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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% | 53.98 | 0.00 | 01:00:00 |
ý
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QUARTERLY 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
|
Kansas
(State or other jurisdiction of
incorporation or organization)
|
|
48-0905805
(IRS Employer
Identification No.)
|
|
|
|
1707 Market Place Blvd
Irving, Texas
|
|
75063
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
|
|
|
|
Non-accelerated filer
|
ý
|
Smaller reporting company
|
¨
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|
|
|
|
Emerging growth company
|
¨
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Page
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|
|
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July 2,
2017 |
|
January 1,
2017 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
89,462
|
|
|
$
|
61,023
|
|
Restricted cash
|
|
115
|
|
|
268
|
|
||
Accounts receivable
|
|
16,785
|
|
|
20,495
|
|
||
Inventories
|
|
24,708
|
|
|
21,677
|
|
||
Prepaid expenses
|
|
21,734
|
|
|
21,498
|
|
||
Total current assets
|
|
152,804
|
|
|
124,961
|
|
||
Property and equipment, net
|
|
586,043
|
|
|
592,886
|
|
||
Goodwill
|
|
484,438
|
|
|
483,876
|
|
||
Intangible assets, net
|
|
482,192
|
|
|
484,083
|
|
||
Other noncurrent assets
|
|
21,703
|
|
|
24,306
|
|
||
Total assets
|
|
$
|
1,727,180
|
|
|
$
|
1,710,112
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
7,613
|
|
Capital lease obligations, current portion
|
|
549
|
|
|
467
|
|
||
Accounts payable
|
|
35,497
|
|
|
33,202
|
|
||
Accrued expenses
|
|
41,433
|
|
|
40,098
|
|
||
Unearned revenues
|
|
18,304
|
|
|
16,381
|
|
||
Accrued interest
|
|
8,128
|
|
|
8,155
|
|
||
Other current liabilities
|
|
4,559
|
|
|
4,275
|
|
||
Total current liabilities
|
|
116,070
|
|
|
110,191
|
|
||
Capital lease obligations, less current portion
|
|
13,304
|
|
|
13,602
|
|
||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
966,739
|
|
|
968,266
|
|
||
Deferred tax liability
|
|
182,581
|
|
|
186,290
|
|
||
Accrued insurance
|
|
7,284
|
|
|
9,183
|
|
||
Other noncurrent liabilities
|
|
221,576
|
|
|
216,575
|
|
||
Total liabilities
|
|
1,507,554
|
|
|
1,504,107
|
|
||
Stockholder’s equity:
|
|
|
|
|
||||
Common stock, $0.01 par value; authorized 1,000 shares; 200 shares issued as of July 2, 2017 and January 1, 2017
|
|
—
|
|
|
—
|
|
||
Capital in excess of par value
|
|
358,956
|
|
|
357,166
|
|
||
Accumulated deficit
|
|
(136,973
|
)
|
|
(148,265
|
)
|
||
Accumulated other comprehensive loss
|
|
(2,357
|
)
|
|
(2,896
|
)
|
||
Total stockholder’s equity
|
|
219,626
|
|
|
206,005
|
|
||
Total liabilities and stockholder’s equity
|
|
$
|
1,727,180
|
|
|
$
|
1,710,112
|
|
|
Three Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
REVENUES:
|
|
|
|
||||
Food and beverage sales
|
$
|
97,411
|
|
|
$
|
97,404
|
|
Entertainment and merchandise sales
|
109,724
|
|
|
114,657
|
|
||
Total company venue sales
|
207,135
|
|
|
212,061
|
|
||
Franchise fees and royalties
|
4,649
|
|
|
4,560
|
|
||
Total revenues
|
211,784
|
|
|
216,621
|
|
||
OPERATING COSTS AND EXPENSES:
|
|
|
|
||||
Company venue operating costs
:
|
|
|
|
||||
Cost of food and beverage (exclusive of items shown separately below)
|
22,823
|
|
|
24,673
|
|
||
Cost of entertainment and merchandise (exclusive of items shown separately below)
|
6,854
|
|
|
8,240
|
|
||
Total cost of food, beverage, entertainment and merchandise
|
29,677
|
|
|
32,913
|
|
||
Labor expenses
|
60,351
|
|
|
60,405
|
|
||
Depreciation and amortization
|
25,791
|
|
|
29,733
|
|
||
Rent expense
|
23,906
|
|
|
24,049
|
|
||
Other venue operating expenses
|
35,967
|
|
|
37,376
|
|
||
Total company venue operating costs
|
175,692
|
|
|
184,476
|
|
||
Other costs and expenses
:
|
|
|
|
||||
Advertising expense
|
12,237
|
|
|
12,162
|
|
||
General and administrative expenses
|
15,551
|
|
|
15,922
|
|
||
Transaction, severance and related litigation costs
|
490
|
|
|
434
|
|
||
Total operating costs and expenses
|
203,970
|
|
|
212,994
|
|
||
Operating income
|
7,814
|
|
|
3,627
|
|
||
Interest expense
|
17,061
|
|
|
17,121
|
|
||
Loss before income taxes
|
(9,247
|
)
|
|
(13,494
|
)
|
||
Income tax benefit
|
(3,317
|
)
|
|
(4,442
|
)
|
||
Net loss
|
$
|
(5,930
|
)
|
|
$
|
(9,052
|
)
|
|
Six Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
REVENUES:
|
|
|
|
||||
Food and beverage sales
|
$
|
221,830
|
|
|
$
|
219,607
|
|
Entertainment and merchandise sales
|
245,641
|
|
|
262,214
|
|
||
Total company venue sales
|
467,471
|
|
|
481,821
|
|
||
Franchise fees and royalties
|
9,272
|
|
|
9,118
|
|
||
Total revenues
|
476,743
|
|
|
490,939
|
|
||
OPERATING COSTS AND EXPENSES:
|
|
|
|
||||
Company venue operating costs
:
|
|
|
|
||||
Cost of food and beverage (exclusive of items shown separately below)
|
51,040
|
|
|
55,195
|
|
||
Cost of entertainment and merchandise (exclusive of items shown separately below)
|
15,341
|
|
|
16,989
|
|
||
Total cost of food, beverage, entertainment and merchandise
|
66,381
|
|
|
72,184
|
|
||
Labor expenses
|
126,738
|
|
|
129,448
|
|
||
Depreciation and amortization
|
52,203
|
|
|
57,362
|
|
||
Rent expense
|
47,225
|
|
|
48,199
|
|
||
Other venue operating expenses
|
72,716
|
|
|
73,387
|
|
||
Total company venue operating costs
|
365,263
|
|
|
380,580
|
|
||
Other costs and expenses
:
|
|
|
|
||||
Advertising expense
|
25,619
|
|
|
25,261
|
|
||
General and administrative expenses
|
32,815
|
|
|
33,939
|
|
||
Transaction, severance and related litigation costs
|
570
|
|
|
1,184
|
|
||
Total operating costs and expenses
|
424,267
|
|
|
440,964
|
|
||
Operating income
|
52,476
|
|
|
49,975
|
|
||
Interest expense
|
34,123
|
|
|
34,182
|
|
||
Income before income taxes
|
18,353
|
|
|
15,793
|
|
||
Income tax expense
|
7,061
|
|
|
6,930
|
|
||
Net income
|
$
|
11,292
|
|
|
$
|
8,863
|
|
|
Three Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
Net loss
|
$
|
(5,930
|
)
|
|
$
|
(9,052
|
)
|
Components of other comprehensive loss, net of tax
:
|
|
|
|
||||
Foreign currency translation adjustments
|
420
|
|
|
161
|
|
||
Comprehensive loss
|
$
|
(5,510
|
)
|
|
$
|
(8,891
|
)
|
|
Six Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
Net income
|
$
|
11,292
|
|
|
$
|
8,863
|
|
Components of other comprehensive income, net of tax
:
|
|
|
|
||||
Foreign currency translation adjustments
|
539
|
|
|
915
|
|
||
Comprehensive income
|
$
|
11,831
|
|
|
$
|
9,778
|
|
|
