10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 29, 2012

- or -

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

For the transition period from to

Commission File Number: 333-173579

LRI Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-5894571
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
3011 Armory Drive, Suite 300, Nashville, Tennessee  37204
(Address of principal executive offices) (Zip Code)

(615) 885-9056

(Registrant's telephone number, including area code)

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.  x Yes    ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes    ¨ No

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

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
	(Do not check if a smaller reporting company)

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

As of June 11, 2012, the registrant has 1 Common Unit, $0.01 par value, outstanding (which is owned by Roadhouse Parent Inc., the registrant’s direct owner), and is not publicly traded.

LRI HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

QUARTERLY PERIOD ENDED APRIL 29, 2012

TABLE OF CONTENTS

	PART I---FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
	PART II---OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
	Signatures	27

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PART I—FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

LRI Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)	April 29, 2012		July 31, 2011
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	5,307	$	19,103
Receivables		8,810		9,960
Inventories		12,112		11,370
Prepaid expenses and other current assets		4,415		3,367
Receivable from RHI		151		-
Income taxes receivable		5,552		3,688
Deferred income taxes		2,199		2,207
Total current assets		38,546		49,695
Property and equipment, net		242,697		232,940
Other assets		18,980		19,492
Goodwill		332,604		331,788
Tradename		71,694		71,694
Other intangible assets, net		21,875		23,215
Total assets	$	726,396	$	728,824
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	19,351	$	17,573
Payable to RHI		-		802
Other current liabilities and accrued expenses		39,475		52,315
Total current liabilities		58,826		70,690
Long-term debt		355,000		355,000
Deferred income taxes		37,556		37,746
Other long-term obligations		38,866		34,808
Total liabilities		490,248		498,244
Commitments and contingencies (Note 5)		-		-
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 earnings		6,148		580
Total stockholder’s equity		236,148		230,580
Total liabilities and stockholder’s equity	$	726,396	$	728,824

See accompanying notes to the condensed consolidated financial statements.

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LRI Holdings, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(In thousands)	Thirteen weeks ended April 29, 2012 (Successor)			Thirteen weeks ended May 1, 2011 (Successor)		Thirty-nine weeks ended April 29, 2012 (Successor)			Period from October 4, 2010 to May 1, 2011 (Successor)			Period from August 2, 2010 to October 3, 2010 (Predecessor)
Revenues:
Net sales	$	169,585		$	158,876	$	470,234		$	346,182		$	93,762
Franchise fees and royalties		584			575		1,621			1,245			348
Total revenues		170,169			159,451		471,855			347,427			94,110
Costs and expenses:
Restaurant operating costs:
Cost of goods sold		54,792			52,078		154,127			112,967			29,172
Labor and other related expenses		48,187			45,484		137,777			100,989			28,578
Occupancy costs		12,281			11,354		36,210			25,333			8,046
Other restaurant operating expenses		25,473			22,386		72,748			49,374			15,478
Depreciation and amortization		5,165			4,508		14,954			10,019			3,112
Pre-opening expenses		1,020			1,059		4,088			2,442			783
General and administrative		6,193			6,399		18,584			24,384			14,440
Impairment and store closing charges		-			-		108			-			-
Total costs and expenses		153,111			143,268		438,596			325,508			99,609
Operating income (loss)		17,058			16,183		33,259			21,919			(5,499	)
Interest expense, net		10,124			10,124		29,614			23,586			3,147
Other income, net		-			-		-			(15	)		(182	)
Income (loss) before income taxes		6,934			6,059		3,645			(1,652	)		(8,464	)
Income tax (benefit) expense		(1,363	)		2,195		(1,923	)		(558	)		(8,240	)
Net income (loss)		8,297			3,864		5,568			(1,094	)		(224	)
Undeclared preferred dividend		-			-		-			-			(2,270	)
Net income (loss) attributable to common stockholders	$	8,297		$	3,864	$	5,568		$	(1,094	)	$	(2,494	)

See accompanying notes to the condensed consolidated financial statements.

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LRI Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

										Total
					Additional		Retained			stockholders’			Preferred
	Common				paid-in		earnings			equity			Shares		Amount
(In thousands, except share data)	Shares		Amount		capital		(deficit)			(Permanent)			(Temporary)		(Temporary)
Balances at August 1, 2010 (Predecessor)		992,427	$	10	$	12,831	$	20,772		$	33,613			64,508	$	60,170
Net loss		-		-		-		(224	)		(224	)		-		-
Balances at October 3, 2010 (Predecessor)		992,427	$	10	$	12,831	$	20,548		$	33,389			64,508	$	60,170
Balances at October 4, 2010 (Date of Transactions)		-	$	-	$	-	$	-		$	-			-	$	-
Capital contribution		1		-		230,000		-			230,000			-		-
Net loss		-		-		-		(1,094	)		(1,094	)		-		-
Balances at May 1, 2011 (Successor)		1	$	-	$	230,000	$	(1,094	)	$	228,906			-	$	-
Balances at July 31, 2011 (Successor)		1	$	-	$	230,000	$	580		$	230,580			-	$	-
Net income		-		-		-		5,568			5,568			-		-
Balances at April 29, 2012 (Successor)		1	$	-	$	230,000	$	6,148		$	236,148			-	$	-

See accompanying notes to the condensed consolidated financial statements.

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LRI Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In thousands)	Thirty-nine weeks ended April 29, 2012 (Successor)			Period from October 4, 2010 to May 1, 2011 (Successor)			Period from August 2, 2010 to October 3, 2010 (Predecessor)
Cash flows from operating activities:
Net income (loss)	$	5,568		$	(1,094	)	$	(224	)
Adjustments to reconcile net income (loss) to net cash provided by   (used in) operating activities:
Depreciation and amortization		14,954			10,019			3,112
Other amortization		764			3,050			241
Unrealized gain on interest rate swap		-			-			(182	)
Loss on sale/disposal of property and equipment		2,093			437			203
Amortization of deferred gain on sale and leaseback transactions		(16	)		(2	)		(18	)
Impairment charges for long-lived assets		108			-			-
Share-based compensation expense		530			569			-
Tax benefit upon cancellation/exercise of Predecessor stock options		-			-			6,431
Deferred income taxes		(182	)		-			(10,701	)
Changes in operating assets and liabilities:
Receivables		1,150			(947	)		126
Inventories		(742	)		(691	)		(205	)
Prepaid expenses and other current assets		(1,048	)		5,048			1,668
Other non-current assets and intangibles		(1,774	)		(474	)		(179	)
Accounts payable		1,208			(2,379	)		413
RHI payable		(33	)		(14	)		-
Income taxes payable/receivable		(1,864	)		(576	)		(3,985	)
Other current liabilities and accrued expenses		(12,840	)		(23,621	)		4,942
Other long-term obligations		4,224			3,061			1,022
Net cash provided by (used in) operating activities		12,100			(7,614	)		2,664
Cash flows from investing activities:
Acquisition of LRI Holdings, net of cash acquired		-			(311,633	)		-
Purchase of property and equipment		(35,736	)		(20,478	)		(7,036	)
Proceeds from sale and leaseback transactions, net of expenses		11,290			1,793			1,656
Net cash used in investing activities		(24,446	)		(330,318	)		(5,380	)
Cash flows from financing activities:
Proceeds from issuance of Senior Secured Notes		-			355,000			-
Payments for debt issuance costs		-			(18,995	)		-
Contribution from parent		-			230,000			-
Repayment of Predecessor’s senior secured credit facility		-			(132,825	)		-
Repayment of Predecessor’s senior subordinated unsecured mezzanine   term notes, including prepayment premium		-			(87,576	)		-
Payments on revolving credit facility		(18,400	)		-			-
Borrowings on revolving credit facility		18,400			-			-
Repurchase of shares		(1,450	)		-			-
Net cash provided by financing activities		(1,450	)		345,604			-
(Decrease) increase in cash and cash equivalents		(13,796	)		7,672			(2,716	)
Cash and cash equivalents, beginning of period		19,103			-			52,211
Cash and cash equivalents, end of period	$	5,307		$	7,672		$	49,495

See accompanying notes to the condensed consolidated financial statements.

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LRI Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except share data)

(unaudited)

1.   Basis of Presentation and Recent Accounting Pronouncements

LRI Holdings, Inc. (“LRI Holdings”) and its subsidiaries (collectively the “Company”, “we”, “our” or “us”) are engaged in the operation and development of the Logan’s Roadhouse restaurant chain.  As of April 29, 2012, our restaurants operate in 23 states and are comprised of 219 company-owned restaurants and 26 franchised restaurants.  LRI Holdings operates its business as one operating and one reportable segment.  The Company operates on a 52 or 53-week fiscal year ending on the Sunday nearest to July 31.

On October 4, 2010, LRI Holdings was acquired by certain wholly owned subsidiaries of Roadhouse Holding Inc. (“RHI”), a Delaware corporation owned by affiliates of Kelso & Company, L.P. (the “Kelso Affiliates”) and certain members of management (the “Management Investors”).  After the acquisition transactions (the “Transactions”), the Kelso Affiliates owned 97% and the Management Investors owned 3% of the outstanding capital stock of RHI.  Because LRI Holdings is a wholly owned subsidiary of an indirect wholly owned subsidiary of RHI, RHI is the ultimate parent of LRI Holdings.

The Transactions resulted in a change of ownership of substantially all of LRI Holdings’ outstanding common stock and were accounted for in accordance with accounting guidance for business combinations and, accordingly, resulted in the recognition of assets acquired and liabilities assumed at fair value as of October 4, 2010.  The purchase price has been “pushed down” to LRI Holdings’ financial statements.  The condensed consolidated financial statements for all periods prior to October 4, 2010 are those of the Company prior to the Transactions (“Predecessor”).  The condensed consolidated financial statements for the periods beginning on or after October 4, 2010 are those of the Company subsequent to the Transactions (“Successor”).  As a result of the Transactions, the financial statements after October 4, 2010 are not comparable to those prior to that date.

Basis of presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and all intercompany balances and transactions have been eliminated during consolidation.

Interim financial statements

We have prepared these condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature.  Operating results for the thirteen week quarter and thirty-nine weeks ended April 29, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending July 29, 2012.  These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2011.  The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in our most recent Form 10-K.

Recent accounting pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued guidance regarding the presentation of other comprehensive income which requires a reporting entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  This guidance eliminates the option to present the components of other comprehensive income as part of the statement of stockholders’ equity.  The guidance is intended to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (our 2013 fiscal year) and should be applied retrospectively.  The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial position, results of operations or cash flows, though it will change our financial statement presentation.

In September 2011, the FASB finalized guidance on testing goodwill for impairment.  The new guidance permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before applying the two-step goodwill impairment model that is currently in place.  If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary.  The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment.  This guidance is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011 (our 2013 fiscal year), with early adoption permitted.  The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

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2.   The Transactions

The Transactions, described in Note 1, resulted in a change in ownership of substantially all of LRI Holdings’ outstanding common stock and were accounted for in accordance with accounting guidance for business combinations and, accordingly resulted in the recognition of assets acquired and liabilities assumed at fair value as of October 4, 2010. The purchase price has been “pushed down” to LRI Holdings’ financial statements.

The following table presents the change in goodwill since the date of the Transactions:

Goodwill, as of October 4, 2010	$	334,106
Tax related adjustments		1,348
Finalization of valuation studies		(2,850	)
Goodwill, as of April 29, 2012	$	332,604

Related party disclosures

At the time of the Transactions, seller proceeds of $17,800 were deposited into an escrow account to serve as security for and as a sole source of payment of the sellers’ obligations relating to Predecessor periods. Of this amount, $674 was paid to the Company as a result of certain purchase price adjustments and $326 was released to the sellers in the Successor period ended July 31, 2011.  The remaining escrow funds were managed in accordance with the terms of an escrow agreement with final distribution of all remaining escrow amounts paid to the sellers in the second quarter of fiscal year 2012.

In accordance with the terms of the Transactions, the sellers are entitled to any actual refunds of income taxes relating to Predecessor periods which will be paid after filing of the Predecessor income tax returns and receipt of those tax refunds by the Company. The deductibility of stock options and transaction costs resulted in an income tax receivable of $5,318 and an offsetting payable to the sellers, included in other current liabilities and accrued expenses, of the same amount at April 29, 2012.

3.   Long-Term Debt

Long-term debt obligations at April 29, 2012 and July 31, 2011, consist of the following:

	April 29, 2012		July 31, 2011
Senior Secured Notes, bearing interest at 10.75%	$	355,000	$	355,000
Senior Secured Revolving Credit Facility		-		-
		355,000		355,000
Less: current maturities		-		-
Long-term debt, less current maturities	$	355,000	$	355,000

Senior Secured Revolving Credit Facility

In connection with the Transactions, the Company terminated the Predecessor’s senior secured credit facility, and Logan’s Roadhouse Inc., a wholly owned subsidiary of LRI Holdings, entered into the Senior Secured Revolving Credit Facility that provides a $30,000 revolving credit facility with a maturity date of October 4, 2015. The Senior Secured Revolving Credit Facility includes a $12,000 letter of credit sub-facility and a $5,000 swingline sub-facility. As of April 29, 2012, the Company had no borrowings drawn on the Senior Secured Revolving Credit Facility and $3,563 of undrawn outstanding letters of credit resulting in available credit of $26,437.

