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Executives

Tilman J. Fertitta - Chairman, President and Chief Executive Officer

Rick H. Liem - Chief Financial Officer, Executive Vice President and Controller

Analysts

Michael Gallo - CL King & Associates

Brian Hunt - Wachovia

Carla Casella - JPMorgan

Jason Esplin - ING Investment Management

Reza Vahabzadeh - Barclays Capital

Paul Westra - Cowen Securities Corporation

Landry's Restaurants, Inc. (LNY) Q4 2008 Earnings Call March 16, 2009 11:00 AM ET

Operator

Good day and welcome to the Landry's Restaurants Incorporated Fourth Quarter 2008 Earnings Release Conference Call.

As a reminder, this call is being recorded. This conference call contains certain forward-looking statements within the meanings of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended, which are intended to be covered by Safe Harbors created thereby.

Stockholders are cautioned that all forward-looking statements are based largely on the company's expectations and involve risks and uncertainties some of which cannot be predicted or are beyond the company's control. A statement containing a projection of revenues, income, earnings per share, same store sales, capital expenditures, or future economic performances are just a few examples of forward-looking statements.

Due to a number of factors affecting consumers, including rising unemployment, home foreclosures, a slowdown in the global economy, contracting credit markets, and reduced consumer spending, the near term outlook for the restaurant, hospitality, entertainment and gaming industries is uncertain and could cause results to differ materially from those projected in the forward-looking statements. Other factors that can cause results to materially differ include ineffective marketing or promotion, competition, weather, store management turnover or continued negative same store sales.

The company may not update or revise any forward-looking statement made during this conference call.

At this time, I would like to turn the call over to Chairman of the Board, President and Chief Executive Officer, Mr. Tilman J. Fertitta. Please go ahead.

Tilman J. Fertitta

Thank you all very much.

We apologize for the delay. The company doing the conference call had a few problems, so thank you all for bearing with us.

I'd like to welcome everybody to Landry's fourth quarter conference call. On February, the 13th, we completed our refinancing transaction on our diversified portfolio of assets. It was a tough market and tough credit environment, and we're very happy to have gotten this done.

This morning we've reported our fourth quarter 2008 results from continuing operations at $0.30 per share on revenues of $253 million versus a loss of $0.10 in the prior year on revenues of $277 million.

The current quarter includes a gain from insurance proceeds associated with Hurricane Ike that effectively offsets the impairment loss in the third quarter. Non-recurring expenses associated with terminating the merger agreement were $0.20 per share, and the non-cash loss on our interest rates swaps for the quarter was $0.52 per share versus $0.06 per share in '07.

For 2008, results from continuing operations were $0.87 per share versus $1.43 per share in 2007 and relatively flat revenues. The non-cash loss on interest swaps for 2008 was $0.60 per share versus $0.15 per share in 2007.

In addition, our interest expense was higher in 2008 by about $0.65 per share primarily due to higher rate on our bonds and the new tower at the Golden Nugget. Unfortunately though, we will incur even higher interest expense going forward as a result of our new refinancing.

All of our restaurants, amusement rides, and complimentary businesses that were closed due to Hurricane Ike have reopened in Kemah and Galveston in time for spring break and Easter. We just happened to have harder weather though the first weekend here that was extremely, extremely disappointing. We've had beautiful weather in Texas for weeks and weeks, and the day spring break started, it's been cold and wet and windy now for four straight days without stopping raining.

The Kemah and Galveston properties were significant drivers of our overall performance in 2008. It's been a top priority to reopen these units. Our team did a great job of getting them all open in time for the spring. We're currently running the local advertising campaign for the Kemah Boardwalk to let everybody know the fun is back in Kemah.

Same store sales for the fourth quarter were negative 4.7, excluding storm-related impacts. Sales were also soft at our tourist locations including Disney. Texas continues to be our strongest market in the fourth quarter with softness in all other areas of the country. One bright spot during the fourth quarter was strong performance in sales performance in our hotels and our Downtown Aquariums.

For 2008, same store sales were negative 2% excluding storm-related impacts. Total storm-related sales loss for 2008 is estimated at 13.1 million net of business interruption proceeds.

Overall, unit level margins in our restaurant and hospitality group in the fourth quarter of 2008 increased 800 basis points, 0.08 excluding the impact of 4.8 million in business interruptions proceeds, compared to the prior year.

