Shells Seafood Restaurants, Inc. Reports First Quarter Results, Disposition of Midwest Units, Hiring of New President and Corporate Restructuring

Apr 23, 2001, 01:00 ET from Shells Seafood Restaurants, Inc.

    TAMPA, Fla., April 23 /PRNewswire Interactive News Release/ --
 Shells Seafood Restaurants, Inc. (OTC Bulletin Board:   SHLL) today reported a
 net loss for the first quarter ended April 1, 2001 of $3,018,000 or $0.68 per
 share in comparison to net income of $986,000 or $0.22 per share diluted for
 the first quarter ended April 2, 2000.  The results for the first quarter
 ended April 1, 2001 included non-recurring charges of $3,167,000, of which
 $1,582,000 related to the write-down of impaired assets (primarily related to
 closures of the Midwest restaurants) to their estimated fair value in
 accordance with Statement of Financial Accounting Standards No. 121.  Other
 non-recurring items included a provision for store closing expenses of
 $1,333,000 related to the Midwest restaurants and a one-time accrual for
 severance arrangements of $252,000.  Exclusive of the non-recurring items, the
 first quarter 2001 net income was $149,000 or $0.03 per share diluted.
     Revenues for the first quarter ended April 1, 2001 decreased by 16% to
 $21,655,000 from $25,851,000 in the comparable period in 2000.  Same store
 sales for the first quarter of 2001 were 5.4% below the comparable period in
 2000.  The Company operated 39 restaurants as of first quarter ended April 1,
 2001, versus 49 restaurants at the comparable period ended in 2000.  Of the 10
 stores closed, eight were located in the Midwest and two in Florida.  In
 addition, six Midwest restaurants were closed subsequent to the end of the
 first quarter.  The Company is presently in negotiations with an unaffiliated
 entity to continue to operate the three remaining Midwest units as Shells
 under a licensing arrangement.
     Effective April 2, 2001, David W. Head joined the Company as President and
 Chief Executive Officer.  Mr. Head was formerly President, Chief Operating
 Officer and Partner of Le Carnassier, LLC, a multi-state franchisee of Red
 Robin International from December 1998 to March 2001.  Prior to that, he was
 President and Chief Operating Officer of Red River Barbeque and Grill.  He
 also served as President and Chief Executive Officer of Houlihan's Restaurant
 Group.  In addition, Mr. Head was the Vice President of Operations and
 Managing Partner of Apple Partners LP, a franchisee of Applebee's
 International.
     In conjunction with the downsizing of its restaurant operating base, the
 Company is taking action designed to reduce administrative support staff and
 related expenses.  The Company recently replaced its Vice President of
 Operations and incorporated the functions of the Vice President of Marketing
 with existing personnel.
     Mr. Head commented, "Year 2000 and the first quarter of 2001 were
 difficult periods for Shells.  The Midwest markets continued to fall short of
 projected earnings goals.  The Midwest stores were not only draining our cash
 flow, but also pulling operational focus from our core Florida markets.  While
 the downsizing and restructuring may negatively affect short-term earnings, it
 positions the Company to successfully execute at a higher level of
 profitability and efficiency in the future."
     Mr. Head further commented, "As Shells has grown and evolved, the
 challenges the Company faced have changed.  Although, the decision to reduce
 the corporate support staff is always a difficult one, I believe that we
 needed to restructure for the future.  I believe that we have an excellent
 opportunity to position the Company for more predictable and sustainable long-
 term growth.  We will be focusing on our core competencies.  I look forward to
 working with all the members of the Shells team.  I am confident that the
 Shells brand has tremendous opportunities ahead."
     The Company currently manages and operates 30 and licenses an additional
 three full-service, mid-priced casual dining seafood restaurants in Florida
 and the Midwest under the name "Shells."  Shells restaurants feature a wide
 selection of seafood items, including shrimp, oysters, clams, scallops,
 lobster, crab, crawfish, 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 and desserts.
     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 and labor
 costs; national, regional and local economic and weather conditions;
 promotional timings and seasonality; demographic trends and traffic patterns;
 competition from other restaurants and food service establishments; and the
 timing, costs and charges relating to restaurant openings and closings.  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,
 operating results, 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.  An investment in the Company involves
 various risks, including those mentioned above and those which 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)
                                                   13 Weeks          13 Weeks
                                                     Ended             Ended
                                                    April 1,          April 2,
                                                      2001              2000
 