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The Senior Secured Revolving Credit Facility is collateralized on a first-priority basis by a security agreement, which includes the tangible and intangible assets of the borrower and those of LRI Holdings and all of its subsidiaries, and is guaranteed by LRI Holdings and the subsidiaries of Logan’s Roadhouse, Inc.

Senior Secured Notes

In connection with the Transactions, Logan’s Roadhouse, Inc. issued $355,000 aggregate principal amount of Senior Secured Notes in a private placement to qualified institutional buyers.  In July 2011, the Company completed an exchange offering which allowed the holders of those notes to exchange their notes for notes identical in all material respects except they are registered with the SEC and are not subject to transfer restrictions.  The Senior Secured Notes bear interest at a rate of 10.75% per annum, payable semi−annually in arrears on April 15 and October 15.  The Senior Secured Notes mature on October 15, 2017.

The Senior Secured Notes are secured on a second-priority basis by the collateral securing the Senior Secured Revolving Credit Facility and are guaranteed by LRI Holdings and the subsidiaries of Logan’s Roadhouse, Inc.

On or after October 15, 2013, Logan’s Roadhouse, Inc. may redeem all or part of the Senior Secured Notes at redemption prices (expressed as a percentage of principal amount) ranging from 108.1% to 100.0%, plus accrued and unpaid interest. Prior to October 15, 2013, Logan’s Roadhouse, Inc. may on one or more occasions redeem up to 35% of the original principal amount of the notes using the proceeds of certain equity offerings at a redemption price of 110.8%, plus any accrued and unpaid interest. At any time during the 12-month periods commencing on October 15, in each of 2010, 2011 and 2012, Logan’s Roadhouse, Inc. may redeem up to 10% of the original principal amount at a redemption price equal to 103.0%, plus any accrued and unpaid interest. As of April 29, 2012, no portion of the Senior Secured Notes has been redeemed.

As of April 29, 2012, the fair value of the Senior Secured Notes was $338,581.

The credit agreement governing the Senior Secured Revolving Credit Facility (the “Credit Agreement”) and the indenture that governs the Senior Secured Notes (the “Indenture”) contain significant financial and operating covenants.  The financial covenants include a maximum consolidated leverage ratio, a minimum consolidated interest coverage ratio and a maximum capital expenditure limit.  The non-financial covenants include prohibitions on the Company and the Company’s guarantor subsidiaries’ ability to incur certain additional indebtedness or to pay dividends.  Additionally, the Company is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as a non−accelerated filer, even if the Company is not specifically required to comply with such sections of the Exchange Act.  Failure to comply with these covenants constitutes a default and may lead to the acceleration of the principal amount and accrued but unpaid interest on the Senior Secured Notes.  As of April 29, 2012, the Company was in compliance with all material covenants.

Debt issuance costs

The Company incurred $19,207 of debt issuance costs in connection with obtaining the financings described above.  These costs were capitalized and will be amortized to interest expense over the lives of the respective debt instruments.

4.   Fair Value Measurements

Fair value measurements are made under a three-tier fair value hierarchy, which prioritizes the inputs used in measuring the fair value:

Level 1:  Observable inputs such as quoted prices in active markets;

Level 2:  Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3:  Unobservable inputs in which there is little or no market data, requiring the reporting entity to develop its own assumptions.

There were no transfers among levels within the fair value hierarchy during the thirty-nine week Successor period ended April 29, 2012, the thirty week Successor period from October 4, 2010 to May 1, 2011 or the nine week Predecessor period from August 2, 2010 to October 3, 2010.

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of April 29, 2012 and July 31, 2011:

	Level		April 29, 2012		July 31, 2011
Deferred compensation plan assets(1)		1	$	1,868	$	1,574

(1)   Represents plan assets established under a Rabbi Trust for the Company’s non-qualified savings plan.  The assets of the Rabbi Trust are invested in mutual funds and are reported at fair value based on active market quotes.

Certain financial assets and liabilities are recorded at their carrying amounts which approximate fair value, based on their short-term nature or variable interest rate.  These financial assets and liabilities include cash and cash equivalents, accounts receivable and accounts payable.

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At April 29, 2012 and July 31, 2011, the Company did not have any significant nonfinancial assets or liabilities that required a fair value measurement on a recurring basis.

5.   Commitments and Contingencies

Litigation

Based upon information currently available, the Company is not a party to any litigation that management believes could have a material effect on the Company’s business or the Company’s condensed consolidated financial statements.  The Company establishes reserves for litigation and similar matters when those matters present loss contingencies that we determine to be both probable and reasonably estimable in accordance with ASC 450, “Contingencies.” In the opinion of management, based on current knowledge and in part upon the advice of legal counsel, all matters are believed to be adequately covered by insurance, or, if not covered, the possibility of losses from such matters are believed to be remote or such matters are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company if disposed of unfavorably.

Guarantees

LRI Holdings has fully and unconditionally guaranteed both the Senior Secured Revolving Credit Facility and the Senior Secured Notes.

Indemnifications

The Company is party to certain indemnifications to third parties in the ordinary course of business. The probability of incurring an actual liability under such indemnifications is sufficiently remote that no liability has been recorded.

6.   Share-Based Awards and Compensation Plans

Successor plan

On January 18, 2011, RHI adopted the Roadhouse Holding Inc. Stock Incentive Plan (the “2011 Plan”), pursuant to which options to purchase approximately 13%, or 345,000 shares, of the common stock of RHI on a fully diluted basis are available for grant to our officers and key employees.  Options granted under the 2011 Plan expire on the ten-year anniversary of the grant date.

A portion of the stock options under the 2011 Plan are subject to time-based vesting and a portion are performance-based. Time-based options granted on March 1, 2011 vest ratably on each of October 4, 2011, 2012, 2013 and 2014. Future grants of time-based options will vest ratably on the first four anniversaries of the date of grant.  Compensation expense for these options is recognized over the requisite service period for the award.  Upon a change in control of RHI, all time-based options will fully vest.  Performance-based stock options do not become exercisable unless and until the Kelso Affiliates, in connection with certain change in control transactions (i) receive proceeds equal to or in excess of 1.75 times their initial investment and (ii) achieve an internal rate of return, or IRR, on their initial investment, compounded annually, of at least 10%.  The Company recognizes compensation expense for performance-based stock options when the achievement of the performance goals is deemed to be probable.

The following table summarizes stock option activity under the 2011 Plan for the thirty-nine week period ended April 29, 2012:

	Time-based options					Performance-based options
	Number			Weighted average exercise price		Number			Weighted average exercise price
Options outstanding as of July 31, 2011		109,855		$	100.00		219,735		$	100.00
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited		(15,333	)		100.00		(30,667	)		100.00
Options outstanding as of April 29, 2012		94,522		$	100.00		189,068		$	100.00
As of April 29, 2012
Options vested		23,631					-
Options exercisable		23,631					-

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7.   Condensed Consolidating Financial Information

The Senior Secured Notes (described in Note 3) were issued by Logan’s Roadhouse, Inc. and guaranteed on a senior basis by its parent company, LRI Holdings, and each of its subsidiaries.  The guarantees are full and unconditional and joint and several.  The Company is providing condensed consolidating financial statements pursuant to SEC Regulation S-X Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.”

The condensed consolidating financial information of Logan’s Roadhouse, Inc. and the guarantors is presented below:

Condensed Consolidated Balance Sheets

April 29, 2012:	LRI Holdings, Inc.		Issuer and subsidiary guarantors		Consolidating adjustments			Consolidated
ASSETS
Current assets	$	-	$	38,546	$	-		$	38,546
Property and equipment, net		-		242,697		-			242,697
Other assets		1,839		135,359		(118,218	)		18,980
Investment in subsidiary		330,147		-		(330,147	)		-
Goodwill		-		332,604		-			332,604
Tradename		-		71,694		-			71,694
Other intangible assets, net		-		21,875		-			21,875
Total assets	$	331,986	$	842,775	$	(448,365	)	$	726,396
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities	$	-	$	58,826	$	-		$	58,826
Long-term debt		-		355,000		-			355,000
Deferred income taxes		-		37,556		-			37,556
Other long-term obligations		118,218		38,866		(118,218	)		38,866
Stockholder’s equity		213,768		352,527		(330,147	)		236,148
Total liabilities and stockholder’s equity	$	331,986	$	842,775	$	(448,365	)	$	726,396
July 31, 2011:	LRI Holdings, Inc.		Issuer and subsidiary guarantors		Consolidating adjustments			Consolidated
ASSETS
Current assets	$	5,895	$	43,800	$	-		$	49,695
Property and equipment, net		-		232,940		-			232,940
Other assets		-		136,179		(116,687	)		19,492
Investment in subsidiary		379,118		-		(379,118	)		-
Goodwill		-		331,788		-			331,788
Tradename		-		71,694		-			71,694
Other intangible assets, net		-		23,215		-			23,215
Total assets	$	385,013	$	839,616	$	(495,805	)	$	728,824
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities	$	-	$	70,690	$	-		$	70,690
Long-term debt		-		355,000		-			355,000
Deferred income taxes		37,746		-		-			37,746
Other long-term obligations		116,687		34,808		(116,687	)		34,808
Stockholder’s equity		230,580		379,118		(379,118	)		230,580
Total liabilities and stockholder’s equity	$	385,013	$	839,616	$	(495,805	)	$	728,824

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Condensed Consolidated Statements of Operations

Thirteen weeks ended April 29, 2012 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	170,169		$	-	$	170,169
Total costs and expenses		8			153,103			-		153,111
Operating (loss) income		(8	)		17,066			-		17,058
Interest expense, net and other income, net		512			9,612			-		10,124
(Loss) income before income taxes		(520	)		7,454			-		6,934
Income tax expense (benefit)		359			(1,722	)		-		(1,363	)
Net (loss) income		(879	)		9,176			-		8,297
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(879	)	$	9,176		$	-	$	8,297
Thirteen weeks ended May 1, 2011 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	159,451		$	-	$	159,451
Total costs and expenses		344			142,924			-		143,268
Operating (loss) income		(344	)		16,527			-		16,183
Interest expense, net and other income, net		503			9,621			-		10,124
(Loss) income before income taxes		(847	)		6,906			-		6,059
Income tax (benefit) expense		(67	)		2,262			-		2,195
Net (loss) income		(780	)		4,644			-		3,864
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(780	)	$	4,644		$	-	$	3,864
Thirty-nine weeks ended April 29, 2012 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	471,855		$	-	$	471,855
Total costs and expenses		59			438,537			-		438,596
Operating (loss) income		(59	)		33,318			-		33,259
Interest expense, net and other income, net		1,529			28,085			-		29,614
(Loss) income before income taxes		(1,588	)		5,233			-		3,645
Income tax expense (benefit)		388			(2,311	)		-		(1,923	)
Net (loss) income		(1,976	)		7,544			-		5,568
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(1,976	)	$	7,544		$	-	$	5,568
Period from October 4, 2010 to May 1, 2011 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	347,427		$	-	$	347,427
Total costs and expenses		11,097			314,411			-		325,508
Operating (loss) income		(11,097	)		33,016			-		21,919
Interest expense, net and other income, net		1,155			22,416			-		23,571
(Loss) income before income taxes		(12,252	)		10,600			-		(1,652	)
Income tax (benefit) expense		(4,139	)		3,581			-		(558	)
Net (loss) income		(8,113	)		7,019			-		(1,094	)
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(8,113	)	$	7,019		$	-	$	(1,094	)
Period from August 2, 2010 to October 3, 2010 (Predecessor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	94,110		$	-	$	94,110
Total costs and expenses		10,305			89,304			-		99,609
Operating (loss) income		(10,305	)		4,806			-		(5,499	)
Interest expense, net and other income, net		-			2,965			-		2,965
(Loss) income before income taxes		(10,305	)		1,841			-		(8,464	)
Income tax (benefit) expense		(10,032	)		1,792			-		(8,240	)
Net (loss) income		(273	)		49			-		(224	)
Undeclared preferred dividend		(2,270	)		-			-		(2,270	)
Net (loss) income attributable to common stockholders	$	(2,543	)	$	49		$	-	$	(2,494	)

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Condensed Consolidated Statements of Cash Flows

