Centerplate Reports 2008 Second Quarter Results

2008-08-06 15:23:00

Centerplate Reports 2008 Second Quarter Results

    STAMFORD, Conn., Aug. 6 /EMWNews/ -- Centerplate, Inc.

(Amex: CVP; TSX: CVP.un), today reported financial results for the second

quarter and fiscal year-to-date ended July 1, 2008. Net sales in the

quarter increased by $37.5 million, or 18.6%, to $238.3 million, compared

to net sales of $200.8 million for the second quarter of 2007. Adjusted

earnings before interest, income taxes, depreciation and amortization

(EBITDA) increased $2.0 million, or 10.7%, to $20.2 million for the second

quarter of 2008 compared to $18.3 million in the second quarter of 2007.

Excluding $1.5 million in costs associated with the exploration of the

company's capital structure and other alternatives, adjusted EBITDA for the

second quarter 2008 would have increased $3.5 million, or 18.9%, to $21.7

million compared to the second quarter of 2007.



    "We are pleased with the increase in net sales and adjusted EBITDA in

the second quarter, particularly given the challenging economic

environment," said Janet L. Steinmayer, President and Chief Executive

Officer of Centerplate.



    The increases in net sales and adjusted EBITDA for the quarter were

driven by strong growth across all major lines of business. During the

quarter, MLB sales improved $25.3 million compared to the second quarter of

2007, due to the opening of Nationals Park in Washington, D.C. and improved

attendance and per capita spending at a number of other MLB facilities.

Arena sales increased $4.0 million mainly due to the opening last October

of the Prudential Center, home of the New Jersey Devils, and play-off games

at the New Orleans Arena, home of the New Orleans Hornets. Sales at

convention centers also increased $2.9 million due to additional events at

some of the company's major convention centers, despite decreased spending

per event due to the economy. The company also benefited in the quarter

from strong sales at the Belmont Stakes primarily due to increased interest

in this year's race for the Triple Crown.



    For the twenty-six weeks ended July 1, 2008, net sales increased $45.3

million, or 13.9%, to $371.5 million, from $326.2 million during the

comparable period in 2007. Adjusted EBITDA for the twenty-six week period

decreased $2.4 million, or 11.7%, to $18.2 million in 2008 from $20.6

million in 2007. Strong second quarter adjusted EBITDA results were offset

by a first quarter decline in adjusted EBITDA as a result of higher labor

costs at convention centers in the first quarter, due to the recession, and

increased worker's compensation costs. As noted above, adjusted EBITDA

results for the first half of the year were also impacted by the $1.5

million in costs associated with the exploration of the company's capital

structure and other alternatives. Without these costs, adjusted EBITDA for

the twenty-six week period would have been $19.7 million, a decrease of

$0.9 million, compared to $20.6 in the first half of 2007.



    For the second quarter of 2008, the company reported income of $1.0

million, or $0.05 per share, compared to $2.2 million, or $0.10 per share,

in the second quarter of 2007. The decline in net income this quarter was

due to higher interest expense driven by fees and expenses paid in

connection with amendments to the company's credit agreement. For the

twenty-six weeks ended July 1, 2008, the company reported a net loss of

$10.1 million, or $0.48 per share, compared to a loss of $5.8 million, or

$0.26 per share, in the prior year period. This year over year decline was

driven by lower operating income in the first quarter of 2008, fees and

expenses of $3.3 million associated with amendments to the company's credit

agreement and higher interest expense.



    Steinmayer added, "On the strategic front, we are continuing to make

progress in exploring our capital structure and other alternatives. We are

vigorously pursuing an outcome that will serve the best interests of our

company."



    Centerplate will discuss its second quarter 2008 financial results on a

conference call today, Wednesday, August 6 at 5:30 p.m. EDT. Interested

parties may participate in the call by dialing 877-407-8029 approximately

10 minutes before the call is scheduled to begin. International callers

should dial 201-689-8029. An audio webcast of the conference call can also

be accessed via http://www.centerplate.com. For individuals unable to participate

in the conference call, a telephone replay will be available from 8:00 p.m.

on August 6, 2008 through midnight on August 20, 2008. The replay can be

accessed domestically by dialing 877-660-6853 or for international callers,

201-612-7415. The replay account number is 252 and the pass code for the

replay call is 291831.



