TAMPA, Fla., March 7 /PRNewswire-FirstCall/ -- Shells Seafood
Restaurants, Inc. (OTC:SHLL) (BULLETIN BOARD: SHLL) today reported
financial results for its fourth quarter and the fiscal year ended
December 30, 2007. Key metrics -- Fourth quarter of 2007 compared
to the fourth quarter of 2006: -- Revenues decreased 21.7% to $7.6
million. -- Comparable restaurant sales decreased 18.3%. -- Net
loss of $2.3 million, was the same as in the fourth quarter of
2006. Excluding non-recurring items, net loss of $1.5 million,
compared to a net loss of $1.0 million. -- Net loss per share of
$0.10, compared to net loss per share of $0.13. Excluding
non-recurring items, net loss per share of $0.06, same as in the
fourth quarter of 2006. Fifty-two weeks of 2007 compared to the
fifty-two weeks of 2006: -- Revenues decreased 13.3% to $41.5
million. -- Comparable restaurant sales decreased 11.4%. -- Net
loss of $4.4 million, compared to a net loss of $3.0 million.
Excluding non-recurring items, net loss of $3.2 million, compared
to a net loss of $2.0 million. -- Net loss per share of $0.21,
compared to a net loss per share of $0.18. Excluding non-recurring
items, net loss per share of $0.15, compared to net loss per share
of $0.12. Warren Nelson, interim president, commented, "2007 has
been a challenging year for casual dining restaurants in general,
and the Florida economic environment has been difficult for Shells.
While we are disappointed with our results in 2007, we have worked
diligently to reduce our expenses, while focusing on providing
greater dining value for our guests." Nelson further added,
"Building guest traffic and sales, while holding expenses in-line,
are both critical to our ability to persevere through this economic
downturn and reposition our brand for future long-term success. Our
efforts are directed toward providing our guests with great quality
seafood at price points which project a strong value statement."
Operating Results Revenues for the fourth quarter of 2007 decreased
21.7% to $7,564,000 from $9,659,000 in the fourth quarter of 2006,
predominantly due to a 18.3% decrease in same store sales, and to a
lesser extent, the second and fourth quarter 2007 dispositions of
two under performing restaurants. As of the end of the fourth
quarter of 2007, the Company had 23 restaurants in operation,
compared to 25 restaurants at the end of the fourth quarter of
2006. Restaurant operating costs, consisting of food and beverage
costs, labor, other operating costs, depreciation expense and
provision for impairment expense, were $8,850,000, or 117.6% of
sales, in the fourth quarter of 2007, compared to $11,001,000, or
114.2% of sales, in the fourth quarter of 2006. Excluding
non-recurring items, restaurant operating costs were $8,192,000, or
108.8% of sales, in the fourth quarter of 2007, compared to
$9,714,000, or 100.9% of sales. The 7.9% increase in restaurant
operating costs, as a percentage of sales, primarily resulted from
a loss of operating leverage as reflected by the reduction in sales
volume, and to a lesser extent, increases in commodity costs and
minimum wage. General & administrative expenses were $792,000,
or 10.5% of revenues, in the fourth quarter of 2007 compared to
$784,000, or 8.1% of revenues, in the fourth quarter of 2006. The
unfavorable variance as a percentage of revenues reflects the
reduction in sales volume and incremental stock option expense of
$71,000, or 1.0% of revenues. The loss from operations in the
fourth quarter of 2007 of $2,078,000 was $48,000 less than the loss
from operations in the comparable period of 2006. Excluding
non-recurring items in both periods, the loss from operations in
the fourth quarter of 2007 of $1,420,000 was $581,000 greater than
the comparable period of 2006. The loss from operations in fiscal
2007 of $3,940,000 was $1,474,000 greater than the loss from
operations in the comparable period of 2006. Excluding
non-recurring items in both periods, the loss from operations in
fiscal 2007 of $2,672,000 was $1,341,000 greater than the
comparable period of 2006. The net loss for the fourth quarter of
2007 was $2,274,000, or $0.10 per share based upon 23.5 million
common shares outstanding, compared to a net loss in the fourth
quarter of 2006 of $2,291,000, or $0.13 per share based upon 17.6
million common shares outstanding. As adjusted for non-recurring
items as summarized in the ensuing financial tables, the net loss
for the fourth quarter of 2007 was $1,506,000, or $0.06 per share,
compared to a net loss for the fourth quarter of 2006 of
$1,004,000, or $0.06 per share. The net loss for fiscal 2007 was
$4,400,000, or $0.21 per share based upon 20.9 million common
shares outstanding, compared to a net loss for fiscal 2006 of