Thirty-nine weeks ended April 29, 2012 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash (used in) provided by operating activities	$	(447	)	$	12,547		$	-	$	12,100
Net cash provided by (used in) investing activities		447			(24,893	)		-		(24,446	)
Net cash provided by financing activities		-			(1,450	)		-		(1,450	)
Decrease in cash and cash equivalents		-			(13,796	)		-		(13,796	)
Cash and cash equivalents, beginning of period		-			19,103			-		19,103
Cash and cash equivalents, end of period	$	-		$	5,307		$	-	$	5,307
Period from October 4, 2010 to May 1, 2011 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash provided by (used in) operating activities	$	107,237		$	(114,851	)	$	-	$	(7,614	)
Net cash (used in) provided by investing activities		(337,237	)		6,919			-		(330,318	)
Net cash provided by financing activities		230,000			115,604			-		345,604
Increase in cash and cash equivalents		-			7,672			-		7,672
Cash and cash equivalents, beginning of period		-			-			-		-
Cash and cash equivalents, end of period	$	-		$	7,672		$	-	$	7,672
Period from August 2, 2010 to October 3, 2010 (Predecessor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash provided by operating activities	$	-		$	2,664		$	-	$	2,664
Net cash used in investing activities		-			(5,380	)		-		(5,380	)
Net cash provided by financing activities		-			-			-		-
Decrease in cash and cash equivalents		-			(2,716	)		-		(2,716	)
Cash and cash equivalents, beginning of period		-			52,211			-		52,211
Cash and cash equivalents, end of period	$	-		$	49,495		$	-	$	49,495

8.   Supplemental Cash Flow Information

The following table presents supplemental cash flow information:

	Thirty-nine weeks ended April 29, 2012 (Successor)		Period from October 4, 2010 to May 1, 2011 (Successor)		Period from August 2, 2010 to October 3, 2010 (Predecessor)
Cash paid for:
Interest, excluding amounts capitalized	$	38,011	$	20,132	$	3,493
Income taxes		521		71		22

9.   Restructuring

In connection with a restructuring of the Company’s marketing group and certain positions within the operations group, the Company incurred a one-time charge of $404 related to termination benefits for two former employees, repurchased shares of common stock of RHI held by the former employees for $1,450, and recorded an adjustment of $175 for the forfeiture of options to purchase stock.  The expense associated with this restructuring was included in general and administrative expenses.

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ITEM 2—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.  Our MD&A is presented in the following sections:

·   General

·   Overview

·   Key Measurements

·   Matters Affecting Comparability

·   Presentation of Results

·   Results of Operations

·   Other Non-GAAP Financial Measures

·   Liquidity and Capital Resources

·   Off Balance Sheet Arrangements

·   Seasonality

·   Segment Reporting

·   Impact of Inflation

·   Critical Accounting Policies

·   Recent Accounting Pronouncements

·   Cautionary Statement Regarding Forward-Looking Statements

This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes in Item 1 of this Quarterly Report.  The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in these forward-looking statements.  See “Cautionary Statement Regarding Forward-Looking Statements” below for factors that could cause or contribute to these differences.  The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions in connection with our analysis of trends and expectations with respect to our results of operations and financial position taken as whole.

General

Logan’s Roadhouse is a family-friendly, casual dining restaurant chain that revisits the classic roadhouse from days past and brings it to life in a modern way through our craveable food, abundance and affordability, welcoming hospitality and upbeat atmosphere.  Our restaurants have a relaxed, come-as-you-are environment where we encourage our customers to enjoy “bottomless buckets” of roasted in-shell peanuts and to toss the shells on the floor.  Our entrée portions are generous and generally include a choice of two side items, all at affordable prices.  We are committed to serving a variety of fresh food from specially seasoned aged steaks to farm-fresh salads to our made-from-scratch yeast rolls.  We believe the freshness and distinctive flavor profiles of our signature dishes, coupled with the variety of our menu, differentiates us from our competitors.  Our restaurants, which are open for lunch and dinner seven days a week, serve a broad and diverse customer base.   We opened our first restaurant in Lexington, Kentucky in 1991, and we have grown to a total of 219 company-owned restaurants and 26 franchised restaurants located across 23 states as of April 29, 2012.

Overview

We are branded as the Real American Roadhouse making us a welcoming destination for a wide range of customers.  Our strategy is to grow long-term sales and profits by delivering a unique customer experience that is so great and so affordable that customers will eat out with us more often.  We execute this vision by providing high quality meals and service in a relaxed, upbeat atmosphere.  Our key strategies, initiatives and insight into our outlook are summarized below.

Growing our restaurant base.  We believe differentiated, moderately priced roadhouse concepts have broad customer appeal and remain underpenetrated relative to the bar and grill and steakhouse segments.  We intend to focus on disciplined growth of our brand by strategically opening additional company-owned restaurants in existing and adjacent states.  We currently plan to open 19 restaurants in fiscal year 2012, of which 18 have been opened as of April 29, 2012.

Growing sales in existing restaurants.  We began to see a decline in average unit volumes beginning in fiscal year 2008 primarily due to the general softening of the overall macroeconomic environment.  In recent years, consumer traffic to casual dining restaurants has been negatively impacted by increasing unemployment rates and a decrease in consumer discretionary income and consumer confidence.  While these general macroeconomic factors have stabilized more recently, we believe our core customer base remains impacted by high levels of unemployment and lower discretionary income resulting in continued traffic softness in our restaurants.  The current restaurant environment is highly competitive with increased advertising, discounting and promotional activity.  In order to address the challenging economic environment and drive traffic into our restaurants, we have increased our advertising efforts and continue to offer and promote value options that we believe are important to our customers in the current economic environment.

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In order to continue to grow our average check, we will continue to keep our menu fresh by introducing new menu and beverage offerings while promoting our premium steak cuts, seafood offerings, and combination meals.  We will continue to introduce flavorful new menu items that enhance the variety of our menu.  We will also continue to look for selective pricing opportunities as our average check remains below many of our steakhouse competitors.

Growing margins.  Our restaurant operating margins have increased in each annual period since 2008 due to a number of cost savings initiatives that have improved the efficiency of our restaurant operations.  We are facing commodity pressures in fiscal year 2012 and remain focused on disciplined cost management opportunities to save costs in areas that are not directly adding value to the customer dining experience.

Throughout the remainder of fiscal year 2012, we expect our customers will continue to be impacted by high unemployment levels and other general economic challenges, which will limit their discretionary income.  As a result, we anticipate that the landscape will remain competitive as restaurant operators compete for market share in a challenging environment.  We also expect cost pressures primarily in the form of commodity inflation.  We plan to continue to focus on protecting restaurant margins while executing our core strategies of disciplined restaurant growth and consistently delivering a great value and unique dining experience to our customers.  Our ability to open new restaurants with strong unit level returns along with revenue and margin growth in existing restaurants will be key drivers to improved operational and financial results.

Key Measurements

The key measures we use to evaluate our performance include:

Average unit volume.  Average unit volume represents the average sales for company-owned restaurants over a specified period of time. It is typically measured on a 52-week basis but may also be applied to a shorter period.  Average unit volume reflects total company restaurant sales divided by total operating weeks, which is the aggregate number of weeks that company-owned restaurants are in operation over a specified period of time.

Change in comparable restaurant sales.  Comparable restaurants for a reporting period include company-owned restaurants that have been open for six or more full quarters at the beginning of the later of the two reporting periods being compared.  Change in comparable restaurant sales reflects changes in sales over the prior year for a comparable group of restaurants over a specified period of time.

Average check.  Average check includes net sales for company-owned restaurants over a specified period of time divided by the total number of customers served during the period. Management uses this indicator to analyze the dollars spent in our restaurants per customer. This measure aids management in identifying trends in customer preferences, as well as the effectiveness of menu price increases and other menu changes.  Unless otherwise noted, we report this metric for comparable restaurants.

Customer traffic.  Customer traffic is the total number of customers served over a specified period of time.  Unless otherwise noted, we report this metric for comparable restaurants.

Adjusted EBITDA.  We also evaluate our performance by using non-GAAP financial measures utilized by us and others in the restaurant industry.  In particular, we regularly review our Adjusted EBITDA, which is described in more detail in the Other Non-GAAP Financial Measures section below.

Matters Affecting Comparability

On October 4, 2010, LRI Holdings was acquired by certain wholly owned subsidiaries of RHI, a newly formed Delaware corporation owned by the Kelso Affiliates and the Management Investors.  The Transactions were funded by an equity investment and the issuance of the Senior Secured Notes and included retirement of all then existing debt.

The Transactions resulted in a change in ownership of substantially all of LRI Holdings’ outstanding common stock and were accounted for in accordance with accounting guidance for business combinations and, accordingly, resulted in the recognition of assets acquired and liabilities assumed at fair value as of October 4, 2010.  The purchase price has been “pushed down” to LRI Holdings’ financial statements.

Allocation of purchase price.  The allocation of purchase price to the assets acquired and liabilities assumed based on their respective fair values resulted in changes in the values of tangible and intangible assets.  The adjustment of property and equipment basis and remaining useful lives affects comparability of depreciation expense between Predecessor and Successor periods.  Allocation of purchase price to intangible assets affects the comparability of cost of goods sold, rent expense and amortization expense between Predecessor and Successor periods.

New debt structure.  In connection with the Transactions, Predecessor debt instruments were retired and replaced with new financings.  This increase in long-term debt and related debt issuance costs affects the comparability of interest expense and cash flows between the Predecessor and Successor periods.

General and administrative expense.  Transaction costs expensed in the Predecessor and Successor periods have a significant impact on results and comparability between periods.

Provision for (benefit from) income taxes.  Non-deductibility of certain costs incurred in connection with the Transactions impacted the income tax rates in both the Predecessor and Successor periods.

- 15 -

Presentation of Results

Our fiscal year ends on the Sunday closest to July 31.  All references to “Q3 2012”and “YTD 2012” relate to the thirteen week quarter ended and thirty-nine week period ended April 29, 2012, respectively.  All references to “Q3 2011” relate to the thirteen week quarter ended May 1, 2011 and all references to the “Combined thirty-nine weeks ended May 1, 2011” or the “Combined YTD 2011” relate to the combined thirty week period ended May 1, 2011 of the Successor and the nine week period ended October 3, 2010 of the Predecessor.

For purposes of this discussion and analysis, we combined the results of operations of the Predecessor for the nine week period from August 2, 2010 to October 3, 2010 with those of the Successor for the thirty week period from October 4, 2010 to May 1, 2011.  Although the combined presentation does not comply with GAAP, we believe that it provides management and investors with a more meaningful perspective on our financial and operational performance than if we did not combine the results of the Predecessor and Successor in this manner.  The combined results have not been prepared on a pro forma basis and should not be used as a substitute for Predecessor and Successor financial statements prepared in accordance with GAAP.

Results of Operations

Thirteen weeks ended April 29, 2012 (Q3 2012)

·   We opened four new restaurants (one ground lease and three ground and building leases) with a gross capital investment of $8.0 million and pre-opening costs (excluding rent) of $0.8 million.  Proceeds of $1.6 million from the sale and leaseback of one of the building leases were received in the quarter to offset gross capital expenditures; while proceeds of $3.2 million related to the other two building leases were not received in the quarter but will be reimbursed upon completion of planned sale and leaseback transactions.

·   Comparable restaurant sales for Q3 2012 decreased 0.8%, our average check increased by 3.3% and customer traffic decreased by 4.0% for company-owned restaurants.

·   Net income increased $4.4 million from Q3 2011 to $8.3 million in Q3 2012.

·   Adjusted EBITDA increased 6.2% from Q3 2011, or $1.5 million, to $26.3 million in Q3 2012.

·   Cash and cash equivalents declined by $13.8 million from July 31, 2011.  Primary drivers of the change in cash flow include interest payments of $38.0 million and net capital expenditures of $24.4 million, which were funded by cash on hand and cash flows from operations.  As of April 29, 2012, we had spent $6.4 million in capital expenditures that will be reimbursed upon completion of planned sale and leaseback transactions.

The following tables and discussion summarize key components of our operating results expressed as a dollar amount and as a percentage of total revenues or net sales.

