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|
x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Kansas
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48-0905805
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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1707 Market Place Blvd, Suite 200
Irving, Texas
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75063
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
|
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Name of each exchange on which registered
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None
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None
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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x
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Smaller reporting company
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¨
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Emerging growth company
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£
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Page
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PART I
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ITEM 1.
|
||
ITEM 1A.
|
||
ITEM 1B.
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
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PART II
|
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ITEM 5.
|
||
ITEM 6.
|
||
ITEM 7.
|
||
ITEM 7A.
|
||
ITEM 8.
|
||
ITEM 9.
|
||
ITEM 9A.
|
||
ITEM 9B.
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||
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PART III
|
|
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ITEM 10.
|
||
ITEM 11.
|
||
ITEM 12.
|
||
ITEM 13.
|
||
ITEM 14.
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||
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PART IV
|
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ITEM 15.
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||
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|
||
|
•
|
our strategy, outlook and growth prospects;
|
•
|
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 preference;
|
•
|
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 consumer discretionary spending;
|
•
|
increases in food, labor and other operating costs;
|
•
|
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 businesses;
|
•
|
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 adequately protect our trademarks or other proprietary rights;
|
•
|
our ability to pay our fixed rental payments;
|
•
|
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.”
|
•
|
Play Pass card system: In
2018
, we completed the deployment of our proprietary Play Pass card system at all Company-operated Chuck E. Cheese’s venues. Guests can purchase “points” on reloadable plastic cards and use these cards to play our games.
|
•
|
AYCP: In the third quarter of 2018, we completed the roll-out of AYCP at all of our domestic Company-operated Chuck E. Cheese’s venues. This product leverages our Play Pass card system and allows guests the option to play unlimited games within a specified period of time. As of
December 30, 2018
, AYCP accounted for approximately 50% of our entertainment revenues.
|
•
|
More Tickets: We believe our guests enjoy the thrill of winning tickets and redeeming them for our merchandise. During the
third quarter of 2018
, we completed the roll-out of higher ticket payouts at our redemption games, coupled with a smaller adjustment to the ticket “prices” of our merchandise.
|
•
|
Gameplay promotions: Play Pass technology allows us to vary pricing and offerings by geography and day part within a venue. During
2018
, we began offering guests promotions that included discounts during slow school days, surge pricing on select weekends and holidays, and traffic-driving deals like discounted AYCP.
|
•
|
Remodeling our venues to provide a modern, fresh look: In
2017
, we began testing a redesigned concept at
seven
of our Chuck E. Cheese’s venues which carefully targeted areas to improve family experience and comfort. Changes included a new exterior and signage, brighter interiors, art décor on the walls, digital menu boards, a new star dance stage, and pizza windows that allow guests to view the pizza being made. In
2018
, we completed
25
remodels and have plans for
60
in 2019.
|
•
|
Refreshing and improving our marketing: We focus on connecting with kids via national television, gaming and promotional opportunities. We also focus on connecting with moms through national television advertising, digital advertising, cross-promotional coupons, social media, public relations and e-mail.
|
•
|
Improved menu offerings and birthday reservations: We continue to enhance the guest experience by introducing new menu items, attractive packaging, promotional programs and simplifying our online birthday ordering system.
|
•
|
“More Cheese” customer loyalty program: In the first quarter of 2018, we launched our first customer loyalty program where guests can earn awards and discounts based on purchases.
|
•
|
increasing our vulnerability to general adverse economic and industry conditions;
|
•
|
limiting our ability to obtain additional financing;
|
•
|
requiring a substantial portion of our available cash to be applied to pay our rental obligations, thus reducing cash available for other purposes;
|
•
|
limiting our flexibility in planning for or reacting to changes in our business or the industry in which we compete; and
|
•
|
placing us at a disadvantage with respect to our competitors.
|
•
|
limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; limit our ability to repurchase shares and pay cash dividends;
|
•
|
limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes;
|
•
|
make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the indenture and the agreements governing other indebtedness;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to the repayment of our indebtedness, thereby reducing funds available to us for other purposes;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our operations or business;
|
•
|
make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;
|
•
|
impact our rent expense on leased space, which could be significant;
|
•
|
make us more vulnerable to downturns in our business or the economy;
|
•
|
restrict us from making strategic acquisitions, engaging in development activities, introducing new technologies, or exploiting business opportunities;
|
•
|
cause us to make non-strategic divestitures; and
|
•
|
expose us to the risk of increased interest rates, as certain of our borrowings are at variable rates of interest.
|
Domestic
|
Company-operated venues
|
|
Franchised venues
|
|
Total
|
|||
Chuck E. Cheese’s
|
504
|
|
|
26
|
|
|
530
|
|
Peter Piper Pizza
|
39
|
|
|
61
|
|
|
100
|
|
Total domestic
|
543
|
|
|
87
|
|
|
630
|
|
International
|
|
|
|
|
|
|||
Chuck E. Cheese’s
|
11
|
|
|
65
|
|
|
76
|
|
Peter Piper Pizza
|
—
|
|
|
44
|
|
|
44
|
|
Total international
|
11
|
|
|
109
|
|
|
120
|
|
Total venues in operation
|
554
|
|
|
196
|
|
|
750
|
|
Domestic
|
Company-
Owned venues |
|
Franchised
venues |
|
Total
|
|||
Alabama
|
8
|
|
|
1
|
|
|
9
|
|
Alaska
|
1
|
|
|
—
|
|
|
1
|
|
Arizona
|
33
|
|
|
15
|
|
|
48
|
|
Arkansas
|
6
|
|
|
—
|
|
|
6
|
|
California
|
81
|
|
|
4
|
|
|
85
|
|
Colorado
|
9
|
|
|
—
|
|
|
9
|
|
Connecticut
|
4
|
|
|
—
|
|
|
4
|
|
Delaware
|
2
|
|
|
—
|
|
|
2
|
|
Florida
|
33
|
|
|
—
|
|
|
33
|
|
Georgia
|
15
|
|
|
—
|
|
|
15
|
|
Hawaii
|
—
|
|
|
3
|
|
|
3
|
|
Idaho
|
1
|
|
|
—
|
|
|
1
|
|
Illinois
|
21
|
|
|
—
|
|
|
21
|
|
Indiana
|
13
|
|
|
—
|
|
|
13
|
|
Iowa
|
4
|
|
|
—
|
|
|
4
|
|
Kansas
|
4
|
|
|
—
|
|
|
4
|
|
Kentucky
|
5
|
|
|
—
|
|
|
5
|
|
Louisiana
|
10
|
|
|
2
|
|
|
12
|
|
Maryland
|
14
|
|
|
—
|
|
|
14
|
|
Massachusetts
|
10
|
|
|
—
|
|
|
10
|
|
Michigan
|
16
|
|
|
—
|
|
|
16
|
|
Minnesota
|
8
|
|
|
—
|
|
|
8
|
|
Mississippi
|
3
|
|
|
2
|
|
|
5
|
|
Missouri
|
8
|
|
|
—
|
|
|
8
|
|
Montana
|
—
|
|
|
1
|
|
|
1
|
|
Nebraska
|
2
|
|
|
—
|
|
|
2
|
|
Nevada
|
8
|
|
|
—
|
|
|
8
|
|
New Hampshire
|
1
|
|
|
—
|
|
|
1
|
|
New Jersey
|
14
|
|
|
—
|
|
|
14
|
|
New Mexico
|
7
|
|
|
3
|
|
|
10
|
|
New York
|
21
|
|
|
—
|
|
|
21
|
|
North Carolina
|
13
|
|
|
2
|
|
|
15
|
|
North Dakota
|
—
|
|
|
1
|
|
|
1
|
|
Ohio
|
19
|
|
|
1
|
|
|
20
|
|
Oklahoma
|
6
|
|
|
—
|
|
|
6
|
|
Oregon
|
1
|
|
|
2
|
|
|
3
|
|
Pennsylvania
|
20
|
|
|
—
|
|
|
20
|
|
Rhode Island
|
1
|
|
|
—
|
|
|
1
|
|
South Carolina
|
7
|
|
|
—
|
|
|
7
|
|
South Dakota
|
2
|
|
|
—
|
|
|
2
|
|
Tennessee
|
12
|
|
|
—
|
|
|
12
|
|
Texas
|
66
|
|
|
46
|
|
|
112
|
|
Utah
|
2
|
|
|
—
|
|
|
2
|
|
Virginia
|
12
|
|
|
3
|
|
|
15
|
|
Washington
|
10
|
|
|
1
|
|
|
11
|
|
West Virginia
|
1
|
|
|
—
|
|
|
1
|
|
Wisconsin
|
9
|
|
|
—
|
|
|
9
|
|
Total domestic
|
543
|
|
|
87
|
|
|
630
|
|
International
|
Company-
Owned venues |
|
Franchised
venues |
|
Total
|
|||
Canada
|
11
|
|
|
—
|
|
|
11
|
|
Chile
|
—
|
|
|
7
|
|
|
7
|
|
Colombia
|
—
|
|
|
2
|
|
|
2
|
|
Costa Rica
|
—
|
|
|
1
|
|
|
1
|
|
Guam
|
—
|
|
|
1
|
|
|
1
|
|
Guatemala
|
—
|
|
|
2
|
|
|
2
|
|
Honduras
|
—
|
|
|
2
|
|
|
2
|
|
Mexico
|
—
|
|
|
63
|
|
|
63
|
|
Panama
|
—
|
|
|
2
|
|
|
2
|
|
Peru
|
—
|
|
|
3
|
|
|
3
|
|
Puerto Rico
|
—
|
|
|
3
|
|
|
3
|
|
Trinidad
|
—
|
|
|
2
|
|
|
2
|
|
Saudi Arabia
|
—
|
|
|
18
|
|
|
18
|
|
United Arab Emirates
|
—
|
|
|
3
|
|
|
3
|
|
Total international
|
11
|
|
|
109
|
|
|
120
|
|
Total venues in operation
|
554
|
|
|
196
|
|
|
750
|
|
|
Fiscal Year 2018
|
|
Fiscal Year 2017
|
|
Fiscal Year 2016
|
|
Fiscal Year 2015
(1)
|
|
For the 317 Day Period Ended December 28, 2014
(6)
|
|
|
For the 47 Day Period Ended February 14, 2014
(7)
|
||||||||||||
|
Successor
(7)
|
|
Successor
(7)
|
|
Successor
(7)
|
|
Successor
(7)
|
|
Successor
(7)
|
|
|
Predecessor
(7)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(in thousands, except percentages and venue number amounts)
|
|||||||||||||||||||||||
Statements of Earnings Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company venue sales
|
$
|
875,334
|
|
|
$
|
868,888
|
|
|
$
|
905,314
|
|
|
$
|
905,110
|
|
|
$
|
712,098
|
|
|
|
$
|
113,556
|
|
Total revenues
|
$
|
896,066
|
|
|
$
|
886,771
|
|
|
$
|
923,653
|
|
|
$
|
922,589
|
|
|
$
|
718,581
|
|
|
|
$
|
114,243
|
|
Operating income (loss)
|
$
|
50,801
|
|
|
$
|
47,890
|
|
|
$
|
61,452
|
|
|
$
|
55,131
|
|
|
$
|
(32,259
|
)
|
|
|
$
|
2,873
|
|
Interest expense
|
$
|
76,283
|
|
|
$
|
69,115
|
|
|
$
|
67,745
|
|
|
$
|
70,582
|
|
|
$
|
60,952
|
|
|
|
$
|
1,151
|
|
Income taxes
|
$
|
(5,021
|
)
|
|
$
|
(74,291
|
)
|
|
$
|
(2,626
|
)
|
|
$
|
(2,941
|
)
|
|
$
|
(31,123
|
)
|
|
|
$
|
1,018
|
|
Net income (loss)
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
$
|
(3,667
|
)
|
|
$
|
(12,510
|
)
|
|
$
|
(62,088
|
)
|
|
|
$
|
704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Statement of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating activities
|
$
|
86,790
|
|
|
$
|
104,297
|
|
|
$
|
118,955
|
|
|
$
|
100,613
|
|
|
$
|
48,091
|
|
|
|
$
|
22,314
|
|
Investing activities
|
$
|
(79,284
|
)
|
|
$
|
(93,712
|
)
|
|
$
|
(98,439
|
)
|
|
$
|
(78,191
|
)
|
|
$
|
(1,124,285
|
)
|
|
|
$
|
(9,659
|
)
|
Financing activities
|
$
|
(11,547
|
)
|
|
$
|
(5,030
|
)
|
|
$
|
(10,095
|
)
|
|
$
|
(81,599
|
)
|
|
$
|
1,168,448
|
|
|
|
$
|
(13,844
|
)
|
Non-GAAP Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted EBITDA
(3)
|
$
|
175,166
|
|
|
$
|
180,800
|
|
|
$
|
207,924
|
|
|
$
|
220,936
|
|
|
$
|
170,456
|
|
|
|
$
|
24,967
|
|
Adjusted EBITDA Margin
(4)
|
19.5
|
%
|
|
20.4
|
%
|
|
22.5
|
%
|
|
23.9
|
%
|
|
23.7
|
%
|
|
|
21.9
|
%
|
||||||
Venue-level Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of venues (end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company-operated
|
554
|
|
|
562
|
|
|
559
|
|
|
556
|
|
|
559
|
|
|
NM
|
|
|||||||
Franchised
|
196
|
|
|
192
|
|
|
188
|
|
|
176
|
|
|
172
|
|
|
NM
|
|
|||||||
|
750
|
|
|
754
|
|
|
747
|
|
|
732
|
|
|
731
|
|
|
NM
|
|
|||||||
Comparable venues (end of period)
(2)
|
526
|
|
|
531
|
|
|
529
|
|
|
489
|
|
|
485
|
|
|
NM
|
|
|||||||
Comparable venue sales change
(2)
|
(0.0
|
)%
|
|
(4.8
|
)%
|
|
2.8
|
%
|
|
(0.4
|
)%
|
|
NM
|
|
|
NM
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|
|
As of
|
||||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
January 1, 2017
|
|
December 28, 2015
|
|
December 28, 2014
|
|
|
February 14, 2014
|
||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
1,666,165
|
|
|
$1,695,044
|
|
$1,710,112
|
|
$1,733,035
|
|
$1,836,113
|
|
|
NM
|
|
|||||||||
Total debt
(5)
|
982,121
|
|
|
986,419
|
|
|
989,948
|
|
|
994,448
|
|
|
999,783
|
|
|
|
NM
|
|
||||||
Stockholders’ equity
|
242,571
|
|
|
262,148
|
|
|
206,005
|
|
|
208,546
|
|
|
292,586
|
|
|
|
NM
|
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
70,000
|
|
|
—
|
|
|
|
—
|
|
(1)
|
We operate on a 52 or 53 week fiscal year ending on the Sunday nearest December 31. Fiscal year 2015 was 53 weeks in length, which resulted in our fourth quarter consisting of 14 weeks. All other fiscal years presented were 52 weeks.
