TAMPA, Fla., Aug. 9 /PRNewswire-FirstCall/ -- Shells Seafood
Restaurants, Inc. (OTC:SHLL) (BULLETIN BOARD: SHLL) today reported
financial results for its second quarter ended July 1, 2007. Key
metrics - Second quarter of 2007 compared to the second quarter of
2006: -- Revenues decreased 12.1% to $11.5 million. -- Comparable
restaurant sales decreased 10.8%. -- Net loss of $1,152,000,
compared to net loss of $9,000. Excluding non- recurring items, net
loss of $628,000, compared to $334,000. -- Net loss per share of
$0.06, compared to net loss per share of $0.00. Excluding
non-recurring items, net loss per share of $0.03, compared to net
loss per share of $0.02. First 26-weeks of 2007 compared to the
first 26-weeks of 2006: -- Revenues decreased 9.9% to $24.9
million. -- Comparable restaurant sales decreased 8.7%. -- Net loss
of $1,117,000, compared to net income of $252,000. Excluding
non-recurring items, net loss of $639,000, compared to a net loss
of $50,000. -- Net loss per share of $0.06, compared to net income
per share of $0.01 diluted. Excluding non-recurring items, net loss
per share of $0.03, compared to net loss per share of $0.00. Leslie
Christon, President and CEO, commented, "Our sales were
disappointing in the second quarter. We believe higher gasoline
prices, a difficult local economy, and competitive value offerings
in the marketplace have heavily influenced consumer dining out
patterns here in Florida. Consumers generally are experiencing
higher personal costs in, among other things, insurance premiums,
property taxes, energy bills and fuel costs. As a result, we
believe they are choosing lower cost dining alternatives, while
reducing their number of dining-out experiences. Additionally, we
were up against strong performance in the 2nd quarter last year,
when our same-store sales increased 8.3%. We will continue to focus
on providing a quality experience at a great value to our guests.
We remain committed to delivering that value over the long term
through our menu offerings, our hospitality, and our ambience. We
believe that ultimately this will yield improved results for our
investors." Operating Results Revenues for the second quarter of
2007 decreased 12.1% to $11.5 million from $13.1 million in the
second quarter of 2006, mostly due to a 10.8% decrease in same
store sales and the under-performance of two non-comparable
restaurants, one of which was closed and disposed of in June 2007.
As of the end of the second quarter of 2007, the Company had 24
restaurants in operation, compared to 25 restaurants at the end of
the second quarter of 2006. Restaurant operating costs, consisting
of food and beverage costs, labor, other operating costs and
depreciation expense, were $11.1 million, or 96.8% of sales, in the
second quarter of 2007, compared to $12.1 million, or 92.9% of
sales, in the second quarter of 2006. The 3.9% increase in
restaurant operating costs, as a percentage of sales was mostly a
result of a loss of operating leverage as reflected by the
reduction in sales volume. A provision for asset impairment of
$610,000 relating to an under performing restaurant was recognized
in the second quarter of 2007. Additionally, the leasehold interest
in a second under performing restaurant was sold for $225,000 in
June 2007 and a net gain of $86,000 was recognized after the
disposition of related assets. General & administrative
expenses were $917,000, or 8.0% of revenues, in the second quarter
of 2007 compared to $977,000, or 7.5% of revenues, in the second
quarter of 2006. The unfavorable variance as a percentage of
revenues reflects the reduction in sales leverage and the affect of
incremental stock option expense. Loss from operations for the
second quarter of 2007 was $1,109,000, or $1,101,000 below the
comparable period of 2006 and, excluding non-recurring items in
both periods, $339,000 below 2006. Loss from operations for the
first 26-weeks of 2007 of $973,000 was $1,441,000 below the income
from operations of $468,000 for the comparable period of 2006 and,
excluding non- recurring items in both periods, $640,000 below
2006. The net loss for the second quarter of 2007 was $1,152,000,
or $0.06 per share based upon 20.1 million common shares
outstanding, compared to a net loss in the second quarter of 2006
of $9,000, or $0.00 per share based upon 16.2 million shares
outstanding. As adjusted for non-recurring items as summarized in
the ensuing financial tables, the net loss for the second quarter
of 2007 was $628,000, or $0.03 per share, compared to a net loss in
the second quarter of 2006 of $334,000, or $0.02 per share. The net
loss for the first 26-weeks of 2007 was $1,117,000, or $0.06 per
share based upon 18.9 million common shares outstanding, compared
to net income in the first 26-weeks of 2006 of $252,000, or $0.01
per share diluted based upon 26.3 million diluted shares
outstanding. As adjusted for non- recurring items as summarized in
the ensuing financial tables, the net loss for the first 26-weeks
of 2007 was $639,000, or $0.03 per share, compared to a net loss in
the first 26-weeks of 2006 of $50,000, or $0.00 per share. About
the Company The Company manages and operates 24 full-service,
neighborhood seafood restaurants in Florida under the name
"Shells". Shells restaurants feature a wide selection of seafood
items, including shrimp, oysters, clams, crawfish, mussels,
scallops, lobster, crab and daily fresh fish specials, cooked to
order in a variety of ways: steamed, saut�ed, grilled, blackened
and fried. Shells restaurants also offer a wide selection of
signature pasta dishes, steaks and chicken, appetizers, salads,
desserts and full bar service. Forward-Looking Statements In
addition to seasonal fluctuations, the Company's quarterly and
