SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 28, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period from __________to __________
COMMISSION FILE NO. 0-28258
SHELLS SEAFOOD RESTAURANTS, INC.
------------------------------------------------------
(Exact Name of registrant as specified in its charter)
DELAWARE 65-0427966
------------------------------- ------------------------------------
(State or other jurisdiction of (IRS) Employer Identification Number
incorporation or organization)
16313 NORTH DALE MABRY HIGHWAY, SUITE 100, TAMPA, FL 33618
----------------------------------------------------------
(Address of principal executive offices) (zip code)
(813) 961-0944
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
CLASS OUTSTANDING AT AUGUST 11, 1998
---------------------------- ------------------------------
Common stock, $.01 par value 4,453,248
<PAGE>
SHELLS SEAFOOD RESTAURANTS, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBER
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 28, 1998 (Unaudited)
and December 28, 1997 3
Consolidated Statements of Income (Unaudited) for the 13 and
26 weeks ended June 28, 1998 and June 29, 1997 4
Consolidated Statements of Cash Flows (Unaudited) for the 26
weeks ended June 28, 1998 and June 29, 1997 5
Notes to Consolidated Financial Statements - (Unaudited) 6 -7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8-11
PART II - OTHER INFORMATION 12
Signatures 13
2
<PAGE>
<TABLE>
<CAPTION>
SHELLS SEAFOOD RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 28, 1998 DECEMBER 28, 1997
------------- -----------------
<S> <C> <C>
ASSETS
Cash $ 4,377,480 $ 5,314,771
Inventories 931,318 861,247
Other current assets 2,123,146 1,663,867
Receivables from related parties 132,926 139,948
----------- -----------
Total current assets 7,564,870 7,979,833
Property and equipment, net 18,481,089 14,306,138
Prepaid rent 661,506 324,321
Other assets 692,259 450,155
Goodwill 3,402,289 3,505,387
----------- -----------
TOTAL ASSETS $30,802,013 $26,565,834
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 2,170,291 $ 3,805,633
Accrued expenses 3,092,046 2,881,404
Sales tax payable 422,920 318,223
Income taxes payable 1,215,136 275,216
Current portion of longterm debt 650,844 215,235
----------- -----------
Total current liabilities 7,551,237 7,495,711
Deferred rent 1,348,790 1,214,143
Long-term debt, less current portion 3,514,680 1,449,092
----------- -----------
Total liabilities 12,414,707 10,158,946
Minority partner interest 484,210 514,047
Shells, Inc. preferred shares subject to redemption,
$10 par value; authorized 10,000,000 shares -- 1,371,852
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; authorized
2,000,000 shares; none issued or outstanding -- --
Common stock, $.01 par value; authorized 20,000,000
shares; 4,453,248 and 4,227,062 shares issued and
outstanding, respectively 44,532 42,270
Additional paid-in-capital 14,157,683 12,944,995
Retained earnings 3,700,881 1,533,724
----------- -----------
Total stockholders' equity 17,903,096 14,520,989
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $30,802,013 $26,565,834
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
3
<PAGE>
<TABLE>
<CAPTION>
SHELLS SEAFOOD RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
13 WEEKS ENDED 26 WEEKS ENDED
--------------------------------- ----------------------------------
JUNE 28, 1998 JUNE 29, 1997 JUNE 28, 1998 JUNE 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Restaurant sales $ 21,703,235 $ 16,387,076 $ 43,068,960 $ 33,253,191
Management fees from related parties 108,567 105,341 221,017 215,254
------------ ------------ ------------ ------------
21,811,802 16,492,417 43,289,977 33,468,445
------------ ------------ ------------ ------------
