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 SEPTEMBER 30, 2006

Commission file number 333-114335

GOLDEN NUGGET, INC.

(Exact name of registrant as specified in its charter)

Nevada	56-2370836
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
129 East Fremont Street Las Vegas, Nevada	89101
(Address of principal executive offices)	(Zip Code)

(702) 385-7111

(Registrant’s telephone number, including area code)

Registrant is a wholly owned subsidiary of Landry’s Restaurant’s, Inc. Registrant meets the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and is filing this Form 10-Q with the reduced disclosure format authorized by General Instruction H.

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

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

Large Accelerated Filer  ¨    Accelerated Filer  ¨    Non-accelerated Filer  x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, no par value, 100 outstanding shares as of November 6, 2006.

GOLDEN NUGGET, INC.

TABLE OF CONTENTS

		Page Number
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005	3
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2006 and 2005	4
	Unaudited Condensed Consolidated Statement of Stockholder’s Equity	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and 2005	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 4.	Disclosure Controls and Procedures	27
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		29

1

GOLDEN NUGGET, INC.

PART 1. FINANCIAL INFORMATION

ITEM 1. Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However in our opinion, all adjustments (consisting only of normal recurring entries) necessary for a fair presentation of our results of operations, financial position and changes therein for the periods presented have been included.

The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and related notes to financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. Operating results for the three and nine months ended September 30, 2006 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending December 31, 2006.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. Forward-looking statements may include the words “may,” “will,” “plans,” “believes,” “estimates,” “expects,” “intends” and other similar expressions. Our forward-looking statements are subject to risks and uncertainty, including, without limitation, our ability to continue our expansion strategy, our ability to make projected capital expenditures, as well as general market conditions, competition, and pricing. Forward-looking statements include statements regarding:

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

• future capital expenditures, including the amount and nature thereof;

• business strategy and measures to implement such strategy;

• competitive strengths;

• goals;

• expansion and growth of our business and operations;

• future commodity prices;

• availability of products, materials and employees;

• consumer perceptions of food safety;

• changes in local, regional and national economic conditions;

• the effectiveness of our marketing efforts;

• changing demographics surrounding our hotels and casinos;

• the effect of changes in tax laws;

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

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

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

• same store sales;

• earnings guidance;

• the seasonality of our business;

• weather and acts of God;

• food, labor, fuel and utilities costs;

• plans; and

• references to future success.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.

2

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	September 30, 2006		December 31, 2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	20,045	$	22,534
Accounts receivable, net		3,862		4,946
Inventories		3,814		3,260
Prepaid expenses and other		6,660		5,125
Total current assets		34,381		35,865
PROPERTY AND EQUIPMENT, net		339,490		321,744
INVESTMENT IN JOINT VENTURE		5,384		5,424
DEPOSITS AND OTHER ASSETS, net		35,350		35,576
Total assets	$	414,605	$	398,609
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	7,316	$	13,858
Accrued liabilities		40,450		29,268
Current portion of notes payable and other obligations		142		132
Amounts due affiliates		10,550		6,193
Total current liabilities		58,458		49,451
OTHER LONG-TERM LIABILITIES		4,031		1,496
NOTES PAYABLE, NET OF CURRENT PORTION		174,565		181,223
Total liabilities		237,054		232,170
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER’S EQUITY:
Common stock (no par value, 10,000 shares authorized, 100 shares issued and outstanding)		—		—
Paid-in capital in excess of par value		163,000		163,000
Retained earnings (deficit)		14,551		3,439
Total stockholder’s equity		177,551		166,439
Total liabilities and stockholder’s equity	$	414,605	$	398,609

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

3

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

	Successor Company									Predecessor Company
	Three Months Ended September 30, 2006			Nine Months Ended September 30, 2006			September 27 - September 30, 2005			July 1 - September 26, 2005			January 1 - September 26, 2005
REVENUES
Casino	$	33,771		$	111,229		$	1,825		$	36,618		$	121,505
Rooms		13,013			42,767			601			12,307			41,139
Food and beverage		9,013			29,585			597			12,809			41,759
Other		2,424			7,117			95			2,474			8,190
Gross revenues		58,221			190,698			3,118			64,208			212,593
Promotional allowances		(6,780	)		(20,460	)		(411	)		(8,146	)		(25,812	)
Net revenues		51,441			170,238			2,707			56,062			186,781
COST AND EXPENSES
Casino		19,422			59,705			1,057			22,392			72,589
Rooms		4,611			14,076			235			5,465			16,766
Food and beverage		5,513			18,074			352			8,571			27,030
Other		1,716			5,228			92			2,141			6,863
General and administrative		12,160			36,339			471			14,061			42,974
Depreciation and amortization		3,014			8,713			202			4,076			12,972
Total cost and expense		46,436			142,135			2,409			56,706			179,194
Operating income (loss)		5,005			28,103			298			(644	)		7,587
OTHER INCOME (EXPENSE):
Equity in loss of joint venture		(287	)		(744	)		(14	)		(312	)		(826	)
Interest expense, net		(3,502	)		(10,459	)		(169	)		(4,207	)		(13,279	)
Gain (loss) on disposal of fixed assets		(6	)		(6	)		—			11			504
Total other income (expense)		(3,795	)		(11,209	)		(183	)		(4,508	)		(13,601	)
Income (loss) before income taxes		1,210			16,894			115			(5,152	)		(6,014	)
Provision for income taxes		351			5,782			37			—			—
NET INCOME (LOSS)	$	859		$	11,112		$	78		$	(5,152	)	$	(6,014	)

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

4

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY

(Dollars in thousands except share amounts)

	Common Stock			Additional Paid in Capital		Retained Earnings		Total
	Shares	Amount
Balance, December 31, 2006	100	$	—	$	163,000	$	3,439	$	166,439
Net income	—		—		—		11,112		11,112
Balance, September 30, 2006	100	$	—	$	163,000	$	14,551	$	177,551

