-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E72aTwbM9xtABTYoyWyPtInLvI5553arzMWO+8sjbH6PsLMc5wux9gOHPxj3voR0 I13/f+wGseJwP0kUDN+usw== 0000813920-05-000015.txt : 20050302 0000813920-05-000015.hdr.sgml : 20050302 20050302162945 ACCESSION NUMBER: 0000813920-05-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050102 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050302 DATE AS OF CHANGE: 20050302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEC ENTERTAINMENT INC CENTRAL INDEX KEY: 0000813920 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 480905805 STATE OF INCORPORATION: KS FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13687 FILM NUMBER: 05654668 BUSINESS ADDRESS: STREET 1: PO BOX 152077 CITY: IRVING STATE: TX ZIP: 75015 BUSINESS PHONE: 9722585403 MAIL ADDRESS: STREET 1: PO BOX 152077 CITY: IRVING STATE: TX ZIP: 75015 FORMER COMPANY: FORMER CONFORMED NAME: SHOWBIZ PIZZA TIME INC DATE OF NAME CHANGE: 19920703 8-K 1 k84th2004earn.txt 2004 4TH QTR EARNINGS RELEASE UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: (Date of earliest event reported) March 2, 2005 CEC ENTERTAINMENT, INC. (Exact name of registrant as specified in charter) Kansas 0-15782 48-0905805 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation or organization) Identification No.) 4441 West Airport Freeway Irving, Texas 75062 (Address of principal executive offices and zip code) (972) 258-8507 (Registrant's telephone number, including area code) N/A (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). Item 7: Financial Statements and Exhibits. (c) Exhibits 99.1 Press Release of CEC Entertainment, Inc. dated March 2, 2005. Item 12: Results of Operations and Financial Condition The information furnished in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of such section. On March 2, 2005, CEC Entertainment, Inc. issued a press release announcing financial results for the fiscal fourth quarter and year ended January 2, 2005. The Company also reported that it has corrected its computation of depreciation, lease classification, straight-line rent expense and the related deferred rent liability. The Company will amend the appropriate filings with the Securities and Exchange Commission to include restated financial statements for the three-year periods ended December 28, 2003 and for the first three fiscal quarters of fiscal 2004 to reflect these matters. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CEC ENTERTAINMENT, INC. Date: March 2, 2005 By: /s/ Christopher D. Morris ----------------------------- Christopher D. Morris Senior Vice President, Chief Financial Officer EXHIBIT INDEX Exhibit Number Description - ------- ----------- 99.1 Press Release of CEC Entertainment, Inc. dated March 2, 2005. EX-99 2 ex9914th2004earn.txt PRESS RELEASE FOR RELEASE CONTACT: Chris Morris March 2, 2005 Senior Vice President 3:05 p.m. Central Time Chief Financial Officer (972) 258-4525 CEC ENTERTAINMENT, INC. REPORTS 2004 EARNINGS; REPORTS RESTATEMENT IRVING, TEXAS - CEC Entertainment, Inc. (NYSE:"CEC") today announced earnings for the fourth quarter of 2004 and year ended January 2, 2005. These and all other amounts in the press release have been presented on a basis consistent with a restatement that the Company previously announced and is described below. Revenues for 2004 increased to $728.1 million from $654.6 million in 2003. Fiscal year 2004 consisted of 53 weeks compared to 52 weeks in fiscal year 2003. Net income in 2004 increased to $82.5 million from $67.4 million in 2003. Diluted earnings per share in 2004 were $2.15 per share compared to $1.66 per share in 2003. Revenues for the fourth quarter of 2004, which consisted of 14 weeks, increased to $172.1 million from $147.4 million in the fourth quarter of 2003, which consisted of 13 weeks. Net income in the fourth quarter of 2004 increased to $15.6 million from $10.9 million in the same period of 2003. Diluted earnings per share in the fourth quarter of 2004 were $0.41 per share compared to $0.28 in the fourth quarter of 2003. Chris Morris, Senior Vice President and Chief Financial Officer stated that, "Comparable store sales in the fourth quarter increased 3.1% primarily attributable to the seasonally strong 53rd week. After excluding the benefit of the extra week, considering Christmas fell on Saturday in 2004 and the significant competition from kids movies, quarterly sales were relatively strong. We estimate that the extra week in the fourth quarter increased diluted earnings per share by approximately $0.11. Our fourth quarter pre-tax margin improved 260 basis points to 14.7%. Comparable store sales for the year increased 2.0%. Diluted earnings per share for 2004, after adjusting for the extra week and a $4.3 