CEC Entertainment, Inc. Reports Second Quarter Results; Board Approves $400 Million Stock Buyback.IRVING, Texas Irving (pronounced 'er-ving') is a city located in the U.S. state of Texas within Dallas County. According to the 2000 U.S. Census, the city population was 191,615; the 2006 estimate was 201,927 according to the North Central Texas Council of Governments, and 196,084 according to -- CEC (Central Electronic Complex) The set of hardware that defines a mainframe, which includes the CPU(s), memory, channels, controllers and power supplies included in the box. Some CECs, such as IBM's Multiprise 2000 and 3000, include data storage devices as well. Entertainment, Inc. (NYSE NYSE See: New York Stock Exchange :CEC) today announced earnings for the second quarter ended July July: see month. 3, 2005. Revenues for the second quarter of 2005 increased to $168.4 million from $165.4 million in the second quarter of 2004. Net income was $14.4 million in both the second quarter of 2005 and the second quarter of 2004. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in the second quarter of 2005 were $0.40 per share compared to $0.37 per share in the second quarter of 2004. Revenues for the first six months of 2005 increased to $382.5 million from $372.4 million in the first six months of 2004. Net income was $46.7 million in the first six months of 2005 and $45.8 million in the same period of 2004. Diluted earnings per share in the first six months of 2005 were $1.26 per share compared to $1.17 per share in the first six months of 2004. Chris CHRIS Chemical Hazards Response Information System (US DoD) CHRIS California Historical Resources Information System CHRIS Computerized Human Resources Information System CHRIS Command Human Resources Intelligence System Morris, Senior Vice President and Chief Financial Officer stated that, "Total revenues in the second quarter increased $3.0 million over the prior year due to new store development. Comparable store sales in the second quarter decreased 2.1%. We believe the decline in comparable store sales was primarily due to unsuccessful promotions in the quarter and the effect of higher gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by prices on the spending decisions of our customers. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share increased 8.1% over the prior year. During the first two quarters of 2005, the Company generated operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of $75 million, invested $34 million primarily in new and existing stores and repurchased $64 million of Company stock. Borrowings on our credit facility increased by $11 million. In July, the Company secured a $200 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility with a term of five years that replaces its previous $132.5 million credit facility that was scheduled to mature in December December: see month. 2005." Mr. Morris further added, "Based on current estimates, we expect diluted earnings per share to range from $2.24 to $2.31 per share for the 2005 fiscal year and $0.56 to $0.61 and $0.42 to $0.44 in the third and fourth quarters of 2005, respectively. Our estimates include the assumption that comparable store sales are slightly negative to flat during the last half of the year." The Company also announced that its Board of Directors has approved a new plan to purchase, from time to time in the open market or through negotiated trades with persons who are not affiliates of the Company, shares of the Company's common stock at an aggregate purchase price of up to $400 million. The Company recently completed the purchase of $100 million of its common stock pursuant to a stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. plan approved in August 2004. The Company's decision to commence a new plan to purchase up to an additional $400 million of its common stock was based on its belief that its common stock represents an attractive long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investment opportunity for the Company. The timing and extent of the purchases will depend on market conditions. The funds required for the stock purchase will be provided from the Company's cash balances, operating cash flow and as appropriate, the Company's credit facility. Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a M. Frank, Chairman and Chief Executive Officer stated that, "We believe the continued execution of our long-term strategies of reinvesting in our core stores, continued new store development, building on operational execution and strategically repurchasing Company stock will drive long-term shareholder value. The $400 million stock buyback plan approved by our Board is significantly higher than previously approved stock buyback plans. The Board's decision to approve the stock buyback plan reflects their confidence in the long-term prospects of the Company and their belief in the opportunity to provide a long-term benefit to shareholders by share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. ." Certain statements in this press release, other than historical information, may be considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, and are subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or should underlying assumptions prove incorrect Incorrect means to not be correct and may also refer to:
CEC Entertainment, Inc. operates a system of 500 Chuck E. Cheese's <noinclude></noinclude> Chuck E. Cheese's is a chain of family entertainment centers. The concept centers around a basic sit-down pizza restaurant, complemented by arcade games, small rides, animatronic characters, and other popular diversions for young restaurants in 48 states, of which 455 are owned and operated by the Company.
