CEC Entertainment (ticker: CEC, exchange: New York Stock Exchange (.N))
News Release -
18-Feb-2004
CEC Entertainment, Inc. Reports 2003 Earnings; Announces 3 for 2 Stock Split IRVING, Texas--(BUSINESS WIRE)--Feb. 18, 2004--CEC Entertainment,
Inc. (NYSE:CEC) today announced earnings for the fourth quarter and
year ended Dec. 28, 2003. The Company also announced that its Board of
Directors has declared a three for two stock split in the form of a
special stock dividend to be effective and distributable on March 15,
2004. Stockholders will receive one additional share for each two
shares of common stock held on the record date of Feb. 25, 2004. The
Company will pay cash in lieu of the distribution of fractional
shares.
Revenues for the fourth quarter of 2003 increased to $147.4
million from $138.1 million in the fourth quarter of 2002. Net income
in the fourth quarter of 2003 increased to $11.8 million from $10.9
million in the same period of 2002. Diluted earnings per share in the
fourth quarter of 2003 were $0.45 per share compared to $0.39 in the
fourth quarter of 2002.
Revenues for 2003 increased to $654.6 million from $602.2 million
in 2002. Net income in 2003 increased to $70.8 million from $69.5
million in 2002. Diluted earnings per share in 2003 were $2.62 per
share compared to $2.46 per share in 2002.
Chris Morris, Senior Vice President and Chief Financial Officer
stated that, "New store development contributed to a 6.8% increase in
revenue and an 8.5% increase in earnings in the fourth quarter. This
increase in earnings and an aggressive stock buyback program in 2003
led to a 15.4% increase in diluted earnings per share for the fourth
quarter. Comparable store sales decreased 1.4% in the fourth quarter
and 0.3% for the year. During 2003, the Company invested capital
expenditures totaling $88.4 million, primarily in new and existing
stores, and repurchased $82.6 million of treasury stock while
increasing outstanding debt by only $2.3 million."
Mr. Morris further added, "Considering relatively strong sales in
the first seven weeks of 2004, we expect diluted earnings per share to
range from $1.16 to $1.18 in the first quarter of 2004. Additionally,
we believe that current analyst consensus estimates of diluted earning
per share for the second and third quarters of 2004 of $0.62 and
$0.77, respectively, are reasonable and are expecting fourth quarter
diluted earnings per share to range from $0.59 to $0.61. Based on
this, we expect diluted earnings per share for fiscal year 2004 to
range from $3.14 to $3.18. The 2004 fiscal year, as well as the fourth
quarter of 2004, will benefit from an additional week of operations
compared to the prior year."
Richard M. Frank, Chairman and Chief Executive Officer stated
that, "Our strong cash flow enables us to execute our long-term
strategies of reinvesting in our core stores, increasing the number of
Company stores through new unit development and franchise acquisitions
by approximately 10% per year and reducing the number of shares
outstanding with our share repurchase plan."
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 is subject to various risks,
uncertainties and assumptions. 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. Among the key factors that may have a direct bearing on
CEC's operating results, performance or financial condition are its
ability to implement its growth strategies, national, regional and
local economic conditions affecting the restaurant/entertainment
industry, competition within each of the restaurant and entertainment
industries, store sales cannibalization, success of its franchise
operations, negative publicity, fluctuations in quarterly results of
operations, including seasonality, government regulations, weather,
school holidays, commodity, insurance and labor costs.
CEC Entertainment, Inc. operates a system of 468 Chuck E. Cheese's
restaurants in 48 states, of which 420 are owned and operated by the
Company.
CEC ENTERTAINMENT, INC.