|
(2)
|
We define “comparable venue sales” as sales for our domestic owned company-operated venues that have been open for more than 18 months as of the beginning of each respective fiscal year or for acquired venues we have operated for at least 12 months as of the beginning of each respective fiscal year. Comparable venue sales excludes sales for our domestic Company-owned venues that are expected to be temporarily closed for more than three months primarily as a result of natural disasters, fires, floods and property damage. We define “comparable venue sales change” as the percentage change in comparable venue sales for each respective period. We believe comparable venue sales change to be a key performance indicator within our industry; it is a critical factor in evaluating our performance, as it is indicative of acceptance of our strategic initiatives and local economic and consumer trends. Our comparable venue sales for Fiscal 2015, and the Successor 2014 period exclude the Peter Piper Pizza venues that were acquired in October 2014 as we had operated them for less than 12 months at the beginning of each respective fiscal year. As a result of the 53 week fiscal year in
2015
, our
2016
fiscal year began one calendar week later than our
2015
fiscal year. . The comparable venue sales change in the table above is presented on a calendar week basis, excluding the additional week of operations in 2015. On a fiscal basis, excluding the additional week of operations in 2015, comparable venue sales change would have been
3.0%
in 2016.
|
(3)
|
For our definition of Adjusted EBITDA, see the “Non-GAAP Financial Measures” section below.
|
(4)
|
Adjusted EBITDA Margin is defined by us as Adjusted EBITDA as a percentage of Total revenues.
|
(5)
|
Total debt includes our senior notes, our outstanding borrowings under the term loan facility and the revolving credit facility, net of deferred financing costs, capital leases, and the Predecessor Facility.
|
(6)
|
Results for the Successor 2014 period include the revenues and expenses for Peter Piper Pizza for the 73 day period from October 17, 2014 through December 28, 2014.
|
(7)
|
As a result of the Merger, we applied the acquisition method of accounting and established a new basis of accounting on February 15, 2014. The period presented for the period December 29, 2013 through February 14, 2014 represent the operations of the predecessor company (“Predecessor”) and the periods presented after February 14, 2014 represent the operations of the successor company (“Successor”). The financial results for the period December 29, 2013 through February 14, 2014 represent the 47 day Predecessor period.
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|
Fiscal 2015
(1)
|
|
For the 317 Day Period Ended December 28, 2014
|
|
|
For the 47 Day Period Ended February 14, 2014
|
||||||||||||
|
Successor
|
|
Successor
|
|
Successor
|
|
Successor
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
|
(in thousands, except percentages)
|
|||||||||||||||||||||
Total revenues
|
$
|
896,066
|
|
|
$
|
886,771
|
|
|
$
|
923,653
|
|
|
$
|
922,589
|
|
|
$
|
718,581
|
|
|
|
$
|
114,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss) as reported
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
$
|
(3,667
|
)
|
|
$
|
(12,510
|
)
|
|
$
|
(62,088
|
)
|
|
|
$
|
704
|
|
Interest expense
|
76,283
|
|
|
69,115
|
|
|
67,745
|
|
|
70,582
|
|
|
60,952
|
|
|
|
1,151
|
|
||||||
Income tax expense (benefit)
|
(5,021
|
)
|
|
(74,291
|
)
|
|
(2,626
|
)
|
|
(2,941
|
)
|
|
(31,123
|
)
|
|
|
1,018
|
|
||||||
Depreciation and amortization
|
100,720
|
|
|
109,771
|
|
|
119,569
|
|
|
119,294
|
|
|
118,556
|
|
|
|
9,883
|
|
||||||
Non-cash impairments, gain or loss on disposal
(2)
|
10,371
|
|
|
9,241
|
|
|
10,070
|
|
|
8,934
|
|
|
9,841
|
|
|
|
294
|
|
||||||
Unrealized gain on foreign exchange
(3)
|
1,255
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Non-cash stock-based compensation
(4)
|
324
|
|
|
606
|
|
|
689
|
|
|
838
|
|
|
703
|
|
|
|
12,639
|
|
||||||
Rent expense book to cash
(5)
|
6,982
|
|
|
5,655
|
|
|
7,852
|
|
|
9,100
|
|
|
10,665
|
|
|
|
(1,190
|
)
|
||||||
Franchise revenue, net cash received
(6)
|
1,632
|
|
|
—
|
|
|
113
|
|
|
1,217
|
|
|
2,585
|
|
|
|
—
|
|
||||||
Impact of purchase accounting
(7)
|
—
|
|
|
817
|
|
|
1,380
|
|
|
995
|
|
|
1,496
|
|
|
|
—
|
|
||||||
Venue pre-opening costs
(8)
|
183
|
|
|
904
|
|
|
1,591
|
|
|
792
|
|
|
1,166
|
|
|
|
131
|
|
||||||
One-time and unusual items
(9)
|
2,898
|
|
|
5,916
|
|
|
5,146
|
|
|
22,448
|
|
|
55,060
|
|
|
|
(165
|
)
|
||||||
Cost savings initiatives
(10)
|
—
|
|
|
—
|
|
|
62
|
|
|
2,187
|
|
|
2,643
|
|
|
|
502
|
|
||||||
Adjusted EBITDA
(11)
|
$
|
175,166
|
|
|
$
|
180,800
|
|
|
$
|
207,924
|
|
|
$
|
220,936
|
|
|
$
|
170,456
|
|
|
|
$
|
24,967
|
|
Adjusted EBITDA Margin
|
19.5
|
%
|
|
20.4
|
%
|
|
22.5
|
%
|
|
23.9
|
%
|
|
23.7
|
%
|
|
|
21.9
|
%
|
(1)
|
We operate on a 52 or 53 week fiscal year ending on the Sunday nearest December 31. Fiscal year 2015 was 53 weeks in length, which resulted in our fourth quarter consisting of 14 weeks. All other fiscal years presented were 52 weeks.
|
(2)
|
Relates primarily to (i) the impairment of Company-operated venues or impairments of long lived assets; (ii) gains or losses upon disposal of property or equipment; and (iii) inventory obsolescence charges in 2015 outside of the ordinary course of business.
|
(3)
|
Relates to unrealized gains on the revaluation of our indebtedness with our Canadian subsidiary. Effective
January 1, 2018
, we no longer consider undistributed income from our Canadian subsidiary to be permanently invested.
|
(4)
|
Represents non-cash equity-based compensation expense.
|
(5)
|
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.
|
(6)
|
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.
|
(7)
|
Represents revenue related to unearned gift cards and unearned franchise fees that were removed in purchase accounting, and therefore were not recorded as revenue.
|
(8)
|
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.
|
(9)
|
Represents non-recurring income and expenses primarily related to (i) accounting, investment banking, legal and other costs incurred in connection with the Merger, the sale leaseback transaction we completed on August 25, 2014 and the acquisition of Peter Piper Pizza (“PPP Acquisition”); (ii) severance expense, executive termination benefits and executive search fees; (iii) one-time integration costs, including consulting fees, accounting service fees, IT system integration costs and travel expenses incurred in connection with the integration of Peter Piper Pizza; (iv) legal fees, claims and settlements related to litigation in respect of the Merger; (v) legal claims and settlements related to employee class action lawsuits and settlements; (vi) one-time costs incurred in connection with the 2015 relocation of our corporate offices; (vii) cash landlord incentives received in 2015 on our new corporate offices; (viii) sales and use tax refunds that relate to prior periods; (ix) professional fees incurred in connection with one-time strategic corporate and tax initiatives, such as accounting and consulting service fees incurred to obtain sale and use tax refunds from prior periods, to enhance transfer pricing and implement Play Pass, initial fees incurred in connection with the overseas outsourcing of our accounts payable and payroll functions, and costs related to the transition in 2015 to new advertising agencies whereby we were under contract for duplicate advertising costs for a period of time; (x) removing the initial recognition of gift card breakage revenue related to prior years on unredeemed Chuck E. Cheese's gift card balances sold by third parties; (xi) removing insurance recoveries relating to prior year business interruption losses at certain v
|
(10)
|
Relates to estimated net cost savings primarily from (i) cost savings related to our change from public to private ownership and the elimination of public equity securities upon the closing of the Merger, including reductions in investor relations activities, directors fees, and certain legal and other securities and filing costs; (ii) estimated full-year effect of venue-level cost savings initiatives implemented in 2013, such as the installation of advanced thermostat systems, the replacement of helium-filled balloons with table top balloons, the consolidation of parts suppliers, and the increase in tickets required to redeem prizes; (iii) estimated effect of cost savings following the Merger from participation in Sponsor-leveraged purchasing programs, including various supplies, travel, and communications purchasing categories; (iv) labor cost savings associated with the elimination of certain management positions in connection with the Merger; (v) the full period impact of reduced occupancy costs associated with the relocation of our corporate offices in 2015; (vi) estimated cost savings associated with the integration of Peter Piper Pizza following its acquisition in October 2014, including labor cost savings associated with headcount reductions implemented in 2015; (vii) the full year effect of cost savings associated with upgrades to our telephone communication systems in 2015; and (viii) the estimated incremental costs associated with the new ERP system we implemented at the beginning of Fiscal 2015, net of system optimization costs, and post-Merger insurance arrangements.
|
(11)
|
With the continued evolution of our games business from tokens to game play credits and now towards time-based play packages following the implementation of All You Can Play (“AYCP”) in
Fiscal 2018
, the impact on our financial results of the fluctuation of the deferred revenue liability related to unused credits on Play Pass cards begins to lessen in importance in understanding our Adjusted EBITDA. Customers continue to see the value of time based play and game play credits continue to decline as a percentage of overall game play. As a result, the change in the deferred revenue liability relating to unused Play Pass cards has been removed from Adjusted EBITDA for all periods presented.
|
•
|
Presentation of Operating Results;
|
•
|
Executive Summary;
|
•
|
Key Measures 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;
|
•
|
Inflation;
|
•
|
Critical Accounting Policies and Estimates; and
|
•
|
Recently Issued Accounting Guidance.
|
|
|
Twelve Months Ended
|
|||||||
|
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
|||
Number of Company-operated venues:
|
|
|
|
|
|
|
|||
Beginning of period
|
|
562
|
|
|
559
|
|
|
556
|
|
New
|
|
1
|
|
|
6
|
|
|
6
|
|
Acquired from franchisee
|
|
—
|
|
|
2
|
|
|
—
|
|
Closed
|
|
(9
|
)
|
|
(5
|
)
|
|
(3
|
)
|
End of period
|
|
554
|
|
|
562
|
|
|
559
|
|
Number of franchised venues:
|
|
|
|
|
|
|
|||
Beginning of period
|
|
192
|
|
|
188
|
|
|
176
|
|
New
|
|
8
|
|
|
8
|
|
|
16
|
|
Acquired from franchisee
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
Closed
|
|
(4
|
)
|
|
(2
|
)
|
|
(4
|
)
|
End of period
|
|
196
|
|
|
192
|
|
|
188
|
|
Total number of venues:
|
|
|
|
|
|
|
|
||
Beginning of period
|
|
754
|
|
|
747
|
|
|
732
|
|
New
|
|
9
|
|
|
14
|
|
|
22
|
|
Closed
|
|
(13
|
)
|
|
(7
|
)
|
|
(7
|
)
|
End of period
|
|
750
|
|
|
754
|
|
|
747
|
|
(1)
|
The number of new and closed Company-operated and Total venues during
2018
included
one
venue that was relocated.
