Grill Concepts (NASDAQ:GRILE)
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Grill Concepts Reports 2004 Second Quarter Results
LOS ANGELES, Oct. 15 /PRNewswire-FirstCall/ -- Grill Concepts, Inc.
(NASDAQ:GRILE) today reported that it has filed with the SEC its Form 10-Q for
the three- and six-month periods ended June 27, 2004. The report had been
delayed to complete a review of the company's consolidation principles applied
to certain affiliates.
For the 2004 second quarter, consolidated revenues, including cost
reimbursements and management and license fees, increased 9.3 percent to $15.9
million, from $14.5 million, as adjusted, in the corresponding 2003 period.
Total system-wide sales, including all restaurants, owned, operated, managed
and licensed, rose to $18.9 million in the quarter, up 8.4 percent from $17.4
million in the 2003 second quarter. Management believes total system-wide
sales, computed by adding revenues of unconsolidated restaurants to total
revenues and subtracting cost reimbursements and management and license fees,
is a key indicator for assessing brand strength.
The company sustained a net loss of $163,000, or $0.03 per share, in the 2004
second quarter, compared with net income of $36,000, or $0.01 per diluted
share, a year earlier.
For the year-to-date period, consolidated revenues, including cost
reimbursements and management and license fees, increased to $32.9 million, up
13.5 percent from $28.9 million, as restated, in the prior-year period. Total
system-wide sales, including all restaurants, owned, operated, managed and
licensed, advanced 10.9 percent to $38.5 million from $34.7 million in the 2003
six-month period. Same store sales year-to-date increased 3.27 percent. The
company posted a net loss of $79,000, or $0.01 per share, in the first half of
2004, compared with adjusted net income of $269,000, or $0.05 per diluted
share, in the 2003 six-month period.
"The increase in revenues for both the three and six-month periods, primarily
reflects the strong contribution from our newest Daily Grill restaurant in
Bethesda, Maryland," said Robert Spivak, president and chief executive officer
of Grill Concepts. "We are pleased with the performance to date, which
underscores the growing strength of the Daily Grill brand."
Spivak added: "We remain excited about our plans to open Daily Grill
restaurants at prominent Southern California locations, including Long Beach
prior to the end of this year, Santa Monica during the first quarter of 2005,
and downtown Los Angeles in the second quarter of 2005. These new openings
will further strengthen the penetration in our core market and will provide
exceptional, added exposure for our restaurant brands."
Results for the 2004 three- and six-month periods and for the corresponding
prior-year periods reflect a re-evaluation of certain accounting principles in
conjunction with the review by the company's independent accountants of the
company's financial statements for the first and second quarters of 2004.
Based on the results of the re-evaluation of accounting principles, the company
has filed an amended Form 10-K for the 2003 year and an amended Form 10-Q for
the 2004 first quarter to restate the results previously reported.
As announced in May 2004, upon a review of the company's stock option plan,
grants under the plan were determined to require a variable accounting
treatment that resulted in an associated non-cash charge to compensation
expense. As a result of the change in accounting treatment, the financial
statements for the 2003 year were restated from those originally issued by the
company to reflect the expensing of employee stock options and to make other
miscellaneous adjustments.
Upon a re-evaluation in September 2004 of the accounting for the company's
joint ventures, it was determined that the terms of the company's investments
in the San Jose Grill, the Chicago Grill on the Alley and the South Bay Daily
Grill, precluded consolidation as a subsidiary, and required treatment under
the equity method. In conjunction with this re-evaluation, the company also
re-evaluated its manner of reporting certain expense reimbursements from
managed restaurants and the reporting of certain tenant improvement allowances.
Pursuant to that re-evaluation process, it was determined that the company's
revenues should be grossed-up to reflect reimbursed expenses from managed
restaurants as revenues with an offsetting deduction to reflect the payment of
those expenses. It was also determined that certain tenant improvement
allowances that had, prior to 2003, not been reflected on the company's balance
sheet should have been reflected as increased depreciable assets and as a
long-term liability. Based on the re-evaluation of applicable accounting
principles, the financial statements for prior periods were restated to revise
the accounting for the previously noted joint ventures, to record costs and
revenues associated with reimbursed costs under management agreements and to
make other miscellaneous corrections. Additionally, the company corrected its
initial adoption of FASB Interpretation No. 46 (FIN 46) related to
consolidation of variable interest equities, which was effected in the first
quarter of 2004. The company also elected to apply the retroactive adoption
provisions of FIN 46 to the previously reported amounts for 2003 so that the
financial presentation is more consistent with ongoing financial position and
results of operations. As a result of the retroactive adoption, The San Jose
Grill, the Chicago Grill on the Alley, the South Bay Daily Grill and the
Universal CityWalk Daily Grill are presented as consolidated entities prior to
fiscal 2004 with no minority interest reflected with respect to the Chicago
Grill on the Alley.