Six Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
11,292
|
|
|
$
|
8,863
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
55,928
|
|
|
60,282
|
|
||
Deferred income taxes
|
(3,589
|
)
|
|
(6,449
|
)
|
||
Stock-based compensation expense
|
336
|
|
|
337
|
|
||
Amortization of lease related liabilities
|
(237
|
)
|
|
23
|
|
||
Amortization of original issue discount and deferred debt financing costs
|
2,273
|
|
|
2,273
|
|
||
Loss on asset disposals, net
|
3,716
|
|
|
4,073
|
|
||
Non-cash rent expense
|
2,101
|
|
|
3,507
|
|
||
Other adjustments
|
9
|
|
|
172
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Restricted cash
|
153
|
|
|
(1,303
|
)
|
||
Accounts receivable
|
2,770
|
|
|
5,527
|
|
||
Inventories
|
(7,453
|
)
|
|
(3,645
|
)
|
||
Prepaid expenses
|
(2,587
|
)
|
|
(2,208
|
)
|
||
Accounts payable
|
8,031
|
|
|
(4,542
|
)
|
||
Accrued expenses
|
(3,090
|
)
|
|
1,763
|
|
||
Unearned revenues
|
2,905
|
|
|
713
|
|
||
Accrued interest
|
54
|
|
|
(868
|
)
|
||
Income taxes payable
|
2,933
|
|
|
7,803
|
|
||
Deferred landlord contributions
|
1,210
|
|
|
1,417
|
|
||
Net cash provided by operating activities
|
76,755
|
|
|
77,738
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
(47,045
|
)
|
|
(42,400
|
)
|
||
Development of internal use software
|
(2,075
|
)
|
|
(6,223
|
)
|
||
Proceeds from sale of property and equipment
|
237
|
|
|
318
|
|
||
Net cash used in investing activities
|
(48,883
|
)
|
|
(48,305
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Repayments on senior term loan
|
(3,800
|
)
|
|
(3,800
|
)
|
||
Repayments on note payable
|
(13
|
)
|
|
(24
|
)
|
||
Proceeds from sale leaseback transaction
|
4,073
|
|
|
—
|
|
||
Payments on capital lease obligations
|
(218
|
)
|
|
(204
|
)
|
||
Payments on sale leaseback obligations
|
(1,161
|
)
|
|
(956
|
)
|
||
Excess tax benefit realized from stock-based compensation
|
—
|
|
|
4
|
|
Return of capital
|
1,447
|
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
328
|
|
|
(4,980
|
)
|
||
Effect of foreign exchange rate changes on cash
|
239
|
|
|
484
|
|
||
Change in cash and cash equivalents
|
28,439
|
|
|
24,937
|
|
||
Cash and cash equivalents at beginning of period
|
61,023
|
|
|
50,654
|
|
||
Cash and cash equivalents at end of period
|
$
|
89,462
|
|
|
$
|
75,591
|
|
|
|
|
|
||||
|
|
|
|
||||
|
Six Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid
|
$
|
31,861
|
|
|
$
|
32,960
|
|
Income taxes paid, net
|
$
|
7,716
|
|
|
$
|
5,572
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
||||
Accrued construction costs
|
$
|
2,214
|
|
|
$
|
1,436
|
|
|
Weighted Average Life (Years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
|
|
(in thousands)
|
||||||||||
Chuck E. Cheese's tradename
|
Indefinite
|
|
$
|
400,000
|
|
|
|
|
$
|
400,000
|
|
||
Peter Piper Pizza tradename
|
Indefinite
|
|
26,700
|
|
|
|
|
26,700
|
|
||||
Favorable lease agreements
(1)
|
10
|
|
14,880
|
|
|
(6,516
|
)
|
|
8,364
|
|
|||
Franchise agreements
|
25
|
|
53,300
|
|
|
(6,172
|
)
|
|
47,128
|
|
|||
|
|
|
$
|
494,880
|
|
|
$
|
(12,688
|
)
|
|
$
|
482,192
|
|
(1)
|
In connection with the Merger, as defined in Note 10 “Consolidating Guarantor Financial Information”, and the acquisition of Peter Piper Pizza in October 2014, we also recorded unfavorable lease liabilities of
$10.2 million
and
$3.9 million
, respectively, which are included in “Other current liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets. Such amounts are being amortized over a weighted average life of
10 years
, and are included in “Rent expense” in our Consolidated Statements of Earnings.
|
|
July 2, 2017
|
|
January 1, 2017
|
||||
|
(in thousands)
|
||||||
Trade and other amounts payable
|
$
|
26,676
|
|
|
$
|
24,615
|
|
Book overdraft
|
8,821
|
|
|
8,587
|
|
||
Accounts payable
|
$
|
35,497
|
|
|
$
|
33,202
|
|
|
July 2,
2017 |
|
January 1,
2017 |
||||
|
(in thousands)
|
||||||
Term loan facility
|
$
|
735,300
|
|
|
$
|
739,100
|
|
Senior notes
|
255,000
|
|
|
255,000
|
|
||
Note payable
|
—
|
|
|
13
|
|
||
Total debt outstanding
|
990,300
|
|
|
994,113
|
|
||
Less:
|
|
|
|
||||
Unamortized original issue discount
|
(1,965
|
)
|
|
(2,235
|
)
|
||
Deferred financing costs, net
|
(13,996
|
)
|
|
(15,999
|
)
|
||
Current portion
|
(7,600
|
)
|
|
(7,613
|
)
|
||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
$
|
966,739
|
|
|
$
|
968,266
|
|
|
Three Months Ended
|
||||||
|
July 2, 2017
|
|
July 3, 2016
|
||||
|
(in thousands)
|
||||||
Term loan facility
(1)
|
$
|
7,619
|
|
|
$
|
7,500
|
|
Senior notes
|
5,083
|
|
|
5,157
|
|
||
Capital lease obligations
|
414
|
|
|
439
|
|
||
Sale leaseback obligations
|
2,663
|
|
|
2,636
|
|
||
Amortization of debt issuance costs
|
1,001
|
|
|
1,001
|
|
||
Other
|
281
|
|
|
388
|
|
||
Total interest expense
|
$
|
17,061
|
|
|
$
|
17,121
|
|
|
Six Months Ended
|
||||||
|
July 2, 2017
|
|
July 3, 2016
|
||||
|
(in thousands)
|
||||||
Term loan facility
(1)
|
$
|
15,226
|
|
|
$
|
15,657
|
|
Senior notes
|
10,165
|
|
|
10,313
|
|
||
Capital lease obligations
|
831
|
|
|
879
|
|
||
Sale leaseback obligations
|
5,302
|
|
|
5,394
|
|
||
Amortization of debt issuance costs
|
2,003
|
|
|
2,002
|
|
||
Other
|
596
|
|
|
(63
|
)
|
||
Total interest expense
|
$
|
34,123
|
|
|
$
|
34,182
|
|
|
|
July 2, 2017
|
|
|
January 1, 2017
|
||||||||||||
|
|
Carrying Amount
(1)
|
|
Estimated Fair Value
|
|
|
Carrying Amount
(1)
|
|
Estimated Fair Value
|
||||||||
|
|
(in thousands)
|
|||||||||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Bank indebtedness and other long-term debt:
|
|
|
|
|
|
|
|
|
|
||||||||
Current portion
|
|
$
|
7,600
|
|
|
$
|
7,572
|
|
|
|
$
|
7,613
|
|
|
$
|
7,623
|
|
Long-term portion
(2)
|
|
980,735
|
|
|
991,477
|
|
|
|
984,265
|
|
|
993,311
|
|
||||
Bank indebtedness and other long-term debt:
|
|
$
|
988,335
|
|
|
$
|
999,049
|
|
|
|
$
|
991,878
|
|
|
$
|
1,000,934
|
|
|
|
Successor
|
||||||
|
|
July 2,
2017 |
|
January 1,
2017 |
||||
|
|
(in thousands)
|
||||||
Sale leaseback obligations, less current portion
(1)
|
|
$
|
179,460
|
|
|
$
|
176,831
|
|
Deferred rent liability
|
|
24,574
|
|
|
21,784
|
|
||
Deferred landlord contributions
|
|
6,352
|
|
|
5,702
|
|
||
Long-term portion of unfavorable leases
|
|
6,380
|
|
|
7,308
|
|
||
Other
|
|
4,810
|
|
|
4,950
|
|
||
Total other noncurrent liabilities
|
|
$
|
221,576
|
|
|
$
|
216,575
|
|
(1)
|
See Note 8 “Sale Leaseback Transaction” for further discussion on the sale leaseback transaction completed in the
six months ended
July 2, 2017
.
