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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 | - |
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
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
|
¨
|
|
|
Emerging growth company
|
¨
|
|
Page
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 29,
2019 |
|
December 30,
2018 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
105,059
|
|
|
$
|
63,170
|
|
Restricted cash
|
|
212
|
|
|
151
|
|
||
Accounts receivable
|
|
20,576
|
|
|
24,020
|
|
||
Income taxes receivable
|
|
—
|
|
|
10,160
|
|
||
Inventories
|
|
27,579
|
|
|
23,807
|
|
||
Prepaid expenses
|
|
14,274
|
|
|
25,424
|
|
||
Total current assets
|
|
167,700
|
|
|
146,732
|
|
||
Property and equipment, net
|
|
525,107
|
|
|
539,185
|
|
||
Operating lease right-of-use assets, net
|
|
536,057
|
|
|
—
|
|
||
Goodwill
|
|
484,438
|
|
|
484,438
|
|
||
Intangible assets, net
|
|
469,218
|
|
|
477,085
|
|
||
Other noncurrent assets
|
|
16,794
|
|
|
18,725
|
|
||
Total assets
|
|
$
|
2,199,314
|
|
|
$
|
1,666,165
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
7,600
|
|
Operating lease liability, current portion
|
|
49,203
|
|
|
—
|
|
||
Accounts payable
|
|
43,701
|
|
|
31,410
|
|
||
Accrued expenses
|
|
44,156
|
|
|
36,030
|
|
||
Unearned revenues
|
|
21,869
|
|
|
18,124
|
|
||
Accrued interest
|
|
8,223
|
|
|
7,463
|
|
||
Other current liabilities
|
|
4,548
|
|
|
5,955
|
|
||
Total current liabilities
|
|
179,300
|
|
|
106,582
|
|
||
Operating lease obligations, less current portion
|
|
522,380
|
|
|
—
|
|
||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
958,986
|
|
|
961,514
|
|
||
Deferred tax liability
|
|
102,721
|
|
|
107,058
|
|
||
Other noncurrent liabilities
|
|
196,030
|
|
|
248,440
|
|
||
Total liabilities
|
|
1,959,417
|
|
|
1,423,594
|
|
||
Stockholder’s equity:
|
|
|
|
|
||||
Common stock, $0.01 par value; authorized 1,000 shares; 200 shares issued as of September 29, 2019 and December 30, 2018
|
|
—
|
|
|
—
|
|
||
Capital in excess of par value
|
|
359,930
|
|
|
359,570
|
|
||
Accumulated deficit
|
|
(118,482
|
)
|
|
(115,660
|
)
|
||
Accumulated other comprehensive loss
|
|
(1,551
|
)
|
|
(1,339
|
)
|
||
Total stockholder’s equity
|
|
239,897
|
|
|
242,571
|
|
||
Total liabilities and stockholder’s equity
|
|
$
|
2,199,314
|
|
|
$
|
1,666,165
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
|
September 29,
2019 |
|
September 30,
2018 |
|
September 29,
2019 |
|
September 30,
2018 |
|||||||||
REVENUES:
|
|
|
|
|
|
|
|
|||||||||
Food and beverage sales
|
$
|
92,645
|
|
|
$
|
94,023
|
|
|
$
|
302,111
|
|
|
$
|
308,658
|
|
|
Entertainment and merchandise sales
|
119,688
|
|
|
121,611
|
|
|
386,778
|
|
|
368,633
|
|
|||||
Total company venue sales
|
212,333
|
|
|
215,634
|
|
|
688,889
|
|
|
677,291
|
|
|||||
Franchise fees and royalties
|
5,261
|
|
|
5,311
|
|
|
17,194
|
|
|
15,917
|
|
|||||
Total revenues
|
217,594
|
|
|
220,945
|
|
|
706,083
|
|
|
693,208
|
|
|||||
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|||||||||
Company venue operating costs and expenses (excluding Depreciation and amortization):
|
|
|
|
|
|
|
|
|
||||||||
Cost of food and beverage
|
21,302
|
|
|
22,520
|
|
|
69,239
|
|
|
72,774
|
|
|||||
Cost of entertainment and merchandise
|
10,113
|
|
|
9,874
|
|
|
31,311
|
|
|
27,676
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
31,415
|
|
|
32,394
|
|
|
100,550
|
|
|
100,450
|
|
|||||
Labor expenses
|
63,213
|
|
|
65,028
|
|
|
199,693
|
|
|
194,994
|
|
|||||
Lease costs
|
27,559
|
|
|
23,851
|
|
|
82,102
|
|
|
72,615
|
|
|||||
Other venue operating expenses
|
34,586
|
|
|
38,232
|
|
|
102,536
|
|
|
113,363
|
|
|||||
Total company venue operating costs and expenses
|
156,773
|
|
|
159,505
|
|
|
484,881
|
|
|
481,422
|
|
|||||
Other costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Advertising expense
|
10,803
|
|
|
11,058
|
|
|
34,033
|
|
|
38,010
|
|
|||||
General and administrative expenses
|
13,051
|
|
|
13,193
|
|
|
42,944
|
|
|
39,519
|
|
|||||
Depreciation and amortization
|
24,622
|
|
|
24,739
|
|
|
73,074
|
|
|
76,804
|
|
|||||
Transaction, severance and related litigation costs
|
371
|
|
|
(263
|
)
|
|
402
|
|
|
463
|
|
|||||
Asset impairments
|
8,202
|
|
|
5,344
|
|
|
9,487
|
|
|
6,935
|
|
|||||
Total operating costs and expenses
|
213,822
|
|
|
213,576
|
|
|
644,821
|
|
|
643,153
|
|
|||||
Operating income
|
3,772
|
|
|
7,369
|
|
|
61,262
|
|
|
50,055
|
|
|||||
Interest expense
|
22,029
|
|
|
19,069
|
|
|
61,816
|
|
|
56,740
|
|
|||||
Loss on extinguishment of debt
|
2,910
|
|
|
—
|
|
—
|
|
2,910
|
|
|
—
|
|
||||
Loss before income taxes
|
(21,167
|
)
|
|
(11,700
|
)
|
|
(3,464
|
)
|
|
(6,685
|
)
|
|||||
Income tax benefit
|
(5,833
|
)
|
|
(2,213
|
)
|
|
(642
|
)
|
|
(454
|
)
|
|||||
Net loss
|
$
|
(15,334
|
)
|
|
$
|
(9,487
|
)
|
|
$
|
(2,822
|
)
|
|
$
|
(6,231
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 29,
2019 |
|
September 30,
2018 |
|
September 29,
2019 |
|
September 30,
2018 |
||||||||
Net loss
|
$
|
(15,334
|
)
|
|
$
|
(9,487
|
)
|
|
$
|
(2,822
|
)
|
|
$
|
(6,231
|
)
|
Foreign currency translation adjustments
|
73
|
|
|
(172
|
)
|
|
(212
|
)
|
|
127
|
|
||||
Comprehensive loss
|
$
|
(15,261
|
)
|
|
$
|
(9,659
|
)
|
|
$
|
(3,034
|
)
|
|
$
|
(6,104
|
)
|
|
Nine Months Ended
|
||||||
|
September 29,
2019 |
|
September 30,
2018 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(2,822
|
)
|
|
$
|
(6,231
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Loss on extinguishment of debt
|
2,910
|
|
|
—
|
|
||
Depreciation and amortization
|
73,074
|
|
|
76,804
|
|
||
Deferred income taxes
|
(4,261
|
)
|
|
(3,314
|
)
|
||
Stock-based compensation expense
|
1,985
|
|
|
169
|
|
||
Amortization of lease related liabilities
|
—
|
|
|
(749
|
)
|
||
Amortization of original issue discount and deferred debt financing costs
|
3,544
|
|
|
3,284
|
|
||
Debt refinancing costs
|
694
|
|
|
—
|
|
||
Loss on asset disposals, net
|
2,903
|
|
|
2,551
|
|
||
Asset impairments
|
9,487
|
|
|
6,935
|
|
||
Non-cash lease costs
|
2,438
|
|
|
4,109
|
|
||
Change in operating lease liabilities
|
(1,219
|
)
|
|
—
|
|
||
Other adjustments
|
(170
|
)
|
|
531
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
4,222
|
|
|
2,016
|
|
||
Inventories
|
(3,871
|
)
|
|
(84
|
)
|
||
Prepaid expenses
|
2,167
|
|
|
(3,479
|
)
|
||
Accounts payable
|
7,356
|
|
|
886
|
|
||
Accrued expenses
|
932
|
|
|
3,847
|
|
||
Unearned revenues
|
3,740
|
|
|
(3,263
|
)
|
||
Accrued interest
|
972
|
|
|
(5,291
|
)
|
||
Income taxes payable
|
11,563
|
|
|
1,994
|
|
||
Deferred landlord contributions
|
—
|
|
|
1,760
|
|
||
Net cash provided by operating activities
|
115,644
|
|
|
82,475
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
(60,388
|
)
|
|
(55,202
|
)
|
||
Development of internal use software
|
(787
|
)
|
|
(1,992
|
)
|
||
Proceeds from sale of property and equipment
|
160
|
|
|
464
|
|
||
Net cash used in investing activities
|
(61,015
|
)
|
|
(56,730
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from refinancing of senior term loan
|
479,449
|
|
|
—
|
|
||
Repayments on senior term loan
|
(473,749
|
)
|
|
(5,700
|
)
|
||
Payment of debt financing costs
|
(15,375
|
)
|
|
(395
|
)
|
||
Payments on financing lease obligations
|
(530
|
)
|
|
(442
|
)
|
||
Payments on sale leaseback obligations
|
(2,469
|
)
|
|
(2,119
|
)
|
Net cash used in financing activities
|
(12,674
|
)
|
|
(8,656
|
)
|
||
Effect of foreign exchange rate changes on cash
|
(5
|
)
|
|
51
|
|
||
Change in cash, cash equivalents and restricted cash
|
41,950
|
|
|
17,140
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
63,321
|
|
|
67,312
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
105,271
|
|
|
$
|
84,452
|
|
|
|
|
|
||||
|
|
|
|
||||
|
Nine Months Ended
|
||||||
|
September 29,
2019 |
|
September 30,
2018 |
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid
|
$
|
57,232
|
|
|
$
|
59,229
|
|
Income taxes (refunded) paid, net
|
$
|
(7,944
|
)
|
|
$
|
867
|
|
Non cash portion of Loss on debt extinguishment
|
2,364
|
|
|
—
|
|
||
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
||||
Accrued construction costs
|
$
|
5,687
|
|
|
$
|
1,659
|
|
|
September 29,
2019 |
|
September 30,
2018 |
||||
Cash and cash equivalents
|
$
|
105,059
|
|
|
$
|
84,429
|
|
Restricted cash(1)
|
212
|
|
|
23
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
105,271
|
|
|
$
|
84,452
|
|
(1)
|
Restricted cash represents cash balances held by the Association that are restricted for use in our advertising, entertainment and media programs.
