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Centerplate Retains UBS Securities as Financial Advisor to Assist in Evaluating Capital Structure Alternatives That Can Better Support GrowthCompany in Final Negotiations on Senior Credit Facility AmendmentReports 2008 First Quarter Results
STAMFORD, Conn., May 7 /PRNewswire-FirstCall/ -- Centerplate, Inc. AMEX: CVP TSX: CVP, today announced that its Board of Directors has initiated a process to evaluate a range of capital structure and other alternatives and has engaged UBS Investment Bank as the company's financial advisor to assist in this process. The company believes its current Income Deposit Security structure may limit its ability to invest to strengthen and grow its business. It expects the evaluation process to take up to six months. Separately, as previously announced, the company has been negotiating an amendment to its senior credit facility to modify, among other things, certain restrictive financial covenants and obtain increased flexibility on capital expenditures and acquisitions. Based on discussions to date, the company believes it will obtain a permanent amendment and expects to communicate the terms of that amendment in the next few weeks. Additionally, in order to provide enhanced financial flexibility, the Board is likely to determine that it is in the company's best interest to eliminate monthly dividend payments beginning in June 2008. Janet L. Steinmayer, President and Chief Executive Officer of Centerplate, said, "Our goal is to have a capital structure that enhances our ability to invest in compelling projects, drive innovation for customers and support the company's long-term growth objectives. Centerplate is a strong franchise with an outstanding team and we just need to find the best way to finance our growth. We plan to work expeditiously with UBS and to communicate the outcome of that process within the next six months." Steinmayer continued, "Although we have experienced very strong new business flows so far in 2008, we believe that - given the current competitive and economic environment - it may be prudent to eliminate the dividend beginning in June and to focus appropriate economic resources on deepening our existing client relationships, pursuing new ones and strengthening our company through strategic acquisitions. We are also looking very closely at costs, in order to protect margins." First Quarter Financial Results The company also reported financial results for the first quarter ended April 1, 2008. Net sales of $133.2 million increased $7.9 million, or 6.3%, compared to net sales of $125.3 million for the first quarter of 2007. The net sales increase for the first quarter of 2008 was partly driven by new accounts, primarily the Prudential Center in Newark, New Jersey, home of the New Jersey Devils. The sales increase was also driven by the Super Bowl, which was held at the University of Phoenix Stadium in Glendale, Arizona and the BCS Championship Game and NBA All-Star Game in New Orleans. Partially offsetting these improvements was a decline in sales at the company's convention centers. Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) declined in the first quarter to a loss of $2.0 million, compared to a gain of $2.4 million in the first quarter of 2007, due to softness in the convention center business, increased workers compensation costs, the timing of new sales expenses and higher legal fees associated with obtaining a short-term amendment to the company's senior credit facility. "Our first quarter's results were impacted by the challenging economic environment which contributed to fewer events in our convention center venues," commented Steinmayer. She added, "We are sharply focusing on managing our labor costs and working on improving adjusted EBITDA through improved efficiencies across the business while driving growth through new accounts, acquisitions and joint ventures." Centerplate reported a net loss of $11.2 million, or $0.53 per share, compared to a net loss of $8.0 million, or $0.36 per share, in the first quarter of 2007. The increased loss was due to the decline in operating income and increased interest expense. The company is in the final stages of the amendment process and anticipates that it will be completed in the next few weeks. Therefore, the filing of the company's Form 10-Q for the quarter ended April 1, 2008 will be delayed and filed on or before May 19, 2008, and we anticipate that the terms of the amendment will be incorporated. Conference Call Centerplate will hold a conference call today, Wednesday, May 7 at 5:30 p.m. eastern daylight time. 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 www.centerplate.com. For individuals unable to participate in the conference call, a telephone replay will be available from 8:00 p.m. on May 7, 2008 through midnight on May 21, 2008. The replay can be accessed domestically by dialing 877-660-6853. For international callers, the dial-in number is 201-612-7415. The replay account number for the call is 252 and the pass code is 283089. About Centerplate Centerplate, Inc., with its principal executive office in Stamford, CT, crafts and delivers extraordinary entertainment experiences in over 130 prominent sports, entertainment and convention center venues across North America. Visit the company online at www.centerplate.com. Presentation of Information in this Press Release Centerplate presents adjusted EBITDA, a non-GAAP measure, 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, including the outcome of negotiations to amend its terms, 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
