Dave & Buster's, Inc. Announces Preliminary Second Quarter Results of Operations and Changes to Jillian's Store Strategy

The company further announced that it plans to convert most of the Jillian's locations to its core Dave & Buster's brand and that its subsidiary has closed the acquired Jillian's complex located in metro Minneapolis Mall of America.

Total revenue for the second quarter is expected to be approximately $111 million, an increase of $16 million, from the $95.0 million in the prior year's comparable quarter. Net loss for the quarter is expected to range from ($.08) to ($.09) per basic share, compared to $.16 of net income per diluted share in the same period last year. Net loss for the second quarter includes an estimated pretax charge of $2.5 million or an estimated $.12 per basic share, relating to the closure of the Mall of America location. In addition, the company expects pretax store closing costs related to this location in the third quarter of approximately $0.5 million.

During the quarter, revenues from the 33 comparable stores, all of which operate under the Dave & Buster's core brand, increased 0.2% as compared to the same period last year.

"Although the performance of the Jillian's units overshadowed our Dave & Buster's same store sales gains during the second quarter, it is important to note that our Dave & Buster's core brand accounts for approximately 85% of our consolidated revenues and continues to show comparable store sales gains of 3% for the first three weeks of the third quarter," said Dave Corriveau, the company's President.

"We hoped that, despite Jillian's protracted bankruptcy proceedings, there would be significant opportunities to revitalize the Jillian's brand upon our acquisition of these stores," stated Buster Corley, the company's CEO. "However, we purchased these locations with the knowledge that we could convert the stores to the Dave & Buster's brand if it became advantageous or necessary to do so. We believe that the conversion of these stores to the Dave & Buster's brand will enhance and accelerate our efforts to improve the results of operations of these stores from the disappointing levels achieved during the first nine months since completion of the acquisition. As the Minneapolis Jillian's location accounts for such a significant portion of this year's shortfall in anticipated results and approximately 40% of the Jillian's store level losses, we do not believe that the capital expenditures necessary to re-brand that store would be justified."

The company has already completed many of the improvements necessary to convert most of the Jillian's stores to the Dave & Buster's brand, including facilities enhancements, product quality improvements, equipment upgrades and additions, new games and significant store level management changes. The company's advertising of the Jillian's stores has been at minimal maintenance levels since the beginning of the year. "Our goal was to make much needed improvements to Jillian's before we began re-marketing the brand. We will now aggressively advertise and market these stores as they convert to the stronger Dave and Buster's brand," continued Mr. Corley. The company estimates that an additional $5 million in capital expenditures will be required to complete the re-branding of these stores during this fiscal year.

"We will re-brand the first Jillian's to Dave and Buster's next month," stated Dave Corriveau, the company's President. "With our scheduled 2005 new store openings in tandem with most of the Jillian's stores converting and the addition of at least two new stores in 2006, our current plan is to have 10-12 more stores operating under the Dave and Buster's brand within a year from today."

The company has lowered its previously announced earnings guidance for the current fiscal year from a range of $1.15 to $1.23 per diluted share to an estimated range of $.64 to $.70 per diluted share. The revised estimate includes the approximate $3.0 million pretax charge associated with the closure of the Mall of America location during the fiscal year. The company has also decided to reduce its new store openings in fiscal 2006 to two or three new stores from three or four new stores, attributable in part to the additional capital expenditures associated with the re-branding program.

Separately, the company has announced that it has agreed to purchase the general partner interest in the Jillian's store located at the Discover Mills Mall in metropolitan Atlanta. The purchase price for this interest, sold pursuant to an auction held by the bankruptcy court, is $900,000. The company will also receive a quarterly management fee from the partnership.



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