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 30, 2018
|
|
December 31, 2017
|
|
January 1, 2017
|
||||||
|
|
(in thousands, except venue number amounts)
|
||||||||||
Average sales per comparable venue
|
|
$
|
1,587
|
|
|
$
|
1,561
|
|
|
$
|
1,636
|
|
Number of venues included in our comparable venue base
|
|
526
|
|
|
531
|
|
|
529
|
|
•
|
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, and the cost of Play Pass and AYCP cards and writsbands, as well as the cost of tickets dispensed to customers;
|
•
|
Labor expenses consist of salaries and wages, bonuses, related payroll taxes and benefits for venue personnel;
|
•
|
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.
|
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
|
December 30, 2018
|
|
December 31, 2017
|
|
January 1, 2017
|
|||||||||||||||
|
|
(in thousands, except percentages)
|
|||||||||||||||||||
Food and beverage sales
|
|
$
|
396,658
|
|
|
45.3
|
%
|
|
$
|
410,609
|
|
|
47.3
|
%
|
|
$
|
415,059
|
|
|
45.8
|
%
|
Entertainment and merchandise sales
|
|
478,676
|
|
|
54.7
|
%
|
|
458,279
|
|
|
52.7
|
%
|
|
490,255
|
|
|
54.2
|
%
|
|||
Total company venue sales
|
|
$
|
875,334
|
|
|
100.0
|
%
|
|
$
|
868,888
|
|
|
100.0
|
%
|
|
$
|
905,314
|
|
|
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 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 becomes due;
|
•
|
frequent inventory turnover and the use of fresh ingredients results in a limited investment required in inventories; and
|
•
|
our accounts payable are generally due within five to 30 days.
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
||||||
|
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
86,790
|
|
|
$
|
104,297
|
|
|
$
|
118,955
|
|
Net cash used in investing activities
|
|
(79,284
|
)
|
|
(93,712
|
)
|
|
(98,439
|
)
|
|||
Net cash used in financing activities
|
|
(11,547
|
)
|
|
(5,030
|
)
|
|
(10,095
|
)
|
|||
Effect of foreign exchange rate changes on cash
|
|
50
|
|
|
466
|
|
|
216
|
|
|||
Change in cash and cash equivalents
|
|
$
|
(3,991
|
)
|
|
$
|
6,021
|
|
|
$
|
10,637
|
|
Cash paid for interest
|
|
$
|
72,966
|
|
|
$
|
64,675
|
|
|
$
|
64,614
|
|
Cash paid for income taxes, net
|
|
$
|
1,054
|
|
|
$
|
7,136
|
|
|
$
|
10,728
|
|
|
|
December 30,
2018 |
|
December 31,
2017 |
||||
|
|
(in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
63,170
|
|
|
$
|
67,200
|
|
Restricted cash
|
|
$
|
151
|
|
|
$
|
112
|
|
Term loan facility
|
|
$
|
723,900
|
|
|
$
|
731,500
|
|
Senior notes
|
|
$
|
255,000
|
|
|
$
|
255,000
|
|
Net availability on undrawn revolving credit facility
|
|
$
|
141,000
|
|
|
$
|
140,100
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 30, 2018
|
|
December 31, 2017
|
|
January 1, 2017
|
||||||
|
|
|
||||||||||
Growth capital spend
(1)
|
|
$
|
31,269
|
|
|
$
|
51,079
|
|
|
$
|
55,200
|
|
Maintenance capital spend
(2)
|
|
44,656
|
|
|
35,678
|
|
|
33,838
|
|
|||
IT capital spend
|
|
3,919
|
|
|
7,309
|
|
|
10,058
|
|
|||
Total Capital Spend
|
|
$
|
79,844
|
|
|
$
|
94,066
|
|
|
$
|
99,096
|
|
(1)
|
Growth capital spend includes our Play Pass initiative, major remodels, venue expansions, major attractions and new venue development, including relocations and franchise acquisitions.
|
(2)
|
Maintenance capital spend includes game enhancements, general venue capital expenditures and corporate capital expenditures.
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
1 Year |
|
1-3
Years |
|
4-5
Years |
|
More than
5 Years |
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating leases
(1)
|
$
|
901,598
|
|
|
$
|
92,435
|
|
|
$
|
179,897
|
|
|
$
|
171,989
|
|
|
$
|
457,277
|
|
Secured credit facilities
|
723,900
|
|
|
7,600
|
|
|
716,300
|
|
|
—
|
|
|
—
|
|
|||||
Sale leaseback obligations
|
257,017
|
|
|
14,083
|
|
|
29,001
|
|
|
30,196
|
|
|
183,737
|
|
|||||
Senior notes
|
255,000
|
|
|
—
|
|
|
—
|
|
|
255,000
|
|
|
—
|
|
|||||
Interest obligations
(2)
|
162,399
|
|
|
60,001
|
|
|
92,198
|
|
|
10,200
|
|
|
—
|
|
|||||
Purchase Obligations
(3)
|
40,486
|
|
|
31,310
|
|
|
8,233
|
|
|
943
|
|
|
—
|
|
|||||
Capital leases
|
24,002
|
|
|
2,182
|
|
|
4,415
|
|
|
4,139
|
|
|
13,266
|
|
|||||
Uncertain tax positions
(4)
|
343
|
|
|
343
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
2,364,745
|
|
|
$
|
207,954
|
|
|
$
|
1,030,044
|
|
|
$
|
472,467
|
|
|
$
|
654,280
|
|
(1)
|
Includes the initial non-cancelable term plus renewal option periods provided for in the lease that can be reasonably assured but excludes contingent rent obligations and obligations to pay property taxes, insurance and maintenance on the leased assets.
|
(2)
|
Interest obligations represent an estimate of future interest payments under our secured credit facilities and senior notes. We calculated the estimate based on the terms of the secured credit facilities and senior notes. Our estimate uses interest rates in effect during
Fiscal 2018
and assumes we will not have any amounts drawn on our revolving credit facility.
|
(3)
|
A “purchase obligation” is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including (a) fixed or minimum quantities to be purchased; (b) fixed, minimum or variable price provisions; and (c) the approximate timing of the transaction. Our purchase obligations primarily consist of obligations for the purchase of merchandise and entertainment inventory, obligations under fixed price purchase agreements and contracts with “spot” market prices primarily relating to food and beverage products, obligations for the purchase of commercial airtime, and obligations associated with the modernization of various information technology platforms. The above purchase obligations exclude agreements that are cancelable without significant penalty.
|
(4)
|
Due to the uncertainty related to the settlement of uncertain tax positions, only the current portion of the liability for unrecognized tax benefits (including accrued interest and penalties) has been provided in the table above. The non-current portion of
$5.1 million
is excluded from the table above.
|
|
|
December 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
63,170
|
|
|
$
|
67,200
|
|
Restricted cash
|
|
151
|
|
|
112
|
|
||
Accounts receivable
|
|
24,020
|
|
|
20,061
|
|
||
Income taxes receivable
|
|
10,160
|
|
|
10,960
|
|
||
Inventories
|
|
23,807
|
|
|
22,000
|
|
||
Prepaid expenses
|
|
25,424
|
|
|
20,398
|
|
||
Total current assets
|
|
146,732
|
|
|
140,731
|
|
||
Property and equipment, net
|
|
539,185
|
|
|
570,021
|
|
||
Goodwill
|
|
484,438
|
|
|
484,438
|
|
||
Intangible assets, net
|
|
477,085
|
|
|
480,377
|
|
||
Other noncurrent assets
|
|
18,725
|
|
|
19,477
|
|
||
Total assets
|
|
$
|
1,666,165
|
|
|
$
|
1,695,044
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
7,600
|
|
Capital lease obligations, current portion
|
|
677
|
|
|
596
|
|
||
Accounts payable
|
|
31,410
|
|
|
31,374
|
|
||
Accrued expenses
|
|
36,030
|
|
|
36,616
|
|
||
Unearned revenues
|
|
18,124
|
|
|
21,050
|
|
||
Accrued interest
|
|
7,463
|
|
|
8,277
|
|
||
Other current liabilities
|
|
5,278
|
|
|
4,776
|
|
||
Total current liabilities
|
|
106,582
|
|
|
110,289
|
|
||
Capital lease obligations, less current portion
|
|
12,330
|
|
|
13,010
|
|
||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
961,514
|
|
|
965,213
|
|
||
Deferred tax liability, net
|
|
107,058
|
|
|
114,186
|
|
||
Accrued insurance
|
|
9,861
|
|
|
8,311
|
|
||
Other noncurrent liabilities
|
|
226,249
|
|
|
221,887
|
|
||
Total liabilities
|
|
1,423,594
|
|
|
1,432,896
|
|
||
Stockholder’s equity:
|
|
|
|
|
||||
Common stock, $0.01 par value; authorized 1,000 shares; 200 shares issued as of December 30, 2018 and December 31, 2017
|
|
—
|
|
|
—
|
|
||
Capital in excess of par value
|
|
359,570
|
|
|
359,233
|
|
||
Accumulated deficit
|
|
(115,660
|
)
|
|
(95,199
|
)
|
||
Accumulated other comprehensive loss
|
|
(1,339
|
)
|
|
(1,886
|
)
|
||
Total stockholder’s equity
|
|
242,571
|
|
|
262,148
|
|
||
Total liabilities and stockholder’s equity
|
|
$
|
1,666,165
|
|
|
$
|
1,695,044
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
||||||
REVENUES:
|
|
|
|
|
|
||||||
Food and beverage sales
|
$
|
396,658
|
|
|
$
|
410,609
|
|
|
$
|
415,059
|
|
Entertainment and merchandise sales
|
478,676
|
|
|
458,279
|
|
|
490,255
|
|
|||
Total company venue sales
|
875,334
|
|
|
868,888
|
|
|
905,314
|
|
|||
Franchise fees and royalties
|
20,732
|
|
|
17,883
|
|
|
18,339
|
|
|||
Total revenues
|
896,066
|
|
|
886,771
|
|
|
923,653
|
|
|||
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
||||||
Cost of food and beverage
|
94,319
|
|
|
97,570
|
|
|
104,315
|
|
|||
Cost of entertainment and merchandise
|
36,650
|
|
|
29,948
|
|
|
32,014
|
|
|||
Total cost of food, beverage, entertainment and merchandise
|
130,969
|
|
|
127,518
|
|
|
136,329
|
|
|||
Labor expenses
|
256,327
|
|
|
248,061
|
|
|
251,426
|
|
|||
Rent expense
|
96,484
|
|
|
95,917
|
|
|
96,006
|
|
|||
Other venue operating expenses
|
150,255
|
|
|
149,462
|
|
|
148,869
|
|
|||
Total company venue operating costs
|
634,035
|
|
|
620,958
|
|
|
632,630
|
|
|||
Other costs and expenses
:
|
|
|
|
|
|
||||||
Advertising expense
|
48,198
|
|
|
48,379
|
|
|
46,142
|
|
|||
General and administrative expenses
|
54,850
|
|
|
56,482
|
|
|
61,011
|
|
|||
Depreciation and amortization
|
100,720
|
|
|
109,771
|
|
|
119,569
|
|
|||
Transaction, severance and related litigation costs
|
527
|
|
|
1,448
|
|
|
1,299
|
|
|||
Asset impairments
|
6,935
|
|
|
1,843
|
|
|
1,550
|
|
|||
Total operating costs and expenses
|
845,265
|
|
|
838,881
|
|
|
862,201
|
|
|||
Operating income
|
50,801
|
|
|
47,890
|
|
|
61,452
|
|
|||
Interest expense
|
76,283
|
|
|
69,115
|
|
|
67,745
|
|
|||
Loss before income taxes
|
(25,482
|
)
|
|
(21,225
|
)
|
|
(6,293
|
)
|
|||
Income tax benefit
|
(5,021
|
)
|
|
(74,291
|
)
|
|
(2,626
|
)
|
|||
Net income (loss)
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
$
|
(3,667
|
)
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
||||||
Net income (loss)
|
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
$
|
(3,667
|
)
|
Components of other comprehensive income (loss), net of tax
:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
547
|
|
|
1,010
|
|
|
420
|
|
|||
Comprehensive income (loss)
|
|
$
|
(19,914
|
)
|
|
$
|
54,076
|
|
|
$
|
(3,247
|
)
|
|
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 January 3, 2016
