TAMPA, Fla., Aug. 11 /PRNewswire-FirstCall/ -- Shells Seafood
Restaurants, Inc. (OTC:SHLL) (BULLETIN BOARD: SHLL) today reported
financial results for its second quarter ended June 29, 2008. Key
metrics - Second quarter of 2008 compared to the second quarter of
2007: -- Revenues decreased 22.0% to $9.0 million. -- Comparable
restaurant sales decreased 18.1%. -- Net loss of $667,000, compared
to net loss of $1,152,000. Excluding non-recurring items, net loss
of $807,000, compared to $628,000. -- Net loss per share of $0.03,
compared to net loss per share of $0.06. Excluding non-recurring
items, net loss per share of $0.03, compared to net loss per share
of $0.03. First 26-weeks of 2008 compared to the first 26-weeks of
2007: -- Revenues decreased 21.1% to $19.6 million. -- Comparable
restaurant sales decreased 16.8%. -- Net loss of $548,000, compared
to a net loss of $1,117,000. Excluding non-recurring items, net
loss of $545,000, compared to a net loss of $639,000. -- Net loss
per share of $0.02, compared to a net loss per share of $0.06.
Excluding non-recurring items, net loss per share of $0.02,
compared to a net loss per share of $0.03. Marc Bernstein, CEO,
commented, "We have been greatly challenged by declining guest
traffic and increasing external cost pressures." Bernstein added,
"We have worked diligently during the second quarter to further
reduce both the operating and administrative cost structure of
Shells. Our efforts were also heavily focused on implementing the
most dramatic menu overhaul in the history of Shells. Our new menu,
which we introduced in early July, included both a roll back of
prices as well as a broadening of offerings. The menu has been
designed to greatly improve our price positioning in light of the
current difficult economic environment. We believe our menu price
proposition and broadened offerings have created a compelling value
statement to our guests." Bernstein additionally stated, "On August
1st, we introduced and opened our first Rock Beach Grill, which was
through the conversion of an existing Shells restaurant located in
Pembroke Pines, Florida. We are very excited about the prospects of
this new brand." Operating Results Revenues for the second quarter
of 2008 decreased 22.0% to $9.0 million from $11.5 million in the
second quarter of 2007, primarily as a result of an 18.1% decrease
in same store sales and dispositions of two underperforming
restaurants in 2007. As of the end of the second quarter of 2008,
the Company had 23 restaurants in operation, compared to 24
restaurants at the end of the second quarter of 2007. Restaurant
operating costs, consisting of food and beverage costs, labor,
other operating costs, depreciation expense and provision for
impairment of assets, were $8.9 million, or 99.7% of sales, in the
second quarter of 2008, compared to $11.7 million, or 102.2% of
sales, in the second quarter of 2007. Excluding the non-recurring
insurance premium refunds of $105,000 in the second quarter of 2008
and a provision for impairment of assets of $610,000 in the second
quarter of 2007, restaurant operating costs were $9.0 million, or
100.9% of sales, in the second quarter of 2008, compared to $11.1
million, or 96.8% of sales, in the second quarter of 2007. The 4.1%
increase in restaurant operating costs, adjusted for non-recurring
items, as a percentage of sales was mostly a result of a loss of
operating leverage as reflected by the reduction in sales volume.
General and administrative expenses were $641,000, or 7.2% of
revenues, in the second quarter of 2008 compared to $917,000, or
8.0% of revenues, in the second quarter of 2007. Excluding a
non-recurring severance expense adjustment of $35,000 in 2008,
general and administrative expenses were $676,000, or 7.6% of
revenues, in the second quarter of 2008. The favorable variance in
dollars and as a percentage of revenues primarily reflected a
general reduction in overhead expenditures. Loss from operations
for the second quarter of 2008 was $548,000, compared to a loss of
$1,110,000 in the second quarter of 2007. Excluding non-recurring
items as summarized in the financial tables below, the loss from
operations for the second quarter of 2008 was $688,000, compared to
a loss of $500,000 in the second quarter of 2007. Loss from
operations for the first 26-weeks of 2008 was $272,000, compared to
a loss of $973,000 for the comparable period in 2007. Excluding
non-recurring items as summarized in the financial tables below,
the loss from operations was $269,000 for the first 26-weeks of
2008, compared to a loss of $324,000 in the comparable period of
2007. The net loss for the second quarter of 2008 was $667,000, or
$0.03 per share, based upon 23.9 million common shares outstanding,
compared to a net loss in the second quarter of 2007 of $1,152,000,
or $0.06 per share, based upon 20.1 million shares outstanding. As
adjusted for non-recurring items as summarized in the financial
tables below, the net loss for the second quarter of 2008 was
$807,000, or $0.03 per share, compared to a net loss in the second
quarter of 2007 of $628,000, or $0.03 per share. The net loss for
the first 26-weeks of 2008 was $548,000, or $0.02 per share, based
upon 23.7 million common shares outstanding, compared to a net loss
in the first 26-weeks of 2007 of $1,117,000, or $0.06 per share,
based upon 18.9 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 2008 was $545,000, or $0.02
