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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q

(Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the quarterly period ended March 28, 2004

OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the transition period from __________ to __________

Commission file number 0-22639

CHAMPPS ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 		04-3370491
(I.R.S.Employer
Identification No.)

10375 Park Meadows Drive, Suite 560, Littleton, Colorado
(Address of principal executive offices) 		80124
(Zip Code)

(303) 804-1333
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d)of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No __

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Yes X No __

Number of shares of Common Stock, $.01 par value, outstanding at April 27, 2004: 12,812,332 (excluding
471,588 shares held in our treasury).

CHAMPPS ENTERTAINMENT INC.

INDEX

PART I – FINANCIAL INFORMATION

ITEM 1.

       

       
       

       

       
       
       
       
       

ITEM 2.

ITEM 3.

ITEM 4.
 Condensed Financial Statements:

 Consolidated Balance Sheets as of March 28, 2004 and June 29, 2003

 Consolidated Statements of Operations - Three and Nine Months Ended March 28, 2004
        and March 30, 2003

 Consolidated Statement of Shareholders' Equity - Nine Months Ended March 28, 2004

Consolidated Statements of Cash Flows – Nine Months Ended March 28, 2004 and
        March 30, 2003

Notes to Unaudited Consolidated Financial Statements – Three and Nine Months Ended
        March 28, 2004 and March 30, 2003

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures about Market Risk

Controls and Procedures

 1


 2

 3


 4


 5

14

27

28

PART II – OTHER INFORMATION

ITEM 1.

ITEM 2.

ITEM 3.

ITEM 4.

ITEM 5.

ITEM 6. 		Legal Proceedings

Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Defaults upon Senior Securities

Submission of Matters to a Vote of Security Holders

Other Information

Exhibits and Reports on Form 8-K 		 28

 28

 28

 28

 28

 29

PART I – FINANCIAL INFORMATION

ITEM 1. Condensed Financial Statements

CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
As of March 28, 2004 and June 29, 2003
(In thousands except share data)
(Unaudited)

March 28,
2004
 June 29,
2003
ASSETS            
Current assets:  
   Cash and cash equivalents   $ 11,732   $ 5,055  
   Restricted cash    100    741  
   Accounts receivable    3,250    2,669  
   Inventories    4,117    3,594  
   Prepaid expenses and other current assets (Note 7)    6,061    6,066  
   Deferred tax asset    2,625    2,000  
     Total current assets    27,885    20,125  
Property and equipment, net    89,390    83,613  
Goodwill    5,069    5,069  
Deferred tax asset    21,115    22,675  
Other assets, net (Note 8)    2,372    2,467  
   Total assets   $ 145,831   $ 133,949  
LIABILITIES AND SHAREHOLDERS' EQUITY   
Current liabilities:  
   Accounts payable   $ 5,495   $ 5,403  
   Accrued expenses (Notes 4 and 9)    11,857    9,750  
   Current portion of capital lease obligations    --    528  
   Current portion of notes payable (Note 6)    2,082    1,244  
     Total current liabilities    19,434    16,925  
Capital lease obligations, net of current portion    --    635  
Notes payable, net of current portion (Note 6)    27,579    26,143  
Other long-term liabilities (Notes 4 and 9)    21,074    17,501  
     Total liabilities    68,087    61,204  
Commitments and contingencies (Note 4)

  
Shareholders' equity:  
   Preferred stock ($.01 par value per share; authorized          
     5,000,000 shares; none issued)    --    --  
   Common stock ($.01 par value per share; authorized 30,000,000  
     shares; 13,275,737 and 13,235,638 shares issued at  
     March 28, 2004 and June 29, 2003, respectively)    133    132  
   Additional paid-in capital    90,330    89,816  
   Accumulated deficit    (9,136 )  (13,620 )
   Treasury stock, at cost (471,588 shares)    (3,583 )  (3,583 )
     Total shareholders' equity    77,744    72,745  
       Total liabilities and shareholders' equity   $ 145,831   $ 133,949  

        See accompanying notes to unaudited consolidated financial statements.