|
200
|
|
|
$
|
—
|
|
|
$
|
356,460
|
|
|
$
|
(144,598
|
)
|
|
$
|
(3,316
|
)
|
|
$
|
208,546
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,667
|
)
|
|
—
|
|
|
(3,667
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
420
|
|
|
420
|
|
|||||
Stock-based compensation costs
|
—
|
|
|
—
|
|
|
702
|
|
|
—
|
|
|
—
|
|
|
702
|
|
|||||
Tax benefit recognized from stock-based compensation awards
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Balance at January 1, 2017
|
200
|
|
|
$
|
—
|
|
|
$
|
357,166
|
|
|
$
|
(148,265
|
)
|
|
$
|
(2,896
|
)
|
|
$
|
206,005
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
53,066
|
|
|
—
|
|
|
53,066
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,010
|
|
|
1,010
|
|
|||||
Stock-based compensation costs
|
—
|
|
|
—
|
|
|
620
|
|
|
—
|
|
|
—
|
|
|
620
|
|
|||||
Return of capital
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|||||
Balance at December 31, 2017
|
200
|
|
|
$
|
—
|
|
|
$
|
359,233
|
|
|
$
|
(95,199
|
)
|
|
$
|
(1,886
|
)
|
|
$
|
262,148
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,461
|
)
|
|
—
|
|
|
(20,461
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
547
|
|
|
547
|
|
|||||
Stock-based compensation costs
|
—
|
|
|
—
|
|
|
337
|
|
|
—
|
|
|
—
|
|
|
337
|
|
|||||
Balance at December 30, 2018
|
200
|
|
|
$
|
—
|
|
|
$
|
359,570
|
|
|
$
|
(115,660
|
)
|
|
$
|
(1,339
|
)
|
|
$
|
242,571
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||||||
Net income (loss)
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
$
|
(3,667
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
100,720
|
|
|
109,771
|
|
|
119,569
|
|
|||
Deferred income taxes
|
(8,182
|
)
|
|
(71,875
|
)
|
|
(15,521
|
)
|
|||
Stock-based compensation expense
|
324
|
|
|
606
|
|
|
689
|
|
|||
Amortization of lease-related liabilities
|
(993
|
)
|
|
(632
|
)
|
|
(448
|
)
|
|||
Amortization of original issue discount and deferred financing costs
|
4,344
|
|
|
4,546
|
|
|
4,546
|
|
|||
Loss on asset disposals, net
|
3,436
|
|
|
7,398
|
|
|
8,520
|
|
|||
Asset impairments
|
6,935
|
|
|
1,843
|
|
|
1,550
|
|
|||
Non-cash rent expenses
|
5,372
|
|
|
4,884
|
|
|
6,873
|
|
|||
Other adjustments
|
768
|
|
|
322
|
|
|
(70
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(4,532
|
)
|
|
(809
|
)
|
|
2,657
|
|
|||
Inventories
|
(1,833
|
)
|
|
(3,964
|
)
|
|
(3,413
|
)
|
|||
Prepaid expenses
|
(686
|
)
|
|
3,173
|
|
|
(4,012
|
)
|
|||
Accounts payable
|
(2,172
|
)
|
|
3,110
|
|
|
(7,601
|
)
|
|||
Accrued expenses
|
2,534
|
|
|
(4,744
|
)
|
|
1,733
|
|
|||
Unearned revenues
|
(2,917
|
)
|
|
5,647
|
|
|
5,167
|
|
|||
Accrued interest
|
(569
|
)
|
|
(70
|
)
|
|
(1,454
|
)
|
|||
Income taxes (receivable) payable
|
2,107
|
|
|
(9,554
|
)
|
|
2,169
|
|
|||
Deferred landlord contributions
|
2,595
|
|
|
1,579
|
|
|
1,668
|
|
|||
Net cash provided by operating activities
|
86,790
|
|
|
104,297
|
|
|
118,955
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(77,088
|
)
|
|
(90,958
|
)
|
|
(88,680
|
)
|
|||
Development of internal use software
|
(2,756
|
)
|
|
(3,243
|
)
|
|
(10,455
|
)
|
|||
Proceeds from sale of property and equipment
|
560
|
|
|
489
|
|
|
696
|
|
|||
Net cash used in investing activities
|
(79,284
|
)
|
|
(93,712
|
)
|
|
(98,439
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Repayments on senior term loan
|
(7,600
|
)
|
|
(7,600
|
)
|
|
(7,600
|
)
|
|||
Repayments on note payable
|
—
|
|
|
(13
|
)
|
|
(50
|
)
|
|||
Proceeds from sale leaseback transaction
|
—
|
|
|
4,073
|
|
|
—
|
|
|||
Payment of debt financing costs
|
(442
|
)
|
|
—
|
|
|
—
|
|
|||
Payments on capital lease obligations
|
(595
|
)
|
|
(467
|
)
|
|
(421
|
)
|
|||
Payments on sale leaseback obligations
|
(2,910
|
)
|
|
(2,470
|
)
|
|
(2,028
|
)
|
|||
Excess tax benefit realized from stock-based compensation
|
—
|
|
|
—
|
|
|
4
|
|
|||
Return of Capital
|
—
|
|
|
1,447
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(11,547
|
)
|
|
(5,030
|
)
|
|
(10,095
|
)
|
|||
Effect of foreign exchange rate changes on cash
|
50
|
|
|
466
|
|
|
216
|
|
|||
Change in cash, cash equivalents and restricted cash
|
(3,991
|
)
|
|
6,021
|
|
|
10,637
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
67,312
|
|
|
61,291
|
|
|
50,654
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
63,321
|
|
|
$
|
67,312
|
|
|
$
|
61,291
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
72,966
|
|
|
$
|
64,675
|
|
|
$
|
64,614
|
|
Cash paid for income taxes, net
|
$
|
1,054
|
|
|
$
|
7,136
|
|
|
$
|
10,728
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Accrued construction costs
|
$
|
2,402
|
|
|
$
|
1,007
|
|
|
$
|
1,651
|
|
Buildings
|
40 years
|
Game and ride equipment
|
4 to 12 years
|
Non-technical play equipment
|
15 to 20 years
|
Furniture, fixtures and other equipment
|
4 to 20 years
|
Level 1 –
|
inputs are quoted prices available for identical assets or liabilities in active markets.
|
|
|
Level 2 –
|
inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; or other inputs that are observable or can be corroborated by observable market data.
|
|
|
Level 3 –
|
inputs are unobservable and reflect our own assumptions.
|
|
December 30, 2018
|
|
December 31, 2017
|
|
January 1, 2017
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
63,170
|
|
|
$
|
67,200
|
|
|
$
|
61,023
|
|
Restricted cash
(1)
|
151
|
|
|
112
|
|
|
268
|
|
|||
Cash, cash equivalents and restricted cash
|
$
|
63,321
|
|
|
$
|
67,312
|
|
|
$
|
61,291
|
|
(1)
|
Restricted cash represents cash balances held by the Association that are restricted for use in our advertising, entertainment and media programs (see “Basis of Presentation” above for further discussion of the Association Funds).
|
|
Balance at
|
|
|
|
|
|
Balance at
|
||||||||
|
January 1, 2018
|
|
Revenue Deferred
|
|
Revenue Recognized
|
|
December 30, 2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Game credit and unredeemed ticket related deferred revenue
|
$
|
12,035
|
|
|
$
|
58,496
|
|
|
$
|
(64,970
|
)
|
|
$
|
5,561
|
|
Gift card related deferred revenue
|
3,868
|
|
|
8,392
|
|
|
(7,007
|
)
|
|
5,253
|
|
||||
Unearned franchise and development fees
|
4,274
|
|
|
2,131
|
|
|
(84
|
)
|
|
6,321
|
|
||||
Other unearned revenues
|
873
|
|
|
25,918
|
|
|
(25,802
|
)
|
|
989
|
|
||||
Total unearned revenue
|
$
|
21,050
|
|
|
$
|
94,937
|
|
|
$
|
(97,863
|
)
|
|
$
|
18,124
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Trade receivables
|
$
|
11,185
|
|
|
$
|
8,863
|
|
Vendor rebates
|
6,651
|
|
|
6,525
|
|
||
Other accounts receivable
|
6,184
|
|
|
4,673
|
|
||
Total Accounts receivable
|
$
|
24,020
|
|
|
$
|
20,061
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Food and beverage
|
$
|
5,383
|
|
|
$
|
5,440
|
|
Entertainment and merchandise
|
18,424
|
|
|
16,560
|
|
||
Inventories
|
$
|
23,807
|
|
|
$
|
22,000
|
|
|
December 30,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Land
|
$
|
50,135
|
|
|
$
|
50,135
|
|
Buildings
|
61,378
|
|
|
56,415
|
|
||
Leasehold improvements
|
474,210
|
|
|
453,167
|
|
||
Game and ride equipment
|
263,689
|
|
|
250,139
|
|
||
Furniture, fixtures and other equipment
|
159,560
|
|
|
150,505
|
|
||
Buildings leased under capital leases
|
15,061
|
|
|
15,067
|
|
||
|
1,024,033
|
|
|
975,428
|
|
||
Less accumulated depreciation and amortization
|
(495,125
|
)
|
|
(414,245
|
)
|
||
Net property and equipment in service
|
528,908
|
|
|
561,183
|
|
||
Construction in progress
|
10,277
|
|
|
8,838
|
|
||
Property and equipment, net
|
$
|
539,185
|
|
|
$
|
570,021
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Balance at beginning of period
|
$
|
484,438
|
|
|
$
|
483,876
|
|
Goodwill assigned in acquisition of franchisee
(1)
|
—
|
|
|
562
|
|
||
Balance at end of period
|
$
|
484,438
|
|
|
$
|
484,438
|
|
(1)
|
Represents goodwill related to two franchise venues the Company acquired in the second quarter of 2017. The acquisition did not have a significant impact on our Consolidated Balance Sheet as of
December 31, 2017
or on our Consolidated Statements of Earnings for
Fiscal 2017
.
|
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Weighted Average Life (Years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
|
|
|
(in thousands)
|
||||||||||||||||||||||
Chuck E. Cheese's tradename
|
Indefinite
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
Peter Piper Pizza tradename
|
Indefinite
|
|
26,700
|
|
|
—
|
|
|
26,700
|
|
|
26,700
|
|
|
—
|
|
|
26,700
|
|
||||||
Favorable lease agreements
(1)
|
10
|
|
14,880
|
|
|
(8,550
|
)
|
|
6,330
|
|
|
14,880
|
|
|
(7,306
|
)
|
|
7,574
|
|
||||||
Franchise agreements
|
25
|
|
53,300
|
|
|
(9,245
|
)
|
|
44,055
|
|
|
53,300
|
|
|
(7,197
|
)
|
|
46,103
|
|
||||||
|
|
|
$
|
494,880
|
|
|
$
|
(17,795
|
)
|
|
$
|
477,085
|
|
|
$
|
494,880
|
|
|
$
|
(14,503
|
)
|
|
$
|
480,377
|
|
(1)
|
In connection with the Merger, as defined in Note 19 “Consolidating Guarantor Financial Information”, and the acquisition of Peter Piper Pizza (“PPP”) in October 2014 (the “PPP Acquisition”), 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.
|
|
|
Favorable Lease Agreements
|
|
Franchise Agreements
|
||||
Fiscal 2019
|
|
$
|
1,102
|
|
|
$
|
2,049
|
|
Fiscal 2020
|
|
1,050
|
|
|
2,088
|
|
||
Fiscal 2021
|
|
846
|
|
|
2,049
|
|
||
Fiscal 2022
|
|
753
|
|
|
2,049
|
|
||
Fiscal 2023
|
|
631
|
|
|
2,049
|
|
||
Thereafter
|
|
1,948
|
|
|
33,771
|
|
||
|
|
$6,330
|
|
$44,055
|
|
|
December 30,
2018 |
|
December 31,
2017 |
||||
|
|
(in thousands)
|
||||||
Internally developed software, net
(1)
|
|
$
|
14,756
|
|
|
$
|
17,167
|
|
Deferred charges
(2)
|
|
1,122
|
|
|
24
|
|
||
Deposits
|
|
848
|
|
|
1,125
|
|
||
Other
|
|
1,999
|
|
|
1,161
|
|
||
Total other noncurrent assets
|
|
$
|
18,725
|
|
|
$
|
19,477
|
|
(1)
|
Relates to the costs directly attributable to the development, testing and validation of internally developed software, primarily our ERP system, Play Pass, and IT related security initiatives, net of accumulated amortization of
$10.3 million
and
$6.6 million
at
December 30, 2018
and
December 31, 2017
, respectively. The assets are being amortized over a weighted average life of
6 years
. See Note 1. “Description of Business and Summary of Significant Accounting Policies - Development of Internal Use Software.”
|
(2)
|
December 30, 2018
includes a commitment to a supplier for IT related services to be paid in January 2020.