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

5

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Successor Company						Predecessor Company
	Nine months ended September 30, 2006			September 27, 2005 - September 30, 2005			January 1, 2005- September 26, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	11,112		$	78		$	(6,014	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities -
Depreciation and amortization		8,713			202			12,972
(Gain) loss on sale of assets		6			—			(504	)
Equity in loss of joint venture		744			14			826
Changes in operating assets and liabilities		5,625			(2,376	)		8,814
Net cash provided by (used in) operating activities		26,200			(2,082	)		16,094
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions		(16,615	)		(3	)		(6,009	)
Proceeds from sale of property and equipment		16			—			1,157
Contributions to joint venture		(704	)		—			(704	)
Net cash used in investing activities		(17,303	)		(3	)		(5,556	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loan		—			(16,500	)		(2,100	)
Borrowings under revolving credit facility and other debt		33,854			16,500			(7,065	)
Repayments under revolving credit facility and other debt		(39,986	)		—			—
Distributions of equity to principal stockholder		—			—			(979	)
Contributions of equity from principal stockholders		—			—			3,000
Increase (decrease) in amounts due to affiliates		(5,254	)		—			—
Net cash provided by (used in) financing activities		(11,386	)		—			(7,144	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(2,489	)		(2,085	)		3,394
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		22,534			27,513			24,119
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	20,045		$	25,428		$	27,513

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

6

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Golden Nugget, Inc. (Golden Nugget) is a Nevada corporation, which through two wholly owned subsidiaries, owns and operates the Golden Nugget hotel, casino, and entertainment resorts in downtown Las Vegas and Laughlin, Nevada. We are a wholly owned subsidiary of Landry’s Restaurants, Inc. (Landry’s or the Parent). Unless otherwise stated, all dollars are in thousands.

On September 27, 2005, Landry’s Gaming Inc., an unrestricted subsidiary of Landry’s, completed the acquisition of the capital stock of Golden Nugget, including $27.5 million in cash, for $163.0 million in cash plus the assumption of $155.0 million of senior secured notes and $27.0 million of bank debt. (See Note 2 for further discussion.) Subsequent to the acquisition, on December 9, 2005, Golden Nugget, formerly Poster Financial Group, Inc., changed its name. A new basis of accounting resulting from the acquisition has been reflected in our Condensed Consolidated Financial Statements. The results of operations and cash flows have been segregated to present post-acquisition activity as the “Successor Company” and pre-acquisition activity as the “Predecessor Company” in the financial statements and accompanying footnotes.

Principles of Consolidation

The accompanying financial statements include the consolidated accounts of Golden Nugget, Inc. and it’s wholly and majority owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

We hold 17.65% of the voting units and 50.0% of the non-voting units of the Fremont Street Experience (FSE), and account for our investment utilizing the equity method of accounting. FSE is owned by a group of unrelated casino operators in downtown Las Vegas, and operates retail malls, parking garages, entertainment venues and a pedestrian mall that encloses Fremont Street, located adjacent to the Golden Nugget – Las Vegas.

Basis of Presentation

The consolidated financial statements included herein have been prepared without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In the opinion of management, all adjustments, consisting of normal recurring items and estimates necessary for a fair presentation of the results for interim periods, have been made. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the 2005 Form 10-K, filed with the Securities and Exchange Commission.

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

Revenue Recognition and Promotional Allowances

Casino revenue is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs (“casino front money”) and for chips in the customer’s possession (“outstanding chip liability”). Casino revenues are recognized net of certain sales incentives, which are recorded as a reduction of revenue. In addition, accruals for the cost of cash-back points in point-loyalty programs, such as points earned in slot players clubs, are recorded as a reduction of revenue.

Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed. Advance deposits on rooms and advance ticket sales are recorded as accrued liabilities until services are provided to the customer. The retail value of accommodations, food and beverage, and other services furnished to hotel-casino guests without charge is included in gross revenue and then deducted as promotional allowances.

7

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

The estimated retail value of such promotional allowances is included in operating revenues as follows:

	Successor Company						Predecessor Company
	Three Months Ended September 30, 2006		Nine Months Ended September 30, 2006		September 27 - September 30, 2005		July 1 - September 26, 2005		January 1 - September 26, 2005
Rooms	$	2,909	$	8,669	$	164	$	2,857	$	9,007
Food & Beverage		3,680		11,172		236		4,909		15,665
Other		191		619		11		380		1,140
	$	6,780	$	20,460	$	411	$	8,146	$	25,812

The estimated cost of providing such promotional allowances is primarily included in casino expenses as follows:

	Successor Company						Predecessor Company
	Three Months Ended September 30, 2006		Nine Months Ended September 30, 2006		September 27 - September 30, 2005		July 1 - September 26, 2005		January 1 - September 26, 2005
Rooms	$	1,748	$	5,223	$	106	$	1,848	$	5,856
Food & Beverage		3,863		11,800		260		5,404		17,121
Other		220		874		16		628		1,898
	$	5,831	$	17,897	$	382	$	7,880	$	24,875

Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. We are currently assessing the impact of this Interpretation on our financial statements.

In September 2006, the FASB issued Staff Accounting Bulletin No. 108 (SAB 108), Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements. SAB 108 addresses the diversity in practice of quantifying and assessing materiality of financial statement errors. It is effective for fiscal years ending after November 15, 2006 and allows for a one-time transitional cumulative effect adjustment to the opening balance of retained earnings for errors that were not previously deemed material. We are currently evaluating the impact of adoption on our financial statements

In September 2006, the FASB issued SFAS 157 Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 is effective for fiscal years ending after December 15, 2006. We are currently evaluating the impact of adoption on our financial statements.

Segment Reporting

Golden Nugget owns and operates the Golden Nugget hotel, casino, and entertainment resorts which consist of two properties, one in Las Vegas and the other in Laughlin, Nevada. Both properties include gaming, hotel, dining, entertainment, retail and other related amenities. Management believes that these two properties meet all of the criteria for aggregating operating segments with similar economic characteristics, products and services, production processes, class of customers, distribution methods, and regulatory environment as defined in SFAS No. 131. As such the Golden Nugget is comprised of one reportable segment.

Supplemental Cash Flow Information

Cash paid for interest expense was $7.7 million and $9.0 million for the nine months ended September 30, 2006 and the period from January 1, 2005 to September 26, 2005, respectively. No cash was paid for income taxes for the nine months ended
September 30, 2006, while $1.0 million was paid for the period from January 1, 2005 to September 26, 2005.