We were able to increase margins on lower sales due to effective food cost controls, oversight of labor scheduling, and restaurant price increases taken earlier. Given the economic situation, we did not increase prices in the fourth quarter this year.

The economy softened dramatically in the fourth quarter and we implemented cost control programs that would not impact the overall guest experience to protect our margins during that quarter. We adjusted fixed labor expenses at all our units, increased oversight of our hourly labor, improved food cost controls and reduced indirect advertising expenses.

These programs are designed for us to remain profitable during this period of sales declines, and just emerge as a stronger company when the economy does turnaround. Our investments in technology to monitor these costs on a daily basis and weekly basis are helping us to operate more efficiently at lower sales volumes.

Strategically, we believe the business is better served to right size the cost structure and maintain our brand as opposed to limited time offers and heavy promotional discounts, and particularly giving our specialty in waterfront locations.

Our cost-saving initiatives have continued to work into '09 even though same store sales were negative in January and February. Our overall restaurant level profit is essentially flat with the prior year, even including the leap day in 2008 through January and February.

In an effort to offset sales declines, we're also working on new menu items, increasing our loyalty program memberships. During the quarter, we worked on menu improvements at Saltgrass that were introduced in February. These include a few items with smaller portion sizes at lower price points, adding successful past promotions to the regular menu and the addition of new appetizers.

At our upscale restaurants, we have increased our efforts to sign up guests to our loyalty programs. Year-over-year, we showed a 12% increase in loyalty sales at Chart House. Even though these results are encouraging, a large percentage of the concept is located in California, where the unemployment rate now is well above 10%, which is clearly impacting our revenues.

We opened our T-Rex restaurant in Disney World, Orlando on October, the 14th. It did exceed our expectations in the fourth quarter. We plan to open up three units this year, a Rainforest Cafe at the Galleria in Houston; a Saltgrass in Conroe, Texas, both of which we expect to open up late in the second quarter or early third, and a Chart House in the new tower at the Golden Nugget in Vegas to open up at the very end of this year.

In response to the current economic conditions, we've taken measures to increase efficiencies and reduce our cost structure across all of our businesses. And as a result of the higher interest costs and the need to refinance again in 2011 and the dramatic economic turmoil, we expect to reduce our unit growth and conserve capital for debt payments.

Golden Nugget revenue in the fourth quarter decreased 14.5% to 56 million from 66 million in the prior year. Revenue decreased due to reduced slot activity, lower occupancy and ADR. EBITDA increased 6.6% to 14.3 million in the fourth quarter from 13.4 million in the prior year. EBITDA margins increased 5% to 25.4% primarily due to lower bonus payments, effective labor controls, reductions in advertising and promotions and other cost controls.

For the full year, revenue decreased 4.8% to 253 million versus 265 million in the prior year. EBITDA decreased 1.8 % to 62 million from 64 million in the prior year.

The construction of the new tower at the Golden Nugget continued during the quarter. We anticipate completing the tower in very late '09. We look forward to continue in the Golden Nugget expansion and focusing on our profitability in our existing restaurants through remainder of '09.

Rick, I'll now turn it over to you to get into more detail.

Rick H. Liem

Thank you, gentlemen.

Revenue from continuing operations decreased to 253.7 million in the fourth quarter of '08 from 277.9 in the comparable period in 2007. The decrease is attributable primarily to -- negative same store sales were about 12 million, a loss from the hurricane net of business interruption of about 7.3 million. The Golden Nugget declined about 9.6 million, about 7.2 million addition from new stores and the rest coming from unit closings.

At the end of the fourth quarter, we finished with 175 units; including 45 Landry's, 42 Saltgrass, 12 Charley's Crabs, 27 Chart Houses, 29 Rainforest Cafes, three T-Rex, which includes the Yak & Yeti in Disney, eight Crab Houses, three Joes, and six specialty division restaurants.

Continuing restaurants costs of sales declined 150 basis points to 25.5% in Q4 '08 from 27% in Q4 '07. If you exclude the impact of business interruption, which we recorded as revenue and no offsetting costs, cost of sales declined 90 basis points. About 60 basis points of this is due to menu-engineering and pricing. Retail cost of sales contributed about 15 basis points. Controls and commodity costs contributed another 15 basis points.

We expect in '09, fresh beef to be down about 6%, fresh poultry to be down about 10%, frozen beef and frozen chicken will both increase about 2 to 3%. Shrimps should be down about 9 to 7. Lobster down 30%, and king crab should up about 20%. Overall, we think commodity cost declines will be net positive for us in 2009.