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Trade and other amounts payable
|
$
|
20,685
|
|
|
$
|
20,492
|
|
Book overdraft
|
10,725
|
|
|
10,882
|
|
||
Accounts Payable
|
$
|
31,410
|
|
|
$
|
31,374
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Current:
|
|
|
|
||||
Salaries and wages
|
$
|
13,702
|
|
|
$
|
11,366
|
|
Insurance
|
4,836
|
|
|
6,614
|
|
||
Taxes, other than income taxes
|
13,488
|
|
|
13,151
|
|
||
Other accrued operating expenses
|
4,004
|
|
|
5,485
|
|
||
Accrued expenses
|
$
|
36,030
|
|
|
$
|
36,616
|
|
Noncurrent:
|
|
|
|
||||
Insurance
|
$
|
9,861
|
|
|
$
|
8,311
|
|
|
December 30,
2018 |
|
December 31,
2017 |
||||
|
(in thousands)
|
||||||
Term loan facility
|
$
|
723,900
|
|
|
$
|
731,500
|
|
Senior notes
|
255,000
|
|
|
255,000
|
|
||
Total debt outstanding
|
978,900
|
|
|
986,500
|
|
||
Less:
|
|
|
|
||||
Unamortized original issue discount
|
(1,153
|
)
|
|
(1,694
|
)
|
||
Deferred financing costs, net
|
(8,633
|
)
|
|
(11,993
|
)
|
||
Current portion
|
(7,600
|
)
|
|
(7,600
|
)
|
||
Bank indebtedness and other long-term debt, less current portion
|
$
|
961,514
|
|
|
$
|
965,213
|
|
One year or less
|
$
|
7,600
|
|
Two years
|
7,600
|
|
|
Three years
|
708,700
|
|
|
Four years
|
255,000
|
|
|
Five years
|
—
|
|
|
|
978,900
|
|
|
Less: debt financing costs, net
|
(8,633
|
)
|
|
Less: unamortized discount
|
(1,153
|
)
|
|
|
$
|
969,114
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 30,
2018 |
|
December 31, 2017
|
|
January 1,
2017 |
||||||
|
(in thousands)
|
||||||||||
Term loan facility
(1)
|
$
|
39,065
|
|
|
$
|
31,549
|
|
|
$
|
30,987
|
|
Senior notes
|
20,330
|
|
|
20,330
|
|
|
19,774
|
|
|||
Capital lease obligations
|
1,643
|
|
|
1,695
|
|
|
1,749
|
|
|||
Sale leaseback obligations
|
10,488
|
|
|
10,585
|
|
|
10,714
|
|
|||
Amortization of debt issuance costs
|
3,803
|
|
|
4,005
|
|
|
4,005
|
|
|||
Other
|
954
|
|
|
951
|
|
|
516
|
|
|||
Total interest expense
|
$
|
76,283
|
|
|
$
|
69,115
|
|
|
$
|
67,745
|
|
|
|
December 30, 2018
|
|
December 31, 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
|
|
|
$
|
7,051
|
|
|
$
|
7,600
|
|
|
$
|
7,220
|
|
Long-term portion
|
|
970,147
|
|
|
885,212
|
|
|
977,206
|
|
|
937,662
|
|
||||
Bank indebtedness and other long-term debt:
|
|
$
|
977,747
|
|
|
$
|
892,263
|
|
|
$
|
984,806
|
|
|
$
|
944,882
|
|
|
|
December 30,
2018 |
|
December 31,
2017 |
||||
|
|
(in thousands)
|
||||||
Sale leaseback obligations, less current portion
(1)
|
|
$
|
174,520
|
|
|
$
|
177,933
|
|
Deferred rent liability
|
|
31,978
|
|
|
27,951
|
|
||
Deferred landlord contributions
|
|
7,603
|
|
|
6,282
|
|
||
Long-term portion of unfavorable leases
|
|
3,796
|
|
|
5,453
|
|
||
Long-term portion of cease use liabilities
(2)
|
|
1,818
|
|
|
—
|
|
||
Other
|
|
6,534
|
|
|
4,268
|
|
||
Total other noncurrent liabilities
|
|
$
|
226,249
|
|
|
$
|
221,887
|
|
(1)
|
See Note 13 “Sale Leaseback Transaction” for further discussion on our sale leaseback obligations.
|
(2)
|
In connection with three Peter Piper Pizza venues in Oklahoma that were closed in 2018, we recorded cease use liabilities totaling
$1.8 million
related to future lease related obligations, net of expected future sublease income, which are included in “Other current liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets at
December 30, 2018
. The liabilities consisted of
$0.9 million
related to future rental payments, net of expected future sublease income, and
$0.9 million
related to future common area maintenance, property tax and insurance expenses, which are included in “Rent expense” and “Other venue operating expenses”, respectively, in our Consolidated Statements of Earnings for
Fiscal 2018
.
|
|
Capital
|
|
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
|
|
||
Thereafter
|
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
|
)
|
|
|
|||
Capital lease obligations, net of current portion
|
$
|
12,330
|
|
|
|
|
Fiscal Year
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Minimum rentals
|
$
|
97,598
|
|
|
$
|
96,927
|
|
|
$
|
96,953
|
|
Contingent rentals
|
43
|
|
|
156
|
|
|
217
|
|
|||
|
$
|
97,641
|
|
|
$
|
97,083
|
|
|
$
|
97,170
|
|
|
|
Fiscal Year
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
|||||||||||
United States
|
|
$
|
(28,731
|
)
|
|
$
|
(25,667
|
)
|
|
$
|
(11,002
|
)
|
Foreign (including U.S. Possessions)
|
|
3,249
|
|
|
4,442
|
|
|
4,709
|
|
|||
Income (loss) before income taxes
|
|
$
|
(25,482
|
)
|
|
$
|
(21,225
|
)
|
|
$
|
(6,293
|
)
|
|
|
Fiscal Year
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
|||||||||||
Current tax expense (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
1,276
|
|
|
$
|
(2,668
|
)
|
|
$
|
8,008
|
|
State
|
|
1,090
|
|
|
(708
|
)
|
|
3,879
|
|
|||
Foreign
|
|
795
|
|
|
960
|
|
|
1,008
|
|
|||
|
|
3,161
|
|
|
(2,416
|
)
|
|
12,895
|
|
|||
Deferred tax expense (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
(8,382
|
)
|
|
(72,829
|
)
|
|
(11,848
|
)
|
|||
State
|
|
24
|
|
|
(137
|
)
|
|
(3,274
|
)
|
|||
Foreign
|
|
176
|
|
|
1,091
|
|
|
(399
|
)
|
|||
|
|
(8,182
|
)
|
|
(71,875
|
)
|
|
(15,521
|
)
|
|||
Income tax expense (benefit)
|
|
$
|
(5,021
|
)
|
|
$
|
(74,291
|
)
|
|
$
|
(2,626
|
)
|
|
Fiscal Year
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Federal statutory rate
|
(21.0
|
)%
|
|
(35.0
|
)%
|
|
(35.0
|
)%
|
State income taxes, net of federal benefit
|
2.0
|
%
|
|
(4.5
|
)%
|
|
2.5
|
%
|
Federal employment related income tax credits, net
|
(2.9
|
)%
|
|
(1.2
|
)%
|
|
(21.8
|
)%
|
Merger and litigation related costs
|
0.4
|
%
|
|
1.6
|
%
|
|
5.8
|
%
|
Canadian tax rate difference
|
—
|
%
|
|
0.4
|
%
|
|
2.4
|
%
|
Canadian nondeductible interest
|
—
|
%
|
|
0.7
|
%
|
|
1.8
|
%
|
Canadian deferred tax valuation adjustment
|
0.7
|
%
|
|
5.7
|
%
|
|
—
|
%
|
Canadian tax reorganization
|
0.8
|
%
|
|
(7.6
|
)%
|
|
—
|
%
|
State tax credit, valuation adjustment
|
1.3
|
%
|
|
2.0
|
%
|
|
2.8
|
%
|
Foreign taxes withheld
|
1.4
|
%
|
|
—
|
%
|
|
—
|
%
|
Other
|
0.4
|
%
|
|
1.9
|
%
|
|
(0.2
|
)%
|
Effective tax rate (before impact of Tax Cuts and Jobs Act of 2017
(1)
|
(16.9
|
)%
|
|
(36.0
|
)%
|
|
(41.7
|
)%
|
Adjustment related to the Tax Cuts and Jobs Act of 2017
(1)
|
(2.8
|
)%
|
|
(314.0
|
)%
|
|
—
|
%
|
Adjusted effective tax rate
|
(19.7
|
)%
|
|
(350.0
|
)%
|
|
(41.7
|
)%
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Accrued compensation
|
$
|
1,523
|
|
|
$
|
1,231
|
|
Unearned revenue
|
2,360
|
|
|
979
|
|
||
Deferred rent
|
8,272
|
|
|
6,914
|
|
||
Stock-based compensation
|
730
|
|
|
639
|
|
||
Accrued insurance and employee benefit plans
|
3,328
|
|
|
3,516
|
|
||
Unrecognized tax benefits
(1)
|
377
|
|
|
452
|
|
||
NOL and other carryforwards
|
5,746
|
|
|
5,635
|
|
||
Loan costs
|
394
|
|
|
577
|
|
||
Other
|
722
|
|
|
552
|
|
||
Gross deferred tax assets
|
23,452
|
|
|
20,495
|
|
||
Less: Valuation allowance
(2)
|
2,896
|
|
|
$
|
2,424
|
|
|
Net deferred tax asset
|
20,556
|
|
|
18,071
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(5,774
|
)
|
|
(9,492
|
)
|
||
Prepaid assets
|
(621
|
)
|
|
(672
|
)
|
||
Intangibles
|
(117,025
|
)
|
|
(117,717
|
)
|
||
Favorable/Unfavorable Leases
|
(172
|
)
|
|
(65
|
)
|
||
Internal use software and other
|
(4,022
|
)
|
|
(4,311
|
)
|
||
Gross deferred tax liabilities
|
(127,614
|
)
|
|
(132,257
|
)
|
||
Net deferred tax liability
|
$
|
(107,058
|
)
|
|
$
|
(114,186
|
)
|
(1)
|
Amount represents the value of future tax benefits that would result if the liabilities for uncertain state tax positions and accrued interest related to uncertain tax positions are settled.
|
(2)
|
Valuation allowance for deferred tax assets relating to Canada net operating loss and other non-U.S. differences and certain state tax credits.
|
|
Fiscal Year
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Balance at beginning of period
|
$
|
3,853
|
|
|
$
|
3,119
|
|
|
$
|
3,288
|
|
Additions for tax positions taken in the current year
|
114
|
|
|
1,677
|
|
|
74
|
|
|||
Increases for tax positions taken in prior years
|
571
|
|
|
16
|
|
|
1,479
|
|
|||
Decreases for tax positions taken in prior years
|
(48
|
)
|
|
(390
|
)
|
|
(964
|
)
|
|||
Settlements with tax authorities
|
(5
|
)
|
|
(32
|
)
|
|
(558
|
)
|
|||
Expiration of statute of limitations
|
(199
|
)
|
|
(537
|
)
|
|
(200
|
)
|
|||
Balance at end of period
|
$
|
4,286
|
|
|
$
|
3,853
|
|
|
$
|
3,119
|
|
|
Fiscal Year
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
February 2018
|
|
August 2017
|
|
February 2017
|
|
February 2016
|
||||
|
|
|
|
|
|
|
|
||||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Volatility for Tranche A
|
33
|
%
|
|
35
|
%
|
|
34
|
%
|
|
30
|
%
|
Volatility for Tranches B and C
|
35
|
%
|
|
34
|
%
|
|
33
|
%
|
|
30
|
%
|
Risk-free interest rate for Tranche A
|
2.70
|
%
|
|
1.39
|
%
|
|
1.38
|
%
|
|
1.09
|
%
|
Risk-free interest rate for Tranches B and C
|
2.42
|
%
|
|
1.28
|
%
|
|
1.16
|
%
|
|
0.99
|
%
|
Expected life - years
|
3.7
|
|
|
1.7
|
|
|
2.2
|
|
|
3.6
|
|
|
|
Stock Options
|
Weighted Average Exercise Price
(1)
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
|||
|
|
|
($ per share)
|
|
($ in thousands)
|
|||
Outstanding stock options, December 31, 2017
|
|
2,349,288
|
|
$9.00
|
|
|
||
Options Granted
|
|
112,769
|
|
$13.73
|
|
|
||
Options Exercised
|
|
(7,745
|
)
|
$9.96
|
|
|
||
Options Forfeited
|
|
(466,981
|
)
|
$10.53
|
|
|
||
Outstanding stock options, December 30, 2018
|
|
1,987,331
|
|
$8.87
|
5.6
|
$
|
—
|
|
Stock options expected to vest, December 30, 2018
|
|
1,360,557
|
|
$9.08
|
5.7
|
$
|
—
|
|
Exercisable stock options, December 30, 2018
|
|
475,603
|
|
$8.21
|
5.2
|
$
|
310
|
|
|
|
Fiscal Year
|
||||||||||
|
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
||||||
|
|
(in thousands)
|
||||||||||
Stock-based compensation costs
|
|
$
|
337
|
|
|
$
|
620
|
|
|
$
|
702
|
|
Portion capitalized as property and equipment
(1)
|
|
(13
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|||
Stock-based compensation expense recognized
|
|
$
|
324
|
|
|
$
|
606
|
|
|
$
|
689
|
|
Tax benefit recognized from stock-based compensation awards
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
As of December 30, 2018
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantor
|
|
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 assets
|
|
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
|
|
Capital lease obligations, current portion
|
|
661
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
677
|
|
|||||
Accounts payable and accrued expenses
|
|
56,277
|
|
|
34,429
|
|
|
2,321
|
|
|
—
|
|
|
93,027
|
|
|||||
Other current liabilities
|
|
4,768
|
|
|
510
|
|
|
—
|
|
|
—
|
|
|
5,278
|
|
|||||
Total current liabilities
|
|
69,306
|
|
|
34,939
|
|
|
2,337
|
|
|
—
|
|
|
106,582
|
|
|||||
Capital lease obligations, less current portion
|
|
12,296
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
12,330
|
|
|||||
Bank indebtedness and other long-term debt, 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
|
|
217,437
|
|
|
18,191
|
|
|
482
|
|
|
—
|
|
|
236,110
|
|
|||||
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
|
|
|||||
Retained 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.
