|
|
|
|
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Kansas
|
|
48-0905805
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS Employer Identification No.)
|
1707 Market Place Blvd, Suite 200
Irving, Texas
|
|
75063
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
None
|
|
None
|
|
|
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
¨
|
Non-accelerated filer
|
|
x
|
|
Smaller reporting company
|
|
¨
|
Emerging growth company
|
|
£
|
|
|
|
|
|
||
|
|
Page
|
|
||
|
|
|
PART I
|
|
|
ITEM 1.
|
||
ITEM 1A.
|
||
ITEM 1B.
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
|
|
|
PART II
|
|
|
ITEM 5.
|
||
ITEM 6.
|
||
ITEM 7.
|
||
ITEM 7A.
|
||
ITEM 8.
|
||
ITEM 9.
|
||
ITEM 9A.
|
||
ITEM 9B.
|
||
|
|
|
PART III
|
|
|
ITEM 10.
|
||
ITEM 11.
|
||
ITEM 12.
|
||
ITEM 13.
|
||
ITEM 14.
|
||
|
|
|
PART IV
|
|
|
ITEM 15.
|
||
|
|
|
|
||
|
•
|
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;
|
•
|
the impact of labor scheduling legislation;
|
•
|
our ability to successfully open international franchises and to operate under the United States and foreign anti-corruption laws that govern those international ventures;
|
•
|
risks related to our substantial indebtedness;
|
•
|
failure of our information technology systems to support our current and growing 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, including those outside the United States;
|
•
|
the seasonality of our business;
|
•
|
inadequate insurance coverage;
|
•
|
labor shortages and immigration reform;
|
•
|
loss of certain personnel;
|
•
|
our ability to protect our trademarks or other proprietary rights;
|
•
|
our ability to pay our fixed rental payments;
|
•
|
impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets;
|
•
|
our ability to successfully integrate the operations of companies we acquire;
|
•
|
our failure to maintain adequate internal controls over our financial and management systems; and
|
•
|
other risks, uncertainties and factors set forth in Part I, Item 1A. “Risk Factors.”
|
•
|
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
|
505
|
|
|
22
|
|
|
527
|
|
Peter Piper Pizza
|
40
|
|
|
61
|
|
|
101
|
|
Total domestic
|
545
|
|
|
83
|
|
|
628
|
|
International
|
|
|
|
|
|
|||
Chuck E. Cheese
|
10
|
|
|
75
|
|
|
85
|
|
Peter Piper Pizza
|
—
|
|
|
28
|
|
|
28
|
|
Total international
|
10
|
|
|
103
|
|
|
113
|
|
Total system-wide venues in operation
|
555
|
|
|
186
|
|
|
741
|
|
Domestic
|
Company-
operated venues |
|
Franchised
venues |
|
Total
|
|||
Alabama
|
8
|
|
|
1
|
|
|
9
|
|
Alaska
|
1
|
|
|
—
|
|
|
1
|
|
Arizona
|
32
|
|
|
15
|
|
|
47
|
|
Arkansas
|
6
|
|
|
—
|
|
|
6
|
|
California
|
81
|
|
|
4
|
|
|
85
|
|
Colorado
|
9
|
|
|
—
|
|
|
9
|
|
Connecticut
|
4
|
|
|
—
|
|
|
4
|
|
Delaware
|
2
|
|
|
—
|
|
|
2
|
|
Florida
|
35
|
|
|
—
|
|
|
35
|
|
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
|
7
|
|
|
—
|
|
|
7
|
|
Mississippi
|
3
|
|
|
2
|
|
|
5
|
|
Missouri
|
8
|
|
|
—
|
|
|
8
|
|
Montana
|
—
|
|
|
1
|
|
|
1
|
|
Nebraska
|
2
|
|
|
—
|
|
|
2
|
|
Nevada
|
8
|
|
|
—
|
|
|
8
|
|
New Hampshire
|
1
|
|
|
—
|
|
|
1
|
|
New Jersey
|
13
|
|
|
—
|
|
|
13
|
|
New Mexico
|
7
|
|
|
3
|
|
|
10
|
|
New York
|
21
|
|
|
—
|
|
|
21
|
|
North Carolina
|
13
|
|
|
2
|
|
|
15
|
|
North Dakota
|
—
|
|
|
1
|
|
|
1
|
|
Ohio
|
19
|
|
|
—
|
|
|
19
|
|
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
|
15
|
|
|
—
|
|
|
15
|
|
Washington
|
10
|
|
|
1
|
|
|
11
|
|
West Virginia
|
1
|
|
|
—
|
|
|
1
|
|
Wisconsin
|
9
|
|
|
—
|
|
|
9
|
|
Total domestic
|
545
|
|
|
83
|
|
|
628
|
|
International
|
|
Company-
operated venues |
|
Franchised
venues |
|
Total
|
|||
Canada
|
|
10
|
|
|
—
|
|
|
10
|
|
Chile
|
|
—
|
|
|
8
|
|
|
8
|
|
Colombia
|
|
—
|
|
|
2
|
|
|
2
|
|
Costa Rica
|
|
—
|
|
|
1
|
|
|
1
|
|
Guam
|
|
—
|
|
|
1
|
|
|
1
|
|
Guatemala
|
|
—
|
|
|
2
|
|
|
2
|
|
Honduras
|
|
—
|
|
|
3
|
|
|
3
|
|
India
|
|
—
|
|
|
1
|
|
|
1
|
|
Jordan
|
|
—
|
|
|
1
|
|
|
1
|
|
Mexico
|
|
—
|
|
|
48
|
|
|
48
|
|
Panama
|
|
—
|
|
|
2
|
|
|
2
|
|
Peru
|
|
—
|
|
|
6
|
|
|
6
|
|
Puerto Rico
|
|
—
|
|
|
3
|
|
|
3
|
|
Saudi Arabia
|
|
—
|
|
|
20
|
|
|
20
|
|
Trinidad and Tobago
|
|
—
|
|
|
2
|
|
|
2
|
|
United Arab Emirates
|
|
—
|
|
|
3
|
|
|
3
|
|
Total international
|
|
10
|
|
|
103
|
|
|
113
|
|
Total venues in operation
|
|
555
|
|
|
186
|
|
|
741
|
|
|
Fiscal Year 2019
|
|
Fiscal Year 2018
|
|
Fiscal Year 2017
|
|
Fiscal Year 2016
|
|
Fiscal Year 2015 (1)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands, except percentages and venue number amounts)
|
||||||||||||||||||
Statements of Earnings Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue sales
|
$
|
890,095
|
|
|
$
|
875,334
|
|
|
$
|
868,888
|
|
|
$
|
905,314
|
|
|
$
|
905,110
|
|
Total revenues
|
$
|
912,865
|
|
|
$
|
896,066
|
|
|
$
|
886,771
|
|
|
$
|
923,653
|
|
|
$
|
922,589
|
|
Operating income
|
$
|
50,198
|
|
|
$
|
50,801
|
|
|
$
|
47,890
|
|
|
$
|
61,452
|
|
|
$
|
55,131
|
|
Interest expense
|
$
|
87,243
|
|
|
$
|
76,283
|
|
|
$
|
69,115
|
|
|
$
|
67,745
|
|
|
$
|
70,582
|
|
Income taxes
|
$
|
(10,364
|
)
|
|
$
|
(5,021
|
)
|
|
$
|
(74,291
|
)
|
|
$
|
(2,626
|
)
|
|
$
|
(2,941
|
)
|
Net income (loss)
|
$
|
(28,923
|
)
|
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
$
|
(3,667
|
)
|
|
$
|
(12,510
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
111,142
|
|
|
$
|
86,790
|
|
|
$
|
104,297
|
|
|
$
|
118,955
|
|
|
$
|
100,613
|
|