|
|
Balance at
|
|
|
|
|
|
Balance at
|
||||||||
|
December 31, 2018
|
|
Revenue Deferred
|
|
Revenue Recognized
|
|
September 29, 2019
|
||||||||
|
(in thousands)
|
||||||||||||||
PlayPass and ticket related deferred revenue
|
$
|
5,561
|
|
|
$
|
36,541
|
|
|
$
|
(35,331
|
)
|
|
$
|
6,771
|
|
Gift card related deferred revenue
|
5,253
|
|
|
7,814
|
|
|
(8,003
|
)
|
|
5,064
|
|
||||
Unearned franchise and development fees
|
6,321
|
|
|
2,324
|
|
|
(145
|
)
|
|
8,500
|
|
||||
Other unearned revenues
|
989
|
|
|
19,944
|
|
|
(19,399
|
)
|
|
1,534
|
|
||||
Total unearned revenues
|
$
|
18,124
|
|
|
$
|
66,623
|
|
|
$
|
(62,878
|
)
|
|
$
|
21,869
|
|
|
Weighted Average Life (Years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
|
|
(in thousands)
|
||||||||||
Chuck E. Cheese tradename
|
Indefinite
|
|
$
|
400,000
|
|
|
|
|
$
|
400,000
|
|
||
Peter Piper Pizza tradename
|
Indefinite
|
|
26,700
|
|
|
|
|
26,700
|
|
||||
Franchise agreements
|
25
|
|
53,300
|
|
|
(10,782
|
)
|
|
42,518
|
|
|||
|
|
|
$
|
480,000
|
|
|
$
|
(10,782
|
)
|
|
$
|
469,218
|
|
|
|
September 29, 2019
|
||
|
Balance Sheet Classification
|
(in thousands)
|
||
Assets
|
|
|
||
Operating
|
Operating lease right-of-use assets, net (1)
|
$
|
536,057
|
|
Finance
|
Property and equipment, net (2)
|
9,346
|
|
|
Total leased assets
|
|
$
|
545,403
|
|
|
|
|
||
Liabilities
|
|
|
||
Current
|
|
|
||
Operating
|
Operating lease liability, current portion
|
$
|
49,203
|
|
Finance
|
Other current liabilities
|
803
|
|
|
Noncurrent
|
|
|
||
Operating
|
Operating lease obligations, less current portion
|
522,380
|
|
|
Finance
|
Other noncurrent liabilities
|
11,675
|
|
|
Total leased liabilities
|
|
$
|
584,061
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
|
|
September 29, 2019
|
|
September 29, 2019
|
||||
|
|
Statement of Earnings Classification
|
|
(in thousands)
|
|
(in thousands)
|
||||
Operating lease cost (1)
|
|
Lease costs
|
|
$
|
27,559
|
|
|
$
|
82,102
|
|
Operating lease cost (2)
|
|
General and administrative
|
|
326
|
|
|
976
|
|
||
Finance lease cost
|
|
|
|
|
|
|
||||
Amortization of leased assets
|
|
Depreciation and amortization
|
|
246
|
|
|
742
|
|
||
Interest on lease liabilities
|
|
Net interest expense
|
|
366
|
|
|
1,123
|
|
||
Net lease cost
|
|
|
|
$
|
28,497
|
|
|
$
|
84,943
|
|
|
|
Operating
Leases (1)
|
|
Finance
Leases (2)
|
|
Total
|
||||||
|
|
(in thousands)
|
||||||||||
Remainder of 2019
|
|
$
|
22,694
|
|
|
$
|
548
|
|
|
$
|
23,242
|
|
2020
|
|
91,537
|
|
|
2,194
|
|
|
93,731
|
|
|||
2021
|
|
89,203
|
|
|
2,173
|
|
|
91,376
|
|
|||
2022
|
|
87,221
|
|
|
2,147
|
|
|
89,368
|
|
|||
2023
|
|
84,861
|
|
|
1,920
|
|
|
86,781
|
|
|||
After 2023
|
|
472,432
|
|
|
12,931
|
|
|
485,363
|
|
|||
Total lease payments
|
|
847,948
|
|
|
21,913
|
|
|
869,861
|
|
|||
Less: interest
|
|
276,365
|
|
|
9,435
|
|
|
285,800
|
|
|||
Present value of minimum lease payments (3)
|
|
$
|
571,583
|
|
|
$
|
12,478
|
|
|
$
|
584,061
|
|
|
|
Nine Months Ended
|
|
Lease Term and Discount Rate
|
September 29, 2019
|
||
Weighted average remaining lease term (years):
|
|
||
Operating leases
|
|
10
|
|
Finance leases
|
|
11
|
|
Weighted average discount rate:
|
|
|
|
Operating leases
|
|
8.0
|
%
|
Finance leases
|
|
13.2
|
%
|
|
Financing
|
|
Operating
|
|||
Fiscal Years
|
(in thousands)
|
|||||
2019
|
2,182
|
|
|
92,435
|
|
|
2020
|
2,214
|
|
|
90,983
|
|
|
2021
|
2,201
|
|
|
88,914
|
|
|
2022
|
2,184
|
|
|
87,183
|
|
|
2023
|
1,956
|
|
|
84,806
|
|
|
After 2023
|
13,266
|
|
|
457,277
|
|
|
Future minimum lease payments
|
24,003
|
|
|
901,598
|
|
|
Less amounts representing interest
|
(10,996
|
)
|
|
|
||
Present value of future minimum lease payments
|
13,007
|
|
|
|
||
Less current portion
|
(677
|
)
|
|
|
||
Finance lease liability, net of current portion
|
$
|
12,330
|
|
|
|
|
September 29,
2019 |
|
December 30, 2018
|
||||
|
(in thousands)
|
||||||
Trade and other amounts payable
|
$
|
33,312
|
|
|
$
|
20,685
|
|
Book overdraft
|
10,389
|
|
|
10,725
|
|
||
Accounts payable
|
$
|
43,701
|
|
|
$
|
31,410
|
|
|
September 29,
2019 |
|
December 30,
2018 |
||||
|
(in thousands)
|
||||||
Term loan facility
|
$
|
760,000
|
|
|
$
|
723,900
|
|
Revolving credit facility
|
—
|
|
|
—
|
|
||
Senior notes
|
255,000
|
|
|
255,000
|
|
||
Total debt outstanding
|
1,015,000
|
|
|
978,900
|
|
||
Less:
|
|
|
|
||||
Deferred financing costs, net
|
(18,003
|
)
|
|
(8,633
|
)
|
||
Unamortized original issue discount
|
(30,411
|
)
|
|
(1,153
|
)
|
||
Current portion of Term Loan Facility
|
(7,600
|
)
|
|
(7,600
|
)
|
||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
$
|
958,986
|
|
|
$
|
961,514
|
|
(i)
|
a $114 million secured revolving credit facility which includes a $50 million letter of credit sub-facility (collectively the “2019 Revolving Credit Facility”) with a maturity date of August 30, 2024 (the “revolver maturity date); and
|
(ii)
|
a $760 million secured term loan facility (the “2019 Term Loan Facility” and together with the 2019 Revolving Credit Facility, the “2019 Secured Credit Facilities”) with a maturity date of August 30, 2026 (the “term loan maturity date”).
|
•
|
Loss on Extinguishment of Debt: We recorded a loss on extinguishment of debt totaling $2.9 million which includes $0.5 million of fees paid to lenders in connection with the 2019 Term Loan Facility and wrote off $2.4 million of unamortized deferred financing costs and original issue discount related to the 2014 Secured Credit
|
•
|
Transaction related costs: We expensed third party fees totaling $0.3 million related to legal fees incurred in connection with the 2019 Term Loan Facility. The transaction related costs are included in “Transaction, severance and related litigation costs” in our Consolidated Statement of Earnings;
|
•
|
Interest Expense: We expensed third party fees totaling $0.4 million related to rating agency fees incurred in connection with the 2019 Secured Credit Facilities. These fees are included in “Interest Expense” in our Consolidated Statement of Earnings; and
|
•
|
Deferred Financing Costs: Debt issuance costs totaling $14.2 million related to the 2019 Secured Credit Facilities were capitalized and are included in “Bank indebtedness and other long-term debt, net of deferred financing costs” on our Consolidated Balance Sheets. We also continued to defer $2.1 million of unamortized deferred financing costs related to the 2014 Secured Credit Facilities.
