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Dave & Buster’s, Inc. Reports Financial Results for Its Fourth Quarter and Fiscal Year 2010

2011-04-14

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Dave & Buster’s Total revenues for the 52-week period increased 0.1% to $521.5 million from $520.8 million for the comparable period last year.

Dave & Buster's, Inc., a leading operator of high volume entertainment/dining complexes, announced results for its fourth quarter and fiscal year ended January 30, 2011.

“Even more encouraging is the broad based sales momentum we have seen in both our walk in and special events business during early 2011.”

Total revenues increased 1.4% to $135.5 million in the fourth quarter of 2010, compared to $133.6 million in the fourth quarter of 2009. The year-over-year revenue increase was driven by a 1.2% increase in comparable store sales and a $3.0 million increase in revenues from non-comparable stores and other revenue sources. These revenue increases were partially offset by the loss of $2.7 million in revenues associated with the flood-related closure of our store in Nashville, Tennessee. Total Food and Beverage revenues increased 0.2%, while revenues from Amusements and Other increased 2.6%.

Adjusted EBITDA increased 12.3% to $28.0 million versus $24.9 million in the fourth quarter of fiscal 2009.

Total revenues for the 52-week period increased 0.1% to $521.5 million from $520.8 million for the comparable period last year. Revenue gains of $17.4 million from our non-comparable stores and other revenue sources were offset by a 1.9% decline in comparable store sales and the loss of $7.4 million in revenues associated with the flood-related closure of the Company’s store in Nashville, Tennessee. Total Food and Beverage revenues decreased 0.9%, while revenues from Amusements and Other increased 1.3%.

Adjusted EBITDA for the 52-week period increased 3.8% to $86.3 million versus $83.1 million for the comparable period last year. The Adjusted EBITDA for the quarter and year-to-date was not adversely affected by the closure of our Nashville store as the result of coverage under our business interruption insurance policy.

“I am very proud of the sales growth that our team delivered during the fourth quarter. We coupled that performance with exceptional cost control to deliver significant profit growth,” said Steve King, Chief Executive Officer. “Even more encouraging is the broad based sales momentum we have seen in both our walk in and special events business during early 2011.”

The Company estimates that for the first 10 weeks of fiscal 2011, comparable store sales increased by approximately 5.3% versus the same period in fiscal 2010.

Non-GAAP Financial Measures

A reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, is set forth in the attachment to this release.

DAVE & BUSTER’S, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(audited)


ASSETS	January 30, 2011		January 31, 2010
	(audited)		(audited)
Current assets:

Cash and cash equivalents	$	34,407	$	16,682
Other current assets		42,284		30,104

Total current assets	$	76,691	$	46,786

Property and equipment, net		304,819		294,151

Intangible and other assets, net		383,032		142,703

Total assets	$	764,542	$	483,640


LIABILITIES AND STOCKHOLDERS' EQUITY

Total current liabilities	$	81,877	$	80,708

Other long-term liabilities		96,417		83,872

Long-term debt, net of unamortized discount		346,418		226,414

Stockholders' equity		239,830		92,646

Total liabilities and stockholders' equity	$	764,542	$	483,640

DAVE & BUSTER’S, INC.
Consolidated Statements of Operations
(dollars in thousands)
(unaudited)


	13 Weeks Ended					13 Weeks Ended
	January 30, 2011					January 31, 2010

Food and beverage revenues	$	72,012		53.2	%	$	71,833		53.7	%
Amusement and other revenues		63,446		46.8	%		61,812		46.3	%
Total revenues		135,458		100.0	%		133,645		100.0	%

Cost of products		26,525		19.6	%		27,340		20.5	%
Store operating expenses		71,261		52.7	%		74,612		55.8	%
General and administrative expenses		8,161		6.0	%		8,158		6.1	%
Depreciation and amortization		12,906		9.5	%		13,825		10.3	%
Pre-opening costs		452		0.3	%		700		0.5	%
Total operating expenses		119,305		88.1	%		124,635		93.2	%

Operating income		16,153		11.9	%		9,010		6.8	%
Interest expense, net		8,321		6.1	%		5,340		4.0	%

Income before provision for income taxes		7,832		5.8	%		3,670		2.8	%
Income tax provision		3,331		2.5	%		3,760		2.8	%
Net income (loss)	$	4,501		3.3	%	$	(90	)	0.0	%

Other information:
Stores open at end of period (2)		58					56

The following table sets forth a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the periods shown:

	13 Weeks Ended					13 Weeks Ended
	January 30, 2011					January 31, 2010

Total net income (loss)	$	4,501				$	(90	)
Add back: Provision for income taxes		3,331					3,760
Interest expense, net		8,321					5,340
Depreciation and amortization		12,906					13,825
EBITDA		29,059					22,835
Add back: (Gain) Loss on asset disposal		(3,326	)				330
Share-based compensation		263					247
Currency transaction (gain) loss		(54	)				1
Pre-opening costs		452					700
Reimbursement of affiliate expenses.		204					342
Severance		216					101
Deferred amusement revenue and ticket redemption liability adjustments		693					345
Transaction costs		464					-
Adjusted EBITDA (3)	$	27,971				$	24,901