million legal settlement charge taken in the third quarter of 2003, increased approximately 17%. We achieved this significant increase in earnings per share despite a $3.4 million increase in food costs associated with higher cheese prices in 2004 compared to 2003. During 2004, the Company generated operating cash flow of $166 million, invested $81 million primarily in new and existing stores and repurchased $114 million of treasury stock while increasing borrowings on our credit facility by only $12 million." Mr. Morris further added, "Based on current estimates, we expect diluted earnings per share to range from $2.33 to $2.38 per share for the 2005 fiscal year and $0.82 to $0.84, $0.44 to $0.46, $0.62 to $0.64 and $0.42 to $0.44 in the first, second, third and fourth quarter of 2005, respectively. The 2005 estimate assumes an increase of 1% to 2% in comparable store sales and is exclusive of the effects of expensing stock options beginning in the third quarter of 2005." Richard M. Frank, Chairman and Chief Executive Officer stated that, "We believe our results reflect the continued success of our long-term strategies of reinvesting in our core stores, continued new store development and building on operational execution. Because of our financial strength, the strong market position of our concept and belief in our ability to continue the execution of a solid strategic plan, we remain confident in our ability to create long-term value for our shareholders." Restatement of Historical Financial Statements: Following a review of its lease-related accounting policies, the Company has corrected its computation of depreciation, lease classification, straight-line rent expense and the related deferred rent liability. Prior to this review, the Company believed the policies it used when accounting for leases and the related depreciation were consistent with industry practice and in accordance with generally accepted accounting principles. The application of these policies will not have any affect on cash balances or the timing or amounts of lease payments. Historically, when accounting for leases, the Company has depreciated its leasehold improvements over a period equal to the lesser of the initial non-cancelable lease term plus periods of expected renewal, or the useful life of the assets. The periods of expected renewal included option periods provided for in the lease and any additional periods that the Company considered reasonably assured of exercising or acquiring. When determining whether each of its leases was an operating lease or a capital lease and when calculating straight-line rent expense, the Company used the initial non-cancelable lease term commencing when the obligation to make current rent payments began. Funds received from the lessor intended to reimburse the Company for the cost of leasehold improvements were netted against the amount recorded for the leasehold improvement. Following an extensive analysis of its lease and related accounting policies and in consultation with its independent registered public accounting firm, Deloitte & Touche LLP, the Company has now determined to use a consistent lease period (generally, the initial non-cancelable lease term plus option periods provided for in the lease that can be reasonably assured) when calculating depreciation of leasehold improvements and in determining straight-line rent expense and classification of its leases as either an operating lease or a capital lease. The lease term and straight-line rent expense will commence on the date when the Company takes possession and has the right to control use of the leased premises. Funds received from the lessor intended to reimburse the Company for the cost of leasehold improvements will be recorded as a deferred credit resulting from a lease incentive and amortized over the lease term as a reduction to rent expense. The cumulative effect of the restatement adjustments through fiscal year 2003 is to increase property and equipment $2.6 million, increase deferred rent liability $37.7 million, increase debt related to capital leases $11.0 million, decrease deferred tax liability $17.9 million and decrease retained earnings $28.2 million. Increases in rent expense, depreciation expense and interest expense, net of the related tax effects, resulted in decreases in diluted earnings per share for fiscal years 2003 and 2004 of $0.09, in both years, and ranged from $0.02 to $0.03 for each quarter of fiscal years 2003 and 2004. The Company will amend the appropriate filings with the Securities and Exchange Commission to include restated financial statements for the three-year periods ended December 28, 2003 and for the first three quarters of fiscal 2004 to reflect these matters. As a result of the restatement and as stated in our Current Report on Form 8-K filed on February 1, 2005, the financial statements contained in the Company's prior filings with the SEC should no longer be relied upon. The Company's management will discuss the restatement and the results for the fourth quarter and fiscal year 2004 on a conference call and simultaneous webcast on March 2, 2005. The webcast can be accessed through the Company's website at www.chuckecheese.com. 