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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cec Entertainment, Inc. | NYSE:CEC | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.00 | - |
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Kansas
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48-0905805
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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1707 Market Place Blvd, Suite 200
Irving, Texas
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75063
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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None
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None
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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x
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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PART III
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ITEM 11.
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PART IV
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ITEM 15.
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•
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our strategy, outlook and growth prospects;
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•
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our operational and financial targets and dividend policy;
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•
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our planned expansion of the venue base and the implementation of the new design in our existing venues;
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•
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general economic trends and trends in the industry and markets; and
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•
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the competitive environment in which we operate.
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•
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negative publicity and changes in consumer preference;
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•
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our ability to successfully expand and update our current venue base;
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•
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our ability to successfully implement our marketing strategy;
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•
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our ability to compete effectively in an environment of intense competition;
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•
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our ability to weather economic uncertainty and changes in consumer discretionary spending;
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•
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increases in food, labor and other operating costs;
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•
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our ability to successfully open international franchises and to operate under the U.S. and foreign anti-corruption laws that govern those international ventures;
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•
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risks related to our substantial indebtedness;
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•
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failure of our information technology systems to support our current and growing businesses;
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•
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disruptions to our commodity distribution system;
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•
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our dependence on third-party vendors to provide us with sufficient quantities of new entertainment-related equipment, prizes and merchandise at acceptable prices;
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•
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risks from product liability claims and product recalls;
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•
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the impact of governmental laws and regulations and the outcomes of legal proceedings;
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•
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potential liability under certain state property laws;
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•
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fluctuations in our financial results due to new venue openings;
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•
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local conditions, natural disasters, terrorist attacks and other events and public health issues;
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•
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the seasonality of our business;
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•
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inadequate insurance coverage;
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•
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labor shortages and immigration reform;
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•
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loss of certain personnel;
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•
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our ability to adequately protect our trademarks or other proprietary rights;
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•
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our ability to pay our fixed rental payments;
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•
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our ability to successfully integrate the operations of companies we acquire;
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•
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impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets;
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•
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our failure to maintain adequate internal controls over our financial and management systems; and
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•
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other risks, uncertainties and factors set forth in Part I, Item 1A. “Risk Factors” of the Company’s Original Form 10-K filed with the SEC on
March 12, 2019
.
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Name and Principal Position
|
Year
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Salary
|
Non-Equity Incentive Plan
Compensation
(2)
|
All Other
Compensation
(3)
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Total
|
||||
|
|
($)
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($)
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($)
|
($)
|
||||
Thomas Leverton
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2018
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550,000
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300,728
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24,000
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874,728
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Chief Executive Officer
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2017
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550,000
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—
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24,000
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574,000
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2016
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550,000
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477,400
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24,000
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1,051,400
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J. Roger Cardinale
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2018
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485,000
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260,337
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18,000
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763,337
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President
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2017
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485,000
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—
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18,000
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503,000
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2016
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485,000
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406,430
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18,000
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909,430
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James Howell
(1)
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2018
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100,000
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121,532
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—
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221,532
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Executive Vice President and Chief Financial Officer
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2017
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n/a
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n/a
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n/a
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n/a
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|
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2016
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n/a
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n/a
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n/a
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n/a
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Dale Black
(4)
|
2018
|
307,692
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—
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19,083
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326,775
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Former Executive Vice President and Chief Financial Officer
|
2017
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400,000
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—
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—
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400,000
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|
2016
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400,000
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320,160
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|
70,893
|
|
791,053
|
|
(1)
|
Mr. Howell began his employment with CEC Entertainment in September 2018.
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(2)
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See “-Narrative Disclosure To Summary Compensation Table - Non Equity Incentive Plan Compensation,” below for more information about the terms of these awards.
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Name
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Year
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Car Allowance/Car Insurance
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Moving Expense Reimbursement
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Vacation Pay on Termination
|
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Total
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||||
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($)
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($)
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($)
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($)
|
||||
Thomas Leverton
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2018
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24,000
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—
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—
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24,000
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2017
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24,000
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|
|
—
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|
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—
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24,000
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2016
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24,000
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—
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|
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—
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24,000
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J. Roger Cardinale
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2018
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18,000
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—
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—
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18,000
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2017
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18,000
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—
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—
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18,000
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|
2016
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18,000
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—
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—
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18,000
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James Howell
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2018
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|
—
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—
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—
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—
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|
2017
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|
n/a
|
|
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n/a
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|
|
n/a
|
|
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n/a
|
|
|
|
2016
|
|
n/a
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|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
Dale Black
|
|
2018
|
|
—
|
|
|
—
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|
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19,083
|
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19,083
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|
|
2017
|
|
—
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|
|
—
|
|
|
—
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|
|
—
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2016
|
|
—
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70,893
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—
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70,893
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(4)
|
The salary paid to Mr. Black in 2018 was his base salary of $400,000, prorated for the period from January 1, 2018 to September 21, 2018, his last date of employment with the Company.