Investing activities
|
$
|
(87,584
|
)
|
|
$
|
(79,284
|
)
|
|
$
|
(93,712
|
)
|
|
$
|
(98,439
|
)
|
|
$
|
(78,191
|
)
|
Financing activities
|
$
|
(52,088
|
)
|
|
$
|
(11,547
|
)
|
|
$
|
(5,030
|
)
|
|
$
|
(10,095
|
)
|
|
$
|
(81,599
|
)
|
Non-GAAP Financial Measures:
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA (3)
|
$
|
184,077
|
|
|
$
|
175,166
|
|
|
$
|
180,800
|
|
|
$
|
207,924
|
|
|
$
|
220,936
|
|
Adjusted EBITDA Margin (4)
|
20.2
|
%
|
|
19.5
|
%
|
|
20.4
|
%
|
|
22.5
|
%
|
|
23.9
|
%
|
|||||
Venue-level Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of venues (end of period):
|
|
|
|
|
|
|
|
|
|
||||||||||
Company-operated
|
555
|
|
|
554
|
|
|
562
|
|
|
559
|
|
|
556
|
||||||
Franchised
|
186
|
|
|
196
|
|
|
192
|
|
|
188
|
|
|
176
|
||||||
|
741
|
|
|
750
|
|
|
754
|
|
|
747
|
|
|
732
|
||||||
Comparable venues (end of period) (2)
|
529
|
|
|
526
|
|
|
531
|
|
|
529
|
|
|
489
|
||||||
Comparable venue sales change (2)
|
2.7
|
%
|
|
—
|
%
|
|
(4.8
|
)%
|
|
2.8
|
%
|
|
(0.4)%
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|
As of
|
||||||||||
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
|
January 3,
2016 |
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
2,119,549
|
|
|
$1,666,165
|
|
$1,695,044
|
|
$1,710,112
|
|
$1,733,035
|
||||||||
Total debt (5)
|
941,880
|
|
|
982,121
|
|
|
984,419
|
|
|
989,948
|
|
|
994,448
|
|
|||||
Stockholders’ equity
|
213,786
|
|
|
242,571
|
|
|
262,148
|
|
|
206,005
|
|
|
208,546
|
|
|||||
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 the sales for our domestic 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
|
(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, and finance leases.
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|
Fiscal 2015 (1)
|
||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||
Total revenues
|
$
|
912,865
|
|
|
$
|
896,066
|
|
|
$
|
886,771
|
|
|
$
|
923,653
|
|
|
$
|
922,589
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) as reported
|
$
|
(28,923
|
)
|
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
$
|
(3,667
|
)
|
|
$
|
(12,510
|
)
|
Interest expense
|
87,243
|
|
|
76,283
|
|
|
69,115
|
|
|
67,745
|
|
|
70,582
|
|
|||||
Income tax benefit
|
(10,364
|
)
|
|
(5,021
|
)
|
|
(74,291
|
)
|
|
(2,626
|
)
|
|
(2,941
|
)
|
|||||
Depreciation and amortization
|
97,629
|
|
|
100,720
|
|
|
109,771
|
|
|
119,569
|
|
|
119,294
|
|
|||||
EBITDA
|
$
|
145,585
|
|
|
$
|
151,521
|
|
|
$
|
157,661
|
|
|
181,021
|
|
|
$
|
174,425
|
|
|
Asset impairments
|
23,333
|
|
|
6,935
|
|
|
1,843
|
|
|
1,550
|
|
|
875
|
|
|||||
Loss on asset disposals, net (2)
|
3,610
|
|
|
3,436
|
|
|
7,398
|
|
|
8,520
|
|
|
8,059
|
|
|||||
Unrealized gain on foreign exchange (3)
|
(668
|
)
|
|
1,255
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Non-cash stock-based compensation (4)
|
2,450
|
|
|
324
|
|
|
606
|
|
|
689
|
|
|
838
|
|
|||||
Lease cost book to cash (5)
|
3,236
|
|
|
6,982
|
|
|
5,655
|
|
|
7,852
|
|
|
9,100
|
|
|||||
Franchise revenue, net cash received (6)
|
1,988
|
|
|
1,632
|
|
|
—
|
|
|
113
|
|
|
1,217
|
|
|||||
Impact of purchase accounting (7)
|
31
|
|
|
—
|
|
|
817
|
|
|
1,380
|
|
|
995
|
|
|||||
Venue pre-opening costs (8)
|
583
|
|
|
183
|
|
|
904
|
|
|
1,591
|
|
|
792
|
|
|||||
One-time and unusual items (9)
|
3,929
|
|
|
2,898
|
|
|
5,916
|
|
|
5,146
|
|
|
22,448
|
|
|||||
Cost savings initiatives (10)
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
2,187
|
|
|||||
Adjusted EBITDA
|
$
|
184,077
|
|
|
$
|
175,166
|
|
|
$
|
180,800
|
|
|
$
|
207,924
|
|
|
$
|
220,936
|
|
Adjusted EBITDA Margin
|
20.2
|
%
|
|
19.5
|
%
|
|
20.4
|
%
|
|
22.5
|
%
|
|
23.9
|
%
|
(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) gains or losses upon disposal of property or equipment; and (ii) 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 lease costs relating to the impact of straight-lining lease costs and, prior to the adoption of a new lease accounting standard on the first day of Fiscal 2019, 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) professional fees 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 loss on extinguishment of debt related to the refinancing of our 2014 Secured Credit Facilities; (vii) non-recurring gain on the repurchase of Senior Notes on the open market; (viii) professional and legal fees incurred in connection with our 2019 Secured Credit Facilities; (ix) legal fees incurred in connection with certain potential transactions the Company did not pursue; (x) one-time costs incurred in connection with the 2015 relocation of our corporate offices; (xi) cash landlord incentives received in 2015 on our new corporate offices; (xii) sales and use tax refunds that relate to prior periods; (xiii) professional fees incurred in connection with one-time strategic corporate and tax initiatives, such as accounting and consulting service fees incurred in connection with matters relating to the acquisition of Peter Piper Pizza (such as transfer pricing and cost segregation), the implementation of Play Pass and the implementation of a new payment processing solution, 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
|
(10)
|
Relates to estimated net cost savings primarily from (i) the full period impact of reduced occupancy costs associated with the relocation of our corporate offices in 2015; (ii) 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.