COST AND EXPENSES:
Cost of restaurant sales 7,458,042 5,721,103 14,582,626 11,723,746
Labor and other related expenses 5,894,214 4,299,265 11,754,822 8,690,812
Other restaurant operating expenses 4,103,392 3,178,983 8,064,610 6,434,306
General and administrative expenses 1,468,355 1,308,602 2,995,750 2,425,878
Depreciation 572,753 333,030 1,083,116 655,183
Amortization 553,647 410,738 998,573 775,064
------------ ------------ ------------ ------------
20,050,403 15,251,721 39,479,497 30,704,989
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 1,761,399 1,240,696 3,810,480 2,763,456
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest income 71,025 45,844 141,169 84,014
Interest expense (160,286) (88,747) (262,022) (178,748)
Other expense, net (8,192) 3,080 (17,616) (23,833)
------------ ------------ ------------ ------------
(97,453) (39,823) (138,469) (118,567)
------------ ------------ ------------ ------------
INCOME BEFORE ELIMINATION OF MINORITY
PARTNER INTEREST AND INCOME TAXES 1,663,946 1,200,873 3,672,011 2,644,889
ELIMINATION OF MINORITY PARTNER INTEREST (54,979) (55,722) (114,210) (107,805)
------------ ------------ ------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,608,967 1,145,151 3,557,801 2,537,084
PROVISION FOR INCOME TAXES (579,000) (390,000) (1,280,000) (863,000)
------------ ------------ ------------ ------------
NET INCOME 1,029,967 755,151 2,277,801 1,674,084
PREFERRED SHARES ACCRETION (96,144) (18,500) (110,644) (37,000)
------------ ------------ ------------ ------------
NET INCOME APPLICABLE TO COMMON STOCK $ 933,823 $ 736,651 $ 2,167,157 $ 1,637,084
============ ============ ============ ============
NET INCOME PER SHARE OF COMMON STOCK $ 0.21 $ 0.22 $ 0.50 $ 0.48
============ ============ ============ ============
WEIGHTED COMMON SHARES OUTSTANDING 4,405,491 3,318,054 4,317,485 3,435,800
============ ============ ============ ============
DILUTED NET INCOME PER SHARE OF COMMON STOCK $ 0.18 $ 0.17 $ 0.43 $ 0.38
============ ============ ============ ============
DILUTED WEIGHTED COMMON SHARES OUTSTANDING 5,156,938 4,360,065 5,056,200 4,327,127
============ ============ ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4
<PAGE>
<TABLE>
<CAPTION>
SHELLS SEAFOOD RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
26 WEEKS ENDED
-----------------------------
JUNE 28, 1998 JUNE 29, 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,277,801 $ 1,674,084
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,083,116 655,183
Amortization 998,573 775,064
Minority partner interest (29,837) (34,005)
Changes in assets and liabilities:
Increase in inventories (70,071) (105,496)
Decrease in receivables from related parties 7,022 13,336
Increase in other assets (1,596,858) (1,322,667)
(Increase) decrease in prepaid rent (337,185) 25,200
(Decrease) increase in accounts payable (1,635,342) 412,310
Increase in accrued expenses 210,642 458,792
Increase in sales tax payable 104,697 114,846
Increase (decrease) in income taxes payable 939,920 (139,500)
Increase in deferred rent 134,647 154,179
----------- -----------
Total adjustments (190,676) 1,007,242
----------- -----------
Net cash provided by operating activities 2,087,125 2,681,326
----------- -----------
INVESTING ACTIVITIES:
Purchase of property and equipment (5,258,067) (3,114,897)
----------- -----------
Net cash used in investing activities (5,258,067) (3,114,897)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from debt financing 2,703,066 576,050
Repayment of debt (201,869) (138,907)
Redemption of preferred shares (1,482,496) (370,624)
Proceeds from exercise of warrants to purchase common stock 1,214,950 754,690
----------- -----------
Net cash provided by financing activities 2,233,651 821,209
----------- -----------
