Champps Entertainment Announces Full Year and Fourth Quarter Results for Fiscal 2006.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. -- Champps Entertainment, Inc. (Nasdaq:CMPP CMPP Centre Médico-Psycho-Pédagogique ) today announced results for its fourth quarter and full year ending July July: see month. 2, 2006. Full Year 2006 Results Total revenues for fiscal 2006 decreased 1.7% to $209.6 million, compared with revenues of $213.3 million for fiscal 2005. The reduction in revenue can be primarily attributed to lower comparable sales of 3.7% for the year(1) and the additional week of sales reported in fiscal 2005 versus in fiscal 2006. This impact was partially offset by operating on average two more restaurants in fiscal 2006 compared to the prior year. Net loss for fiscal 2006 was $1.6 million, or $0.12 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 compared with a reported net loss of $0.2 million, or $0.02 per diluted share, in the previous year. Champps' fiscal 2005 comparable results were positively impacted by the additional week of operations(2), whereas fiscal 2006 year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. results were negatively impacted from the stock-based compensation costs associated with the implementation of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123(3). Additionally, the Company's results for both fiscal 2006 and 2005 included asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges and restaurant closings/disposals of $2.4 million and $4.0 million, respectively. Loss on discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , net of tax effects, totaled $2.9 million in fiscal 2006 and $2.0 million in fiscal 2005. In May 2006, the Company closed three underperforming restaurants in the Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , and Toledo, Ohio
"We are disappointed with our results," noted Mike O'Donnell O'Donnell (Irish: Ó Dónaill or Ó Dómhnaill), which is derived from the forname Domhnaill (meaning "world ruler", Rex Mundi in Latin, Modern Irish spelling, Dónall) were an ancient and powerful Irish clan, kings, princes, and lords of Tyrconnel in early times, and , Champps' Chairman, President, and Chief Executive Officer. "We know that we are being influenced by outside issues, however, it is our job to adjust and focus on increasing sales and cost controls." O'Donnell continued, "In the first half of fiscal 2006, we had gained confidence that our plan was the right one to get us back on track to better performance. However, late in the third quarter we began to lose sales momentum, and these conditions continued through the end of the year. Part of the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. clearly was triggered by a number of external macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. factors, namely higher fuel and utility costs, rising interest rates, and overall lower consumer confidence which has dampened consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. levels. The restaurant industry, particularly the casual dining segment, appears to be significantly impacted by these factors and our 2006 plan did not adequately predict or address this drop-off." "We are now actively engaged in refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar our strategy to counteract these factors and believe our best opportunity to do so is to intensify in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: our focus on our initiatives, while we continue to further improve upon our overall execution. During fiscal 2006, we implemented a number of our initiatives, and continue to be encouraged that we will see future benefits of our hard work. We now have 14 general managers and three directors of operation on our new cash flow partnership bonus plan, and we expect to further expand participation throughout fiscal 2007. We rolled out our updated menu in April, which incorporated a number of changes from our test menu. Our specials continue to get rave reviews and increase as a percentage of menu mix. Finally, we just finished a 'visioneering' process to define and communicate our foundational ideas, principles and stakeholder stakeholder n. a person having in his/her possession (holding) money or property in which he/she has no interest, right or title, awaiting the outcome of a dispute between two or more claimants to the money or property. commitments with the help of an outside consultant which was presented to our general managers in August and is expected to be rolled system-wide over this next fiscal year along with enhanced training programs." Fourth Quarter 2006 Results Total revenues for the fourth quarter decreased 4.8% to $50.0 million, compared with revenues of $52.5 million for the fourth quarter of our last fiscal year due to a decline in 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 . Net loss for the fourth quarter 2006 was $2.0 million, or $0.15 per diluted share compared to net loss of $0.5 million, or $0.04 per diluted share in the same quarter a year ago. This year's fourth quarter included a loss from discontinued operations, net of tax effects, of $1.1 million compared to a $0.2 million loss in the same quarter last year. Comparable same store sales decreased 5.5 percent for fourth quarter 2006 reflecting a comparable alcohol sales decrease of 3.2 percent and a comparable food sales decrease of 6.3 percent. Total cost of sales and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased to 89.2 percent of sales for the fourth quarter this year compared to 87.4 percent of sales for the same quarter last year, largely reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the impact of the lower comparable sales. Product costs modestly increased to 28.7 percent of sales in the most recent quarter from 28.6 percent of sales compared to the fourth quarter of the last fiscal year, and labor costs increased to 33.1 percent of sales from 32.5 percent of sales for the same period last fiscal year. Other operating costs operating costs npl → gastos mpl operacionales increased to 16.7 percent of sales in this year's fourth quarter from 15.6 percent of sales in the same quarter last year. Occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy expense increased to 10.7 percent of sales versus 10.0 percent of sales