CEC ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(Thousands, except per share date)
Quarter Ended Year to Date Ended
07/03/05 06/27/04 07/03/05 06/27/04
--------- --------- --------- ---------
Revenues:
Food and beverage $109,455 $108,739 $248,499 $245,078
Games and merchandise 58,253 55,826 132,495 125,567
Franchise fees and royalties 685 852 1,480 1,713
Interest income 8 7 13 14
--------- --------- --------- ---------
168,401 165,424 382,487 372,372
--------- --------- --------- ---------
Costs and expenses:
Cost of sales:
Food, beverage and related
supplies 19,837 21,307 45,405 45,785
Games and merchandise 6,707 7,218 15,031 15,860
Labor 48,622 47,688 102,447 100,927
Selling, general and
administrative expenses 21,416 20,047 46,833 43,879
Depreciation and
amortization 15,780 13,880 30,177 27,258
Interest expense 984 485 1,707 968
Other operating expenses 31,659 31,436 65,214 63,387
--------- --------- --------- ---------
145,005 142,061 306,814 298,064
--------- --------- --------- ---------
Income before income taxes 23,396 23,363 75,673 74,308
Income taxes 8,960 8,947 28,983 28,459
--------- --------- --------- ---------
Net income $14,436 $14,416 $46,690 $45,849
========= ========= ========= =========
Earnings per share:
Basic $.41 $.38 $1.31 $1.21
Diluted $.40 $.37 $1.26 $1.17
Weighted average shares
outstanding:
Basic 35,255 37,507 35,736 37,910
Diluted 36,473 38,604 36,963 39,107
CEC ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands, except share amounts)
July 3, January 2,
2005 2005
----------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $9,611 $11,798
Accounts receivable 15,141 13,482
Inventories 11,919 12,171
Prepaid expenses 9,144 7,444
Deferred tax asset 1,763 1,763
----------- --------------
Total current assets 47,578 46,658
----------- --------------
Property and equipment, net 567,231 563,081
----------- --------------
Other assets 1,122 2,278
----------- --------------
$615,931 $612,017
=========== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $534 $78,279
Accounts payable 22,927 24,294
Accrued liabilities 32,957 36,329
----------- --------------
Total current liabilities 56,418 138,902
----------- --------------
Long-term debt, less current portion 100,669 11,673
----------- --------------
Deferred rent 58,545 53,427
----------- --------------
Deferred tax liability 34,386 36,429
----------- --------------
Accrued insurance 10,750 10,856
----------- --------------
Shareholders' equity:
Common stock, $.10 par value; authorized
100,000,000 shares; 55,973,127 and
55,556,857 shares issued, respectively 5,597 5,556
Capital in excess of par value 257,823 245,991
Retained earnings 479,957 433,267
Accumulated other comprehensive income 1,333 1,476
Less treasury shares of 20,921,268 and
19,210,568, respectively, at cost (389,547) (325,560)
----------- --------------
355,163 360,730
----------- --------------
$615,931 $612,017
=========== ==============
CEC ENTERTAINMENT, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Thousands)
Quarter Ended Year to Date Ended
07/03/05 06/27/04 07/03/05 06/27/04
--------- --------- --------- ---------
Number of Company-owned
stores:
Beginning of period 453 420 449 418
New 1 10 5 12
Company purchased franchise
stores 1 1
Closed
--------- --------- --------- ---------
End of period 455 430 455 430
Number of franchise stores:
Beginning of period 45 48 46 48
New 1 1 1 1
Company purchased franchise
stores (1) (1)
Closed (1)
--------- --------- --------- ---------
End of period 45 49 45 49
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