CONDENSED RESULTS OF OPERATIONS
(Thousands, except per share date)
Quarter Ended Year Ended
12/28/03 12/29/02 12/28/03 12/29/02
--------- --------- --------- ---------
Revenues:
Food and beverage $99,589 $92,439 $433,952 $400,119
Games and merchandise 47,111 44,743 217,261 198,466
Franchise fees and
royalties 715 754 3,335 3,188
Interest income 34 135 50 428
--------- --------- --------- ---------
147,449 138,071 654,598 602,201
Costs and expenses:
Cost of sales 68,586 63,056 290,005 266,357
Selling, general and
administrative
expenses 18,908 20,091 84,701 76,621
Depreciation and
amortization 11,771 10,592 45,109 39,243
Interest expense 482 320 1,449 1,201
Other operating expenses 28,443 26,357 117,657 105,119
--------- --------- --------- ---------
128,190 120,416 538,921 488,541
Income before income taxes 19,259 17,655 115,677 113,660
Income taxes 7,472 6,787 44,882 44,134
--------- --------- --------- ---------
Net income $11,787 $10,868 $70,795 $69,526
========= ========= ========= =========
Earnings per share:
Basic $.46 $.39 $2.67 $2.50
Diluted $.45 $.39 $2.62 $2.46
Weighted average
shares outstanding:
Basic 25,624 27,467 26,436 27,674
Diluted 26,446 27,725 26,926 28,175
CEC ENTERTAINMENT, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Thousands)
Quarter Ended Year Ended
12/28/03 12/29/02 12/28/03 12/29/02
--------- --------- --------- ---------
Cost of sales:
Food, beverage and
related supplies $18,545 $16,763 $79,982 $73,690
Games and merchandise 6,262 5,953 28,234 25,490
Labor 43,779 40,340 181,789 167,177
--------- --------- --------- ---------
$68,586 $63,056 $290,005 $266,357
========= ========= ========= =========
Number of Company-owned
stores:
Beginning of period 401 371 384 350
New 14 13 32 32
Acquired from
franchisees 3 3 3
Closed (1) (1)
--------- --------- --------- ---------
End of period 418 384 418 384
========= ========= ========= =========
Number of franchised stores:
Beginning of period 51 49 50 52
New 1 1 2 1
Acquired from
franchisees (3) (3) (3)
Closed (1) (1)
--------- --------- --------- ---------
End of period 48 50 48 50
========= ========= ========= =========
CEC ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands, except share amounts)
December 28, December 29,
2003 2002
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $8,067 $12,214
Accounts receivable 13,103 11,270
Inventories 12,491 10,716
Prepaid expenses 7,608 5,500
Deferred tax asset 1,487 1,319
------------- -------------
Total current assets 42,756 41,019
------------- -------------
Property and equipment, net 536,124 493,533
------------- -------------
Other assets:
Notes receivable from related party 3,825
Other 1,471 1,326
------------- -------------
1,471 5,151
------------- -------------
$580,351 $539,703
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $168 $143
Accounts payable and accrued liabilities 58,736 43,002
------------- -------------
Total current liabilities 58,904 43,145
------------- -------------
Long-term debt, less current portion 64,581 62,349
------------- -------------
Deferred rent 5,153 4,086
------------- -------------
Deferred tax liability 50,714 38,156
------------- -------------
Other accrued liabilities 8,500 4,750
------------- -------------
Commitments and contingencies
Redeemable preferred stock 2,549
-------------
Shareholders' equity:
Common stock, $.10 par value; authorized
100,000,000 shares; 36,321,275 and
35,669,773 shares issued, respectively 3,632 3,567
Capital in excess of par value 220,887 201,936
Retained earnings 378,911 308,277
Accumulated other comprehensive income
(loss) 695 (91)
Less treasury shares of 10,694,945
and 8,409,169, respectively, at cost (211,626) (129,021)
------------- -------------
392,499 384,668
------------- -------------
$580,351 $539,703
============= =============
CONTACT: CEC Entertainment, Inc., Irving
Chris Morris, 972-258-4525
SOURCE: CEC Entertainment, Inc.
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CEC Entertainment
