EXHIBIT 99.1
[LOGO CENTERPLATE]
CONTACTS:
Elaine Gosnell Chuck Burgess
Centerplate The Abernathy MacGregor Group
864-597-0142 212-371-5999
elaine.gosnell@centerplate.com clb@abmac.com
FOR IMMEDIATE RELEASE
CENTERPLATE REPORTS 2004 FIRST QUARTER RESULTS
SALES INCREASE DRIVEN BY NEW ACCOUNTS
SPARTANBURG, S.C., May 3, 2004 - Centerplate (AMEX: CVP; TSX: CVP.un), the trade
name for Volume Services America Holdings, Inc.'s operating businesses, and a
leading provider of catering, concessions, merchandise and facility management
services, today reported financial results for the first quarter ended March 30,
2004. Net sales for the quarter increased $1.3 million or 1.4%, to $98.2 million
from $96.9 million for the quarter ended April 1, 2003. Adjusted earnings before
interest, income taxes, depreciation and amortization (EBITDA) for the first
quarter 2004 were $2,599,000, compared to $1,979,000 for the first quarter 2003.
The increase in adjusted EBITDA was due primarily to new business activity
realized in the quarter and to a modest increase in operating results at
existing accounts.
(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.)
For the first quarter 2004, Centerplate reported a net loss of $9,340,000
versus a net loss of $6,545,000 in 2003, primarily as a result of a lower
effective income tax rate and the completion of the tender for the remaining
high-yield notes under the company's old 1999 indenture.
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"We are pleased to report increased net sales as a result of both new
accounts and a modest increase in other operations," said Larry Honig,
Centerplate's chairman and chief executive officer. "However, as expected, we
reported a net loss for the quarter, which is standard due to the seasonality of
our business. The charge related to our recent conversion to a public company
and a decrease in the effective tax rate led to a greater quarterly loss in 2004
compared to 2003."
During the quarter, new accounts contributed $5.8 million in increased net
sales over the first quarter of 2003. This increase was partially offset by a
reduction in sales of $2.2 million because the company did not host the Super
Bowl in 2004, and by a reduction in sales of $2.9 million because five fewer
major league baseball games took place in the company's facilities, including
two games lost because the company no longer serves the San Diego Padres.
Also during the quarter, the company closed a number of marginally
profitable and minor accounts, which accounted for $1.2 million of net sales in
the first quarter of 2003. Mr. Honig continued, "We are pleased that our
strategic efforts are continuing to bear fruit, because of the tremendous
efforts being made by all our employees, and especially by our facility General
Managers. We are delighted as well with the support of our clients and other
business partners as we make the transition to a public company."
Mr. Honig concluded, "We are concentrating on building on our strengths and
extending our reach. We are aggressively pursuing new clients by further
penetrating the mid-market, in which many facilities still do not have a
professional food and beverage provider; by extending our suite and club-level
catering service, based on a major step-up in our food quality and service
levels; by building the important facility management business, for which we've
staffed up and to which we've committed significant resources; and by offering a
compelling variety of branded products to our clients, including new and
exciting brands just beginning to attract national attention."
On a per-share basis, Centerplate reported a net loss for the first quarter
2004 of $0.41 per share versus a loss of $0.48 per share for the comparable
period of 2003.
As previously announced, Centerplate will make its fifth distribution on
May 20 to IDS holders in accordance with its announced intention to make
distributions at the annual rate of approximately $1.56 per IDS.
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In addition, as previously disclosed, those investors who held the
company's common stock prior to its initial public offering (the "Initial Equity
Investors") have the right to require the company to issue subordinated notes in
exchange for a portion of their common stock in order to create IDSs to sell
pursuant to a follow-on registration statement filed by the company. The first
date on which the Initial Equity Investors may demand that the company file a
registration statement on their behalf, and thus the first occasion for this
right to be exercised, is June 2, 2004. The company is currently examining
whether the right of the Initial Equity Investors to exchange a portion of their
common stock for subordinated notes should be treated as mezzanine equity. This
treatment would result in recording approximately $14.4 million as mezzanine
equity between total liabilities and stockholders' equity, and decrease
stockholders' equity by a corresponding amount. The treatment would not affect
the company's earnings or income statement. In addition, it is not expected that
this treatment would in any material way affect the company's ability to pay
dividends.