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, success of its franchise operations, negative publicity, fluctuations in quarterly results of operations, including seasonality, government regulations, weather, school holidays, commodity and labor costs. CEC Entertainment, Inc. operates a system of 498 Chuck E. Cheese's restaurants in 48 states, of which 452 are owned and operated by the Company. # # # CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (Thousands, except per share date) Quarter Ended Year Ended 01/02/05 12/28/03 01/02/05 12/28/03 --------- --------- --------- --------- (as restated) (as restated) Revenues: Food and beverage $ 114,247 $ 99,589 $ 479,741 $ 433,952 Games and merchandise 57,127 47,111 245,088 217,261 Franchise fees and royalties 700 715 3,220 3,335 Interest income 11 34 30 50 --------- --------- --------- --------- 172,085 147,449 728,079 654,598 Costs and expenses: Cost of sales Food, beverage and related supplies 21,291 18,545 89,228 79,982 Games and merchandise 6,613 6,262 30,395 28,234 Labor 49,699 43,779 200,554 181,789 --------- --------- --------- --------- 77,603 68,586 320,177 290,005 Selling, general and administrative expenses 21,182 18,159 86,471 83,024 Depreciation and amortization 14,294 12,869 55,771 49,502 Interest expense 919 668 2,486 2,194 Other operating expenses 32,852 29,302 129,409 119,775 --------- --------- --------- --------- 146,850 129,584 594,314 544,500 Income before income taxes 25,235 17,865 133,765 110,098 Income taxes 9,666 6,931 51,233 42,717 --------- --------- --------- --------- Net income $ 15,569 $ 10,934 $ 82,532 $ 67,381 ========= ========= ========= ========= Earnings per share: Basic $ .43 $ .28 $ 2.22 $ 1.70 Diluted $ .41 $ .28 $ 2.15 $ 1.66 Weighted average shares outstanding: Basic 36,416 38,436 37,251 39,654 Diluted 37,734 39,669 38,472 40,389
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands, except share amounts) January 2, December 28, 2005 2003 ---------- ------------ (as restated) ASSETS Current assets: Cash and cash equivalents...................................... $ 11,798 $ 8,067 Accounts receivable............................................ 13,482 13,103 Inventories.................................................... 12,171 12,491 Prepaid expenses............................................... 7,444 7,608 Deferred tax asset............................................. 1,763 1,487 --------- --------- Total current assets......................................... 46,658 42,756 --------- --------- Property and equipment, net....................................... 563,081 538,756 --------- --------- Other assets ..................................................... 2,278 1,471 --------- --------- $ 612,017 $ 582,983 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt.............................. $ 79,270 $ 1,158 Accounts payable and accrued liabilities....................... 60,623 58,736 --------- --------- Total current liabilities................................. 139,893 59,894 --------- --------- Long-term debt, less current portion.............................. 10,682 74,601 --------- --------- Deferred rent..................................................... 53,427 42,816 --------- --------- Deferred tax liability............................................ 36,429 32,849 --------- --------- Accrued insurance ................................................ 10,856 8,500 --------- --------- Shareholders' equity: Common stock, $.10 par value; authorized 100,000,000 shares; 55,556,857 and 54,481,913 shares issued, respectively ........ 5,556 5,448 Capital in excess of par value................................. 245,991 219,071 Retained earnings ............................................. 433,267 350,735 Accumulated other comprehensive income ........................ 1,476 695 Less treasury shares of 19,210,568 and 16,042,418, respectively, at cost....................... (325,560) (211,626) --------- --------- 360,730 364,323 --------- --------- $ 612,017 $ 582,983 ========= =========
