TAMPA, Fla., Nov. 9 /PRNewswire-FirstCall/ -- Shells Seafood
Restaurants, Inc. (OTC:SHLL) (BULLETIN BOARD: SHLL) today reported
financial results for its third quarter ended September 30, 2007.
Key metrics - Third quarter of 2007 compared to the third quarter
of 2006: -- Revenues decreased 14.7% to $9.0 million. -- Comparable
restaurant sales decreased 12.1%. -- Net loss of $1,010,000,
compared to a net loss of $962,000. -- Net loss per share of $0.05,
compared to net loss per share of $0.06. First 39-weeks of 2007
compared to the first 39-weeks of 2006: -- Revenues decreased 11.2%
to $33.9 million. -- Comparable restaurant sales decreased 9.7%. --
Net loss of $2,126,000, compared to a net loss of $709,000.
Excluding non-recurring items, net loss of $1,648,000, compared to
a net loss of $1,011,000. -- Net loss per share of $0.11, compared
to a net loss per share of $0.04. Excluding non-recurring items,
net loss per share of $0.08, compared to net loss per share of
$0.06. Leslie Christon, President and CEO, commented, "The
restaurant industry continues to be challenged by a tough operating
environment. Soft sales, increasing commodity expenses, and a
higher than federal hourly wage rate are affecting us heavily in
Florida, and we are disappointed in our financial results. We
remain committed to delivering a quality experience to our guests,
and to providing strong value in our menu offerings. Growing our
guest traffic and strengthening our business fundamentals continue
to be our highest priorities. Florida residents are heavily
impacted by increasing expenses in the cost of living, and are
looking for greater value for their dollar. We are responding with
strong menu offerings at moderate prices, which will provide our
guests with an exceptional lunch or dinner value. Supporting these
offers with media will make a broader audience aware of the quality
and value they can receive at Shells." Operating Results Revenues
for the third quarter of 2007 decreased 14.7% to $9.0 million from
$10.5 million in the third quarter of 2006, mostly due to an 12.1%
decrease in same store sales and the second quarter 2007 closing
and disposition of an underperforming restaurant. As of the end of
the third quarter of 2007, the Company had 24 restaurants in
operation, compared to 25 restaurants at the end of the third
quarter of 2006. Restaurant operating costs, consisting of food and
beverage costs, labor, other operating costs and depreciation
expense, were $9.0 million, or 100.9% of sales, in the third
quarter of 2007, compared to $10.5 million, or 99.7% of sales, in
the third quarter of 2006. The 1.2% 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. General & administrative expenses were $827,000, or
9.2% of revenues, in the third quarter of 2007 compared to
$881,000, or 8.4% of revenues, in the third quarter of 2006. The
unfavorable variance as a percentage of revenues reflects
incremental stock option expense of $66,000, or 0.7% of revenues.
Loss from operations for the third quarter of 2007 of $891,000 was
$85,000 greater than the loss from operations of $806,000 for the
comparable period of 2006. Loss from operations for the first
39-weeks of 2007 of $1,863,000 was $1,524,000 greater than the loss
from operations of $339,000 for the comparable period of 2006 and,
excluding non-recurring items in both periods, the loss was
$723,000 greater than the comparable period of 2006. The net loss
for the third quarter of 2007 was $1,010,000, or $0.05 per share
based upon 22.2 million common shares outstanding, compared to a
net loss in the third quarter of 2006 of $962,000, or $0.06 per
share based upon 16.7 million common shares outstanding. The net
loss for the first 39-weeks of 2007 was $2,126,000, or $0.11 per
share based upon 20.0 million common shares outstanding, compared
to a net loss in the first 39 weeks of 2006 of $709,000, or $0.04
per share based upon 16.4 million common shares outstanding. As