Labor for continuing operations decreased 110 basis points to 29.5% from 30.6 in '07. Once again, if you exclude business interruption and our labor decreased 40 basis points that is primarily driven by hourly labor. We reduced overtime, we put in an improved labor scheduling program, and we are watching it extremely closely.

We expect hourly wage rates to increase in 2009 as a result of federal as well as state minimum wages going up. We expect to partially offset these increases in state-specific areas with menu prices. Otherwise, we continue to work on driving labor out of the business and being more efficient.

Our management turnover was 17% in 2008 as slightly higher than prior years was driven by an over all reduction in management labor, where we kept the best, and some of the lower performers have exited as we're going to open up fewer stores in future. Unit measure turnover in total was 27%, it is a slight decrease, but overall we've been pretty consistent with low management turnover.

Other restaurant operating expenses decreased 10 basis points to 24.7 in the fourth quarter '08 from 24.8% in 2007. If you exclude business interruption, restaurant operating costs increased 50 basis points. This is a result of higher costs in utilities, rents primarily, because we opened up two new stores, both in Disney; insurance, and this was offset by some lower costs and supplies. Depreciation increased 40 basis points as a percentage of revenue.

Golden Nugget EBITDA for the quarter, 13.9 versus 13.5%. General and administrative expenses increased 140 basis points to 5.7% from 4.3%. That includes 4.7 million in non-recurring costs associated with the merger transaction. Total G&A dollars increased 2.6 million year-over-year. Reopening was 874,000 for the (inaudible) almost all of it was the T-Rex in Orlando. Our interest expense was 19.6 million for the quarter versus $20 million last year. The effective interest rate at the end of the quarter is 8.4%. Overall, we had about $80 million of interest expense in '08 versus $62 million in '07. Effective tax rate for 2008 was 34.9%.

CapEx for the quarter was 32.7 million, which includes 20.6 million for Golden Nugget. Our 2008 total CapEx was 122 million, which included 61 million for the Golden Nugget and $28 million for new restaurants.

Our debt balance at the end of the quarter was $871 million, 423 million at the Golden Nugget, and $448 million at Landry's. Book value at December 31, 2008, was $18.24 per share.

And now we'd be happy to take some questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Our first question comes from the line of Michael Gallo with CL King. Please go ahead.

Michael Gallo - CL King & Associates

Hi, good morning. Question I have is around cost reduction opportunities. You obviously typically run I think a pretty tight shift in terms of costs. And I was wondering if you could put some specificity on how big an opportunity you see there. Is it mostly in G&A and hourly labor or are there some other areas where you see opportunity? And then on the commodity costs side, which commodity have you locked it on for this year? Thank you.

Rick Liem

Let me just say this. We kind of saw this coming, so we attacked cost controls pretty early without totally disrupting the company. Is there more? Sure, there is always more if we go to that next step in the economy. But we would like not to do anything else unless the economy weakens even more so, and sales weaken even more so. But, we went to that next level. The next level is disruptive. And we hope we never have to go there. Is there the ability to go there? Absolutely.

From a cost standpoint, I mean, we're saving millions of dollars in commodities this year. And our new stake contract goes in, in April. Shrimp is as cheap as it's ever been. It's just the way it's worked out that commodity costs have come down at the same time that revenue has come down. And that is tremendously helping in this.

We had great systems here at Landry's for menu linked to our Oracle systems; we were able to really watch labor control, and how many potatoes are being thrown away. And we're just really using all of our tools that we've worked and developed in the last couple of years, three years. And so, we feel comfortable. Our percentage of sales we were losing to the bottom line on a percentage is better than it has ever been by far, because everybody knows that they've got to be better right now. So that's basically where we are.

Tilman Fertitta

We've locked in chicken and beef on the fresh for 2009.

Michael Gallo - CL King & Associates

Okay, great. That's helpful. And then just have you... actually, I will go back in the queue. I've got another follow up to ask. Thank you.

Operator

Thank you. Our next question comes from the line of Brian Hunt with Wachovia. Please go ahead.

Brian Hunt - Wachovia

Good morning, Rick and Tilman.

Tilman Fertitta

Good morning, Ryan.

Brian Hunt - Wachovia

I was wondering if you could talk about what the difference was in between and what you just released on EBITDA on an annualized basis versus what you pre-released on January 26. The range on January 26, I believe, is like 198 to 201.

