Exhibit 99.1

CENTERPLATE REPORTS SOLID OPERATING RESULTS FOR 2004
ANNOUNCES INTENT TO REFINANCE SENIOR DEBT
AND NAMES JANET L. STEINMAYER PRESIDENT
SPARTANBURG, S.C., February 28, 2005 – Centerplate, Inc. (AMEX: CVP; TSX: CVP.un) today reported financial results for the fourth quarter and fiscal year ended December 28, 2004. Net sales of $607.2 million for fiscal year 2004 decreased by $8.9 million, or 1.5%, from $616.1 million in fiscal year 2003. Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) for 2004 increased to $53.4 million compared to $53.0 million for its fiscal year ended December 30, 2003. For the full year 2004, Centerplate reported net income of $2.3 million compared to a loss of $4.4 million in 2003.
“We are pleased to report increased adjusted EBITDA in our first full year of being a public company,” said Lawrence E. Honig, chairman and chief executive officer of Centerplate. He added, “Our convention center business has picked up, and we are pleased that net new accounts contributed to a net increase in adjusted EBITDA.”
Centerplate also announced that it had signed a commitment letter with General Electric Capital Corporation (GE Capital) to refinance its existing $65 million term loan and $50 million revolving credit facility with a $100 million term loan and a $115 million revolving credit facility. In addition, the company announced that the Board of Directors of Centerplate named Janet L. Steinmayer President, effective immediately.
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Regarding the GE refinancing, Honig said, “This will enable us to respond more effectively to many new business opportunities, such as the recent reemergence of new stadium construction, and to invest more heavily in our business, particularly our service and quality initiatives, including those with outside partners.” He added, “I am very pleased with the Board’s decision to name Janet Steinmayer President of Centerplate, recognizing the role she is already filling at the company. Janet has played an integral part in Centerplate’s strategic efforts to improve the quality and service in our business. Among her many contributions, she is spearheading the development of Centerplate’s branded food product concepts, which are being introduced with great success in our sports facilities and convention centers.” Honig noted that Steinmayer’s position at Centerplate includes oversight of the legal, human resources, marketing, risk management and information technology departments.
Ms. Steinmayer joined the company in 1993 as general counsel. Prior to joining the company, she was senior vice president and general counsel of Trans World Airlines, Inc., at the time the airline was owned by the Icahn organization. Ms. Steinmayer is a graduate of Bryn Mawr College, where she currently serves on its Board of Trustees, and of the University of Chicago Law School.
The decrease in net sales for fiscal year 2004 was due primarily to a $25.6 million sales decline in the MLB and NFL facilities served by Centerplate. In Major League Baseball, this was caused mostly by the loss of the San Diego Padres, which moved to a facility not served by Centerplate (approximately $14.1 million), plus five fewer post-season games played in the fourth quarter of 2004 (approximately $7.2 million) and a decrease in attendance levels at another Centerplate facility. In the National Football League, the decline in net sales was caused mostly by four fewer games played (because of scheduling, which moved four games from the 2004 NFL season into Centerplate’s fiscal 2005). These decreases were partially offset by an increase of $14.8 million in sales at convention centers due to an increase in trade shows and convention center business.
For the fourth quarter of fiscal 2004, Centerplate reported net sales of $134.1 million, an increase of 1.7%, compared to $131.8 million in the fourth quarter of 2003. Adjusted EBITDA for the
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fourth quarter of 2004 was $11.5 million compared to $9.3 million in the fourth quarter of 2003. Centerplate reported net income of $0.4 million for the fourth quarter of 2004 compared to a net loss of $11.4 million for the comparable quarter in 2003. Net sales for the quarter improved mainly due to an increase of revenue at the company’s convention centers and the additional revenue associated with new accounts. The improvement in net income is primarily the result of the non-recurring IPO related costs incurred in 2003.