|
|
Three Months Ended
|
||||||
|
July 2, 2017
|
|
July 3, 2016
|
||||
|
(in thousands, except %)
|
||||||
Federal and state income taxes
|
$
|
(3,420
|
)
|
|
$
|
(4,551
|
)
|
Foreign income taxes
(1)
|
103
|
|
|
109
|
|
||
Income tax expense (benefit)
|
$
|
(3,317
|
)
|
|
$
|
(4,442
|
)
|
|
Six Months Ended
|
||||||
|
July 2, 2017
|
|
July 3, 2016
|
||||
|
(in thousands, except %)
|
||||||
Federal and state income taxes
|
$
|
6,678
|
|
|
$
|
6,712
|
|
Foreign income taxes
(1)
|
383
|
|
|
218
|
|
||
Income tax expense (benefit)
|
$
|
7,061
|
|
|
$
|
6,930
|
|
|
Stock Options
|
Weighted Average Exercise Price
(1)
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
|||
|
|
($ per share)
|
|
($ in thousands)
|
|||
Outstanding stock options, January 1, 2017
|
2,400,914
|
|
$8.74
|
|
|
||
Options Granted
|
53,771
|
|
$14.86
|
|
|
||
Options Forfeited
|
(26,165
|
)
|
$12.23
|
|
|
||
Outstanding stock options, July 2, 2017
|
2,428,520
|
|
$8.94
|
6.8
|
$
|
20,544
|
|
Stock options expected to vest, July 2, 2017
|
1,800,778
|
|
$8.52
|
6.8
|
$
|
15,998
|
|
Exercisable stock options, July 2, 2017
|
427,655
|
|
$8.42
|
6.8
|
$
|
3,840
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
|
(in thousands)
|
||||||
Stock-based compensation costs
|
$
|
189
|
|
|
$
|
206
|
|
Portion capitalized as property and equipment
(1)
|
(3
|
)
|
|
(4
|
)
|
||
Stock-based compensation expense recognized
|
$
|
186
|
|
|
$
|
202
|
|
|
Six Months Ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
|
(in thousands)
|
||||||
Stock-based compensation costs
|
$
|
343
|
|
|
$
|
344
|
|
Portion capitalized as property and equipment
(1)
|
(7
|
)
|
|
(7
|
)
|
||
Stock-based compensation expense recognized
|
$
|
336
|
|
|
$
|
337
|
|
Excess tax benefit recognized from exercise of stock-based compensation awards
|
$
|
—
|
|
|
$
|
4
|
|
(1)
|
We capitalize the portion of stock-based compensation costs related to our design, construction, facilities and legal departments that are directly attributable to our venue development projects, such as the design and construction of a new venue and the remodeling and expansion of our existing venues. Capitalized stock-based compensation costs attributable to our venue development projects are included in “Property and equipment, net” in the Consolidated Balance Sheets.
|
|
|
Common Stock
|
|
Capital In
Excess of Par Value |
|
Accumulated Deficit
|
|
Accumulated
Other Comprehensive Loss |
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
|
|
(in thousands, except share information)
|
|||||||||||||||||||||
Balance at January 1, 2017
|
|
200
|
|
|
$
|
—
|
|
|
$
|
357,166
|
|
|
$
|
(148,265
|
)
|
|
$
|
(2,896
|
)
|
|
$
|
206,005
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,292
|
|
|
—
|
|
|
11,292
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
539
|
|
|
539
|
|
|||||
Stock-based compensation costs
|
|
—
|
|
|
—
|
|
|
343
|
|
|
—
|
|
|
—
|
|
|
343
|
|
|||||
Return of capital
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|||||
Balance July 2, 2017
|
|
200
|
|
|
$
|
—
|
|
|
$
|
358,956
|
|
|
$
|
(136,973
|
)
|
|
$
|
(2,357
|
)
|
|
$
|
219,626
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
As of July 2, 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
77,470
|
|
|
$
|
5,334
|
|
|
$
|
6,658
|
|
|
$
|
—
|
|
|
$
|
89,462
|
|
Restricted cash
|
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|||||
Accounts receivable
|
|
13,864
|
|
|
2,257
|
|
|
4,082
|
|
|
(3,418
|
)
|
|
16,785
|
|
|||||
Inventories
|
|
20,887
|
|
|
3,542
|
|
|
279
|
|
|
—
|
|
|
24,708
|
|
|||||
Prepaid expenses
|
|
13,056
|
|
|
7,529
|
|
|
1,149
|
|
|
—
|
|
|
21,734
|
|
|||||
Total current assets
|
|
125,277
|
|
|
18,662
|
|
|
12,283
|
|
|
(3,418
|
)
|
|
152,804
|
|
|||||
Property and equipment, net
|
|
521,750
|
|
|
57,705
|
|
|
6,588
|
|
|
—
|
|
|
586,043
|
|
|||||
Goodwill
|
|
433,024
|
|
|
51,414
|
|
|
—
|
|
|
—
|
|
|
484,438
|
|
|||||
Intangible assets, net
|
|
17,922
|
|
|
464,270
|
|
|
—
|
|
|
—
|
|
|
482,192
|
|
|||||
Intercompany
|
|
101,632
|
|
|
—
|
|
|
—
|
|
|
(101,632
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
475,669
|
|
|
—
|
|
|
—
|
|
|
(475,669
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
8,112
|
|
|
13,295
|
|
|
296
|
|
|
—
|
|
|
21,703
|
|
|||||
Total assets
|
|
$
|
1,683,386
|
|
|
$
|
605,346
|
|
|
$
|
19,167
|
|
|
$
|
(580,719
|
)
|
|
$
|
1,727,180
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,600
|
|
Capital lease obligations, current portion
|
|
539
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
549
|
|
|||||
Accounts payable and accrued expenses
|
|
96,018
|
|
|
3,594
|
|
|
3,750
|
|
|
—
|
|
|
103,362
|
|
|||||
Other current liabilities
|
|
4,048
|
|
|
511
|
|
|
—
|
|
|
—
|
|
|
4,559
|
|
|||||
Total current liabilities
|
|
108,205
|
|
|
4,105
|
|
|
3,760
|
|
|
—
|
|
|
116,070
|
|
|||||
Capital lease obligations, less current portion
|
|
13,249
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
13,304
|
|
|||||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
966,739
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
966,739
|
|
|||||
Deferred tax liability
|
|
160,581
|
|
|
24,241
|
|
|
(2,241
|
)
|
|
—
|
|
|
182,581
|
|
|||||
Intercompany
|
|
—
|
|
|
79,026
|
|
|
26,024
|
|
|
(105,050
|
)
|
|
—
|
|
|||||
Other noncurrent liabilities
|
|
214,986
|
|
|
13,497
|
|
|
377
|
|
|
—
|
|
|
228,860
|
|
|||||
Total liabilities
|
|
1,463,760
|
|
|
120,869
|
|
|
27,975
|
|
|
(105,050
|
)
|
|
1,507,554
|
|
|||||
Stockholder's equity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital in excess of par value
|
|
358,956
|
|
|
466,114
|
|
|
3,241
|
|
|
(469,355
|
)
|
|
358,956
|
|
|||||
Retained earnings (deficit)
|
|
(136,973
|
)
|
|
18,363
|
|
|
(9,692
|
)
|
|
(8,671
|
)
|
|
(136,973
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
|
(2,357
|
)
|
|
—
|
|
|
(2,357
|
)
|
|
2,357
|
|
|
(2,357
|
)
|
|||||
Total stockholder's equity
|
|
219,626
|
|
|
484,477
|
|
|
(8,808
|
)
|
|
(475,669
|
)
|
|
219,626
|
|
|||||
Total liabilities and stockholder's equity
|
|
$
|
1,683,386
|
|
|
$
|
605,346
|
|
|
$
|
19,167
|
|
|
$
|
(580,719
|
)
|
|
$
|
1,727,180
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
As of January 1, 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
53,088
|
|
|
$
|
1,158
|
|
|
$
|
6,777
|
|
|
$
|
—
|
|
|
$
|
61,023
|
|
Restricted cash
|
|
—
|
|
|
—
|
|
|
268
|
|
|
—
|
|
|
268
|
|
|||||
Accounts receivable
|
|
16,922
|
|
|
3,220
|
|
|
2,455
|
|
|
(2,102
|
)
|
|
20,495
|
|
|||||
Inventories
|
|
18,255
|
|
|
3,151
|
|
|
271
|
|
|
—
|
|
|
21,677
|
|
|||||
Prepaid expenses
|
|
14,294
|
|
|
6,077
|
|
|
1,127
|
|
|
—
|
|
|
21,498
|
|
|||||
Total current assets
|
|
102,559
|
|
|
13,606
|
|
|
10,898
|
|
|
(2,102
|
)
|
|
124,961
|
|
|||||
Property and equipment, net