adjusted for non-recurring items as summarized in the ensuing
financial tables, the net loss for the first 39- weeks of 2007 was
$1,648,000, or $0.08 per share, compared to a net loss in the first
39-weeks of 2006 of $1,011,000, or $0.06 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, 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 September 30, 2007 October 1, 2006
Amount Percent Amount Percent Revenues: Restaurant sales $8,954
99.7% $10,485 99.6% Management fees 25 0.3% 44 0.4% Total revenues
8,979 100.0% 10,529 100.0% Restaurant operating costs: Food and
beverage (1) 2,905 32.4% 3,398 32.4% Labor (1) 2,977 33.2% 3,354
32.0% Other (1) 2,749 30.7% 3,124 29.8% Depreciation and
amortization (1) 412 4.6% 578 5.5% Provision for impairment of
assets (1) - 0.0% - - Total restaurant operating costs (1) 9,043
100.9% 10,454 99.7% Restaurant operating (loss) income (1) (64)
-0.7% 75 0.7% General and administrative expenses 827 9.2% 881 8.4%
Loss from operations (891) -9.9% (806) -7.7% Lease buy-out - 0.0% -
- Interest expense, net (74) -0.8% (97) -0.9% Other expense (45)
-0.5% (59) -0.6% Net loss (1,010) -11.2% (962) -9.2% Net loss per
share of common stock: Basic and diluted $(0.05) $(0.06) Common
shares used in computing net loss per share: Basic and diluted
22,249 16,674 (1) As a percent of restaurant sales SHELLS SEAFOOD
RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data) Thirty-nine Week Period Ended
September 30, 2007 October 1, 2006 Amount Percent Amount Percent
Revenues: Restaurant sales $33,779 99.7% $38,042 99.7% Management
fees 116 0.3% 128 0.3% Total revenues 33,895 100.0% 38,170 100.0%
Restaurant operating costs: Food and beverage (1) 10,984 32.5%
12,248 32.2% Labor (1) 10,410 30.8% 11,606 30.5% Other (1) 9,613
28.5% 9,976 26.2% Depreciation and amortization (1) 1,373 4.1%
1,643 4.3% Provision for impairment of assets (1) 610 1.8% - -
Total restaurant operating costs (1) 32,990 97.7% 35,473 93.2%
Restaurant operating (loss) income (1) 905 2.7% 2,697 7.1% General
and administrative expenses 2,768 8.2% 3,036 8.0% Loss from
operations (1,863) -5.5% (339) -0.9% Lease buy-out - 0.0% 212 0.6%
Interest expense, net (216) -0.6% (235) -0.6% Other expense (47)
-0.1% (347) -0.9% Net loss (2,126) -6.2% (709) -1.8% Net loss per
share of common stock: Basic and diluted $(0.11) $(0.04) Common
shares used in computing net loss per share: Basic and diluted
20,048 16,360 (1) As a percent of restaurant sales SHELLS SEAFOOD
RESTAURANTS, INC. (Dollars in thousands, except per share data)
(Unaudited) September 30, October 1, 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 $539
$590 Working capital (deficiency) (5,379) (6,048) Total assets
12,078 16,826 Long-term debt 1,152 1,813 Stockholders' equity 2,553
6,617 (1) Includes one joint venture restaurant in which the
Company has a 51% equity interest. Thirteen Week Thirty-nine Week
Period Ended Period Ended September 30, October 1, September 30,
October 1, NON-RECURRING ITEMS: 2007 2006 2007 2006 Net loss, as
reported $(1,010) $(962) $(2,126) $(709) Non-recurring (expense)
income: Workers' comp insurance refund and reserve adjustment - - -
152 Lease renewal costs - - (39) - Provision for impairment of
assets - - (610) - Non-recurring items affecting (loss) income from
operations - - (649) 152 Lease buyout option - - - 212 Legal
settlement proceeds - - 85 - Lease termination fee - - - (23) Gain
(loss) on disposal of assets - - 86 (39) Total non-recurring
(expense) income - - (478) 302 Net loss, excluding non- recurring
items (1,010) (962) (1,648) (1,011) Net loss per share of common
stock: Basic and diluted, as reported $(0.05) $(0.06) $(0.11)
$(0.04) Basic and diluted, excluding non-recurring items $(0.05)
$(0.06) $(0.08) $(0.06) Common shares used in computing net loss
per share of common stock, excluding non-recurring items 22,249
16,674 20,048 16,360 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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