For more information contact: Jeff Elliott or Geralyn DeBusk Halliburton Investor Relations 972-458-8000
DAVE & BUSTER’S, INC. REPORTS FOURTH QUARTER AND FISCAL 2004 RESULTS
DALLAS (April 14, 2005)- Dave & Buster’s, Inc. (NYSE: DAB), a leading operator of upscale restaurant/entertainment complexes, today announced its results for the fourth quarter and fiscal year ended January 30, 2005.
Total revenue for the quarter increased 21.4 percent, or $21.4 million, to $121.4 million from $100.0 million in the prior year’s comparable quarter. Food and beverage revenue increased 26.0 percent and amusement and other revenue increased 15.9 percent. Revenue from comparable stores decreased 1.6 percent over last year’s fourth quarter. As previously announced, we believe the major snowstorms in January 2005 reduced revenues by approximately $2.0 million. We estimate that the comparable store revenue impact was approximately 1.3 percentage points for the quarter. Operating income for the period increased 11.7 percent to $13.3 million compared to $11.9 million last year. Net income for the quarter rose 2.8 percent to $7.2 million, or $0.46 per diluted share, compared to $7.0 million, or $0.46 per diluted share, in the prior year’s fourth quarter. EBITDA increased 13.9 percent to $23.0 million from $20.2 million last year. Special event revenue, on a comparable store basis, was 23.4 percent of total revenue compared to 22.2 percent of total revenue last year. We estimate the impact of the severe weather in the fourth quarter was approximately $0.05 per diluted share. The earnings for the quarter were also impacted by approximately $0.02 per share related to higher than anticipated costs of completing the requirements of Sarbanes-Oxley testing and compliance. Overall, for the year, the company incurred costs related to Sarbanes-Oxley compliance of approximately $1 million. The number of diluted shares outstanding increased 3.9 percent to 16.562 million, for the fourth quarter compared to 15.944 million last year.
For the fiscal year ended January 30, 2005, total revenue was $390.3 million compared to $362.8 million last year, a 7.6 percent increase. Food and beverage revenue increased 9.3 percent and amusement and other revenue increased 5.6 percent for the fiscal year. Revenue from comparable stores for the year was essentially flat. Operating income improved 8.2 percent to $25.4 million compared to $23.5 million in the prior year. Net income was $12.9 million, or $0.87 per diluted share, compared to $10.9 million, or $0.79 per diluted share, in the prior year. EBITDA increased 6.1 percent to $59.6 million from $56.2 million last year. Special event revenue, on a comparable store basis, was 16.2 percent of total revenue for the fiscal year compared to 15.3 percent of total revenue last year. As previously announced, the financial statements for periods prior to the fourth quarter of 2004 have been restated to reflect changes in the company’s lease accounting for landlord allowances and rent holidays related to the construction period for our complexes. The impact of the lease accounting adjustments on the fiscal year results was $0.01 per diluted share. The number of diluted shares outstanding increased 12.9 percent to 16.540 million, for the 52 weeks compared to 14.646 million last year.
Non-GAAP Financial Measures A reconciliation of EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, is set forth in the attachment to this release.
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“We continue to see improvement in the profitability of the company,” stated Buster Corley, the company’s CEO. “Our D&B store management teams continue to improve their operating contributions and we are making good progress with our newly acquired Jillian’s stores in their revitalization.”
“We have signed the lease for our third Dave & Buster’s opening for 2005. The store will open in Buffalo, New York late in the second half of the year,” said Dave Corriveau, the company’s President. “This location, along with our Omaha, Nebraska location will be a smaller version of our intermediate size store. The stores will have approximately 60 percent of the square footage, construction cost and revenue of our larger mega-size store. We expect to see returns on our investment similar to those of a typical store since we anticipate lower fixed operating costs for this size store. We are also planning to open in Kansas City, Kansas in the second half of the year.”
“We were successful in continuing the quarterly profit improvement trend even with the impact of the severe weather in January and the costs of Sarbanes-Oxley compliance,” commented W. C. Hammett, the company’s CFO. “We do not anticipate similar cost impact from Sarbanes-Oxley compliance efforts during fiscal 2005. We currently expect to adopt FAS 123R, “Share Based Payment” in the third quarter of fiscal 2005. If adopted, we expect the effect of this change in accounting for stock options to be approximately $0.04 per diluted share for the year ending January 29, 2006. This would change our previously announced annual earnings guidance to a range of $1.11 to $1.19 per diluted share.”