Non-cash investing and financing activities include $9.6 million in capital expenditures funded by an increase in amounts due to Landry’s.

8

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

2. CHANGE OF CONTROL

On September 27, 2005, Landry’s completed the acquisition of the capital stock of the Golden Nugget, including $27.5 million in cash, for $163.0 million plus the assumption of $155.0 million of senior secured notes due 2011 and $27.0 million in bank debt. The following summarizes the allocation of purchase price based on estimated fair values of the assets acquired and liabilities assumed. These fair values were determined using appraised values and management’s estimates from available information as well as preliminary plans for future operations.

Estimated fair value of assets acquired	$	403,144
Liabilities assumed or created		(240,144	)
Allocated purchase price		163,000
Less: Cash acquired and debt assumed		(27,513	)
Net cash paid	$	135,487

As a result of the acquisition, we have recorded direct acquisition costs included in accrued liabilities for the estimated incremental costs to rationalize activities at the two locations and for estimated contract termination and severance costs. Accounting principles generally accepted in the United States, provide that these direct acquisition expenses, which are not associated with the generation of future revenues and have no future economic benefit, be reflected as assumed liabilities in the allocation of the purchase price. The acquisition liabilities included in the purchase price allocation aggregate approximately $4.9 million of which $3.8 million have been paid as of September 30, 2006.

The following pro forma financial information presents the consolidated results of operations as if the acquisition occurred on January 1, 2005, after including certain pro forma adjustments for interest expense, depreciation and amortization, and income taxes.

	Predecessor
	July 1, 2005 - September 26, 2005			January 1, 2005 - September 26, 2005
Revenue	$	56,062		$	186,781
Net income (loss)	$	(2,068	)	$	82

The pro forma financial information is not necessarily indicative of the combined results of operations had the transaction occurred on January 1, 2005 or the results of operations that may be obtained in the future.

9

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

3. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

	September 30, 2006		December 31, 2005
Salaries and related benefits	$	13,060	$	11,829
Gaming related, excluding taxes		12,133		11,182
Taxes, other than income taxes		1,904		2,061
Interest payable and other		6,552		1,919
Income taxes payable, net		5,753		349
Merger costs		1,048		1,928
Total accrued liabilities	$	40,450	$	29,268

4. LONG-TERM DEBT

Debt Issuance

In December 2003, we issued $155.0 million of 8 3/4% senior secured notes due 2011 to finance a portion of the purchase price of the acquisition of the Golden Nugget from MGM Mirage. All payments are fully, unconditionally and irrevocably guaranteed, jointly and severally, by all our current and future restricted subsidiaries on a senior secured basis. The senior notes and the guarantees are secured by a pledge of capital stock of our restricted subsidiaries and a security interest in substantially all of our and the guarantors’ current and future assets. Such security interest is junior to the security interest granted to the lenders under our credit facility. Interest on the notes is payable in June and December of each year.

The $155.0 million of 8 3/4% senior secured notes due 2011 remained outstanding following Landry’s purchase of the Golden Nugget. As a result of the change of control, we were required to commence an offer to purchase all outstanding senior notes for 101% of the aggregate principal amount plus any accrued and unpaid interest. The offer commenced in accordance with the indenture and expired on November 28, 2005. No notes were tendered under the offer.

Bank Credit Agreement

In January 2004, we entered into a $35.0 million senior secured credit facility consisting of a $20.0 million amortizing term loan and a $15.0 million revolver. The senior secured credit facility was later amended, expanding the revolver to $25.0 million. Under the credit facility, we are subject to various financial covenants, including among other things, limitations on the disposal of assets, mergers and acquisitions, liens or indebtedness, and transactions with affiliates. Our obligations under the credit facility are guaranteed, jointly and severally, by all our subsidiaries. Our obligations under the credit facility are also secured by a pledge of capital stock of our restricted subsidiaries and our interest in FSE, as well as a first priority lien on substantially all of our and the guarantors’ current and future assets.

10

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

At March 31, 2005, we failed to satisfy the financial covenants under the loan and security agreement. On March 31, 2005, we entered into a commitment letter arrangement with our lender, which on May 2, 2005, was formalized into an amendment to the loan and security agreement relating to its credit facility. The amendment modifies financial ratios and covenants to resolve certain defaults (which had been previously waived by the lenders) and to permit the sale of the Golden Nugget — Laughlin. On August 10, 2005, we entered into an amendment to the loan and security agreement relating to the senior secured credit facility. The amendment modified the financial covenants to include the results of operations of the Laughlin properties.

In connection with the September 27, 2005 acquisition by Landry’s, we amended the senior secured credit facility whereby the outstanding balance of the term loan plus accrued interest was repaid; the revolver was increased to $43.0 million; certain financial covenants were adjusted; and the financing spread was reduced to Libor plus 1.75% or base rate plus 0.75% as of June 30, 2006, plus a commitment fee. The financing spread and commitment fee increases or decreases based on a financial leverage ratio as defined in the credit agreement. As of September 30, 2006, the average interest rate on the credit facility was 7.17%, $2.5 million in letters of credit were outstanding with $24.5 million of available borrowing capacity.

Long-term debt is comprised of the following:

	September 30, 2006			December 31, 2005
$43.0 million senior secured credit facility, Libor + 1.75%, due January 2009	$	16,000		$	22,002
$155.0 million senior secured note, 8 3/4% interest only, due 2011		158,565			159,081
Other long-term notes payable with various interest rates, principal and interest		142			272
Total debt		174,707			181,355
Less current portion		(142	)		(132	)
Long-term debt	$	174,565		$	181,223

5. FREMONT STREET EXPERIENCE

We indirectly own 17.65% of the voting units and 50.0% of the non-voting units of the Fremont Street Experience. This investment is accounted for under the equity method of accounting whereby the carrying value of the investment is adjusted by our share of earnings, losses, capital contributions and distributions.