    About Centerplate



    Centerplate, with its principal executive office in Stamford, CT, is a

leading provider of food and related services including concessions,

catering and merchandise services in more than 130 sports facilities,

convention centers and other entertainment venues throughout the United

States and Canada. Visit the company online at http://www.centerplate.com.



    Presentation of Information in this Press Release



    Centerplate presents adjusted EBITDA because covenants in the indenture

governing the company's subordinated notes contain ratios based on this

measure. A reconciliation of adjusted EBITDA to net income or loss is

included in the attached tables.



    Forward-Looking Statements



    This news release includes forward-looking statements within the

meaning of Section 27A of the Securities Act and Section 21E of the

Securities Exchange Act. These statements may involve risks and

uncertainties that could cause actual results to differ materially from

those described in such statements. Although Centerplate believes that the

expectations reflected in these forward-looking statements are reasonable,

the company can give no assurance that these expectations will prove to

have been correct or that they will occur. Important factors beyond

Centerplate's control, including general economic conditions, the outcome

of the company's exploration of alternatives, consumer spending levels,

changing trends in our business and competitive environment, the company's

borrowing capacity and the provisions of the credit agreement, the

provisions of the indenture, adverse weather conditions and other factors,

as well as the risks identified in our most recent annual report on Form

10-K and other filings with the Securities and Exchange Commission could

cause actual results to differ materially from Centerplate's expectations.

Centerplate undertakes no obligation to update or review any

forward-looking statement, whether as a result of new information, future

developments or otherwise.




