GRILE Grill Concepts Inc. (MM)

Grill Concepts Reports Higher Revenues for 2004 First Quarter; Same Store Sales Increase 7.8% - Earnings Impacted by Expensing of Options - LOS ANGELES, May 26 /PRNewswire-FirstCall/ -- Grill Concepts, Inc. (NASDAQ:GRIL) today reported growth of 11.2 percent in consolidated revenues with a 7.8 percent increase in same store sales for the three-month period ended March 28, 2004 as compared to the first quarter of 2003. Consolidated revenues, including management and license fees advanced to $13.3 million in the first quarter of 2004 from $11.9 million in the year-earlier period. Total systemwide sales, including all restaurants, owned, operated, managed and licensed, rose 13.9 percent in the quarter to $19.7 million from $17.3 million in 2003. Management believes total systemwide sales is a key measurement for assessing the current strength of The Grill on the Alley and Daily Grill restaurant brands against historical performance. Grill Concepts previously announced that as a result of a recent review of its stock option plan, a determination was made that grants under the plan require variable accounting treatment. This accounting treatment reflects the difference between the current market price of the company's stock and the option's exercise price and results in an associated non-cash charge to compensation expense. As a result of the change in accounting treatment, the company filed an amended Form 10-K for the period ended December 28, 2003 restating the financial results for the 2003 full year to reflect the expensing of employee stock options. For the 2004 first quarter, the company achieved net income of $87,000, or $0.01 per diluted share, which includes stock option compensation expense of $187,000. This compares with restated net income of $342,000, or $0.06 per diluted share, a year earlier, including stock option compensation expense of $5,000. "From an operating perspective, we are off to a strong start in 2004," said Robert Spivak, president and chief executive officer of Grill Concepts. "The strong revenue growth demonstrates continued appreciation for our brand and reinforces our confidence as the year unfolds." Same store sales for the Daily Grill restaurants were 8.7 percent higher compared with a year ago, and The Grill on the Alley restaurants achieved an increase of 6.1 percent in comparable sales over the first quarter of 2003. Spivak said first quarter revenues reflected another period of improved check averages and increased guest counts, leading to higher weighted average weekly sales of 6.1 percent at The Grill restaurants and 2.8 percent at Daily Grill restaurants. During the first quarter, the company opened its fourth Daily Grill in the greater Washington, D.C. area in the 390-room Hyatt Regency at One Bethesda Metro Center. Recently, Grill Concepts announced plans to open a Daily Grill restaurant in the heart of Santa Monica's entertainment hub in the Colorado Center, a property leased and managed by Tishman Speyer Properties, formerly known as MGM Plaza, and now home to tenants Metro-Goldwyn-Mayer Studios, CBS Enterprises and HBO. About Grill Concepts, Inc. Grill Concepts owns and manages upscale casual and fine dining, full service restaurants under two core brand names: The Grill on the Alley and Daily Grill. The company operates 23 restaurants including four The Grill on the Alley-branded restaurants in Beverly Hills, Hollywood, San Jose, California, and Chicago, as well as 19 Daily Grill restaurants in Southern and Northern California, the Washington, D.C. metropolitan region, Houston, Texas, Portland, Oregon and Skokie, Illinois. This news release contains forward-looking statements, which are based on current operations, plans and expectations. Such statements include, but are not limited to, the company's ability to continue expanding its restaurant network, among other factors. Actual results may differ materially from these statements due to risks and uncertainties beyond the company's control, which are detailed from time to time in the company's filings with the United States Securities and Exchange Commission. GRILL CONCEPTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended March 28, March 30, 2004 2003 (restated) Revenues: Sales $12,958,000 $11,667,000 Management and license fees 296,000 255,000 Total revenues 13,254,000 11,922,000 Cost of sales 3,630,000 3,174,000 Gross profit 9,624,000 8,748,000 Costs and expenses: Restaurant operating expenses 7,776,000 6,997,000 Gain on disposal of assets -- (12,000) General and administrative 1,227,000 910,000 Depreciation and amortization 386,000 432,000 Pre-opening costs 147,000 187,000 Total operating expenses 9,536,000 8,514,000 Income from operations 88,000 234,000 Interest expense, net (34,000) (48,000) Income before provision for income taxes, equity in loss of joint venture and minority interest 54,000 186,000 Provision for income taxes (23,000) (55,000) Minority interest in loss of subsidiaries 60,000 216,000 Equity in loss of joint venture (4,000) (5,000) Net income $87,000 $342,000 Preferred dividends accrued or paid (13,000) (13,000) Net income applicable to common stockholders $74,000 $329,000 Net income per share Basic $0.01 $0.06 Diluted $0.01 $0.06 Weighted average shares outstanding Basic 5,545,864 5,537,071 Diluted 6,192,910 5,537,071 Note: The consolidated financial statement for the three months ended March 30, 2003 have been restated from those originally issued by the company to reflect the accounting for employee stock options using variable accounting treatment. GRILL CONCEPTS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP (unaudited) Systemwide Sales The following table reconciles Grill Concepts' total consolidated revenues, prepared on the basis of GAAP, to total systemwide sales for the periods presented: Three Months Ended March 28, March 30, 2004 2003 Total consolidated revenues $13,254,000 $11,922,000 Managed restaurants sales 4,572,000 3,302,000 Licensed restaurants sales 2,142,000 2,295,000 Less management and license fees (296,000) (255,000) Total systemwide sales $19,672,000 $17,264,000 DATASOURCE: Grill Concepts, Inc. CONTACT: Daryl E. Ansel, Chief Financial Officer of Grill Concepts, Inc., +1-310-820-5559; or Roger S. Pondel or Angie H. Yang of PondelWilkinson Inc., +1-323-866-6004, , for Grill Concepts, Inc. Web site: http://www.pondel.com/

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