Net (decrease) increase in cash (937,291) 387,638
CASH AT BEGINNING OF PERIOD 5,314,771 3,033,851
----------- -----------
CASH AT END OF PERIOD $ 4,377,480 $ 3,421,489
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5
<PAGE>
SHELLS SEAFOOD RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-Q and, therefore, these
statements do not include all of the information and footnotes required by
generally accepted accounting principles for annual financial statements. In the
opinion of management, all material adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The financial statements of Shells Seafood Restaurants, Inc. ("the Company")
should be read in conjunction with the audited consolidated financial statements
and notes thereto contained in the Form 10-K for the year ended December 28,
1997 filed with the Securities and Exchange Commission.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
JUNE 28, 1998 DECEMBER 29, 1997
------------- -----------------
Equipment $ 7,779,276 $ 6,312,696
Leasehold improvements 8,063,899 6,438,300
Furniture and fixtures 4,143,791 2,994,259
Land and buildings 2,862,765 1,478,512
Signage 863,179 752,014
Construction in progress -- 479,062
------------ ------------
23,712,910 18,454,843
Less accumulated depreciation and
amortization (5,231,821) (4,148,705)
------------ ------------
$ 18,481,089 $ 14,306,138
============ ============
3. STOCKHOLDERS' EQUITY
The Company had issued warrants to purchase 230,000 shares of common stock of
the Company which expired April 22, 1998. Warrants to purchase 229,000 shares
were exercised through the expiration date generating proceeds, net of expenses,
of $1,215,000. In accordance with contractual obligations, the proceeds of these
warrant exercises were used by the Company to repurchase all the outstanding
Shells, Inc, Preferred Shares.
6
<PAGE>
4. EARNINGS PER SHARE
The following table represents the computation of basic and diluted earnings per
share of common stock as required by Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share":
<TABLE>
<CAPTION>
13 WEEKS ENDED 26 WEEKS ENDED
--------------------------------------------------------------
JUNE 28, 1998 JUNE 29, 1997 JUNE 28, 1998 JUNE 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income $ 1,029,967 $ 755,151 $ 2,277,801 $ 1,674,084
Preferred share accretion (96,144) (18,500) (110,644) (37,000)
----------- ----------- ----------- -----------
Net income applicable to common stock $ 933,823 $ 736,651 $ 2,167,157 $ 1,637,084
=========== =========== =========== ===========
Weighted common shares outstanding 4,405,491 3,318,054 4,317,485 3,435,800
=========== =========== =========== ===========
Net income per share of common stock $ 0.21 $ 0.22 $ 0.50 $ 0.48
=========== =========== =========== ===========
Effect of dilutive securities:
Warrants 616,357 931,917 617,245 783,074
Stock options 135,090 110,094 121,470 108,253
Diluted weighted common shares outstanding 5,156,938 4,360,065 5,056,200 4,327,127
=========== =========== =========== ===========
Diluted net income per share of common stock $ 0.18 $ 0.17 $ 0.43 $ 0.38
=========== =========== =========== ===========
</TABLE>
5. NEW ACCOUNTING PRONOUNCEMENT
In April, 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting the Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5 requires
such costs to be expensed as incurred. SOP 98-5 is effective for fiscal years
beginning after December 15, 1998. The effect on the Company's consolidated
financial statements upon adoption of SOP 98-5 is not presently determinable.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth, for the periods indicated, the percentages which
the items in the Company's Consolidated Statements of Income bear to total
revenues, or where indicated, restaurant sales.