     Revenues                                       $21,655           $25,851
 
     Costs and expenses
       Cost of sales                                  8,143             9,261
       Labor and other related expenses               6,455             7,400
       Other restaurant operating expenses            4,599             4,930
       General and administrative expenses            1,694             1,812
       Depreciation and amortization                    536               677
       Provision for impairment of assets             1,582               ---
       Provision for store closings                   1,333               ---
     Income (loss) from operations                   (2,687)            1,771
 
     Interest expense, net                             (186)             (192)
     Other expense                                      (66)              (11)
     Income (loss) before elimination of
      minority partner interest and income taxes     (2,939)            1,568
     Elimination of minority partner
      interest                                          (79)              (96)
     Income (loss) before provision for
      income taxes                                   (3,018)            1,472
     Income tax expense                                 ---              (486)
 
     Net income  (loss)                             $(3,018)             $986
 
     Basic net income (loss) per share               $(0.68)            $0.22
     Weighted average common shares
      outstanding                                     4,454             4,454
 
     Diluted net income (loss) per share             $(0.68)            $0.22
     Diluted weighted average common
      shares outstanding                              4,454             4,454
 
 
                         SHELLS SEAFOOD RESTAURANTS, INC.
                              (Dollars in thousands)
                                    (Unaudited)
 
                                                   13 Weeks          13 Weeks
                                                     Ended             Ended
                                                    April 1,          April 2,
                                                      2001              2000
     System-wide sales:
       Company-owned restaurants (1)                $21,545           $25,736
       Licensed restaurants                           2,738             2,877
       Total                                        $24,283           $28,613
 
     Number of restaurants at end of
      period:
       Company-owned restaurants (1)                     35                45
       Licensed restaurants                               4                 4
       Total                                             39                49
 
     Balance sheet data:
       Cash                                            $371            $5,311
       Working capital (deficiency)                  (8,741)           (1,734)
       Total assets                                  18,833            33,003
       Stockholders' equity                           1,394            14,732
 
     (1) Includes one joint venture restaurant in which the Company has a 51%
         equity interest.
 