1

CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended March 28, 2004 and March 30,2003
(In thousands except per share data)
(Unaudited)

Three Months Ended
 Nine Months Ended
March 28,
2004
 March 30,
2003
 March 28,
2004
 March 30,
2003
Revenue                    
   Sales   $ 54,017   $ 46,037   $ 157,431   $ 133,758  
   Franchising and royalty, net    148    147    430    444  
   Total revenue    54,165    46,184    157,861    134,202  
Costs and expenses   
Restaurant operating expenses:  
   Product costs    14,933    13,003    43,816    37,442  
   Labor costs    17,350    14,982    50,674    43,025  
   Other operating expenses    8,435    7,265    24,433    20,976  
   Occupancy    4,798    4,249    13,876    11,855  
   Depreciation and amortization    2,491    1,939    7,074    5,602  
     Total restaurant operating expenses    48,007    41,438    139,873    118,900  
Restaurant operating and franchise contribution    6,158    4,746    17,988    15,302  
   General and administrative expenses    3,058    2,643    8,267    7,492  
   Pre-opening expenses    45    593    1,640    2,145  
   Other (income) expense    63    41    146    242  
Income from operations    2,992    1,469    7,935    5,423  
   Other (income) expense:  
     Interest expense and income, net    602    526    1,750    1,337  
     Expenses related to predecessor companies    54    272    259    272  
     Debt extinguishment costs    4    --    4    290  
Income before income taxes    2,332    671    5,922    3,524  
   Income tax expense    505    127    1,438    240  
Net income   $ 1,827   $ 544   $ 4,484   $ 3,284  
Basic income per share (Note 3):   $ 0.14   $ 0.04   $ 0.35   $ 0.26  
Diluted income per share (Note 3):   $ 0.14   $ 0.04   $ 0.35   $ 0.25  
Basic weighted average shares outstanding    12,799    12,712    12,787    12,470  
Diluted weighted average shares outstanding    13,082    12,989    12,961    12,957  

See accompanying notes to unaudited consolidated financial statements.

2

CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
Nine Months Ended March 28, 2004
(In thousands except share data)
(Unaudited)

Common Stock
 Additional
Paid-in
 Accumulated
 Treasury Stock
 Total
Shareholders'
Shares
 Amount
 Capital
 Deficit
 Shares
 Amount
 Equity
Balance, June 29, 2003      13,235,638   $ 132   $ 89,816   $ (13,620 )  471,588   $ (3,583 ) $ 72,745  
Common shares issued    40,099    1    186    --    --    --    187  
Income tax benefit of stock options                              
     exercised    --    --    14    --    --    --    14  
Interest on loan for exercise of  
     stock options    --    --    (2 )  --    --    --    (2 )
Repayment of loan for exercise of                              
    stock options (Note 10)    --    --    316    --    --    --    316  
Net income    --    --    --    4,484    --    --    4,484  
Balance, March 28, 2004     13,275,737   $ 133   $ 90,330   $ (9,136 )  471,588   $ (3,583 ) $ 77,744  

See accompanying notes to unaudited consolidated financial statements.

3

CHAMPPS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 28, 2004 and March 30, 2003
(In thousands)
(Unaudited)

March 28,
2004
 March 30,
2003
Cash flows from operating activities:            
Net income   $ 4,484   $ 3,284  
Adjustments to reconcile net income to net cash provided by  
    operating activities:  
        Depreciation and amortization (Note 5)    7,347    5,901  
        Amortization of notes payable discount    151    59  
        Loss on disposal of assets    146    257  
        Income tax benefit of stock options exercised    14    1,068  
        Interest on loan for exercise of stock options    (2 )  (26 )
        Deferred income tax expense (benefit)    935    (983 )
    Changes in assets and liabilities:  
        Accounts receivable    (466 )  (232 )
        Inventories    (523 )  (440 )
        Prepaid expenses and other current assets    5    (2,723 )
        Accounts payable    92    (254 )
        Accrued expenses    2,107    2,486  
        Other assets    60    56  
        Other long-term liabilities    (477 )  (395 )
    Net cash provided by operating activities    13,873    8,058  
Cash flows from investing activities:   
Purchase of property and equipment    (13,259 )  (15,619 )
Proceeds from disposal of assets    24    --  
Restricted cash balances    641    389  
Repayment of loan for exercise of stock options (Note 10)    316    350  
    Net cash used in investing activities    (12,278 )  (14,880 )
Cash flows from financing activities:   
Proceeds from issuance of common stock    187    3,792