|
•
|
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 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
|||
Number of Company-operated venues:
|
|
|
|
|
|
|
|||
Beginning of period
|
|
554
|
|
|
562
|
|
|
559
|
|
New
|
|
2
|
|
|
1
|
|
|
6
|
|
Acquired from franchisee
|
|
4
|
|
|
—
|
|
|
2
|
|
Closed
|
|
(5
|
)
|
|
(9
|
)
|
|
(5
|
)
|
End of period
|
|
555
|
|
|
554
|
|
|
562
|
|
Number of franchised venues:
|
|
|
|
|
|
|
|||
Beginning of period
|
|
196
|
|
|
192
|
|
|
188
|
|
New
|
|
12
|
|
|
8
|
|
|
8
|
|
Acquired from franchisee
|
|
(4
|
)
|
|
—
|
|
|
(2
|
)
|
Closed
|
|
(18
|
)
|
|
(4
|
)
|
|
(2
|
)
|
End of period
|
|
186
|
|
|
196
|
|
|
192
|
|
Total number of system-wide venues:
|
|
|
|
|
|
|
|
||
Beginning of period
|
|
750
|
|
|
754
|
|
|
747
|
|
New
|
|
14
|
|
|
9
|
|
|
14
|
|
Closed
|
|
(23
|
)
|
|
(13
|
)
|
|
(7
|
)
|
End of period
|
|
741
|
|
|
750
|
|
|
754
|
|
(1)
|
The number of new and closed Company-operated and Total system-wide venues during 2018 includes one venue that was relocated.
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||
|
|
(in thousands, except venue number amounts)
|
||||||||||
Average sales per comparable venue
|
|
$
|
1,617
|
|
|
$
|
1,587
|
|
|
$
|
1,561
|
|
Number of venues included in our comparable venue base
|
|
529
|
|
|
526
|
|
|
531
|
|
•
|
Cost of food and beverage includes all direct costs of food, beverages and costs of related paper and birthday supplies, less rebates from suppliers;
|
•
|
Cost of entertainment and merchandise includes all direct costs of tickets issued, stored-value Play Pass and AYCP cards, prizes provided and merchandise sold to our customers;
|
•
|
Labor expenses consist of salaries and wages, bonuses, related payroll taxes and benefits for venue personnel;
|
•
|
Lease costs include lease costs for Company-operated venues and, effective the first day of Fiscal 2019, in connection with the adoption of a new lease accounting standard, lease costs include common area maintenance (“CAM”) charges; and
|
•
|
Other venue operating expenses primarily include utilities, repair and maintenance costs, liability and property insurance, property taxes, credit card processing fees, licenses, preopening expenses, venue asset disposal gains and losses, CAM charges (through the end of Fiscal 2018 as discussed under Lease costs above), and all other costs directly related to the operation of a venue.
|
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
|||||||||||||||
|
|
(in thousands, except percentages)
|
|||||||||||||||||||
Food and beverage sales
|
|
$
|
390,891
|
|
|
43.9
|
%
|
|
$
|
396,658
|
|
|
45.3
|
%
|
|
$
|
410,609
|
|
|
47.3
|
%
|
Entertainment and merchandise sales
|
|
499,204
|
|
|
56.1
|
%
|
|
478,676
|
|
|
54.7
|
%
|
|
458,279
|
|
|
52.7
|
%
|
|||
Total company venue sales
|
|
$
|
890,095
|
|
|
100.0
|
%
|
|
$
|
875,334
|
|
|
100.0
|
%
|
|
$
|
868,888
|
|
|
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)
|
With the adoption of the new lease standard effective December 31, 2018, Lease costs for the twelve months ended December 29, 2019 include common area maintenance charges of $13.9 million. Common area maintenance charges were previously included in Other venue operating costs.
|
(5)
|
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.
|
(i)
|
nondeductible penalties and other expenses;
|
(ii)
|
state income taxes;
|
(iii)
|
foreign income taxes withheld (not offset by foreign tax credits due to the foreign tax credit limitation);
|
(iv)
|
accruals for uncertain tax positions; and
|
(v)
|
an increase in the valuation allowance for deferred tax assets associated with a carryforward of state tax credits that are more than likely to expire before utilized.
|
(i)
|
nondeductible litigation costs related to the Merger;
|
(ii)
|
nondeductible penalties and other expenses;
|
(iii)
|
state income taxes including an increase in our state income tax expense caused by state tax legislation enacted during the second quarter that increased the amount of income subject to state taxation;
|
(iv)
|
foreign income taxes withheld (not offset by a foreign tax credits due to the foreign tax credit limitation);
|
(v)
|
accruals for uncertain tax positions;
|
(vi)
|
an increase in the valuation allowance for deferred tax assets associated with a carryforward of state tax credits that are more than likely to expire before utilized; and
|
(vii)
|
an increase in the valuation allowance for deferred tax assets relating to our Canada operations that could expire before they are utilized, partially offset by a favorable one-time adjustment to deferred tax (the tax effect of the cumulative foreign currency translation adjustment existing as of January 1, 2018) resulting from the change in our intent to no longer indefinitely reinvest monies previously loaned to our Canadian subsidiary recorded in the first quarter of Fiscal 2018.
|
•
|
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 results in a limited investment required in inventories; and
|
•
|
our accounts payable cash management strategies.