DAVE & BUSTER’S, INC.
Consolidated Statements of Operations
(dollars in thousands)
(audited)

	52 Weeks Ended					52 Weeks Ended
	January 30, 2011 (1)					January 31, 2010

Food and beverage revenues	$	267,514		51.3	%	$	269,973		51.8	%
Amusement and other revenues		254,025		48.7	%		250,810		48.2	%
Total revenues		521,539		100.0	%		520,783		100.0	%

Cost of products		103,981		19.9	%		104,137		20.0	%
Store operating expenses		300,498		57.7	%		306,799		59.0	%
General and administrative expenses		42,734		8.2	%		30,437		5.8	%
Depreciation and amortization		50,018		9.6	%		53,658		10.3	%
Pre-opening costs		2,289		0.4	%		3,881		0.7	%
Total operating expenses		499,520		95.8	%		498,912		95.8	%

Operating income		22,019		4.2	%		21,871		4.2	%
Interest expense, net		32,462		6.2	%		22,122		4.2	%

Loss before provision for income taxes		(10,443	)	-2.0	%		(251	)	0.0	%
Income tax provision (benefit)		(3,148	)	-0.6	%		99		0.0	%
Net loss	$	(7,295	)	-1.4	%	$	(350	)	0.0	%

Other information:
Stores open at end of period (2)		58					56

The following table sets forth a reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods shown:

	52 Weeks Ended					52 Weeks Ended
	January 30, 2011 (1)					January 31, 2010

Total net loss	$	(7,295	)			$	(350	)
Add back: Provision (benefit) for income taxes		(3,148	)				99
Interest expense, net		32,462					22,122
Depreciation and amortization		50,018					53,658
EBITDA		72,037					75,529
Add back: (Gain) Loss on asset disposal		(2,397	)				1,361
Gain on acquisition of limited partnership		-					(357	)
Share-based compensation		2,491					722
Currency transaction gain		(143	)				(123	)
Pre-opening costs		2,289					3,881
Reimbursement of affiliate expenses		626					750
Severance		1,183					295
Deferred amusement revenue and ticket redemption liability adjustments		1,276					932
Transaction costs		8,918					155
Adjusted EBITDA (3)	$	86,280				$	83,145

NOTE

(1) As previously reported by the Company, on June 1, 2010, affiliates of Oak Hill Capital Partners acquired all of the outstanding capital stock of our direct parent, Dave & Buster’s Holdings, Inc. Accounting principles generally accepted in the United States require operating results for the Company prior to the June 1, 2010 acquisition to be presented as Predecessor’s results in the historical financial statements. Operating results for the Company subsequent to the June 1, 2010 acquisition are presented or referred to as Successor’s results in our historical financial statements. References to the 52 week period ended January 30, 2011, included in this release relate to the combined 244 day period ended January 30, 2011 of the Successor and the 120 day period ended May 31, 2010 of the Predecessor. The results for the Successor period include the impacts of purchase accounting. However, we believe that the discussion of our combined operational results is appropriate as we highlight operational changes as well as purchase accounting related items.

(2) The number of stores open at January 30, 2011 includes our stores in Roseville, California and Wauwatosa, Wisconsin which opened on May 3, 2010 and March 1, 2010, respectively. The store counts as of the end of both fiscal years include one franchise location in Canada (opened June 25, 2009) and our location in Nashville, Tennessee, which temporarily closed on May 2, 2010 due to flooding. The Nashville location remains closed as of January 30, 2011.

(3) EBITDA, a non-GAAP measure, is defined as net income (loss) before income tax expense (benefit), interest expense (net) and depreciation and amortization. Adjusted EBITDA, also a non-GAAP measure, is defined as EBITDA plus (gain) loss on asset disposal, share-based compensation expense, pre-opening costs, reimbursement of affiliate expenses, and other non-cash or non-recurring charges. The company believes that EBITDA and Adjusted EBITDA (collectively, “EBITDA – Based Measures”) provide useful information to debt holders regarding the Company’s operating performance and its capacity to incur and service debt and fund capital expenditures. The Company believes that the EBITDA – Based Measures are used by many investors, analysts and rating agencies as a measure of performance. In addition, Adjusted EBITDA is approximately equal to “Consolidated EBITDA” as defined in our Senior Credit Facility and indentures relating to the Company’s senior notes. Neither of the EBITDA – Based Measures is defined by GAAP and neither should be considered in isolation or as an alternative to other financial data prepared in accordance with GAAP or as an indicator of the Company’s operating performance. EBITDA and Adjusted EBITDA as defined in this release may differ from similarly titled measures presented by other companies.

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