DAB Dave & Busters

Dave & Buster's, Inc. (NYSE:DAB), a leading operator of upscale restaurant/entertainment complexes, today announced results for its second quarter ended July 31, 2005. In a preliminary release Dave & Buster's announced a change in its recently acquired Jillian's stores strategy. Now most of the Jillian's stores will be converted to the Dave & Buster's brand. Total revenue for the second quarter increased 23.4 percent, or $21.0 million, to $110.8 million from $89.8 million in the prior year's comparable quarter. Food and beverage revenue increased 28.4 percent and amusement and other revenue increased 17.8 percent. Special event revenue on a comparable store basis was 13.5 percent of total revenue compared to 13.4 percent last year. Pre-opening expenses for the period were $0.8 million compared to $0.1 million last year. Operating loss for the period of $(0.3) million includes a pre-tax charge of $2.5 million for the previously announced closure of the underperforming Jillian's location in Minneapolis. Excluding this charge, operating income decreased 51.5 percent to $2.2 million compared to $4.5 million last year. EBITDA decreased to $12.0 million, or 5.3 percent, from $12.7 million last year. Net loss for the quarter was $(1.3) million, or $(0.09) per basic share, compared to net income in the same period last year of $2.2 million, or $0.16 per diluted share. The estimated effect of the store closure charge is approximately $(0.12) per basic share. During the quarter, revenues from the 33 comparable stores, all of which operate under the Dave & Buster's brand, increased 0.2% as compared to the same period last year. The Dave & Buster's core brand accounts for approximately 85% of consolidated revenues. Total revenues for the 26-week period increased 22.6 percent to $226.6 million from $184.8 million for the comparable period last year. Food and beverage revenue increased 26.8 percent, and amusement and other revenue increased 18.1 percent. Special event revenue on a comparable store basis increased to 13.5 percent of total revenue from 13.1 percent in the prior year. Pre-opening expenses for the 26-week period were $0.9 million compared to $0.1 million last year. Operating income of $8.6 million includes the $2.5 million charge discussed above. Excluding this charge, operating income was $11.1 million compared to $11.4 million for the prior year. EBITDA increased to $30.7 million, or 10.3 percent, from $27.8 million last year. Net income was $3.3 million, or $0.24 per diluted share, compared to $5.8 million, or $0.40 per diluted share, in the prior year. "We expect our first converted store to re-open as a Dave & Buster's by early next month with three to four to follow prior to the end of the year," said Buster Corley, the company's CEO. "We believe, as we discussed on our last conference call, that the re-branding of the Jillian's locations will enable us to improve the overall operating results at a faster pace," continued Mr. Corley. "Our new Dave & Buster's stores are on schedule to open in Buffalo, New York on October 5 and Kansas City in November," said Dave Corriveau, the company's President. "As we have previously announced, we add the Jillian's at Discover Mills Mall in metro Atlanta later this month," continued Mr. Corriveau. The company re-confirms annual guidance of $.64 to $.70 per diluted share. This revised estimate includes the approximate $3.0 million pretax charge associated with the store closure in Minneapolis. Non-GAAP Financial Measures A reconciliation of EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, is set forth in the attachment to this release. The Company will hold a conference call to discuss second quarter results on Thursday, September 8, 2005, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time). The call will be Webcast by CCBN and can be accessed at Dave & Buster's Web site, www.daveandbusters.com. Individual investors can listen to the call through CCBN's individual investor center, www.companyboardroom.com. In addition, investors can access the call by visiting any of the investor sites in the CCBN Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, www.streetevents.com. The Webcast will be archived on the company's Web site and available for replay through September 23, 2005. Celebrating over 22 years of operations, Dave & Buster's was founded in 1982 and is one of the country's leading upscale, restaurant/entertainment concepts with 43 locations throughout the United States and in Canada. More information on the company, including the latest investor presentation is available on the company's Website, www.daveandbusters.com. "Safe Harbor" Statements Under the Private Securities Litigation Reform Act of 1995 Certain information contained in this press release includes forward-looking statements. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, projections, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitations, by the use of forward-looking terminology such as "may," "will," "anticipates," "expects," "projects," "believes," "intends," "should," or comparable terms or the negative thereof. All forward-looking statements included in this press release are based on information available to us on the date hereof. Such statements speak only as of the date hereof. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: our ability to open new high-volume restaurant/entertainment complexes; our ability to raise and access sufficient capital in the future; changes in consumer preferences, general economic conditions or consumer discretionary spending; the outbreak or continuation of war or other hostilities involving the United States; potential fluctuation in our quarterly operating result due to seasonality and other factors; the continued service of key management personnel; our ability to attract, motivate and retain qualified personnel; the impact of federal, state or local government regulations relating to our personnel or the sale of food or alcoholic beverages; the impact of litigation; the effect of competition in our industry; additional costs associated with compliance with the Sarbanes-Oxley Act and related regulations and requirements; and other risk factors described from time to time in our reports filed with the SEC. -0- *T DAVE & BUSTER'S, INC. Condensed Consolidated Balance Sheets (in thousands) (unaudited) July 31, 2005 January 30, 2005 ASSETS Current assets: Cash and cash equivalents $ 6,786 $ 7,624 Other current assets 43,942 34,581 ------------ ------------- Total current assets 50,728 42,205 Property and equipment, net 335,074 331,478 Other assets and deferred charges 21,045 23,725 ------------ ------------- Total assets $ 406,847 $ 397,408 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY Total current liabilities $ 56,376 $ 49,861 Other long-term liabilities 73,176 70,251 Long-term debt 74,823 80,351 Stockholders' equity: Common stock 136 135 Paid-in capital 124,190 122,173 Restricted stock awards 1,815 1,454 Accumulated other comprehensive income 67 225 Retained earnings 78,110 74,804 ------------ ------------- 204,318 198,791 Less: treasury stock 1,846 1,846 ------------ ------------- Total stockholders' equity 202,472 196,945 ------------ ------------- Total liabilities and stockholders' equity $ 406,847 $ 397,408 ============ ============= DAVE & BUSTER'S, INC. Consolidated Statements of Income (dollars in thousands, except per share amounts) (unaudited) 13 Weeks Ended 13 Weeks Ended July 31, 2005 August 1, 2004 (as restated) Food and beverage revenues $ 60,378 54.5% $47,030 52.3% Amusement and other revenues 50,451 45.5% 42,814 47.7% -------- ------- ------- ------ Total revenues 110,829 100.0% 89,844 100.0% Cost of products 21,196 19.1% 17,283 19.2% Operating payroll and benefits 32,259 29.1% 25,545 28.4% Other store operating expenses 37,365 33.7% 28,401 31.6% General and administrative expenses 7,204 6.5% 5,800 6.5% Depreciation and amortization 12,317 11.1% 8,175 9.1% Preopening costs 804 0.8% 136 0.2% -------- ------- ------- ------ Total operating expenses 111,145 100.3% 85,340 95.0% Operating income (loss) (316) (0.3)% 4,504 5.0% Interest expense, net 1,661 1.5% 1,102 1.2% -------- ------- ------- ------ Income (loss) before provision for income taxes (1,977) (1.8)% 3,402 3.8% Provision (benefit) for income taxes (721) (0.7)% 1,200 1.3% -------- ------- ------- ------ Net income (loss) $ (1,256) (1.1)% $ 2,202 