	Successor									Successor					Successor					Predecessor					Combined
	Thirteen weeks					Thirteen weeks				Thirty-nine weeks					Period from					Period from					Thirty-nine weeks
	ended					ended				ended					October 4, 2010					August 2, 2010					ended
(In thousands)	April 29, 2012					May 1, 2011				April 29, 2012					to May 1, 2011					to October 3, 2010					May 1, 2011
Statement of operations data:
Revenues:
Net sales	$	169,585		99.7	%	$	158,876	99.6	%	$	470,234		99.7	%	$	346,182		99.6	%	$	93,762		99.6	%	$	439,944		99.6	%
Franchise fees and royalties		584		0.3			575	0.4			1,621		0.3			1,245		0.4			348		0.4			1,593		0.4
Total revenues		170,169		100.0			159,451	100.0			471,855		100.0			347,427		100.0			94,110		100.0			441,537		100.0
Costs and expenses:
(As a percentage of net sales)
Restaurant operating costs:
Cost of goods sold		54,792		32.3			52,078	32.8			154,127		32.8			112,967		32.6			29,172		31.1			142,139		32.3
Labor and other related expenses		48,187		28.4			45,484	28.6			137,777		29.3			100,989		29.2			28,578		30.5			129,567		29.5
Occupancy costs		12,281		7.2			11,354	7.1			36,210		7.7			25,333		7.3			8,046		8.6			33,379		7.6
Other restaurant operating expenses		25,473		15.0			22,386	14.1			72,748		15.5			49,374		14.3			15,478		16.5			64,852		14.7
(As a percentage of total revenues)
Depreciation and amortization		5,165		3.0			4,508	2.8			14,954		3.2			10,019		2.9			3,112		3.3			13,131		3.0
Pre-opening expenses		1,020		0.6			1,059	0.7			4,088		0.9			2,442		0.7			783		0.8			3,225		0.7
General and administrative		6,193		3.6			6,399	4.0			18,584		3.9			24,384		7.0			14,440		15.3			38,824		8.8
Impairment and store closing charges		-		-			-	-			108		-			-		-			-		-			-		-
Total costs and expenses		153,111		90.0			143,268	89.9			438,596		93.0			325,508		93.7			99,609		105.8			425,117		96.3
Operating income (loss)		17,058		10.0			16,183	10.1			33,259		7.0			21,919		6.3			(5,499	)	(5.8	)		16,420		3.7
Interest expense, net		10,124		5.9			10,124	6.3			29,614		6.3			23,586		6.8			3,147		3.3			26,733		6.1
Other income, net		-		-			-	-			-		-			(15	)	-			(182	)	(0.2	)		(197	)	-
Income (loss) before income taxes		6,934		4.1			6,059	3.8			3,645		0.8			(1,652	)	(0.5	)		(8,464	)	(9.0	)		(10,116	)	(2.3	)
Income tax (benefit) expense		(1,363	)	(0.8	)		2,195	1.4			(1,923	)	(0.4	)		(558	)	(0.2	)		(8,240	)	(8.8	)		(8,798	)	(2.0	)
Net income (loss)	$	8,297		4.9	%	$	3,864	2.4	%	$	5,568		1.2	%	$	(1,094	)	-0.3	%	$	(224	)	-0.2	%	$	(1,318	)	-0.3	%

- 16 -

Restaurant Unit Activity

	Company-owned		Franchised		Total
Restaurants at July 31, 2011		201		26		227
Openings		18		-		18
Closures		-		-		-
Restaurants at April 29, 2012		219		26		245

Q3 2012 (13 weeks) Compared to Q3 2011 (13 weeks) and YTD 2012 (39 weeks) Compared to the Combined YTD 2011 (39 weeks)

TOTAL REVENUES

 Net sales consist of food and beverage sales of company-owned restaurants and other miscellaneous income.  Net sales increased by $10.7 million, or 6.7%, to $169.6 million in Q3 2012 compared to Q3 2011.  This increase is primarily due to the opening of new restaurants and was partially offset by a 0.8% decline in comparable restaurant sales.  Net sales increased by $30.3 million, or 6.9%, to $470.2 million in YTD 2012 compared to the Combined YTD 2011.  This increase is primarily due to the opening of new restaurants and was partially offset by a 0.9% decline in comparable restaurant sales.

 The following table summarizes the period over period changes and key net sales drivers at company-owned restaurants for the periods presented:

	Successor						Successor			Combined - Successor/Predecessor
	Thirteen week period ended						Thirty-nine week period ended
	April 29, 2012			May 1, 2011			April 29, 2012			May 1, 2011
Company-owned restaurants:
Increase in restaurant operating weeks		9.0	%					9.2	%
Decrease in average unit volume		-2.3	%					-2.3	%
Total increase in restaurant sales		6.7	%					6.9	%
Change in comparable restaurant sales		-0.8	%		0.1	%		-0.9	%		0.9	%
Restaurant operating weeks		2,829			2,595			8,251			7,557

The increase in restaurant operating weeks for the periods presented above was due to the opening of new restaurants.  The decreases in average unit volume were primarily driven by customer traffic declines.  For our comparable restaurants, the decrease in customer traffic was 4.0% and 4.6% which was offset by a 3.3% and 3.8% increase in average check for Q3 2012 and YTD 2012, respectively.  The increase in average check was driven by menu pricing increases of 2.5% and 2.4% for Q3 2012 and YTD 2012, respectively, along with favorable menu mix shifts and higher liquor, beer and wine sales per guest.  Franchise fees and royalties, for our two franchisees that operate 26 restaurants, remained relatively consistent for the periods presented.

TOTAL COSTS AND EXPENSES

Total costs and expenses increased $9.8 million, or 6.8%, to $153.1 million in Q3 2012 compared to Q3 2011 and increased $13.5 million, or 3.2%, to $438.6 million in YTD 2012 compared to the Combined YTD 2011.  As a percent of total revenues, total costs and expenses in Q3 2012 were 90.0%, which increased from 89.9% in Q3 2011 and 93.0% in YTD 2012, which decreased from 96.3% in the Combined YTD 2011.  The primary drivers of the fluctuations in total costs and expenses are as follows:

Cost of goods sold

Cost of goods sold consists of food and beverage costs, along with related purchasing and distribution costs.  Costs of goods sold, as a percentage of net sales, decreased to 32.3% in Q3 2012 from 32.8% in Q3 2011 and increased to 32.8% in YTD 2012 from 32.3% in the Combined YTD 2011.  The decrease in Q3 2012 compared to Q3 2011 was primarily due to menu pricing and the amortization of a favorable beef contract in the prior year, partially offset by higher commodity costs.  The increase in YTD 2012 from the Combined YTD 2011 was primarily due to inflation across most commodities along with promotional offers that had an adverse impact on cost of goods sold, partially offset by menu pricing and the amortization of a favorable beef contract in the prior year period.

Labor and other related expenses

Labor and other related expenses consists of all restaurant management and hourly labor costs, including salaries, wages, benefits, bonuses and other indirect labor costs.  Labor and other related expenses, as a percentage of net sales, decreased to 28.4% in Q3 2012 from 28.6% in Q3 2011 and decreased to 29.3% in YTD 2012 from 29.5% in the Combined YTD 2011.  The decrease in Q3 2012 compared to Q3 2011 is primarily due to improved labor staffing and wage rate efficiency, partially offset by increased manager salaries due to inflation and lost leverage from lower sales.  The decrease in YTD 2012 from the Combined YTD 2011 resulted from improved staffing and wage rate efficiency, lower restaurant bonuses and workers’ compensation reserves, partially offset by the non-recurring payroll tax credits realized in the prior year period.

Occupancy costs

Occupancy costs include rent, common area maintenance, property taxes, licenses and other related fees.  Occupancy costs, as a percentage of net sales, increased to 7.2% in Q3 2012 from 7.1% in Q3 2011 and increased to 7.7% in YTD 2012 from 7.6% in the Combined YTD 2011.  Occupancy costs fluctuate based upon the timing and number of new restaurant openings and our mix of owned sites, land leases and land and building leases.  Due to the fixed nature of these costs they are also impacted by lost sales leverage.

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Other restaurant operating expenses

Other restaurant operating expenses include all restaurant-level operating costs, the major components of which are operating supplies, utilities, repairs and maintenance, advertising, general liability and credit card fees.  Other restaurant operating expenses, as a percentage of net sales, increased to 15.0% in Q3 2012 from 14.1% in Q3 2011 and increased to 15.5% in YTD 2012 from 14.7% in the Combined YTD 2011.  The increase in Q3 2012 compared to Q3 2011 resulted from increased advertising costs and an increase in asset disposals from facility improvements, partially offset by a decrease in general insurance reserves and reduced debit card fees resulting from regulation reducing the debit card fees charged to retailers.  The increase in YTD 2012 as compared to the Combined YTD 2011 was primarily due to increased advertising costs and increased asset disposals from facility improvements, partially offset by reduced debit card fees resulting from regulation reducing the debit card fees charged to retailers.

Depreciation and amortization

Depreciation and amortization includes the depreciation of fixed assets and capitalized leasehold improvements and the amortization of intangible assets.  Depreciation and amortization, as a percentage of total revenues increased to 3.0% in Q3 2012 from 2.8% in Q3 2011 and increased to 3.2% in YTD 2012 from 3.0% in the Combined YTD 2011.  The increases were primarily due to the additional depreciation from new restaurant openings and lost leverage from declining sales.  In addition, the YTD 2012 increase was also impacted by the revaluation of the depreciable basis of property and equipment as a result of the Transactions.

Pre-opening expenses

Pre-opening expenses consist of costs related to a new restaurant opening and primarily include manager salaries, employee payroll, travel, non-cash rent expense and other costs related to training and preparing new restaurants for opening.  Pre-opening costs will fluctuate from period to period based on the number and timing of restaurant openings.  Our pre-opening costs (excluding rent) have remained constant at approximately $0.2 million per opening.

General and administrative

General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support restaurant operations and development.  General and administrative expenses, as a percentage of total revenues, decreased to 3.6% in Q3 2012 from 4.0% in Q3 2011.  Included in Q3 2011 was $0.3 million of transaction related costs.  Excluding the impact of these costs, general and administrative expenses were 3.8% of total revenues in Q3 2011.  The decrease in general and administrative expenses as a percentage of total revenues, excluding transaction related costs, was due to a decrease in stock option expense from the prior year period.  The prior year period included additional expense due to the retroactive vesting of newly granted options and the current year period includes an adjustment for forfeited options.

General and administrative expenses, as a percentage of total revenues, decreased to 3.9% in YTD 2012 from 8.8% in the Combined YTD 2011.  Included in the Combined YTD 2011 was $21.3 million of transaction related costs.  Excluding the impact of these costs, general and administrative expenses were 4.0% of total revenues in the Combined YTD 2011.  The decrease in general and administrative expenses as a percentage of total revenues, excluding transaction related costs, was due to reduced home office bonus accruals.

Impairment and store closing charges

Impairment and store closing charges include long-lived and indefinite-lived asset impairment charges and store closing charges.  In YTD 2012, we recorded $0.1 million of impairment charges for asset additions to restaurants that had been fully impaired in prior years.

INTEREST EXPENSE, NET AND OTHER INCOME, NET

Interest expense, net consists primarily of interest expense related to our debt, net of interest income, see the “Liquidity and Capital Resources” section for further detail.  Other income, net consists primarily of gains and losses associated with interest rate swaps.  Interest expense, net remained consistent at $10.1 million in Q3 2012 and Q3 2011.  Interest expense, net increased to $29.6 million in YTD 2012 from $26.7 million in the Combined YTD 2011 as a result of the debt incurred in connection with the Transactions.  In connection with the Transactions, we terminated our interest rate swap agreement related to outstanding borrowings under the prior credit facilities.

INCOME TAX EXPENSE

Our effective tax rate (“ETR”) was a tax benefit of 52.8% in YTD 2012, 33.8% in the Successor period from October 4, 2010 to May 1, 2011 and 97.4% in the Predecessor period from August 2, 2010 to October 3, 2010.  A combined presentation is not meaningful as we file a separate tax return for each of the short periods in fiscal year 2011.  The ETR for YTD 2012 includes the impact of wage based credits on a low pre-tax income and an annual adjustment of the deferred state tax rate.  The ETRs for the Successor period ended May 1, 2011 and Predecessor period ended October 3, 2010 were impacted by differing GAAP and tax treatment for costs incurred as a result of the Transactions, offset by wage credits.

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Other Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

EBITDA represents net income (loss) before interest expense, net, income tax (benefit) expense and depreciation and amortization.  Adjusted EBITDA is further adjusted to reflect the additions and eliminations described in the table below. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income or cash flow from operations as determined under GAAP, and our calculations thereof may not be comparable to those reported by other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations are:

·   EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for, capital expenditures or contractual commitments;

·   EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

·   EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness;

·   EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

·   although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and

·   other companies in the restaurant industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. We further believe that our presentation of these non-GAAP financial measures provides information that is useful to analysts and investors because it is an important indicator of the strength of our operations and the performance of our core business.

As noted in the table below, Adjusted EBITDA excludes pre-opening expenses (excluding rent), sponsor management fees, hedging gain and losses on disposal of property and equipment and property sales, share-based compensation, and non-cash rent, among other items. It is reasonable to expect that these items will occur in future periods. However, we believe these adjustments are appropriate partly because the amounts recognized can vary significantly from period to period and complicate comparisons of our internal operating results and operating results of other restaurant companies over time. In addition, Adjusted EBITDA includes adjustments for other items that we do not expect to regularly record, including transaction costs and expenses recorded pursuant to accounting for business combinations. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help to provide management with a measure of our core operating performance over time by removing items that are not related to day-to-day restaurant level operations.