|
|
538,195
|
|
|
47,906
|
|
|
6,785
|
|
|
—
|
|
|
592,886
|
|
|||||
Goodwill
|
|
432,462
|
|
|
51,414
|
|
|
—
|
|
|
—
|
|
|
483,876
|
|
|||||
Intangible assets, net
|
|
19,157
|
|
|
464,926
|
|
|
—
|
|
|
—
|
|
|
484,083
|
|
|||||
Intercompany
|
|
127,107
|
|
|
317
|
|
|
—
|
|
|
(127,424
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
436,483
|
|
|
—
|
|
|
—
|
|
|
(436,483
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
6,888
|
|
|
17,025
|
|
|
393
|
|
|
—
|
|
|
24,306
|
|
|||||
Total assets
|
|
$
|
1,662,851
|
|
|
$
|
595,194
|
|
|
$
|
18,076
|
|
|
$
|
(566,009
|
)
|
|
$
|
1,710,112
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,613
|
|
Capital lease obligations, current portion
|
|
460
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
467
|
|
|||||
Accounts payable and accrued expenses
|
|
84,207
|
|
|
11,445
|
|
|
2,184
|
|
|
—
|
|
|
97,836
|
|
|||||
Other current liabilities
|
|
3,764
|
|
|
511
|
|
|
—
|
|
|
—
|
|
|
4,275
|
|
|||||
Total current liabilities
|
|
96,031
|
|
|
11,969
|
|
|
2,191
|
|
|
—
|
|
|
110,191
|
|
|||||
Capital lease obligations, less current portion
|
|
13,542
|
|
|
—
|
|
|
60
|
|
|
—
|
|
|
13,602
|
|
|||||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
968,266
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
968,266
|
|
|||||
Deferred tax liability
|
|
166,064
|
|
|
21,234
|
|
|
(1,008
|
)
|
|
—
|
|
|
186,290
|
|
|||||
Intercompany
|
|
—
|
|
|
106,131
|
|
|
23,395
|
|
|
(129,526
|
)
|
|
—
|
|
|||||
Other noncurrent liabilities
|
|
212,943
|
|
|
12,484
|
|
|
331
|
|
|
—
|
|
|
225,758
|
|
|||||
Total liabilities
|
|
1,456,846
|
|
|
151,818
|
|
|
24,969
|
|
|
(129,526
|
)
|
|
1,504,107
|
|
|||||
Stockholder's equity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital in excess of par value
|
|
357,166
|
|
|
466,114
|
|
|
3,241
|
|
|
(469,355
|
)
|
|
357,166
|
|
|||||
Retained earnings (deficit)
|
|
(148,265
|
)
|
|
(22,738
|
)
|
|
(7,238
|
)
|
|
29,976
|
|
|
(148,265
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
|
(2,896
|
)
|
|
—
|
|
|
(2,896
|
)
|
|
2,896
|
|
|
(2,896
|
)
|
|||||
Total stockholder's equity
|
|
206,005
|
|
|
443,376
|
|
|
(6,893
|
)
|
|
(436,483
|
)
|
|
206,005
|
|
|||||
Total liabilities and stockholder's equity
|
|
$
|
1,662,851
|
|
|
$
|
595,194
|
|
|
$
|
18,076
|
|
|
$
|
(566,009
|
)
|
|
$
|
1,710,112
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
For the Three Months Ended July 2, 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
||||||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
82,807
|
|
|
$
|
13,324
|
|
|
$
|
1,280
|
|
|
$
|
—
|
|
|
$
|
97,411
|
|
Entertainment and merchandise sales
|
|
88,857
|
|
|
18,811
|
|
|
2,056
|
|
|
—
|
|
|
109,724
|
|
|||||
Total company venue sales
|
|
171,664
|
|
|
32,135
|
|
|
3,336
|
|
|
—
|
|
|
207,135
|
|
|||||
Franchise fees and royalties
|
|
463
|
|
|
4,186
|
|
|
—
|
|
|
—
|
|
|
4,649
|
|
|||||
International Association assessments and other fees
|
|
375
|
|
|
10,544
|
|
|
8,098
|
|
|
(19,017
|
)
|
|
—
|
|
|||||
Total revenues
|
|
172,502
|
|
|
46,865
|
|
|
11,434
|
|
|
(19,017
|
)
|
|
211,784
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
18,936
|
|
|
3,464
|
|
|
423
|
|
|
—
|
|
|
22,823
|
|
|||||
Cost of entertainment and merchandise
|
|
6,329
|
|
|
389
|
|
|
136
|
|
|
—
|
|
|
6,854
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
25,265
|
|
|
3,853
|
|
|
559
|
|
|
—
|
|
|
29,677
|
|
|||||
Labor expenses
|
|
54,654
|
|
|
4,541
|
|
|
1,156
|
|
|
—
|
|
|
60,351
|
|
|||||
Depreciation and amortization
|
|
24,394
|
|
|
962
|
|
|
435
|
|
|
—
|
|
|
25,791
|
|
|||||
Rent expense
|
|
21,825
|
|
|
1,552
|
|
|
529
|
|
|
—
|
|
|
23,906
|
|
|||||
Other venue operating expenses
|
|
42,664
|
|
|
3,259
|
|
|
990
|
|
|
(10,946
|
)
|
|
35,967
|
|
|||||
Total company venue operating costs
|
|
168,802
|
|
|
14,167
|
|
|
3,669
|
|
|
(10,946
|
)
|
|
175,692
|
|
|||||
Advertising expense
|
|
8,315
|
|
|
1,413
|
|
|
10,580
|
|
|
(8,071
|
)
|
|
12,237
|
|
|||||
General and administrative expenses
|
|
4,726
|
|
|
10,707
|
|
|
118
|
|
|
—
|
|
|
15,551
|
|
|||||
Transaction, severance and related litigation costs
|
|
490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
490
|
|
|||||
Total operating costs and expenses
|
|
182,333
|
|
|
26,287
|
|
|
14,367
|
|
|
(19,017
|
)
|
|
203,970
|
|
|||||
Operating income (loss)
|
|
(9,831
|
)
|
|
20,578
|
|
|
(2,933
|
)
|
|
—
|
|
|
7,814
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
27,993
|
|
|
—
|
|
|
—
|
|
|
(27,993
|
)
|
|
—
|
|
|||||
Interest expense
|
|
15,921
|
|
|
975
|
|
|
165
|
|
|
—
|
|
|
17,061
|
|
|||||
Income (loss) before income taxes
|
|
2,241
|
|
|
19,603
|
|
|
(3,098
|
)
|
|
(27,993
|
)
|
|
(9,247
|
)
|
|||||
Income tax expense (benefit)
|
|
8,171
|
|
|
(10,515
|
)
|
|
(973
|
)
|
|
—
|
|
|
(3,317
|
)
|
|||||
Net income (loss)
|
|
$
|
(5,930
|
)
|
|
$
|
30,118
|
|
|
$
|
(2,125
|
)
|
|
$
|
(27,993
|
)
|
|
$
|
(5,930
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
420
|
|
|
—
|
|
|
420
|
|
|
(420
|
)
|
|
420
|
|
|||||
Comprehensive income (loss)
|
|
$
|
(5,510
|
)
|
|
$
|
30,118
|
|
|
$
|
(1,705
|
)
|
|
$
|
(28,413
|
)
|
|
$
|
(5,510
|
)
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
For the Three Months Ended July 3, 2016
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
||||||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
84,011
|
|
|
$
|
12,099
|
|
|
$
|
1,294
|
|
|
$
|
—
|
|
|
$
|
97,404
|
|
Entertainment and merchandise sales
|
|
106,678
|
|
|
5,850
|
|
|
2,129
|
|
|
—
|
|
|
114,657
|
|
|||||
Total company venue sales
|
|
190,689
|
|
|
17,949
|
|
|
3,423
|
|
|
—
|
|
|
212,061
|
|
|||||
Franchise fees and royalties
|
|
672
|
|
|
3,888
|
|
|
—
|
|
|
—
|
|
|
4,560
|
|
|||||
International Association assessments and other fees
|
|
207
|
|
|
615
|
|
|
8,357
|
|
|
(9,179
|
)
|
|
—
|
|
|||||
Total revenues
|
|
191,568
|
|
|
22,452
|
|
|
11,780
|
|
|
(9,179
|
)
|
|
216,621
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
21,014
|
|
|
3,140
|
|
|
519
|
|
|
—
|
|
|
24,673
|
|
|||||
Cost of entertainment and merchandise
|
|
7,639
|
|
|
457
|
|
|
144
|
|
|
—
|
|
|
8,240
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
28,653
|
|
|
3,597
|
|
|
663
|
|
|
—
|
|
|
32,913
|
|
|||||
Labor expenses
|
|
55,375
|
|
|
3,803
|
|
|
1,227
|
|
|
—
|
|
|
60,405
|
|
|||||
Depreciation and amortization
|
|
28,596
|
|
|
628
|
|
|
509
|
|
|
—
|
|
|
29,733
|
|
|||||
Rent expense
|
|
22,110
|
|
|
1,379
|
|
|
560
|
|
|
—
|
|
|
24,049
|
|
|||||
Other venue operating expenses
|
|
34,876
|
|
|
2,369
|
|
|
979
|
|
|
(848
|
)
|
|
37,376
|
|
|||||
Total company venue operating costs
|
|
169,610
|
|
|
11,776
|
|
|
3,938
|
|
|
(848
|
)
|
|
184,476
|
|
|||||
Advertising expense
|
|
8,801
|
|
|
1,048
|
|
|
10,644
|
|