<TABLE>
<CAPTION>
13 WEEKS ENDED 26 WEEKS ENDED
------------------------------- -------------------------------
JUNE 28, 1998 JUNE 29, 1997 JUNE 28, 1998 JUNE 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Restaurant sales 99.5% 99.4% 99.5% 99.4%
Management fees from related parties 0.5% 0.6% 0.5% 0.6%
------ ------ ------ ------
100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
COST AND EXPENSES:
Cost of restaurant sales (1) 34.4% 34.9% 33.9% 35.3%
Labor and other related expenses (1) 27.2% 26.2% 27.3% 26.1%
Other restaurant operating expenses (1) 18.9% 19.4% 18.7% 19.3%
------ ------ ------ ------
Total restaurant costs and expenses (1) 80.5% 80.5% 79.9% 80.7%
------ ------ ------ ------
General and administrative expenses 6.7% 7.9% 6.9% 7.2%
Depreciation 2.6% 2.0% 2.5% 2.0%
Amortization 2.5% 2.5% 2.3% 2.3%
INCOME FROM OPERATIONS 8.1% 7.5% 8.8% 8.3%
------ ------ ------ ------
OTHER INCOME (EXPENSE):
Interest income 0.3% 0.3% 0.3% 0.3%
Interest expense -0.7% -0.5% -0.6% -0.5%
Other expense, net 0.0% 0.0% 0.0% -0.1%
------ ------ ------ ------
-0.4% -0.2% -0.3% -0.3%
------ ------ ------ ------
INCOME BEFORE ELIMINATION OF MINORITY
PARTNER INTEREST AND INCOME TAXES 7.7% 7.3% 8.5% 8.0%
ELIMINATION OF MINORITY PARTNER INTEREST -0.3% -0.3% -0.3% -0.3%
------ ------ ------ ------
INCOME BEFORE PROVISION FOR INCOME TAXES 7.4% 7.0% 8.2% 7.7%
PROVISION FOR INCOME TAXES -2.7% -2.4% -3.0% -2.6%
------ ------ ------ ------
NET INCOME 4.7% 4.6% 5.2% 5.1%
====== ====== ====== ======
<FN>
- ----------
(1) As a percentage of restaurant sales.
</FN>
</TABLE>
8
<PAGE>
13 WEEKS ENDED JUNE 28, 1998 AND JUNE 29, 1997
REVENUES. Total revenues for the 13 weeks ended June 28, 1998 were $21,812,000
as compared to $16,492,000 for the 13 weeks ended June 29, 1997. The 32.3%
increase in revenues primarily was due to the opening of ten new restaurants
subsequent to the second quarter of 1997 and, to a lesser extent, a 4.5%
increase in same store sales and selective menu price increases.
COST OF RESTAURANT SALES. The cost of restaurant sales as a percentage of
restaurant sales decreased to 34.4% for the second quarter of 1998 from 34.9%
for the second quarter of 1997. This decrease primarily was due to favorable
food procurement costs and to selective menu price increases that were
implemented during the fourth quarter of 1997, offset somewhat by certain
promotions during the second quarter of fiscal 1998.
LABOR AND OTHER RELATED EXPENSES. Labor and other related expenses, as a
percentage of restaurant sales, increased to 27.2% during the second quarter of
1998 as compared to 26.2% for the second quarter of 1997. This increase was
primarily attributed to higher labor costs in the new Midwest restaurants
including related relocation costs.
OTHER RESTAURANT OPERATING EXPENSES. Other restaurant operating expenses as a
percentage of restaurant sales improved to 18.9% for the second quarter of 1998
as compared with 19.4% for the second quarter of 1997. The improvement was
primarily due to more favorable utilities and occupancy expenses relative to
sales.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses as a
percentage of revenues improved to 6.7% for the second quarter of 1998 as
compared with 7.9% for the second quarter of 1997. The improvement is attributed
to efficiencies realized through higher chain-wide sales volumes.
DEPRECIATION. Depreciation as a percentage of revenues increased to 2.6% for the
second quarter of 1998 from 2.0% in the second quarter of 1997. The increase was
primarily due to remodeling and upgrading of equipment undertaken over the past
year as well as generally higher build-out costs associated with the new Midwest
restaurants.
PROVISION FOR INCOME TAXES. A provision for income taxes of $579,000 was
recognized for the second quarter of 1998 as compared to $390,000 during the
second quarter in 1997. The increase was primarily attributed to higher income
before taxes and, to a lesser extent , an increase in the effective tax rate
being utilized by the Company to 36% in Fiscal 1998 from 34% in Fiscal 1997.