Activity relating to our investment in the Fremont Street Experience is as follows:

Investment balance - December 31, 2005	$	5,424
Contributions		704
Equity in loss of joint venture		(744	)
Investment balance - September 30, 2006	$	5,384

11

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

The investment balance reflects the estimated fair value of our member’s equity in FSE at the acquisition date, including an additional $1.5 million contribution made by the Golden Nugget in 1995 on a voluntary basis, and used by the FSE to acquire additional fixed assets used in its operations.

The additional contribution of $1.5 million represents a non-voting interest which has been treated as a redeemable preferred member contribution of the FSE. The redeemable preferred member contribution is not allocated profit or loss distribution and must be repaid before any distributions are made on voting interests.

The allocation of purchase price based on the fair values of assets acquired and liabilities assumed, arising from the September 27, 2005 acquisition of the Golden Nugget by Landry’s, resulted in a difference of approximately $3.4 million between the carrying value of the company’s investment in FSE and its proportionate share of FSE’s net assets. This difference primarily relates to deferred grant revenue, associated with assets contributed to FSE, which is being recognized as income by FSE over a thirty year period. We are amortizing this difference as a charge to equity in loss of joint venture over the remaining amortization period of the related deferred grant revenue.

Summarized financial information of FSE is as follows:

	September 30, 2006			December 31, 2005
Current assets	$	12,000		$	2,379
Non-current assets		38,560			40,368
Total assets	$	50,560		$	42,747
Current liabilities	$	403		$	4,683
Non-current liabilities		43,757			32,148
Preferred member contribution		3,040			3,040
Members’ capital		3,360			2,876
Total liabilities and members’ capital	$	50,560		$	42,747
	Nine months ended September 30, 2006			Nine months ended September 30, 2005
Total revenues	$	4,694		$	4,539
Costs and expenses		8,044			9,300
Net loss	$	(3,350	)	$	(4,761	)

6. EMPLOYEE BENEFIT PLANS

Our employees, who are members of various unions, are covered by union-sponsored, collective bargained, multi-employer health and welfare and defined benefit pension plans. Under such plans we recorded an expense of $2.9 million and $7.2 million for the three and nine months ended September 30, 2006, respectively, and $0.1 million for the period from September 27, 2005 through September 30, 2005, $7.8 million for the period from January 1, 2005 through September 26, 2005. The plans’ sponsors have not provided sufficient information to permit us to determine our share of unfunded vested benefits, if any. However, based on available information, we do not believe that unfunded amounts attributable to our casino operation are material.

12

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

We are self-insured up to certain limits for most health care benefits for our non-union employees. The liability for claims filed and estimates of claims incurred but not reported is included in the accrued liabilities caption in the accompanying consolidated balance sheets.

We sponsor a retirement savings plan under Section 401(k) of the Internal Revenue Code covering our non-union employees. The plan is available to certain employees with at least three months of service. The plan allows eligible employees to defer, within prescribed limits, up to 20 percent of their income on a pre-tax basis through contributions to the plan. We match, within prescribed limits, a portion of eligible employees’ contributions up to a maximum of 2 percent of an employees’ eligible compensation. We recorded charges for matching contributions of approximately $0.2 million and $0.4 million for the three months and nine months ended September 30, 2006, respectively, and approximately $7,000 for the period from September 27, 2005 through September 30, 2005, $551,000 for the period from January 1, 2005 through September 26, 2005.

7. COMMITMENTS AND CONTINGENCIES

General Litigation

We are subject to legal proceedings and claims that arise in the ordinary course of business. We do not believe that the outcome of any of these matters will have a material adverse effect on our financial position, results of operations or cash flows.

8. TRANSACTIONS WITH AFFILIATES

We have entered into a management agreement with Landry’s whereby our parent provides resources, expertise and negotiating leverage, primarily in the areas of advertising, purchasing, event management and financing. We have also entered into certain lease agreements with Landry’s wherein they operate restaurants in our casino properties and we receive rental payments based on the restaurant performance. Moreover, we routinely enter into certain transactions with affiliated companies of Landry’s. These transactions have been entered into between related parties and are not the result of arm’s-length negotiations. Accordingly, the terms of the transactions may have been more or less favorable to us than might have been obtained from unaffiliated third parties. Landry’s is currently funding several renovation projects which may be transferred, contributed, or leased to the Golden Nugget upon completion. As of September 30, 2006, the in progress construction projects total approximately $43.6 million.

9. SUMMARIZED FINANCIAL INFORMATION

All payments with respect to our 8 ³/4% senior secured Notes due 2011 are guaranteed, jointly and severally, by all of our subsidiaries. The notes are also collateralized by a pledge of capital stock of our subsidiaries and a security interest in substantially all of our and the guarantors’ current and future assets. Such security interest is junior to the security interest granted to the lenders under the Senior Credit Facility.

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

13

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING BALANCE SHEETS

September 30, 2006

	Golden Nugget, Inc.		Guarantor Subsidiaries		Consolidating/ Eliminating Entries			Total
Assets
Current Assets
Cash and cash equivalents	$	—	$	20,045	$	—		$	20,045
Accounts receivable, net		—		3,862		—			3,862
Inventories		—		3,814		—			3,814
Prepaid expenses and other		—		6,660		—			6,660
Total current assets		—		34,381		—			34,381
Property and equipment, net		—		339,490		—			339,490
Investment in and advances to subsidiaries		369,600		18,540		(388,140	)(a)		—
Investment in joint venture		—		5,384		—			5,384
Deposits and other assets, net		456		34,894		—			35,350
Total assets	$	370,056	$	432,689	$	(388,140	)	$	414,605
Liabilities and Stockholder’s Equity
Current Liabilities
Accounts payable	$	—	$	7,316	$	—		$	7,316
Accrued liabilities		7,390		33,060		—			40,450
Current portion of notes payable and other obligations		—		142		—			142
Amounts due to parent		10,550		—		—			10,550
Total current liabilities		17,940		40,518		—			58,458
Other long-term liabilities		—		4,031		—			4,031
Notes payable including amounts pushed down from parent company		174,565		174,565		(174,565	)(b)		174,565
Total liabilities		192,505		219,114		(174,565	)		237,054
Contingencies and Commitments
Stockholder’s equity		177,551		213,575		(213,575	)		177,551
Total liabilities and stockholder’s equity	$	370,056	$	432,689	$	(388,140	)	$	414,605

(a) To eliminate investment in subsidiaries in consolidation.