|
(8,331
|
)
|
|
12,162
|
|
|||||
General and administrative expenses
|
|
5,746
|
|
|
10,067
|
|
|
109
|
|
|
—
|
|
|
15,922
|
|
|||||
Transaction, severance and related litigation costs
|
|
427
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
434
|
|
|||||
Total operating costs and expenses
|
|
184,584
|
|
|
22,898
|
|
|
14,691
|
|
|
(9,179
|
)
|
|
212,994
|
|
|||||
Operating income (loss)
|
|
6,984
|
|
|
(446
|
)
|
|
(2,911
|
)
|
|
—
|
|
|
3,627
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
(4,683
|
)
|
|
—
|
|
|
—
|
|
|
4,683
|
|
|
—
|
|
|||||
Interest expense
|
|
15,479
|
|
|
1,536
|
|
|
106
|
|
|
—
|
|
|
17,121
|
|
|||||
Income (loss) before income taxes
|
|
(13,178
|
)
|
|
(1,982
|
)
|
|
(3,017
|
)
|
|
4,683
|
|
|
(13,494
|
)
|
|||||
Income tax expense (benefit)
|
|
(4,126
|
)
|
|
585
|
|
|
(901
|
)
|
|
—
|
|
|
(4,442
|
)
|
|||||
Net income (loss)
|
|
$
|
(9,052
|
)
|
|
$
|
(2,567
|
)
|
|
$
|
(2,116
|
)
|
|
$
|
4,683
|
|
|
$
|
(9,052
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
161
|
|
|
—
|
|
|
161
|
|
|
(161
|
)
|
|
161
|
|
|||||
Comprehensive income (loss)
|
|
$
|
(8,891
|
)
|
|
$
|
(2,567
|
)
|
|
$
|
(1,955
|
)
|
|
$
|
4,522
|
|
|
$
|
(8,891
|
)
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
For the Six Months Ended July 2, 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
190,998
|
|
|
$
|
27,725
|
|
|
$
|
3,107
|
|
|
$
|
—
|
|
|
$
|
221,830
|
|
Entertainment and merchandise sales
|
|
207,645
|
|
|
32,923
|
|
|
5,073
|
|
|
—
|
|
|
245,641
|
|
|||||
Total company venue sales
|
|
398,643
|
|
|
60,648
|
|
|
8,180
|
|
|
—
|
|
|
467,471
|
|
|||||
Franchise fees and royalties
|
|
904
|
|
|
8,368
|
|
|
—
|
|
|
—
|
|
|
9,272
|
|
|||||
International Association assessments and other fees
|
|
689
|
|
|
21,088
|
|
|
18,607
|
|
|
(40,384
|
)
|
|
—
|
|
|||||
Total revenues
|
|
400,236
|
|
|
90,104
|
|
|
26,787
|
|
|
(40,384
|
)
|
|
476,743
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
42,931
|
|
|
7,152
|
|
|
957
|
|
|
—
|
|
|
51,040
|
|
|||||
Cost of entertainment and merchandise
|
|
14,230
|
|
|
804
|
|
|
307
|
|
|
—
|
|
|
15,341
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
57,161
|
|
|
7,956
|
|
|
1,264
|
|
|
—
|
|
|
66,381
|
|
|||||
Labor expenses
|
|
114,837
|
|
|
9,379
|
|
|
2,522
|
|
|
—
|
|
|
126,738
|
|
|||||
Depreciation and amortization
|
|
49,374
|
|
|
1,882
|
|
|
947
|
|
|
—
|
|
|
52,203
|
|
|||||
Rent expense
|
|
43,104
|
|
|
3,053
|
|
|
1,068
|
|
|
—
|
|
|
47,225
|
|
|||||
Other venue operating expenses
|
|
85,680
|
|
|
6,545
|
|
|
2,295
|
|
|
(21,804
|
)
|
|
72,716
|
|
|||||
Total company venue operating costs
|
|
350,156
|
|
|
28,815
|
|
|
8,096
|
|
|
(21,804
|
)
|
|
365,263
|
|
|||||
Advertising expense
|
|
19,252
|
|
|
3,259
|
|
|
21,688
|
|
|
(18,580
|
)
|
|
25,619
|
|
|||||
General and administrative expenses
|
|
10,807
|
|
|
21,741
|
|
|
267
|
|
|
—
|
|
|
32,815
|
|
|||||
Transaction, severance and related litigation costs
|
|
570
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
570
|
|
|||||
Total operating costs and expenses
|
|
380,785
|
|
|
53,815
|
|
|
30,051
|
|
|
(40,384
|
)
|
|
424,267
|
|
|||||
Operating income (loss)
|
|
19,451
|
|
|
36,289
|
|
|
(3,264
|
)
|
|
—
|
|
|
52,476
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
38,647
|
|
|
—
|
|
|
—
|
|
|
(38,647
|
)
|
|
—
|
|
|||||
Interest expense (income)
|
|
31,828
|
|
|
1,992
|
|
|
303
|
|
|
—
|
|
|
34,123
|
|
|||||
Income (loss) before income taxes
|
|
26,270
|
|
|
34,297
|
|
|
(3,567
|
)
|
|
(38,647
|
)
|
|
18,353
|
|
|||||
Income tax expense (benefit)
|
|
14,978
|
|
|
(6,803
|
)
|
|
(1,114
|
)
|
|
—
|
|
|
7,061
|
|
|||||
Net income (loss)
|
|
$
|
11,292
|
|
|
$
|
41,100
|
|
|
$
|
(2,453
|
)
|
|
$
|
(38,647
|
)
|
|
$
|
11,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
539
|
|
|
—
|
|
|
539
|
|
|
(539
|
)
|
|
539
|
|
|||||
Comprehensive income (loss)
|
|
$
|
11,831
|
|
|
$
|
41,100
|
|
|
$
|
(1,914
|
)
|
|
$
|
(39,186
|
)
|
|
$
|
11,831
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
For the Six Months Ended July 3, 2016
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
191,834
|
|
|
$
|
24,888
|
|
|
$
|
2,885
|
|
|
$
|
—
|
|
|
$
|
219,607
|
|
Entertainment and merchandise sales
|
|
245,886
|
|
|
11,448
|
|
|
4,880
|
|
|
—
|
|
|
262,214
|
|
|||||
Total company venue sales
|
|
437,720
|
|
|
36,336
|
|
|
7,765
|
|
|
—
|
|
|
481,821
|
|
|||||
Franchise fees and royalties
|
|
1,268
|
|
|
7,850
|
|
|
|
|
|
—
|
|
|
9,118
|
|
|||||
International Association assessments and other fees
|
|
462
|
|
|
1,230
|
|
|
20,315
|
|
|
(22,007
|
)
|
|
—
|
|
|||||
Total revenues
|
|
439,450
|
|
|
45,416
|
|
|
28,080
|
|
|
(22,007
|
)
|
|
490,939
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
47,658
|
|
|
6,438
|
|
|
1,099
|
|
|
—
|
|
|
55,195
|
|
|||||
Cost of entertainment and merchandise
|
|
15,757
|
|
|
902
|
|
|
330
|
|
|
—
|
|
|
16,989
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
63,415
|
|
|
7,340
|
|
|
1,429
|
|
|
—
|
|
|
72,184
|
|
|||||
Labor expenses
|
|
119,109
|
|
|
7,802
|
|
|
2,537
|
|
|
—
|
|
|
129,448
|
|
|||||
Depreciation and amortization
|
|
55,158
|
|
|
1,235
|
|
|
969
|
|
|
—
|
|
|
57,362
|
|
|||||
Rent expense
|
|
44,367
|
|
|
2,712
|
|
|
1,120
|
|
|
—
|
|
|
48,199
|
|
|||||
Other venue operating expenses
|
|
68,639
|
|
|
4,536
|
|
|
1,930
|
|
|
(1,718
|
)
|
|
73,387
|
|
|||||
Total company venue operating costs
|
|
350,688
|
|
|
23,625
|
|
|
7,985
|
|
|
(1,718
|
)
|
|
380,580
|
|
|||||
Advertising expense
|
|
21,222
|
|
|
2,719
|
|
|
21,609
|
|
|
(20,289
|
)
|
|
25,261
|
|
|||||
General and administrative expenses
|
|
12,928
|
|
|
20,726
|
|
|
285
|
|
|
—
|
|
|
33,939
|
|
|||||
Transaction, severance and related litigation costs
|
|
1,129
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
1,184
|
|
|||||
Total operating costs and expenses
|
|
385,967
|
|
|
47,125
|
|
|
29,879
|
|
|
(22,007
|
)
|
|
440,964
|
|
|||||
Operating income (loss)
|
|
53,483
|
|
|
(1,709
|
)
|
|
(1,799
|
)
|
|
—
|
|
|
49,975
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
(5,795
|
)
|
|
—
|
|
|
—
|
|
|
5,795
|
|
|
—
|
|
|||||
Interest expense
|
|
32,081
|
|
|
1,887
|
|
|
214
|
|
|
—
|
|
|
34,182
|
|
|||||
Income (loss) before income taxes
|
|
15,607
|
|
|
(3,596
|
)
|
|
(2,013
|
)
|
|
5,795
|
|
|
15,793
|
|
|||||
Income tax expense (benefit)
|
|
6,744
|
|
|
751
|
|
|
(565
|
)
|
|
—
|
|
|
6,930
|
|
|||||
Net income (loss)
|
|
$
|
8,863
|
|
|
$
|
(4,347
|
)
|
|
$
|
(1,448
|
)
|
|
$
|
5,795
|
|
|
$
|
8,863
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
915
|
|
|
—
|
|
|
915
|
|
|
(915
|
)
|
|
915
|
|
|||||
Comprehensive income (loss)
|
|
$
|
9,778
|
|
|
$
|
(4,347
|
)
|
|
$
|
(533
|
)
|
|
$
|
4,880
|
|
|
$
|
9,778
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Cash Flows