On a per share basis, Centerplate reported earnings of $0.09 per share for fiscal 2004 versus a net loss of $0.31 per share for fiscal 2003 and net earnings of $0.02 per share for the fourth quarter of 2004 compared to a net loss of $0.70 per share for the fourth quarter of 2003.
As previously announced, Centerplate will make its 15th distribution to IDS holders on March 18, at the annual rate of approximately $1.56 per IDS.
Centerplate will discuss its fourth quarter and year-end 2004 financial results on a conference call at 5:30 p.m. (EST) on Monday, February 28, 2005. Interested parties may participate in the call by dialing 877-692-2590 approximately 10 minutes before the call is scheduled to begin. International callers should dial 973-935-8508. An audio web cast of the conference call can also be accessed via www.centerplate.com. For individuals unable to participate in the conference call, a telephone replay will be available from 8:00 p.m. February 28, 2005 through midnight on March 14, 2005. The replay can be accessed domestically by dialing 877-519-4471. For international callers, the dial-in number is 973-341-3080. The pass code for the replay call is 5722237.
About Centerplate
Centerplate, formerly Volume Services America Holdings, Inc., is a leading provider of catering, concessions, merchandise and facility management services for sports facilities, convention centers and other entertainment venues. Visit the company online atwww.centerplate.com.
Presentation of Information in this Press Release
Centerplate presents adjusted EBITDA because covenants in the indenture governing the company’s subordinated notes contain ratios based on this measure. A reconciliation of adjusted EBITDA to net income or loss is included in the attached tables.
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Forward-Looking Statements
The information contained in this news release, other than historical information, includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although Centerplate believes that the expectations reflected in such forward-looking statements are reasonable, the company can give no assurance that such expectations will prove to have been correct or that they will occur. Important factors beyond Centerplate’s control, including general economic conditions, consumer spending levels, changing trends in our business and competitive environment, adverse weather conditions and other factors, as well as the risks identified in the prospectus relating to the offering of IDSs, could cause actual results to differ materially from Centerplate’s expectations. Centerplate undertakes no obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
Contact Information
Gael Doar
Director of Communications
203-975-5941
gael.doar@centerplate.com
(Financial Tables Follow)
CENTERPLATE, INC.
SELECTED CONSOLIDATED BALANCE SHEET DATA (UNAUDITED)
(in thousands)
| | | | | | | | |
| | December 28, | | | December 30, | |
| | 2004 | | | 2003 | |
ASSETS | | | | | | | | |
Current assets | | $ | 71,755 | | | $ | 76,602 | |
Property and equipment, net | | | 48,222 | | | | 52,751 | |
Contract rights, net | | | 87,981 | | | | 101,512 | |
Cost in excess of net assets acquired | | | 41,142 | | | | 46,457 | |
Deferred financing costs, net | | | 11,707 | | | | 13,017 | |
Other assets | | | 38,239 | | | | 31,934 | |
| | | | | | |
TOTAL ASSETS | | $ | 299,046 | | | $ | 322,273 | |
| | | | | | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities | | $ | 70,243 | | | $ | 79,422 | |
Long-term debt | | | 170,245 | | | | 170,245 | |
Other liabilities | | | 6,332 | | | | 4,944 | |