|
||||||||||||||||||||
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
As of December 31, 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantor
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
59,948
|
|
|
$
|
410
|
|
|
$
|
6,842
|
|
|
—
|
|
|
$
|
67,200
|
|
|
Restricted cash
|
|
—
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
112
|
|
|||||
Accounts receivable
|
|
27,098
|
|
|
3,283
|
|
|
2,563
|
|
|
(1,923
|
)
|
|
31,021
|
|
|||||
Inventories
|
|
17,104
|
|
|
4,614
|
|
|
282
|
|
|
—
|
|
|
22,000
|
|
|||||
Prepaid assets
|
|
13,766
|
|
|
5,549
|
|
|
1,083
|
|
|
—
|
|
|
20,398
|
|
|||||
Total current assets
|
|
117,916
|
|
|
13,856
|
|
|
10,882
|
|
|
(1,923
|
)
|
|
140,731
|
|
|||||
Property and equipment, net
|
|
496,725
|
|
|
66,669
|
|
|
6,627
|
|
|
—
|
|
|
570,021
|
|
|||||
Goodwill
|
|
433,024
|
|
|
51,414
|
|
|
—
|
|
|
—
|
|
|
484,438
|
|
|||||
Intangible assets, net
|
|
16,764
|
|
|
463,613
|
|
|
—
|
|
|
—
|
|
|
480,377
|
|
|||||
Intercompany
|
|
90,937
|
|
|
10,770
|
|
|
—
|
|
|
(101,707
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
462,873
|
|
|
—
|
|
|
—
|
|
|
(462,873
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
7,913
|
|
|
11,359
|
|
|
205
|
|
|
—
|
|
|
19,477
|
|
|||||
Total assets
|
|
$
|
1,626,152
|
|
|
$
|
617,681
|
|
|
$
|
17,714
|
|
|
$
|
(566,503
|
)
|
|
$
|
1,695,044
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,600
|
|
Capital lease obligations, current portion
|
|
586
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
596
|
|
|||||
Accounts payable and accrued expenses
|
|
58,014
|
|
|
35,134
|
|
|
4,169
|
|
|
—
|
|
|
97,317
|
|
|||||
Other current liabilities
|
|
4,265
|
|
|
511
|
|
|
—
|
|
|
—
|
|
|
4,776
|
|
|||||
Total current liabilities
|
|
70,465
|
|
|
35,645
|
|
|
4,179
|
|
|
—
|
|
|
110,289
|
|
|||||
Capital lease obligations, less current portion
|
|
12,956
|
|
|
—
|
|
|
54
|
|
|
—
|
|
|
13,010
|
|
|||||
Bank indebtedness and other long-term debt, less current portion
|
|
965,213
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
965,213
|
|
|||||
Deferred tax liability
|
|
99,083
|
|
|
16,697
|
|
|
(1,594
|
)
|
|
—
|
|
|
114,186
|
|
|||||
Intercompany
|
|
—
|
|
|
75,052
|
|
|
28,578
|
|
|
(103,630
|
)
|
|
—
|
|
|||||
Other noncurrent liabilities
|
|
216,287
|
|
|
13,465
|
|
|
446
|
|
|
—
|
|
|
230,198
|
|
|||||
Total liabilities
|
|
1,364,004
|
|
|
140,859
|
|
|
31,663
|
|
|
(103,630
|
)
|
|
1,432,896
|
|
|||||
Stockholder's equity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital in excess of par value
|
|
359,233
|
|
|
466,114
|
|
|
3,241
|
|
|
(469,355
|
)
|
|
359,233
|
|
|||||
Retained earnings (deficit)
|
|
(95,199
|
)
|
|
10,708
|
|
|
(15,304
|
)
|
|
4,596
|
|
|
(95,199
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
|
(1,886
|
)
|
|
—
|
|
|
(1,886
|
)
|
|
1,886
|
|
|
(1,886
|
)
|
|||||
Total stockholder's equity
|
|
262,148
|
|
|
476,822
|
|
|
(13,949
|
)
|
|
(462,873
|
)
|
|
262,148
|
|
|||||
Total liabilities and stockholder's equity
|
|
$
|
1,626,152
|
|
|
$
|
617,681
|
|
|
$
|
17,714
|
|
|
$
|
(566,503
|
)
|
|
$
|
1,695,044
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
Fiscal Year 2018
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantor
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
338,837
|
|
|
$
|
52,353
|
|
|
$
|
5,468
|
|
|
$
|
—
|
|
|
$
|
396,658
|
|
Entertainment and merchandise sales
|
|
432,266
|
|
|
36,086
|
|
|
10,324
|
|
|
—
|
|
|
478,676
|
|
|||||
Total company venue sales
|
|
771,103
|
|
|
88,439
|
|
|
15,792
|
|
|
—
|
|
|
875,334
|
|
|||||
Franchise fees and royalties
|
|
1,797
|
|
|
16,693
|
|
|
2,242
|
|
|
—
|
|
|
20,732
|
|
|||||
International Association assessments and other fees
|
|
1,187
|
|
|
38,659
|
|
|
36,043
|
|
|
(75,889
|
)
|
|
—
|
|
|||||
Total revenues
|
|
774,087
|
|
|
143,791
|
|
|
54,077
|
|
|
(75,889
|
)
|
|
896,066
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
78,458
|
|
|
13,925
|
|
|
1,936
|
|
|
—
|
|
|
94,319
|
|
|||||
Cost of entertainment and merchandise
|
|
34,435
|
|
|
1,580
|
|
|
635
|
|
|
—
|
|
|
36,650
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
112,893
|
|
|
15,505
|
|
|
2,571
|
|
|
—
|
|
|
130,969
|
|
|||||
Labor expenses
|
|
231,727
|
|
|
19,657
|
|
|
4,943
|
|
|
—
|
|
|
256,327
|
|
|||||
Rent expense
|
|
86,882
|
|
|
7,544
|
|
|
2,058
|
|
|
—
|
|
|
96,484
|
|
|||||
Other venue operating expenses
|
|
170,239
|
|
|
16,287
|
|
|
3,602
|
|
|
(39,873
|
)
|
|
150,255
|
|
|||||
Total company venue operating costs
|
|
601,741
|
|
|
58,993
|
|
|
13,174
|
|
|
(39,873
|
)
|
|
634,035
|
|
|||||
Advertising expense
|
|
36,833
|
|
|
6,051
|
|
|
41,330
|
|
|
(36,016
|
)
|
|
48,198
|
|
|||||
General and administrative expenses
|
|
17,956
|
|
|
35,184
|
|
|
1,710
|
|
|
—
|
|
|
54,850
|
|
|||||
Depreciation and amortization
|
|
88,174
|
|
|
10,606
|
|
|
1,940
|
|
|
—
|
|
|
100,720
|
|
|||||
Transaction, severance and related litigation costs
|
|
277
|
|
|
250
|
|
|
—
|
|
|
—
|
|
|
527
|
|
|||||
Asset Impairment
|
|
2,591
|
|
|
4,341
|
|
|
3
|
|
|
—
|
|
|
6,935
|
|
|||||
Total operating costs and expenses
|
|
747,572
|
|
|
115,425
|
|
|
58,157
|
|
|
(75,889
|
)
|
|
845,265
|
|
|||||
Operating income (loss)
|
|
26,515
|
|
|
28,366
|
|
|
(4,080
|
)
|
|
—
|
|
|
50,801
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
13,940
|
|
|
—
|
|
|
—
|
|
|
(13,940
|
)
|
|
—
|
|
|||||
Interest expense
|
|
72,394
|
|
|
3,241
|
|
|
648
|
|
|
—
|
|
|
76,283
|
|
|||||
Income (loss) before income taxes
|
|
(31,939
|
)
|
|
25,125
|
|
|
(4,728
|
)
|
|
(13,940
|
)
|
|
(25,482
|
)
|
|||||
Income tax expense (benefit)
|
|
(11,478
|
)
|
|
7,295
|
|
|
(838
|
)
|
|
—
|
|
|
(5,021
|
)
|
|||||
Net income (loss)
|
|
$
|
(20,461
|
)
|
|
$
|
17,830
|
|
|
$
|
(3,890
|
)
|
|
$
|
(13,940
|
)
|
|
$
|
(20,461
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments
|
|
547
|
|
|
—
|
|
|
547
|
|
|
(547
|
)
|
|
547
|
|
|||||
Comprehensive income (loss)
|
|
$
|
(19,914
|
)
|
|
$
|
17,830
|
|
|
$
|
(3,343
|
)
|
|
$
|
(14,487
|
)
|
|
$
|
(19,914
|
)
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
Fiscal Year 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantor
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
351,374
|
|
|
$
|
52,962
|
|
|
$
|
6,273
|
|
|
$
|
—
|
|
|
$
|
410,609
|
|
Entertainment and merchandise sales
|
|
406,930
|
|
|
41,036
|
|
|
10,313
|
|
|
—
|
|
|
458,279
|
|
|||||
Total company venue sales
|
|
758,304
|
|
|
93,998
|
|
|
16,586
|
|
|
—
|
|
|
868,888
|
|
|||||
Franchise fees and royalties
|
|
1,694
|
|
|
16,189
|
|
|
—
|
|
|
|
|
|
17,883
|
|
|||||
International Association assessments and other fees
|
|
1,684
|
|
|
37,743
|
|
|
34,366
|
|
|
(73,793
|
)
|
|
—
|
|
|||||
Total revenues
|
|
761,682
|
|
|
147,930
|
|
|
50,952
|
|
|
(73,793
|
)
|
|
886,771
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
81,420
|
|
|
14,137
|
|
|
2,013
|
|
|
—
|
|
|
97,570
|
|
|||||
Cost of entertainment and merchandise
|
|
27,704
|
|
|
1,591
|
|
|
653
|
|
|
—
|
|
|
29,948
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
109,124
|
|
|
15,728
|
|
|
2,666
|
|
|
—
|
|
|
127,518
|
|
|||||
Labor expenses
|
|
224,176
|
|
|
18,791
|
|
|
5,094
|
|
|
—
|
|
|
248,061
|
|
|||||
Rent expense
|
|
87,342
|
|
|
6,375
|
|
|
2,200
|
|
|
—
|
|
|
95,917
|
|
|||||
Other venue operating expenses
|
|
168,991
|
|
|
15,122
|
|
|
4,802
|
|
|
(39,453
|
)
|
|
149,462
|
|
|||||
Total company venue operating costs
|
|
589,633
|
|
|
56,016
|
|
|
14,762
|
|
|
(39,453
|
)
|
|
620,958
|
|
|||||
Advertising expense
|
|
35,514
|
|
|
5,437
|
|
|
41,768
|
|
|
(34,340
|
)
|
|
48,379
|
|
|||||
General and administrative expenses
|
|
20,208
|
|
|
35,950
|
|
|
324
|
|
|
—
|
|
|
56,482
|
|
|||||
Depreciation and amortization
|
|
97,789
|
|
|
9,900
|
|
|
2,082
|
|
|
—
|
|
|
109,771
|
|
|||||
Transaction, severance and related litigation costs
|
|
974
|
|
|
474
|
|
|
—
|
|
|
—
|
|
|
1,448
|
|
|||||
Asset Impairment
|
|
1,824
|
|
|
14
|
|
|
5
|
|
|
—
|
|
|
1,843
|
|
|||||
Total operating costs and expenses
|
|
745,942
|
|
|
107,791
|
|
|
58,941
|
|
|
(73,793
|
)
|
|
838,881
|
|
|||||
Operating income (loss)
|
|
15,740
|
|
|
40,139
|
|
|
(7,989
|
)
|
|
—
|
|
|
47,890
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
25,405
|
|
|
—
|
|
|
—
|
|
|
(25,405
|
)
|
|
—
|
|
|||||
Interest expense
|
|
64,117
|
|
|
4,261
|
|
|
737
|
|
|
—
|
|
|
69,115
|
|
|||||
Income (loss) before income taxes
|
|
(22,972
|
)
|
|
35,878
|
|
|
(8,726
|
)
|
|
(25,405
|
)
|
|
(21,225
|
)
|
|||||
Income tax expense (benefit)
|
|
(76,038
|
)
|
|
2,407
|
|
|
(660
|
)
|
|
—
|
|
|
(74,291
|
)
|
|||||
Net income (loss)
|
|
$
|
53,066
|
|
|
$
|
33,471
|
|
|
$
|
(8,066
|
)
|
|
$
|
(25,405
|
)
|
|
$
|
53,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Foreign currency translation adjustments
|
|
1,010
|
|
|
—
|
|
|
1,010
|
|
|
(1,010
|
)
|
|
1,010
|
|
|||||
Comprehensive income (loss)
|
|
$
|
54,076
|
|
|
$
|
33,471
|
|
|
$
|
(7,056
|
)
|
|
$
|
(26,415
|
)
|
|
$
|
54,076
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
Fiscal Year 2016
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantor
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
361,111
|
|
|
$
|
48,178
|
|
|
$
|
5,770
|
|
|
$
|
—
|
|
|
$
|
415,059
|
|
Entertainment and merchandise sales
|
|
453,362
|
|
|
27,059
|
|
|
9,834
|
|
|
—
|
|
|
490,255
|
|
|||||
Total company venue sales
|
|
814,473
|
|
|
75,237
|
|
|
15,604
|
|
|
—
|
|
|
905,314
|
|
|||||
Franchise fees and royalties
|
|
2,011
|
|
|
16,328
|
|
|
—
|
|
|
—
|
|
|
18,339
|
|
|||||
International Association assessments and other fees
|
|
1,308
|
|
|
36,861
|
|
|
36,250
|
|
|
(74,419
|
)
|
|
—
|
|
|||||
Total revenues
|
|
817,792
|
|
|
128,426
|
|
|
51,854
|
|
|
(74,419
|
)
|
|
923,653
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
89,373
|
|
|
12,835
|
|
|
2,107
|
|
|
—
|
|
|
104,315
|
|
|||||
Cost of entertainment and merchandise
|
|
29,668
|
|
|
1,690
|
|
|
656
|
|
|
—
|
|
|
32,014
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
119,041
|
|
|
14,525
|
|
|
2,763
|
|
|
—
|
|
|
136,329
|
|
|||||
Labor expenses
|
|
230,526
|
|
|
15,865
|
|
|
5,035
|
|
|
—
|
|
|
251,426
|
|
|||||
Rent expense
|
|
88,557
|
|
|
5,234
|
|
|
2,215
|
|
|
—
|
|
|
96,006
|
|
|||||
Other venue operating expenses
|
|
170,385
|
|
|
12,134
|
|
|
4,545
|
|
|
(38,195
|
)
|
|
148,869
|
|
|||||
Total company venue operating costs