|
•
|
Excess Cash Flow- Subject to certain exceptions, to the extent we have excess cash flow determined on an annual basis (as defined in the 2019 Secured Credit Facilities agreement), we are required to make a mandatory prepayment of term loan principal (reduced by any optional prepayments of principal that may have occurred during the fiscal year) to the extent that 75% (the “required percentage” which is subject to step downs discussed below) times the excess cash flow exceeds $10.0 million. The required percentage steps down from 75% to 50% provided our Net Total Leverage Ratio (the ratio of total consolidated debt including lease related obligations net of unrestricted cash to the last twelve month’s EBITDA, as defined in the 2019 Senior Credit Facilities agreement) is less than or equal to 4.50 to 1.00 and greater than 4.25 to 1.00, steps down to 25% provided our Net Total Leverage Ratio is less than or equal to 4.25 to 1.00 and greater than 4.00 to 1.00, and steps down to 0% provided our Net Total Leverage Ratio is less than or equal to 4.00 to 1.00.
|
•
|
Sales and Disposition of Assets- Subject to certain exceptions, we are required to make a mandatory prepayment of term loan principal of 100% of the net cash proceeds of all non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and provided that the Company may (i) reinvest within 12 months or (ii) commit to reinvest those proceeds and does reinvest such proceeds within 18 months in assets to be used in its business, or certain other permitted investments; and
|
•
|
Issuance or incurrence of Debt- Subject to certain exceptions, we are required to make a mandatory prepayment of term loan principal of 100% of the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the 2019 Secured Credit Facilities.
|
Margin for Base Rate Loans
|
|
Margin for LIBOR Loans
|
|
5.50%
|
|
6.50
|
%
|
Net Total Leverage Ratio
|
|
Margin for Base Rate Loans
|
|
Margin for LIBOR Loans
|
Greater than 4.80 to 1.00
|
|
5.50%
|
|
6.50%
|
Less than or equal to 4.80 to 1.00 but greater than 4.30 to 1.00
|
|
5.25%
|
|
6.25%
|
Less than or equal to 4.30 to 1.00
|
|
5.00%
|
|
6.00%
|
Net Total Leverage Ratio
|
|
Commitment Fee
|
Greater than 4.30 to 1.00
|
|
0.50%
|
Less than or equal to 4.30 to 1.00
|
|
0.375%
|
|
Three Months Ended
|
||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||
|
(in thousands)
|
||||||
Term Loan Facility (1)
|
$
|
12,776
|
|
|
$
|
9,946
|
|
Senior notes
|
5,083
|
|
|
5,083
|
|
||
Finance lease obligations
|
366
|
|
|
394
|
|
||
Sale leaseback obligations
|
2,393
|
|
|
2,628
|
|
||
Amortization of deferred financing costs
|
970
|
|
|
923
|
|
||
Other
|
441
|
|
|
95
|
|
||
Total interest expense
|
$
|
22,029
|
|
|
$
|
19,069
|
|
|
Nine Months Ended
|
||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||
|
(in thousands)
|
||||||
Term Loan Facility (1)
|
$
|
34,019
|
|
|
$
|
28,747
|
|
Senior Notes
|
15,248
|
|
|
15,248
|
|
||
Finance lease obligations
|
1,123
|
|
|
1,253
|
|
||
Sale leaseback obligations
|
7,770
|
|
|
7,880
|
|
||
Amortization of deferred financing costs
|
2,817
|
|
|
2,878
|
|
||
Other
|
839
|
|
|
734
|
|
||
Total interest expense
|
$
|
61,816
|
|
|
$
|
56,740
|
|
|
|
September 29, 2019
|
|
|
December 30, 2018
|
||||||||||||
|
|
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
|
|
|
$
|
7,464
|
|
|
|
$
|
7,600
|
|
|
$
|
7,051
|
|
Long-term portion (2)
|
|
1,007,400
|
|
|
980,882
|
|
|
|
971,300
|
|
|
885,212
|
|
||||
Bank indebtedness and other long-term debt:
|
|
$
|
1,015,000
|
|
|
$
|
988,346
|
|
|
|
$
|
978,900
|
|
|
$
|
892,263
|
|
|
|
September 29, 2019
|
|
December 30, 2018
|
||||
|
|
(in thousands)
|
||||||
Sale leaseback obligations, less current portion (1)
|
|
$
|
171,729
|
|
|
$
|
174,520
|
|
Lease related liabilities (2)
|
|
—
|
|
|
45,195
|
|
||
Financing lease obligations, less current portion
|
|
11,675
|
|
|
12,330
|
|
||
Accrued insurance
|
|
6,724
|
|
|
9,861
|
|
||
Other
|
|
5,902
|
|
|
6,534
|
|
||
Total other noncurrent liabilities
|
|
$
|
196,030
|
|
|
$
|
248,440
|
|
(1)
|
The sale leaseback obligations are accounted for under the financing method, rather than as completed sales. Under the financing method the sales proceeds received are included in other long-term liabilities until our continuing involvement with the properties is terminated. The rental payments related to the sale leaseback properties are recorded as interest expense and a reduction of the sale leaseback obligation.
|
(2)
|
Lease liabilities totaling $45.2 million were reclassified in connection with the adoption of ASU 2016-02 on December 31, 2018. See Note 1. “Description of Business and Summary of Significant Accounting Policies - Recently Adopted Accounting Guidance” and Note 5. “Leases” for further discussion on the adoption of ASU 2016-02.
|
|
Three Months Ended
|
||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||
|
(in thousands)
|
||||||
Federal and state income taxes
|
$
|
(5,900
|
)
|
|
$
|
(2,451
|
)
|
Foreign income taxes (1)
|
67
|
|
|
238
|
|
||
Income tax benefit
|
$
|
(5,833
|
)
|
|
$
|
(2,213
|
)
|
|
Nine Months Ended
|
||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||
|
(in thousands)
|
||||||
Federal and state income taxes
|
$
|
(1,334
|
)
|
|
$
|
(1,167
|
)
|
Foreign income taxes (1)
|
692
|
|
|
713
|
|
||
Income tax benefit
|
$
|
(642
|
)
|
|
$
|
(454
|
)
|
|
Stock Options
|
Weighted Average Exercise Price (1)
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
|||
|
|
($ per share)
|
|
($ in thousands)
|
|||
Outstanding stock options, December 30, 2018
|
1,987,331
|
|
$8.87
|
|
|
||
Options granted
|
424,985
|
|
$8.86
|
|
|
||
Options forfeited
|
(114,921
|
)
|
$9.87
|
|
|
||
Outstanding stock options, September 29, 2019
|
2,297,395
|
|
$8.80
|
5.5
|
$
|
—
|
|
Stock options expected to vest, September 29, 2019
|
1,530,812
|
|
$8.97
|
5.9
|
$
|
—
|
|
Exercisable stock options, September 29, 2019
|
841,086
|
|
$8.31
|
4.5
|
$
|
—
|
|
|
Three Months Ended
|
||||||
|
September 29,
2019 |
|
September 30,
2018 |
||||
|
(in thousands)
|
||||||
Stock-based compensation costs related to stock awards
|
$
|
(182
|
)
|
|
$
|
—
|
|
Stock-based compensation costs related to incentive stock options, net (1)
|
71
|
|
|
(58
|
)
|
||
Stock-based compensation expense recognized
|
$
|
(111
|
)
|
|
$
|
(58
|
)
|
|
Nine Months Ended
|
||||||
|
September 29,
2019 |
|
September 30,
2018 |
||||
|
(in thousands)
|
||||||
Stock-based compensation costs related to stock awards
|
$
|
1,632
|
|
|
$
|
—
|
|
Stock-based compensation costs related to incentive stock options, net (1)
|
353
|
|
|
169
|
|
||
Stock-based compensation expense recognized
|
$
|
1,985
|
|
|
$
|
169
|
|
Payroll taxes related to stock awards
|
$
|
15
|
|
|
$
|
—
|
|
(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 Income (Loss) |
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
|
|
(in thousands, except share information)
|
|||||||||||||||||||||
Balance at December 30, 2018
|
|
200
|
|
|
$
|
—
|
|
|
$
|
359,570
|
|
|
$
|
(115,660
|
)
|
|
$
|
(1,339
|
)
|
|
$
|
242,571
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,246
|
|
|
—
|
|
|
21,246
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(155
|
)
|
|
(155
|
)
|
|||||
Stock-based compensation costs related to stock awards
|
|
—
|
|
|
—
|
|
|
126
|
|
|
—
|
|
|
—
|
|
|
126
|
|
|||||
Balance March 31, 2019
|
|
200
|
|
|
$
|
—
|
|
|
$
|
359,696
|
|
|
$
|
(94,414
|
)
|
|
$
|
(1,494
|
)
|
|
$
|
263,788
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,734
|
)
|
|
—
|
|
|
(8,734
|
)
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|
(130
|
)
|
|||||
Stock-based compensation costs related to stock awards
|
|
—
|
|
|
—
|
|
|
171
|
|
|
—
|
|
|
—
|
|
|
171
|
|
|||||
Balance June 30, 2019
|
|
200
|
|
|
$
|
—
|
|
|
$
|
359,867
|
|
|
$
|
(103,148
|
)
|
|
$
|
(1,624
|
)
|
|
$
|
255,095
|
|
Net loss