Common Stock with conversion option, par value $0.01, exchangeable for subordinated debt, net of discount | | | 14,352 | | | | 14,035 | |
| | | | | | |
| | | | | | | | |
Total stockholders’ equity | | | 37,874 | | | | 53,627 | |
| | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 299,046 | | | $ | 322,273 | |
| | | | | | |
CENTERPLATE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(in thousands, except share data)
| | | | | | | | | | | | | | | | |
| | Thirteen Weeks Ended | | | Fifty-two Weeks Ended | |
| | December 28, | | | December 30, | | | December 28, | | | December 30, | |
| | 2004 | | | 2003 | | | 2004 | | | 2003 | |
Net sales | | $ | 134,127 | | | $ | 131,788 | | | $ | 607,154 | | | $ | 616,057 | |
| | | | | | | | | | | | | | | | |
Cost of sales | | | 107,836 | | | | 108,289 | | | | 492,462 | | | | 503,986 | |
Selling, general and administrative | | | 14,883 | | | | 14,320 | | | | 61,540 | | | | 59,591 | |
Depreciation and amortization | | | 6,509 | | | | 6,793 | | | | 26,644 | | | | 27,119 | |
Transaction related expenses | | | — | | | | 2,577 | | | | — | | | | 2,577 | |
Contract related losses | | | 290 | | | | 184 | | | | 411 | | | | 831 | |
| | | | | | | | | | | | |
Operating income (loss) | | | 4,609 | | | | (375 | ) | | | 26,097 | | | | 21,953 | |
| | | | | | | | | | | | |
Interest expense, net | | | 6,223 | | | | 17,735 | | | | 25,010 | | | | 32,763 | |
Other income, net | | | (96 | ) | | | (28 | ) | | | (266 | ) | | | (55 | ) |
| | | | | | | | | | | | |
Income (loss) before income taxes | | | (1,518 | ) | | | (18,082 | ) | | | 1,353 | | | | (10,755 | ) |
Income tax benefit | | | (1,888 | ) | | | (6,659 | ) | | | (967 | ) | | | (6,337 | ) |
| | | | | | | | | | | | |
Net income (loss) | | | 370 | | | | (11,423 | ) | | | 2,320 | | | | (4,418 | ) |
Accretion of conversion option | | | — | | | | — | | | | (317 | ) | | | — | |
| | | | | | | | | | | | |
Net income (loss) available to common stock with or without the conversion option | | $ | 370 | | | $ | (11,423 | ) | | $ | 2,003 | | | $ | (4,418 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Basic net income (loss) per share with conversion option | | $ | 0.02 | | | $ | (0.70 | ) | | $ | 0.17 | | | $ | (0.31 | ) |
| | | | | | | | | | | | |
Diluted net income (loss) per share with conversion option | | $ | 0.02 | | | $ | (0.70 | ) | | $ | 0.17 | | | $ | (0.31 | ) |
| | | | | | | | | | | | |
Basic net income (loss) per share without conversion option | | $ | 0.02 | | | $ | (0.70 | ) | | $ | 0.09 | | | $ | (0.31 | ) |
| | | | | | | | | | | | |
Diluted net income (loss) per share without conversion option | | $ | 0.02 | | | $ | (0.70 | ) | | $ | 0.09 | | | $ | (0.31 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding with conversion option | | | 4,060,997 | | | | 1,458,950 | | | | 4,060,997 | | | | 364,738 | |
Weighted average shares outstanding without conversion option | | | 18,463,995 | | | | 14,755,220 | | | | 18,463,995 | | | | 13,898,426 | |
| | | | | | | | | | | | |
Total weighted average shares outstanding | | | 22,524,992 | | | | 16,214,170 | | | | 22,524,992 | | | | 14,263,164 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Dividends declared per share | | $ | 0.20 | | | $ | 0.09 | | | $ | 0.79 | | | $ | 0.09 | |
| | | | | | | | | | | | |
CENTERPLATE, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EARNINGS BEFORE INTEREST,
INCOME TAXES, DEPRECIATION, AND AMORTIZATION (UNAUDITED)
(in thousands)
| | | | | | | | | | | | | | | | |
| | Thirteen Weeks Ended | | | Fifty-two Weeks Ended | |
| | December 28, | | | December 30, | | | December 28, | | | December 30, | |
| | 2004 | | | 2003 | | | 2004 | | | 2003 | |