|
||||||||||||||||||||
For the Six Months Ended July 2, 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows provided by (used in) operating activities:
|
|
$
|
55,867
|
|
|
$
|
20,594
|
|
|
$
|
294
|
|
|
$
|
—
|
|
|
$
|
76,755
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
|
(32,066
|
)
|
|
(14,330
|
)
|
|
(649
|
)
|
|
—
|
|
|
(47,045
|
)
|
|||||
Development of internal use software
|
|
—
|
|
|
(2,075
|
)
|
|
—
|
|
|
—
|
|
|
(2,075
|
)
|
|||||
Proceeds from sale of property and equipment
|
|
237
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
237
|
|
|||||
Cash flows provided by (used in) investing activities
|
|
(31,829
|
)
|
|
(16,405
|
)
|
|
(649
|
)
|
|
—
|
|
|
(48,883
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments on senior term loan
|
|
(3,800
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,800
|
)
|
|||||
Repayments on note payable
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||||
Proceeds from sale-leaseback transaction
|
|
4,073
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,073
|
|
|||||
Payments on capital lease obligations
|
|
(215
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(218
|
)
|
|||||
Payments on sale leaseback transactions
|
|
(1,161
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,161
|
)
|
|||||
Return of capital
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|||||
Cash flows provided by (used in) financing activities
|
|
344
|
|
|
(13
|
)
|
|
(3
|
)
|
|
—
|
|
|
328
|
|
|||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
239
|
|
|
—
|
|
|
239
|
|
|||||
Change in cash and cash equivalents
|
|
24,382
|
|
|
4,176
|
|
|
(119
|
)
|
|
—
|
|
|
28,439
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
53,088
|
|
|
1,158
|
|
|
6,777
|
|
|
—
|
|
|
61,023
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
77,470
|
|
|
$
|
5,334
|
|
|
$
|
6,658
|
|
|
$
|
—
|
|
|
$
|
89,462
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||||||
Consolidating Statement of Cash Flows
|
||||||||||||||||||||||||
For the Six Months Ended July 3, 2016
|
||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||||||
Cash flows provided by (used in) operating activities:
|
|
$
|
66,349
|
|
|
$
|
11,899
|
|
|
$
|
(510
|
)
|
|
$
|
—
|
|
|
$
|
77,738
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Purchases of property and equipment
|
|
(31,814
|
)
|
|
(10,459
|
)
|
|
(127
|
)
|
|
—
|
|
|
(42,400
|
)
|
|||||||||
Development of internal use software
|
|
(3,439
|
)
|
|
(2,784
|
)
|
|
—
|
|
|
—
|
|
|
(6,223
|
)
|
|||||||||
Proceeds from the sale of property and equipment
|
|
—
|
|
|
318
|
|
|
—
|
|
|
—
|
|
|
318
|
|
|||||||||
Cash flows provided by (used in) investing activities
|
|
(35,253
|
)
|
—
|
|
(12,925
|
)
|
—
|
|
(127
|
)
|
—
|
|
—
|
|
—
|
|
(48,305
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Repayments on senior term loan
|
|
(3,800
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,800
|
)
|
|||||||||
Repayments on note payable
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|||||||||
Payments on capital lease obligations
|
|
(202
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(204
|
)
|
|||||||||
Payments on sale leaseback transactions
|
|
(956
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(956
|
)
|
|||||||||
Excess tax benefit realized from stock-based compensation
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||||||
Cash flows provided by (used in) financing activities
|
|
(4,954
|
)
|
—
|
|
(24
|
)
|
—
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
(4,980
|
)
|
|||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
484
|
|
|
—
|
|
|
484
|
|
|||||||||
Change in cash and cash equivalents
|
|
26,142
|
|
—
|
|
(1,050
|
)
|
—
|
|
(155
|
)
|
—
|
|
—
|
|
—
|
|
24,937
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
42,235
|
|
|
1,797
|
|
|
6,622
|
|
|
—
|
|
|
50,654
|
|
|||||||||
Cash and cash equivalents at end of period
|
|
$
|
68,377
|
|
|
$
|
747
|
|
|
$
|
6,467
|
|
|
$
|
—
|
|
|
$
|
75,591
|
|
•
|
Executive Summary;
|
•
|
Results of Operations;
|
•
|
Financial Condition, Liquidity and Capital Resources;
|
•
|
Off-Balance Sheet Arrangements and Contractual Obligations;
|
•
|
Critical Accounting Policies and Estimates;
|
•
|
Recently Issued Accounting Guidance;
|
•
|
Non-GAAP Financial Measures; and
|
•
|
Cautionary Statement Regarding Forward-Looking Statements.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
|
July 2,
2017 |
|
July 3,
2016 |
|
July 2,
2017 |
|
July 3,
2016 |
||||
Number of Company-owned venues:
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
560
|
|
|
556
|
|
|
559
|
|
|
556
|
|
New
|
|
2
|
|
|
—
|
|
|
3
|
|
|
1
|
|
Acquired from franchisee
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Closed
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
End of period
|
|
564
|
|
|
556
|
|
|
564
|
|
|
556
|
|
Number of franchised venues:
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
191
|
|
|
179
|
|
|
188
|
|
|
176
|
|
New
|
|
4
|
|
|
5
|
|
|
7
|
|
|
9
|
|
Acquired from franchisee
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
Closed
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
End of period
|
|
193
|
|
|
183
|
|
|
193
|
|
|
183
|
|
Total number of venues:
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
751
|
|
|
735
|
|
|
747
|
|
|
732
|
|
New
|
|
6
|
|
|
5
|
|
|
10
|
|
|
10
|
|
Acquired from franchisee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Closed
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
End of period
|
|
757
|
|
|
739
|
|
|
757
|
|
|
739
|
|
•
|
Cost of food and beverage includes all direct costs of food, beverages and costs of related paper and birthday supplies, less rebates from suppliers;
|
•
|
Cost of entertainment and merchandise includes all direct costs of prizes provided and merchandise sold to our customers, as well as the cost of tickets dispensed to guests;
|
•
|
Labor expenses consist of salaries and wages, bonuses, related payroll taxes and benefits for venue personnel;
|
•
|
Depreciation and amortization includes expenses that are directly related to our Company-operated venues’ property and equipment, including leasehold improvements, game and ride equipment, furniture, fixtures and other equipment;
|
•
|
Rent expense includes lease costs for Company-operated venues, excluding common occupancy costs (e.g., common area maintenance (“CAM”) charges and property taxes); and
|
•
|
Other venue operating expenses primarily include utilities, repair and maintenance costs, liability and property insurance, CAM charges, property taxes, credit card processing fees, licenses, preopening expenses, venue asset disposal gains and losses and all other costs directly related to the operation of a venue.