annual operating results are affected by a wide variety of other
factors that could materially and adversely affect revenues and
profitability, including changes in consumer preferences, tastes
and eating habits; increases in food, labor costs and other
operating expenses; the availability of food acceptable to our
quality standards at acceptable prices; the availability of
qualified labor; national, regional and local economic and weather
conditions; promotional timings and seasonality; demographic trends
and traffic patterns; changes in travel and tourism tendencies,
particularly in light of world events; competition from other
restaurants and food service establishments; availability of third
party financing to fund capital or operating activities, if
required; and the timing, costs and charges relating to restaurant
openings, closings and remodelings. As a result of these and other
factors, the Company may experience material fluctuations in future
operating results on a quarterly or annual basis, which could
materially and adversely affect its business, financial condition
and stock price. Furthermore, this press release and other
documents filed by the Company with the Securities and Exchange
Commission ("SEC") contain certain forward-looking statements with
respect to the business of the Company and the industry in which it
operates. These forward-looking statements are subject to certain
risks and uncertainties, including those mentioned above, which may
cause results to differ significantly from these forward-looking
statements. The Company undertakes no obligation to update these
forward looking statements on a regular basis. An investment in the
Company involves various risks, including those mentioned above and
those that are detailed from time-to-time in the Company's SEC
filings. SHELLS SEAFOOD RESTAURANTS, INC. CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED) (In thousands, except per share data)
Thirteen Week Period Ended July 1, 2007 July 2, 2006 Amount Percent
Amount Percent Revenues: Restaurant sales $11,428 99.5% $13,012
99.7% Management fees 53 0.5% 43 0.3% Total revenues 11,481 100.0%
13,055 100.0% Restaurant operating costs: Food and beverage (1)
3,724 32.6% 4,208 32.3% Labor (1) 3,543 31.0% 3,895 29.9% Other (1)
3,342 29.2% 3,416 26.3% Depreciation and amortization (1) 454 4.0%
567 4.4% Provision for impairment of assets (1) 610 5.3% - 0.0%
Total restaurant operating costs (1) 11,673 102.1% 12,086 92.9%
Restaurant operating (loss) income (1) (192) -1.7% 969 7.4% General
and administrative expenses 917 8.0% 977 7.5% Loss from operations
(1,109) -9.7% (8) -0.1% Lease buy-out - 0.0% 212 1.6% Interest
expense, net (75) -0.7% (67) -0.5% Other income (expense) 32 0.3%
(146) -1.1% Net loss (1,152) -10.1% (9) -0.1% Net loss per share of
common stock: Basic $(0.06) $(0.00) Diluted $(0.06) $(0.00) Shares
used in computing net loss per share: Basic 20,052 16,226 Diluted
20,052 16,226 Twenty-Six Week Period Ended July 1, 2007 July 2,
2006 Amount Percent Amount Percent Revenues: Restaurant sales
$24,824 99.6% $27,557 99.7% Management fees 92 0.4% 84 0.3% Total
revenues 24,916 100.0% 27,641 100.0% Restaurant operating costs:
Food and beverage (1) 8,079 32.5% 8,851 32.1% Labor (1) 7,433 29.9%
8,252 29.9% Other (1) 6,864 27.7% 6,850 24.9% Depreciation and
amortization (1) 960 3.9% 1,065 3.9% Provision for impairment of
assets(1) 610 2.5% - 0.0% Total restaurant operating costs (1)
23,946 96.5% 25,018 90.8% Restaurant operating income (1) 970 3.9%
2,623 9.5% General and administrative expenses 1,943 7.8% 2,155
7.8% (Loss) income from operations (973) -3.9% 468 1.7% Lease
buy-out - 0.0% 212 0.7% Interest expense, net (141) -0.6% (139)
-0.5% Other (expense) (3) 0.0% (289) -1.0% Net (loss) income
(1,117) -4.5% 252 0.9% Net (loss) income per share of common stock:
Basic $(0.06) $0.02 Diluted $(0.06) $0.01 Shares used in computing
net (loss) income per share: Basic 18,947 16,203 Diluted 18,947
26,293 (1) As a percent of restaurant sales SHELLS SEAFOOD
RESTAURANTS, INC. (Dollars in thousands, except per share data)
(Unaudited) July 1, July 2, 2007 2006 Number of restaurants at end
of period: Company-owned restaurants (1) 21 22 Licensed restaurants
3 3 Total 24 25 Balance sheet data: Cash $630 $1,050 Working
capital (deficiency) (5,342) (5,539) Total assets 13,007 18,154
Long-term debt 1,426 2,174 Stockholders' equity 3,480 7,562 (1)
Includes one joint venture restaurant in which the Company has a
51% equity interest. Thirteen Week Twenty-Six Week Period Ended
Period Ended July 1, July 2, July 1, July 2, NON-RECURRING ITEMS:
2007 2006 2007 2006 Net (loss) income, as reported $(1,152) $(9)
$(1,117) $252 Non-recurring (expense) income: Workers' comp
insurance refund and reserve adjustment - 152 - 152 Lease renewal
costs - - (39) - Provision for impairment of assets (610) - (610) -
Non-recurring items affecting (loss) income from operations (610)
152 (649) 152 Ocala sale-leaseback - 212 - 212 Legal settlement
proceeds - - 85 - Lease termination fee - - - (23) Gain (loss) on
disposal of assets 86 (39) 86 (39) Total non-recurring (expense)
income (524) 325 (478) 302 Net loss excluding non-recurring items
(628) (334) (639) (50) Net (loss) income per share of common stock:
Diluted, as reported $(0.06) $(0.00) $(0.06) $0.01 Diluted,
excluding non-recurring items $(0.03) $(0.02) $(0.03) $(0.00)
Diluted shares used in computing net loss per share of common
stock, excluding non-recurring items 20,052 16,226 18,947 16,203
DATASOURCE: Shells Seafood Restaurants, Inc. CONTACT: Warren
Nelson, Shells Seafood Restaurants, Inc., +1-813-961-0944 Web site:
http://www.shellsseafood.com/
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