(Financial Tables Follow)
CENTERPLATE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Thirteen Weeks Ended
April 1, April 3,
2008 2007
(In thousands, except share data)
------------ ------------
Net sales $133,224 $125,333
Cost of sales (excluding depreciation
and amortization) 116,174 106,258
Selling, general and administrative 19,209 17,200
Depreciation and amortization 8,286 7,382
------------ ------------
Operating loss (10,445) (5,507)
------------ ------------
Interest expense, net 9,395 8,052
Other income (173) (502)
------------ ------------
Loss before income taxes (19,667) (13,057)
Income tax benefit (8,485) (5,009)
------------ ------------
Net loss $(11,182) $(8,048)
============ ============
Basic and Diluted Net Loss per share
with and without conversion option $(0.53) $(0.36)
============ ============
Weighted average shares outstanding
with conversion option - 4,060,997
Weighted average shares outstanding
without conversion option 20,981,813 18,463,995
============ ============
Total weighted average shares
outstanding 20,981,813 22,524,992
============ ============
Dividends declared per share $0.20 $0.20
============ ============
CENTERPLATE, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EARNINGS BEFORE INTEREST,
INCOME TAXES, DEPRECIATION, AND AMORTIZATION (UNAUDITED)
Thirteen Weeks Ended
April 1, April 3,
2008 2007
------------ ------------
(In thousands)
Net loss $(11,182) $(8,048)
Income tax benefit (8,485) (5,009)
------------ ------------
Loss before income taxes (19,667) (13,057)
Adjustments:
Interest expense 9,395 8,052
Depreciation and amortization 8,286 7,382
------------ ------------
EBITDA (1) $(1,986) $2,377
============ ============
The following adjustments to EBITDA
were made to compute Adjusted
EBITDA:
EBITDA $(1,986) $2,377
------------ ------------
Adjustments:
Adjusted EBITDA (1) $(1,986) $2,377
============ ============
(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 Ended
April 1, April 3,
2008 2007
------------ ------------
(In thousands)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(11,182) $(8,048)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 8,286 7,382
Amortization of deferred
financing costs 642 642
Interest earned on restricted cash (79) (115)
Change in fair value of derivative 217 672
Deferred tax benefit (8,264) (4,734)
Gain on disposition of assets (1) -
Changes in assets and liabilities 8,893 (5,125)
------------ ------------
Net cash used in
operating activities (1,488) (9,326)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business (1,000) -
Purchase of property and
equipment (3,424) (3,306)
Proceeds from sale of
property and equipment 26 2
Contract rights acquired (2,796) (2,397)
Decrease in restricted cash 3 458
------------ ------------
Net cash used in
investing activities (7,191) (5,243)
------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayments - revolving loans (7,500) (11,000)
Borrowings - revolving loans 36,000 23,500
Net borrowings - swingline
loans (1,000) 4,000
Principal payments on long-
term debt (538) (269)
Dividend payments (4,155) (4,460)
Decrease in bank overdrafts (6,243) (3,838)
------------ ------------
Net cash provided by
financing activities 16,564 7,933
------------ ------------
Effect of foreign currency
translation on cash (333) -
------------ ------------
INCREASE/(DECREASE) IN CASH 7,552 (6,636)
CASH AND CASH EQUIVALENTS:
Beginning of period 33,853 39,591
------------ ------------
End of period $41,405 $32,955
============ ============
CENTERPLATE, INC.
SELECTED CONSOLIDATED BALANCE SHEET DATA (UNAUDITED)
April 1, January 1,
2008 2008
------------ ------------
ASSETS (in thousands)
Current assets $109,492 $95,517
Property and equipment, net 52,512 51,986
Contract rights, net 82,829 85,183
Cost in excess of net assets acquired 41,142 41,142
Deferred financing costs, net 9,719 10,361
Other assets 58,607 48,162
------------ ------------
TOTAL ASSETS $354,301 $332,351
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities $151,148 $114,992
Long-term debt 222,796 223,334
Other liabilities 13,621 11,559
Total stockholders' deficiency (33,264) (17,534)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $354,301 $332,351
============ ============
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