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|CEC Entertainment Reports Financial Results for the Second Quarter of 2011|
IRVING, Texas, Aug 04, 2011 (BUSINESS WIRE) -- CEC Entertainment, Inc. (NYSE: CEC) today announced its financial results for its second quarter ended July 3, 2011. Total revenues for the second quarter of 2011 increased $5.2 million, or 2.9%, to $186.2 million from $181.0 million for the second quarter of 2010. The increase was primarily due to a weighted average net increase of approximately nine stores as compared to the second quarter of 2010, and a 0.3% increase in comparable store sales.
Net income for the second quarter ended July 3, 2011 increased to $6.5 million as compared to net income of $4.8 million for the second quarter of 2010. In addition, our diluted earnings per share for the second quarter of 2011 was $0.34 as compared to diluted earnings per share of $0.22 for the second quarter of 2010. An unfavorable tax adjustment was recorded in the prior year of approximately $2.8 million, net of taxes, in connection with an Internal Revenue Service ("IRS") examination. In addition, diluted earnings per share benefitted from our repurchase of approximately 2.8 million shares of our common stock since the beginning of the second quarter of 2010.
For the first six months of 2011, total revenues increased $15.3 million, or 3.6%, to $442.6 million as compared to $427.3 million for the first six months of 2010. The increase was primarily due to a weighted average net increase of approximately eight stores and a 0.8% increase in comparable store sales.
Net income for the first six months of 2011 increased to $40.6 million as compared to $38.6 million for the first six months of 2010. In addition, our diluted earnings per share for the first six months of 2011 was $2.06 as compared to diluted earnings per share of $1.77 for the first six months of 2010. An unfavorable tax adjustment was recorded in the prior year of approximately $2.8 million, net of taxes, in connection with an IRS examination. In addition, diluted earnings per share benefitted from our repurchase of approximately 3.2 million shares of our common stock since the beginning of fiscal year 2010.
On May 3, 2011, the Company's Board of Directors declared a cash dividend of $0.20 per share that was paid on July 7, 2011 to stockholders of record as of June 2, 2011. The Company's Board of Directors declared a cash dividend of $0.20 per share on August 2, 2011 that will be paid on October 6, 2011 to stockholders of record as of September 8, 2011.
Michael Magusiak, President and Chief Executive Officer, stated that, "During the first six months of 2011, we generated $111.6 million of operating cash flow. We utilized this cash by investing $46.8 million primarily in new and existing stores, reducing our outstanding borrowings on our revolving credit facility by $20.5 million, paying out $3.9 million in cash dividends, and using $40.0 million to repurchase 1,049,224 shares of our common stock or approximately 5.3% of diluted shares outstanding at quarter-end."
Comparable store sales were up 0.8% during the first half of 2011 and were down 7.9% during the first four weeks of the third quarter of 2011. It is difficult to quantify factors that negatively impact sales over a four week period. We believe, however, that our sales were adversely impacted by declines in consumer confidence in July of this year in contrast to the more healthy economic indicators in the prior year. Additionally, we believe that July was negatively impacted by more difficult weather comparisons due to high rainfall totals during the same four weeks of the prior year and increased competition from certain PG-13 movies this year. It is very difficult to project comparable store sales over the short-term, however, considering our year-to-date results and our concerns relating to the current economic environment that we believe is creating uncertainties in consumer spending, we are lowering our projected fiscal year 2011 diluted earnings per share to now be in a range of $2.75 to $2.95. This guidance incorporates the following assumptions for the 2011 fiscal year:
Second Quarter 2011 Conference Call:
The Company will host a conference call Thursday, August 4, 2011, at 3:30 p.m. Central Time to discuss its second quarter financial results and outlook for fiscal year 2011. A live webcast of the call (listen only) can be accessed through the Company's website, www.chuckecheese.com. Shortly after its conclusion, a replay of the call will be available on the website through Friday, September 23, 2011.
Non-GAAP Financial Measures:
The Company reports and discusses its operating results using financial measures consistent with accounting principles generally accepted in the United States ("GAAP"). From time to time in the course of financial presentations, earnings conference calls or otherwise, the Company may disclose certain non-GAAP financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Free Cash Flow. The non-GAAP financial measures presented in this earnings release should not be viewed as alternatives or substitutes for the Company's reported GAAP results. A reconciliation of the most directly comparable GAAP financial measure to EBITDA and Free Cash Flow is set forth in a table accompanying this release.
