EX-99 2 ex993rd2005earn.txt PRESS RELEASE FOR RELEASE CONTACT: Chris Morris October 25, 2005 Senior Vice President 3:05 p.m. Central Time Chief Financial Officer (972) 258-4525 CEC ENTERTAINMENT, INC. REPORTS THIRD QUARTER RESULTS IRVING, TEXAS - CEC Entertainment, Inc. (NYSE:"CEC") today announced earnings for the third quarter ended October 2, 2005. Revenues for the third quarter of 2005 decreased to $179.6 million from $183.6 million in the third quarter of 2004. Net income was $16.3 million in the third quarter of 2005 and $21.1 million in the third quarter of 2004. Diluted earnings per share in the third quarter of 2005 were $0.45 per share compared to $0.56 per share in the third quarter of 2004. Revenues for the first nine months of 2005 increased to $562.1 million from $556.0 million in the first nine months of 2004. Net income was $63.0 million in the first nine months of 2005 and $67.0 million in the same period of 2004. Diluted earnings per share in the first nine months of 2005 were $1.72 per share compared to $1.73 per share in the first nine months of 2004. Chris Morris, Senior Vice President and Chief Financial Officer stated that, "Total revenues in the third quarter decreased $4.0 million over the prior year. Comparable store sales in the third quarter declined 5.1%. We believe the decline in comparable store sales was primarily due to unsuccessful promotions in the quarter, the effect of higher gasoline prices on the spending decisions of our customers and lost sales due to Hurricanes Katrina and Rita. During the first three quarters of 2005, the Company generated operating cash flow of $111 million, invested $58 million primarily in new and existing stores and repurchased $88 million of Company stock. Borrowings on our credit facility increased by $26 million." Mr. Morris further added, "Based on current estimates, we expect diluted earnings per share to range from $2.02 to $2.08 per share for the 2005 fiscal year and $0.30 to $0.36 in the fourth quarter of 2005. Our estimates include the assumption that comparable store sales are flat to negative 3% during the fourth quarter of 2005. Our preliminary estimate for diluted earnings per share for the first quarter of 2006 is a range from $0.93 to $0.96, excluding the effects of expensing stock options. We expect diluted earnings per share for fiscal year 2006 to increase 10% to 12% over fiscal year 2005." Richard M. Frank, Chairman and Chief Executive Officer stated that, "Although significantly challenged by the current external environment, we believe the continued execution of our long-term strategies of enhancing our value and experience for our guests, implementing effective advertising, continued new store development, building on 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 are 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 507 Chuck E. Cheese's restaurants in 48 states, of which 462 are owned and operated by the Company. # # #
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (Thousands, except per share date) Quarter Ended Year to Date Ended 10/02/05 09/26/04 10/02/05 09/26/04 -------- -------- -------- -------- Revenues: Food and beverage $ 114,284 $ 120,416 $ 362,783 $ 365,494 Games and merchandise 64,527 62,394 197,022 187,961 Franchise fees and royalties 769 807 2,249 2,520 Interest income 9 5 22 19 --------- --------- --------- --------- 179,589 183,622 562,076 555,994 --------- --------- --------- --------- Costs and expenses: Cost of sales: Food, beverage and related supplies 21,316 22,152 66,721 67,937 Games and merchandise 7,875 7,922 22,906 23,782 Labor 49,888 49,928 152,335 150,855 Selling, general and administrative expenses 21,378 21,410 68,211 65,289 Depreciation and amortization 15,377 14,220 45,554 41,478 Interest expense 1,072 599 2,779 1,567 Other operating expenses 36,298 33,169 101,512 96,556 --------- --------- --------- --------- 153,204 149,400 460,018 447,464 --------- --------- --------- --------- Income before income taxes 26,385 34,222 102,058 108,530 Income taxes 10,105 13,108 39,088 41,567 --------- --------- --------- --------- Net income $ 16,280 $ 21,114 $ 62,970 $ 66,963 ========= ========= ========= ========= Earnings per share: Basic $ .47 $ .57 $ 1.78 $ 1.78 Diluted $ .45 $ .56 $ 1.72 $ 1.73 Weighted average shares outstanding: Basic 34,954 36,834 35,475 37,551 Diluted 36,004 37,970 36,658 38,726
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands, except share amounts) Oct. 2, January 2, 2005 2005 --------- ---------- (unaudited) ASSETS Current assets: Cash and cash equivalents........................................... $ 10,781 $ 11,798 Accounts receivable................................................. 18,109 13,482 Inventories......................................................... 14,088 12,171 Prepaid expenses.................................................... 9,078 7,444 Deferred tax asset.................................................. 1,763 1,763 --------- --------- Total current assets............................................. 53,819 46,658 --------- --------- Property and equipment, net.......................................... 575,741 563,081 --------- --------- Other assets ........................................................ 2,043 2,278 --------- --------- $ 631,603 $ 612,017 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt................................... $ 590 $ 78,279 Accounts payable.................................................... 26,469 24,294 Accrued liabilities................................................. 37,150 36,329 --------- --------- Total current liabilities........................................ 64,209 138,902 --------- --------- Long-term debt, less current portion................................... 115,468 11,673 --------- --------- Deferred rent.......................................................... 59,113 53,427 --------- --------- Deferred tax liability................................................. 33,673 36,429 --------- --------- Accrued insurance ..................................................... 10,750 10,856 --------- --------- Shareholders' equity: Common stock, $.10 par value; authorized 100,000,000 shares; 56,000,490 and 55,556,857 shares issued, respectively ........... 5,600 5,556 Capital in excess of par value...................................... 258,581 245,991 Retained earnings .................................................. 496,237 433,267 Accumulated other comprehensive income ............................. 1,650 1,476 Less treasury shares of 21,676,588 and 19,210,568, respectively, at cost............................ (413,678) (325,560) --------- --------- 348,390 360,730 --------- --------- $ 631,603 $ 612,017 ========= =========
CEC ENTERTAINMENT, INC. SUPPLEMENTAL FINANCIAL INFORMATION (Thousands) Quarter Ended Year to Date Ended 10/02/05 09/26/04 10/02/05 09/26/04 -------- -------- -------- -------- Number of Company-owned stores: Beginning of period 455 430 449 418 New 7 8 12 20 Company purchased franchise stores 1 Closed ---- ---- ---- ---- End of period 462 438 462 438 Number of franchise stores: Beginning of period 45 49 46 48 New 1 1 Company purchased franchise stores 2 (1) 2 Closed (1) (1) (1) ---- ---- ---- ---- End of period 45 50 45 50