(b) To eliminate notes payable pushed down to the guarantor subsidiaries.

14

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2005

	Golden Nugget, Inc.		Guarantor Subsidiaries		Consolidating/ Eliminating Entries			Total
Assets
Current Assets
Cash and cash equivalents	$	—	$	22,534	$	—		$	22,534
Accounts receivable, net		—		4,946		—			4,946
Inventories		—		3,260		—			3,260
Prepaid expenses and other		54		5,071		—			5,125
Total current assets		54		35,811		—			35,865
Property and equipment, net		—		321,744		—			321,744
Investment in and advances to subsidiaries		355,163		9,666		(364,829	)(a)		—
Investment in joint venture		—		5,424		—			5,424
Deposits and other assets, net		234		35,342		—			35,576
Total assets	$	355,451	$	407,987	$	(364,829	)	$	398,609
Liabilities and Stockholder’s Equity
Current Liabilities
Accounts payable	$	13	$	13,845	$	—		$	13,858
Accrued liabilities		1,723		27,545		—			29,268
Current portion of notes payable and other obligations		2		132		(2	) (b)		132
Amounts due to parent		6,193		—		—			6,193
Total current liabilities		7,931		41,522		(2	)		49,451
Other long-term liabilities		—		1,496		—			1,496
Notes payable including amounts pushed down from parent company		181,081		181,223		(181,081	)(b)		181,223
Total liabilities		189,012		224,241		(181,083	)		232,170
Contingencies and Commitments
Stockholder’s equity		166,439		183,746		(183,746	)		166,439
Total liabilities and stockholder’s equity	$	355,451	$	407,987	$	(364,829	)	$	398,609

(a) To eliminate investment in subsidiaries in consolidation.

(b) To eliminate notes payable pushed down to the guarantor subsidiaries.

15

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the three months ended September 30, 2006

	Successor Company
	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries			Total
Net revenues	$	—		$	51,441		$	—		$	51,441
Cost and expenses
Casino-hotel operations		—			31,262			—			31,262
General and administrative		—			12,160			—			12,160
Depreciation and amortization		—			3,014			—			3,014
Total cost and expenses		—			46,436			—			46,436
Operating income		—			5,005			—			5,005
Other income (expense)
Equity in loss of joint venture		—			(287	)		—			(287	)
Equity in income (loss) of subsidiaries		6,328			—			(6,328	)(a)		-
Interest expense, net		(3,399	)		(103	)		—			(3,502	)
Gain (loss) on disposal of fixed assets		—			(6	)		—			(6	)
Interest expense associated with pushed down indebtedness		—			(3,399	)		3,399	(b)		—
Total other income (expense)		2,929			(3,795	)		(2,929	)		(3,795	)
Income (loss) before income taxes		2,929			1,210			(2,929	)		1,210
Provision for income taxes		2,070			351			(2,070	)(c)		351
Net income (loss)	$	859		$	859		$	(859	)	$	859

(a) To eliminate equity in the income of subsidiaries in consolidation.

(b) To eliminate interest expense on the notes and term loan pushed down to the guarantor subsidiaries.

(c) To eliminate taxes in consolidation.

16

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the nine months ended September 30, 2006

	Successor Company
	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries			Total
Net revenues	$	—		$	170,238		$	—		$	170,238
Cost and expenses
Casino-hotel operations		—			97,083			—			97,083
General and administrative		—			36,339			—			36,339
Depreciation and amortization		—			8,713			—			8,713
Total cost and expenses		—			142,135			—			142,135
Operating income		—			28,103			—			28,103
Other income (expense)
Equity in loss of joint venture		—			(744	)		—			(744	)
Equity in income (loss) of subsidiaries		25,219			—			(25,219	)(a)		—
Interest expense, net		(10,440	)		(19	)		—			(10,459	)
Gain (loss) on disposal of fixed assets		—			(6	)		—			(6	)
Interest expense associated with pushed down indebtedness		—			(10,440	)		10,440	(b)		—
Total other income (expense)		14,779			(11,209	)		(14,779	)		(11,209	)
Income (loss) before income taxes		14,779			16,894			(14,779	)		16,894
Provision for income taxes		3,667			5,782			(3,667	)(c)		5,782
Net income (loss)	$	11,112		$	11,112		$	(11,112	)	$	11,112

(a) To eliminate equity in the income of subsidiaries in consolidation.

(b) To eliminate interest expense on the notes and term loan pushed down to the guarantor subsidiaries.

(c) To eliminate taxes in consolidation.

17

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the period from September 27, 2005 through September 30, 2005

	Successor Company
	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries			Total
Net revenues	$	—		$	2,707		$	—		$	2,707
Cost and expenses
Casino-hotel operations		—			1,736			—			1,736
General and administrative		—			471			—			471
Depreciation and amortization		—			202			—			202
Total cost and expenses		—			2,409			—			2,409
Operating income		—			298			—			298
Other income (expense)
Equity in loss of joint venture		—			(14	)		—			(14	)
Equity in income (loss) of subsidiaries		194			—			(194	)(a)		—
Interest expense, net		(169	)		—			—			(169	)
Interest expense associated with pushed down indebtedness		—			(169	)		169	(b)		—
Total other income (expense)		25			(183	)		(25	)		(183	)
Income (loss) before income taxes		25			115			(25	)		115
Provision for income taxes		(53	)		90			—			37
Net income (loss)	$	78		$	25		$	(25	)	$	78

(a) To eliminate equity in the income of subsidiaries in consolidation.

(b) To eliminate interest expense on the notes and term loan pushed down to the guarantor subsidiaries.