Management uses Adjusted EBITDA:

·   as a measure of operating performance to assist us in comparing the operating performance of our restaurants on a consistent basis because it removes the impact of items not directly resulting from our core operations;

·   for planning purposes, including the preparation of our internal annual operating budgets and financial projections;

·   to evaluate the performance and effectiveness of our operational strategies; and

·   to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan.

Adjusted EBITDAR further excludes cash rent expense from Adjusted EBITDA. Cash rent expense represents actual cash payments required under our leases.

In addition, EBITDA, Adjusted EBITDA and Adjusted EBITDAR are used by investors as supplemental measures to evaluate the overall operating performance of companies in the restaurant industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as reasonable bases for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back items that are not part of normal day-to-day operations of our business. By providing these non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

We also present Adjusted EBITDA because it is based on “Consolidated EBITDA,” a measure which is used in calculating financial ratios in material debt covenants in the Indenture and the Credit Agreement. We believe that presenting Adjusted EBITDA is appropriate to provide additional information to investors about how the covenants in the agreements governing our debt facilities operate. The Credit Agreement and the Indenture may permit us to exclude other non-cash charges and specified non-recurring expenses in calculating Consolidated EBITDA in future periods, which are not reflected in the Adjusted EBITDA data presented in this Report.

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

	Successor						Successor			Successor			Predecessor			Combined
										Period from			Period from
	Thirteen weeks			Thirteen weeks			Thirty-nine weeks			October 4, 2010			August 2, 2010			Thirty-nine weeks
	ended			ended			ended			to			to			ended
(In thousands)	April 29, 2012			May 1, 2011			April 29, 2012			May 1, 2011			October 3, 2010			May 1, 2011
Net income (loss)	$	8,297		$	3,864		$	5,568		$	(1,094	)	$	(224	)	$	(1,318	)
Interest expense, net		10,124			10,124			29,614			23,586			3,147			26,733
Income tax (benefit) expense		(1,363	)		2,195			(1,923	)		(558	)		(8,240	)		(8,798	)
Depreciation and amortization		5,165			4,508			14,954			10,019			3,112			13,131
EBITDA		22,223			20,691			48,213			31,953			(2,205	)		29,748
Adjustments
Sponsor management fees(a)		250			260			750			607			205			812
Non-cash asset write-offs:
Restaurant impairment(b)		-			-			108			-			-			-
Loss on disposal of property and equipment(c)		1,616			220			2,085			423			164			587
Restructuring costs(d)		430			-			430			-			-			-
Pre-opening expenses (excluding rent)(e)		773			896			3,337			2,026			598			2,624
Hedging gain (f)		-			-			-			-			(182	)		(182	)
Losses on sales of property(g)		-			(7	)		8			14			39			53
Non-cash rent adjustment(h)		918			991			3,353			3,395			(334	)		3,061
Costs related to the Transactions(i)		-			1,085			43			12,869			10,272			23,141
Non-cash stock-based compensation(j)		40			569			530			569			-			569
Other adjustments(k)		5			7			25			9			10			19
Adjusted EBITDA		26,255			24,712			58,882			51,865			8,567			60,432
Cash rent expense(l)		9,448			8,631			27,388			18,224			7,128			25,352
Adjusted EBITDAR	$	35,703		$	33,343		$	86,270		$	70,089		$	15,695		$	85,784

(a)   Prior to the completion of the Transactions, sponsor management fees consisted of fees paid to our Predecessor owners under a management and consulting services agreement, which was terminated in connection with the completion of the Transactions. Following the completion of the Transactions, sponsor management fees consist of fees paid to 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 charges include severance and other related charges.

(e)   Pre-opening expenses (excluding rent) include expenses directly associated with the opening of a new restaurant.

(f)   Hedging gain relates to fair market value changes of an interest rate swap. The interest rate swap was terminated in connection with the Transactions.

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(g)   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.

(i)   Costs related to the Transactions include: expenses related to business combination accounting recognized in connection with the Transactions, a one-time fee of $7.0 million paid to the Kelso Affiliates and legal, professional, and other fees incurred as a result of the Transactions.

(j)   Non-cash stock-based compensation represents compensation expense recognized for time-based stock options issued by RHI.

(k)   Other adjustments include ongoing expenses of closed restaurants, as well as inventory write-offs, employee termination buyouts and incidental charges related to restaurant closings.

(l)   Cash rent expense represents actual cash payments required under our leases.

Our Q3 2012 Adjusted EBITDA was $26.3 million, an increase of 6.2%, compared to Adjusted EBITDA of $24.7 million in Q3 2011.  Our YTD 2012 Adjusted EBITDA was $58.9 million, a decrease of 2.6%, compared to Adjusted EBITDA of $60.4 million in the Combined YTD 2011.  The increase in Adjusted EBITDA for Q3 2012 compared to Q3 2011 was primarily due to sales from new restaurant openings and improved cost management.  The decrease in Adjusted EBITDA for YTD 2012 compared to the Combined YTD 2011 was primarily driven by a decline in comparable restaurant sales and commodity inflation partially offset by contributions from our new restaurant openings.

Liquidity and Capital Resources

Summary

Our primary requirements for liquidity and capital are new restaurant development and debt service requirements.  Historically, our primary sources of liquidity and capital resources have been net cash provided from operating activities and operating lease financing.  Based on our current restaurant development plans, we anticipate that our cash position, our expected cash flows from operations and availability under the Senior Secured Revolving Credit Facility will be sufficient to finance our planned capital expenditures, operating activities and debt service requirements. However, our ability to fund future operating expenses and capital expenditures and our ability to make scheduled payments of interest on, to pay principal of or to refinance our indebtedness and to satisfy any other of our present or future debt obligations will depend on our future operating performance which will be affected by general economic, financial and other factors beyond our control.  As of April 29, 2012, we had $5.3 million in cash and cash equivalents and $26.4 million in available credit under our Senior Secured Revolving Credit Facility.

Consistent with many other restaurant and retail chain store operations, we utilize operating lease arrangements and sale and leaseback arrangements and believe that these financing methods provide a useful source of capital in a financially efficient manner.

Post-Transactions Liquidity

The total sources used to fund the Transactions of $628.6 million included $230.0 million of new capital contribution indirectly from the Kelso Affiliates and the Management Investors; $355.0 million from the proceeds of the Senior Secured Notes; and $43.6 million of cash from our balance sheet. The funds were used to repay existing indebtedness of $224.4 million; pay sellers’ expenses of $28.5 million; pay buyer’s expenses (primarily debt issuance costs) of $20.0 million; with the remainder payable to our Predecessor stockholders and option holders as consideration for their equity interests.

As part of the Transactions, we entered into the Senior Secured Revolving Credit Facility, which provides for up to $30.0 million of borrowings. The Senior Secured Revolving Credit Facility is available to fund working capital and for general corporate purposes. As of April 29, 2012, we had no outstanding borrowings drawn on the Senior Secured Revolving Credit Facility and $3.6 million of outstanding letters of credit resulting in available credit of $26.4 million.

In connection with the Transactions, Logan’s Roadhouse, Inc. issued $355,000 aggregate principal amount of Senior Secured Notes in a private placement to qualified institutional buyers.  In July 2011, the Company completed an exchange offering which allowed the holders of those notes to exchange their notes for notes identical in all material respects except they are registered with the SEC and are not subject to transfer restrictions.  The Senior Secured Notes bear interest at a rate of 10.75% per annum, payable semi−annually in arrears on April 15 and October 15.  The Senior Secured Notes mature on October 15, 2017.

The Senior Secured Revolving Credit Facility and the Indenture that governs the Senior Secured Notes contain financial and operating covenants.  The financial covenants include a maximum consolidated leverage ratio calculated as total debt outstanding divided by Adjusted EBITDA; a minimum consolidated interest coverage ratio calculated as Adjusted EBITDAR divided by the sum of interest expense and cash rent; and a maximum capital expenditure limit.  The non-financial covenants include prohibitions on our ability to incur certain additional indebtedness or to pay dividends.  Additionally, we are subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, as a non-accelerated filer, even if we are not specifically required to comply with such sections otherwise.  Failure to comply with these covenants constitutes a default and may lead to the acceleration of the principal amount and accrued and unpaid interest on the Senior Secured Notes.  As of April 29, 2012, we were in compliance with all material covenants and expect to remain in compliance throughout fiscal year 2012.

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Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for each of the thirty-nine week periods presented:

	Successor			Combined - Successor/ Predecessor
	Thirty-nine week period ended
(In thousands)	April 29, 2012			May 1, 2011
Total cash provided by (used in):
Operating activities	$	12,100		$	(4,950	)
Investing activities		(24,446	)		(335,698	)
Financing activities		(1,450	)		345,604
(Decrease) increase in cash and cash equivalents	$	(13,796	)	$	4,956

Operating activities

Cash provided by operating activities in YTD 2012 includes cash flows generated from ongoing operations and is partially offset by $38.0 million of cash paid for interest.  Cash used in operating activities in the Combined YTD 2011 was impacted by the increased net loss resulting from costs incurred as a result of the Transactions.

We had negative working capital of $20.3 million and $21.0 million on April 29, 2012 and July 31, 2011, respectively.  Like many other restaurant companies, we are able, and expect to operate with negative working capital.  Restaurant operations do not require significant inventories and substantially all sales are for cash or paid by third-party credit cards.

Investing activities

Cash used in investing activities primarily represents capital expenditures for new restaurant growth as well as $311.6 million of costs in the Combined YTD 2011 to acquire LRI Holdings, as part of the Transactions.  Excluding these transaction costs, capital expenditures were comparable at $24.4 million in YTD 2012 and $24.1 million in the Combined YTD 2011.  During YTD 2012 and the Combined YTD 2011 expenditures were offset by sale and leaseback transactions of $11.3 million and $3.4 million, respectively.

Financing activities

Draws on the Senior Secured Revolving Credit Facility of $18.4 million were fully repaid in the YTD 2012 period.  Cash used in financing activities in YTD 2012 was due to share repurchases of $1.5 million in conjunction with the departure of two officers of the Company.  Cash provided by financing activities in the Combined YTD 2011 included proceeds from debt issuance and equity contributions required to fund the Transactions, offset by the repayment of prior credit facilities and new debt issuance costs.

Off Balance Sheet Arrangements

Other than operating leases, we do not have any off-balance sheet arrangements.

Seasonality

Our business is subject to minor seasonal fluctuations.  Historically, sales are typically lowest in the fall.  Holidays, severe weather and similar conditions may impact sales volumes seasonally in some operating regions.  Because of these factors, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Segment Reporting

We aggregate our operations into a single reportable segment within the restaurant industry, providing similar products to similar customers, exclusively in the United States. Our restaurants also possess similar pricing structures, resulting in similar long-term expected financial performance characteristics. Accordingly, no further segment reporting beyond the unaudited condensed consolidated financial statements is presented.

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Impact of Inflation

Our operating margins depend on, among other things, our ability to anticipate and react to changes in the costs of key operating resources, including food and other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our restaurant customers. While we have taken steps to qualify multiple suppliers and enter into fixed price agreements for many of the commodities used in our restaurant operations, there can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather and other market conditions outside of our control. Certain of our commodities are not contracted and remain subject to fluctuating market prices.  Consequently, these commodities can be subject to unforeseen supply and cost fluctuations.

Our staff members are subject to various minimum wage requirements.  There have been and may be additional minimum wage increases in excess of federal minimum wage implemented in various jurisdictions in which we operate or seek to operate.  Minimum wage increases may have a material adverse effect on our labor costs. Certain operating costs, such as taxes, insurance and other outside services continue to increase and may also be subject to other cost and supply fluctuations outside of our control.  While we have been able to partially offset inflation and other changes in the costs of key operating resources by gradually increasing prices for our menu items, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future.  From time to time, competitive conditions could limit our menu pricing ability.  In addition, macroeconomic conditions could make additional menu price increases imprudent.  There can be no assurance that all future cost increases can be offset by increased menu prices or that increased menu prices will be fully absorbed by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns.  There can be no assurance that we will be able to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures.

Critical Accounting Policies

We prepare our unaudited condensed consolidated financial statements in conformity with GAAP.  The preparation of these financial statements requires us to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures.  We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared.  However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.  Our critical accounting policies have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended July 31, 2011.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included within Note 1 to our unaudited condensed consolidated financial statements in Part 1, Item 1 of this report.