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
|
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
111,142
|
|
|
$
|
86,790
|
|
|
$
|
104,297
|
|
Net cash used in investing activities
|
|
(87,584
|
)
|
|
(79,284
|
)
|
|
(93,712
|
)
|
|||
Net cash used in financing activities
|
|
(52,088
|
)
|
|
(11,547
|
)
|
|
(5,030
|
)
|
|||
Effect of foreign exchange rate changes on cash
|
|
(2
|
)
|
|
50
|
|
|
466
|
|
|||
Change in cash and cash equivalents
|
|
$
|
(28,532
|
)
|
|
$
|
(3,991
|
)
|
|
$
|
6,021
|
|
Cash paid for interest
|
|
$
|
77,315
|
|
|
$
|
72,966
|
|
|
$
|
64,675
|
|
Cash paid (refunded) for income taxes, net
|
|
$
|
(7,264
|
)
|
|
$
|
1,054
|
|
|
$
|
7,136
|
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
|
(in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
34,771
|
|
|
$
|
63,170
|
|
Restricted cash
|
|
$
|
18
|
|
|
$
|
151
|
|
Available unused commitments under Revolving Credit Facility
|
|
$
|
105,538
|
|
|
$
|
141,000
|
|
Total cash, cash equivalents, restricted cash and available unused commitments under the revolving credit facility
|
|
$
|
140,327
|
|
|
$
|
204,321
|
|
Term loan facility
|
|
$
|
760,000
|
|
|
$
|
723,900
|
|
Senior Notes
|
|
$
|
215,721
|
|
|
$
|
255,000
|
|
(i)
|
a $114 million secured revolving credit facility, which includes a $50 million letter of credit sub-facility (collectively the “2019 Revolving Credit Facility”), with a maturity date of August 30, 2024 (the “revolver maturity date); and
|
(ii)
|
a $760 million secured term loan facility (the “2019 Term Loan Facility” and together with the 2019 Revolving Credit Facility, the “2019 Secured Credit Facilities”) with a maturity date of August 30, 2026 (the “term loan maturity date”).
|
•
|
Loss on Extinguishment of Debt: We recorded a loss on extinguishment of debt totaling $2.9 million which includes $0.5 million of fees paid to lenders in connection with the 2019 Term Loan Facility and a write-off of $2.4 million of unamortized deferred financing costs and original issue discount related to the 2014 Secured
|
•
|
Transaction related costs: We expensed third party fees totaling $0.4 million related to legal fees incurred in connection with the 2019 Term Loan Facility;
|
•
|
Interest Expense: We expensed third party fees totaling $0.4 million related to rating agency fees incurred in connection with the 2019 Secured Credit Facilities; and
|
•
|
Deferred Financing Costs: Debt issuance costs totaling $14.1 million related to the 2019 Secured Credit Facilities were capitalized. We also continued to defer $2.1 million of unamortized deferred financing costs related to the 2014 Secured Credit Facilities.
|
Margin for Base Rate Loans
|
|
Margin for LIBOR Loans
|
5.50%
|
|
6.50%
|
Net Total Leverage Ratio
|
|
Revolver - Base Rate Loans
|
|
Revolver - LIBOR Loans
|
Greater than 4.80 to 1.00
|
|
5.50%
|
|
6.50%
|
Less than or equal to 4.80 to 1.00 but greater than 4.30 to 1.00
|
|
5.25%
|
|
6.25%
|
Less than or equal to 4.30 to 1.00
|
|
5.00%
|
|
6.00%
|
Net Total Leverage Ratio
|
|
Commitment Fee
|
Greater than 4.30 to 1.00
|
|
0.50%
|
Less than or equal to 4.30 to 1.00
|
|
0.375%
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||
|
|
|
||||||||||
Growth capital spend (1)
|
|
$
|
39,391
|
|
|
$
|
31,269
|
|
|
$
|
51,079
|
|
Maintenance capital spend (2)
|
|
40,968
|
|
|
44,656
|
|
|
35,678
|
|
|||
IT capital spend
|
|
7,429
|
|
|
3,919
|
|
|
7,309
|
|
|||
Total Capital Spend
|
|
$
|
87,788
|
|
|
$
|
79,844
|
|
|
$
|
94,066
|
|
(1)
|
Growth capital spend includes major remodels, including the re-imaging effort to update Chuck E. Cheese venue to a new look and feel, venue expansions, new venue development, including relocations, our Play Pass initiative, 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)
|
$
|
849,638
|
|
|
$
|
93,748
|
|
|
$
|
181,269
|
|
|
$
|
170,182
|
|
|
$
|
404,439
|
|
Secured credit facilities (2)
|
760,000
|
|
|
7,600
|
|
|
15,200
|
|
|
15,200
|
|
|
722,000
|
|
|||||
Sale leaseback obligations
|
242,933
|
|
|
14,360
|
|
|
29,588
|
|
|
30,797
|
|
|
168,188
|
|
|||||
Senior Notes
|
215,721
|
|
|
—
|
|
|
215,721
|
|
|
—
|
|
|
—
|
|
|||||
Interest obligations (3)
|
454,932
|
|
|
87,326
|
|
|
149,871
|
|
|
106,217
|
|
|
111,518
|
|
|||||
Purchase Obligations (4)
|
38,216
|
|
|
32,937
|
|
|
5,279
|
|
|
—
|
|
|
—
|
|
|||||
Finance leases
|
21,474
|
|
|
2,204
|
|
|
4,328
|
|
|
3,771
|
|
|
11,171
|
|
|||||
Uncertain tax positions (5)
|
729
|
|
|
729
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
2,583,643
|
|
|
$
|
238,904
|
|
|
$
|
601,256
|
|
|
$
|
326,167
|
|
|
$
|
1,417,316
|
|
(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)
|
Assumes repayment of the Senior Notes based on stated maturity date and that the maturity date does not spring forward to November 16, 2021 (see further discussion of the springing maturity under “Financial Condition, Liquidity and Capital Resources - Debt Financing - Secured Credit Facilities”).
|
(3)
|
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 assumes we will not have any amounts drawn on our revolving credit facility.
|
(4)
|
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.
|
(5)
|
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 $4.2 million is excluded from the table above.
