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Stocks D / Dave & Buster's, Inc.
|Subject: Dave and Buster's Stockholders Meeting||Date: 6/7/2000 11:02 PM|
|Author: CWRailroad||Number: 335 of 401|
Dave and Buster's
Monday June 5th 2000
The regular shareholder meeting of Dave and Buster's was held at 1:00 Pm Monday June 5th 2000 at corporate headquarters in Dallas Texas. The meeting was held in the original Dave and Buster's restaurant located at 10727 Composite Drive in Northwest Dallas. The original Dave and Busters opened this very same week in this converted warehouse in June of 1982.
The meeting was brought to order at 1:00 by co founder and co CEO Dave Corruveau. Introductions were made of the Board of Directors, Senior Management and other individuals that will have a impact on the performance of the company in the following year. One of the introductions was Stuart Myers new Vice President of the newly created Marketing Department. Election of the Board of the Director took place as well as the one item on the agenda of restatement of the Dave and Buster's Stock Option Plan. Both the Board of Directors and the Stock Option plan were excepted as declared and at about 1:15 CDT the formal meeting was adjourned.
Now the fun begins.
Co founder and Co CEO Buster Corley opened the next part of the meeting by going over the 1999 year. It was not a good year for the company and this was made clear at this time. To say that both CEO's and other members of senior management were not happy was made clear. Their forward projections for 1999 were grossly overstated and the problems of the California stores not meeting return customer and new customer expect ions clearly hurt the bottom line. Both CEO's clearly pointed out that the market in the LA basin is difficult to crack but made even more difficult by what they termed the laid back management style that was determined not to fit what Dave and Buster's is all about thus the changes in management on several levels in the stores in the LA Basin. It was also stated that these changes has already paid off in all stores now meeting or beating comp sales from last year, with the best turnaround in the original California store in Ontario California. It was also mentioned the new store in San Jose store opened at record openings and that they feel this store could be one of the best stores in the chain. Plans for 4 more stores instead of the 8, down 4 from last years meeting was also presented for the fiscal year 2001. These stores will be located through out the United States with Ft Worth Tx, Miami Florida and the northeast United States getting the new stores.
Also the expansion of the company in the international market continues with new store opening the day before on Sunday June 4th in a new mall complex in Toronto Canada. Also other stores have opened in Taiwan, 2 British Locations and in December of this year the 1st German location will open. No good estimate was given to the impact of the international licenses granted for these store at this time but it appears that all will be great hits.
New locations for the approximately 4 stores that are planned in 2002 are in the works but nothing at this time has been finalized or signed at this time.
Chas Michel CFO then took the podium for a review of the current financial of the company. Of the original 100 million line of credit granted 94 million has been used for company expansion and a additional 10 million is being negotiated for the fiscal year 2001 to more expansion. As stated, Chas Michel pointed out that the company want to keep the company leveraged at about 40% and with the increase of revenues and free cash flow the other 10 million in credit is justified. A question was then asked from the floor about the rate of interest on these notes and when and how will this debt be reduced. Mr. Michel stated that with interest continuing to go up in the near term but felt that it did not warrant fixing the rates at this time. With the additional 10 million dollar line of credit being negotiated now and with increased revenues as more store come on line and begin to come out of the “honeymoon phase “ phase of operations that by 2002 or 2003 that there should be 55 million of free cash flow and with depreciation there should be sufficient revenue to begin to reduce the debt and build new stores. As for the comp store sales a chart was shown that from when a store open to 24 months there is a dip then it has a steady climb as more and more people continue to come and visit Dave and Buster's. A example given was the original store where the meeting was held, while located in a light industrial and older section of northwest Dallas the original Dave and Buster's has enjoyed their best years in the last 3 years at this location. Advertising budget is now 9 million dollars for 2000, unprecedented in this company's history. Which brings us to Mr. Stuart Myers the new VP of marketing.
Mr. Myers comes from the Whataburger Restaurant chain as their marketing executive with many years of marketing experience. He immediately did market research and implemented several “stop gap” measure to fight the erosion on customer repeats and slowing of new customer visits. This was done in the California area as well as several other areas to get a feel for the local market. The results of even this “stop gap” has already made a difference in the California markets and started to pay dividends through out the chain. Using the Gallop research marketing people he identified the typical D&B customer to be a 33 year old male with a average income of $60,000 per year. The “word of mouth” advertising while effective for the smaller number of stores is now not sufficient to continue to grow the customer base. Beginning on Monday June 12th a brand new national campaign on ESPN, ABC,CBS, and NBC will begin in the existing mark