LOS ANGELES, Aug. 14, 2007 (PRIME NEWSWIRE) -- Grill Concepts, Inc. (Nasdaq:GRIL) today announced that it has completed the review of its accounting treatment for the purchase of certain contractual rights held by Hotel Restaurant Properties, Inc. and affiliates (collectively "HRP") and filed amended consolidated financial statements for its fiscal 2006 third quarter, 2006 full year and 2007 first quarter.
As previously reported, Grill Concepts originally recorded its purchase of HRP's contractual rights as a non-current asset attributable to a five-year non-compete agreement as of June 30, 2006, with the asset being amortized ratably over the life of the non-compete agreement. As a result, the company recorded no expense associated with the purchase agreement at the time of signing and reported amortization expense with respect to the non-compete agreement of $155,000 for each quarterly period since.
Upon completion of the review, the company determined that the consideration paid for the HRP purchase agreement should have been treated as a contract termination cost, resulting in a charge to earnings at the time of executing the agreement. As such, Grill Concepts restated its above-mentioned financial reports to reflect a contract termination cost of $3.1 million in the three and nine-month periods ended September 24, 2006 and elimination of the non-compete agreement as an asset on the balance sheet, along with the reversal of amortization expense in the statement of operations related to the non-compete agreement for the third quarter of 2006 and each quarterly period amended since. In addition, the restated financial statements reflect other immaterial corrections related to additional pre-opening costs, additional bonuses, additional management incentive revenue and the tax effect of these adjustments, all of which have been recorded in the 2006 amended reports.
Summarized Effects of the Restatement on the Consolidated Financial Statements
The following presents the impact of the financial statement adjustments on the previously reported net income (loss), in thousands, and the net income (loss) per share applicable to common stock:
Three Months Ended
April 1, 2007
----------------------------------
As Previously
Reported As Restated
------------- -----------
Net (loss) income $ (49) $ 187
Net (loss) income per share
applicable to common stock:
Basic $ (0.01) $ 0.03
Diluted $ (0.01) $ 0.03
Year Ended
December 31, 2006
----------------------------------
As Previously
Reported As Restated
------------- -----------
Net income $ 3,029 $ 1,304
Net income per share applicable
to common stock:
Basic $ 0.49 $ 0.21
Diluted $ 0.48 $ 0.20
Three Months Ended
September 24, 2006
----------------------------------
As Previously
Reported As Restated
------------- -----------
Net loss $ (445) $ (1,923)
Net loss per share applicable
to common stock:
Basic $ (0.07) $ (0.30)
Diluted $ (0.07) $ (0.30)
Nine Months Ended
September 24, 2006
----------------------------------
As Previously
Reported As Restated
------------- -----------
Net income $ 1,547 $ 69
Net income per share applicable
to common stock:
Basic $ 0.25 $ 0.01
Diluted $ 0.24 $ 0.01
This news release should be read in conjunction with the company's amended Form 10-K/A for the full year ended December 31, 2006 and amended Form 10-Q/A's for the quarterly periods ended September 24, 2006 and April 1, 2007, filed today.
About Grill Concepts, Inc.
Grill Concepts owns, manages and licenses upscale casual and fine dining, full service restaurants under two core brand names: The Grill on the Alley and Daily Grill. The company operates 27 restaurants including five The Grill on the Alley-branded restaurants in Beverly Hills, Hollywood, San Jose, California; Chicago, Illinois; and Dallas, Texas as well as 22 Daily Grill restaurants in Southern and Northern California; the Washington, D.C. metropolitan region; Houston and Austin, Texas; Portland, Oregon; Memphis, Tennessee; and Seattle, Washington.