Rick Liem

I think what we released in January really was my EBITDA for my debt, and so non-recurring costs aren't thrown in there of which we had a substantial amount associated with the transaction, associated with the financing.

Brian Hunt - Wachovia

So the $4.7 million of non-recurring is not added back to that 39 number you just gave us?

Rick Liem

Correct.

Brian Hunt - Wachovia

Okay, that helps. Second, I guess the problems with your conference call continued while you were speaking. You broke up when you talked about pre-opening expense for the Q4. I was wondering if you can give us that again.

Rick Liem

$874,000 of T-Rex, Orlando.

Brian Hunt - Wachovia

And what was it for the year through the opening?

Rick Liem

I think it was 2.2 to 3 something like that.

Brian Hunt - Wachovia

Okay.

Rick Liem

2.26.

Brian Hunt - Wachovia

Thank you. The year-to-date figures from Q3 and adding in Q4 is just released, don't fudge very well or don't match very well with the annual number. I was wondering if you can talk about maybe what you closed or what's in discontinued operations beginning in Q4? Or will there be adjustments to Q1, 2, 3 when you release the comparable figures going forward?

Rick Liem

I don't know if I totally understand you, Brian. I think we certainly do have some discontinued operations. You've got to go back and reset them all. But I don't know exact... maybe after this and we'll go through it.

Brian Hunt - Wachovia

Yeah, all right that sounds great. And could you talk about maybe what your plans for CapEx are for the year? And I'll get back in the queue.

Rick Liem

I think it's about 115 million for '09, which is pretty much finishing the tower of those three restaurants that we talked about for Landry's.

Brian Hunt - Wachovia

All right, thank you.

Operator

Thank you. Our next question comes from the line of Ken Bann with Jefferies & Company. Please go ahead.

Kenn Bann – Jefferies & Company

Good morning. Maybe if you could just give us what your calculation is for EBITDA for just the restaurant operations for the year and the quarter that'd be helpful.

Rick Liem

From the bank situation, for our credit facilities, our EBITDA for the year was 132.5 restaurant side; and I think it was 30 million for the quarter.

Kenn Bann – Jefferies & Company

And that does not include that additional 4 million plus add back; is that correct?

Rick Liem

Yeah, that's in there; the 132 in there.

Kenn Bann – Jefferies & Company

It is in there, okay. And on the CapEx budget for the restaurant side, could you just go over what you have spent there, and... how much you are spending on the new Rainforest Cafe that's in there?

Rick Liem

It's about $12 million for all the restaurants. Now in the Rain Forest it's about 12 million bucks.

Kenn Bann – Jefferies & Company

12 million in total for all three and how much is the Rainforest for that, 3 million, 4 million

Rick Liem

Couple of million dollars.

Kenn Bann – Jefferies & Company

Okay. And could you talk about I mean there has been just... Disney sales have been somewhat soft lately, and there's laid off some labor. Could you talk about how the Disney restaurants have been doing lately and how the new T-Rex is doing currently?

Rick Liem

The Disney stores are also a little soft. But once again, I don't think that Disney needs to put in tens of thousands of people into their parks, and we only need to put in hundreds into our stores, so some of the impact of all their discounting is driving people to the park, which is positive for our restaurants.

Kenn Bann – Jefferies & Company

And then if you could finally talk a little bit about... you mentioned weak weather at the start of the spring season at Kemah Boardwalk and Galveston. Was this the most important weekend of the spring season for you there or is it possible weather improves, you can make a lot of that back up over the next couple of weekends?

Tilman Fertitta

Number one, January and February we held our own. But March makes the quarter, okay? You're not going to make... you can't ever make it back, okay? When it's gone, it's gone, okay? And we were probably off in sales this weekend in the Houston Galveston area by $1.5 million. I know that's hard to believe for three days, but that's how much impact it had, because that's how much business we would have done more, and we basically had a four day rain, not basically we did.

Rick Liem

Not only it was raining, but it was also in the 40s, the temperature was in the 40s, and it was just... pretty rough.

Tilman Fertitta

And it's still right now sitting in this office, you can't see out 100 yards because of advancements in the fog. So, it's not like people are running to Galveston and Kemah. We are off to a bad March, and March is where you make your money. So, we'll just see how it shapes out. There is two more weeks left in the month and let's just see what happen.

Kenn Bann – Jefferies & Company

Okay. And then finally could you maybe give us a little bit of information about how each different restaurant kind of self is doing? You have sort of indicated that Texas is good, so I presume Saltgrass is good, and Chart House is down. But how's the Landry's doing?