|
|
608,509
|
|
|
47,758
|
|
|
14,558
|
|
|
(38,195
|
)
|
|
632,630
|
|
|||||
Advertising expense
|
|
37,891
|
|
|
4,358
|
|
|
40,117
|
|
|
(36,224
|
)
|
|
46,142
|
|
|||||
General and administrative expenses
|
|
24,704
|
|
|
35,867
|
|
|
440
|
|
|
—
|
|
|
61,011
|
|
|||||
Depreciation and amortization
|
|
109,985
|
|
|
7,343
|
|
|
2,241
|
|
|
—
|
|
|
119,569
|
|
|||||
Transaction, severance and related litigation costs
|
|
1,244
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
1,299
|
|
|||||
Asset Impairment
|
|
1,487
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
1,550
|
|
|||||
Total operating costs and expenses
|
|
783,820
|
|
|
95,381
|
|
|
57,419
|
|
|
(74,419
|
)
|
|
862,201
|
|
|||||
Operating income (loss)
|
|
33,972
|
|
|
33,045
|
|
|
(5,565
|
)
|
|
—
|
|
|
61,452
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
13,654
|
|
|
—
|
|
|
—
|
|
|
(13,654
|
)
|
|
—
|
|
|||||
Interest expense
|
|
62,630
|
|
|
4,664
|
|
|
451
|
|
|
—
|
|
|
67,745
|
|
|||||
Income (loss) before income taxes
|
|
(15,004
|
)
|
|
28,381
|
|
|
(6,016
|
)
|
|
(13,654
|
)
|
|
(6,293
|
)
|
|||||
Income tax expense (benefit)
|
|
(11,337
|
)
|
|
10,520
|
|
|
(1,809
|
)
|
|
—
|
|
|
(2,626
|
)
|
|||||
Net income (loss)
|
|
$
|
(3,667
|
)
|
|
$
|
17,861
|
|
|
$
|
(4,207
|
)
|
|
$
|
(13,654
|
)
|
|
$
|
(3,667
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
420
|
|
|
—
|
|
|
420
|
|
|
(420
|
)
|
|
420
|
|
|||||
Comprehensive income (loss)
|
|
$
|
(3,247
|
)
|
|
$
|
17,861
|
|
|
$
|
(3,787
|
)
|
|
$
|
(14,074
|
)
|
|
$
|
(3,247
|
)
|
CEC Entertainment, Inc.
|
|||||||||||||||||||||
Consolidating Statement of Cash Flows
|
|||||||||||||||||||||
Fiscal Year 2018
|
|||||||||||||||||||||
(in thousands)
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|||||||||||
Cash flows provided by (used in) operating activities:
|
|
$
|
68,828
|
|
|
$
|
21,872
|
|
|
$
|
(3,910
|
)
|
|
$
|
—
|
|
|
$
|
86,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Purchases of property and equipment
|
|
(61,178
|
)
|
|
(14,646
|
)
|
|
(1,264
|
)
|
|
—
|
|
|
(77,088
|
)
|
||||||
Development of internal use software
|
|
(1,845
|
)
|
|
(911
|
)
|
|
—
|
|
|
—
|
|
|
(2,756
|
)
|
||||||
Proceeds from sale of property and equipment
|
|
560
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
560
|
|
||||||
Cash flows provided by (used in) investing activities
|
|
(62,463
|
)
|
|
|
(15,557
|
)
|
|
(1,264
|
)
|
|
—
|
|
|
(79,284
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Repayments on senior term loan
|
|
(7,600
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,600
|
)
|
||||||
Payment of debt financing costs
|
|
(442
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(442
|
)
|
||||||
Payments on capital lease obligations
|
|
(586
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(595
|
)
|
||||||
Payments on sale leaseback transactions
|
|
(2,910
|
)
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,910
|
)
|
|||||
Cash flows provided by (used in) financing activities
|
|
(11,538
|
)
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(11,547
|
)
|
|||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Change in cash, cash equivalents and restricted cash
|
|
(5,173
|
)
|
|
|
6,315
|
|
|
(5,133
|
)
|
|
—
|
|
|
(3,991
|
)
|
|||||
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
|
|
$
|
54,775
|
|
|
|
$
|
6,725
|
|
|
$
|
1,821
|
|
|
$
|
—
|
|
|
$
|
63,321
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||||||
Consolidating Statement of Cash Flows
|
||||||||||||||||||||||||
Fiscal Year 2017
|
||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||||||
Cash flows provided by (used in) operating activities:
|
|
$
|
73,925
|
|
|
$
|
29,569
|
|
|
$
|
803
|
|
|
$
|
—
|
|
|
$
|
104,297
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Purchases of property and equipment
|
|
(62,544
|
)
|
|
(27,061
|
)
|
|
(1,353
|
)
|
|
—
|
|
|
(90,958
|
)
|
|||||||||
Development of internal use software
|
|
—
|
|
|
(3,243
|
)
|
|
—
|
|
|
—
|
|
|
(3,243
|
)
|
|||||||||
Proceeds from sale of property and equipment
|
|
489
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
489
|
|
|||||||||
Cash flows provided by (used in) investing activities
|
|
(62,055
|
)
|
—
|
|
(30,304
|
)
|
—
|
|
(1,353
|
)
|
—
|
|
—
|
|
—
|
|
(93,712
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Repayments on senior term loan
|
|
(7,600
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,600
|
)
|
|||||||||
Repayments on note payable
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||||||||
Proceeds from financing sale-leaseback transaction
|
|
4,073
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,073
|
|
|||||||||
Payments on capital lease obligations
|
|
(460
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(467
|
)
|
|||||||||
Payments on sale leaseback transactions
|
|
(2,470
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,470
|
)
|
|||||||||
Return of capital
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|||||||||
Cash flows provided by (used in) financing activities
|
|
(5,010
|
)
|
|
(13
|
)
|
|
(7
|
)
|
|
—
|
|
|
(5,030
|
)
|
|||||||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
466
|
|
|
—
|
|
|
466
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Change in cash and cash equivalents and
restricted cash
|
|
6,860
|
|
|
(748
|
)
|
|
(91
|
)
|
|
—
|
|
|
6,021
|
|
|||||||||
Cash and cash equivalents and
restricted cash
at beginning of period
|
|
53,088
|
|
|
1,158
|
|
|
7,045
|
|
|
—
|
|
|
61,291
|
|
|||||||||
Cash and cash equivalents and
restricted cash
at end of period
|
|
$
|
59,948
|
|
|
$
|
410
|
|
|
$
|
6,954
|
|
|
$
|
—
|
|
|
$
|
67,312
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||||||
Consolidating Statement of Cash Flows
|
||||||||||||||||||||||||
Fiscal Year 2016
|
||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Successor
|
||||||||||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||||||
Cash flows provided by (used in) operating activities:
|
|
$
|
73,722
|
|
|
$
|
44,608
|
|
|
$
|
625
|
|
|
$
|
—
|
|
|
$
|
118,955
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Purchases of property and equipment
|
|
(69,827
|
)
|
|
(18,439
|
)
|
|
(414
|
)
|
|
—
|
|
|
(88,680
|
)
|
|||||||||
Development of internal use software
|
|
(7,671
|
)
|
|
(2,784
|
)
|
|
—
|
|
|
—
|
|
|
(10,455
|
)
|
|||||||||
Proceeds from sale of property and equipment
|
|
696
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
696
|
|
|||||||||
Cash flows provided by (used in) investing activities
|
|
(76,802
|
)
|
—
|
|
(21,223
|
)
|
—
|
|
(414
|
)
|
—
|
|
—
|
|
—
|
|
(98,439
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Repayments on senior term loan
|
|
(7,600
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,600
|
)
|
|||||||||
Repayments on note payable
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|||||||||
Intercompany note
|
|
23,974
|
|
|
(23,974
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Payments on capital lease obligations
|
|
(417
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(421
|
)
|
|||||||||
Payments on sale leaseback transactions
|
|
(2,028
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,028
|
)
|
|||||||||
Excess tax benefit realized from stock-based compensation
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||||||
Cash flows provided by (used in) financing activities
|
|
13,933
|
|
|
(24,024
|
)
|
|
(4
|
)
|
|
—
|
|
|
(10,095
|
)
|
|||||||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
216
|
|
|
—
|
|
|
216
|
|
|||||||||
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|||||
Change in cash and cash equivalents and
restricted cash
|
|
10,853
|
|
|
(639
|
)
|
|
423
|
|
|
—
|
|
|
10,637
|
|
|||||||||
Cash and cash equivalents and
restricted cash
at beginning of period
|
|
$
|
42,235
|
|
|
$
|
1,797
|
|
|
$
|
6,622
|
|
|
$
|
—
|
|
|
$
|
50,654
|
|
||||
Cash and cash equivalents and
restricted cash
at end of period
|
|
$
|
53,088
|
|
|
$
|
1,158
|
|
|
$
|
7,045
|
|
|
$
|
—
|
|
|
$
|
61,291
|
|
|
Quarters in Fiscal Year 2018
|
||||||||||||||
|
April 1,
2018 |
|
July 1,
2018 |
|
September 30,
2018 |
|
December 30,
2018 |
||||||||
|
(in thousands)
|
||||||||||||||
Food and beverage sales
|
$
|
118,377
|
|
|
$
|
96,258
|
|
|
$
|
94,023
|
|
|
$
|
88,000
|
|
Entertainment and merchandise sales
|
131,117
|
|
|
115,904
|
|
|
121,611
|
|
|
110,044
|
|
||||
Company venue sales
|
249,494
|
|
|
212,162
|
|
|
215,634
|
|
|
198,044
|
|
||||
Franchise fees and royalties
|
5,410
|
|
|
5,196
|
|
|
5,311
|
|
|
4,815
|
|
||||
Total revenues
|
$
|
254,904
|
|
|
$
|
217,358
|
|
|
$
|
220,945
|
|
|
$
|
202,859
|
|
Operating income (loss)
|
$
|
34,713
|
|
|
$
|
7,974
|
|
|
$
|
7,369
|
|
|
$
|
745
|
|
Income (loss) before income taxes
|
$
|
16,156
|
|
|
$
|
(11,139
|
)
|
|
$
|
(11,700
|
)
|
|
$
|
(18,799
|
)
|
Net income (loss)
|
$
|
12,223
|
|
|
$
|
(8,965
|
)
|
|
$
|
(9,487
|
)
|
|
$
|
(14,232
|
)
|
|
Quarters in Fiscal Year 2017
|
||||||||||||||
|
April 2,
2017 |
|
July 2,
2017 |
|
October 1,
2017 |
|
December 31,
2017 |
||||||||
|
(in thousands)
|
||||||||||||||
Food and beverage sales
|
$
|
124,419
|
|
|
$
|
97,411
|
|
|
$
|
98,255
|
|
|
$
|
90,524
|
|
Entertainment and merchandise sales
|
135,917
|
|
|
109,724
|
|
|
110,633
|
|
|
102,005
|
|
||||
Company venue sales
|
260,336
|
|
|
207,135
|
|
|
208,888
|
|
|
192,529
|
|
||||
Franchise fees and royalties
|
4,623
|
|
|
4,649
|
|
|
4,459
|
|
|
4,152
|
|
||||
Total revenues
|
$
|
264,959
|
|
|
$
|
211,784
|
|
|
$
|
213,347
|
|
|
$
|
196,681
|
|
Operating income (loss)
|
$
|
44,659
|
|
|
$
|
7,814
|
|
|
$
|
1,138
|
|
|
$
|
(5,721
|
)
|
Income (loss) before income taxes
|
$
|
27,598
|
|
|
$
|
(9,247
|
)
|
|
$
|
(16,313
|
)
|
|
$
|
(23,263
|
)
|
Net income (loss)
|
$
|
17,220
|
|
|
$
|
(5,930
|
)
|
|
$
|
(11,092
|
)
|
|
$
|
52,868
|
|
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
Thomas Leverton
|
|
47
|
|
Chief Executive Officer and Director
|
J. Roger Cardinale
|
|
59
|
|
President
|
James A. Howell
|
|
53
|
|
Executive Vice President and Chief Financial Officer
|
Andrew S. Jhawar
|
|
47
|
|
Chairman
|
Naveen R. Shahani
|
|
28
|
|
Director
|
Allen R. Weiss
|
|
64
|
|
Director
|
Name of Beneficial Owner
|
|
Number of Shares of Common Stock
|
|
Percentage of Outstanding Common Stock
|
||
Queso Holdings Inc.