The company will hold a conference call on Thursday, April 14 at 11:30 a. m. EDT (10:30 a.m. CDT) to discuss the results. The call will be Webcast by both CCBN and Vcall and can be accessed via Dave & Buster’s Web site,www.daveandbusters.com. Individual investors can listen to the call through CCBN’s individual investor center,www.companyboardrom.com, or PrecisionIR’s Webcast site,www.vcall.com. In addition, investors can access the call by visiting any of the investor sites in the CCBN or PrecisionIR Individual Investor Network. Institutional investors can access the call via CCBN’s password-protected event management site,www.streetevents.com. The Webcast will be archived on the company’s Web site and available for replay through April 28, 2005.
Celebrating over 22 years of operations, Dave & Buster’s was founded in 1982 and is one of the country’s leading upscale, restaurant/entertainment concepts with 43 locations throughout the United States and Canada.
“Safe Harbor” Statements Under the Private Securities Litigation Reform Act of 1995
Certain information contained in this press release includes forward-looking statements. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, projections, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitations, by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “projects,” “believes,” “intends,” “should,” or comparable terms or the negative thereof. All forward-looking statements included in this press release are based on information available to us on the date hereof. Such statements speak only as of the date hereof. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: our ability to open new high-volume restaurant/entertainment complexes; our ability to raise and access sufficient capital in the future; changes in consumer preferences, general economic conditions or consumer discretionary spending; the outbreak or continuation of war or other hostilities involving the United States; potential fluctuation in our quarterly operating result due to seasonality and other factors; the continued service of key management personnel; our ability to attract, motivate and retain qualified personnel; the impact of federal, state or local government regulations relating to our personnel or the sale of food or alcoholic beverages; the impact of litigation; the effect of competition in our industry; additional costs associated with compliance with the Sarbanes-Oxley Act and related regulations and requirements; and other risk factors described from time to time in our reports filed with the SEC.
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DAVE & BUSTER’S, INC. Condensed Consolidated Balance Sheets (in thousands)
January 30, 2005
February 1, 2004
ASSETS
(as restated)
Current assets Cash and cash equivalents
$
7,624
$
3,897
Other current assets
34,581
31,460
Total current assets
42,205
35,357
Property and equipment, net
331,478
291,473
Other assets and deferred charges
23,725
13,371
$
397,408
$
340,201
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities
$
49,862
$
35,577
Other long-term liabilities
70,251
74,639
Long-term debt
80,351
50,201
Stockholders’ equity Common stock
135
132
Paid in capital
122,173
118,669
Restricted stock awards
1,454
905
Accumulated comprehensive income
225
—
Retained earnings
74,804
61,924
198,791
181,630
Less: Treasury stock
(1,846
)
(1,846
)
Total stockholders’ equity
196,945
179,784
$
397,408
$
340,201
3
DAVE & BUSTER’S, INC. Consolidated Statements of Income (dollars in thousands, except per share amounts) (unaudited)
13 Weeks Ended
13 Weeks Ended
January 30,2005
February 1, 2004
(as restated)
Food and beverage revenues
$
68,243
56.2
%
$
54,158
54.1
%
Amusement and other revenues
53,171
43.8
%
45,887
45.9
%
Total revenues
121,414
100.0
%
100,045
100.0
%
Cost of food and beverage
16,303
13.4
%
12,969
13.0
%
Cost of amusement and other
5,737
4.7
%
6,057
6.0
%
Total cost of product
22,040
18.1
%
19,026
19.0
%
Operating payroll and benefits
33,366
27.5
%
26,705
26.7
%
Other store operating expenses
34,842
28.7
%
26,996
27.0
%
General and administrative expenses
7,868
6.5
%
7,102
7.1
%
Depreciation and amortization expense
9,755
8.0
%
8,342
8.3
%
Preopening costs
280
0.2
%
¾
0.0
%
Total operating expenses
86,111
70.9
%
69,145
69.1
%
Operating income
13,263
10.9
%
11,874
11.9
%
Interest expense, net
2,174
1.8
%
1,316
1.3
%
Income before provision for income taxes
11,089
9.1
%
10,558
10.6
%
Provision for income taxes
3,923
3.2
%
3,589
3.6
%
Net income
$
7,166
5.9
%
$
6,969
7.0
%
Net income per share Basic
$
0.53
$
0.54
Diluted
$
0.46
$
0.46
Weighted average shares outstanding Basic weighted average shares outstanding
13,418
13,161
Diluted weighted average shares outstanding
16,562
15,944
Other information:
Company operated stores open
43
33
EBITDA, which is earnings before interest, taxes, depreciation and amortization, is used by management, bankers and investors to evaluate a company’s ability to repay debt and for compliance of certain debt covenants.