Tilman Fertitta

I would say overall they're all a little soft. I mean that's kind of the market out there. We have restaurants in all your markets around the country and it's soft out there. There is not one that's doing tremendously worse than the others, but to say it if any, it's Chart House just because of the abundance of California locations. But and I know it is just soft out there, would you say, Rick?

Rick Liem

I agree, it's pretty consistent. I mean Florida is soft, California is soft, and then Texas is less soft.

Kenn Bann – Jefferies & Company

Okay. All right, thank you very much.

Operator

Thank you. Our next question comes from the line of Carla Casella with JPMorgan. Please go ahead.

Carla Casella - JPMorgan

Hi, my question is on the food costs. You mentioned that you had locked in chicken and beef through '09. Is that locked into your hedging or do you have contracts with your suppliers that lock in prices?

Tilman Fertitta

Yes, we just contractually purchased our usage for those two products, so it's not hedges, it is just a purchase.

Carla Casella - JPMorgan

Okay. So, you have suppliers that will still go out that find pricing?

Tilman Fertitta

Yes.

Carla Casella - JPMorgan

Do they have any kind of cost plus escalators in them?

Tilman Fertitta

No.

Carla Casella - JPMorgan

No? Okay, great. Thank you.

Operator

Thank you. Our next question comes from the line of Jason Esplin with ING Investment Management. Please go ahead.

Jason Esplin - ING Investment Management

Hey guys, couple of questions on Golden Nuggets specifically; did you say what the total CapEx spend to date on the hotel tower is at that Golden Nugget?

Rick Liem

Probably as of right now, 60 plus million.

Jason Esplin - ING Investment Management

And that's through today or that's through 12/31?

Rick Liem

Through end of February.

Jason Esplin - ING Investment Management

Through the end of February? Okay. And then what is the cash balance at the Golden Nugget and then how much of the revolver is drawn?

Rick Liem

I think the revolver has nothing on it.

Jason Esplin - ING Investment Management

Okay.

Rick Liem

What was the next question?

Jason Esplin - ING Investment Management

The cash balance?

Rick Liem

Cash balance is probably about $15 million, something like that.

Jason Esplin - ING Investment Management

Okay. And then the last piece of that is how much of the delayed draw term loan is still available?

Rick Liem

Pardon me?

Jason Esplin - ING Investment Management

How much of the delayed draw term loan is still available at the Golden Nugget?

Rick Liem

20 million.

Jason Esplin - ING Investment Management

20 million. Okay, so...

Rick Liem

I was wrong, I think about 28 million in cash.

Jason Esplin - ING Investment Management

Okay. And does that include, because I think you would have had taken down some of the delayed draw term loan? I think you were 40 million last quarter. And you were saying you had 20 left. So you took down 60?

Rick Liem

Right.

Jason Esplin - ING Investment Management

Is that 60 included in kind of the cash balance or has that money already been spent into the budget?

Rick Liem

Probably it's already been spent, but what hasn't been spent is in cash.

Jason Esplin - ING Investment Management

So, it's reflected in the 15?

Rick Liem

It's 28 cash.

Jason Esplin - ING Investment Management

28, I'm sorry; got you. Okay. That's all I've got. Thanks.

Operator

Thank you. Our next question comes from the line Reza Vahabzadeh with Barclays Capital. Please go ahead.

Reza Vahabzadeh - Barclays Capital

Good morning.

Tilman Fertitta

Good morning.

Reza Vahabzadeh - Barclays Capital

Just on the same store sales front, I know you've commented that the first quarter has been challenging. But, do you have any more commentary on how same store sales in the first quarter would compare with what you've posted in the fourth quarter?

Rick Liem

Again, March is going to be the driving month, because it's from a waiting perspective, it's so much bigger than January and February. And it's difficult to project, because the weather's so important to us in our coastal locations here in Texas. But I think January is negative 4.5. February is probably higher single digits. And we just don't know what March is going to be.

Reza Vahabzadeh - Barclays Capital

I see. Okay. But so based on your comments it sounds like your first quarter is tracking slightly behind the fourth quarter, just so far.

Rick Liem

I'd agree with it.

Reza Vahabzadeh - Barclays Capital

Okay. And as far as cash taxes on a go-forward basis, Rick, what's a good number for 2009?

Rick Liem

I think you could probably use 15%.