About Grill Concepts, Inc.
Grill Concepts owns and manages upscale casual and fine dining, full service
restaurants under two core brand names: The Grill on the Alley and Daily Grill.
The company operates 23 restaurants including four The Grill on the
Alley-branded restaurants in Beverly Hills, Hollywood, San Jose, California,
and Chicago, as well as 19 Daily Grill restaurants in Southern and Northern
California, the Washington, D.C. metropolitan region, Houston, Texas, Portland,
Oregon and Skokie, Illinois.
This news release contains forward-looking statements, which are based on
current operations, plans and expectations. Such statements include, but are
not limited to, the company's ability to continue expanding its restaurant
network, and the company's ability to complete construction and open Daily
Grill restaurants in Santa Monica and downtown Los Angeles, among other
factors. Actual results may differ materially from these statements due to
risks and uncertainties beyond the company's control, which are detailed from
time to time in the company's filings with the United States Securities and
Exchange Commission.
GRILL CONCEPTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 27, June 29, June 27, June 29,
2004 2003 2004 2003
(restated) (restated)
Revenues:
Sales $12,646,000 $12,050,000 $26,156,000 $24,184,000
Cost
reimbursements 2,903,000 2,217,000 6,093,000 4,284,000
Management and
license fees 306,000 235,000 602,000 466,000
Total revenues 15,855,000 14,502,000 32,851,000 28,934,000
Cost of sales
(exclusive of
depreciation,
presented
separately below) 3,607,000 3,354,000 7,379,000 6,637,000
Gross profit 12,248,000 11,148,000 25,472,000 22,297,000
Operating
expenses:
Restaurant
operating
expenses 8,054,000 7,444,000 16,179,000 14,751,000
Reimbursed costs 2,903,000 2,217,000 6,093,000 4,284,000
Gain on disposal
of assets (1,000) -- (1,000) (11,000)
General and
administrative 1,083,000 993,000 2,310,000 1,903,000
Depreciation
and amortization 454,000 428,000 903,000 930,000
Pre-opening costs 1,000 -- 148,000 187,000
Total
operating
expenses 12,494,000 11,082,000 25,632,000 22,044,000
Income (loss)
from operations (246,000) 66,000 (160,000) 253,000
Interest expense,
net (66,000) (80,000) (132,000) (162,000)
Income (loss)
before provision
for income taxes
and minority
interest (312,000) (14,000) (292,000) 91,000
Provision for
income taxes (5,000) (26,000) (28,000) (81,000)
Minority interest
in loss of
subsidiaries 166,000 88,000 266,000 284,000
Net income (loss) (151,000) 48,000 (54,000) 294,000
Preferred
dividends accrued (12,000) (12,000) (25,000) (25,000)
Net income (loss)
applicable to
common stock $(163,000) $36,000 $(79,000) $269,000
Net income (loss)
per share
applicable to
common stock:
Basic net income
(loss) $(0.03) $0.01 $(0.01) $0.05
Diluted net
income (loss) $(0.03) $0.01 $(0.01) $0.05
Weighted average
shares
outstanding:
Basic 5,590,445 5,537,071 5,568,155 5,537,071
Diluted 5,590,445 5,563,370 5,568,155 5,547,389
GRILL CONCEPTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP
(unaudited)
System-wide Sales
The following table reconciles Grill Concepts' total consolidated revenues,
prepared on the basis of GAAP, to total system-wide sales for the periods
presented:
Three Months Ended Six Months Ended
June 27, June 29, June 27, June 29,
2004 2003 2004 2003
(restated) (restated)
Total
consolidated
revenues $15,855,000 $14,502,000 $32,851,000 $28,934,000
Managed
restaurants
sales 4,027,000 3,203,000 8,048,000 6,037,000
Licensed
restaurants
sales 2,221,000 2,184,000 4,269,000 4,479,000
Less
reimbursed
costs (2,903,000) (2,217,000) (6,093,000) (4,284,000)
Less
management and
license fees (306,000) (235,000) (602,000) (466,000)
Total system-wide
sales $18,894,000 $17,437,000 $38,473,000 $34,700,000
DATASOURCE: Grill Concepts, Inc.
CONTACT: Philip Gay, Chief Financial Officer of Grill Concepts, Inc.,
+1-310-820-5559; or Roger Pondel, or Angie Yang, both of PondelWilkinson Inc.,
for Grill Concepts, Inc., +1-310-279-5980,