FOR RELEASE CONTACT: Chris Morris
April 25, 2006 Executive Vice President
3:05 p.m. Central Time Chief Financial Officer
(972) 258-4525
CEC ENTERTAINMENT, INC. REPORTS FIRST QUARTER RESULTS
IRVING, TEXAS - CEC Entertainment, Inc. (NYSE:"CEC") today announced earnings
for the first quarter ended April 2, 2006.
Revenues for the first quarter of 2006 increased to $227.0 million from $214.1
million in the first quarter of 2005. Net income in the first quarter of 2006
decreased to $29.2 million from $31.3 million in the same period of 2005.
Diluted earnings per share in the first quarter of 2006 were $0.85 per share
compared to $0.84 per share in the first quarter of 2005.
Chris Morris, Executive Vice President and Chief Financial Officer stated that,
"Total revenues increased 6.0% in the first quarter of 2006 over the same period
of the prior year due to new store development and an increase in comparable
store sales of 1.2%. During the first quarter of 2006, the Company generated
operating cash flow of $60 million, invested $19 million primarily in new and
existing stores and repurchased $10 million of its common stock while reducing
outstanding borrowings on our credit facility to $105 million at the end of the
quarter."
Mr. Morris further added, "Based on current estimates, we expect diluted
earnings per share to range from $0.37 to $0.39 per share for the second quarter
of 2006 and from $1.94 to $2.02 per share for the year. Expected diluted
earnings per share for the year are unchanged from prior guidance."
Richard M. Frank, Chairman and Chief Executive Officer stated that, "The Company
remains financially strong which gives us the opportunity to effectively execute
our comprehensive business plan and create long-term shareholder value. We are
confident in our strategies and have the talented and motivated people to
execute them. We believe quality execution of our long-term strategies of
improving our product through an aggressive capital plan, enhancing our value
and experience for our guest, reinforced with effective advertising, quality new
store development, coupled with operational execution and strategically
repurchasing Company stock will drive long-term shareholder value."
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, insurance, utility and labor costs.
CEC Entertainment, Inc. operates a system of 522 Chuck E. Cheese's restaurants
in 48 states, of which 477 are owned and operated by the Company. # # #
CEC ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(Thousands, except per share data)
Quarter Ended
04/02/06 04/03/05
--------- ---------
Revenues:
Food and beverage....................................... $ 148,600 $ 139,044
Games and merchandise................................... 77,506 74,242
Franchise fees and royalties............................ 884 795
Interest income......................................... 2 5
--------- ---------
226,992 214,086
Costs and expenses:
Cost of sales:
Food, beverage and related........................... 27,422 25,568
Games and merchandise................................ 10,062 8,324
Labor................................................ 59,626 53,825
--------- ---------
97,110 87,717
Selling, general and administrative expenses............ 28,672 26,894
Depreciation and amortization........................... 15,919 14,397
Interest expense........................................ 1,703 723
Other operating expenses................................ 36,610 33,555
--------- ---------
180,014 163,286
Income before income taxes................................. 46,978 50,800
Income taxes............................................... 17,758 19,457
--------- ---------
Net income................................................. $ 29,220 $ 31,343
========= =========
Earnings per share:
Basic................................................... $ .87 $ .86
Diluted................................................. $ .85 $ .84
Weighted average shares outstanding:
Basic................................................... 33,719 36,355
Diluted................................................. 34,517 37,451
CEC ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands, except share amounts)
April 2, January 1,
2006 2006
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 15,689 $ 12,184
Accounts receivable................................................... 19,652 20,323
Inventories........................................................... 12,799 13,659
Prepaid expenses...................................................... 9,746 7,882
Deferred tax asset.................................................... 1,824 1,824
--------- ---------
Total current assets................................................ 59,710 55,872
--------- ---------
Property and equipment, net.............................................. 594,550 592,255
--------- ---------
Other assets ............................................................ 1,762 2,201
--------- ---------
$ 656,022 $ 650,328
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..................................... $ 599 $ 594
Accounts payable...................................................... 20,932 30,264
Accrued liabilities................................................... 48,222 27,791
--------- ---------
Total current liabilities........................................... 69,753 58,649
--------- ---------
Long-term debt, less current portion..................................... 116,729 148,974
--------- ---------
Deferred rent............................................................ 63,974 61,877
--------- ---------
Deferred tax liability................................................... 15,451 17,001
--------- ---------
Accrued insurance ....................................................... 17,000 17,000
--------- ---------
Shareholders' equity:
Common stock, $.10 par value; authorized 100,000,000 shares;
56,591,613 and 56,115,658 shares issued, respectively .............. 5,659 5,612
Capital in excess of par value........................................ 327,220 312,863
Retained earnings .................................................... 497,618 468,398
Accumulated other comprehensive income ............................... 2,467 2,446
Less treasury shares of 22,821,415
and 22,499,815, respectively, at cost............................... (452,934) (442,492)
Deferred compensation................................................. (6,915) 0
--------- ---------
373,115 346,827
--------- ---------
$ 656,022 $ 650,328
========= =========
CEC ENTERTAINMENT, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Thousands)
Quarter Ended
04/02/05 04/03/05
-------- --------
Number of Company-owned stores:
Beginning of period 475 449
New 3 4
Closed (1)
---- ----
End of period 477 453
==== ====
Number of Franchised stores:
Beginning of period 44 46
New 1
Closed (1)
---- ----
End of period 45 45
==== ====