Net income (loss) | | $ | 370 | | | $ | (11,423 | ) | | $ | 2,320 | | | $ | (4,418 | ) |
Income tax benefit | | | (1,888 | ) | | | (6,659 | ) | | | (967 | ) | | | (6,337 | ) |
| | | | | | | | | | | | |
Income (loss) before income taxes | | | (1,518 | ) | | | (18,082 | ) | | | 1,353 | | | | (10,755 | ) |
Adjustments: | | | | | | | | | | | | | | | | |
Interest expense (1) | | | 6,223 | | | | 17,735 | | | | 25,010 | | | | 32,763 | |
Depreciation and amortization | | | 6,509 | | | | 6,793 | | | | 26,644 | | | | 27,119 | |
| | | | | | | | | | | | |
EBITDA (2) | | $ | 11,214 | | | $ | 6,446 | | | $ | 53,007 | | | $ | 49,127 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
The following adjustments to EBITDA were made to compute Adjusted EBITDA: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
EBITDA | | $ | 11,214 | | | $ | 6,446 | | | $ | 53,007 | | | $ | 49,127 | |
Adjustments: | | | | | | | | | | | | | | | | |
Transaction related expenses (3) | | | — | | | | 2,577 | | | | — | | | | 2,577 | |
Contract related losses (4) | | | 290 | | | | 184 | | | | 411 | | | | 831 | |
Non-cash compensation | | | — | | | | — | | | | — | | | | 64 | |
Management fees paid to affiliates of Blackstone and GE Capital (5) | | | — | | | | 82 | | | | — | | | | 394 | |
| | | | | | | | | | | | |
Adjusted EBITDA (2) | | $ | 11,504 | | | $ | 9,289 | | | $ | 53,418 | | | $ | 52,993 | |
| | | | | | | | | | | | |
(1) | | Included in interest expense for the 13 and 52 week periods ended December 28, 2004 is $0.9 million and $2.0 million, respectively, related to the change in the fair value of our derivatives. In addition, included in the 52 weeks ended December 28, 2004 is $1.5 million in expenses related to the repurchase of the remaining $12.3 million senior subordinated notes issued in 1999 of which $0.3 million is amortization expense. Included in interest expense for the 13 and 52 weeks ended December 30, 2003 is a $5.3 million non-cash charge related to the refinancing of our credit facility and $7.2 million in expenses related to the repurchase of the senior subordinated notes issued in 1999. |
|
(2) | | EBITDA is not a measure in accordance with GAAP. EBITDA is not intended to represent cash flows from operations as determined by GAAP and should not be used as an alternative to income (loss) before taxes or net income (loss) as an indicator of operating performance or to cash flows as a measure of liquidity. We believe that EBITDA is an important measure of the cash returned on our investment in capital expenditures under our contracts. Adjusted EBITDA as defined in the indenture governing our subordinated notes issued in 2003, is determined as EBITDA as adjusted for transaction related expenses, contract related losses, other non-cash charges, and the former annual management fee paid to affiliates of Blackstone and GE Capital, less any non-cash credits. We present Adjusted EBITDA because covenants in the indenture governing our 2003 notes contain ratios based on this measure and it is used by management to among other things evaluate our ability to make interest and dividend payments. |
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(3) | | Transaction related expenses in fiscal 2003 include certain expenses related to executive compensation associated with our 2003 Initial Public Offering of IDSs. |
|
(4) | | Contract related losses reflect non-cash charges incurred for the write-off of assets for certain accounts. |
|
(5) | | Management fees in the fiscal 2003 period represent fees paid to former majority owners for certain administrative and management functions. |
CENTERPLATE, INC.