18

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the period from January 1, 2005 through September 26, 2005

	Predecessor Company
	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries			Total
Net revenues	$	—		$	186,781		$	—		$	186,781
Cost and expenses
Casino-hotel operations		—			123,248			—			123,248
General and administrative		925			42,049			—			42,974
Depreciation and amortization		—			12,972			—			12,972
Total cost and expenses		925			178,269			—			179,194
Operating income		(925	)		8,512			—			7,587
Other income (expense)
Equity in loss of joint venture		—			(826	)		—			(826	)
Equity in income (loss) of subsidiaries		8,190			—			(8,190	)(a)		—
Interest expense, net		(13,279	)		—			—			(13,279	)
Gain (loss) on disposal of Fixed Assets		—			504			—			504
Interest expense associated with pushed down indebtedness		—			(13,279	)		13,279	(b)		—
Total other income (expense)		(5,089	)		(13,601	)		5,089			(13,601	)
Income (loss) before income taxes		(6,014	)		(5,089	)		5,089			(6,014	)
Provision for income taxes		—			—			—			—
Net income (loss)	$	(6,014	)	$	(5,089	)	$	5,089		$	(6,014	)

(a) To eliminate equity in the income of subsidiaries in consolidation.

(b) To eliminate interest expense on the notes and term loan pushed down to the guarantor subsidiaries.

19

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the period from July 1, 2005 through September 26, 2005

	Predecessor Company
	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries			Total
Net revenues	$	—		$	56,062		$	—		$	56,062
Cost and expenses
Casino-hotel operations		—			38,569			—			38,569
General and administrative		412			13,649			—			14,061
Depreciation and amortization		—			4,076			—			4,076
Total cost and expenses		412			56,294			—			56,706
Operating income		(412	)		(232	)		—			(644	)
Other income (expense)
Equity in loss of joint venture		—			(312	)		—			(312	)
Equity in income (loss) of subsidiaries		(534	)		—			534	(a)		—
Interest expense, net		(4,206	)		(1	)		—			(4,207	)
Gain (loss) on a disposal of fixed assets		—			11			—			11
Interest expense associated with pushed down indebtedness		—			(4,206	)		4,206	(b)		—
Total other income (expense)		(4,740	)		(4,508	)		4,740			(4,508	)
Income (loss) before income taxes		(5,152	)		(4,740	)		4,740			(5,152	)
Provision for income taxes		—			—			—			—
Net income (loss)	$	(5,152	)	$	(4,740	)	$	4,740		$	(5,152	)

(a) To eliminate equity in the income of subsidiaries in consolidation.

(b) To eliminate interest expense on the notes and term loan pushed down to the guarantor subsidiaries.

20

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2006

	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries		Total
Cash flows from operating activities	$	11,386		$	14,814		$	—	$	26,200
Cash flows from investing activities
Property and equipment additions		—			(16,615	)		—		(16,615	)
Proceeds from sale of property and equipment		—			16			—		16
Contributions to joint venture		—			(704	)		—		(704	)
Net cash used in investing activities		—			(17,303	)		—		(17,303	)
Cash flows from financing activities
Payments on term loan		—			—			—		—
Net borrowings (repayments) under revolving credit facility		(6,132	)		—			—		(6,132	)
Increase (decrease) in amounts due to affiliates		(5,254	)		—			—		(5,254	)
Net cash provided by financing activities		(11,386	)		—			—		(11,386	)
Net increase in cash and cash equivalents		—			(2,489	)		—		(2,489	)
Cash and cash equivalents, beginning of period		—			22,534			—		22,534
Cash and cash equivalents, end of period	$	—		$	20,045		$	—	$	20,045

21

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the period from January 1, 2005 through September 26, 2005

	Predecessor Company
	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries		Total
Cash flows from operating activities	$	7,144		$	8,950		$	—	$	16,094
Cash flows from investing activities
Acquisition of property and equipment		—			(6,009	)		—		(6,009	)
Proceeds from the sale of equipment		—			1,157			—		1,157
Contributions to joint venture		—			(704	)		—		(704	)
Net cash used in investing activities		—			(5,556	)		—		(5,556	)
Cash flows from financing activities
Payments on term loan		(2,100	)		—			—		(2,100	)
Net borrowings (repayments) under revolving credit facility		(7,065	)		—			—		(7,065	)
Additional contribution of equity from parent		3,000			—			—		3,000
Distributions to Parent		(979	)		—			—		(979	)
Net cash provided by financing activities		(7,144	)		—			—		(7,144	)
Net increase in cash and cash equivalents		—			3,394			—		3,394
Cash and cash equivalents, beginning of period		—			24,119			—		24,119
Cash and cash equivalents, end of period	$	—		$	27,513		$	—	$	27,513

22

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the period from September 27, 2005 through September 30, 2005

	Successor Company
	Golden Nugget, Inc.			Guarantor Subsidiaries			Consolidating/ Eliminating Entries		Total
Cash flows from operating activities	$	—		$	(2,082	)	$	—	$	(2,082	)
Cash flows from investing activities
Acquisition of property and equipment		—			(3	)		—		(3	)
Net cash used in investing activities		—			(3	)		—		(3	)
Cash flows from financing activities
Payments on term loan		(16,500	)		—			—		(16,500	)
Net borrowings (repayments) under revolving credit facility		16,500			—			—		16,500
Net cash provided by financing activities		—			—			—		—
Net increase in cash and cash equivalents		—			(2,085	)		—		(2,085	)
Cash and cash equivalents, beginning of period		—			27,513			—		27,513
Cash and cash equivalents, end of period	$	—		$	25,428		$	—	$	25,428

23

GOLDEN NUGGET, INC.

(A WHOLLY OWNED SUBSIDIARY OF LANDRY’S RESTAURANTS, INC.)

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

We own and operate the Golden Nugget—Las Vegas and the Golden Nugget—Laughlin hotel casinos. The following table sets forth information about each of the Golden Nugget properties as of September 30, 2006:

	Casino
Property	Slot Machines	Table Games	Space (sq. ft.)	Hotel Rooms
Golden Nugget - Las Vegas	1,001	50	38,000	1,907
Golden Nugget - Laughlin	970	14	32,000	300
	1,971	64	70,000	2,207

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

We also have an investment in the Fremont Street Experience, LLC, the entity which owns and operates the Fremont Street Experience (“FSE”). FSE is a unique entertainment attraction located in the center of downtown Las Vegas on Fremont Street, where the Golden Nugget—Las Vegas is located.

