IRVING, Texas, Nov 03, 2011 (BUSINESS WIRE) -- CEC Entertainment, Inc. (NYSE: CEC) today announced its financial results for its third quarter ended October 2, 2011. Total revenues for the third quarter of 2011 decreased 3.5%, or $7.1 million, to $200.0 million from $207.1 million for the third quarter of 2010. Comparable store sales decreased 6.3% for the third quarter of 2011 as compared to the third quarter of 2010.
Net income for the third quarter ended October 2, 2011 decreased to $11.7 million as compared to $12.6 million for the third quarter of 2010. Diluted earnings per share for the third quarter of 2011 were $0.62 per share as compared to diluted earnings per share of $0.60 per share for the third quarter of 2010. The increase in diluted earnings per share benefited from, among other things, our repurchase of approximately 2.8 million shares of our common stock since the beginning of the third quarter of 2010.
For the nine months ended October 2, 2011, total revenues increased 1.3%, or $8.1 million, to $642.6 million as compared to $634.5 million for the nine months ended October 3, 2010. Comparable store sales decreased 1.5% for the nine months ended October 2, 2011 as compared to the nine months ended October 3, 2010. The increase in total revenues was primarily related to a weighted average net increase of seven stores, which was offset by lower comparable store sales.
Net income for the nine months ended October 2, 2011 increased 2.0%, or $1.0 million, to $52.2 million as compared to $51.2 million for the nine months ended October 3, 2010. Diluted earnings per share for the nine months ended October 2, 2011 were $2.70 per share as compared to diluted earnings per share of $2.38 per share for the nine months ended October 3, 2010. Diluted earnings per share benefited from, among other things, our repurchase of approximately 3.7 million shares of our common stock since the beginning of fiscal year 2010.
On October 28, 2011, we amended and restated our revolving credit facility which among other things extended the maturity date to October 28, 2016. Total borrowings available to us under the credit facility are $500 million and the credit facility includes an accordion feature allowing us, subject to meeting certain conditions and lender approval, to request an increase in our revolving commitment of up to $200 million in borrowings. The credit facility bears interest at LIBOR plus an applicable margin that ranges between 0.875% and 1.625%, determined based on our financial performance and debt levels, or alternatively, the highest of the (i) prime interest rate, (ii) Federal Funds rate plus 0.50%, or (iii) one month LIBOR plus 1.0%; plus an applicable margin that ranges between 0.0% and 0.625%. Based on the Company's Consolidated Leverage Ratio, as defined in the credit facility, the Company's current borrowing rate as of November 2, 2011 for Eurodollar Rate Loans is 1.62028% and the current borrowing rate for Base Rate Loans is 3.625%.
On November 1, 2011, the Company's Board of Directors approved a 10% increase in the Company's quarterly cash dividend to $0.22 per share. This cash dividend will be paid on January 5, 2012 to stockholders of record as of December 1, 2011.
Michael Magusiak, President and Chief Executive Officer, stated that, "Through the third quarter of 2011, we generated $154.7 million of operating cash flow. We utilized $68.2 million of our cash to complete 121 existing stores enhancements in the form of store expansions, major remodels, and game enhancements and open two new stores. We also used $21.5 million of cash to reduce our outstanding borrowings on our revolving credit facility, paid out $7.8 million in cash dividends, and used $55.4 million of cash to repurchase approximately 1.6 million shares of our common stock or approximately 8.1% of diluted shares outstanding as of the end of the third quarter of 2011."
Mr. Magusiak continued, "Despite the challenging economic times, our concept remains well-positioned in the marketplace and we continue our focus on enhancing long-term shareholder value by concentrating our efforts on growing our concept both domestically and internationally. Our healthy cash flow coupled with the renewal of our credit facility will enable us to continue to improve our restaurant/entertainment product and return capital to shareholders in the form of share repurchases and the payment of cash dividends which we are pleased to have increased 10%. We believe that our growth strategies combined with our share repurchase program will enhance long-term shareholder value. Finally, we are proud of our operators and support center employees who are hard at work helping to successfully implement our strategies and further develop our concept in the United States and around the world."
At this time, we are projecting comparable store sales for the fourth quarter to be in a range of down 4-5% and fiscal year 2011 diluted earnings per share to be in a range of $2.80 - $2.90. This guidance incorporates the following assumptions:
The Company will host a conference call Thursday, November 3, 2011, at 3:30 p.m. Central Time to discuss its third quarter financial results and outlook for fiscal year 2011. A live webcast of the call (listen only) can be accessed through the Company's website, www.chuckecheese.com. Shortly after its conclusion, a replay of the call will be available on the website through Friday, December 23, 2011.