INCOME FROM OPERATIONS AND NET INCOME. As a result of the factors discussed
above, the Company's income from operations increased 41.9% to $1,761,000 for
the second quarter of 1998 from $1,241,000 for the second quarter of 1997. The
Company's net income increased 36.4% to $1,030,000 for the second quarter of
1998 from $755,000 for the second quarter of 1997.
26 WEEKS ENDED JUNE 28, 1998 AND JUNE 29, 1997
REVENUES. Total revenues for the 26 weeks ended June 28, 1998 were $43,290,000
as compared to $33,468,000 for the 26 weeks ended June 29, 1997. The 29.3%
increase in revenues primarily was due to the opening of five new restaurants in
both the second half of fiscal 1997 and the first half of fiscal 1998 and, to a
lesser extent, a 2.0% increase in same store sales and selective menu price
increases.
COST OF RESTAURANT SALES. The cost of restaurant sales as a percentage of
restaurant sales decreased to 33.9% for the 26 weeks ended June 28, 1998 from
35.3% for same period in 1997. This decrease was due to favorable food
procurement costs and to selective menu price increases that were implemented
during the fourth quarter of 1997, offset somewhat by certain promotions during
the second quarter of fiscal 1998.
LABOR AND OTHER RELATED EXPENSES. Labor and other related expenses, as a
percentage of restaurant sales, increased to 27.3% during the 26 weeks ended
June 28, 1998 as compared to 26.1% for the same period in 1997. This increase
was primarily attributed to higher labor costs in the new Midwest markets
including related relocation costs.
9
<PAGE>
OTHER RESTAURANT OPERATING EXPENSES. Other restaurant operating expenses as a
percentage of restaurant sales improved to 18.7% for the 26 weeks ended June 28,
1998 as compared with 19.3% for the same period in 1997. The improvement was
primarily due to more favorable utilities and occupancy expenses relative to
sales.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses as a
percentage of revenues improved to 6.9% for the 26 weeks ended June 28, 1998 as
compared with 7.2% for the same period in 1997. The improvement was attributed
to efficiencies realized through higher chain-wide sales volumes.
DEPRECIATION. Depreciation as a percentage of revenues increased to 2.5% for the
26 weeks ended June 28, 1998 as compared with 2.0% for the same period in 1997.
The increase was primarily due to remodeling and upgrading of equipment
undertaken over the past year as well as generally higher build-out costs
associated with the new Midwest restaurants.
PROVISION FOR INCOME TAXES. A provision for income taxes of $1,280,000 was
recognized for the 26 weeks ended June 28, 1998 as compared to $863,000 during
the same period in 1997. The increase was primarily attributed to higher income
before taxes and, to a lesser extent, an increase in the effective tax rate
being utilized by the Company to 36% in Fiscal 1998 from 34% in Fiscal 1997.
INCOME FROM OPERATIONS AND NET INCOME. As a result of the factors discussed
above, the Company's income from operations increased 37.9% to $3,810,000 for
the 26 weeks ended June 28, 1998 from $2,763,000 for the same period in 1997.
The Company's net income increased 36.1% to $2,278,000 for the 26 weeks ended
June 28, 1998 from $1,674,000 for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of June 28, 1998, the Company's current assets of $7,565,000 exceeded its
current liabilities of $7,551,000, resulting in working capital of $14,000.
Historically, the Company has generally operated with minimal or negative
working capital as a result of the investing of current assets into non-current
property and equipment as well as the turnover of restaurant inventory relative
to more favorable vendor terms in accounts payable.
Cash provided by operating activities for the 26 weeks ended June 28, 1998 was
$2,087,000 as compared with $2,681,000 for the same period in 1997. The net
decrease of $594,000 was primarily attributed to a decrease in accounts payable
offset by increases in prepaid rent, income taxes payable, net income and
depreciation and amortization.
The cash used in investing activities was $5,258,000 for the 26 weeks ended June
28, 1998 as compared with $3,115,000 for the same period in 1997. The increase
of $2,143,000 was due to the Company opening five new restaurants during the
first half of 1998 including the purchase of one property at a cost of
$1,200,000. The cash used in investing activities during the first half of 1997
included the cost of opening four new restaurants, one major remodeling and the
cost of one new restaurant which opened subsequent to June, 1997.