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
34,771
|
|
|
$
|
63,170
|
|
Restricted cash
|
|
18
|
|
|
151
|
|
||
Accounts receivable
|
|
26,342
|
|
|
24,020
|
|
||
Income taxes receivable
|
|
—
|
|
|
10,160
|
|
||
Inventories
|
|
27,983
|
|
|
23,807
|
|
||
Prepaid expenses
|
|
15,661
|
|
|
25,424
|
|
||
Total current assets
|
|
104,775
|
|
|
146,732
|
|
||
Property and equipment, net
|
|
513,317
|
|
|
539,185
|
|
||
Operating lease right-of-use assets, net
|
|
532,913
|
|
|
—
|
|
||
Goodwill
|
|
484,438
|
|
|
484,438
|
|
||
Intangible assets, net
|
|
468,706
|
|
|
477,085
|
|
||
Other noncurrent assets
|
|
15,400
|
|
|
18,725
|
|
||
Total assets
|
|
$
|
2,119,549
|
|
|
$
|
1,666,165
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
7,600
|
|
Operating lease obligations, current portion
|
|
48,920
|
|
|
—
|
|
||
Finance lease obligations, current portion
|
|
810
|
|
|
677
|
|
||
Accounts payable
|
|
30,951
|
|
|
31,410
|
|
||
Accrued expenses
|
|
43,684
|
|
|
36,030
|
|
||
Unearned revenues
|
|
22,932
|
|
|
18,124
|
|
||
Accrued interest
|
|
12,038
|
|
|
7,463
|
|
||
Other current liabilities
|
|
3,870
|
|
|
5,278
|
|
||
Total current liabilities
|
|
170,805
|
|
|
106,582
|
|
||
Operating lease obligations, less current portion
|
|
525,535
|
|
|
—
|
|
||
Finance lease obligations, less current portion
|
|
11,502
|
|
|
12,330
|
|
||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
|
921,968
|
|
|
961,514
|
|
||
Deferred tax liability, net
|
|
92,440
|
|
|
107,058
|
|
||
Other noncurrent liabilities
|
|
183,513
|
|
|
236,110
|
|
||
Total liabilities
|
|
1,905,763
|
|
|
1,423,594
|
|
||
Stockholder’s equity:
|
|
|
|
|
||||
Common stock, $0.01 par value; authorized 1,000 shares; 200 shares issued as of December 29, 2019 and December 30, 2018
|
|
—
|
|
|
—
|
|
||
Capital in excess of par value
|
|
360,005
|
|
|
359,570
|
|
||
Accumulated deficit
|
|
(144,583
|
)
|
|
(115,660
|
)
|
||
Accumulated other comprehensive loss
|
|
(1,636
|
)
|
|
(1,339
|
)
|
||
Total stockholder’s equity
|
|
213,786
|
|
|
242,571
|
|
||
Total liabilities and stockholder’s equity
|
|
$
|
2,119,549
|
|
|
$
|
1,666,165
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
REVENUES:
|
|
|
|
|
|
||||||
Food and beverage sales
|
$
|
390,891
|
|
|
$
|
396,658
|
|
|
$
|
410,609
|
|
Entertainment and merchandise sales
|
499,204
|
|
|
478,676
|
|
|
458,279
|
|
|||
Total company venue sales
|
890,095
|
|
|
875,334
|
|
|
868,888
|
|
|||
Franchise fees and royalties
|
22,770
|
|
|
20,732
|
|
|
17,883
|
|
|||
Total revenues
|
912,865
|
|
|
896,066
|
|
|
886,771
|
|
|||
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
||||||
Cost of food and beverage
|
90,582
|
|
|
94,319
|
|
|
97,570
|
|
|||
Cost of entertainment and merchandise
|
40,967
|
|
|
36,650
|
|
|
29,948
|
|
|||
Total cost of food, beverage, entertainment and merchandise
|
131,549
|
|
|
130,969
|
|
|
127,518
|
|
|||
Labor expenses
|
263,898
|
|
|
256,327
|
|
|
248,061
|
|
|||
Lease costs
|
109,043
|
|
|
96,484
|
|
|
95,917
|
|
|||
Other venue operating expenses
|
134,740
|
|
|
150,255
|
|
|
149,462
|
|
|||
Total company venue operating costs
|
639,230
|
|
|
634,035
|
|
|
620,958
|
|
|||
Other costs and expenses:
|
|
|
|
|
|
||||||
Advertising expense
|
44,745
|
|
|
48,198
|
|
|
48,379
|
|
|||
General and administrative expenses
|
56,960
|
|
|
54,850
|
|
|
56,482
|
|
|||
Depreciation and amortization
|
97,629
|
|
|
100,720
|
|
|
109,771
|
|
|||
Transaction, severance and related litigation costs
|
770
|
|
|
527
|
|
|
1,448
|
|
|||
Asset impairments
|
23,333
|
|
|
6,935
|
|
|
1,843
|
|
|||
Total operating costs and expenses
|
862,667
|
|
|
845,265
|
|
|
838,881
|
|
|||
Operating income
|
50,198
|
|
|
50,801
|
|
|
47,890
|
|
|||
Interest expense
|
87,243
|
|
|
76,283
|
|
|
69,115
|
|
|||
Loss on extinguishment of debt
|
2,242
|
|
|
—
|
|
|
—
|
|
|||
Loss before income taxes
|
(39,287
|
)
|
|
(25,482
|
)
|
|
(21,225
|
)
|
|||
Income tax benefit
|
(10,364
|
)
|
|
(5,021
|
)
|
|
(74,291
|
)
|
|||
Net income (loss)
|
$
|
(28,923
|
)
|
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
Net income (loss)
|
|
$
|
(28,923
|
)
|
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
(297
|
)
|
|
547
|
|
|
1,010
|
|
|||
Comprehensive income (loss)
|
|
$
|
(29,220
|
)
|
|
$
|
(19,914
|
)
|
|
$
|
54,076
|
|
|
