EX-99 2 ex992nd2007.txt PRESS RELEASE FOR RELEASE CONTACT: Chris Morris July 24, 2007 Executive Vice President 3:05 p.m. Central Time Chief Financial Officer (972) 258-4525 CEC ENTERTAINMENT, INC. REPORTS SECOND QUARTER EARNINGS IRVING, TEXAS - CEC Entertainment, Inc. (NYSE:"CEC") today announced earnings for the second quarter ended July 1, 2007. Revenues for the second quarter of 2007 increased to $179.8 million from $176.2 million in the second quarter of 2006 primarily due to new store development. Comparable store sales declined 1.6% during the second quarter of 2007. Net income in the second quarter of 2007 decreased to $8.5 million from $10.2 million in the same period of 2006. Diluted earnings per share in the second quarter of 2007 decreased to $0.26 per share from $0.30 per share in the second quarter of 2006. Revenues for the first six months of 2007 increased to $412.7 million from $403.2 million in the first six months of 2006. Net income was $40.6 million in the first six months of 2007 and $39.0 million in the same period of 2006. Diluted earnings per share in the first six months of 2007 were $1.22 per share compared to $1.15 per share in the first six months of 2006. Richard M. Frank, Chairman and Chief Executive Officer, stated that, "We believe sales and operating results in the second quarter were negatively impacted by pressures on consumer disposable income and significant increases in competition from family movies during the quarter. Although disappointed by the sales trends during the second quarter, we continue to believe our strategies will positively impact sales and earnings and over the long-term will deliver an excellent experience for our guests and solid performance for our shareholders." Based on current estimates, the Company expects diluted earnings per share to range from $1.96 to $2.04 per share for the 2007 fiscal year. Estimates for fiscal year 2007 assume comparable store sales in a range of negative 1% to flat, 10 new restaurant openings and capital expenditures of approximately $100 million to $105 million. Diluted earnings per share are expected to range from $0.46 to $0.52 per share for the third quarter of 2007 with comparable store sales in a range of negative 2% to flat. The Company's management will discuss the results for the second quarter on a conference call and simultaneous webcast on July 24, 2007 at 3:30 p.m. Central Time. The webcast can be accessed through the Company's website at www.chuckecheese.com. 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; health epidemics or pandemics; acts of God; terrorists acts; litigation; demographic trends; fluctuations in quarterly results of operations, including seasonality; government regulations; weather; school holidays; increased commodity, utility, insurance, advertising and labor costs. CEC Entertainment, Inc. operates a system of 531 Chuck E. Cheese's restaurants in 48 states, of which 487 are owned and operated by the Company. # # #
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (Thousands, except per share data) Quarter Ended Year to Date Ended 07/01/07 07/02/06 07/01/07 07/02/06 --------- --------- --------- --------- Revenues: Food and beverage $ 110,940 $ 110,283 $ 254,946 $ 258,883 Games and merchandise 68,234 65,138 156,270 142,644 Franchise fees and royalties 645 747 1,501 1,631 Interest income 5 11 6 13 --------- --------- --------- --------- 179,824 176,179 412,723 403,171 --------- --------- --------- --------- Costs and expenses: Cost of sales: Food, beverage and related supplies 21,261 20,533 47,830 47,955 Games and merchandise 7,925 7,875 17,610 17,937 Labor 51,474 50,866 109,708 110,492 Selling, general and administrative expenses 25,867 25,729 55,561 54,212 Depreciation and amortization 17,601 16,145 34,707 32,064 Interest expense 2,850 2,340 5,622 4,133 Other operating expenses 39,148 36,115 76,509 72,725 --------- --------- --------- --------- 166,126 159,603 347,547 339,518 --------- --------- --------- --------- Income before income taxes 13,698 16,576 65,176 63,653 Income taxes 5,150 6,417 24,608 24,641 --------- --------- --------- --------- Net income $ 8,548 $ 10,159 $ 40,568 $ 39,012 ========= ========= ========= ========= Earnings per share: Basic $ .27 $ .31 $ 1.26 $ 1.18 Diluted $ .26 $ .30 $ 1.22 $ 1.15 Weighted average shares outstanding: Basic 32,020 32,745 32,093 33,182 Diluted 33,003 33,546 33,356 34,038
CEC ENTERTAINMENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands, except share amounts) July 1, December 31, 2007 2006 --------- ------------ ASSETS Current assets: Cash and cash equivalents.......................................... $ 12,157 $ 18,308 Accounts receivable, net........................................... 13,005 17,556 Inventories........................................................ 15,119 18,296 Prepaid expenses................................................... 9,200 8,210 Deferred tax asset................................................. 2,394 2,394 --------- --------- Total current assets............................................ 51,875 64,764 --------- --------- Property and equipment, net........................................... 663,619 637,560 --------- --------- Other assets ......................................................... 1,885 1,861 --------- --------- $ 717,379 $ 704,185 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt.................................. $ 724 $ 693 Accounts payable................................................... 33,766 33,430 Accrued liabilities................................................ 47,450 40,680 --------- --------- Total current liabilities....................................... 81,940 74,803 --------- --------- Long-term debt, less current portion.................................. 181,609 181,088 --------- --------- Deferred rent......................................................... 71,254 68,449 --------- --------- Deferred tax liability................................................ 6,571 12,056 --------- --------- Accrued insurance .................................................... 7,883 8,583 --------- --------- Other liabilities .................................................... 4,854 0 --------- --------- Shareholders' equity: Common stock, $.10 par value; authorized 100,000,000 shares; 58,536,253 and 56,619,300 shares issued, respectively .......... 5,854 5,662 Capital in excess of par value..................................... 366,818 325,212 Retained earnings ................................................. 569,373 531,435 Accumulated other comprehensive income ............................ 4,172 2,368 Less treasury shares of 26,318,285 and 24,359,450, respectively, at cost........................... (582,949) (505,471) --------- --------- 363,268 359,206 --------- --------- $ 717,379 $ 704,185 ========= =========
CEC ENTERTAINMENT, INC. SUPPLEMENTAL FINANCIAL INFORMATION (Thousands) Quarter Ended Year to Date Ended 07/01/07 07/02/06 07/01/07 07/02/06 -------- -------- -------- -------- Number of Company-owned stores: Beginning of period 485 477 484 475 New 4 7 3 Closed (2) (1) (4) (2) ---- ---- ---- ---- End of period 487 476 487 476 Number of franchise stores: Beginning of period 45 45 45 44 New 1 Closed (1) (1) ---- ---- ---- ---- End of period 44 45 44 45