Centerplate will discuss its first quarter 2004 financial results on a
conference call at 10:00 AM Eastern Time on Tuesday, May 4, 2004. Interested
parties may participate in the call by dialing 1-877-780-2271 approximately 10
minutes before the call is scheduled to begin. International callers should dial
1-973-582-2737. The call will also be broadcast live on the company's website at
www.centerplate.com. For individuals unable to participate in the conference
call, a telephone replay will be available from noon Eastern Time on May 4, 2004
through midnight on March 7, 2004. The replay can be accessed domestically by
dialing 1-877-519-4471. For international callers, the dial-in number is
1-973-341-3080. The passcode for the call is 4729949.
ABOUT CENTERPLATE
Centerplate, the trade name for Volume Services America Holdings, Inc.'s
operating businesses, 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 at
www.centerplate.com.
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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 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, 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.
VOLUME SERVICES AMERICA HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE LOSS (UNAUDITED)
(in thousands, except share data)
Thirteen Weeks Ended
March 30, April 1,
2004 2003
------------ ------------
Net sales $ 98,236 $ 96,900
Cost of sales 82,147 81,655
Selling, general and administrative expense 13,547 13,375
Depreciation and amortization 6,878 6,475
Contract related losses
-- 110
------------ ------------
Loss from operations (4,336) (4,715)
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Interest expense, net 6,807 5,071
Other income, net (57) (5)
------------ ------------
Loss before income taxes (11,086) (9,781)
Income tax benefit (3,236) (1,746)
------------ ------------
Net loss (9,340) (6,545)
Other comprehensive income - foreign
currency translation adjustment 7 247
------------ ------------
Comprehensive loss $ (9,333) $ (6,298)
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Basic net loss per share $ (0.41) $ (0.48)
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Diluted net loss per share $ (0.41) $ (0.48)
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Weighted average shares 22,524,992 13,612,829
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VOLUME SERVICES AMERICA HOLDINGS, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EARNINGS BEFORE INTEREST,
INCOME TAXES, DEPRECIATION, AND AMORTIZATION (UNAUDITED)
(in thousands)
Thirteen Weeks Ended
March 30, April 1,
2004 2003
-------- --------
Net loss $ (9,340) $ (6,545)
Income tax benefit (1,746) (3,236)
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Loss before income taxes (11,086) (9,781)
Adjustments:
Interest expense (1) 6,807 5,071
Depreciation and amortization 6,878 6,475
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EBITDA (2) $ 2,599 $ 1,765
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The following adjustments to EBITDA were made to compute Adjusted EBITDA:
EBITDA $ 2,599 $ 1,765
Adjustments:
Contract related losses (3) -- 110
Management fees paid to affiliates of
Blackstone and GE Capital (4) -- 104
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Adjusted EBITDA (2) $ 2,599 $ 1,979
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(1) Included in interest expense for the fiscal 2004 period is $1.2 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.
(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 annual management fee paid to
former majority owners, less any non-cash credits. We present Adjusted EBITDA
because covenants in the indenture governing our subordinated notes issued in
2003 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.
(3) Contract related losses in the fiscal 2003 period reflect non-cash charges
incurred for the write-off of assets for a terminated contract.
(4) Management fees in the fiscal 2003 period represent fees paid to former
majority owners for certain administrative and management functions.
VOLUME SERVICES AMERICA HOLDINGS, INC.
SELECTED CONSOLIDATED CASH FLOW DATA (UNAUDITED)
(in thousands)
Thirteen Weeks Ended
March 30, April, 1
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,340) $ (6,545)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 6,878 6,475
Amortization of deferred financing costs 672 358
Contract related losses -- 110
Deferred tax change (1,746) (3,236)
Interest expense on retired subordinated notes 922 --
Other 7 247
Loss on disposition of assets 3 24
Changes in assets and liabilities 3,032 (2,480)
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Net cash provided by (used in) operating activities 428 (5,047)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,027) (4,257)
Proceeds from sale of property, plant and equipment 3 --
Purchase of location contracts (5,013) (5,832)
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Net cash used in investing activities (6,037) (10,089)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings - revolving loans 12,000 16,500
Principal payments on long-term debt -- (288)
Payment of financing costs (130) --
Payment of debt issuance costs (189) --
Decrease in bank overdrafts (3,256) (149)
Dividend payments (4,955) --
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Net cash provided by financing activities 3,470 16,063
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INCREASE/(DECREASE) IN CASH (2,139) 927
CASH - BEGINNING OF PERIOD 22,929 10,374
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CASH - END OF PERIOD $ 20,790 $ 11,301
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