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 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
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,923
|
)
|
|
—
|
|
|
(28,923
|
)
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(297
|
)
|
|
(297
|
)
|
|||||
Stock-based compensation costs
|
—
|
|
|
—
|
|
|
435
|
|
|
—
|
|
|
—
|
|
|
435
|
|
|||||
Balance at December 29, 2019
|
200
|
|
|
$
|
—
|
|
|
$
|
360,005
|
|
|
$
|
(144,583
|
)
|
|
$
|
(1,636
|
)
|
|
$
|
213,786
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||||||
Net income (loss)
|
$
|
(28,923
|
)
|
|
$
|
(20,461
|
)
|
|
$
|
53,066
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Loss on extinguishment of debt
|
2,242
|
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
97,629
|
|
|
100,720
|
|
|
109,771
|
|
|||
Deferred income taxes
|
(14,510
|
)
|
|
(8,182
|
)
|
|
(71,875
|
)
|
|||
Stock-based compensation expense
|
2,435
|
|
|
324
|
|
|
606
|
|
|||
Amortization of lease-related liabilities
|
—
|
|
|
(993
|
)
|
|
(632
|
)
|
|||
Amortization of original issue discount and deferred financing costs
|
5,487
|
|
|
4,344
|
|
|
4,546
|
|
|||
Debt refinancing costs
|
694
|
|
|
—
|
|
|
—
|
|
|||
Loss on asset disposals, net
|
3,610
|
|
|
3,436
|
|
|
7,398
|
|
|||
Asset impairments
|
23,333
|
|
|
6,935
|
|
|
1,843
|
|
|||
Non-cash rent expenses
|
2,935
|
|
|
5,372
|
|
|
4,884
|
|
|||
Change in operating lease obligations
|
1,602
|
|
|
—
|
|
|
—
|
|
|||
Other adjustments
|
(107
|
)
|
|
768
|
|
|
322
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(2,420
|
)
|
|
(4,532
|
)
|
|
(809
|
)
|
|||
Inventories
|
(4,272
|
)
|
|
(1,833
|
)
|
|
(3,964
|
)
|
|||
Prepaid expenses
|
(772
|
)
|
|
(686
|
)
|
|
3,173
|
|
|||
Accounts payable
|
877
|
|
|
(2,172
|
)
|
|
3,110
|
|
|||
Accrued expenses
|
424
|
|
|
2,534
|
|
|
(4,744
|
)
|
|||
Unearned revenues
|
4,808
|
|
|
(2,917
|
)
|
|
5,647
|
|
|||
Accrued interest
|
4,660
|
|
|
(569
|
)
|
|
(70
|
)
|
|||
Income taxes (receivable) payable
|
11,410
|
|
|
2,107
|
|
|
(9,554
|
)
|
|||
Deferred landlord contributions
|
—
|
|
|
2,595
|
|
|
1,579
|
|
|||
Net cash provided by operating activities
|
111,142
|
|
|
86,790
|
|
|
104,297
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(87,018
|
)
|
|
(77,088
|
)
|
|
(90,958
|
)
|
|||
Development of internal use software
|
(770
|
)
|
|
(2,756
|
)
|
|
(3,243
|
)
|
|||
Proceeds from sale of property and equipment
|
204
|
|
|
560
|
|
|
489
|
|
|||
Net cash used in investing activities
|
(87,584
|
)
|
|
(79,284
|
)
|
|
(93,712
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from refinancing of senior term loan
|
479,449
|
|
|
—
|
|
|
—
|
|
|||
Repayments on senior term loan
|
(473,749
|
)
|
|
(7,600
|
)
|
|
(7,600
|
)
|
|||
Repurchase of Senior Notes
|
(38,337
|
)
|
|
—
|
|
|
—
|
|
|||
Repayments on note payable
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||
Payment of debt financing costs
|
(15,375
|
)
|
|
(442
|
)
|
|
—
|
|
|||
Proceeds from sale leaseback transaction
|
—
|
|
|
—
|
|
|
4,073
|
|
|||
Payments on finance lease obligations
|
(697
|
)
|
|
(595
|
)
|
|
(467
|
)
|
|||
Payments on sale leaseback obligations
|
(3,379
|
)
|
|
(2,910
|
)
|
|
(2,470
|
)
|
|||
Return of capital
|
—
|
|
|
—
|
|
|
1,447
|
|
|||
Net cash used in financing activities
|
(52,088
|
)
|
|
(11,547
|
)
|
|
(5,030
|
)
|
|||
Effect of foreign exchange rate changes on cash
|
(2
|
)
|
|
50
|
|
|
466
|
|
|||
Change in cash, cash equivalents and restricted cash
|
(28,532
|
)
|
|
(3,991
|
)
|
|
6,021
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
63,321
|
|
|
67,312
|
|
|
61,291
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
34,789
|
|
|
$
|
63,321
|
|
|
$
|
67,312
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
77,315
|
|
|
$
|
72,966
|
|
|
$
|
64,675
|
|
Cash paid (refunded) for income taxes, net
|
$
|
(7,264
|
)
|
|
$
|
1,054
|
|
|
$
|
7,136
|
|
Right-of-use assets obtained in exchange for lease obligations
|
$
|
26,318
|
|
|
$
|
—
|
|
|
$
|
—
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Accrued construction costs
|
$
|
939
|
|
|
$
|
2,402
|
|
|
$
|
1,007
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
34,771
|
|
|
$
|
63,170
|
|
Restricted cash (1)
|
18
|
|
|
151
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
34,789
|
|
|
$
|
63,321
|
|
(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).
|
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.