$3,002,000, or $0.18 per share based upon 16.7 million common
shares outstanding. As adjusted for non-recurring items as
summarized in the ensuing financial tables, the net loss for fiscal
2007 was $3,154,000, or $0.15 per share, compared to a net loss for
fiscal 2006 of $2,017,000, or $0.12 per share. About the Company
The Company manages and operates 23 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, sauteed, 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; 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; 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 December 30, 2007 December 31, 2006
Amount Percent Amount Percent Revenues Restaurant sales $7,526
99.5% $9,631 99.7% Management fees 23 0.3% 28 0.3% International
fees 15 0.2% 0 0.0% Total Revenues $7,564 100.0% $9,659 100.0%
Costs and expenses: Cost of sales (1) 2,485 33.0% 3,115 32.3% Labor
and other related expenses (1) 2,528 33.6% 3,116 32.4% Other
restaurant operating expenses (1) 2,760 36.7% 2,971 30.8%
Depreciation and amortization (1) 417 5.5% 557 5.8% Provision for
impairment of assets (1) 660 8.8% 1,242 12.9% Total restaurant
operating costs (1) 8,850 117.6% 11,001 114.2% Restaurant operating
(loss) income (1) (1,286) -17.1% (1,342) -13.9% General and
administrative expenses 792 10.5% 784 8.1% Loss from operations
(2,078) -27.5% (2,126) -22.0% Lease buy-out option - 0.0% - 0.0%
Interest expense, net (80) -1.1% (97) -1.0% Other expense (104)
-1.4% (15) -0.2% Loss before elimination of minority partner
interest (2,262) -29.9% (2,238) -23.2% Elimination of minority
partner interest (12) -0.2% (53) -0.5% Net loss $(2,274) -30.1%
$(2,291) -23.7% Net loss per share of common stock: Basic and
diluted $(0.10) $(0.13) Average number of weighted common shares
outstanding: Basic and diluted 23,538 17,582 (1) Percentage as a
percent of restaurant sales Fifty-Two Week Period Ended December
30, 2007 December 31, 2006 2006 Percent 2006 Percent Revenues
Restaurant sales $41,305 99.6% $47,673 99.7% Management fees 139
0.3% 156 0.3% International fees 15 0.0% 0 0.0% Total Revenues
$41,459 100.0% $47,829 100.0% Costs and expenses: Cost of sales (1)
13,469 32.6% 15,363 32.2% Labor and other related expenses (1)
12,938 31.3% 14,722 30.9% Other restaurant operating expenses (1)
12,373 30.0% 12,948 27.2% Depreciation and amortization (1) 1,789
4.3% 2,199 4.6% Provision for impairment of assets (1) 1,270 3.1%
1,242 2.6% Total restaurant operating costs (1) 41,839 101.3%
46,474 97.5% Restaurant operating (loss) income (1) (380) -0.9%
1,355 2.8% General and administrative expenses 3,560 8.6% 3,821
8.0% Loss from operations (3,940) -9.5% (2,466) -5.2% Lease buy-out
option - 0.0% 212 0.4% Interest expense, net (296) -0.7% (332)
-0.7% Other expense (5) 0.0% (173) -0.4% Loss before elimination of
minority partner interest (4,241) -10.2% (2,759) -5.8% Elimination
of minority partner interest (159) -0.4% (243) -0.5% Net loss
$(4,400) -10.6% $(3,002) -6.3% Net loss per share of common stock:
Basic and diluted $(0.21) $(0.18) Average number of weighted common
shares outstanding: Basic and diluted 20,920 16,665 (1) Percentage
as a percent of restaurant sales SHELLS SEAFOOD RESTAURANTS, INC.
(Dollars in thousands) 52 Weeks 52 Weeks Ended Ended December 30,
December 31, 2007 2006 Number of restaurants at end of period:
Company-owned restaurants (1) 20 22 Licensed restaurants 3 3 Total
23 25 Balance sheet data: Cash $458 $734 Working capital
(deficiency) (4,536) (4,446) Total assets 11,479 13,837
Stockholders' equity 361 4,339 (1) Includes one joint venture
restaurant in which the Company has a 51% equity interest. SUMMARY
OF NON-RECURRING ITEMS: (Unaudited) Thirteen Week Fifty-Two Week
Period Ended Period Ended December December December December 30,
31, 30, 31, 2007 2006 2007 2006 Net loss, as reported $(2,274)
$(2,291) $(4,400) $(3,002) Non-recurring (expense) income: Lease
buy out option - - - 212 Lease renewal / termination fee - - (39)
(23) Workers compensation premium refund - - - 152 Workers
compensation reserve adjustment 20 (45) 20 (45) Credit card fee
legal settlement proceeds - - 85 - (Loss) gain on disposal or sale
of assets (80) - 6 (39) Closed store reserve adjustment (30) - (30)
- Asset impairment charge (660) (1,242) (1,270) (1,242) Inventory
write-down (18) - (18) - Non-recurring expense, net (768) (1,287)
(1,246) (985) Net loss, excluding non-recurring items $(1,506)
$(1,004) $(3,154) $(2,017) Net loss per share of common stock:
Basic and diluted, as reported $(0.10) $(0.13) $(0.21) $(0.18)
Basic and diluted, excluding non- recurring items $(0.06) $(0.06)
$(0.15) $(0.12) 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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