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15,334
|
)
|
|
$
|
—
|
|
|
$
|
(15,334
|
)
|
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73
|
|
|
73
|
|
|||||
Stock-based compensation costs related to stock awards
|
|
—
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|||||
Balance September 29, 2019
|
|
200
|
|
|
$
|
—
|
|
|
$
|
359,930
|
|
|
$
|
(118,482
|
)
|
|
$
|
(1,551
|
)
|
|
$
|
239,897
|
|
|
|
Common Stock
|
|
Capital In
Excess of Par Value |
|
Accumulated Deficit
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
|
|
(in thousands, except share information)
|
|||||||||||||||||||||
Balance at December 31, 2017
|
|
200
|
|
|
$
|
—
|
|
|
$
|
359,233
|
|
|
$
|
(95,199
|
)
|
|
$
|
(1,886
|
)
|
|
$
|
262,148
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,223
|
|
|
—
|
|
|
12,223
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
154
|
|
|
154
|
|
|||||
Stock-based compensation costs related to stock awards
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|||||
Balance April 1, 2018
|
|
200
|
|
|
$
|
—
|
|
|
$
|
359,300
|
|
|
$
|
(82,976
|
)
|
|
$
|
(1,732
|
)
|
|
$
|
274,592
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,965
|
)
|
|
—
|
|
|
(8,965
|
)
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145
|
|
|
145
|
|
|||||
Stock-based compensation costs related to stock awards
|
|
—
|
|
|
—
|
|
|
166
|
|
|
—
|
|
|
—
|
|
|
166
|
|
|||||
Balance July 1, 2018
|
|
200
|
|
|
$
|
—
|
|
|
$
|
359,466
|
|
|
$
|
(91,941
|
)
|
|
$
|
(1,587
|
)
|
|
$
|
265,938
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,487
|
)
|
|
—
|
|
|
(9,487
|
)
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
(172
|
)
|
|||||
Stock-based compensation costs related to stock awards
|
|
—
|
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
|
—
|
|
|
(55
|
)
|
|||||
Balance September 30, 2018
|
|
200
|
|
|
—
|
|
|
$
|
359,411
|
|
|
$
|
(101,428
|
)
|
|
$
|
(1,759
|
)
|
|
$
|
256,224
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
As of September 29, 2019
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
94,627
|
|
|
$
|
7,712
|
|
|
$
|
2,720
|
|
|
$
|
—
|
|
|
$
|
105,059
|
|
Restricted cash
|
|
—
|
|
|
—
|
|
|
212
|
|
|
—
|
|
|
212
|
|
|||||
Accounts receivable
|
|
13,098
|
|
|
6,644
|
|
|
4,620
|
|
|
(3,786
|
)
|
|
20,576
|
|
|||||
Inventories
|
|
20,420
|
|
|
6,862
|
|
|
297
|
|
|
—
|
|
|
27,579
|
|
|||||
Prepaid expenses
|
|
6,754
|
|
|
6,776
|
|
|
744
|
|
|
—
|
|
|
14,274
|
|
|||||
Total current assets
|
|
134,899
|
|
|
27,994
|
|
|
8,593
|
|
|
(3,786
|
)
|
|
167,700
|
|
|||||
Property and equipment, net
|
|
456,798
|
|
|
63,281
|
|
|
5,028
|
|
|
—
|
|
|
525,107
|
|
|||||
Operating lease right-of-use assets, net
|
|
478,836
|
|
|
47,677
|
|
|
9,544
|
|
|
—
|
|
|
536,057
|
|
|||||
Goodwill
|
|
433,024
|
|
|
51,414
|
|
|
—
|
|
|
—
|
|
|
484,438
|
|
|||||
Intangible assets, net
|
|
8,152
|
|
|
461,066
|
|
|
—
|
|
|
—
|
|
|
469,218
|
|
|||||
Intercompany
|
|
41,679
|
|
|
96,942
|
|
|
—
|
|
|
(138,621
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
497,945
|
|
|
—
|
|
|
—
|
|
|
(497,945
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
6,741
|
|
|
10,036
|
|
|
17
|
|
|
—
|
|
|
16,794
|
|
|||||
Total assets
|
|
$
|
2,058,074
|
|
|
$
|
758,410
|
|
|
$
|
23,182
|
|
|
$
|
(640,352
|
)
|
|
$
|
2,199,314
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,600
|
|
Operating lease liability, current portion
|
|
44,413
|
|
|
3,749
|
|
|
1,041
|
|
|
—
|
|
|
49,203
|
|
|||||
Accounts payable, accrued expenses and unearned revenues
|
|
66,180
|
|
|
46,049
|
|
|
5,720
|
|
|
—
|
|
|
117,949
|
|
|||||
Other current liabilities
|
|
4,530
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
4,548
|
|
|||||
Total current liabilities
|
|
122,723
|
|
|
49,798
|
|
|
6,779
|
|
|
—
|
|
|
179,300
|
|
|||||
Operating lease obligations, less current portion
|
|
458,412
|
|
|
55,100
|
|
|
8,868
|
|
|
—
|
|
|
522,380
|
|
|||||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
958,986
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
958,986
|
|
|||||
Deferred tax liability
|
|
86,918
|
|
|
17,577
|
|
|
(1,774
|
)
|
|
—
|
|
|
102,721
|
|
|||||
Intercompany
|
|
—
|
|
|
116,739
|
|
|
25,668
|
|
|
(142,407
|
)
|
|
—
|
|
|||||
Other noncurrent liabilities
|
|
191,138
|
|
|
4,868
|
|
|
24
|
|
|
—
|
|
|
196,030
|
|
|||||
Total liabilities
|
|
1,818,177
|
|
|
244,082
|
|
|
39,565
|
|
|
(142,407
|
)
|
|
1,959,417
|
|
|||||
Stockholder's equity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital in excess of par value
|
|
359,930
|
|
|
466,114
|
|
|
3,241
|
|
|
(469,355
|
)
|
|
359,930
|
|
|||||
Accumulated earnings (deficit)
|
|
(118,482
|
)
|
|
48,214
|
|
|
(18,073
|
)
|
|
(30,141
|
)
|
|
(118,482
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
|
(1,551
|
)
|
|
—
|
|
|
(1,551
|
)
|
|
1,551
|
|
|
(1,551
|
)
|
|||||
Total stockholder's equity
|
|
239,897
|
|
|
514,328
|
|
|
(16,383
|
)
|
|
(497,945
|
)
|
|
239,897
|
|
|||||
Total liabilities and stockholder's equity
|
|
$
|
2,058,074
|
|
|
$
|
758,410
|
|
|
$
|
23,182
|
|
|
$
|
(640,352
|
)
|
|
$
|
2,199,314
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
As of December 30, 2018
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
54,775
|
|
|
$
|
6,725
|
|
|
$
|
1,670
|
|
|
$
|
—
|
|
|
$
|
63,170
|
|
Restricted cash
|
|
—
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
151
|
|
|||||
Accounts receivable
|
|
28,421
|
|
|
4,956
|
|
|
4,117
|
|
|
(3,314
|
)
|
|
34,180
|
|
|||||
Inventories
|
|
16,896
|
|
|
6,617
|
|
|
294
|
|
|
—
|
|
|
23,807
|
|
|||||
Prepaid expenses
|
|
14,264
|
|
|
10,562
|
|
|
598
|
|
|
—
|
|
|
25,424
|
|
|||||
Total current assets
|
|
114,356
|
|
|
28,860
|
|
|
6,830
|
|
|
(3,314
|
)
|
|
146,732
|
|
|||||
Property and equipment, net
|
|
468,827
|
|
|
64,721
|
|
|
5,637
|
|
|
—
|
|
|
539,185
|
|
|||||
Goodwill
|
|
433,024
|
|
|
51,414
|
|
|
—
|
|
|
—
|
|
|
484,438
|
|
|||||
Intangible assets, net
|
|
14,716
|
|
|
462,369
|
|
|
—
|
|
|
—
|
|
|
477,085
|
|
|||||
Intercompany
|
|
78,402
|
|
|
66,373
|
|
|
—
|
|
|
(144,775
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
477,556
|
|
|
—
|
|
|
—
|
|
|
(477,556
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
7,292
|
|
|
11,409
|
|
|
24
|
|
|
—
|
|
|
18,725
|
|
|||||
Total assets
|
|
$
|
1,594,173
|
|
|
$
|
685,146
|
|
|
$
|
12,491
|
|
|
$
|
(625,645
|
)
|
|
$
|
1,666,165
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,600
|
|
Accounts payable, accrued expenses and unearned revenues
|
|
56,277
|
|
|
34,429
|
|
|
2,321
|
|
|
—
|
|
|
93,027
|
|
|||||
Other current liabilities
|
|
5,429
|
|
|
510
|
|
|
16
|
|
|
—
|
|
|
5,955
|
|
|||||
Total current liabilities
|
|
69,306
|
|
|
34,939
|
|
|
2,337
|
|
|
—
|
|
|
106,582
|
|
|||||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
961,514
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
961,514
|
|
|||||
Deferred tax liability
|
|
91,049
|
|
|
17,866
|
|
|
(1,857
|
)
|
|
—
|
|
|
107,058
|
|
|||||
Intercompany
|
|
—
|
|
|
119,498
|
|
|
28,591
|
|
|
(148,089
|
)
|
|
—
|
|
|||||
Other noncurrent liabilities
|
|
229,733
|
|
|
18,191
|
|
|
516
|
|
|
—
|
|
|
248,440
|
|
|||||
Total liabilities
|
|
1,351,602
|
|
|
190,494
|
|
|
29,587
|
|
|
(148,089
|
)
|
|
1,423,594
|
|
|||||
Stockholder's equity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital in excess of par value
|
|
359,570
|
|
|
466,114
|
|
|
3,241
|
|
|
(469,355
|
)
|
|
359,570
|
|
|||||
Accumulated earnings (deficit)
|
|
(115,660
|
)
|
|
28,538
|
|
|
(18,691
|
)
|
|
(9,847
|
)
|
|
(115,660
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
|
(1,339
|
)
|
|
—
|
|
|
(1,646
|
)
|
|
1,646
|
|
|
(1,339
|
)
|
|||||
Total stockholder's equity
|
|
242,571
|
|
|
494,652
|
|
|
(17,096
|
)
|
|
(477,556
|
)
|
|
242,571
|
|
|||||
Total liabilities and stockholder's equity
|
|
$
|
1,594,173
|
|
|
$
|
685,146
|
|
|
$
|
12,491
|
|
|
$
|
(625,645
|
)
|
|
$
|
1,666,165
|
|
CEC Entertainment, Inc.
