GRILE Grill Concepts Inc. (MM)

Grill Concepts Reports Improved Operating Results for 2004 Fourth Quarter - Restates for Lease Accounting and Files Form 10-K - LOS ANGELES, May 23 /PRNewswire-FirstCall/ -- Grill Concepts, Inc. (NASDAQ:GRILE) today reported net income of $230,000, or $0.04 per diluted share, for the 2004 fourth quarter, up from adjusted net income of $120,000, or $0.02 per diluted share, in the year-earlier period. The company also said that it has filed its Form 10-K for fiscal 2004, following the completion of the review of its accounting treatment for operating leases, estimated useful lives of assets and complimentary and promotional sales. For the 2004 fourth quarter, consolidated revenues, including cost reimbursements and management and license fees, rose 12.8 percent to $17.1 million from $15.2 million, as adjusted, for the same period in 2003. Total system-wide sales, including sales of non-consolidated restaurants operated under license, management or partnership agreements, grew to $18.1 million in the 2004 fourth quarter from $16.7 million in the prior-year period. Management believes 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 measurement for assessing brand strength. Same store sales for the 2004 fourth quarter rose 4.2 percent. For full year ended December 26, 2004, consolidated revenues, including cost reimbursements and management and license fees, advanced 12.4 percent to $63.7 million from $56.6 million a year ago, as adjusted. Total system-wide sales, including sales of non-consolidated restaurants operated under license, management or partnership agreements, increased 9.4 percent to $74.3 million from $67.9 million in 2003. Same store sales for the year increased 3.7 percent. Net income for the year amounted to $38,000, or $0.00 per share, compared with adjusted net income of $128,000, or $0.01 per diluted share, in 2003. "We are pleased with the performances of the latest additions to our expanded network of Daily Grill-branded restaurants, which include the Bethesda Daily Grill restaurant, which opened during the first quarter of 2004 and the Long Beach Daily Grill restaurant, which opened during the fourth quarter," said Robert Spivak, president and chief executive officer of Grill Concepts. "Our Bethesda Daily Grill restaurant, in particular, has delivered exceptional results since its opening and has fueled higher revenues throughout 2004. "Our newest restaurant -- the Santa Monica Daily Grill, which opened its doors in the first quarter of 2005 -- is experiencing extremely high lunch volumes and already has the most active bar of all of our restaurants in Southern California. These trends, together with improved comparative same store sales at our Daily Grill and Grill on the Alley restaurants, exemplifies the mounting strength of our restaurant brands and gives us greater confidence in the prospects for our Downtown Daily Grill restaurant, expected to open in downtown Los Angeles during the second quarter of this year," Spivak added. As previously announced, the company's 2004 Form 10-K reflects adjusted interim quarterly results conforming with U.S. generally accepted accounting practices (GAAP) as expressed in a February 7, 2005 letter by the Chief Accountant of the Securities and Exchange Commission (SEC) to the American Institute of Certified Public Accountants, plus correcting the estimate of useful lives of assets and correctly accounting for complimentary and promotional sales. In order to ensure consistent application of GAAP, the company also restated its financial statements for the 2002 and 2003 fiscal years. These adjustments to lease accounting policies are more fully described in the company's Form 10-K filed today with the SEC. 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 24 restaurants including four The Grill on the Alley-branded restaurants in Beverly Hills, Hollywood, San Jose, California, and Chicago, as well as 20 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. 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. CONTACTS: Philip Gay Chief Financial Officer Grill Concepts, Inc. (310) 820-5559 Roger Pondel/Angie Yang PondelWilkinson Inc. (310) 279-5980 Grill Concepts, Inc. and Subsidiaries Consolidated Condensed Statements of Operations Three Months Ended Year Ended December 26, December 28, December 26, December 28, 2004 2003 2004 2003 (restated) (restated) Revenues: Sales $13,023,000 $11,741,000 $49,938,000 $45,858,000 Cost reimbursements 3,731,000 3,114,000 12,439,000 9,728,000 Management and license fees 372,000 328,000 1,282,000 1,037,000 Total revenues 17,126,000 15,183,000 63,659,000 56,623,000 Operating expenses: Cost of sales (exclusive of depreciation, presented separately) 3,719,000 3,502,000 14,465,000 13,274,000 Restaurant operating expenses 7,908,000 7,023,000 30,552,000 28,050,000 Reimbursed costs 3,731,000 3,158,000 12,439,000 9,772,000 General and administrative 1,170,000 947,000 4,472,000 3,696,000 Depreciation and amortization 557,000 385,000 2,005,000 1,816,000 Pre-opening expenses 19,000 (5,000) 167,000 182,000 Gain on sale of assets 1,000 -- (2,000) (11,000) Total operating expenses 17,105,000 15,010,000 64,098,000 56,779,000 Income (loss) from operations 21,000 173,000 (439,000) (156,000) Interest expense, net 81,000 86,000 (272,000) (331,000) Income (loss) before provision for income tax and minority interest (60,000) 87,000 (711,000) (487,000) Provision for income taxes (31,000) 21,000 (65,000) (89,000) Income (loss) before minority interest (91,000) 66,000 (776,000) (576,000) Minority interest in loss of subsidiaries 321,000 54,000 814,000 704,000 Net income 230,000 120,000 38,000 128,000 Preferred dividends accrued (12,000) (12,000) (50,000) (50,000) Net income applicable to common stock $218,000 $108,000 $(12,000) $78,000 Net income (loss) per share applicable to common stock: Basic $0.04 $0.02 $(0.00) $0.01 Diluted $0.04 $0.02 $(0.00) $0.01 Average weighted shares outstanding: Basic 5,650,146 5,537,071 5,608,541 5,537,071 Diluted 5,680,285 5,714,770 5,608,541 5,640,842 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 Year Ended December 26, December 28, December 26, December 28, 2004 2003 2004 2003 (restated) (restated) Total consolidated revenues $17,126,000 $15,183,000 $63,659,000 $56,623,000 Managed restaurants sales 4,082,000 3,269,000 16,382,000 13,256,000 Licensed restaurants sales 1,862,000 2,222,000 8,003,000 8,773,000 Less reimbursed costs (3,731,000) (3,114,000) (12,439,000) (9,728,000) Less management and license fees (372,000) (328,000) (1,282,000) (1,037,000) Total system-wide sales $18,113,000 $16,683,000 $74,323,000 $67,887,000 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., +1-310-279-5980, , for Grill Concepts, Inc.

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