Cautionary Statement Regarding Forward-Looking Statements

This report contains forward−looking statements based on our current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward−looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward−looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward−looking statements as a result of various factors. The section entitled “Risk Factors” in our Annual Report on Form 10−K for the fiscal year ended July 31, 2011, filed with the SEC, discusses some of the important risk factors that may affect our business, results of operations, or financial condition.  These risks and uncertainties include, but are not limited to:

·   our ability to successfully execute our strategy and open new restaurants that are profitable;

·   macroeconomic conditions;

·   our ability to compete with many other restaurants;

·   potential negative publicity regarding food safety and health concerns;

·   health concerns arising from the outbreak of viruses or food-borne illness;

·   the effects of seasonality and weather conditions on sales;

·   changes in food and supply costs;

·   our reliance on certain vendors, suppliers and distributors;

·   impairment charges on certain long-lived or intangible assets;

·   our ability to attract and retain qualified executive officers and employees while also controlling labor costs;

·   our ability to adapt to escalating labor costs;

·   our ability to maintain insurance that provides adequate levels of coverage against claims;

·   legal complaints or litigation;

·   our ability to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations;

·   the reliability of our information systems;

·   costs resulting from breaches of security of confidential information;

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·   our ability to protect and enforce our intellectual property rights;

·   our franchisees’ actions;

·   the cost of compliance with federal, state and local laws;

·   any potential strategic transactions;

·   our ability to maintain effective internal controls over financial reporting and the resources and management oversight required to comply with the requirements of the Sarbanes-Oxley Act of 2002;

·   control of us by the Kelso Affiliates;

·   our substantial indebtedness; and

·   our ability to incur additional debt.

We undertake no obligation to revise or update publicly any forward−looking statements for any reason. The information contained in this Form 10−Q is not a complete description of our business or the risks associated with our business. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that discuss our business in greater detail and advise interested parties of certain risks, uncertainties and other factors that may affect our business, results of operations or financial condition.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to the risks inherent in our operations, we are exposed to certain market risks, including adverse changes in commodity prices and interest rates.

Commodity price risk

Many of the ingredients used in the products sold in our restaurants are commodities subject to price volatility caused by limited supply, weather, production problems, delivery difficulties, economic factors, and other conditions which are outside our control and may be unpredictable.  In order to minimize risk, we employ various purchasing and pricing techniques including negotiating fixed price contracts with vendors, generally over one year periods, and securing supply contracts with vendors that remain subject to fluctuating market prices.  We do not currently utilize financial instruments to hedge commodity prices, but we will continue to evaluate their effectiveness.

Four food categories (beef, produce, seafood and chicken) account for the largest share of our cost of goods sold (at 31.9%, 9.8%, 10.0% and 7.5%, respectively, in the thirty-nine week period ended April 29, 2012).  Other categories affected by commodity price fluctuations, such as pork, cheese and dairy, may each account for 4-6%, individually, of our purchases. 

We recognize that commodity pricing may be extremely volatile and can change unpredictably and over short periods.  Changes in commodity prices would generally affect us and our competitors similarly, depending upon the terms and duration of supply contracts.  In many cases, or over the longer term, we believe we will be able to pass through some or all of the increased commodity costs by adjusting menu pricing.  However, competitive circumstances or judgments about consumer acceptance of price increases, may limit price flexibility and, in those circumstances, increases in commodity prices may have an adverse affect on restaurant operating margins. 

We are subject to additional risk due to our reliance on single suppliers for many of our commodity purchases, including beef.  However, our menu items are based on generally available products, and if any existing suppliers fail, or are unable, to deliver in quantities we require, we believe that there are sufficient alternative suppliers in the marketplace so that our sources of supply can be replaced as necessary.  Although we believe the supply could be replaced by alternative suppliers, we may encounter temporary supply shortages or incur higher supply costs which could have an adverse affect on our results of operations.

Interest rate risk

We are subject to interest rate risk in connection with borrowings under the Senior Secured Revolving Credit Facility, which bears interest at variable rates.  As of April 29, 2012, we had no outstanding borrowings on our Senior Secured Revolving Credit Facility.  There is no interest rate risk associated with our Senior Secured Notes, as the interest rate is fixed at 10.75% per annum.

ITEM 4—CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of April 29, 2012.

Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 24 -

PART II—OTHER INFORMATION

ITEM 1—LEGAL PROCEEDINGS

Information regarding legal proceedings is included within Note 5 to our unaudited condensed consolidated financial statements included within Part I, Item 1 of this report.

ITEM 1A—RISK FACTORS

There have been no material changes in the risk factors set forth in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, 2011.

ITEM 5—OTHER INFORMATION

We qualify as an “emerging growth company” pursuant to the provisions of the Jumpstart Our Business Startups Act, or the JOBS Act, enacted on April 5, 2012.

Therefore, we may take advantage of certain exemptions from various reporting requirements that are applicable to other companies that are not ''emerging growth companies'' including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports.

In addition, Section 102 of the JOBS Act also provides that an ''emerging growth company'' can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An ''emerging growth company'' can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to ''opt out'' of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

- 25 -

ITEM 6—EXHIBITS

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of LRI Holdings, Inc.*
3.2	Amended and Restated By-Laws of LRI Holdings, Inc.*
4.1	Credit Agreement, dated as of October 4, 2010, among LRI Holdings, Inc. and Logan’s Roadhouse, Inc., as Borrower, the Several Lenders from Time to Time Parties thereto, JPMorgan Chase Bank, N.A., Credit Suisse AG, as Co-Documentation Agents, Credit Suisse AG, as Syndication Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent, together with the Joinder to the Credit Agreement, dated as of October 4, 2010, made by LRI Holdings, Inc. and Logan’s Roadhouse, Inc. for the benefit of the Lenders under the Credit Agreement.*
4.2	First Lien Guarantee and Collateral Agreement, dated as of October 4, 2010, made by LRI Holdings, Inc. and Logan’s Roadhouse, Inc. and the Guarantors Identified Therein, in favor of JPMorgan Chase Bank, N.A., as Administrative Agent, together with the Assumption Agreement to the First lien Guarantee and the Collateral Agreement, dated October 4, 2010, made by LRI Holdings, Inc., Logan’s Roadhouse, Inc., Logan’s Roadhouse of Texas, Inc. and Logan’s Roadhouse of Kansas, Inc. in favor of JPMorgan Chase Bank N.A., as Administrative Agent under the Credit Agreement.*
4.3	Security Agreement, dated as of October 4, 2010, made by LRI Holdings, Inc. and Logan’s Roadhouse, Inc., in favor of Wells Fargo Bank, National Association, as Collateral Agent, together with the Joinder Agreement to Security Agreement dated as of October 4, 2010 made by LRI Holdings, Inc., Logan’s Roadhouse, Inc., Logan’s Roadhouse of Texas, Inc., Logan’s Roadhouse of Kansas, Inc., in favor of Wells Fargo Bank, National Association, as Collateral Agent under the Security Agreement.*
4.4	Intercreditor Agreement, dated as of October 4, 2010, among JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, National Association, as Collateral Agent, Logan’s Roadhouse, Inc., and each of the other Loan Parties party thereto, together with the Joinder to Intercreditor Agreement dated as of October 4, 2010 by LRI Holdings, Inc., Logan’s Roadhouse, Inc., Logan’s Roadhouse of Texas, Inc., Logan’s Roadhouse of Kansas, Inc., in favor of JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association.*
4.5	Indenture, dated as of October 4, 2010, among Logan’s Roadhouse, Inc., LRI Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee and Wells Fargo Bank, National Association, as Collateral Agent, relating to the 10.75% Senior Secured Notes due 2017, together with the Supplemental Indenture for Merger entered into as of October 4, 2010 by and among Logan’s Roadhouse, Inc., LRI Holdings, Inc., Logan’s Roadhouse of Texas, Inc., Logan’s Roadhouse of Kansas, Inc., Wells Fargo Bank, National Association, as Trustee and Wells Fargo Bank, National Association, as Collateral Agent under the Indenture.*
4.6	Form of 10.75% Senior Secured Note due 2017 (included in Exhibit 4.5 hereto).*
10.1	Separation Agreement by and among Logan’s Roadhouse, Inc., Roadhouse Holding, Inc. and Stephen R. Anderson dated March 19, 2012.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following unaudited financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 29, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.**

*Filed previously by the Company as an exhibit to Registration Statement on Form S-4 (File No. 333-173579) filed on April 18, 2011 and incorporated herein by reference.

** Furnished electronically herewith.

- 26 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:    June 11, 2012	LRI Holdings, Inc.
	By:	/s/ Amy L. Bertauski
		Amy L. Bertauski
		Chief Financial Officer and Treasurer
		(Duly Authorized Officer)
Date:    June 11, 2012
	By:	/s/  Nicole A. Williams
		Nicole A. Williams
		Vice President - Controller
		(Principal Accounting Officer)

- 27 -

EX-10.1

    ex10-1.htm
    
    
    


Please see the attached Exhibit 10.1 pdf file.

EX-31.1

    ex31-1.htm
    
    
    

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Amy L. Bertauski, certify that:

1. I have reviewed this report on Form 10-Q of LRI Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 11, 2012

/s/ Amy L. Bertauski

Amy L. Bertauski

Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, the undersigned President and Chief Executive Officer of LRI Holdings, Inc. (the Company), hereby certifies that the Company's Quarterly Report on Form 10-Q for the period ended April 29, 2012 (the Report) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 11, 2012

/s/ G. Thomas Vogel

G. Thomas Vogel

President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, the undersigned President and Chief Executive Officer of LRI Holdings, Inc. (the Company), hereby certifies that the Company's Quarterly Report on Form 10-Q for the period ended April 29, 2012 (the Report) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 11, 2012

/s/ Amy L. Bertauski

Amy L. Bertauski

Chief Financial Officer and Treasurer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report.

XML

Long-Term Debt

9 Months Ended

Apr. 29, 2012

Long-Term Debt [Abstract]

Long-Term Debt

3. Long-Term Debt

Long-term debt obligations at April 29, 2012 and July 31, 2011, consist of the following:

	April 29, 2012		July 31, 2011
Senior Secured Notes, bearing interest at 10.75%	$	355,000	$	355,000
Senior Secured Revolving Credit Facility		-		-
		355,000		355,000
Less: current maturities		-		-
Long-term debt, less current maturities	$	355,000	$	355,000

Senior Secured Revolving Credit Facility

In connection with the Transactions, the Company terminated the Predecessor's senior secured credit facility, and Logan's Roadhouse Inc., a wholly owned subsidiary of LRI Holdings, entered into the Senior Secured Revolving Credit Facility that provides a $30,000 revolving credit facility with a maturity date of October 4, 2015. The Senior Secured Revolving Credit Facility includes a $12,000 letter of credit sub-facility and a $5,000 swingline sub-facility. As of April 29, 2012, the Company had no borrowings drawn on the Senior Secured Revolving Credit Facility and $3,563 of undrawn outstanding letters of credit resulting in available credit of $26,437.

The Senior Secured Revolving Credit Facility is collateralized on a first-priority basis by a security agreement, which includes the tangible and intangible assets of the borrower and those of LRI Holdings and all of its subsidiaries, and is guaranteed by LRI Holdings and the subsidiaries of Logan's Roadhouse, Inc.

Senior Secured Notes

In connection with the Transactions, Logan's Roadhouse, Inc. issued $355,000 aggregate principal amount of Senior Secured Notes in a private placement to qualified institutional buyers.  In July 2011, the Company completed an exchange offering which allowed the holders of those notes to exchange their notes for notes identical in all material respects except they are registered with the SEC and are not subject to transfer restrictions.  The Senior Secured Notes bear interest at a rate of 10.75% per annum, payable semi−annually in arrears on April 15 and October 15.  The Senior Secured Notes mature on October 15, 2017.

The Senior Secured Notes are secured on a second-priority basis by the collateral securing the Senior Secured Revolving Credit Facility and are guaranteed by LRI Holdings and the subsidiaries of Logan's Roadhouse, Inc.

On or after October 15, 2013, Logan's Roadhouse, Inc. may redeem all or part of the Senior Secured Notes at redemption prices (expressed as a percentage of principal amount) ranging from 108.1% to 100.0%, plus accrued and unpaid interest. Prior to October 15, 2013, Logan's Roadhouse, Inc. may on one or more occasions redeem up to 35% of the original principal amount of the notes using the proceeds of certain equity offerings at a redemption price of 110.8%, plus any accrued and unpaid interest. At any time during the 12-month periods commencing on October 15, in each of 2010, 2011 and 2012, Logan's Roadhouse, Inc. may redeem up to 10% of the original principal amount at a redemption price equal to 103.0%, plus any accrued and unpaid interest. As of April 29, 2012, no portion of the Senior Secured Notes has been redeemed.

As of April 29, 2012, the fair value of the Senior Secured Notes was $338,581.

The credit agreement governing the Senior Secured Revolving Credit Facility (the "Credit Agreement") and the indenture that governs the Senior Secured Notes (the "Indenture") contain significant financial and operating covenants.  The financial covenants include a maximum consolidated leverage ratio, a minimum consolidated interest coverage ratio and a maximum capital expenditure limit.  The non-financial covenants include prohibitions on the Company and the Company's guarantor subsidiaries' ability to incur certain additional indebtedness or to pay dividends.  Additionally, the Company is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), as a non−accelerated filer, even if the Company is not specifically required to comply with such sections of the Exchange Act.  Failure to comply with these covenants constitutes a default and may lead to the acceleration of the principal amount and accrued but unpaid interest on the Senior Secured Notes.  As of April 29, 2012, the Company was in compliance with all material covenants.