The Company reports and discusses its operating results using financial measures consistent with accounting principles generally accepted in the United States ("GAAP"). From time to time in the course of financial presentations, earnings conference calls or otherwise, the Company may disclose certain non-GAAP financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Free Cash Flow. The non-GAAP financial measures presented in this earnings release should not be viewed as alternatives or substitutes for the Company's reported GAAP results. A reconciliation of the most directly comparable GAAP financial measure to EBITDA and Free Cash Flow is set forth in a table accompanying this release.
For more than 30 years, CEC Entertainment has served as the nationally recognized leader in family dining and entertainment and the place Where a Kid can be a Kid®. The Company and its franchisees operate a system of 556 Chuck E. Cheese's stores located in 48 states and seven foreign countries or territories. Currently, 507 locations in the United States and Canada are owned and operated by the Company. CEC Entertainment, Inc. and its franchises have the common goal of creating lifelong memories for families through fun, food, and play. Each Chuck E. Cheese's features musical and comic robotic entertainment, games, rides, and play areas, as well as a variety of dining options including pizza, sandwiches, a salad bar, and desserts. Committed to providing a fun, safe environment, Chuck E. Cheese's helps protect families through industry-leading programs such as Kid Check®.
Chuck E. Cheese's aims to promote positive, lifelong memories inside and outside of its stores. In addition to providing a fun entertainment experience for millions of families across the world, Chuck E. Cheese's has donated more than $6 million to schools and non-profit institutions through its fundraising programs. For more information, see 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. Statements that are not historical in nature, and which may be identified by the use of words such as "may," "should," "could," "believe," "predict," "potential," "continue," "plan," "intend," "expect," "anticipate," "future," "project," "estimate," and similar expressions (or the negative of such expressions) are forward-looking statements. Forward-looking statements are made based on management's current expectations and beliefs concerning future events and, therefore, involve a number of assumptions, risks and uncertainties, including the risk factors described in Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2011, filed on February 24, 2011. 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.
Factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, but are not limited to:
The forward-looking statements made in this press release relate only to events as of the date on which the statements were made. Except as may be required by law, the Company undertakes no obligation to update its forward-looking statements to reflect events and circumstances after the date on which the statements were made or to reflect the occurrence of unanticipated events.
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Percentages are expressed as a percent of total revenues (except as otherwise noted).
(1) Percent amount expressed as a percentage of food and beverage sales.
(2) Percent amount expressed as a percentage of entertainment and merchandise sales.
(3) Percentage amount expressed as a percentage of Company store sales.
(Note - Due to rounding, percentages presented in the table above may not add. The percentage amounts for the components of cost of food and beverage, and the cost of entertainment and merchandise do not sum due to the fact that cost of food and beverage and cost of entertainment and merchandise are expressed as a percentage of related food and beverage and entertainment and merchandise sales, as opposed to total Company store sales.)
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CEC ENTERTAINMENT, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
Net Income to EBITDA:
The following tables set forth a reconciliation of net income to EBITDA and EBITDA expressed as a percentage of total revenues for the periods shown:
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The Company believes that EBITDA provides useful information to the Company, investors and other interested parties about the Company's operating performance, its capacity to incur and service debt, fund capital expenditures and other corporate uses.
EBITDA, a non-GAAP financial measure, is defined by the Company as net income before income taxes, interest expense, and depreciation and amortization. The non-GAAP financial measure presented in the table above should not be viewed as an alternative or substitute for the Company's reported GAAP results. EBITDA as defined herein may differ from similarly titled measures presented by other companies.
Free Cash Flow:
The following table sets forth a reconciliation of cash provided by operating activities to Free Cash Flow for the periods shown:
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Free Cash Flow, a non-GAAP financial measure, is defined by the Company as cash provided by operating activities less capital expenditures.
The Company believes that Free Cash Flow provides useful information to the Company, investors and other interested parties about the amount of cash generated by the business that, after the acquisition of property and equipment, can be used for other strategic opportunities, including servicing debt, funding additional capital expenditures and making investments in the business. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. The non-GAAP financial measure presented in the table above should not be viewed as an alternative or substitute for the Company's reported GAAP results. Free Cash Flow as defined herein may differ from similarly titled measures presented by other companies.
Store Count Information:
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(1) The nine months ended October 2, 2011 includes the closing and opening of one relocated store.
SOURCE: CEC Entertainment, Inc.
For more than 35 years, CEC Entertainment is a family dining and entertainment franchise.