Prospectus Supplement Filed Pursuant to Rule 424(b)(3) and 424(c)
(To Prospectus dated October 7, 2005) Commission File No. 333-126487
27,772,411 Shares
[LOGO]
Common Stock
This prospectus supplement supplements the prospectus dated October 7,
2005, which relates to the shares of our common stock that may be sold by the
selling stockholders named therein.
This prospectus supplement should be read in connection with, and may not
be delivered or utilized without, the prospectus dated October 7, 2005, and the
prospectus supplements dated November 2, 2005, December 1, 2005, December 2,
2005, March 23, 2006, April 7, 2006, April 27, 2006 and May 1, 2006. This
prospectus supplement is qualified by reference to the prospectus and the
prospectus supplements, except to the extent that the information in this
prospectus supplement updates or supersedes the information contained in the
prospectus dated October 7, 2005, or the prospectus supplements dated November
2, 2005, December 1, 2005, December 2, 2005, March 23, 2006, April 7, 2006,
April 27, 2006 and May 1, 2006.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
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The date of this prospectus supplement is August 2, 2006
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 4, 2006
SHELLS SEAFOOD RESTAURANTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-28258 65-0427966
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
16313 N. Dale Mabry Hwy, Suite 100, Tampa, FL 33618
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 961-0944
Not Applicable
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Shells Seafood Restaurants, Inc. issued a press release on May 4, 2006
announcing its financial results for the first quarter of 2006. Included in the
press release issued by the Company and furnished herewith as Exhibit 99.1 are
certain non-GAAP financial measures. Management of the Company believes such
non-GAAP financial measures are useful to investors assessing the financial
condition and results of operations of the Company's core business operations
because they exclude results which management believes are atypical and unlikely
to occur with regularity in the future.
A copy of the press release is furnished as Exhibit 99.1 to this report and is
incorporated herein by reference.
This information, including the press release filed as Exhibit 99.1, shall not
be deemed to be "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934 nor shall it be deemed to be incorporated by reference in any filing
under the Securities Act of 1933.
Signature
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 hereunto duly authorized.
Dated: May 10, 2006
SHELLS SEAFOOD RESTAURANTS, INC.
By: /s/ Warren R. Nelson
----------------------------
Warren R. Nelson
Executive Vice President and CFO
Exhibit 99.1
Shells Seafood Restaurants, Inc.
Reports First Quarter 2006 Earnings; Same Store Sales Increase 7.1%;
Sixth Consecutive Quarterly Increase
Business Editors
TAMPA, Fla.--(BUSINESS WIRE)--May 4, 2006--Shells Seafood Restaurants, Inc.
(OTC Bulletin Board:SHLL) today reported financial results for its first quarter
ended April 2, 2006.
Key metrics for the first quarter of 2006 compared to the first quarter of
2005 were:
-- Revenues increased 16.4% to $14.6 million.
-- Comparable restaurant sales increased 7.1%.
-- Sixth consecutive quarterly increase.
-- Comparable restaurant sales in the 16 remodeled restaurants
increased 9.4%, compared to a decrease of 1.3% for the four
non-remodeled restaurants.
-- The Lent season and Easter holiday occurred three weeks later this
year than in fiscal 2005, which had an estimated unfavorable impact
of 1.1% on first quarter 2006 comparable restaurant sales.
-- Net income of $0.3 million, compared to $0.4 million.
-- Diluted earnings per share of $0.01, compared to $0.03.
"Guests are impressed with the new Shells, and our sales momentum is
strong," said President & CEO Leslie Christon, noting that guest satisfaction
ratings for the quarter reached an all-time high. "With nearly all company-owned
restaurants now remodeled using our bright new look; the challenge is to attract
more new guests to experience what our regulars have been excited about. The
investments to reenergize our concept have been significant, and while we're
making steady progress, we've still got much work ahead to realize our
objectives."
