluding rent)(e)		246				797				253				2,189
Losses on sales of property(f)		7				67				11				80
Non-cash rent adjustment(g)		667				834				2,968				3,215
Costs related to the Transactions(h)		-				-				-				20
Non-cash stock-based compensation(i)		498				241				1,354				714
Other adjustments(j)		699				84				1,182				174
Adjusted EBITDA		17,239				21,381				33,736				48,105
Cash rent expense(k)		10,487				10,073				31,264				29,694
Adjusted EBITDAR		$	27,726			$	31,454			$	65,000			$	77,799

(a)	Sponsor management fees consist of fees payable to certain affiliates of Kelso & Company, L.P. (the "Kelso Affiliates") under an advisory agreement.
(b)	Restaurant impairment charges were recorded in connection with the determination that the carrying value of certain of our restaurants exceeded their estimated fair value.
(c)	Loss on disposal of property and equipment consists of the loss on disposal or retirement of assets that are not fully depreciated.
(d)	Restructuring costs include severance, hiring replacement costs and other related charges, including the reversal of any such charges.
(e)	Pre-opening expenses (excluding rent) include expenses directly associated with the opening of a new restaurant.
(f)	We recognize losses in connection with the sale and leaseback of restaurants when the fair value of the property being sold is less than the undepreciated cost of the property.
(g)	Non-cash rent adjustments represent the non-cash rent expense calculated as the difference between GAAP rent expense and amounts payable in cash under the leases during such time period. In measuring our operational performance, we focus on our cash rent payments.
(h)	Costs related to the Transactions include legal, professional and other fees incurred in connection with our acquisition by the Kelso Affiliates and Management Investors (the "Transactions").
(i)	Non-cash stock-based compensation represents compensation expense recognized for time-based stock options issued by Roadhouse Holding Inc.
(j)	Other adjustments include non-recurring expenses and professional fees, legal and settlement fees related to contract termination and ongoing expenses of closed restaurants.
(k)	Cash rent expense represents actual cash payments required under our leases.

SOURCE LRI Holdings, Inc.