Champps Entertainment, Inc. Reports Fiscal 2003 Second Quarter Results.Business Editors LITTLETON Littleton, city (1990 pop. 33,685), seat of Arapahoe co., N central Colo.; platted 1812, inc. 1890. It is a suburb south of Denver in an irrigated farm area. , Colo.--(BUSINESS WIRE)--Jan. 21, 2003 Champps Entertainment, Inc. (Nasdaq:CMPP CMPP Centre Médico-Psycho-Pédagogique ) today announced results for the second quarter of fiscal 2003 ended December December: see month. 29, 2002. Highlights for the quarter include: -- Total revenue increased 14.7 percent -- Restaurant operating and franchise contribution increased 17.7 percent -- Restaurant contribution margin improved 40 basis points -- Net income increased 81.7 percent -- Diluted earnings per share increased 75.0 percent Revenues for the quarter reached $46,538,000 compared to $40,565,000 reported for the second quarter of fiscal 2002, an increase of 14.7 percent. 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 was $0.14 for the second quarter on net income of $1,768,000 compared to $0.08 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 on net income of $973,000 for the same period last fiscal year. Restaurant operating and franchise contribution for the quarter was $6,091,000 compared to $5,176,000 for the same period last fiscal year, an increase of 17.7 percent. General and administrative expenses were 5.5 percent of revenues compared to 5.4 percent of revenues the prior year. Comparable food sales increased 1.6 percent while comparable liquor liquor /li·quor/ (lik´er) (li´kwor) pl. liquors, liquo´res [L.] 1. a liquid, especially an aqueous solution containing a medicinal substance. 2. sales decreased 7.6 percent, resulting in an overall decrease in comparable same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of of 1.6 percent for the quarter. The Company successfully opened two new Champps restaurants during the quarter in the Cleveland Cleveland, former county, England Cleveland, former county, NE England, created under the Local Government Act of 1972 (effective 1974). It was composed of the county boroughs of Hartlepool and Teeside and parts of the former counties of Durham and and Raleigh Raleigh (rôl`ē, räl`ē), city (1990 pop. 207,951), state capital, and seat of Wake co., central N.C.; the site was selected for the capital in 1788, and the city was laid out and inc. 1792. markets, increasing the number of Company-owned Champps restaurants to 38. The Company intends to open one additional Champps restaurant in the third quarter and three additional Champps restaurants in the fourth quarter of fiscal 2003. In December 2002, the Company completed the sale of $15,000,000 in convertible notes and related warrants in a private placement. A portion of the proceeds was applied to pay down approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $5,243,000 of existing debt, resulting in debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. costs of $290,000 during the quarter or $0.02 per diluted share. Additionally, the Company took a charge of $144,000, or $0.01 per diluted share, related to costs associated with a proposed real estate transaction for a Champps location that was abandoned. The Company has amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its agreement with a third party for sale/leaseback financing for Champps restaurants to be developed in the future. The amended agreement provides available funds of $24,500,000 for the construction of up to seven new Champps restaurants through November November: see month. 30, 2005. The Company has also received a commitment from a financial institution for an $8,000,000 line of credit, $6,000,000 of which may be used for interim financing Interim financing A short-term loan made to a company on the condition that a takeout will follow with long-term or intermediate financing. interim financing The financing that supports a transaction until permanent financing can be arranged. of construction costs for new Champps restaurants. William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack H. Baumhauer, Champps' chairman, president and chief executive officer, commented: "We are pleased to report strong operating results for our second quarter. In this difficult operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. we continue to focus our efforts on restaurant level execution. We have also initiated several programs to drive sales for the third quarter, including a new menu to be introduced in the first week of February February: see month. . Our goal this quarter is to report positive comparable same store sales in addition to positive guest counts. We are projecting revenues of $47,000,000 to $48,000,000 for the third quarter with earnings per share in the $0.17 to $0.19 range and revenues for the fourth quarter of $48,000,000 to $49,000,000 with earnings per share in the $0.15 to $0.17 range. These estimates for the balance of the fiscal year have been revised to reflect the impact of the costs associated with the issuance of the convertible notes and related warrants and contemplates comparable same store sales to range between flat and a positive one percent. These estimates include an effective tax rate of 4% for state and local income tax and do not include income associated with the recognition of additional deferred tax assets." Littleton, Colo.-based Champps Entertainment, Inc. currently owns and operates 38 and franchises 12 Champps restaurants in 18 states. Champps, which competes in the upscale casual dining segment, offers an extensive menu consisting of freshly prepared food, coupled with exceptional service. Champps creates an exciting environment through the use of videos, music, sports and promotions. Statements made in this press release include 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. made pursuant to 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. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Information on significant potential risks and uncertainties that may cause such differences include, but are not limited to, those mentioned by the Company from time to time in its filings with the Securities and Exchange Commission. The words "believe," "estimate," "expect," "intend," "anticipate," "should" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and, therefore, readers should not place undue reliance on these forward-looking statements.
CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------- ------------------
December December December December
29, 30, 29, 30,
2002 2001 2002 2001
--------- --------- --------- --------
Revenue
Sales $46,389 $40,413 $87,721 $75,083
Franchising and royalty, net 149 152 297 307
--------- --------- --------- --------
Total revenue 46,538 40,565 88,018 75,390
--------- --------- --------- --------
Costs and expenses
Restaurant operating expenses:
Product costs 12,908 11,352 24,439 21,351
Labor costs 14,487 12,953 28,043 24,301
Other operating expenses 7,268 6,108 13,711 11,670
Occupancy 3,888 3,380 7,606 6,241
Depreciation and
amortization 1,896 1,596 3,663 3,085
--------- --------- --------- --------
Total restaurant
operating expenses 40,447 35,389 77,462 66,648
--------- --------- --------- --------
Restaurant operating and
franchise contribution 6,091 5,176 10,556 8,742
General and administrative
expense 2,544 2,197 4,849 4,119
Pre-opening expense 849 1,029 1,552 1,716
Expenses related to
predecessor companies - 283 - 283
Interest expense and income,
net 415 491 811 935
Debt extinguishment costs 290 - 290 -
Other (income) expense 150 (3) 201 (6)
--------- --------- --------- --------
Income from continuing
operations 1,843 1,179 2,853 1,695
Loss from discontinued
operations, net of tax - 153 - 153
--------- --------- --------- --------
Income before income taxes 1,843 1,026 2,853 1,542
Income tax expense 75 53 113 93
--------- --------- --------- --------
Net income $1,768 $973 $2,740 $1,449
========= ========= ========= ========
Income before discontinued
operations $0.14 $0.09 $0.22 $0.13
Loss from discontinued
operations - (0.01) - (0.01)
--------- --------- --------- --------
Basic income per share: $0.14 $0.08 $0.22 $0.12
========= ========= ========= ========
Income before discontinued
operations $0.14 $0.09 $0.21 $0.12
Loss from discontinued
operations - (0.01) - (0.01)
--------- --------- --------- --------
Diluted income per share: $0.14 $0.08 $0.21 $0.11
========= ========= ========= ========
Basic weighted average shares
outstanding 12,497 12,071 12,349 12,060
========= ========= ========= ========
Diluted weighted average shares
outstanding 13,089 12,667 13,004 12,698
========= ========= ========= ========
Supplemental Information -- Restaurant Operating Expenses
(Stated as a percentage of sales)
Three Months Ended Six Months Ended
------------------- ------------------
December December December December
29, 30, 29, 30,
2002 2001 2002 2001
--------- --------- --------- --------
Product costs 27.8% 28.1% 27.9% 28.4%
Labor costs 31.2% 32.0% 32.0% 32.4%
Other operating expenses 15.7% 15.1% 15.6% 15.6%
Occupancy 8.4% 8.4% 8.7% 8.3%
Depreciation and
amortization 4.1% 3.9% 4.2% 4.1%
Total restaurant
contribution margin 12.8% 12.4% 11.7% 11.2%
--------- --------- --------- --------
General and administrative
expense 5.5% 5.4% 5.5% 5.5%
(Stated as a percentage --------- --------- --------- --------
of revenue)
Selected Consolidated Balance Sheet
Information December June
29, 30,
2002 2002
--------- ---------
Cash and cash equivalents $11,313 $4,643
Property and equipment, net 73,985 67,541
Total assets 114,697 95,575
Notes payable 27,917 19,299
Capital lease obligations 1,785 2,536
Shareholders' equity 56,954 50,955
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