The cash provided by financing activities was $2,234,000 for the first half of
1998 as compared with $821,000 for the first half of 1997. The increase in cash
provided of $1,413,000 was primarily due to increased borrowings to support
restaurant openings, including $1,000,000 related to the mortgage financing of
the restaurant which opened in April, 1998. The Company also received proceeds
of $1,215,000 from the exercise of warrants to purchase common stock. These
proceeds were used to fully retire $1,482,000 of Shells, Inc. Preferred Shares.
YEAR 2000 ISSUE
The Company's computer systems, both hardware and software, were designed in
recent years, and concerns relating to the year 2000 issue have generally been
addressed at initial development. The Company intends to continually review both
its systems and the systems of its vendors relative to year 2000 compliance
during 1998 and 1999. At this time, the Company does not believe the year 2000
issue will present a material event or uncertainty relative to the Company's
ability to operate its business.
10
<PAGE>
SEASONALITY
The restaurant industry in general is seasonal depending on the location and
type of food served. The Company has experienced fluctuations in its quarter to
quarter operating results due to various factors, including the seasonal nature
of its business, local and regional weather conditions and the health of the
economy in Florida and the Midwest as well as the tourism industry. Seasonality
at the Company's restaurants is magnified due to its concentration in Florida
and, in many cases, coastal city locations, where sales are significantly
dependent on tourism, weather and seasonality patterns. Because of the
seasonality of the Company's business and the impact of new restaurant openings,
results for any quarter are not generally indicative of the results that may be
achieved for a full fiscal year on an annualized basis and cannot be used to
indicate financial performance for the entire year.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities and Use of Proceeds
None
Item 3 - Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on May 14, 1998,
the following directors were nominated and elected by the votes indicated:
Frederick R. Adler: 3,080,431 For, 3,650 Against or Withheld, 0 Abstaining
Philip R. Chapman: 3,080,931 For, 3,150 Against or Withheld, 0 Abstaining
William E. Hattaway: 3,082,731 For, 1,350 Against or Withheld, 0 Abstaining
Kamal Mustafa: 3,081,931 For, 2,150 Against or Withheld, 0 Abstaining
Jay S. Nickse: 3,082,731 For, 1,350 Against or Withheld, 0 Abstaining
Edwin F. Russo: 3,079,691 For, 4,390 Against or Withheld, 0 Abstaining
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHELLS SEAFOOD RESTAURANTS, INC.
(Registrant)
- ------------------------------- /s/ WILLIAM E. HATTAWAY
Date August 11, 1998 ------------------------------------------
William E. Hattaway
President and Chief Executive Officer
- ------------------------------- /s/ WARREN R. NELSON
Date August 11, 1998 ------------------------------------------
Warren R. Nelson
Vice President and Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and the consolidated statements of income
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> DEC-29-1997
<PERIOD-END> JUN-28-1998
<CASH> 4,377,480
<SECURITIES> 0
<RECEIVABLES> 132,926
<ALLOWANCES> 0
<INVENTORY> 931,318
<CURRENT-ASSETS> 7,564,870
<PP&E> 23,712,910
<DEPRECIATION> (5,231,821)
<TOTAL-ASSETS> 30,802,013
<CURRENT-LIABILITIES> 7,551,237
<BONDS> 0
0
0
<COMMON> 44,532
<OTHER-SE> 17,858,564
<TOTAL-LIABILITY-AND-EQUITY> 30,802,013
<SALES> 43,068,960
<TOTAL-REVENUES> 43,289,977
<CGS> 14,582,626
<TOTAL-COSTS> 39,479,497
<OTHER-EXPENSES> (131,826)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (120,853)
<INCOME-PRETAX> 3,557,801
<INCOME-TAX> (1,280,000)
<INCOME-CONTINUING> 2,277,801
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,277,801
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.43
</TABLE>