Debt issuance costs

The Company incurred $19,207 of debt issuance costs in connection with obtaining the financings described above.  These costs were capitalized and will be amortized to interest expense over the lives of the respective debt instruments.

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The Transactions

9 Months Ended

Apr. 29, 2012

The Transactions [Abstract]

The Transactions

2. The Transactions

The Transactions, described in Note 1, resulted in a change in ownership of substantially all of LRI Holdings' outstanding common stock and were accounted for in accordance with accounting guidance for business combinations and, accordingly resulted in the recognition of assets acquired and liabilities assumed at fair value as of October 4, 2010. The purchase price has been "pushed down" to LRI Holdings' financial statements.

The following table presents the change in goodwill since the date of the Transactions:

Goodwill, as of October 4, 2010	$	334,106
Tax related adjustments		1,348
Finalization of valuation studies		(2,850	)
Goodwill, as of April 29, 2012	$	332,604

Related party disclosures

At the time of the Transactions, seller proceeds of $17,800 were deposited into an escrow account to serve as security for and as a sole source of payment of the sellers' obligations relating to Predecessor periods. Of this amount, $674 was paid to the Company as a result of certain purchase price adjustments and $326 was released to the sellers in the Successor period ended July 31, 2011.  The remaining escrow funds were managed in accordance with the terms of an escrow agreement with final distribution of all remaining escrow amounts paid to the sellers in the second quarter of fiscal year 2012.

In accordance with the terms of the Transactions, the sellers are entitled to any actual refunds of income taxes relating to Predecessor periods which will be paid after filing of the Predecessor income tax returns and receipt of those tax refunds by the Company. The deductibility of stock options and transaction costs resulted in an income tax receivable of $5,318 and an offsetting payable to the sellers, included in other current liabilities and accrued expenses, of the same amount at April 29, 2012.

XML

Condensed Consolidated Balance Sheets (unaudited) (USD $) In Thousands, unless otherwise specified	Apr. 29, 2012	Jul. 31, 2011
Current assets:
Cash and cash equivalents	$ 5,307	$ 19,103
Receivables	8,810	9,960
Inventories	12,112	11,370
Prepaid expenses and other current assets	4,415	3,367
Receivable from RHI	151	0
Income taxes receivable	5,552	3,688
Deferred income taxes	2,199	2,207
Total current assets	38,546	49,695
Property and equipment, net	242,697	232,940
Other assets	18,980	19,492
Goodwill	332,604	331,788
Tradename	71,694	71,694
Other intangible assets, net	21,875	23,215
Total assets	726,396	728,824
Current liabilities:
Accounts payable	19,351	17,573
Payable to RHI	0	802
Other current liabilities and accrued expenses	39,475	52,315
Total current liabilities	58,826	70,690
Long-term debt	355,000	355,000
Deferred income taxes	37,556	37,746
Other long-term obligations	38,866	34,808
Total liabilities	490,248	498,244
Commitments and contingencies (Note 5)
Stockholder's equity:
Common stock ($0.01 par value; 100 shares authorized; 1 share issued and outstanding)	0	0
Additional paid-in capital	230,000	230,000
Retained earnings	6,148	580
Total stockholder's equity	236,148	230,580
Total liabilities and stockholder's equity	$ 726,396	$ 728,824

XML

Condensed Consolidated Statements of Cash Flows (unaudited) (USD $) In Thousands, unless otherwise specified	7 Months Ended	9 Months Ended	2 Months Ended
	May 01, 2011 Successor [Member]	Apr. 29, 2012 Successor [Member]	Oct. 03, 2010 Predecessor [Member]
Cash flows from operating activities:
Net income (loss)	$ (1,094)	$ 5,568	$ (224)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	10,019	14,954	3,112
Other amortization	3,050	764	241
Unrealized gain on interest rate swap	0	0	(182)
Loss on sale/disposal of property and equipment	437	2,093	203
Amortization of deferred gain on sale and leaseback transactions	(2)	(16)	(18)
Impairment charges for long-lived assets	0	108	0
Share-based compensation expense	569	530	0
Tax benefit upon cancellation/exercise of Predecessor stock options	0	0	6,431
Deferred income taxes	0	(182)	(10,701)
Changes in operating assets and liabilities:
Receivables	(947)	1,150	126
Inventories	(691)	(742)	(205)
Prepaid expenses and other current assets	5,048	(1,048)	1,668
Other non-current assets and intangibles	(474)	(1,774)	(179)
Accounts payable	(2,379)	1,208	413
Intercompany payable	(14)	(33)	0
Income taxes payable / receivable	(576)	(1,864)	(3,985)
Other current liabilities and accrued expenses	(23,621)	(12,840)	4,942
Other long-term obligations	3,061	4,224	1,022
Net cash provided by (used in) operating activities	(7,614)	12,100	2,664
Cash flows from investing activities:
Acquisition of LRI Holdings, net of cash acquired	(311,633)	0	0
Purchase of property and equipment	(20,478)	(35,736)	(7,036)
Proceeds from sale and leaseback transactions, net of expenses	1,793	11,290	1,656
Net cash used in investing activities	(330,318)	(24,446)	(5,380)
Cash flows from financing activities:
Proceeds from issuance of Senior Secured Notes	355,000	0	0
Payments for debt issuance costs	(18,995)	0	0
Contribution from parent	230,000	0	0
Repayment of Predecessor's senior secured credit facility	(132,825)	0	0
Repayment of Predecessor's senior subordinated unsecured mezzanine term notes, including prepayment premium	(87,576)	0	0
Payments on revolving credit facility	0	(18,400)	0
Borrowings on revolving credit facility	0	18,400	0
Repurchase of shares	0	(1,450)	0
Net cash provided by financing activities	345,604	(1,450)	0
(Decrease) increase in cash and cash equivalents	7,672	(13,796)	(2,716)
Cash and cash equivalents, beginning of period	0	19,103	52,211
Cash and cash equivalents, end of period	$ 7,672	$ 5,307	$ 49,495

XML

Basis of Presentation and Recent Accounting Pronouncements

9 Months Ended

Apr. 29, 2012

Basis of Presentation and Recent Accounting Pronouncements [Abstract]

Basis of Presentation and Recent Accounting Pronouncements

1. Basis of Presentation and Recent Accounting Pronouncements

LRI Holdings, Inc. ("LRI Holdings") and its subsidiaries (collectively the "Company", "we", "our" or "us") are engaged in the operation and development of the Logan's Roadhouse restaurant chain.  As of April 29, 2012, our restaurants operate in 23 states and are comprised of 219 company-owned restaurants and 26 franchised restaurants.  LRI Holdings operates its business as one operating and one reportable segment.  The Company operates on a 52 or 53-week fiscal year ending on the Sunday nearest to July 31.

On October 4, 2010, LRI Holdings was acquired by certain wholly owned subsidiaries of Roadhouse Holding Inc. ("RHI"), a Delaware corporation owned by affiliates of Kelso & Company, L.P. (the "Kelso Affiliates") and certain members of management (the "Management Investors").  After the acquisition transactions (the "Transactions"), the Kelso Affiliates owned 97% and the Management Investors owned 3% of the outstanding capital stock of RHI.  Because LRI Holdings is a wholly owned subsidiary of an indirect wholly owned subsidiary of RHI, RHI is the ultimate parent of LRI Holdings.

The Transactions resulted in a change of ownership of substantially all of LRI Holdings' outstanding common stock and were accounted for in accordance with accounting guidance for business combinations and, accordingly, resulted in the recognition of assets acquired and liabilities assumed at fair value as of October 4, 2010.  The purchase price has been "pushed down" to LRI Holdings' financial statements.  The condensed consolidated financial statements for all periods prior to October 4, 2010 are those of the Company prior to the Transactions ("Predecessor").  The condensed consolidated financial statements for the periods beginning on or after October 4, 2010 are those of the Company subsequent to the Transactions ("Successor").  As a result of the Transactions, the financial statements after October 4, 2010 are not comparable to those prior to that date.

Basis of presentation

The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), and all intercompany balances and transactions have been eliminated during consolidation.

Interim financial statements

We have prepared these condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").  Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature.  Operating results for the thirteen week quarter and thirty-nine weeks ended April 29, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending July 29, 2012.  These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2011.  The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in our most recent Form 10-K.

Recent accounting pronouncements

In June 2011, the Financial Accounting Standards Board ("FASB") issued guidance regarding the presentation of other comprehensive income which requires a reporting entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  This guidance eliminates the option to present the components of other comprehensive income as part of the statement of stockholders' equity.  The guidance is intended to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (our 2013 fiscal year) and should be applied retrospectively.  The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial position, results of operations or cash flows, though it will change our financial statement presentation.

In September 2011, the FASB finalized guidance on testing goodwill for impairment.  The new guidance permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value before applying the two-step goodwill impairment model that is currently in place.  If it is determined through the qualitative assessment that a reporting unit's fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary.  The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment.  This guidance is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011 (our 2013 fiscal year), with early adoption permitted.  The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

XML

Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $)	Apr. 29, 2012	Jul. 31, 2011
Stockholder's equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100	100
Common stock, shares issued (in shares)	1	1
Common stock, shares outstanding (in shares)	1	1

XML

Document and Entity Information	9 Months Ended
	Apr. 29, 2012	Jun. 11, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	LRI HOLDINGS, INC.
Entity Central Index Key	0001383875
Current Fiscal Year End Date	--07-29
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 29, 2012

XML

Condensed Consolidated Statements of Operations (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		7 Months Ended	9 Months Ended	2 Months Ended
	Apr. 29, 2012 Successor [Member]	May 01, 2011 Successor [Member]	May 01, 2011 Successor [Member]	Apr. 29, 2012 Successor [Member]	Oct. 03, 2010 Predecessor [Member]
Revenues:
Net sales	$ 169,585	$ 158,876	$ 346,182	$ 470,234	$ 93,762
Franchise fees and royalties	584	575	1,245	1,621	348
Total revenues	170,169	159,451	347,427	471,855	94,110
Restaurant operating costs:
Cost of goods sold	54,792	52,078	112,967	154,127	29,172
Labor and other related expenses	48,187	45,484	100,989	137,777	28,578
Occupancy costs	12,281	11,354	25,333	36,210	8,046
Other restaurant operating expenses	25,473	22,386	49,374	72,748	15,478
Depreciation and amortization	5,165	4,508	10,019	14,954	3,112
Pre-opening expenses	1,020	1,059	2,442	4,088	783
General and administrative	6,193	6,399	24,384	18,584	14,440
Impairment and store closing charges	0	0	0	108	0
Total costs and expenses	153,111	143,268	325,508	438,596	99,609
Operating income (loss)	17,058	16,183	21,919	33,259	(5,499)
Interest expense, net	10,124	10,124	23,586	29,614	3,147
Other income, net	0	0	(15)	0	(182)
Income (loss) before income taxes	6,934	6,059	(1,652)	3,645	(8,464)
Income tax expense (benefit)	(1,363)	2,195	(558)	(1,923)	(8,240)
Net income (loss)	8,297	3,864	(1,094)	5,568	(224)
Undeclared preferred dividend	0	0	0	0	(2,270)
Net income (loss) attributable to common stockholders	$ 8,297	$ 3,864	$ (1,094)	$ 5,568	$ (2,494)

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Share-Based Awards and Compensation Plans

9 Months Ended

Apr. 29, 2012

Share-Based Awards and Compensation Plans [Abstract]

Share-Based Awards and Compensation Plans

6. Share-Based Awards and Compensation Plans

Successor plan

On January 18, 2011, RHI adopted the Roadhouse Holding Inc. Stock Incentive Plan (the "2011 Plan"), pursuant to which options to purchase approximately 13%, or 345,000 shares, of the common stock of RHI on a fully diluted basis are available for grant to our officers and key employees.  Options granted under the 2011 Plan expire on the ten-year anniversary of the grant date.

A portion of the stock options under the 2011 Plan are subject to time-based vesting and a portion are performance-based. Time-based options granted on March 1, 2011 vest ratably on each of October 4, 2011, 2012, 2013 and 2014. Future grants of time-based options will vest ratably on the first four anniversaries of the date of grant.  Compensation expense for these options is recognized over the requisite service period for the award.  Upon a change in control of RHI, all time-based options will fully vest.  Performance-based stock options do not become exercisable unless and until the Kelso Affiliates, in connection with certain change in control transactions (i) receive proceeds equal to or in excess of 1.75 times their initial investment and (ii) achieve an internal rate of return, or IRR, on their initial investment, compounded annually, of at least 10%.  The Company recognizes compensation expense for performance-based stock options when the achievement of the performance goals is deemed to be probable.

