Smith & Wollensky (NASDAQ:SWRG)
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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/