Reza Vahabzadeh - Barclays Capital

15%, okay. And then, you talked about the food costs and a number of items being down significantly. For 2009 in total, I mean, what's a good food cost inflation number or deflation number that one should be kind of using for you guys?

Rick Liem

I think you could probably do maybe flattish to 25, 50 basis points positive all in.

Reza Vahabzadeh - Barclays Capital

You mean 25 basis points lower...

Rick Liem

Yes.

Reza Vahabzadeh - Barclays Capital

...as a percentage of revenues. Got it, okay. And the after tax, I am sorry, the before-tax insurance proceeds was what, 70 million bucks?

Rick Liem

Before-tax insurance proceeds, no, I think we probably ended up all in the $30 million range in total insurance proceeds.

Reza Vahabzadeh - Barclays Capital

No, just for the fourth quarter.

Rick Liem

Yeah, probably 17 million.

Reza Vahabzadeh - Barclays Capital

Okay. Thank you much.

Operator

Thank you. Our next question comes from the line of Paul Westra with Cowen and Company. Please go ahead.

Paul Westra - Cowen Securities Corporation

Great, thanks. Good afternoon.

Tilman Fertitta

Hey, Paul. How are you doing?

Paul Westra - Cowen Securities Corporation

Doing pretty well. Just curious about the look out for CapEx after the 115 million spent this year. What would be a normalized I guess, maintenance CapEx number for 2010 and beyond assuming no new contraction.

Rick Liem

22 million bucks.

Paul Westra - Cowen Securities Corporation

Okay. And is it safe to assume outlook for new units for 2010 beyond are going to be near zero?

Rick Liem

Right.

Tilman Fertitta

Unless just an unbelievable opportunity comes up, which as kind of the Saltgrass in Conroe, something that's just really special that we got for nothing or we just kind of fall into it. We are not pursuing anything.

Paul Westra - Cowen Securities Corporation

Right. Okay, that makes sense. And then one more question on the sort of modeling on SG&A; it seems like you've got that down at least in the fourth quarter here to about a $10 million quarter run rate. Is that a good number to think about as a base line?

Rick Liem

We may not probably go low 40s for the year, but that's with stock options.

Paul Westra - Cowen Securities Corporation

So low 40s all in with it?

Rick Liem

Yeah, right.

Paul Westra - Cowen Securities Corporation

Okay. And then more of a general question on the promotional activity side, it sounds like you cut back a little bit on the Golden Nugget. Can you talk a little bit about your '09 budget, year-over-year, up or down, maybe as a percent of sales? And then what in particular are you doing, clearly there is opportunity on the restaurant side with the lower commodity costs for some of the faster and trim side. I was wondering what you're going to do on the restaurant side and of course also on the Golden Nugget part.

Operator

Thank you. Our next question comes from...

Rick Liem

One second, one second. So I would tell you that, Paul, what we really did is cut back on some of the high dollar direct mailers at the Nugget, and we've really moved more into the email process from a tapping into our customer base, because it just... the returns on those big direct mailers are expensive, and we won't get any big returns on those. The email blasting, less people know what we are doing, the people have generally come for the Nuggets.

I think on the restaurant side, we're really going to be focused on this loyalty process. And again, it tends to be, once you build up that database, you know who they are, you can touch them at a much lower cost than going out to a generic advertising. And then we've also cut back on some of our indirect marketing, where you just torn the brand out there in sports venues and what have you. So, that's kind of where we've pulled back, and then I think we'll continue to respond to the market as it progresses.

Paul Westra - Cowen Securities Corporation

On a dollar percentage basis, would you spend...

Rick Liem

Get above 1.1% in '08, and I think that's probably a decent number for '09.

Paul Westra - Cowen Securities Corporation

Okay. Thanks.

Operator

Our next question comes from the line from Michael Gallo. Please go ahead.

Michael Gallo - CL King & Associates

I just had a follow-up question for Tilman. Tilman, the stake in McCormick's; is that just a personal investment or should we read into any more than that? Thank you.

Tilman Fertitta

It's just a personal investment just like Eba stock (ph).

Michael Gallo - CL King & Associates

Thank you.

Operator

Thank you. And at this time, we show no further questions. I'd now like to turn the conference back over for any closing remarks. Please go ahead.

Tilman Fertitta

Thank you all very much. Once again, we can answer offline; feel free to call us. You all have a good afternoon. Thank you.

Operator

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation and for using ACT Teleconference. You may now disconnect.

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