|
|
|
Three Months Ended
|
||||||||||||
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||
Food and beverage sales
|
|
$
|
97,411
|
|
|
47.0
|
%
|
|
$
|
97,404
|
|
|
45.9
|
%
|
Entertainment and merchandise sales
|
|
109,724
|
|
|
53.0
|
%
|
|
114,657
|
|
|
54.1
|
%
|
||
Total company venue sales
|
|
$
|
207,135
|
|
|
100.0
|
%
|
|
$
|
212,061
|
|
|
100.0
|
%
|
|
|
Six Months Ended
|
||||||||||||
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||
Food and beverage sales
|
|
$
|
221,830
|
|
|
47.5
|
%
|
|
$
|
219,607
|
|
|
45.6
|
%
|
Entertainment and merchandise sales
|
|
245,641
|
|
|
52.5
|
%
|
|
262,214
|
|
|
54.4
|
%
|
||
Total company venue sales
|
|
$
|
467,471
|
|
|
100.0
|
%
|
|
$
|
481,821
|
|
|
100.0
|
%
|
(1)
|
Percent amount expressed as a percentage of Food and beverage sales.
|
(2)
|
Percent amount expressed as a percentage of Entertainment and merchandise sales.
|
(3)
|
Percent amount expressed as a percentage of Total company venue sales.
|
(4)
|
Due to rounding, percentages presented in the table above may not sum to total. The percentage amounts for the components of Cost of food and beverage and the Cost of entertainment and merchandise may not sum to total due to the fact that Cost of food and beverage and Cost of entertainment and merchandise are expressed as a percentage of related Food and beverage sales and Entertainment and merchandise sales, as opposed to Total company venue sales.
|
|
|
Six Months Ended
|
||||||||||||
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||
Total company venue sales
|
|
$
|
467,471
|
|
|
98.1
|
%
|
|
$
|
481,821
|
|
|
98.1
|
%
|
Franchise fees and royalties
|
|
9,272
|
|
|
1.9
|
%
|
|
9,118
|
|
|
1.9
|
%
|
||
Total revenues
|
|
476,743
|
|
|
100.0
|
%
|
|
490,939
|
|
|
100.0
|
%
|
||
Company venue operating costs:
|
|
|
|
|
|
|
|
|
||||||
Cost of food and beverage
(1)
|
|
51,040
|
|
|
23.0
|
%
|
|
55,195
|
|
|
25.1
|
%
|
||
Cost of entertainment and merchandise
(2)
|
|
15,341
|
|
|
6.2
|
%
|
|
16,989
|
|
|
6.5
|
%
|
||
Total cost of food, beverage, entertainment and merchandise
(3)
|
|
66,381
|
|
|
14.2
|
%
|
|
72,184
|
|
|
15.0
|
%
|
||
Labor expenses
(3)
|
|
126,738
|
|
|
27.1
|
%
|
|
129,448
|
|
|
26.9
|
%
|
||
Depreciation and amortization
(3)
|
|
52,203
|
|
|
11.2
|
%
|
|
57,362
|
|
|
11.9
|
%
|
||
Rent expense
(3)
|
|
47,225
|
|
|
10.1
|
%
|
|
48,199
|
|
|
10.0
|
%
|
||
Other venue operating expenses
(3)
|
|
72,716
|
|
|
15.6
|
%
|
|
73,387
|
|
|
15.2
|
%
|
||
Total company venue operating costs
(3)
|
|
365,263
|
|
|
78.1
|
%
|
|
380,580
|
|
|
79.0
|
%
|
||
Other costs and expenses
:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Advertising expense
|
|
25,619
|
|
|
5.4
|
%
|
|
25,261
|
|
|
5.1
|
%
|
||
General and administrative expenses
|
|
32,815
|
|
|
6.9
|
%
|
|
33,939
|
|
|
6.9
|
%
|
||
Transaction, severance and related litigation costs
|
|
570
|
|
|
0.1
|
%
|
|
1,184
|
|
|
0.2
|
%
|
||
Total operating costs and expenses
|
|
424,267
|
|
|
89.0
|
%
|
|
440,964
|
|
|
89.8
|
%
|
||
Operating income
|
|
52,476
|
|
|
11.0
|
%
|
|
49,975
|
|
|
10.2
|
%
|
||
Interest expense
|
|
34,123
|
|
|
7.2
|
%
|
|
34,182
|
|
|
7.0
|
%
|
||
Income before income taxes
|
|
$
|
18,353
|
|
|
3.8
|
%
|
|
$
|
15,793
|
|
|
3.2
|
%
|
(1)
|
Percent amount expressed as a percentage of Food and beverage sales.
|
(2)
|
Percent amount expressed as a percentage of Entertainment and merchandise sales.
|
(3)
|
Percent amount expressed as a percentage of Total company venue sales.
|
(4)
|
Due to rounding, percentages presented in the table above may not sum to total. The percentage amounts for the components of Cost of food and beverage and the Cost of entertainment and merchandise may not sum to total due to the fact that Cost of food and beverage and Cost of entertainment and merchandise are expressed as a percentage of related Food and beverage sales and Entertainment and merchandise sales, as opposed to Total company venue sales.
|
•
|
our venue guests pay for their purchases in cash or credit cards at the time of the sale and the cash from these sales is typically received before our related accounts payable to suppliers and employee payroll become due;
|
•
|
frequent inventory turnover results in a limited investment required in inventories; and
|
•
|
our accounts payable are generally due within five to 30 days.