Total net income
$
7,166
$
6,969
Add back: depreciation and amortization
9,755
8,342
interest expense, net
2,174
1,316
provision for income taxes
3,923
3,589
EBITDA
$
23,018
$
20,216
4
DAVE & BUSTER’S, INC. Consolidated Statements of Income (dollars in thousands, except per share amounts)
52 Weeks Ended
52 Weeks Ended
January 30, 2005
February 1, 2004
(as restated)
Food and beverage revenues
$
209,689
53.7
%
$
191,881
52.9
%
Amusement and other revenues
180,578
46.3
%
170,941
47.1
%
Total revenues
390,267
100.0
%
362,822
100.0
%
Cost of food and beverage
51,367
13.1
%
46,354
12.8
%
Cost of amusement and other
21,704
5.6
%
21,788
6.0
%
Total cost of product
73,071
18.7
%
68,142
18.8
%
Operating payroll and benefits
110,542
28.3
%
105,027
28.9
%
Other store operating expenses
119,509
30.6
%
108,413
30.0
%
General and administrative expenses
26,221
6.7
%
25,033
6.9
%
Depreciation and amortization expense
34,238
8.8
%
32,741
9.0
%
Pre-opening costs
1,295 0.3
%
¾
0.0
%
Total operating expenses
364,876
93.5
%
339,356
93.5
%
Operating income
25,391
6.5
%
23,466
6.5
%
Interest expense, net
5,586
1.4
%
6,926
1.9
%
Income before provision for income taxes
19,805 5.1
%
16,540
4.6
%
Provision for income taxes
6,925
1.8
%
5,619
1.6
%
Net income
$
12,880
3.3
%
$
10,921
3.0
%
Net income per share – basic
$
0.97
$
0.83
Net income per share – diluted
$
0.87
$
0.79
Weighted average shares outstanding Basic weighted average shares outstanding
13,331
13,128
Diluted weighted average shares outstanding
16,540
14,646
Other information:
Company operated stores open
43
33
EBITDA, which is earnings before interest, taxes, depreciation and amortization, is used by management, bankers and investors to evaluate a company’s ability to repay debt and for compliance of certain debt covenants.
Total net income (loss)
$
12,880
$
10,921
Add back: depreciation and amortization
34,238
32,741
interest expense, net
5,586
6,926
provision for income taxes
6,925
5,619
EBITDA
$
59,629
$
56,207
5
DAVE & BUSTER’S, INC. Consolidated Statements of Cash Flow (dollars in thousands)
13 Weeks Ended
52 Weeks Ended
January 30, 2005
January 30, 2005
(Unaudited)
Cash flows from operating activities:
Net income
$
7,166
$
12,880
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization expense
9,755
34,238
Deferred income tax expense
(1,791
)
(3,820
)
Tax benefit related to stock options
180
705
Restricted stock awards
163
549
Warrants related to convertible debt
63
254
Other, net
174
314
Changes in operating assets and liabilities, net of effect of business acquisitions Inventories
(1,064
)
(2,069
)
Prepaid expenses 1,134 (325) Other current assets (1,397) (94)
Other assets and deferred charges
(4433
)
(1,884
)
Accounts payable
(1,554
)
(1,200
)
Accrued liabilities
2,574
3,535
Income taxes payable
5,502
2,914
Deferred rent liability
4,276
2,154
Other liabilities
(3,973
)
188
Net cash provided by operating activities
16,775
48,339
Cash flows from investing activities:
Capital expenditures
(5,599
)
(34,234
)
Business acquisition, net cash acquired
(43,187
)
(47,876
)
Proceeds from sale of property and equipment
(181
)
338
Net cash used in investing activities
(48,967
)
(81,772
)
Cash flows from financing activities:
Borrowings under long-term debt
71,196
78,446
Repayments of long-term debt
(36,833
)
(43,250
)
Debt costs
(841
)
(841
)
Proceeds from exercises of common stock options7012,805 Net cash provided by financing activities34,22337,160
Increase in cash and cash equivalents
2,031
3,727
Beginning cash and cash equivalents
5,593
3,897
Ending cash and cash equivalents
$
7,624
$
7,624
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