First Quarter 2006 Results
Revenues for the first quarter of 2006 increased 16.4% to $14.6 million from
$12.5 million in the first quarter of 2005, partly due to a 7.1% increase in
same store sales. The Company also benefited from a stronger mix of operating
restaurants in the first quarter of 2006 versus the same period last year,
having opened two new restaurants, relocated one restaurant, closed an
underperforming restaurant and terminated the operations of a licensed
restaurant. As of the end of the first quarter of 2006, the Company had 25
restaurants in operation compared to 26 units a year-ago.
Restaurant operating costs, consisting of food and beverage costs, labor and
other operating costs, were $12.4 million, or 85.5% of sales, in the first
quarter of 2006, compared to $10.4 million, or 83.6% of sales, in the first
quarter of 2005. Food and beverage costs improved 0.9% as a percentage of sales
compared to the prior year, because of higher menu pricing implemented to offset
the effect of the Florida minimum wage increases, an improvement in liquor mix,
and gains derived from better operational controls over food and beverage costs.
Labor costs rose 0.6% as a percentage of sales compared to the prior year,
mostly due to additional training costs, as well as, the effect of the Florida
minimum wage increases on hourly labor. Other operating costs were negatively
affected by increased utilities, insurance and occupancy costs, resulting in a
2.2% increase as a percentage of sales, compared to the prior year.
"During the first quarter, the benefits of positive same store sales
momentum were offset by the margin pressure we faced, which hampered our efforts
to improve earnings," Christon said. "For the balance of the year, we will stay
vigilant in controlling our operating costs, while enhancing the guest
experience."
General & administrative expenses were $1.2 million, or 8.1% of revenues, in
the first quarter of 2006 compared to $0.9 million, or 7.3% of revenues, in the
first quarter of 2005. The Company increased its resources for recruiting and
training in the first quarter of 2006 in comparison to the same period last
year.
Depreciation expense increased $0.2 million, or 0.6% as a percentage of
revenues, as compared to the prior year due to additional restaurant remodels
and new and relocated restaurants. New restaurant pre-opening expense in the
first quarter last year totaled $0.3 million, or 2.4% of revenues, compared to
no pre-opening expense in the first quarter of 2006.
Net interest expense in the first quarter of 2006 was $0.1 million, or 0.5%
of revenues, compared to net interest expense in the first quarter of 2005 of
$0.2 million, or 1.3% of revenues.
Including non-recurring items as summarized in the ensuing financial tables,
net income for the first quarter of 2006 was $0.3 million, or $0.01 per diluted
share based upon 26.5 million diluted common shares outstanding, compared to net
income in the first quarter of 2005 of $0.4 million, or $0.03 per diluted share
based upon 15.6 million diluted common shares outstanding. The increase in
common shares outstanding is due to the securities issued in the Company's May
2005 private placement financing transaction.
Annual Shareholder's Meeting
The Company will be holding its Annual Shareholder's Meeting on Thursday,
May 18, 2006 at 10:00 AM EDT at its headquarters. The location is 16313 North
Dale Mabry Highway, Tampa, FL 33618.
About the Company
The Company manages and operates 25 full-service, neighborhood seafood
restaurants in Florida under the name "Shells". Shells restaurants feature a
wide selection of seafood items, including shrimp, oysters, clams, mussels,
scallops, lobster, crab and daily fresh fish specials, cooked to order in a
variety of ways: steamed, sauteed, grilled, blackened and fried. Shells
restaurants also offer a wide selection of signature pasta dishes, appetizers,
salads, desserts and full bar service.