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Metric
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Total Bonus %
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Adjusted EBITDA
|
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80%
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Discretionary
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20%
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Total
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100%
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Metric
|
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Minimum
(1)
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Target
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Maximum
(2)
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Adjusted EBITDA
(3)
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$50.2
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$52.8
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$55.0
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(1)
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If the minimum quantitative component of the Alternative Incentive Bonus Plan were achieved, the bonus payout, as a percentage of target, would be 50%.
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(2)
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The maximum bonus payout on the quantitative component of the Alternative Incentive Bonus Plan, as a percentage of target, is 150%.
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(3)
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Target for the incentive period covering August, 2018 through December, 2018 (5/12 of the 2018 Fiscal Year).
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2018 Payout
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Metric
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% Weighting
|
|
Bonus as a % of Target
|
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% of Base
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Adjusted Plan EBITDA
|
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80%
|
|
109.16%
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87.3%
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Discretionary
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20%
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100%
|
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20%
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Total
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100%
|
|
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107.3%
|
Name and Position
|
|
2018 Incentive Bonus Plan Payment
|
Tom Leverton, Chief Executive Officer
|
|
$300,728
|
J. Roger Cardinale, President
|
|
$260,337
|
James Howell, Chief Financial Officer
|
|
$121,532
|
Dale Black, Former Chief Financial Officer
(1)
|
|
—
|
(1)
|
As Mr. Black’s employment with the Company terminated as of September 21, 2018, he was not eligible to receive a payment under the Alternative Incentive Bonus Plan for 2018.
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|
|
Option Awards
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|||||||||||||
Name
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Number of Securities Underlying Unexercised Options (#) Exercisable
|
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
(1)
|
|
Number of Securities Underlying Unexercised Unearned Options (#)
(1)
|
|
Options Exercise Price ($)
(2)
|
|
Option Expiration Date
|
|||||
Thomas Leverton
|
|
154,900
|
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38,725
|
|
|
387,250
|
|
|
8.03
|
|
|
02/14/2024
|
|
J. Roger Cardinale
|
|
103,266
|
|
|
25,817
|
|
|
258,166
|
|
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8.03
|
|
|
02/14/2024
|
|
James Howell
(3)
|
|
—
|
|
|
—
|
|
|
—
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|
|
—
|
|
|
—
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|
(1)
|
Under the Queso Holdings Inc. Equity Incentive Plan Stock Option Agreement (the “Option Agreement”), which each named executive officer signed as a condition of receiving option grants from Parent, each of our named executive officers was awarded three tranches of stock options (with each of Tranche A, Tranche B, and Tranche C equal to
1
/
3
of the total grant). As to Messrs. Leverton and Cardinale, Tranche A stock options vest and become exercisable in equal installments on each of the first five anniversaries of February 14, 2014. Tranche B stock options vest and become exercisable if AP VIII CEC Holdings, L.P. (f/k/a AP VIII Queso Holdings, L.P.), an affiliate of our sponsor, and its affiliates realize a multiple on invested capital (“MOIC”) of at least 2.0x (with such MOIC to be calculated in accordance with the methodology set forth in the Equity Incentive Plan). Tranche C stock options vest and become exercisable if AP VIII CEC Holdings, L.P., an affiliate of our sponsor, and its affiliates realize an MOIC of at least 3.0x. For a description of the treatment of the stock option in the event of an initial public offering or change in control, please see the description below under the heading “- Potential Payments Upon Termination or Change in Control - Accelerated Vesting of Stock Options; Option to Repurchase Stock.” As of the same date, none of our named executive officers’ Tranche B and C stock options had vested.
|
(3)
|
Mr. Howell had not been granted any stock options as of December 30, 2018.
|
Name
|
|
|
Resignation with Good Reason
|
|
Termination Without Cause
|
|
Terminated Without Cause or Resignation with Good Reason Following a Change in Control
|
|
|
|
($)
|
|
($)
|
|
($)
|
Thomas Leverton:
|
|
|
|
|
|
|
|
• Salary
|
|
|
550,000
|
|
550,000
|
|
550,000
|
• Non-Equity Incentive Plan Compensation
|
|
|
300,728
|
|
300,728
|
|
300,728
|
• Accelerated payment of the Converted Award
(1)
|
|
|
—
|
|
—
|
|
32,142
|
Totals
|
|
|
850,728
|
|
850,728
|
|
882,870
|
|
|
|
|
|
|
|
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J. Roger Cardinale
|
|
|
|
|
|
|
|
• Salary
|
|
|
485,000
|
|
485,000
|
|
485,000
|
• Non-Equity Incentive Plan Compensation
|
|
|
260,337
|
|
260,337
|
|
260,337
|
• Accelerated payment of the Converted Award
(1)
|
|
|
—
|
|
—
|
|
21,428
|
Totals
|
|
|
745,337
|
|
745,337
|
|
766,765
|
|
|
|
|
|
|
|
|
James Howell
|
|
|
|
|
|
|
|
• Salary
|
|
|
400,000
|
|
400,000
|
|
400,000
|
• Non-Equity Incentive Plan Compensation
|
|
|
121,532
|
|
121,532
|
|
121,532
|
• Accelerated vesting of unvested Tranche A stock options
(2)
|
|
|
n/a
|
|
n/a
|
|
n/a
|
Totals
|
|
|
521,532
|
|
521,532
|
|
521,532
|
(1)
|
Subject to the continued employment of Messrs. Leverton and Cardinale, as applicable, any portion of the Converted Award (
i.e.
