EX-99 2 ex9913rd2004.txt PRESS RELEASE FOR RELEASE CONTACT:Chris Morris October 13, 2004 Senior Vice President 3:05 p.m. Central Time Chief Financial Officer (972) 258-4525 CEC ENTERTAINMENT, INC. REPORTS RECORD THIRD QUARTER RESULTS IRVING, TEXAS - CEC Entertainment, Inc. (NYSE:"CEC") today announced record earnings for the third quarter ended September 26, 2004. Revenues for the third quarter of 2004 increased to $183.6 million from $170.1 million in the third quarter of 2003. Net income in the third quarter of 2004 increased to $22.0 million from $16.8 million in the same period of 2003. Diluted earnings per share increased to $0.58 in the third quarter of 2004 from $0.42 in the third quarter of 2003. Financial results in the third quarter of 2003 included a pretax charge of $4.25 million or approximately $0.07 per diluted share after taxes related to the settlement of litigation. Revenues for the first nine months of 2004 increased to $556.0 million from $507.1 million in the first nine months of 2003. Net income in the first nine months of 2004 increased to $69.7 million from $59.0 million in the same period of 2003. Diluted earnings per share increased to $1.80 in the first nine months of 2004 from $1.45 in the first nine months of 2003. Chris Morris, Senior Vice President and Chief Financial Officer, stated that, "New store development and an increase in comparable store sales of 0.4% contributed to a 7.9% increase in revenue in the third quarter of 2004. Excluding the $4.25 million legal charge in 2003, net income and diluted earnings per share in the third quarter increased 13% and 18%, respectively. During the first nine months of 2004, the Company generated operating cash flow of $131.3 million, invested $52.0 million in new and existing stores and repurchased $103.9 million of the Company's common stock while maintaining a strong balance sheet." Mr. Morris further added, "Based on current estimates, we expect diluted earnings per share to range from $0.44 to $0.45 in the fourth quarter of 2004, including an estimated $0.10 to $0.12 per share benefit from the extra week in fiscal year 2004, and a diluted earnings per share range of $0.86 to $0.88 in the first quarter of 2005. The current preliminary estimate for 2005, assuming an increase in comparable stores sales of 1% to 2%, is a diluted earnings per share range of $2.38 to $2.42, representing an earnings growth rate of 11% to 14% excluding the estimated benefit of the extra week in 2004." Richard M. Frank, Chairman and Chief Executive Officer, stated that, "For the first nine months of 2004, comparable store sales increased 2.0% and helped fuel EPS growth of 24%. Because of our financial strength, the strong market position of our concept and belief in our ability to execute a solid strategic plan, we remain confident in our ability to create long-term value for our shareholders." 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 487 Chuck E. Cheese's restaurants in 48 states, of which 440 are owned and operated by the Company. # # #
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (Thousands, except per share data) Quarter Ended Year to Date Ended 09/26/04 09/28/03 09/26/04 09/28/03 -------- -------- -------- -------- Revenues: Food and beverage $120,416 $112,286 $365,494 $334,363 Games and merchandise 62,394 56,886 187,961 170,150 Franchise fees and royalties 807 962 2,520 2,620 Interest income 5 4 19 16 -------- -------- -------- -------- 183,622 170,138 555,994 507,149 Costs and expenses: Cost of sales: Food, beverage and related supplies 22,152 21,222 67,937 61,437 Games and merchandise 7,922 7,483 23,782 21,972 Labor 49,928 46,322 150,855 138,010 Selling, general and administrative expenses 21,828 25,158 66,575 65,793 Depreciation and amortization 13,070 11,381 38,029 33,338 Interest expense 401 503 975 967 Other operating expenses 32,618 30,553 94,870 89,214 -------- -------- -------- -------- 147,919 142,622 443,023 410,731 Income before income taxes 35,703 27,516 112,971 96,418 Income taxes 13,675 10,676 43,268 37,410 -------- -------- -------- -------- Net income $ 22,028 $ 16,840 $ 69,703 $ 59,008 ======== ======== ======== ======== Earnings per share: Basic $ .60 $ .43 $ 1.86 $ 1.47 Diluted $ .58 $ .42 $ 1.80 $ 1.45 Weighted average shares outstanding: Basic 36,834 38,831 37,551 40,061 Diluted 37,970 39,749 38,726 40,584 Earnings per share and weighted average shares outstanding have been adjusted retroactively for the effect of a 3 for 2 stock split effective March 15, 2004.
CEC ENTERTAINMENT, INC. SUPPLEMENTAL FINANCIAL INFORMATION (Thousands, except store counts) Quarter Ended Year to Date Ended 09/26/04 09/28/03 09/26/04 09/28/03 -------- -------- -------- -------- Number of Company-owned stores: Beginning of period 430 391 418 384 New 8 10 20 18 Company purchased franchise stores 2 2 Closed (1) ----- ----- ----- ----- End of period 440 401 440 401 Number of franchise stores: Beginning of period 49 51 48 50 New 1 Company purchased franchise stores (2) (2) 2 Closed (4) ----- ----- ----- ----- End of period 47 51 47 48
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands, except share amounts) September 26, December 28, 2004 2003 ------------ ------------ ASSETS Current assets: Cash and cash equivalents.......................................... $ 13,311 $ 8,067 Accounts receivable................................................ 10,398 13,103 Inventories........................................................ 11,611 12,491 Prepaid expenses................................................... 7,763 7,608 Deferred tax asset................................................. 1,487 1,487 --------- --------- Total current assets............................................ 44,570 42,756 --------- --------- Property and equipment, net........................................... 549,613 536,124 --------- --------- Other assets.......................................................... 1,319 1,471 --------- --------- $ 595,502 $ 580,351 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt.................................. $ 190 $ 168 Accounts payable and accrued liabilities........................... 64,037 58,736 --------- --------- Total current liabilities....................................... 64,227 58,904 --------- --------- Long-term debt, less current portion.................................. 82,035 64,581 --------- --------- Deferred rent......................................................... 6,125 5,153 --------- --------- Deferred tax liability................................................ 61,447 50,714 --------- --------- Accrued insurance..................................................... 8,518 8,500 --------- --------- Shareholders' equity: Common stock, $.10 par value; authorized 100,000,000 shares; 55,168,260 and 54,481,913 shares issued, respectively .......... 5,517 5,448 Capital in excess of par value..................................... 233,582 219,071 Retained earnings ................................................. 448,614 378,911 Accumulated other comprehensive income ........................... 982 695 Less treasury shares of 18,959,168 and 16,042,418, respectively, at cost........................... (315,545) (211,626) --------- --------- 373,150 392,499 --------- --------- $ 595,502 $ 580,351 ========= ========= Share amounts have been adjusted retroactively for the effect of a 3 for 2 stock split effective March 15, 2004.