Forward-Looking Statements
In addition to seasonal fluctuations, the Company's quarterly and annual
operating results are affected by a wide variety of other factors that could
materially and adversely affect revenues and profitability, including changes in
consumer preferences, tastes and eating habits; increases in food and labor
costs; the availability of food acceptable to our quality standards at
acceptable prices; the availability of qualified labor; national, regional and
local economic and weather conditions; promotional timings and seasonality;
demographic trends and traffic patterns; changes in travel and tourism
tendencies, particularly in light of world events; competition from other
restaurants and food service establishments; availability of third party
financing to fund capital or operating activities, if required; and the timing,
costs and charges relating to restaurant openings, closings and remodelings. As
a result of these and other factors, the Company may experience material
fluctuations in future operating results on a quarterly or annual basis, which
could materially and adversely affect its business, financial condition and
stock price. Furthermore, this press release and other documents filed by the
Company with the Securities and Exchange Commission ("SEC") contain certain
forward-looking statements with respect to the business of the Company and the
industry in which it operates. These forward-looking statements are subject to
certain risks and uncertainties, including those mentioned above, which may
cause results to differ significantly from these forward-looking statements. The
Company undertakes no obligation to update these forward looking statements on a
regular basis. An investment in the Company involves various risks, including
those mentioned above and those that are detailed from time-to-time in the
Company's SEC filings.
-0-
*T
SHELLS SEAFOOD RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
Thirteen Week Period Ended
April 2, 2006 April 3, 2005
----------------- -----------------
Amount Percent Amount Percent
--------- ------- --------- -------
Revenues:
Restaurant sales $ 14,545 99.7% $ 12,485 99.7%
Management fees 41 0.3% 41 0.3%
--------- ------- --------- -------
Total revenues 14,586 100.0% 12,526 100.0%
Restaurant operating costs:
Food and beverage(1) 4,643 31.9% 4,097 32.8%
Labor(1) 4,357 30.0% 3,667 29.4%
Other(1) 3,436 23.6% 2,675 21.4%
--------- ------- --------- -------
Total restaurant operating
costs(1) 12,436 85.5% 10,439 83.6%
General and administrative
expenses 1,177 8.1% 911 7.3%
Depreciation and amortization 498 3.4% 348 2.8%
Pre-opening expenses - 0.0% 300 2.4%
--------- ------- --------- -------
Total costs and expense 14,111 96.7% 11,998 95.8%
--------- ------- --------- -------
Income from operations 475 3.3% 528 4.2%
Other income (expense) (143) -1.0% 50 0.4%
Interest expense, net (71) -0.5% (168) -1.3%
--------- ------- --------- -------
Net income $ 261 1.8% $ 410 3.3%
--------- ------- --------- -------
Net income per share:
Basic $ 0.02 $ 0.03
Diluted $ 0.01 $ 0.03
Shares used in computing net income per share:
Basic 16,179 12,357
Diluted 26,563 15,617
SHELLS SEAFOOD RESTAURANTS, INC.
(Dollars in thousands, except per share data)
(Unaudited)
April 2, April 3,
2006 2005
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Number of restaurants at end of period:
Company-owned restaurants(1) 22 22
Licensed restaurants 3 4
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Total 25 26
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Balance sheet data:
Cash $ 1,336 $ 2,084
Working capital (deficiency) (4,674) (5,207)
Total assets 17,508 15,272
Long-term debt 1,813 3,207
Stockholders' equity 7,524 2,451
(1) Includes one joint venture restaurant in which the Company has a 51% equity
interest.
Thirteen Week
Period Ended
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NON-RECURRING ITEMS: April 2, April 3,
2006 2005
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Net income, as reported $ 261 $ 410
Non-recurring (expense) income:
Lease termination fee (23) -
Lease buy-out option - 600
Provision for impairment of assets due to
lease-buyout - (211)
Loss on disposal of assets - (162)
Financing costs, line of credit fee - (80)
--------- ---------
Total non-recurring (expense) income (23) 147
Pre-opening expenses - (300)
--------- ---------
Net income, excluding non-recurring items 284 563
========= =========
Net income per share:
Diluted, as reported $ 0.01 $ 0.03
Diluted, excluding non-recurring items $ 0.01 $ 0.04
*T
--30--AC/ny*
CONTACT: Shells Seafood Restaurants, Inc.
Media:
Rick Van Warner, 407-628-3104
or
Integrated Corporate Relations
Investors:
Raphael Gross, 203-682-8253
KEYWORD: FLORIDA
INDUSTRY KEYWORD: RESTAURANTS FOODS/BEVERAGES RETAIL EARNINGS
SOURCE: Shells Seafood Restaurants, Inc.