The following table summarizes stock option activity under the 2011 Plan for the thirty-nine week period ended April 29, 2012:

	Time-based options					Performance-based options
	Number			Weighted average exercise price		Number			Weighted average exercise price
Options outstanding as of July 31, 2011		109,855		$	100.00		219,735		$	100.00
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited		(15,333	)		100.00		(30,667	)		100.00
Options outstanding as of April 29, 2012		94,522		$	100.00		189,068		$	100.00
As of April 29, 2012
Options vested		23,631					-
Options exercisable		23,631					-

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Commitments and Contingencies

9 Months Ended

Apr. 29, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Litigation

Based upon information currently available, the Company is not a party to any litigation that management believes could have a material effect on the Company's business or the Company's condensed consolidated financial statements.  The Company establishes reserves for litigation and similar matters when those matters present loss contingencies that we determine to be both probable and reasonably estimable in accordance with ASC 450, "Contingencies." In the opinion of management, based on current knowledge and in part upon the advice of legal counsel, all matters are believed to be adequately covered by insurance, or, if not covered, the possibility of losses from such matters are believed to be remote or such matters are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company if disposed of unfavorably.

Guarantees

LRI Holdings has fully and unconditionally guaranteed both the Senior Secured Revolving Credit Facility and the Senior Secured Notes.

Indemnifications

The Company is party to certain indemnifications to third parties in the ordinary course of business. The probability of incurring an actual liability under such indemnifications is sufficiently remote that no liability has been recorded.

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Restructuring

9 Months Ended

Apr. 29, 2012

Restructuring [Abstract]

Restructuring [Text Block]

9. Restructuring

In connection with a restructuring of the Company's marketing group and certain positions within the operations group, the Company incurred a one-time charge of $404 related to termination benefits for two former employees, repurchased shares of common stock of RHI held by the former employees for $1,450, and recorded an adjustment of $175 for the forfeiture of options to purchase stock.  The expense associated with this restructuring was included in general and administrative expenses.

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Condensed Consolidating Financial Information

9 Months Ended

Apr. 29, 2012

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

7. Condensed Consolidating Financial Information

The Senior Secured Notes (described in Note 3) were issued by Logan's Roadhouse, Inc. and guaranteed on a senior basis by its parent company, LRI Holdings, and each of its subsidiaries.  The guarantees are full and unconditional and joint and several.  The Company is providing condensed consolidating financial statements pursuant to SEC Regulation S-X Rule 3-10 "Financial Statements of Guarantors and Issuers of GuaranteedSecurities Registered or Being Registered."

The condensed consolidating financial information of Logan's Roadhouse, Inc. and the guarantors is presented below:

Condensed Consolidated Balance Sheets

April 29, 2012:	LRI Holdings, Inc.		Issuer and subsidiary guarantors		Consolidating adjustments			Consolidated
ASSETS
Current assets	$	-	$	38,546	$	-		$	38,546
Property and equipment, net		-		242,697		-			242,697
Other assets		1,839		135,359		(118,218	)		18,980
Investment in subsidiary		330,147		-		(330,147	)		-
Goodwill		-		332,604		-			332,604
Tradename		-		71,694		-			71,694
Other intangible assets, net		-		21,875		-			21,875
Total assets	$	331,986	$	842,775	$	(448,365	)	$	726,396
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities	$	-	$	58,826	$	-		$	58,826
Long-term debt		-		355,000		-			355,000
Deferred income taxes		-		37,556		-			37,556
Other long-term obligations		118,218		38,866		(118,218	)		38,866
Stockholder's equity		213,768		352,527		(330,147	)		236,148
Total liabilities and stockholder's equity	$	331,986	$	842,775	$	(448,365	)	$	726,396
July 31, 2011:	LRI Holdings, Inc.		Issuer and subsidiary guarantors		Consolidating adjustments			Consolidated
ASSETS
Current assets	$	5,895	$	43,800	$	-		$	49,695
Property and equipment, net		-		232,940		-			232,940
Other assets		-		136,179		(116,687	)		19,492
Investment in subsidiary		379,118		-		(379,118	)		-
Goodwill		-		331,788		-			331,788
Tradename		-		71,694		-			71,694
Other intangible assets, net		-		23,215		-			23,215
Total assets	$	385,013	$	839,616	$	(495,805	)	$	728,824
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities	$	-	$	70,690	$	-		$	70,690
Long-term debt		-		355,000		-			355,000
Deferred income taxes		37,746		-		-			37,746
Other long-term obligations		116,687		34,808		(116,687	)		34,808
Stockholder's equity		230,580		379,118		(379,118	)		230,580
Total liabilities and stockholder's equity	$	385,013	$	839,616	$	(495,805	)	$	728,824

Condensed Consolidated Statements of Operations

Thirteen weeks ended April 29, 2012 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	170,169		$	-	$	170,169
Total costs and expenses		8			153,103			-		153,111
Operating (loss) income		(8	)		17,066			-		17,058
Interest expense, net and other income, net		512			9,612			-		10,124
(Loss) income before income taxes		(520	)		7,454			-		6,934
Income tax expense (benefit)		359			(722	)		-		(1,363	)
Net (loss) income		(879	)		9,176			-		8,297
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(879	)	$	9,176		$	-	$	8,297
Thirteen weeks ended May 1, 2011 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	159,451		$	-	$	159,451
Total costs and expenses		344			142,924			-		143,268
Operating (loss) income		(344	)		16,527			-		16,183
Interest expense, net and other income, net		503			9,621			-		10,124
(Loss) income before income taxes		(847	)		6,906			-		6,059
Income tax (benefit) expense		(67	)		2,262			-		2,195
Net (loss) income		(780	)		4,644			-		3,864
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(780	)	$	4,644		$	-	$	3,864
Thirty-nine weeks ended April 29, 2012 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	471,855		$	-	$	471,855
Total costs and expenses		59			438,537			-		438,596
Operating (loss) income		(59	)		33,318			-		33,259
Interest expense, net and other income, net		1,529			28,085			-		29,614
(Loss) income before income taxes		(1,588	)		5,233			-		3,645
Income tax expense (benefit)		388			(2,311	)		-		(1,923	)
Net (loss) income		(976	)		544			-		5,568
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(976	)	$	544		$	-	$	5,568
Period from October 4, 2010 to May 1, 2011 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	347,427		$	-	$	347,427
Total costs and expenses		11,097			314,411			-		325,508
Operating (loss) income		(11,097	)		33,016			-		21,919
Interest expense, net and other income, net		1,155			22,416			-		23,571
(Loss) income before income taxes		(12,252	)		10,600			-		(1,652	)
Income tax (benefit) expense		(4,139	)		3,581			-		(558	)
Net (loss) income		(8,113	)		7,019			-		(1,094	)
Undeclared preferred dividend		-			-			-		-
Net (loss) income attributable to common stockholders	$	(8,113	)	$	7,019		$	-	$	(1,094	)
Period from August 2, 2010 to October 3, 2010 (Predecessor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Total revenues	$	-		$	94,110		$	-	$	94,110
Total costs and expenses		10,305			89,304			-		99,609
Operating (loss) income		(10,305	)		4,806			-		(5,499	)
Interest expense, net and other income, net		-			2,965			-		2,965
(Loss) income before income taxes		(10,305	)		1,841			-		(8,464	)
Income tax (benefit) expense		(10,032	)		1,792			-		(8,240	)
Net (loss) income		(273	)		49			-		(224	)
Undeclared preferred dividend		(2,270	)		-			-		(2,270	)
Net (loss) income attributable to common stockholders	$	(2,543	)	$	49		$	-	$	(2,494	)

Condensed Consolidated Statements of Cash Flows

Thirty-nine weeks ended April 29, 2012 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash (used in) provided by operating activities	$	(447	)	$	12,547		$	-	$	12,100
Net cash provided by (used in) investing activities		447			(24,893	)		-		(24,446	)
Net cash provided by financing activities		-			(1,450	)		-		(1,450	)
Decrease in cash and cash equivalents		-			(13,796	)		-		(13,796	)
Cash and cash equivalents, beginning of period		-			19,103			-		19,103
Cash and cash equivalents, end of period	$	-		$	5,307		$	-	$	5,307
Period from October 4, 2010 to May 1, 2011 (Successor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash provided by (used in) operating activities	$	107,237		$	(114,851	)	$	-	$	(7,614	)
Net cash (used in) provided by investing activities		(337,237	)		6,919			-		(330,318	)
Net cash provided by financing activities		230,000			115,604			-		345,604
Increase in cash and cash equivalents		-			7,672			-		7,672
Cash and cash equivalents, beginning of period		-			-			-		-
Cash and cash equivalents, end of period	$	-		$	7,672		$	-	$	7,672
Period from August 2, 2010 to October 3, 2010 (Predecessor)	LRI Holdings, Inc.			Issuer and subsidiary guarantors			Consolidating adjustments		Consolidated
Net cash provided by operating activities	$	-		$	2,664		$	-	$	2,664
Net cash used in investing activities		-			(5,380	)		-		(5,380	)
Net cash provided by financing activities		-			-			-		-
Decrease in cash and cash equivalents		-			(2,716	)		-		(2,716	)
Cash and cash equivalents, beginning of period		-			52,211			-		52,211
Cash and cash equivalents, end of period	$	-		$	49,495		$	-	$	49,495

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Supplemental Cash Flow Information

9 Months Ended

Apr. 29, 2012

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

8. Supplemental Cash Flow Information

The following table presents supplemental cash flow information:

	Thirty-nine weeks ended April 29, 2012 (Successor)		Period from October 4, 2010 to May 1, 2011 (Successor)		Period from August 2, 2010 to October 3, 2010 (Predecessor)
Cash paid for:
Interest, excluding amounts capitalized	$	38,011	$	20,132	$	3,493
Income taxes		521		71		22

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Condensed Consolidated Statements of Stockholders' Equity (unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Common stock [Member] Predecessor [Member]	Common stock [Member] Successor [Member]	Additional paid-in capital [Member] Predecessor [Member]	Additional paid-in capital [Member] Successor [Member]	Retained earnings [Member] Predecessor [Member]	Retained earnings [Member] Successor [Member]	Total	Predecessor [Member]	Successor [Member]	Preferred stock (Temporary) [Member] Predecessor [Member]	Preferred stock (Temporary) [Member] Successor [Member]
Balances at Aug. 01, 2010	$ 10		$ 12,831		$ 20,772		$ 33,613			$ 60,170
Balances (in shares) at Aug. 01, 2010	992,427									64,508
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	0		0		(224)			(224)		0
Balances at Oct. 03, 2010	10	0	12,831	0	20,548	0		33,389	0	60,170	0
Balances (in shares) at Oct. 03, 2010	992,427	0								64,508	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)		0		0		(1,094)			(1,094)		0
Capital contribution		0		230,000		0	230,000				0
Capital contribution (in shares)		1									0
Balances at May. 01, 2011		0		230,000		(1,094)	228,906				0
Balances (in shares) at May. 01, 2011		1									0
Balances at Jul. 31, 2011		0		230,000		580	230,580				0
Balances (in shares) at Jul. 31, 2011		1									0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)		0		0		5,568			5,568		0
Balances at Apr. 29, 2012		$ 0		$ 230,000		$ 6,148	$ 236,148				$ 0
Balances (in shares) at Apr. 29, 2012		1									0

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Fair Value Measurements

9 Months Ended

Apr. 29, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

4. Fair Value Measurements

Fair value measurements are made under a three-tier fair value hierarchy, which prioritizes the inputs used in measuring the fair value:

Level 1:  Observable inputs such as quoted prices in active markets;

Level 2:  Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3:  Unobservable inputs in which there is little or no market data, requiring the reporting entity to develop its own assumptions.

There were no transfers among levels within the fair value hierarchy during the thirty-nine week Successor period ended April 29, 2012, the thirty week Successor period from October 4, 2010 to May 1, 2011 or the nine week Predecessor period from August 2, 2010 to October 3, 2010.

The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis as of April 29, 2012 and July 31, 2011:

		Level		April 29, 2012		July 31, 2011
Deferred compensation plan assets(1)			1	$	1,868	$	1,574
(1)	Represents plan assets established under a Rabbi Trust for the Company's non-qualified savings plan.  The assets of the Rabbi Trust are invested in mutual funds and are reported at fair value based on active market quotes.

Certain financial assets and liabilities are recorded at their carrying amounts which approximate fair value, based on their short-term nature or variable interest rate.  These financial assets and liabilities include cash and cash equivalents, accounts receivable and accounts payable.

At April 29, 2012 and July 31, 2011, the Company did not have any significant nonfinancial assets or liabilities that required a fair value measurement on a recurring basis.