2.5% ======== ======= ======= ====== Net income (loss) per share Basic $ (0.09) $ 0.17 Diluted $ (0.09) $ 0.16 Weighted average shares outstanding Basic weighted average shares outstanding 13,559 13,319 Diluted weighted average shares outstanding 13,559 16,486 Other information: Company operated stores open 44 33 EBITDA, which is earnings before interest, taxes, depreciation and amortization, is used by management, bankers and investors to evaluate a company's ability to repay debt and for compliance of certain debt covenants. Total net income (loss) $ (1,256) $ 2,202 Add back: depreciation and amortization 12,317 8,175 interest expense, net 1,661 1,102 provision for income taxes (721) 1,200 --------- ------- $ 12,001 $12,679 ========= ======= DAVE & BUSTER'S, INC. Consolidated Statements of Income (dollars in thousands, except per share amounts) (unaudited) 26 Weeks Ended 26 Weeks Ended July 31, 2005 August 1, 2004 (as restated) Food and beverage revenues $121,769 53.7% $ 96,051 52.0% Amusement and other revenues 104,795 46.3% 88,759 48.0% -------- ------- --------- ------- Total revenues 226,564 100.0% 184,810 100.0% Cost of products 42,203 18.6% 35,004 18.9% Operating payroll and benefits 64,984 28.7% 52,473 28.4% Other store operating expenses 72,900 32.2% 57,269 31.0% General and administrative expenses 14,896 6.6% 12,099 6.5% Depreciation and amortization 22,058 9.7% 16,395 8.9% Preopening costs 882 0.4% 136 0.1% -------- ------- --------- ------- Total operating expenses 217,923 96.2% 173,376 93.8% Operating income 8,641 3.8% 11,434 6.2% Interest expense, net 3,434 1.5% 2,580 1.4% -------- ------- --------- ------- Income before provision for income taxes 5,207 2.3% 8,854 4.8% Provision for income taxes 1,901 0.8% 3,052 1.7% -------- ------- --------- ------- Net income $ 3,306 1.5% $ 5,802 3.1% ======== ======= ========= ======= Net income per share Basic $ 0.25 $ 0.44 Diluted $ 0.24 $ 0.40 Weighted average shares outstanding Basic weighted average shares outstanding 13,515 13,262 Diluted weighted average shares outstanding 16,626 16,376 Other information: Company operated stores open 44 33 EBITDA, which is earnings before interest, taxes, depreciation and amortization, is used by management, bankers and investors to evaluate a company's ability to repay debt and for compliance of certain debt covenants. Total net income $ 3,306 $ 5,802 Add back: depreciation and amortization 22,058 16,395 interest expense, net 3,434 2,580 provision for income taxes 1,901 3,052 -------- --------- $ 30,699 $ 27,829 ======== ========= DAVE & BUSTER'S, INC. Consolidates Statements of Cash Flow (dollars in thousands) (unaudited) 26 Weeks Ended 26 Weeks Ended July 31, 2005 August 1, 2004 (as restated) Cash flows from operating activities: Income $ 3,306 $ 5,802 Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization 22,058 16,395 Deferred income tax benefit 81 (2,024) Tax benefit related to stock option exercises 619 493 Amortization of restricted stock awards 361 219 Warrants related to convertible debt 128 128 Other, net (227) (48) Changes in operating assets and liabilities Inventories (43) (167) Prepaid expenses (9,399) (1,582) Other current assets 81 871 Other assets and deferred charges 3,158 (1,066) Accounts payable 5,823 507 Accrued liabilities 677 929 Income taxes payable (4,527) (2,007) Deferred rent liability 815 (962) Other liabilities 2,037 1,002 ------------- -------------- Net cash provided by operating activities 24,948 18,490 Cash flows from investing activities: Capital expenditures (22,556) (16,580) Proceeds from sales of property and equipment 111 390 ------------- -------------- Net cash used in investing activities (22,445) (16,190) ------------- -------------- Cash flows from financing activities: Borrowings under long-term debt 6,500 3,250 Repayments of long-term debt (11,240) (6,417) Proceeds from exercises of stock options 1,399 2,007 ------------- -------------- Net cash provided by (used in) financing activities (3,341) (1,160) ------------- -------------- Increase (decrease) in cash and cash equivalents (838) 1,140 Beginning cash and cash equivalents 7,624 3,897 ------------- -------------- Ending cash and cash equivalents $ 6,786 $ 5,037 ============= ============== *T