|
|||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||||
For the Three Months Ended September 29, 2019
|
|||||||||||||||||||||
(in thousands)
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|||||||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Food and beverage sales
|
|
$
|
77,475
|
|
|
$
|
13,866
|
|
|
$
|
1,304
|
|
|
$
|
—
|
|
|
$
|
92,645
|
|
|
Entertainment and merchandise sales
|
|
106,258
|
|
|
10,651
|
|
|
2,779
|
|
|
—
|
|
|
119,688
|
|
||||||
Total company venue sales
|
|
183,733
|
|
|
24,517
|
|
|
4,083
|
|
|
—
|
|
|
212,333
|
|
||||||
Franchise fees and royalties
|
|
448
|
|
|
4,249
|
|
|
564
|
|
|
—
|
|
|
5,261
|
|
||||||
International Association assessments and other fees
|
|
258
|
|
|
8,485
|
|
|
8,763
|
|
|
(17,506
|
)
|
|
—
|
|
||||||
Total revenues
|
|
184,439
|
|
|
37,251
|
|
|
13,410
|
|
|
(17,506
|
)
|
|
217,594
|
|
||||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Company venue operating costs:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of food and beverage
|
|
17,243
|
|
|
3,635
|
|
|
424
|
|
|
—
|
|
|
21,302
|
|
||||||
Cost of entertainment and merchandise
|
|
9,445
|
|
|
396
|
|
|
272
|
|
|
—
|
|
|
10,113
|
|
||||||
Total cost of food, beverage, entertainment and merchandise
|
|
26,688
|
|
|
4,031
|
|
|
696
|
|
|
—
|
|
|
31,415
|
|
||||||
Labor expenses
|
|
57,163
|
|
|
4,847
|
|
|
1,203
|
|
|
—
|
|
|
63,213
|
|
||||||
Lease costs
|
|
25,105
|
|
|
1,865
|
|
|
589
|
|
|
—
|
|
|
27,559
|
|
||||||
Other venue operating expenses
|
|
38,399
|
|
|
3,992
|
|
|
939
|
|
|
(8,744
|
)
|
|
34,586
|
|
||||||
Total company venue operating costs
|
|
147,355
|
|
|
14,735
|
|
|
3,427
|
|
|
(8,744
|
)
|
|
156,773
|
|
||||||
Advertising expense
|
|
8,649
|
|
|
1,190
|
|
|
9,726
|
|
|
(8,762
|
)
|
|
10,803
|
|
||||||
General and administrative expenses
|
|
4,240
|
|
|
8,561
|
|
|
250
|
|
|
—
|
|
|
13,051
|
|
||||||
Depreciation and Amortization
|
74,749
|
|
21,766
|
|
|
2,476
|
|
|
380
|
|
|
—
|
|
|
24,622
|
|
|||||
Transaction, severance and related litigation costs
|
|
371
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
371
|
|
||||||
Asset impairments
|
|
2,023
|
|
|
6,179
|
|
|
—
|
|
|
—
|
|
|
8,202
|
|
||||||
Total operating costs and expenses
|
|
184,404
|
|
|
33,141
|
|
|
13,783
|
|
|
(17,506
|
)
|
|
213,822
|
|
||||||
Operating income (loss)
|
|
35
|
|
|
4,110
|
|
|
(373
|
)
|
|
—
|
|
|
3,772
|
|
||||||
Equity in earnings in affiliates
|
|
658
|
|
|
—
|
|
|
—
|
|
|
(658
|
)
|
|
—
|
|
||||||
Interest expense
|
|
21,150
|
|
|
705
|
|
|
174
|
|
|
—
|
|
|
22,029
|
|
||||||
Loss on extinguishment of debt
|
|
2,910
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,910
|
|
||||||
Income (loss) before income taxes
|
|
(23,367
|
)
|
|
3,405
|
|
|
(547
|
)
|
|
(658
|
)
|
|
(21,167
|
)
|
||||||
Income tax expense (benefit)
|
|
(8,033
|
)
|
|
2,321
|
|
|
(121
|
)
|
|
—
|
|
|
(5,833
|
)
|
||||||
Net income (loss)
|
|
$
|
(15,334
|
)
|
|
$
|
1,084
|
|
|
$
|
(426
|
)
|
|
$
|
(658
|
)
|
|
$
|
(15,334
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustments
|
|
73
|
|
|
|
|
|
(73
|
)
|
|
73
|
|
|
73
|
|
||||||
Comprehensive income (loss)
|
|
$
|
(15,261
|
)
|
|
$
|
1,084
|
|
|
$
|
(499
|
)
|
|
$
|
(585
|
)
|
|
$
|
(15,261
|
)
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
For the Three Months Ended September 30, 2018
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
||||||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
79,871
|
|
|
$
|
12,854
|
|
|
$
|
1,298
|
|
|
$
|
—
|
|
|
$
|
94,023
|
|
Entertainment and merchandise sales
|
|
108,461
|
|
|
10,380
|
|
|
2,770
|
|
|
—
|
|
|
121,611
|
|
|||||
Total company venue sales
|
|
188,332
|
|
|
23,234
|
|
|
4,068
|
|
|
—
|
|
|
215,634
|
|
|||||
Franchise fees and royalties
|
|
441
|
|
|
4,302
|
|
|
568
|
|
|
—
|
|
|
5,311
|
|
|||||
International Association assessments and other fees
|
|
221
|
|
|
9,588
|
|
|
8,862
|
|
|
(18,671
|
)
|
|
—
|
|
|||||
Total revenues
|
|
188,994
|
|
|
37,124
|
|
|
13,498
|
|
|
(18,671
|
)
|
|
220,945
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
18,700
|
|
|
3,348
|
|
|
472
|
|
|
—
|
|
|
22,520
|
|
|||||
Cost of entertainment and merchandise
|
|
9,306
|
|
|
391
|
|
|
177
|
|
|
—
|
|
|
9,874
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
28,006
|
|
|
3,739
|
|
|
649
|
|
|
—
|
|
|
32,394
|
|
|||||
Labor expenses
|
|
58,818
|
|
|
4,976
|
|
|
1,234
|
|
|
—
|
|
|
65,028
|
|
|||||
Lease costs
|
|
21,719
|
|
|
1,630
|
|
|
502
|
|
|
—
|
|
|
23,851
|
|
|||||
Other venue operating expenses
|
|
43,711
|
|
|
3,500
|
|
|
830
|
|
|
(9,809
|
)
|
|
38,232
|
|
|||||
Total company venue operating costs
|
|
152,254
|
|
|
13,845
|
|
|
3,215
|
|
|
(9,809
|
)
|
|
159,505
|
|
|||||
Advertising expense
|
|
8,984
|
|
|
1,150
|
|
|
9,786
|
|
|
(8,862
|
)
|
|
11,058
|
|
|||||
General and administrative expenses
|
|
5,017
|
|
|
8,499
|
|
|
(323
|
)
|
|
—
|
|
|
13,193
|
|
|||||
Depreciation and amortization
|
|
21,429
|
|
|
2,807
|
|
|
503
|
|
|
—
|
|
|
24,739
|
|
|||||
Transaction, severance and related litigation costs
|
|
(262
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(263
|
)
|
|||||
Asset impairments
|
|
2,505
|
|
|
2,836
|
|
|
3
|
|
|
—
|
|
|
5,344
|
|
|||||
Total operating costs and expenses
|
|
189,927
|
|
|
29,136
|
|
|
13,184
|
|
|
(18,671
|
)
|
|
213,576
|
|
|||||
Operating income (loss)
|
|
(933
|
)
|
|
7,988
|
|
|
314
|
|
|
—
|
|
|
7,369
|
|
|||||
Equity in earnings in affiliates
|
|
5,444
|
|
|
—
|
|
|
—
|
|
|
(5,444
|
)
|
|
—
|
|
|||||
Interest expense
|
|
18,205
|
|
|
692
|
|
|
172
|
|
|
—
|
|
|
19,069
|
|
|||||
Income (loss) before income taxes
|
|
(13,694
|
)
|
|
7,296
|
|
|
142
|
|
|
(5,444
|
)
|
|
(11,700
|
)
|
|||||
Income tax expense (benefit)
|
|
(4,207
|
)
|
|
2,113
|
|
|
(119
|
)
|
|
—
|
|
|
(2,213
|
)
|
|||||
Net income (loss)
|
|
$
|
(9,487
|
)
|
|
$
|
5,183
|
|
|
$
|
261
|
|
|
$
|
(5,444
|
)
|
|
$
|
(9,487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
|
172
|
|