Following the acquisition described below, we initiated an extensive renovation program which includes upgrading the porte cochere, race and sports book area, poker room, pool area, lobby, lounge, buffet, showroom and public areas. In addition, we have added a new VIP check-in area, Vic and Anthony’s Steakhouse, and Grotto Italian Restaurant. We anticipate completing the majority of the renovations in 2006.

The gaming industry is intensely competitive and affected by changes in consumer tastes and by national, regional and local economic conditions and demographic trends. The performance of the individual casinos may be affected by factors such as: traffic patterns, demographic considerations, marketing, weather conditions, and the type, number and location of competing casinos.

Recent Developments

Purchase of Golden Nugget, Inc.

On September 27, 2005, Landry’s completed the acquisition of the capital stock of Golden Nugget, Inc. (“Golden Nugget”), including $27.5 million in cash, for $163.0 million plus the assumption of $155.0 million of senior secured notes due 2011 and $27.0 million in bank debt. Based on this event, we have reported operating results and financial position for all periods presented from January 1, 2005 through September 26, 2005 as those of the Predecessor Company and for all periods from and after September 27, 2005 as those of the Successor Company. Each period has a different basis of accounting and as a result they are not comparable. For purposes of presenting a comparison of our 2006 results to prior periods, we have presented our 2005 results as the mathematical addition of the Predecessor Company and Successor Company periods. We believe that this presentation provides the most meaningful information about our results of operations. This approach is not consistent with GAAP, may yield results that are not strictly comparable on a period to period basis, and may not reflect the actual results we would have achieved.

Seasonality and Quarterly Results

Historically, the financial performance and revenues of the Golden Nugget properties are higher during the first and fourth quarters of each year. Accordingly, our results of operations are expected to fluctuate from quarter to quarter, and the results for any fiscal quarter may not be indicative of results for future fiscal quarters.

Results of Operations

Three months ended September 30, 2006 Compared to Three months ended September 30, 2005

Net revenues for the three months ended September 30, 2006 were $51.4 million, a decrease of $7.3 million, or 12.5% compared to the three months ended September 30, 2005. The decrease in net revenues was primarily attributable to decreases in casino revenues and food and beverage revenues offset by a decrease in promotional allowances. These decreases in revenues were more than offset by the positive impact of reducing casino, food and beverage, and general and administrative expenses as well as cost savings from lower interest rates on outstanding debt. Overall, net income increased to $0.9 million in the three months ended September 30, 2006 compared to a loss of $5.1 million in the three months ended September 30, 2005.

24

Revenues

Casino revenues during the three months ended September 30, 2006 totaled $33.8 million, a decrease of $4.7 million or 12.2% over the three months ended September 30, 2005. The decline is primarily the result of changes in table game limits and credit policy which reduced table games drop as well as a decline in slot play which reduced overall slot win in the three months ended September 30, 2006 compared to the three months ended September 30, 2005. Casino revenues were also adversely impacted by the disruption resulting from the renovation.

Room revenues increased 0.8% during the three months ended September 30, 2006 to $13.0 million. This increase is primarily the result of an increase in the average daily rate. This increase was offset by reduced hotel occupancy due to the disruption arising from the renovation.

Food and beverage revenues decreased $4.4 million or 32.8% during the three months ended September 30, 2006 compared to the three months ended September 30, 2005. This decrease is attributed to fewer available restaurants as a result of restaurant renovations and closures subsequent to the acquisition as well as upgrading certain restaurants to Landry’s operated concepts.

Promotional allowances provided to gaming patrons decreased $1.8 million to $6.8 million for the three months ended September 30, 2006 compared to the three months ended September 30, 2005. This decrease is primarily related to the decrease in casino revenues associated with the change in table game limits and credit policy as well as the decreased slot play compared to the prior year period.

Operating Expenses

Casino operating expenses for the three months ended September 30, 2006 totaled $19.4 million compared to $23.4 million for the three months ended September 30, 2005. The decrease is primarily due to decreases in gaming taxes, payroll expenses, and casino marketing expenses.

Food and beverage expenses for the three months ended September 30, 2006 were $5.5 million compared to $8.9 million for the three months ended September 30, 2005. The decrease is due to lower costs associated with operating fewer restaurants.

General and administrative expenses for the three months ended September 30, 2006 were $12.2 million, or 23.6% of net revenues, compared to $14.5 million, or 24.7% of net revenues for the three months ended September 30, 2005. The decrease in general and administrative expenses is primarily attributed to reductions in payroll expense and reduced bad debt allowance associated with better than anticipated collections of casino receivables.

Other Income and Expense

Other income and expense consists principally of interest expense on the senior notes and the credit facility and our equity in the loss of FSE. Interest expense decreased $0.9 million in the three months ended September 30, 2006 to $3.5 million compared to $4.4 million in three months ended September 30, 2005 as a result of lower average borrowings and a lower average interest rate from amending the credit facility. FSE is primarily designed to increase visitation to downtown Las Vegas and it is expected to continue to incur losses. Golden Nugget - Las Vegas has a 17.65% interest in FSE, consistent throughout 2005 and 2006.

Income Taxes

The provision for income taxes for the three months ended September 30, 2006 was $0.35 million or 29.0%. Prior to the acquisition by Landry’s, Golden Nugget and its subsidiaries were a qualified sub chapter S corporation and as a result, the owners were taxed on income at a personal level not at the corporate level.

Nine months ended September 30, 2006 Compared to Nine months ended September 30, 2005

Net revenues for the nine months ended September 30, 2006 were $170.2 million, a decrease of $19.3 million, or 10.2% over the nine months ended September 30, 2005. The decrease in net revenues was primarily attributable to decreases in casino revenues and food and beverage revenues offset by a decrease in promotional allowances as well as an increase in rooms revenue.

Overall, net income increased to $11.1 million in the nine months ended September 30, 2006 compared to a loss of $5.9 million in the nine months ended September 30, 2005.