|
|
|
Six Months Ended
|
||||||
|
|
July 2,
2017 |
|
July 3,
2016 |
||||
|
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
|
$
|
76,755
|
|
|
$
|
77,738
|
|
Net cash used in investing activities
|
|
(48,883
|
)
|
|
(48,305
|
)
|
||
Net cash provided by (used in) financing activities
|
|
328
|
|
|
(4,980
|
)
|
||
Effect of foreign exchange rate changes on cash
|
|
239
|
|
|
484
|
|
||
Change in cash and cash equivalents
|
|
$
|
28,439
|
|
|
$
|
24,937
|
|
Interest paid
|
|
$
|
31,861
|
|
|
$
|
32,960
|
|
Income taxes paid, net
|
|
$
|
7,716
|
|
|
$
|
5,572
|
|
|
|
July 2,
2017 |
|
January 1,
2017 |
||||
|
|
(in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
89,462
|
|
|
$
|
61,023
|
|
Restricted cash
|
|
$
|
115
|
|
|
$
|
268
|
|
Term loan facility
|
|
$
|
735,300
|
|
|
$
|
739,100
|
|
Senior notes
|
|
$
|
255,000
|
|
|
$
|
255,000
|
|
Note payable
|
|
$
|
—
|
|
|
$
|
13
|
|
Available unused commitments under revolving credit facility
|
|
$
|
140,100
|
|
|
$
|
140,100
|
|
|
|
Six Months Ended
|
||||||
|
|
July 2, 2017
|
|
July 3, 2016
|
||||
|
|
(in thousands)
|
||||||
Growth capital spend
(1)
|
|
$
|
28,890
|
|
|
$
|
23,162
|
|
Maintenance capital spend
(2)
|
|
16,304
|
|
|
18,706
|
|
||
IT capital spend
|
|
3,916
|
|
|
6,722
|
|
||
Total Capital Spend
|
|
$
|
49,110
|
|
|
$
|
48,590
|
|
(1)
|
Growth capital spend includes major remodels, venue expansions, our PlayPass initiative and new venue development, including relocations and franchise acquisitions.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||
Total revenues
|
|
$
|
211,784
|
|
|
$
|
216,621
|
|
|
$
|
476,743
|
|
|
$
|
490,939
|
|
Net income (loss) as reported
|
|
$
|
(5,930
|
)
|
|
$
|
(9,052
|
)
|
|
$
|
11,292
|
|
|
$
|
8,863
|
|
Interest expense
|
|
17,061
|
|
|
17,121
|
|
|
34,123
|
|
|
34,182
|
|
||||
Income tax expense (benefit)
|
|
(3,317
|
)
|
|
(4,442
|
)
|
|
7,061
|
|
|
6,930
|
|
||||
Depreciation and amortization
|
|
27,623
|
|
|
31,284
|
|
|
55,928
|
|
|
60,282
|
|
||||
Loss on asset disposals, net
(1)
|
|
1,961
|
|
|
1,895
|
|
|
3,716
|
|
|
4,073
|
|
||||
Non-cash stock-based compensation
(2)
|
|
186
|
|
|
202
|
|
|
336
|
|
|
337
|
|
||||
Rent expense book to cash
(3)
|
|
1,856
|
|
|
2,592
|
|
|
2,836
|
|
|
4,840
|
|
||||
Franchise revenue, net cash received
(4)
|
|
(254
|
)
|
|
271
|
|
|
(344
|
)
|
|
162
|
|
||||
Impact of purchase accounting
(5)
|
|
569
|
|
|
356
|
|
|
785
|
|
|
555
|
|
||||
Venue pre-opening costs
(6)
|
|
248
|
|
|
96
|
|
|
488
|
|
|
316
|
|
||||
One-time and unusual items
(7)
|
|
947
|
|
|
1,063
|
|
|
3,213
|
|
|
2,876
|
|
||||
Cost savings initiatives
(8)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
||||
Change in deferred amusement revenue
(9)
|
|
(676
|
)
|
|
281
|
|
|
4,368
|
|
|
682
|
|
||||
Adjusted EBITDA
|
|
$
|
40,274
|
|
|
$
|
41,667
|
|
|
$
|
123,802
|
|
|
$
|
124,160
|
|
Adjusted EBITDA Margin
|
|
19.0
|
%
|
|
19.2
|
%
|
|
26.0
|
%
|
|
25.3
|
%
|
(1)
|
Relates primarily to gains or losses upon disposal of property or equipment.
|
(2)
|
Represents non-cash equity-based compensation expense.
|
(3)
|
Represents (i) the removal of the non-cash portion of rent expense relating to the impact of straight-line rent and the amortization of cash incentives and allowances received from landlords, plus (ii) the actual cash received from landlords incentives and allowances in the period in which it was received.
|
(4)
|
Represents the actual cash received for franchise fees received in the period for post-acquisition franchise development agreements, which are not recorded as revenue until the franchise venue is opened, less the actual revenue recognized with respect to these franchise development agreements at the time the franchise venue is opened.
|
(5)
|
Represents revenue related to unearned gift cards and unearned franchise fees that were removed in purchase accounting, and, therefore, were not recorded as revenue.
|
(6)
|
Relates to start-up and marketing costs incurred prior to the opening of new Company-owned venues and generally consists of payroll, recruiting, training, supplies and rent incurred prior to venue opening.
|
(7)
|
Represents non-recurring income and expenses primarily related to (i) legal fees, claims and settlements related to litigation in respect of the Merger; (ii) severance expense and executive termination benefits; (iii) legal claims and settlements related to employee class action lawsuits and settlements; (iv) one-time costs incurred in connection with the relocation of our corporate offices; (vi) sales and use tax refunds relating to prior periods; (v) professional fees incurred in connection with one-time strategic corporate and tax initiatives, such as accounting and consulting fees incurred to enhance transfer pricing and to implement PlayPass, and initial fees incurred in connection with the overseas outsourcing of our accounts payable and payroll functions; (vi) removing the initial recognition of gift card breakage revenue related to prior years unredeemed on Chuck E. Cheese’s gift card balances sold by third parties; (vii) removing insurance recoveries relating to prior year business interruption losses at certain venues, primarily relating to disaster recoveries, such as natural disasters, fires, floods and property damage; and (viii) one-time training and travel-related costs incurred in connection with training venue employees in connection with the implementation of our PlayPass initiative that we began in 2016.
|
(8)
|
Relates to estimated net cost savings primarily from estimated cost savings associated with the full-year effect of costs savings associated with upgrades to our IT and telephone communication systems.
|
(9)
|
Represents the change in deferred revenue estimates related to unused game play credits on PlayPass cards. The deferred revenue liability is building due to the PlayPass implementation as the shift in our business model is impacting revenue recognition. Once PlayPass is fully deployed, the liability will fluctuate in proportion to entertainment and merchandise revenue thereafter.
|
•
|
our strategy, outlook and growth prospects;
|
•
|
our operational and financial targets and dividend policy;
|
•
|
our planned expansion of the venue base and the implementation of the new design in our existing venues;
|
•
|
general economic trends and trends in the industry and markets; and
|
•
|
the competitive environment in which we operate.
|
•
|
negative publicity concerning food quality, health, general safety and other issues, and changes in consumer preferences;
|
•
|
our ability to successfully expand and update our current venue base;
|
•
|
our ability to successfully implement our marketing strategy;
|
•
|
our ability to compete effectively in an environment of intense competition in both the restaurant and entertainment industries;
|
•
|
our ability to weather economic uncertainty and changes in discretionary spending;
|
•
|
increases in food, labor and other operating costs;
|
•
|
our ability to successfully open international franchises and to operate under the U.S. and foreign anti-corruption laws that govern those international ventures;
|
•
|
risks related to our substantial indebtedness;
|
•
|
failure of our information technology systems to support our current and growing business;
|
•
|
disruptions to our commodity distribution system;
|
•
|
our dependence on third-party vendors to provide us with sufficient quantities of new entertainment-related equipment, prizes and merchandise at acceptable prices;
|
•
|
risks from product liability claims and product recalls;
|
•
|
the impact of governmental laws and regulations and the outcomes of legal proceedings;
|
•
|
potential liability under certain state property laws;
|
•
|
fluctuations in our financials due to new venue openings;
|
•
|
local conditions, natural disasters, terrorist attacks and other events and public health issues;
|
•
|
the seasonality of our business;
|
•
|
inadequate insurance coverage;
|
•
|
labor shortages and immigration reform;
|
•
|
loss of certain personnel;
|
•
|
our ability to protect our trademarks or other proprietary rights;
|
•
|
risks associated with owning and leasing real estate, as well as the risks from any forced venue relocaton or closure;
|
•
|
our ability to successfully integrate the operations of companies we acquire;
|
•
|
impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets;
|
•
|
our failure to maintain adequate internal controls over our financial and management systems; and
|
•
|
other risks, uncertainties and factors set forth in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended
January 1, 2017
, filed with the SEC on
March 16, 2017
.
|
Exhibit
Number
|
|
Description
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
CEC ENTERTAINMENT, INC.
|
|
|
|
|
|
August 4, 2017
|
|
By:
|
|
/s/ Dale R. Black
|
|
|
|
|
Dale R. Black
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
August 4, 2017
|
|
|
|
/s/ Laurie E. Priest
|
|
|
|
|
Laurie E. Priest
|
|
|
|
|
Vice President, Controller
|
|
|
|
|
(Principal Accounting Officer)
|
Exhibit
Number
|
|
Description
|
|
|
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31.1*
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|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
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31.2*
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
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32.1**
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
|
XBRL Instance Document
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|
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101.SCH
|
|
XBRL Taxonomy Extension Schema Document
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101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
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|
|
|
101.DEF
|
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XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
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101.LAB
|
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XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1 Year Cec Entertainment Chart |
1 Month Cec Entertainment Chart |
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