|
(172
|
)
|
|||||
Comprehensive income (loss)
|
|
$
|
(9,659
|
)
|
|
$
|
5,183
|
|
|
$
|
89
|
|
|
$
|
(5,272
|
)
|
|
$
|
(9,659
|
)
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
For the Nine Months Ended September 29, 2019
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
256,765
|
|
|
$
|
41,416
|
|
|
$
|
3,930
|
|
|
$
|
—
|
|
|
$
|
302,111
|
|
Entertainment and merchandise sales
|
|
344,417
|
|
|
34,566
|
|
|
7,795
|
|
|
—
|
|
|
386,778
|
|
|||||
Total company venue sales
|
|
601,182
|
|
|
75,982
|
|
|
11,725
|
|
|
—
|
|
|
688,889
|
|
|||||
Franchise fees and royalties
|
|
1,784
|
|
|
13,235
|
|
|
2,175
|
|
|
—
|
|
|
17,194
|
|
|||||
International Association assessments and other fees
|
|
836
|
|
|
30,710
|
|
|
28,692
|
|
|
(60,238
|
)
|
|
—
|
|
|||||
Total revenues
|
|
603,802
|
|
|
119,927
|
|
|
42,592
|
|
|
(60,238
|
)
|
|
706,083
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
57,048
|
|
|
10,870
|
|
|
1,321
|
|
|
—
|
|
|
69,239
|
|
|||||
Cost of entertainment and merchandise
|
|
29,315
|
|
|
1,266
|
|
|
730
|
|
|
—
|
|
|
31,311
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
86,363
|
|
|
12,136
|
|
|
2,051
|
|
|
—
|
|
|
100,550
|
|
|||||
Labor expenses
|
|
181,397
|
|
|
14,591
|
|
|
3,705
|
|
|
—
|
|
|
199,693
|
|
|||||
Lease costs
|
|
74,749
|
|
|
5,587
|
|
|
1,766
|
|
|
—
|
|
|
82,102
|
|
|||||
Other venue operating expenses
|
|
119,942
|
|
|
11,617
|
|
|
2,549
|
|
|
(31,572
|
)
|
|
102,536
|
|
|||||
Total company venue operating costs
|
|
462,451
|
|
|
43,931
|
|
|
10,071
|
|
|
(31,572
|
)
|
|
484,881
|
|
|||||
Advertising expense
|
|
28,562
|
|
|
4,165
|
|
|
29,972
|
|
|
(28,666
|
)
|
|
34,033
|
|
|||||
General and administrative expenses
|
|
13,895
|
|
|
29,297
|
|
|
(248
|
)
|
|
—
|
|
|
42,944
|
|
|||||
Depreciation and amortization
|
|
64,461
|
|
|
7,414
|
|
|
1,199
|
|
|
—
|
|
|
73,074
|
|
|||||
Transaction, severance and related litigation costs
|
|
402
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
402
|
|
|||||
Asset Impairments
|
|
3,134
|
|
|
6,353
|
|
|
—
|
|
|
—
|
|
|
9,487
|
|
|||||
Total operating costs and expenses
|
|
572,905
|
|
|
91,160
|
|
|
40,994
|
|
|
(60,238
|
)
|
|
644,821
|
|
|||||
Operating income
|
|
30,897
|
|
|
28,767
|
|
|
1,598
|
|
|
—
|
|
|
61,262
|
|
|||||
Equity in earnings in affiliates
|
|
20,677
|
|
|
—
|
|
|
—
|
|
|
(20,677
|
)
|
|
—
|
|
|||||
Interest expense
|
|
59,093
|
|
|
2,210
|
|
|
513
|
|
|
—
|
|
|
61,816
|
|
|||||
Loss on debt extinguishment
|
|
2,910
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,910
|
|
|||||
Income before income taxes
|
|
(10,429
|
)
|
|
26,557
|
|
|
1,085
|
|
|
(20,677
|
)
|
|
(3,464
|
)
|
|||||
Income tax expense
|
|
(7,607
|
)
|
|
6,880
|
|
|
85
|
|
|
—
|
|
|
(642
|
)
|
|||||
Net income
|
|
$
|
(2,822
|
)
|
|
$
|
19,677
|
|
|
$
|
1,000
|
|
|
$
|
(20,677
|
)
|
|
$
|
(2,822
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
(212
|
)
|
|
—
|
|
|
(212
|
)
|
|
212
|
|
|
(212
|
)
|
|||||
Comprehensive income (loss)
|
|
$
|
(3,034
|
)
|
|
$
|
19,677
|
|
|
$
|
788
|
|
|
$
|
(20,465
|
)
|
|
$
|
(3,034
|
)
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
For the Nine Months Ended September 30, 2018
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
264,130
|
|
|
$
|
40,250
|
|
|
$
|
4,278
|
|
|
$
|
—
|
|
|
$
|
308,658
|
|
Entertainment and merchandise sales
|
|
324,231
|
|
|
36,255
|
|
|
8,147
|
|
|
—
|
|
|
368,633
|
|
|||||
Total company venue sales
|
|
588,361
|
|
|
76,505
|
|
|
12,425
|
|
|
—
|
|
|
677,291
|
|
|||||
Franchise fees and royalties
|
|
1,441
|
|
|
12,661
|
|
|
1,815
|
|
|
—
|
|
|
15,917
|
|
|||||
International Association assessments and other fees
|
|
794
|
|
|
28,339
|
|
|
27,951
|
|
|
(57,084
|
)
|
|
—
|
|
|||||
Total revenues
|
|
590,596
|
|
|
117,505
|
|
|
42,191
|
|
|
(57,084
|
)
|
|
693,208
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
60,432
|
|
|
10,845
|
|
|
1,497
|
|
|
—
|
|
|
72,774
|
|
|||||
Cost of entertainment and merchandise
|
|
25,972
|
|
|
1,238
|
|
|
466
|
|
|
—
|
|
|
27,676
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
86,404
|
|
|
12,083
|
|
|
1,963
|
|
|
—
|
|
|
100,450
|
|
|||||
Labor expenses
|
|
176,106
|
|
|
15,065
|
|
|
3,823
|
|
|
—
|
|
|
194,994
|
|
|||||
Lease costs
|
|
65,417
|
|
|
5,638
|
|
|
1,560
|
|
|
—
|
|
|
72,615
|
|
|||||
Other venue operating expenses
|
|
129,006
|
|
|
10,882
|
|
|
2,634
|
|
|
(29,159
|
)
|
|
113,363
|
|
|||||
Total company venue operating costs
|
|
456,933
|
|
|
43,668
|
|
|
9,980
|
|
|
(29,159
|
)
|
|
481,422
|
|
|||||
Advertising expense
|
|
28,742
|
|
|
4,511
|
|
|
32,682
|
|
|
(27,925
|
)
|
|
38,010
|
|
|||||
General and administrative expenses
|
|
13,539
|
|
|
25,336
|
|
|
644
|
|
|
—
|
|
|
39,519
|
|
|||||
Depreciation and amortization
|
|
67,073
|
|
|
8,253
|
|
|
1,478
|
|
|
—
|
|
|
76,804
|
|
|||||
Transaction, severance and related litigation costs
|
|
197
|
|
|
266
|
|
|
—
|
|
|
—
|
|
|
463
|
|
|||||
Asset impairment
|
|
2,591
|
|
|
4,341
|
|
|
3
|
|
|
—
|
|
|
6,935
|
|
|||||
Total operating costs and expenses
|
|
569,075
|
|
|
86,375
|
|
|
44,787
|
|
|
(57,084
|
)
|
|
643,153
|
|
|||||
Operating income (loss)
|
|
21,521
|
|
|
31,130
|
|
|
(2,596
|
)
|
|
—
|
|
|
50,055
|
|
|||||
Equity in earnings in affiliates
|
|
19,869
|
|
|
—
|
|
|
—
|
|
|
(19,869
|
)
|
|
—
|
|
|||||
Interest expense
|
|
53,833
|
|
|
2,446
|
|
|
461
|
|
|
—
|
|
|
56,740
|
|
|||||
Income (loss) before income taxes
|
|
(12,443
|
)
|
|
28,684
|
|
|
(3,057
|
)
|
|
(19,869
|
)
|
|
(6,685
|
)
|
|||||
Income tax expense
|
|
(6,212
|
)
|
|
6,526
|
|
|
(768
|
)
|
|
—
|
|
|
(454
|
)
|
|||||
Net income (loss)
|
|
$
|
(6,231
|
)
|
|
$
|
22,158
|
|
|
$
|
(2,289
|
)
|
|
$
|
(19,869
|
)
|
|
$
|
(6,231
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
127
|
|
|
—
|
|
|
127
|
|
|
(127
|
)
|
|
127
|
|
|||||
Comprehensive income (loss)
|
|
$
|
(6,104
|
)
|
|
$
|
22,158
|
|
|
$
|
(2,162
|
)
|
|
$
|
(19,996
|
)
|
|
$
|
(6,104
|
)
|
CEC Entertainment, Inc.