About CEC Entertainment, Inc.:
For more than 30 years, CEC Entertainment has served as the nationally recognized leader in family dining and entertainment and the place Where a Kid can be a Kid®. The Company and its franchisees operate a system of 555 Chuck E. Cheese's stores located in 48 states and seven foreign countries or territories. Currently, 508 locations in the United States and Canada are owned and operated by the Company. CEC Entertainment, Inc. and its franchises have the common goal of creating lifelong memories for families through fun, food, and play. Each Chuck E. Cheese's features musical and comic robotic entertainment, games, rides, and play areas, as well as a variety of dining options including pizza, sandwiches, a salad bar, and desserts. Committed to providing a fun, safe environment, Chuck E. Cheese's helps protect families through industry-leading programs such as Kid Check®.
Chuck E. Cheese's aims to promote positive, lifelong memories inside and outside of its stores. In addition to providing a fun entertainment experience for millions of families across the world, Chuck E. Cheese's has donated more than $6 million to schools and non-profit institutions through its fundraising programs. For more information, see the Company's website at www.chuckecheese.com.
Certain statements in this press release, other than historical information, may be considered "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, and are subject to various risks, uncertainties and assumptions. Statements that are not historical in nature, and which may be identified by the use of words such as "may," "should," "believe," "predict," "potential," "continue," "plan," "intend," "expect," "anticipate," "future," "project," "estimate," and similar expressions (or the negative of such expressions) are forward-looking statements. Forward-looking statements are made based on management's current expectations and beliefs concerning future events and, therefore, involve a number of assumptions, risks and uncertainties, including the risk factors described in Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2011, filed on February 24, 2011. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ from those anticipated, estimated or expected.
Factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, but are not limited to:
The forward-looking statements made in this press release relate only to events as of the date on which the statements were made. Except as may be required by law, the Company undertakes no obligation to update its forward-looking statements to reflect events and circumstances after the date on which the statements were made or to reflect the occurrence of unanticipated events.
(1) Percent amount expressed as a percentage of food and beverage sales.
(2) Percent amount expressed as a percentage of entertainment and merchandise sales.
(3) Percent amount expressed as a percentage of Company store sales.
Due to rounding, percentages presented in the table above may not add. The percentage amounts for the components of cost of food, beverage, entertainment and merchandise do not sum due to the fact that cost of food and beverage and cost of entertainment and merchandise are expressed as a percentage of related food and beverage and entertainment and merchandise sales, as opposed to total Company store sales.
CEC ENTERTAINMENT, INC.
Net Income to EBITDA:
The following tables set forth a reconciliation of net income to EBITDA and EBITDA expressed as a percentage of total revenues for the periods shown:
The Company believes that EBITDA provides useful information to the Company, investors and other interested parties about the Company's operating performance, its capacity to incur and service debt, fund capital expenditures, and other corporate uses.
EBITDA, a non-GAAP financial measure, is defined by the Company as net income before income taxes, interest expense, and depreciation and amortization. The non-GAAP financial measure presented in the table above should not be viewed as an alternative or substitute for the Company's reported GAAP results. EBITDA as defined herein may differ from similarly titled measures presented by other companies.
Free Cash Flow:
The following table sets forth a reconciliation of cash provided by operating activities to Free Cash Flow for the periods shown:
Free Cash Flow, a non-GAAP financial measure, is defined by the Company as cash provided by operating activities less capital expenditures and payment of dividends.
The Company believes that Free Cash Flow provides useful information to the Company, investors and other interested parties about the amount of cash generated by the business that, after the acquisition of property and equipment, can be used for other strategic opportunities, including servicing debt, funding additional capital expenditures and making investments in the business. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. The non-GAAP financial measure presented in the table above should not be viewed as an alternative or substitute for the Company's reported GAAP results. Free Cash Flow as defined herein may differ from similarly titled measures presented by other companies.
Store Count Information:
(1) For the six months ended July 3, 2011, included the closing and opening of one relocated store.
SOURCE: CEC Entertainment, Inc.
CEC Entertainment, Inc.
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