CEC ENTERTAINMENT, INC. SUPPLEMENTAL FINANCIAL INFORMATION (Thousands) Quarter Ended Year Ended 01/02/05 12/28/03 01/02/05 12/28/03 -------- -------- -------- -------- Number of Company-owned stores: Beginning of period 440 401 418 384 New 9 14 29 32 Acquired from franchisees 1 3 3 3 Closed (1) (1) (1) ---- ---- ---- ---- End of period 449 418 449 418 ==== ==== ==== ==== Number of Franchised stores: Beginning of period 47 51 48 50 New 1 1 2 Acquired from franchisees (1) (3) (3) (3) Closed (1) (1) ---- ---- ---- ---- End of period 46 48 46 48 ==== ==== ==== ===
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS SUMMARY OF RESTATEMENT IMPACTS QUARTER ENDED DECEMBER 28, 2003 (Thousands, except per share date) As Reported Adjustment As Restated ----------- ---------- ----------- Revenues: Food and beverage $ 99,589 $ 99,589 Games and merchandise 47,111 47,111 Franchise fees and royalties 715 715 Interest income 34 34 --------- --------- 147,449 147,449 Costs and expenses: Cost of sales Food, beverage and related supplies 18,545 18,545 Games and merchandise 6,262 6,262 Labor 43,779 43,779 --------- --------- 68,586 68,586 Selling, general and administrative expenses 18,159 18,159 Depreciation and amortization 11,771 $ 1,098 12,869 Interest expense 482 186 668 Other operating expenses 29,192 110 29,302 --------- --------- --------- 128,190 1,394 129,584 Income before income taxes 19,259 (1,394) 17,865 Income taxes 7,472 (541) 6,931 --------- --------- --------- Net income $ 11,787 $ (853) $ 10,934 ========= ========= ========= Earnings per share: Basic $ .31 $ (.03) $ .28 Diluted $ .30 $ (.02) $ .28 Weighted average shares outstanding: Basic 38,436 38,436 Diluted 39,669 39,669
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS SUMMARY OF RESTATEMENT IMPACTS YEAR ENDED DECEMBER 28, 2003 (Thousands, except per share date) As Reported Adjustment As Restated ----------- ---------- ----------- Revenues: Food and beverage $ 433,952 $ 433,952 Games and merchandise 217,261 217,261 Franchise fees and royalties 3,335 3,335 Interest income 50 50 --------- --------- 654,598 654,598 Costs and expenses: Cost of sales Food, beverage and related supplies 79,982 79,982 Games and merchandise 28,234 28,234 Labor 181,789 181,789 --------- --------- 290,005 290,005 Selling, general and administrative expenses 83,024 83,024 Depreciation and amortization 45,109 $ 4,393 49,502 Interest expense 1,449 745 2,194 Other operating expenses 119,334 441 119,775 --------- --------- --------- 538,921 5,579 544,500 Income before income taxes 115,677 (5,579) 110,098 Income taxes 44,882 (2,165) 42,717 --------- --------- --------- Net income $ 70,795 $ (3,414) $ 67,381 ========= ========= ========= Earnings per share: Basic $ 1.78 $ (.09) $ 1.70 Diluted $ 1.75 $ (.08) $ 1.66 Weighted average shares outstanding: Basic 39,654 39,654 Diluted 40,389 40,389
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS SUMMARY OF RESTATEMENT IMPACTS (Thousands, except share amounts) December 28, December 28, 2003 Adjustment 2003 ------------ ---------- ------------ (as reported) (as restated) ASSETS Current assets: Cash and cash equivalents....................... $ 8,067 $ 8,067 Accounts receivable............................. 13,103 13,103 Inventories..................................... 12,491 12,491 Prepaid expenses................................ 7,608 7,608 Deferred tax asset.............................. 1,487 1,487 --------- --------- Total current assets......................... 42,756 42,756 --------- --------- Property and equipment, net........................ 536,124 $ 2,632 538,756 --------- --------- --------- Other assets ...................................... 1,471 1,471 --------- --------- --------- $ 580,351 $ 2,632 $ 582,983 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt............. $ 168 $ 990 $ 1,158 Accounts payable and accrued liabilities...... 58,736 58,736 --------- --------- --------- Total current liabilities................. 58,904 990 59,894 --------- --------- --------- Long-term debt, less current portion............... 64,581 10,020 74,601 --------- --------- --------- Deferred rent...................................... 5,153 37,663 42,816 --------- --------- --------- Deferred tax liability............................. 50,714 (17,865) 32,849 --------- --------- --------- Accrued insurance ................................. 8,500 8,500 --------- --------- Shareholders' equity: Common stock ................................... 5,448 5,448 Capital in excess of par value.................. 219,071 219,071 Retained earnings .............................. 378,911 (28,176) 350,735 Accumulated other comprehensive income ......... 695 695 Less treasury shares ........................... (211,626) (211,626) --------- --------- --------- 392,499 (28,176) 364,323 --------- --------- --------- $ 580,351 $ 2,632 $ 582,983 ========= ========= =========
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