|
||||||||||||||||
Consolidating Statement of Cash Flows
|
||||||||||||||||
For the Nine Months Ended September 29, 2019
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Consolidated
|
||||||||
Cash flows provided by operating activities:
|
|
$
|
104,719
|
|
|
$
|
9,292
|
|
|
$
|
1,633
|
|
|
$
|
115,644
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
||||||||
Purchases of property and equipment
|
|
(52,180
|
)
|
|
(7,701
|
)
|
|
(507
|
)
|
|
(60,388
|
)
|
||||
Development of internal use software
|
|
(183
|
)
|
|
(604
|
)
|
|
—
|
|
|
(787
|
)
|
||||
Proceeds from sale of property and equipment
|
|
160
|
|
|
—
|
|
|
—
|
|
|
160
|
|
||||
Cash flows used in investing activities
|
|
(52,203
|
)
|
|
(8,305
|
)
|
|
(507
|
)
|
|
(61,015
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
||||||||
Net proceeds from senior term loan, net of original issue discount
|
|
479,449
|
|
|
—
|
|
|
—
|
|
|
479,449
|
|
||||
Repayments on senior term loan
|
|
(473,749
|
)
|
|
—
|
|
|
—
|
|
|
(473,749
|
)
|
||||
Payment of debt financing costs
|
|
(15,375
|
)
|
|
—
|
|
|
—
|
|
|
(15,375
|
)
|
||||
Payments on financing lease obligations
|
|
(520
|
)
|
|
—
|
|
|
(10
|
)
|
|
(530
|
)
|
||||
Payments on sale leaseback transactions
|
|
(2,469
|
)
|
|
—
|
|
|
—
|
|
|
(2,469
|
)
|
||||
Cash flows used in financing activities
|
|
(12,664
|
)
|
|
—
|
|
|
(10
|
)
|
|
(12,674
|
)
|
||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||
Change in cash, cash equivalents and restricted cash
|
|
39,852
|
|
|
987
|
|
|
1,111
|
|
|
41,950
|
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
54,775
|
|
|
6,725
|
|
|
1,821
|
|
|
63,321
|
|
||||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
94,627
|
|
|
$
|
7,712
|
|
|
$
|
2,932
|
|
|
$
|
105,271
|
|
CEC Entertainment, Inc.
|
|||||||||||||||||||
Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the Nine Months Ended September 30, 2018
|
|||||||||||||||||||
(in thousands)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Consolidated
|
|||||||||||
Cash flows provided by (used in) operating activities:
|
|
$
|
68,801
|
|
|
$
|
17,888
|
|
|
$
|
(4,214
|
)
|
|
$
|
82,475
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||||||||||
Purchases of property and equipment
|
|
(38,536
|
)
|
|
(15,512
|
)
|
|
(1,154
|
)
|
|
(55,202
|
)
|
|||||||
Development of internal use software
|
|
(1,484
|
)
|
|
(508
|
)
|
|
—
|
|
|
(1,992
|
)
|
|||||||
Proceeds from the sale of property and equipment
|
|
464
|
|
|
|
|
|
—
|
|
|
464
|
|
|||||||
Cash flows used in investing activities
|
|
(39,556
|
)
|
—
|
|
(16,020
|
)
|
—
|
|
(1,154
|
)
|
—
|
|
(56,730
|
)
|
||||
|
|
|
|
|
|
|
|
|
|||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||||||||||
Repayments on senior term loan
|
|
(5,700
|
)
|
|
—
|
|
|
—
|
|
|
(5,700
|
)
|
|||||||
Payment of debt financing costs
|
|
(395
|
)
|
|
—
|
|
|
—
|
|
|
(395
|
)
|
|||||||
Payments on capital lease obligations
|
|
(436
|
)
|
|
—
|
|
|
(6
|
)
|
|
(442
|
)
|
|||||||
Payments on sale leaseback transactions
|
|
(2,119
|
)
|
|
—
|
|
|
—
|
|
|
(2,119
|
)
|
|||||||
Cash flows used in financing activities
|
|
(8,650
|
)
|
—
|
|
—
|
|
—
|
|
(6
|
)
|
—
|
|
(8,656
|
)
|
||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
|||||||
Change in cash, cash equivalents and restricted cash
|
|
20,595
|
|
—
|
|
1,868
|
|
—
|
|
(5,323
|
)
|
—
|
|
17,140
|
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
59,948
|
|
|
410
|
|
|
6,954
|
|
|
67,312
|
|
|||||||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
80,543
|
|
|
$
|
2,278
|
|
|
$
|
1,631
|
|
|
$
|
84,452
|
|
•
|
Presentation of Operating Results;
|
•
|
Executive Summary;
|
•
|
Key Measure of Our Financial Performance and Key Non-GAAP Measures;
|
•
|
Key Income Statement Line Item Descriptions;
|
•
|
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
|
|
Nine Months Ended
|
||||||||
|
|
September 29,
2019 |
|
September 30,
2018 |
|
September 29,
2019 |
|
September 30,
2018 |
||||
Number of Company-operated venues:
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
554
|
|
|
559
|
|
|
554
|
|
|
562
|
|
New
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Acquired from franchisee (1)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Closed
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
(6
|
)
|
End of period
|
|
553
|
|
|
557
|
|
|
553
|
|
|
557
|
|
Number of franchised venues:
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
195
|
|
|
196
|
|
|
196
|
|
|
192
|
|
New
|
|
4
|
|
|
1
|
|
|
7
|
|
|
7
|
|
Acquired from franchisee (1)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
Closed
|
|
(14
|
)
|
|
—
|
|
|
(17
|
)
|
|
(2
|
)
|
End of period
|
|
185
|
|
|
197
|
|
|
185
|
|
|
197
|
|
Total number of venues:
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
749
|
|
|
755
|
|
|
750
|
|
|
754
|
|
New
|
|
5
|
|
|
2
|
|
|
8
|
|
|
8
|
|
Acquired from franchisee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Closed
|
|
(16
|
)
|
|
(3
|
)
|
|
(20
|
)
|
|
(8
|
)
|
End of period
|
|
738
|
|
|
754
|
|
|
738
|
|
|
754
|
|
(1)
|
The number of new Company-operated venues and closed franchised venues during the nine months ended September 29, 2019 included one store that was acquired from a franchisee.
|
•
|
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 tickets issued, stored-value PlayPass and All You Can Play (“AYCP”) cards, prizes provided and merchandise sold to our customers.
|
•
|
Labor expenses consist of salaries and wages, bonuses, related payroll taxes and benefits for venue personnel;
|
•
|
Lease costs include lease costs for Company-operated venues and, effective the first day of Fiscal 2019, in connection with the adoption of a new lease accounting standards, lease costs include common area maintenance (“CAM”) charges; and
|
•
|
Other venue operating expenses primarily include utilities, repair and maintenance costs, liability and property insurance, property taxes, credit card processing fees, licenses, preopening expenses, venue asset disposal gains and losses, CAM charges (through the end of Fiscal 2018 as discussed under Lease costs above) and all other costs directly related to the operation of a venue.
|
|
|
Three Months Ended
|
||||||||||||
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||
Food and beverage sales
|
|
$
|
92,645
|
|
|
43.6
|
%
|
|
$
|
94,023
|
|
|
43.6
|
%
|
Entertainment and merchandise sales
|
|
119,688
|
|
|
56.4
|
%
|
|
121,611
|
|
|
56.4
|
%
|
||
Total company venue sales
|
|
$
|
212,333
|
|
|
100.0
|
%
|
|
$
|
215,634
|
|
|
100.0
|
%
|
|
|
Nine Months Ended
|
||||||||||||
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||
Food and beverage sales
|
|
$
|
302,111
|
|
|
43.9
|
%
|
|
$
|
308,658
|
|
|
45.6
|
%
|
Entertainment and merchandise sales
|
|
386,778
|
|
|
56.1
|
%
|
|
368,633
|
|
|
54.4
|
%
|
||
Total company venue sales
|
|
$
|
688,889
|
|
|
100.0
|
%
|
|
$
|
677,291
|
|
|
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.
|
•
|
our 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 cash management strategies.
|
|
|
Nine Months Ended
|
||||||
|
|
September 29,
2019 |
|
September 30,
2018 |
||||
|
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
|
$
|
115,644
|
|
|
$
|
82,475
|
|
Net cash used in investing activities
|
|
(61,015
|
)
|
|
(56,730
|
)
|
||
Net cash used in financing activities
|
|
(12,674
|
)
|
|
(8,656
|
)
|
||
Effect of foreign exchange rate changes on cash
|
|
(5
|
)
|
|
51
|
|
||
Change in cash, cash equivalents and restricted cash
|
|
$
|
41,950
|
|
|
$
|
17,140
|
|
Interest paid
|
|
$
|
57,232
|
|
|
$
|
59,229
|
|
Income taxes paid (refunded), net
|
|
$
|
(7,944
|
)
|
|
$
|
867
|
|
|
|
September 29,
2019 |
|
December 30,
2018 |
||||
|
|
($ in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
105,059
|
|
|
$
|
63,170
|
|
Restricted cash
|
|
212
|
|
|
151
|
|
||
Available unused commitments under Revolving Credit Facility
|
|
105,538
|
|
|
141,000
|
|
||
Total cash, cash equivalents, restricted cash and available unused commitments under Revolving Credit Facility
|
|
$
|
210,809
|
|
|
$
|
204,321
|
|
Term loan facility
|
|
760,000
|
|
|
723,900
|
|
||
Senior notes
|
|
255,000
|
|
|
255,000
|
|
(i)
|
a $114 million secured revolving credit facility which includes a $50 million letter of credit sub-facility (collectively the “2019 Revolving Credit Facility”) with a maturity date of August 30, 2024 (the “revolver maturity date); and
|
(ii)
|
a $760 million secured term loan facility (the “2019 Term Loan Facility” and together with the 2019
|
•
|
Loss on Extinguishment of Debt: We recorded a loss on extinguishment of debt totaling $2.9 million which includes $0.5 million of fees paid to lenders in connection with the 2019 Term Loan Facility and wrote off $2.4 million of unamortized deferred financing costs and original issue discount related to the 2014 Secured Credit Facilities;
|
•
|
Transaction related costs: We expensed third party fees totaling $0.3 million related to legal fees incurred in connection with the 2019 Term Loan Facility. The transaction related costs are included in “Transaction, severance and related litigation costs” in our Consolidated Statement of Earnings;
|
•
|
Interest Expense: We expensed third party fees totaling $0.4 million related to rating agency fees incurred in connection with the 2019 Secured Credit Facilities. These fees are included in “Interest Expense” in our Consolidated Statement of Earnings; and
|
•
|
Deferred Financing Costs: Debt issuance costs totaling $14.2 million related to the 2019 Secured Credit Facilities were capitalized and are included in “Bank indebtedness and other long-term debt, net of deferred financing costs” on our Consolidated Balance Sheets. We also continued to defer $2.1 million of unamortized deferred financing costs related to the 2014 Secured Credit Facilities.
