Smith & Wollensky Reports Third Quarter Financial Results NEW
YORK, Nov. 11 /PRNewswire-FirstCall/ -- The Smith & Wollensky
Restaurant Group, Inc. (NASDAQ:SWRG) today announced financial
results for the third quarter and nine months ended September 27,
2004. Total consolidated restaurant sales for the third quarter
were $24.5 million, a 5.9% increase from the corresponding period a
year ago. Comparable consolidated restaurant sales for the quarter
were down 2.0%. The significant factors contributing to the decline
in comparable consolidated restaurant sales included the loss of
business at our Miami and New Orleans units both during and after
three major hurricanes, and the effect of the Republican National
Convention in New York City. Net loss for the third quarter of 2004
was $3.2 million, or $(0.34) per share, compared with net loss of
$1.7 million, or $(0.18) per share, in the comparable quarter last
year. The Company estimates that approximately $500,000 of the
current period's loss related directly to the pre-opening costs of
our newest Smith & Wollensky in Boston on September 20, 2004.
The Company began to see some positive results from past pricing
action and a leveling off in the cost of beef in the third quarter
of 2004. For the first nine months of 2004, total consolidated
restaurant sales were $85.1 million, a 14.2% increase from the
first nine months of 2003. Comparable consolidated restaurant sales
for the first nine months rose 6.2%. Net loss for the nine-month
period was $3.2 million, or $(0.34) per share, compared with $1.4
million, or $(0.15) per share, for the first nine months of 2003.
The results for the nine-month period of 2004 include the
pre-opening costs and initial operating losses of two new Smith
& Wollensky units (Houston in the first quarter of 2004 and
Boston in the third quarter of 2004) versus one new opening in
Dallas in the first quarter of 2003. Chairman and CEO Alan Stillman
commented, "This quarter marked the most unusual set of
circumstances that we have faced as a public company to date. The
hurricanes in the southern United States, coupled with the effects
of the Republican National Convention held in New York City
resulted in atypical sales performance in September. The unusual
nature of these results is evidenced by the strength of our October
sales, which returned to more robust levels." On October 28, the
Company released its October sales figures, which show that total
consolidated restaurant sales for the fiscal month ended October
25, 2004 were approximately $10.8 million, up 25.2% from October
2003. Comparable consolidated restaurant sales increased 8.3% to
$9.3 million for October 2004, as compared to $8.6 million for
October 2003. Last week, the Company made significant public
filings. The first announced that due to the sale of the Plaza
Hotel in New York, ONEc.p.s., a restaurant the Company manages in
the hotel, will be closed effective January 1, 2005. In a separate
filing, the Company, after consultation with its predecessor
auditors KPMG LLP, determined it must restate certain previously
filed financial statements due to a change in accounting treatment
relating to the Las Vegas property. This restatement will reduce
the cost basis of the Las Vegas property, accounted for as a
capital lease, from $9.9 million to $8.0 million. However, the
land, building, and improvements the Company has made to the site
were recently appraised for $32.9 million. The remaining obligation
under the capital lease as of September 27, 2004 is $10.1 million,
and the land, building, and improvements are the security for $9.0
million of the Company's outstanding debt. This restatement's
impact on the statement of operations will be a non- cash increase
to occupancy and related expenses by approximately $62,000 for the
quarter ending June 30, 2003 and approximately $93,000 for each of
the quarters ending September 29, 2003, December 29, 2003, March
29, 2004 and June 28, 2004. The impact of this restatement on the
statement of operations for the fiscal year ending December 29,
2003 will be approximately $248,000. Conference Call Alan Stillman,
Chairman & CEO, and Alan Mandel, CFO, will conduct a conference
call to review the Company's financial results for the third
quarter of 2004 and nine months ended September 27, 2004 at 5:00
p.m. ET on November 11, 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 third 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 eleven Smith
& Wollensky restaurants located in New York, Miami Beach,
Chicago, New Orleans, Las Vegas, Washington, D.C., Philadelphia,
Columbus, Dallas, Houston, and Boston. 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. THE SMITH & WOLLENSKY RESTAURANT
GROUP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of
Operations (dollar amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended September September September
September 27, 29, 27, 29, 2004 2003(a)(b) 2004 2003(a)(b)
Restaurant sales $24,480 $23,110 $85,142 $74,550 Total cost of
restaurant sales 24,830 22,171 79,105 67,517 Income from restaurant
operations (350) 939 6,037 7,033 Management fee income 260 215 891
659 Income from owned and managed restaurants (90) 1,154 6,928
7,692 General and administrative expenses 2,336 2,277 7,239 7,363
Royalty expense 360 329 1,236 1,046 Operating loss (2,786) (1,452)
(1,547) (717) Interest expense (331) (362) (987) (765) Amortization
of deferred debt financing costs (32) (13) (76) (39) Interest
income 1 16 1 90 Interest expense, net (362) (359) (1,062) (714)
Loss before provision for income taxes (3,148) (1,811) (2,609)
(1,431) Provision for income taxes 52 35 155 160 Loss before
interest in (income) loss of consolidated variable interest entity
(3,200) (1,846) (2,764) (1,591) Interest in (income) loss of
consolidated variable interest entity 41 149 (388) 155 Net loss
$(3,159) $(1,697) $(3,152) $(1,436) Net loss per common share:
Basic and diluted $(0.34) $(0.18) $(0.34) $(0.15) Weighted average
common shares outstanding: Basic and diluted 9,377,960 9,371,907
9,377,100 9,360,212 (a) Restated to reflect the adoption of FIN 46
(R) (b) Restated to reflect a change in accounting treatment THE
SMITH & WOLLENSKY RESTAURANT GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (dollar amounts in thousands, except
per share data) September 27, December 29, Assets 2004 2003(a)(b)
Current assets: Cash and cash equivalents $1,186 $2,181 Short-term
investments 173 1,055 Accounts receivable, net 3,168 2,680
Merchandise inventory 4,992 4,749 Prepaid expenses and other
current assets 1,107 845 Total current assets 10,626 11,510
Property and equipment, net 69,406 61,532 Goodwill, net 6,886 6,886
Licensing agreement, net 3,679 3,338 Other assets 4,518 3,941 Total
assets $95,115 $87,207 Liabilities and Stockholders' Equity Current
liabilities: Current portion of long-term debt $3,326 $2,121
Accounts payable and accrued expenses 16,948 11,922 Total current
liabilities 20,274 14,043 Obligations under capital lease 10,093
9,991 Long-term debt, net of current portion 10,354 6,099 Deferred
rent 5,145 4,793 Total liabilities 45,866 34,926 Interest in
consolidated variable interest entity (1,613) (1,680) Stockholders'
equity: Common stock (par value $.01; authorized 40,000,000 shares;
9,378,349 shares issued and outstanding at September 27, 2004 and
December 29, 2003, respectively) 94 94 Additional paid-in capital
69,952 69,940 Accumulated deficit (19,241) (16,089) Accumulated
other comprehensive income 57 16 50,862 53,961 Total liabilities
and stockholders' equity $95,115 $87,207 (a) Restated to reflect
the adoption of FIN 46 (R) (b) Restated to reflect a change in
accounting treatment DATASOURCE: The Smith & Wollensky
Restaurant Group CONTACT: Allison Good of The Smith & Wollensky
Restaurant Group, +1-212-838-2061, or Web site:
http://www.smithandwollensky.com/
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