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Revenues

Casino revenues during the nine months ended September 30, 2006 totaled $111.2 million, a decrease of $12.1 million or 9.8% over the nine months ended September 30, 2005. The decline is primarily the result of changes in table game limits and credit policy which reduced table games drop, as well as a decline in slot play which reduced overall slot win in the nine months ended September 30, 2006. Casino revenues were adversely impacted by the disruption resulting from the Golden Nugget—Las Vegas renovation.

Room revenues increased 2.5% in the nine months ended September 30, 2006 to $42.8 million. This increase is primarily the result of higher average daily rates.

Food and beverage revenues decreased $12.8 million or 30.2% in the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005. This decrease is attributed to fewer available restaurants resulting from restaurant renovations and closures subsequent to the acquisition as well as upgrading certain restaurants to Landry’s operated concepts.

Promotional allowances provided to gaming patrons decreased $5.8 million to $20.5 million in the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005. This decrease is primarily related to the decrease in casino revenues associated with the change in table game limits and credit policy as well as the decreased slot play.

Operating Expenses

Casino operating expenses for the nine months ended September 30, 2006 totaled $59.7 million compared to $73.6 million for the nine months ended September 30, 2005. The decrease is primarily due to decreases in gaming taxes, payroll expenses, and casino marketing expenses.

Food and Beverage expense decreased $9.3 million for the nine months ended September 30, 2006. The decrease is attributable to lower costs associated with operating fewer restaurants.

General and administrative expenses for the nine months ended September 30, 2006 were $36.4 million or 21.3% of net revenues, compared to $43.4 million or 22.9% of net revenues for the nine months ended September 30, 2005. The decrease in general and administrative expenses is primarily attributed to reductions in payroll expense and reduced bad debt allowance associated with better than anticipated collections of casino receivables.

Other Income and Expense

Other income and expense consists principally of interest expense on the senior notes and the credit facility and the equity in the loss of our joint venture investment in FSE. Interest expense decreased $2.9 million in the nine months ended September 30, 2006 to $10.6 million compared to $13.5 million in nine months ended September 30, 2005 as a result of lower average borrowings and a lower average interest rate that resulted from amending the credit facility. The joint venture is primarily designed to increase visitation to downtown Las Vegas and it is expected to continue to incur losses. Golden Nugget—Las Vegas has a 17.65% interest in FSE, consistent throughout 2005 and 2006.

Income Taxes

The provision for income taxes for the nine months ended September 30, 2006 was $5.8 million or 34.2%. Prior to the acquisition by Landry’s, we were a qualified sub chapter S corporation and as a result, the owners were taxed on the income at a personal level not at the corporate level.

Liquidity and Capital Resources

In connection with the acquisition, we entered into an amended loan and security agreement whereby the remaining balance of the existing term loan plus accrued interest was repaid; the existing revolving credit facility was increased to $43.0 million; certain financial covenants were adjusted; and the financing spread was reduced to Libor plus 1.75% or the bank’s base rate plus 0.75% as of September 30, 2006, plus a commitment fee. The financing spread and commitment fee increases or decreases based on a financial leverage ratio as defined in the credit agreement.

At September 30, 2006, we had cash and cash equivalents of $20.0 million, approximately $16.0 million outstanding under our revolving credit facility, and $2.5 million drawn under letters of credit with remaining availability under the credit facility of approximately $24.5 million.

We anticipate capital expenditures associated with the Golden Nugget – Las Vegas renovation to approximate $90.1 million in 2006, with additional expenditures for an expansion in 2007. As of September 30, 2006, we have spent $16.6 million for capital expenditures in connection with the renovation in the current year. Our Parent has expended approximately $43.6 million for in progress construction related to the renovation which may be transferred, contributed or leased to us upon completion.

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We believe our existing cash on hand, cash flow from operations and funds available under our existing bank credit facility will be sufficient to fund operations and maintain existing properties, while incremental funding will be necessary to complete the planned renovation and expansion. The amount of such incremental funding is dependent on, among other things, future cash flows, debt service requirements and additional capital investment activity.

We believe our Parent has capacity under its credit agreements to fund a significant portion of the anticipated expenditures and that we will be able to access additional sources of capital for any remaining funding requirements; however, there can be no assurances such funds will be available, and if so, on terms acceptable to us.

Critical Accounting Policies

Revenue Recognition. Casino revenues represent the net win from gaming activities, which is the difference between gaming wins and losses. Hotel and other revenues are recognized at the time the related service is performed.

Property and Equipment. At September 30, 2006, we had approximately $339.5 million of net property and equipment recorded on our balance sheet. We depreciate our assets on a straight-line basis over their estimated useful lives. The estimate of the useful lives is based on the nature of the asset as well as our current operating strategy. Future events, such as property expansions, new competition and new regulations, could result in a change in the manner in which we use certain assets, which could require a change in the estimated useful lives of such assets. In assessing the recoverability of the carrying value of property and equipment, we must make assumptions regarding estimated future cash flows and other factors. If these estimates or the related assumptions change in the future, we may be required to record impairment charges for these assets.

Slot Club Liability. We offer a program whereby participants can accumulate points for casino wagering that can currently be redeemed for cash, lodging, food and beverages and merchandise. A liability is recorded for the estimate of unredeemed points based upon redemption history at our casinos. Changes in the program, increases in membership and changes in the redemption patterns of the participants can impact this liability.

Self-Insurance. We are self-insured to certain limits for costs associated with workers compensation, general liability, and employee medical claims. Estimated costs to settle unpaid claims and estimated incurred but not reported claims are included in Other Accrued Liabilities based on historical results and projected trends.

ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-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, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings - None.

Item 5. Other Information - None.

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Item 6. Exhibits

No. 31.1	-	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
No. 31.2	-	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
No. 32	-	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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 thereunto duly authorized.

Golden Nugget, Inc.,

Registrant

/s/ Tilman J. Fertitta

Tilman J. Fertitta

Chairman of the Board of Directors,

President and Chief Executive Officer for

Registrant and Landry’s Restaurants, Inc.

(Principal Executive Officer)

/s/ Rick H. Liem

Rick H. Liem

Senior Vice President and

Chief Financial Officer for Registrant and

Landry’s Restaurants, Inc.

(Principal Financial and Accounting Officer)

Dated: November 14, 2006

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