|
•
|
Excess Cash Flow- Subject to certain exceptions, to the extent we have excess cash flow determined on an annual basis (as defined in the 2019 Secured Credit Facilities agreement), we are required to make a mandatory prepayment of term loan principal (reduced by any optional prepayments of principal that may have occurred during the fiscal year) to the extent that 75% (the “required percentage” which is subject to step downs discussed below) times the excess cash flow exceeds $10.0 million. The required percentage steps down from 75% to 50% provided our Net Total Leverage Ratio (the ratio of total consolidated debt including lease related obligations net of unrestricted cash to the last twelve month’s EBITDA, as defined in the 2019 Senior Credit Facilities agreement) is less than or equal to 4.50 to 1.00 and greater than 4.25 to 1.00, steps down to 25% provided our Net Total Leverage Ratio is less than or equal to 4.25 to 1.00 and greater than 4.00 to 1.00, and steps down to 0% provided our Net Total Leverage Ratio is less than or equal to 4.00 to 1.00.
|
•
|
Sales and Disposition of Assets- Subject to certain exceptions, we are required to make a mandatory prepayment of term loan principal of 100% of the net cash proceeds of all non-ordinary course asset sales,
|
•
|
Issuance or incurrence of Debt- Subject to certain exceptions, we are required to make a mandatory prepayment of term loan principal of 100% of the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the 2019 Secured Credit Facilities.
|
Margin for Base Rate Loans
|
|
Margin for LIBOR Loans
|
5.50%
|
|
6.50%
|
Net Total Leverage Ratio
|
|
Margin for Base Rate Loans
|
|
Margin for LIBOR Loans
|
Greater than 4.80 to 1.00
|
|
5.50%
|
|
6.50%
|
Less than or equal to 4.80 to 1.00 but greater than 4.30 to 1.00
|
|
5.25%
|
|
6.25%
|
Less than or equal to 4.30 to 1.00
|
|
5.00%
|
|
6.00%
|
Net Total Leverage Ratio
|
|
Commitment Fee
|
Greater than 4.30 to 1.00
|
|
0.50%
|
Less than or equal to 4.30 to 1.00
|
|
0.375%
|
|
|
Nine Months Ended
|
||||||
|
|
September 29, 2019
|
|
September 30, 2018
|
||||
|
|
(in thousands)
|
||||||
Growth capital spend (1)
|
|
$
|
23,390
|
|
|
$
|
21,157
|
|
Maintenance capital spend (2)
|
|
35,264
|
|
|
33,048
|
|
||
IT capital spend
|
|
2,521
|
|
|
2,989
|
|
||
Total Capital Spend
|
|
$
|
61,175
|
|
|
$
|
57,194
|
|
(1)
|
Growth capital spend includes major remodels, including the re-imaging effort to update Chuck E. Cheese venues to a new look and feel, venue expansions, new venue development, including relocations, and franchise acquisitions.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 29,
2019 |
|
September 30,
2018 |
|
September 29,
2019 |
|
September 30,
2018 |
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||
Total revenues
|
|
$
|
217,594
|
|
|
$
|
220,945
|
|
|
$
|
706,083
|
|
|
$
|
693,208
|
|
Net loss as reported
|
|
$
|
(15,334
|
)
|
|
$
|
(9,487
|
)
|
|
$
|
(2,822
|
)
|
|
$
|
(6,231
|
)
|
Interest expense
|
|
22,029
|
|
|
19,069
|
|
|
61,816
|
|
|
56,740
|
|
||||
Income tax benefit
|
|
(5,833
|
)
|
|
(2,213
|
)
|
|
(642
|
)
|
|
(454
|
)
|
||||
Depreciation and amortization
|
|
24,622
|
|
|
24,739
|
|
|
73,074
|
|
|
76,804
|
|
||||
EBITDA
|
|
25,484
|
|
|
32,108
|
|
|
131,426
|
|
|
126,859
|
|
||||
Asset impairments
|
|
8,202
|
|
|
5,344
|
|
|
9,487
|
|
|
6,935
|
|
||||
Loss on asset disposals, net (1)
|
|
920
|
|
|
513
|
|
|
2,903
|
|
|
2,551
|
|
||||
Unrealized (gain) loss on foreign exchange (2)
|
|
168
|
|
|
(412
|
)
|
|
(469
|
)
|
|
283
|
|
||||
Non-cash stock-based compensation (3)
|
|
(111
|
)
|
|
(58
|
)
|
|
2,000
|
|
|
169
|
|
||||
Rent expense book to cash (4)
|
|
783
|
|
|
945
|
|
|
2,481
|
|
|
5,133
|
|
||||
Franchise revenue, net cash received (5)
|
|
464
|
|
|
(30
|
)
|
|
1,634
|
|
|
712
|
|
||||
Impact of purchase accounting (6)
|
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
||||
Venue pre-opening costs (7)
|
|
170
|
|
|
81
|
|
|
386
|
|
|
105
|
|
||||
One-time and unusual items (8)
|
|
2,781
|
|
|
44
|
|
|
3,566
|
|
|
1,511
|
|
||||
Adjusted EBITDA
|
|
$
|
38,892
|
|
|
$
|
38,535
|
|
|
$
|
153,445
|
|
|
$
|
144,258
|
|
Adjusted EBITDA Margin
|
|
17.9
|
%
|
|
17.4
|
%
|
|
21.7
|
%
|
|
20.8
|
%
|
(1)
|
Relates primarily to gains or losses upon disposal of property or equipment.
|
(2)
|
Relates to unrealized gains or losses on the revaluation of our indebtedness with our Canadian subsidiary.
|
(3)
|
Represents non-cash equity-based compensation expense.
|
(4)
|
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 landlord incentives and allowances in the period in which it was received.
|
(5)
|
Represents the actual cash received for franchise fees received in the period for post-acquisition franchise development agreements, which we do not start recognizing into revenue until the franchise venue is opened.
|
(6)
|
Represents revenue related to unearned franchise fees that were removed in purchase accounting, and therefore were not recorded as revenue.
|
(7)
|
Relates to start-up and marketing costs incurred prior to the opening of new Company-operated venues and generally consists of payroll, recruiting, training, supplies and rent incurred prior to venue opening.
|
(8)
|
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 loss on extinguishment of debt related to the refinancing of our 2014 Secured Credit Facilities; (v) professional and legal fees incurred in connection with our 2019 Secured Credit Facilities; (vi) sales and use taxes relating to prior periods; (vii) professional fees incurred in connection with one-time strategic corporate and tax initiatives, such as accounting and consulting fees related to the acquisition of Peter Piper Pizza (such as transfer pricing and cost segregation); (viii) legal fees incurred in connection with certain potential transactions the Company did not pursue; (ix) removing current period property losses and insurance recoveries relating to prior period business interruption losses at certain venues, primarily relating to disaster recoveries, such as natural disasters, fires, floods and property damage; (x) one-time costs related to the early termination of a supplier contract in connection with the transition to a new supplier; (xi) one-time marketing expenses related to the grand openings of our re-imaged Chuck E. Cheese venues; and (xii) one-time training and travel-related costs incurred in connection with training venue employees in connection with the implementation of our PlayPass initiative and the re-imaging effort of the venues in our Chuck E. Cheese portfolio.
|
•
|
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 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;
|
•
|
our ability to weather economic uncertainty and changes in discretionary spending;
|
•
|
increases in food, labor and other operating costs;
|
•
|
the impact of labor scheduling legislation;
|
•
|
our ability to successfully open international franchises and to operate under the United States 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 financial results 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;
|
•
|
our ability to pay our fixed rental payments;
|
•
|
impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets;
|
•
|
our ability to successfully integrate the operations of companies we acquire;
|
•
|
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 December 30, 2018, filed with the SEC on March 12, 2019.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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.
|
|
|
|
|
|
November 12, 2019
|
|
By:
|
|
/s/ James A. Howell
|
|
|
|
|
James A. Howell
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
November 12, 2019
|
|
By:
|
|
/s/ Tony Howard
|
|
|
|
|
Tony Howard
|
|
|
|
|
Vice President, Controller and Chief Accounting Officer
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
1 Year Cec Entertainment Chart |
1 Month Cec Entertainment Chart |
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