|
|
Balance at
|
|
|
|
|
|
Balance at
|
||||||||
|
December 30, 2018
|
|
Revenue Deferred
|
|
Revenue Recognized
|
|
December 29, 2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Game credit and unredeemed ticket related deferred revenue
|
$
|
5,561
|
|
|
$
|
46,773
|
|
|
$
|
(46,631
|
)
|
|
$
|
5,703
|
|
Gift card related deferred revenue
|
5,253
|
|
|
13,975
|
|
|
(11,410
|
)
|
|
7,818
|
|
||||
Unearned franchise and development fees
|
6,321
|
|
|
2,325
|
|
|
(366
|
)
|
|
8,280
|
|
||||
Other unearned revenues
|
989
|
|
|
26,334
|
|
|
(26,192
|
)
|
|
1,131
|
|
||||
Total unearned revenue
|
$
|
18,124
|
|
|
$
|
89,407
|
|
|
$
|
(84,599
|
)
|
|
$
|
22,932
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
|
(in thousands)
|
||||||
Trade receivables
|
$
|
10,984
|
|
|
$
|
11,185
|
|
Vendor rebates
|
6,590
|
|
|
6,651
|
|
||
Other accounts receivable
|
8,768
|
|
|
6,184
|
|
||
Total accounts receivable
|
$
|
26,342
|
|
|
$
|
24,020
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
|
(in thousands)
|
||||||
Food and beverage
|
$
|
5,302
|
|
|
$
|
5,383
|
|
Entertainment and merchandise
|
22,681
|
|
|
18,424
|
|
||
Inventories
|
$
|
27,983
|
|
|
$
|
23,807
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
(in thousands)
|
||||||
Land
|
$
|
50,135
|
|
|
$
|
50,135
|
|
Buildings
|
67,178
|
|
|
61,378
|
|
||
Leasehold improvements
|
495,948
|
|
|
474,210
|
|
||
Game and ride equipment
|
277,125
|
|
|
263,689
|
|
||
Furniture, fixtures and other equipment
|
170,710
|
|
|
159,560
|
|
||
Buildings leased under finance leases
|
15,063
|
|
|
15,061
|
|
||
|
1,076,159
|
|
|
1,024,033
|
|
||
Less accumulated depreciation and amortization
|
(570,423
|
)
|
|
(495,125
|
)
|
||
Net property and equipment in service
|
505,736
|
|
|
528,908
|
|
||
Construction in progress
|
7,581
|
|
|
10,277
|
|
||
Property and equipment, net
|
$
|
513,317
|
|
|
$
|
539,185
|
|
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||||||||||||||||||
|
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 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
|
10
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,880
|
|
|
(8,550
|
)
|
|
6,330
|
|
||||||
Franchise agreements
|
25
|
|
53,300
|
|
|
(11,294
|
)
|
|
42,006
|
|
|
53,300
|
|
|
(9,245
|
)
|
|
44,055
|
|
||||||
|
|
|
$
|
480,000
|
|
|
$
|
(11,294
|
)
|
|
$
|
468,706
|
|
|
$
|
494,880
|
|
|
$
|
(17,795
|
)
|
|
$
|
477,085
|
|
|
|
Franchise Agreements
|
||
Fiscal 2020
|
|
$
|
2,088
|
|
Fiscal 2021
|
|
2,049
|
|
|
Fiscal 2022
|
|
2,049
|
|
|
Fiscal 2023
|
|
2,049
|
|
|
Fiscal 2024
|
|
2,049
|
|
|
Thereafter
|
|
31,722
|
|
|
|
|
$42,006
|
|
|
December 29, 2019
|
||
|
Balance Sheet Classification
|
(in thousands)
|
||
Assets
|
|
|
||
Operating
|
Operating lease right-of-use assets, net
|
$
|
532,913
|
|
Finance
|
Property and equipment, net (1)
|
9,099
|
|
|
Total leased assets
|
|
$
|
542,012
|
|
|
|
|
||
Liabilities
|
|
|
||
Current
|
|
|
||
Operating
|
Operating lease obligations, current portion
|
$
|
48,920
|
|
Finance
|
Finance lease obligations, current portion
|
810
|
|
|
Noncurrent
|
|
|
||
Operating
|
Operating lease obligations, less current portion
|
525,535
|
|
|
Finance
|
Finance lease obligations, less current portion
|
11,502
|
|
|
Total leased liabilities
|
|
$
|
586,767
|
|
|
|
|
|
Fiscal 2019
|
||
|
|
Statement of Earnings Classification
|
|
(in thousands)
|
||
Operating lease cost (1)
|
|
Lease costs
|
|
$
|
109,043
|
|
Operating lease cost (2)
|
|
General and administrative
|
|
1,303
|
|
|
Finance lease cost
|
|
|
|
|
||
Amortization of leased assets
|
|
Depreciation and amortization
|
|
990
|
|
|
Interest on lease obligations
|
|
Net interest expense
|
|
1,485
|
|
|
Net lease cost
|
|
|
|
$
|
112,821
|
|
|
|
Operating
Leases (1)
|
|
Finance
Leases (2)
|
|
Total
|
||||||
|
|
(in thousands)
|
||||||||||
2020
|
|
$
|
93,748
|
|
|
$
|
2,204
|
|
|
$
|
95,952
|
|
2021
|
|
91,677
|
|
|
2,181
|
|
|
93,858
|
|
|||
2022
|
|
89,592
|
|
|
2,147
|
|
|
91,739
|
|
|||
2023
|
|
87,040
|
|
|
1,920
|
|
|
88,960
|
|
|||
2024
|
|
83,142
|
|
|
1,851
|
|
|
84,993
|
|
|||
After 2024
|
|
404,439
|
|
|
11,171
|
|
|
415,610
|
|
|||
Total lease payments
|
|
849,638
|
|
|
21,474
|
|
|
871,112
|
|
|||
Less: interest
|
|
275,183
|
|
|
9,162
|
|
|
284,345
|
|
|||
Present value of minimum lease payments (3)
|
|
$
|
574,455
|
|
|
$
|
12,312
|
|
|
$
|
586,767
|
|
Lease Term and Discount Rate
|
Fiscal 2019
|
||
Weighted average remaining lease term (years):
|
|
||
Operating leases
|
|
9.9
|
|
Finance leases
|
|
10.8
|
|
Weighted average discount rate:
|
|
|
|
Operating leases
|
|
8.0
|
%
|
Finance leases
|
|
12.6
|
%
|
|
Financing
|
|
Operating
|
||||
Fiscal Years
|
(in thousands)
|
||||||
2019
|
$
|
2,182
|
|
|
$
|
92,435
|
|
2020
|
2,214
|
|
|
90,983
|
|
||
2021
|
2,201
|
|
|
88,914
|
|
||
2022
|
2,184
|
|
|
87,183
|
|
||
2023
|
1,956
|
|
|
84,806
|
|
||
After 2023
|
13,266
|
|
|
457,277
|
|
||
Future minimum lease payments
|
24,003
|
|
|
$
|
901,598
|
|
|
Less amounts representing interest
|
(10,996
|
)
|
|
|
|||
Present value of future minimum lease payments
|
13,007
|
|
|
|
|||
Less current portion
|
(677
|
)
|
|
|
|||
Finance lease obligations, less current portion
|
$
|
12,330
|
|
|
|
|
Fiscal Year
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Minimum lease costs
|
$
|
96,376
|
|
|
$
|
97,598
|
|
|
$
|
96,927
|
|
Variable non-lease costs (1)
|
13,854
|
|
|
—
|
|
|
—
|
|
|||
Contingent lease costs
|
116
|
|
|
43
|
|
|
156
|
|
|||
|
$
|
110,346
|
|
|
$
|
97,641
|
|
|
$
|
97,083
|
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
|
(in thousands)
|
||||||
Internally developed software, net (1)
|
|
$
|
12,032
|
|
|
$
|
14,756
|
|
Deferred charges
|
|
1,249
|
|
|
1,122
|
|
||
Deposits
|
|
744
|
|
|
848
|
|
||
Other
|
|
1,375
|
|
|
1,999
|
|
||
Total other noncurrent assets
|
|
$
|
15,400
|
|
|
$
|
18,725
|
|
(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 $14.4 million and $10.3 million at December 29, 2019 and December 30, 2018, 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.”