per share, compared to a net loss in the first 26-weeks of 2007 of
$639,000, or $0.03 per share. About the Company The Company manages
and operates 22 full-service, neighborhood seafood restaurants in
Florida under the name "Shells." Additionally, the Company is the
70% owner of and manages a full-service restaurant named "Rock
Beach Grill" in Pembroke Pines, Florida. The Company's restaurants
feature a wide selection of seafood items, including shrimp,
oysters, clams, mussels, scallops, lobster, crab and daily fresh
fish specials, cooked to order in a variety of ways: steamed,
sauteed, grilled, blackened and fried. The Company's restaurants
also offer a wide selection of pasta dishes, ribs, chicken, steaks,
appetizers, salads, desserts, full bar service and sushi, in select
locations. 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; international economic, cultural and political
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; changes in personnel, including senior management; 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 (In thousands, except per share data) (Unaudited)
Thirteen Week Period Ended June 29, 2008 July 1, 2007 Amount
Percent Amount Percent Revenues Restaurant sales $8,882 99.2%
$11,428 99.5% Management fees 25 0.3% 53 0.5% International fees 44
0.5% 0 0.0% Total Revenues $8,951 100.0% $11,481 100.0% Costs and
expenses: Cost of sales (1) 2,882 32.4% 3,724 32.6% Labor and other
related expenses (1) 3,013 33.9% 3,543 31.0% Other restaurant
operating expenses(1) 2,616 29.5% 3,343 29.3% Depreciation and
amortization (1) 347 3.9% 454 4.0% Provision for impairment of
assets (1) - 0.0% 610 5.3% Total restaurant operating costs (1)
8,858 99.7% 11,674 102.2% Restaurant operating income (loss) (1) 93
1.0% (193) -1.7% General and administrative expenses 641 7.2% 917
8.0% Loss from operations (548) -6.1% (1,110) -9.7% Interest
expense, net (76) -0.8% (75) -0.7% Other (expense) income (19)
-0.1% 75 0.7% Loss before elimination of minority partner interest
(643) -7.2% (1,110) -9.7% Elimination of minority partner interest
(24) -0.3% (42) -0.4% Net loss $(667) -7.5% $(1,152) -10.0% Net
loss per share of common stock: Basic and Diluted $(0.03) $(0.06)
Average number of weighted common shares outstanding: Basic and
Diluted 23,887 20,052 (1) Percentage as a percent of restaurant
sales SHELLS SEAFOOD RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data) (Unaudited)
Twenty-Six Week Period Ended June 29, 2008 July 1, 2007 Amount
Percent Amount Percent Revenues Restaurant sales $19,504 99.3%
$24,824 99.6% Management fees 56 0.3% 92 0.4% International fees 87
0.4% 0 0.0% Total Revenues $19,647 100.0% $24,916 100.0% Costs and
expenses: Cost of sales (1) 6,102 31.3% 8,079 32.5% Labor and other
related expenses (1) 6,150 31.5% 7,434 29.9% Other restaurant
operating expenses (1) 5,369 27.5% 6,864 27.7% Depreciation and
amortization (1) 712 3.7% 960 3.9% Provision for impairment of
assets (1) - 0.0% 610 2.5% Total restaurant operating costs (1)
18,333 94.0% 23,947 96.5% Restaurant operating income (1) 1,314
6.7% 969 3.9% General and administrative expenses 1,586 8.1% 1,942
7.8% Loss from operations (272) -1.4% (973) -3.9% Interest expense,
net (153) -0.8% (141) -0.6% Other (expense) income (25) -0.1% 114
0.5% Loss before elimination of minority partner interest (450)
-2.3% (1,000) -4.0% Elimination of minority partner interest (98)
-0.5% (117) -0.5% Net loss $(548) -2.8% $(1,117) -4.5% Net loss per
share of common stock: Basic and Diluted $(0.02) $(0.06) Average
number of weighted common shares outstanding: Basic and Diluted
23,713 18,947 (1) Percentage as a percent of restaurant sales
SHELLS SEAFOOD RESTAURANTS, INC. (Dollars in thousands, except per
share data) (Unaudited) June 29, July 1, 2008 2007 Number of
restaurants at end of period: Company-owned restaurants (1) 20 21
Licensed restaurants 3 3 Total 23 24 Balance sheet data: Cash $642
$630 Working capital (deficiency) (4,657) (5,342) Total assets
10,675 13,007 Long-term debt 590 1,426 Stockholders' equity (7)
3,480 (1) Includes one joint venture restaurant in which the
Company has a 51% equity interest. Thirteen Week Period Ended
NON-RECURRING ITEMS: June 29, 2008 July 1, 2007 Net loss, as
reported $(667) $(1,152) Non-recurring income (expense): Insurance
premium refunds 105 - Severance 35 - Provision for impairment of
assets - (610) Non-recurring items affecting loss from operations
140 (610) Gain on disposal of assets - 86 Total non-recurring
income (expense) 140 (524) Net loss, excluding non-recurring items
(807) (628) Net loss per share: As reported $(0.03) $(0.06)
Excluding non-recurring items $(0.03) $(0.03) Twenty-Six Week
Period Ended NON-RECURRING ITEMS: June 29, 2008 July 1, 2007 Net
loss, as reported $(548) $(1,117) Non-recurring income (expense):
Insurance premium refunds 105 - Severance (108) - Lease renewal
costs - (39) Provision for impairment of assets - (610)
Non-recurring items affecting loss from operations (3) (649) Legal
settlement proceeds - 85 Gain on disposal of assets - 86 Total
non-recurring expense (3) (478) Net loss, excluding non-recurring
items (545) (639) Net loss per share: As reported $(0.02) $(0.06)
Excluding non-recurring items $(0.02) $(0.03) DATASOURCE: Shells
Seafood Restaurants, Inc. CONTACT: Warren Nelson of Shells Seafood
Restaurants, Inc., +1-813-961-0944 Web site:
http://www.shellsseafood.com/
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