SWRG Smith & Wollensky Restr Grp (MM)

Smith & Wollensky Reports Second Quarter Financial Results NEW YORK, Aug. 5 /PRNewswire-FirstCall/ -- The Smith & Wollensky Restaurant Group, Inc. (NASDAQ:SWRG) today announced financial results for the second quarter and six months ended June 28, 2004. (Logo: http://www.newscom.com/cgi-bin/prnh/20020904/SWRGLOGO ) Total consolidated restaurant sales for the second quarter were $30.0 million, a 15.1% increase from the corresponding period a year ago. Comparable consolidated restaurant sales for the quarter were up 9.3%. This represents the ninth consecutive quarter of comparable consolidated restaurant sales increases. Net income for the second quarter of 2004 was $263,000, or $0.03 per share, compared with net income of $240,000, or $0.02 per share, in the comparable quarter last year. Although the Company has taken pricing action to offset the continued high cost of beef, food cost, as a percentage of sales, was higher than in the second quarter of 2003. The Company estimates that increases in the average cost of prime cuts added approximately $370,000 and $900,000, respectively, to the second quarter and six months ended June 28, 2004 food cost for comparable consolidated restaurants when compared to the second quarter and six months ended June 30, 2003. For the first six months of 2004, total consolidated restaurant sales were $60.7 million, a 17.9% increase from the first six months of 2003. Comparable consolidated restaurant sales for the first half rose 9.4%. Net income for the six-month period was $193,000, or $0.02 per share, compared with $323,000, or $0.03 per share, for the first half of 2003. Results for both the six-month periods of 2004 and 2003 included opening costs and initial operating losses related to a new restaurant -- Houston in the first quarter of 2004 and Dallas in the first quarter of 2003. As a result of the Company's adoption of FIN 46, the results and accounts for Maloney & Porcelli, a restaurant managed by the Company, have been consolidated by the Company for 2004 and 2003. Prior to the adoption of FIN 46, the Company had been including in its consolidated results only the fee received for managing the operations of Maloney & Porcelli. The Company also announced today that total consolidated restaurant sales for its July fiscal month -- the four weeks ended July 26, 2004 -- increased 12.7% from July 2003. Comparable consolidated restaurant sales for the month rose 4.1%. Chairman and CEO Alan Stillman commented, "We continue to be pleased with the Company's sales performance with particular note to the strong public response to our Houston unit. We are also looking forward to a successful opening of our Boston location early this fall." Mr. Stillman continued, "Other notable events during the second quarter of 2004 include the completion of $ 4.0 million of additional financing, which will be used for the construction of our Boston location." Conference Call Alan Stillman, Chairman & CEO, and Alan Mandel, CFO, will conduct a conference call to review the Company's financial results for the second quarter of 2004 and six months ended June 28, 2004 at 5:00 p.m. ET on August 5, 2004. Interested parties may listen to the live call over the Internet via http://www.smithandwollensky.com/. To listen to the live call, please go to the website at least 15 minutes early to register and to download and install any necessary audio software. If you are unable to listen live, the conference call will also be archived on the website listed above. An audio recording of the conference call, which may contain material non-public information regarding the Company's results of operations or financial condition for the second quarter of 2004, is expected to be posted on the Company's website under the heading Investor Relations following the conference call. About Smith & Wollensky Restaurant Group The Smith & Wollensky Restaurant Group develops, owns and operates high- end, high-volume restaurants in major cities across the United States. The original Smith & Wollensky, a traditional New York steakhouse, opened in 1977 and is currently believed to be the largest-grossing a la carte restaurant in the country. The company operates ten Smith & Wollensky restaurants located in New York, Miami Beach, Chicago, New Orleans, Las Vegas, Washington, D.C., Philadelphia, Columbus, Dallas and Houston. SWRG also operates seven other restaurants in New York and Chicago: Cite, Maloney & Porcelli, Manhattan Ocean Club, Mrs. Park's Tavern, ONEc.p.s., Park Avenue Cafe and The Post House. Except for historical information contained herein, the statements made in this press release regarding the Company's business, strategy and results of operations are forward-looking statements which are based on management's beliefs and information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from such statements. Factors that may cause such differences include changes in economic conditions generally or in each of the markets in which the Company is located, unanticipated changes in labor or food costs, changes in consumer preferences, the level of competition in the high-end segment of the restaurant industry and the success of the Company's growth strategy. For a more detailed description of such factors, please see the Company's filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. (Financial Tables Follow) THE SMITH & WOLLENSKY RESTAURANT GROUP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of Operations (dollar amounts in thousands, except per share amounts) Three Months Ended Six Months Ended June 28, June 30, June 28, June 30, 2004 2003 2004 2003 Restaurant sales $30,010 $26,081 $60,662 $51,440 Total cost of restaurant sales 26,593 22,910 54,090 45,284 Income from restaurant operations 3,417 3,171 6,572 6,156 Management fee income 316 232 632 444 Income from owned and managed restaurants 3,733 3,403 7,204 6,600 General and administrative expenses 2,367 2,389 4,908 5,086 Royalty expense 432 369 871 717 Operating income 934 645 1,425 797 Interest expense (333) (277) (656) (403) Amortization of deferred debt financing costs (26) (13) (44) (26) Interest income - 31 - 74 Interest expense, net (359) (259) (700) (355) Income before provision for income taxes 575 386 725 442 Provision for income taxes 51 75 103 125 Income before interest in (income) loss of consolidated variable interest entity 524 311 622 317 Interest in (income) loss of consolidated variable interest entity (261) (71) (429) 6 Net income $263 $240 $193 $323 Net income per common share: Basic $0.03 $0.03 $0.02 $0.03 Diluted $0.03 $0.02 $0.02 $0.03 Weighted average common shares outstanding: Basic 9,376,249 9,354,481 9,376,249 9,354,374 Diluted 10,131,915 9,806,731 10,131,915 9,667,470 THE SMITH & WOLLENSKY RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (dollar amounts in thousands, except per share data) June 28, December 29, Assets 2004 2003 Current assets: Cash and cash equivalents $1,033 $2,181 Short-term investments 168 1,055 Accounts receivable, net 2,818 2,680 Merchandise inventory 4,867 4,749 Prepaid expenses and other current assets 1,376 845 Total current assets 10,262 11,510 Property and equipment, net 68,527 63,386 Goodwill, net 6,886 6,886 Licensing agreement, net 3,489 3,338 Other assets 4,241 3,941 Total assets $93,405 $89,061 Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $1,323 $2,121 Accounts payable and accrued expenses 12,206 11,922 Total current liabilities 13,529 14,043 Obligations under capital lease 10,062 9,991 Long-term debt, net of current portion 10,497 6,099 Deferred rent 6,481 6,400 Total liabilities 40,569 36,533 Interest in consolidated variable interest entity (1,601) (1,680) Stockholders' equity: Common stock (par value $.01; authorized 40,000,000 shares; 9,376,249 shares issued and outstanding at June 28, 2004 and December 29, 2003, respectively) 94 94 Additional paid-in capital 69,940 69,940 Accumulated deficit (15,649) (15,842) Accumulated other comprehensive income 52 16 54,437 54,208 Total liabilities and stockholders' equity $93,405 $89,061 http://www.newscom.com/cgi-bin/prnh/20020904/SWRGLOGODATASOURCE: The Smith & Wollensky Restaurant Group CONTACT: Allison Good of The Smith & Wollensky Restaurant Group, +1-212-838-2061, or ; or Investors, Lauren Felice of RFBinder Partners, +1-212-994-7541, or Web site: http://www.smithandwollensky.com/

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