Contact Information Gael Doar Director of Communications 203-975-5941 gael.doar@centerplate.com CENTERPLATE, INC. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Thirteen Weeks Ended Twenty-Six Weeks Ended July 1, July 3, July 1, July 3, 2008 2007 2008 2007 ----------- ----------- ----------- ----------- (In thousands, except share data) Net sales $238,292 $200,839 $371,516 $326,172 Cost of sales (excluding depreciation and amortization) 194,117 162,948 310,291 269,206 Selling, general and administrative 24,060 20,161 43,269 37,361 Depreciation and amortization 8,842 7,713 17,128 15,095 Transaction related expenses - 333 - 333 ----------- ----------- ----------- ----------- Operating income 11,273 9,684 828 4,177 ----------- ----------- ----------- ----------- Interest expense 9,907 7,079 19,302 15,131 Other income (111) (542) (284) (1,044) ----------- ----------- ----------- ----------- Income (loss) before income taxes 1,477 3,147 (18,190) (9,910) Income tax provision (benefit) 442 907 (8,043) (4,102) ----------- ----------- ----------- ----------- Net income (loss) $1,035 $2,240 $(10,147) $(5,808) =========== =========== =========== =========== Basic and Diluted Net Income (loss) per share with and without conversion option $0.05 $0.10 $(0.48) $(0.26) =========== =========== =========== =========== Weighted average shares outstanding with conversion option - 4,060,997 - 4,060,997 Weighted average shares outstanding without conversion option 20,981,813 18,463,995 20,981,813 18,463,995 =========== =========== =========== =========== Total weighted average shares outstanding 20,981,813 22,524,992 20,981,813 22,524,992 =========== =========== =========== =========== Dividends declared per share $0.07 $0.20 $0.27 $0.40 =========== =========== =========== =========== CENTERPLATE, INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION, AND AMORTIZATION (UNAUDITED) Thirteen Weeks Twenty-Six Weeks Ended Ended July 1, July 3, July 1, July 3, 2008 2007 2008 2007 ------- ------- ------- ------- (In thousands) Net income (loss) $1,035 $2,240 $(10,147) $(5,808) Income tax provision (benefit) 442 907 (8,043) (4,102) ------- ------- ------- ------- Income (loss) before income taxes 1,477 3,147 (18,190) (9,910) Adjustments: Interest expense 9,907 7,079 19,302 15,131 Depreciation and amortization 8,842 7,713 17,128 15,095 ------- ------- ------- ------- EBITDA (1) $20,226 $17,939 $18,240 $20,316 ======= ======= ======= ======= The following adjustments to EBITDA were made to compute Adjusted EBITDA: EBITDA $20,226 $17,939 $18,240 $20,316 Adjustments: Transaction related expenses - 333 - 333 ------- ------- ------- ------- Adjusted EBITDA (1) $20,226 $18,272 $18,240 $20,649 ======= ======= ======= ======= (1) EBITDA is not a measure in accordance with GAAP. EBITDA is not intended to represent cash flows from operations as determined by GAAP and should not be used as an alternative to income (loss) before taxes or net income (loss) as an indicator of operating performance or to cash flows as a measure of liquidity. We believe that EBITDA is an important measure of the cash returned on our investment in capital expenditures under our contracts. Adjusted EBITDA as defined in the indenture governing our subordinated notes issued in 2003, is determined as EBITDA as adjusted for transaction related expenses, contract related losses, other non-cash charges, and the former annual management fee paid to affiliates of Blackstone and GE Capital, less any non-cash credits. We present Adjusted EBITDA because covenants in the indenture governing our 2003 notes contain ratios based on this measure and it is used by management to among other things evaluate our ability to make interest and dividend payments. CENTERPLATE, INC. SELECTED CONSOLIDATED CASH FLOW DATA (UNAUDITED) Thirteen Weeks Twenty-six Weeks Ended Ended July 1, July 3, July 1, July 3, 2008 2007 2008 2007 -------- -------- -------- -------- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $1,035 $2,240 $(10,147) $(5,808) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 8,842 7,713 17,128 15,095 Amortization of deferred financing costs 642 642 1,284 1,284 Interest earned on restricted cash (32) (117) (111) (232) Change in fair value of derivative (528) (554) (311) 118 Deferred tax change 180 749 (8,084) (3,985) Gain (loss) on disposition of assets (1) (26) (2) (26) Other 17 710 (30) 710 Changes in assets and liabilities 13,770 14,694 22,710 9,569 -------- -------- -------- -------- Net cash provided by operating activities 23,925 26,051 22,437 16,725 -------- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of business - - (1,000) - Purchase of property and equipment (4,699) (4,804) (8,123) (8,110) Proceeds from sale of property and equipment 32 15 58 17 Contract rights acquired (9,882) (1,646) (12,678) (4,043) Restricted cash 351 391 354 849 -------- -------- -------- -------- Net cash used in investing activities (14,198) (6,044) (21,389) (11,287) -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Restricted cash 8,033 - 8,033 - Repayments - revolving loans (35,000) (30,000) (42,500) (41,000) Borrowings - revolving loans 26,500 15,000 62,500 38,500 Net Borrowings - swingline loans (3,000) (4,000) (4,000) - Principal payments on long-term debt (8,302) (269) (8,840) (538) Dividend payments (2,770) (4,460) (6,925) (8,920) Increase (decrease) in bank overdrafts 8,529 5,180 2,286 1,342 -------- -------- -------- -------- Net cash provided by (used in) financing activities (6,010) (18,549) 10,554 (10,616) -------- -------- -------- -------- Effect of exchange rate on cash 93 (240) INCREASE IN CASH 3,810 1,458 11,362 (5,178) CASH AND CASH EQUIVALENTS: Beginning of period 41,405 32,955 33,853 39,591 -------- -------- -------- -------- End of period $45,215 $34,413 $45,215 $34,413 ======== ======== ======== ======== CENTERPLATE, INC. SELECTED CONSOLIDATED BALANCE SHEET DATA (UNAUDITED) July 1, January 1, 2008 2008 ---------- ---------- ASSETS (in thousands) Current assets $118,884 $95,517 Property and equipment, net 53,222 51,986 Contract rights, net 95,106 85,183 Cost in excess of net assets acquired 41,142 41,142 Deferred financing costs, net 9,077 10,361 Other assets 49,475 48,162 ---------- ---------- TOTAL ASSETS $366,906 $332,351 ========== ========== LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities $164,339 $114,992 Long-term debt 214,494 223,334 Other liabilities 21,584 11,559 Total stockholders' deficiency (33,511) (17,534) ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $366,906 $332,351 ========== ==========

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