SELECTED CONSOLIDATED CASH FLOW DATA (UNAUDITED)
(in thousands)
| | | | | | | | | | | | | | | | |
| | Thirteen Weeks Ended | | | Fifty-two Weeks Ended | |
| | December 28, | | | December 30, | | | December 28, | | | December 30, | |
| | 2004 | | | 2003 | | | 2004 | | | 2003 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 370 | | | $ | (11,423 | ) | | $ | 2,320 | | | $ | (4,418 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 6,509 | | | | 6,793 | | | | 26,644 | | | | 27,119 | |
Amortization of deferred financing costs | | | 381 | | | | 5,833 | | | | 1,814 | | | | 6,906 | |
Contract related losses | | | — | | | | 184 | | | | 411 | | | | 831 | |
Noncash compensation | | | — | | | | — | | | | — | | | | 64 | |
Derivative noncash interest | | | 859 | | | | — | | | | 2,001 | | | | — | |
Deferred tax change | | | (2,105 | ) | | | (6,500 | ) | | | (1,272 | ) | | | (6,178 | ) |
Other | | | 208 | | | | 124 | | | | 351 | | | | 668 | |
Gain (loss) on disposition of assets | | | 53 | | | | (5 | ) | | | 103 | | | | (69 | ) |
| | | | | | | | | | | | | | | | |
Changes in assets and liabilities | | | (19,734 | ) | | | (13,261 | ) | | | (3,933 | ) | | | 2,236 | |
| | | | | | | | | | | | |
Net cash provided by (used in) operating activities | | | (13,459 | ) | | | (18,255 | ) | | | 28,439 | | | | 27,159 | |
| | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | |
Purchase of property and equipment | | | (2,285 | ) | | | (1,602 | ) | | | (7,969 | ) | | | (7,904 | ) |
Proceeds from sale of property and equipment | | | — | | | | 585 | | | | 809 | | | | 585 | |
Purchase of contract rights | | | (8,221 | ) | | | (2,532 | ) | | | (15,900 | ) | | | (16,029 | ) |
Return of unamortized capital investment | | | 5,000 | | | | — | | | | 16,531 | | | | — | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net cash used in investing activities | | | (5,506 | ) | | | (3,549 | ) | | | (6,529 | ) | | | (23,348 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | |
Net repayments — revolving loans | | | — | | | | (1,000 | ) | | | (4,000 | ) | | | (11,000 | ) |
Principal payments on long-term debt | | | — | | | | (109,538 | ) | | | — | | | | (110,400 | ) |
Proceeds from issuance of long-term debt | | | — | | | | 65,000 | | | | — | | | | 65,000 | |
Proceeds from issuance of stock, net | | | — | | | | 151,517 | | | | — | | | | 151,517 | |
Proceeds from issuance of subordinated notes | | | — | | | | 105,245 | | | | — | | | | 105,245 | |
Payment of existing subordinated notes | | | — | | | | (87,750 | ) | | | (12,250 | ) | | | (87,750 | ) |
Repurchase of stock | | | — | | | | (71,440 | ) | | | — | | | | (71,440 | ) |
Proceeds from loans to related parties | | | — | | | | 1,241 | | | | — | | | | 1,241 | |
Payments of debt issuance costs | | | — | | | | (12,837 | ) | | | (267 | ) | | | (12,837 | ) |
Restricted cash | | | — | | | | (22,048 | ) | | | 13,628 | | | | (22,048 | ) |
Payments of financing costs | | | (124 | ) | | | — | | | | (504 | ) | | | — | |
Increase (decrease) in bank overdrafts | | | 2,283 | | | | (862 | ) | | | 1,666 | | | | 1,282 | |
Loans to related parties | | | — | | | | — | | | | — | | | | (66 | ) |
Dividend payments | | | (4,460 | ) | | | — | | | | (18,335 | ) | | | — | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | (2,301 | ) | | | 17,528 | | | | (20,062 | ) | | | 8,744 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
INCREASE (DECREASE) IN CASH | | | (21,266 | ) | | | (4,276 | ) | | | 1,848 | | | | 12,555 | |
| | | | | | | | | | | | | | | | |
CASH AND CASH EQUIVALENTS: | | | | | | | | | | | | | | | | |
Beginning of period | | | 46,043 | | | | 27,205 | | | | 22,929 | | | | 10,374 | |
| | | | | | | | | | | | |
End of period | | $ | 24,777 | | | $ | 22,929 | | | $ | 24,777 | | | $ | 22,929 | |
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