(1)
|
|
200
|
|
|
100
|
%
|
Thomas Leverton
|
|
—
|
|
|
—
|
|
J. Roger Cardinale
|
|
—
|
|
|
—
|
|
James A. Howell
|
|
—
|
|
|
—
|
|
Andrew S. Jhawar
|
|
—
|
|
|
—
|
|
Naveen R. Shahani
|
|
—
|
|
|
—
|
|
Allen R. Weiss
|
|
—
|
|
|
—
|
|
Directors and Executive Officers as a Group (6 persons)
|
|
—
|
|
|
—
|
|
(1)
|
AP VIII CEC Holdings, L.P. (“Queso LP”) is the sole shareholder of Queso Holdings Inc. Apollo Management VIII, L.P. (“Management VIII”) is the manager of Queso LP. AIF VIII Management, LLC (“AIF VIII LLC”) is the general partner of Management VIII. Apollo Management, L.P. (“Apollo Management”) is the sole member-manager of AIF VIII LLC. Apollo Management GP, LLC (“Management GP”) is the general partner of Apollo Management. Apollo Management Holdings, L.P. (“Management Holdings”) is the sole member of Management GP. Apollo Management Holdings GP, LLC (“Management Holdings GP”) is the general partner of Management Holdings. Leon Black, Joshua Harris and Marc Rowan are the managers, as well as executive officers, of Management Holdings GP, and as such may be deemed to have voting and dispositive control with respect to the shares of our common stock held of record by Queso Holdings Inc. Each of Queso LP, Management VIII, AIF VIII LLC, Apollo Management, Management GP, Management Holdings and Management Holdings GP, disclaims beneficial ownership of the shares of our common stock owned of record by Queso Holdings Inc., except to the extent of any pecuniary interest therein. The address of each of Queso Holdings Inc., Queso LP, Management VIII, AIF VIII LLC, Apollo Management, Management GP, Management Holdings and Management Holdings GP, and Messrs. Black, Harris and Rowan, is 9 W. 57th Street, 43rd Floor, New York, New York 10019.
|
•
|
Related party transactions must be approved by the Audit Committee or by the Chairman of the Audit Committee under authority delegated to the Chairman of the Audit Committee by the Audit Committee.
|
•
|
A related party transaction will be approved only if the Audit Committee or the Chairman of the Audit Committee determines that it is fair to the Company and in, or not inconsistent with, the best interests of the Company and its stockholders.
|
•
|
In considering the transaction, the Audit Committee or its Chairman will consider all relevant facts and circumstances of the transaction or proposed transaction with a related party.
|
•
|
The affected related party will bring the matter to the attention of the General Counsel.
|
•
|
The General Counsel will determine whether the matter should be considered by the Audit Committee or its Chairman.
|
•
|
If a member of the Audit Committee is involved in the transaction, he or she will be recused from all discussions and decisions about the transaction.
|
•
|
The transaction must be approved in advance by the Audit Committee or its Chairman whenever practicable, and if not practicable, it may be presented to the General Counsel for preliminary approval, or be preliminarily entered into, subject to ratification by the Audit Committee or its Chairman.
|
•
|
If the Audit Committee or its Chairman does not ratify the related party transaction, the Company will take all reasonable efforts or actions to amend, terminate or cancel it, as directed by the Audit Committee or its Chairman.
|
•
|
All related party transactions will be disclosed to the Board of Directors following their approval or ratification.
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||
Audit Fees
(1)
|
|
$
|
585,000
|
|
|
$
|
585,000
|
|
Audit-related Fees
(2)
|
|
10,000
|
|
|
7,000
|
|
||
Tax fees
(3)
|
|
—
|
|
|
15,000
|
|
||
All other fees
(4)
|
|
3,000
|
|
|
2,000
|
|
||
Total
|
|
$
|
598,000
|
|
|
$
|
609,000
|
|
(1)
|
“Audit fees” are fees billed by Deloitte & Touche LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements included in the Company’s Form 10-K, the review of the Company’s quarterly consolidated financial statements included in the Company’s Forms 10-Q, and includes fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as consents, comfort letters, statutory audits, attest services and review of documents filed with the Securities and Exchange Commission.
|
(2)
|
“Audit-related fees” are fees billed by Deloitte & Touche LLP for assurance services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements or other attestation services or consultations that are not reported under audit fees.
|
(3)
|
“Tax fees” are fees billed by Deloitte & Touche LLP for professional services rendered for tax compliance, tax planning and tax advice.
|
(4)
|
“All other fees” are fees billed by Deloitte & Touche LLP for any professional services not included in the first three categories.
|
|
|
|
Financial Statements.
|
|
The financial statements and related notes included in Part II, Item 8. “Financial Statements and Supplementary Data” are filed as a part of this Annual Report on Form 10-K. See “Index to Consolidated Financial Statements.”
|
|
|
|
Financial Statement Schedules.
|
|
There are no financial statement schedules filed as a part of this Annual Report on Form 10-K, since the circumstances requiring inclusion of such schedules are not present.
|
|
|
|
Exhibits.
|
|
The exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index, which Exhibit Index is incorporated in this Annual Report on Form 10-K by reference. The exhibits include agreements to which the Company is a party or has a beneficial interest. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.
|
|
||
|
|
|
Dated: March 11, 2019
|
|
CEC Entertainment, Inc.
|
|
|
|
|
|
/s/ Thomas Leverton
|
|
|
Thomas Leverton
|
|
|
Chief Executive Officer and Director
|
|
||||
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Thomas Leverton
|
|
Chief Executive Officer and Director (Principal Executive Officer)
|
|
March 11, 2019
|
Thomas Leverton
|
|
|
|
|
|
|
|
||
/s/ James A. Howell
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
March 11, 2019
|
James A. Howell
|
|
|
|
|
|
|
|
||
/s/ David Rappaport
|
|
Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)
|
|
March 11, 2019
|
David Rappaport
|
|
|
|
|
|
|
|
||
*
|
|
Director
|
|
March 11, 2019
|
Andrew S. Jhawar
|
|
|
|
|
|
|
|
||
*
|
|
Director
|
|
March 11, 2019
|
Naveen R. Shahani
|
|
|
|
|
|
|
|
||
*
|
|
Director
|
|
March 11, 2019
|
Allen R. Weiss
|
|
|
|
|
|
|
|
||
*By:
|
|
|
|
|
/s/ Rodolfo Rodriguez, Jr.
|
|
Executive Vice President, Chief Legal and Human Resources Officer
|
|
March 11, 2019
|
Rodolfo Rodriguez, Jr.
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14*
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
24.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
Jurisdiction of Formation
|
|
Percentage of Equity Interest Owned
|
|
|
|
|
|||
1.
|
|
CEC Entertainment Canada, ULC
|
|
Canada
|
|
100%
|
|
|
|
|
|||
2.
|
|
CEC Entertainment Holdings, LLC
|
|
Nevada
|
|
100%
|
|
|
|
|
|||
3.
|
|
SPT Distribution Company, Inc.
|
|
Texas
|
|
100%
|
|
|
|
|
|||
4.
|
|
BHC Acquisition Corporation
|
|
Texas
|
|
100%
|
|
|
|
|
|||
5.
|
|
CEC Entertainment Concepts, L.P.
|
|
Texas
|
|
0.1% by CEC Entertainment, Inc.
99.9% by CEC Entertainment Holdings, LLC
|
|
|
|
|
|||
6.
|
|
Hospitality Distribution Incorporated
|
|
Texas
|
|
100% by BHC Acquisition Corporation
|
|
|
|
|
|||
7.
|
|
SB Hospitality Corporation
|
|
Texas
|
|
100% by Hospitality Distribution Incorporated
|
|
|
|
|
|||
8.
|
|
CEC Entertainment Leasing Company
|
|
Delaware
|
|
100%
|
9.
|
|
CEC Leaseholder, LLC
|
|
Delaware
|
|
100%
|
10.
|
|
Peter Piper Holdings, Inc.
|
|
Delaware
|
|
100%
|
11.
|
|
Peter Piper, Inc.
|
|
Arizona
|
|
100% by Peter Piper Holdings, Inc.
|
12.
|
|
Peter Piper Texas, LLC
|
|
Texas
|
|
100% by Peter Piper, Inc.
|
13.
|
|
Peter Piper Mexico, LLC
|
|
Arizona
|
|
100% by Peter Piper, Inc.
|
14.
|
|
Texas PP Beverage, Inc.
|
|
Texas
|
|
100% by Peter Piper Texas, LLC
|
15.
|
|
Peter Piper De Mexico, S. De R.L. De C.V.
|
|
Mexico
|
|
1% by Peter Piper Mexico, LLC
99% by Peter Piper, Inc.
|
16.
|
|
CEC Entertainment International, LLC
|
|
Delaware
|
|
100%
|
17.
|
|
CEC Leaseholder #2, LLC
|
|
Delaware
|
|
100%
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 30, 2018
of CEC Entertainment, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
March 11, 2019
|
|
/s/ Thomas Leverton
|
|
|
Thomas Leverton
|
|
|
Chief Executive Officer and Director
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 30, 2018
of CEC Entertainment, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
March 11, 2019
|
|
/s/ James A. Howell
|
|
|
James A. Howell
|
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in this Report.
|
March 11, 2019
|
/s/ Thomas Leverton
|
|
Thomas Leverton
|
|
Chief Executive Officer and Director
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in this Report.
|
March 11, 2019
|
/s/ James A. Howell
|
|
James A. Howell
|
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Executive Vice President and Chief Financial Officer
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