, the spread value of Tranche A stock options in a change in control) is payable on the six-month anniversary of such transaction. If, however, the employment of Mr. Leverton or Mr. Cardinale, as applicable, is terminated without cause or due to a resignation with good reason prior to such date, such named executive officer would be eligible to accelerated payment of the Converted Award.
|
(2)
|
As of December 30, 2018, Mr. Howell had not been granted any stock options.
|
Name
(1)
|
|
Fees Earned or Paid in Cash
|
|
Stock Awards
|
|
Option Awards
|
|
All Other Compensation
|
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Total
|
|||||
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($)
(6)
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($)
|
|
($)
|
|
($)
|
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($)
|
|||||
Lance A. Milken
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
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|
Michael Diverio
(3)
|
|
—
|
|
|
—
|
|
|
—
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|
|
—
|
|
|
—
|
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Allen R. Weiss
(3)
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|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
Andrew S. Jhawar
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Naveen R. Shahani
(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Mr. Leverton has been excluded from this table because his compensation is fully reflected in the Summary Compensation Table for executive officers.
|
(2)
|
Mr. Milken, who resigned as a director effective December 21, 2018, was an employee of Apollo through the date of his resignation and was therefore not awarded any compensation for his Board of Directors and committee service.
|
(3)
|
During Fiscal 2018, Mr. Diverio, who resigned as a director effective February 19, 2019, was an employees of Apollo and was not awarded any compensation for his board of directors and committee service. The Company is only compensating Mr. Weiss, the sole independent director of the board of directors, for his board of directors and committee service.
|
(4)
|
Mr. Jhawar was appointed to the Board to serve as Chairman of the Board, effective as of December 21, 2018. In addition, the Board also appointed Mr. Jhawar as Chairman of the Audit and Compensation Committees of the Board. Mr. Jhawar was an employee of Apollo during the period from December 21, 2018 through December 30, 2018 and was not awarded any compensation for his board of directors and committee service.
|
(5)
|
Mr. Shahani was appointed to the Board effective as of February 19, 2019.
|
(6)
|
This column reports the amount of cash compensation earned in 2018 for Board of Directors and committee service.
|
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Financial Statements.
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Financial Statement Schedules.
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Exhibits.
|
|
The exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index, which Exhibit Index is incorporated in this Annual Report on Form 10-K by reference.
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Dated: April 29, 2019
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CEC Entertainment, Inc.
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/s/ Thomas Leverton
|
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Thomas Leverton
|
|
|
Chief Executive Officer and Director
|
10.3
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10.4
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10.5
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10.6
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10.7
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10.8
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10.9
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10.10
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10.11
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10.12
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10.13
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10.14
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21.1
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24.1
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31.1
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31.2
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31.3*
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31.4*
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32.1
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32.2
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101.INS
|
|
XBRL Instance Document (incorporated by reference to Exhibit 101.1INS to the Company’s Annual Report on Form 10-K (File No. 001-13687) as filed with the Commission on March 12, 2019)
|
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101.SCH
|
|
XBRL Taxonomy Extension Schema Document (incorporated by reference to Exhibit 101.1SCH to the Company’s Annual Report on Form 10-K (File No. 001-13687) as filed with the Commission on March 12, 2019)
|
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101.CAL
|
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XBRL Taxonomy Extension Calculation Linkbase Document (incorporated by reference to Exhibit 101.1CAL to the Company’s Annual Report on Form 10-K (File No. 001-13687) as filed with the Commission on March 12, 2019)
|
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101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document (incorporated by reference to Exhibit 101.1DEF to the Company’s Annual Report on Form 10-K (File No. 001-13687) as filed with the Commission on March 12, 2019)
|
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101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document (incorporated by reference to Exhibit 101.1LAB to the Company’s Annual Report on Form 10-K (File No. 001-13687) as filed with the Commission on March 12, 2019)
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document (incorporated by reference to Exhibit 101.1PRE to the Company’s Annual Report on Form 10-K (File No. 001-13687) as filed with the Commission on March 12, 2019)
|
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