in the fourth quarter of 2005 because of the effect of lower sales. Depreciation and amortization expense modestly increased to 5.2 percent of sales this year versus 5.1 percent of sales last year again due to the de-leveraging effect of lower average sales. Pre-opening expenses for the quarter were $26,000 compared to $356,000 for the same quarter in the prior year. No new restaurants were opened in the fourth quarter of fiscal 2006 while one new restaurant was opened in the fourth quarter of fiscal 2005. General and administrative expenses for the fourth quarter were $4.2 million, or 8.4 percent of revenues, compared to $4.2 million, or 8.1 percent of revenues, in the comparable quarter last fiscal year. Higher legal costs, marketing related costs, and compensation expense for stock-based compensation resulting from adoption of a new accounting standard and the issuance of restricted stock awards was offset by reduced auditing/SOX 404 assessment costs and support staff levels. 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. for the fourth quarter of fiscal 2006 was $2.7 million, after a reduction of $2.2 million due to spending related to closure and exit costs. During the quarter, the Company spent $3.2 million to purchase a previously closed restaurant from its original landlord, which Champps intends to resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. . During the fourth quarter of fiscal 2006, $0.5 million of Champps' stock was repurchased under the previously announced $5 million share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and . To date, Champps has repurchased 91,480 shares at a cost of $0.7 million. In total, the Company ended the year with $9.4 million of cash, which is an increase of $6.7 million for the year. Currently, Champps has no outstanding credit facility borrowings, and improved net working capital by $9.1 million during fiscal 2006. Dave Womack Womack may refer to:
Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for fiscal 2007 is expected to be between $4 to $6 million, which is dependent on the level of new location capital spending related to fiscal 2008 openings that fall in that year." Previously Announced Management Changes As previously announced, Rich Scanlan People
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of Champps, but will still remain with the Company as a director of operations/market partner overseeing our operations in the Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. and Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces markets. Mike O'Donnell, Champps' Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , will be assuming the COO (Cell Of Origin) See mobile positioning. duties until such time as a replacement is found. Webcast Information The Company's management will discuss the results of the fourth quarter 2006 on a conference call and simultaneous webcast on September September: see month. 6, 2006, at 10:00 a.m. ET. To hear the call in a listen-only mode, participants must dial 800-947-6545 or 706-634-1745 (International) at least 10 minutes prior to the start of the call and refer to conference identification number 4892393. To hear a live Web simulcast Simulcast is a portmanteau of "simultaneous broadcast", and refers to programs or events broadcast across more than one medium, or more than one service on the same medium, at the same time. of the call, visit the company's Web site at www.champps.com, click on the Investor Relations Investor relations The process by which the corporation communicates with its investors. icon and refer to conference identification number 4892393. If unable to participate at the time of the call, the archived webcast can be accessed until October October: see month. 6, 2006, by visiting www.champps.com, clicking on the Investor Relations icon and referring to conference identification number 4892393. About Champps Entertainment, Inc. Champps Entertainment, Inc. owns and operates 50 and franchises/licenses 13 Champps restaurants in 23 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. 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. Statement Certain statements made in this press release are 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. based on management's current experience and expectations. These forward-looking statements are made pursuant to the safe harbor 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. Such forward-looking statements include statements regarding our strategic initiatives; stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program; impairment charges and closing of restaurants; new menu and operating initiatives critical to improvement in same store sales, the absence of new store openings in fiscal 2007, modest growth in fiscal 2008 and future uses of cash for stock repurchases, exit costs and capital expenditures, among others. Among the factors that could cause future results to differ materially from those provided in this press release are: the ability of the Company to successfully implement our strategic initiatives to improve same store sales; the ability to make and fund stock repurchases; the ability to successfully close or renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. lease terms for certain restaurants; the impact of intense competition in the casual dining restaurant industry, the Company's ability to control restaurant operating costs, which are impacted by commodity prices, minimum wage and other employment laws, fuel and energy costs, consumer perceptions of food safety, changes in consumer tastes and trends, and general business and economic conditions. Information on significant potential risks and uncertainties that may also cause such differences includes, but are not limited to, those mentioned by the Company from time to time in its filings with the SEC. The words "may," "believe," "estimate," "expect," "plan," "intend," "project," "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. (1)Presented on a basis that excludes the extra week in fiscal 2005. (2)The sales impact of the extra week in fiscal 2005 was approximately $3.8 million. (3)We recorded $0.9 million of stock-based compensation and $0.3 million of restricted stock expenses in fiscal 2006 and $0.3 million of restricted stock expense in fiscal 2005.
CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Fiscal Year Ended
July 2, 2006 and July 3, 2005
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Fiscal Year
Ended Ended
-----------------------------------
July 2, July 3, July 2, July 3,
2006 2005 2006 2005
-----------------------------------
Revenue
Sales $49,856 $52,298 $209,003 $212,668
Franchising and royalty, net 175 184 643 621
-----------------------------------
Total revenue 50,031 52,482 209,646 213,289
-----------------------------------
Costs and expenses
Cost of sales and operating
expenses
Product costs 14,290 14,936 58,933 60,510
Labor costs 16,490 17,048 66,599 67,557
Other operating expense 8,347 8,169 32,572 31,276
Occupancy 5,312 5,217 21,222 20,376
Pre-opening expense 26 356 183 1,339
General and administrative
expense 4,196 4,230 14,735 13,889
Depreciation and amortization 2,606 2,642 10,893 10,715
Severance - 108 110 655
Asset impairment charges and
restaurant closings/disposals 287 - 2,423 4,006
Other (income) expense 188 19 474 (90)
-----------------------------------
Income (loss) from operations (1,711) (243) 1,502 3,056
Interest expense and income,
net 214 344 1,127 1,444
Expenses related to predecessor
companies - 43 (5) 358
-----------------------------------
Income (loss) before income taxes (1,925) (630) 380 1,254
Income tax expense (benefit) (1,044) (320) (1,001) (486)
-----------------------------------
Income (loss) from continuing
operations (881) (310) 1,381 1,740
Loss on discontinued operations,
net of tax 1,113 212 2,939 1,989
-----------------------------------
Net loss $(1,994) $(522) $(1,558) $(249)
===================================
Basic income (loss) per share
Income (loss) from continuing
operations $(0.07) $(0.02) $0.11 $0.14
Loss on discontinued
operations, net of tax $(0.08) $(0.02) $(0.23) $(0.16)
Net loss $(0.15) $(0.04) $(0.12) $(0.02)
Diluted income (loss) per share
Income (loss) from continuing
operations $(0.07) $(0.02) $0.10 $0.13
Loss on discontinued
operations, net of tax $(0.08) $(0.02) $(0.22) $(0.15)
Net loss $(0.15) $(0.04) $(0.12) $(0.02)
Basic weighted average shares
outstanding 13,199 12,981 13,151 12,887
Diluted weighted average shares
outstanding 13,199 12,981 13,213 13,118
CHAMPPS ENTERTAINMENT, INC.
Supplemental Information
(Stated as a percentage of restaurant sales)
(Unaudited)
Three Months Fiscal Year
Ended Ended
------------------------------------
July 2, July 3, July 2, July 3,
2006 2005 2006 2005
------------------------------------
Store weeks 650 640 2,600 2,529
Average weekly sales 76,702 81,716 80,386 84,092
Product costs 28.7% 28.6% 28.2% 28.4%
Labor costs 33.1% 32.5% 31.9% 31.8%
Other operating expenses 16.7% 15.6% 15.6% 14.7%
Occupancy 10.7% 10.0% 10.1% 9.6%
Pre-opening expenses 0.0% 0.7% 0.1% 0.6%
------------------------------------
Total cost of sales and
operating expenses 89.2% 87.4% 85.9% 85.1%
Depreciation and amortization 5.2% 5.1% 5.2% 5.1%
Total cost of sales, operating
expenses and depreciation and
amortization 94.4% 92.5% 91.1% 90.2%
------------------------------------
General and administrative expense 8.4% 8.1% 7.0% 6.5%
(Stated as a percentage of ------------------------------------
revenue)
Champps Entertainment, Inc.
Selected Balance Sheet Information
(In thousands)
(Unaudited)
July 2, July 3,
2006 2005
--------------------
Cash and cash equivalents $9,449 $2,702
Current assets 24,869 17,053
Total assets 136,702 137,311
Current liabilities 13,377 14,667
Debt 14,707 14,649
Total shareholders' equity 76,728 76,061
Champps Entertainment, Inc.
Selected Cash Flow Information
(In thousands)
(Unaudited)
Fiscal Year Ended
--------------------
July 2, July 3,
2006 2005
--------------------
Net cash provided by operating activities $13,824 $19,634
Net cash used in investing activities (7,619) (15,792)
Net cash provided by (used in) financing
activities 542 (2,589)
--------------------
Net change in cash and cash equivalents $6,747 $1,253
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