 
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SOURCE Shells Seafood Restaurants, Inc.
    TAMPA, Fla., April 23 /PRNewswire Interactive News Release/ --
 Shells Seafood Restaurants, Inc. (OTC Bulletin Board:   SHLL) today reported a
 net loss for the first quarter ended April 1, 2001 of $3,018,000 or $0.68 per
 share in comparison to net income of $986,000 or $0.22 per share diluted for
 the first quarter ended April 2, 2000.  The results for the first quarter
 ended April 1, 2001 included non-recurring charges of $3,167,000, of which
 $1,582,000 related to the write-down of impaired assets (primarily related to
 closures of the Midwest restaurants) to their estimated fair value in
 accordance with Statement of Financial Accounting Standards No. 121.  Other
 non-recurring items included a provision for store closing expenses of
 $1,333,000 related to the Midwest restaurants and a one-time accrual for
 severance arrangements of $252,000.  Exclusive of the non-recurring items, the
 first quarter 2001 net income was $149,000 or $0.03 per share diluted.
     Revenues for the first quarter ended April 1, 2001 decreased by 16% to
 $21,655,000 from $25,851,000 in the comparable period in 2000.  Same store
 sales for the first quarter of 2001 were 5.4% below the comparable period in
 2000.  The Company operated 39 restaurants as of first quarter ended April 1,
 2001, versus 49 restaurants at the comparable period ended in 2000.  Of the 10
 stores closed, eight were located in the Midwest and two in Florida.  In
 addition, six Midwest restaurants were closed subsequent to the end of the
 first quarter.  The Company is presently in negotiations with an unaffiliated
 entity to continue to operate the three remaining Midwest units as Shells
 under a licensing arrangement.
     Effective April 2, 2001, David W. Head joined the Company as President and
 Chief Executive Officer.  Mr. Head was formerly President, Chief Operating
 Officer and Partner of Le Carnassier, LLC, a multi-state franchisee of Red
 Robin International from December 1998 to March 2001.  Prior to that, he was
 President and Chief Operating Officer of Red River Barbeque and Grill.  He
 also served as President and Chief Executive Officer of Houlihan's Restaurant
 Group.  In addition, Mr. Head was the Vice President of Operations and
 Managing Partner of Apple Partners LP, a franchisee of Applebee's
 International.
     In conjunction with the downsizing of its restaurant operating base, the
 Company is taking action designed to reduce administrative support staff and
 related expenses.  The Company recently replaced its Vice President of
 Operations and incorporated the functions of the Vice President of Marketing
 with existing personnel.
     Mr. Head commented, "Year 2000 and the first quarter of 2001 were
 difficult periods for Shells.  The Midwest markets continued to fall short of
 projected earnings goals.  The Midwest stores were not only draining our cash
 flow, but also pulling operational focus from our core Florida markets.  While
 the downsizing and restructuring may negatively affect short-term earnings, it
 positions the Company to successfully execute at a higher level of
 profitability and efficiency in the future."
     Mr. Head further commented, "As Shells has grown and evolved, the
 challenges the Company faced have changed.  Although, the decision to reduce
 the corporate support staff is always a difficult one, I believe that we
 needed to restructure for the future.  I believe that we have an excellent
 opportunity to position the Company for more predictable and sustainable long-
 term growth.  We will be focusing on our core competencies.  I look forward to
 working with all the members of the Shells team.  I am confident that the
 Shells brand has tremendous opportunities ahead."
     The Company currently manages and operates 30 and licenses an additional
 three full-service, mid-priced casual dining seafood restaurants in Florida
 and the Midwest under the name "Shells."  Shells restaurants feature a wide
 selection of seafood items, including shrimp, oysters, clams, scallops,
 lobster, crab, crawfish, 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 and desserts.
     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 and labor
 costs; national, regional and local economic and weather conditions;
 promotional timings and seasonality; demographic trends and traffic patterns;
 competition from other restaurants and food service establishments; and the
 timing, costs and charges relating to restaurant openings and closings.  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,
 operating results, 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.  An investment in the Company involves
 various risks, including those mentioned above and those which 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)
                                                   13 Weeks          13 Weeks
                                                     Ended             Ended
                                                    April 1,          April 2,
                                                      2001              2000
 
     Revenues                                       $21,655           $25,851
 
     Costs and expenses
       Cost of sales                                  8,143             9,261
       Labor and other related expenses               6,455             7,400
       Other restaurant operating expenses            4,599             4,930
       General and administrative expenses            1,694             1,812
       Depreciation and amortization                    536               677
       Provision for impairment of assets             1,582               ---
       Provision for store closings                   1,333               ---
     Income (loss) from operations                   (2,687)            1,771
 
     Interest expense, net                             (186)             (192)
     Other expense                                      (66)              (11)
     Income (loss) before elimination of
      minority partner interest and income taxes     (2,939)            1,568
     Elimination of minority partner
      interest                                          (79)              (96)
     Income (loss) before provision for
      income taxes                                   (3,018)            1,472
     Income tax expense                                 ---              (486)
 
     Net income  (loss)                             $(3,018)             $986
 
     Basic net income (loss) per share               $(0.68)            $0.22
     Weighted average common shares
      outstanding                                     4,454             4,454
 
     Diluted net income (loss) per share             $(0.68)            $0.22
     Diluted weighted average common
      shares outstanding                              4,454             4,454
 
 
                         SHELLS SEAFOOD RESTAURANTS, INC.
                              (Dollars in thousands)
                                    (Unaudited)
 
                                                   13 Weeks          13 Weeks
                                                     Ended             Ended
                                                    April 1,          April 2,
                                                      2001              2000
     System-wide sales:
       Company-owned restaurants (1)                $21,545           $25,736
       Licensed restaurants                           2,738             2,877
       Total                                        $24,283           $28,613
 
     Number of restaurants at end of
      period:
       Company-owned restaurants (1)                     35                45
       Licensed restaurants                               4                 4
       Total                                             39                49
 
     Balance sheet data:
       Cash                                            $371            $5,311
       Working capital (deficiency)                  (8,741)           (1,734)
       Total assets                                  18,833            33,003
       Stockholders' equity                           1,394            14,732
 
     (1) Includes one joint venture restaurant in which the Company has a 51%
         equity interest.
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X70802143
 
 SOURCE  Shells Seafood Restaurants, Inc.