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
(in thousands)
|
||||||
Trade and other amounts payable
|
$
|
22,391
|
|
|
$
|
20,685
|
|
Book overdraft
|
8,560
|
|
|
10,725
|
|
||
Accounts payable
|
$
|
30,951
|
|
|
$
|
31,410
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
(in thousands)
|
||||||
Current:
|
|
|
|
||||
Salaries and wages
|
$
|
17,058
|
|
|
$
|
13,702
|
|
Insurance
|
6,466
|
|
|
4,836
|
|
||
Taxes, other than income taxes
|
13,967
|
|
|
13,488
|
|
||
Other accrued operating expenses
|
6,193
|
|
|
4,004
|
|
||
Accrued expenses
|
$
|
43,684
|
|
|
$
|
36,030
|
|
Noncurrent:
|
|
|
|
||||
Insurance
|
$
|
7,876
|
|
|
$
|
9,861
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
(in thousands)
|
||||||
Term loan facility
|
$
|
760,000
|
|
|
$
|
723,900
|
|
Senior Notes
|
215,721
|
|
|
255,000
|
|
||
Total debt outstanding
|
975,721
|
|
|
978,900
|
|
||
Less:
|
|
|
|
||||
Unamortized original issue discount
|
(29,310
|
)
|
|
(1,153
|
)
|
||
Deferred financing costs, net
|
(16,843
|
)
|
|
(8,633
|
)
|
||
Current portion of Term Loan Facility
|
(7,600
|
)
|
|
(7,600
|
)
|
||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion
|
$
|
921,968
|
|
|
$
|
961,514
|
|
(i)
|
a $114 million secured revolving credit facility which includes a $50 million letter of credit sub-facility (collectively the “2019 Revolving Credit Facility”) with a maturity date of August 30, 2024 (the “revolver maturity date); and
|
(ii)
|
a $760 million secured term loan facility (the “2019 Term Loan Facility” and together with the 2019 Revolving Credit Facility, the “2019 Secured Credit Facilities”) with a maturity date of August 30, 2026 (the “term loan maturity date”).
|
•
|
Loss on Extinguishment of Debt: We recorded a loss on extinguishment of debt totaling $2.9 million which includes $0.5 million of fees paid to lenders in connection with the 2019 Term Loan Facility and a write off of $2.4 million of unamortized deferred financing costs and original issue discount related to the 2014 Secured Credit Facilities;
|
•
|
Transaction related costs: We expensed third party fees totaling $0.4 million related to legal fees incurred in connection with the 2019 Term Loan Facility. The transaction related costs are included in “Transaction, severance and related litigation costs” in our Consolidated Statement of Earnings;
|
•
|
Interest Expense: We expensed third party fees totaling $0.4 million related to rating agency fees incurred in connection with the 2019 Secured Credit Facilities. These fees are included in “Interest Expense” in our Consolidated Statement of Earnings; and
|
•
|
Deferred Financing Costs: Debt issuance costs totaling $14.1 million related to the 2019 Secured Credit
|
•
|
Excess Cash Flow- Subject to certain exceptions, to the extent we have excess cash flow determined on an annual basis (as defined in the 2019 Secured Credit Facilities agreement), we are required to make a mandatory prepayment of term loan principal (reduced by any optional prepayments of principal that may have occurred during the fiscal year) to the extent that 75% (the “required percentage” which is subject to step downs discussed below) times the excess cash flow exceeds $10.0 million. The required percentage steps down from 75% to 50% provided our Net Total Leverage Ratio (the ratio of total consolidated debt including lease related obligations net of unrestricted cash to the last twelve month’s EBITDA, as defined in the 2019 Senior Credit Facilities agreement) is less than or equal to 4.50 to 1.00 and greater than 4.25 to 1.00, steps down to 25% provided our Net Total Leverage Ratio is less than or equal to 4.25 to 1.00 and greater than 4.00 to 1.00, and steps down to 0% provided our Net Total Leverage Ratio is less than or equal to 4.00 to 1.00.
|
•
|
Sales and Disposition of Assets- Subject to certain exceptions, we are required to make a mandatory prepayment of term loan principal of 100% of the net cash proceeds of all non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and provided that the Company may (i) reinvest within 12 months or (ii) commit to reinvest those proceeds and does reinvest such proceeds within 18 months in assets to be used in its business, or certain other permitted investments; and
|
•
|
Issuance or incurrence of Debt- Subject to certain exceptions, we are required to make a mandatory prepayment of term loan principal of 100% of the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the 2019 Secured Credit Facilities.
|
Margin for Base Rate Loans
|
|
Margin for LIBOR Loans
|
5.50%
|
|
6.50%
|
Net Total Leverage Ratio
|
|
Revolver - Base Rate Loans
|
|
Revolver - LIBOR Loans
|
Greater than 4.80 to 1.00
|
|
5.50%
|
|
6.50%
|
Less than or equal to 4.80 to 1.00 but greater than 4.30 to 1.00
|
|
5.25%
|
|
6.25%
|
Less than or equal to 4.30 to 1.00
|
|
5.00%
|
|
6.00%
|
Net Total Leverage Ratio
|
|
Commitment Fee
|
Greater than 4.30 to 1.00
|
|
0.50%
|
Less than or equal to 4.30 to 1.00
|
|
0.375%
|
One year or less
|
$
|
7,600
|
|
Two years
|
7,600
|
|
|
Three years
|
223,321
|
|
|
Four years
|
7,600
|
|
|
Five years
|
7,600
|
|
|
Thereafter
|
722,000
|
|
|
|
$
|
975,721
|
|
Less: debt financing costs, net
|
(16,843
|
)
|
|
Less: unamortized discount
|
(29,310
|
)
|
|
|
$
|
929,568
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 29,
2019 |
|
December 30, 2018
|
|
December 31,
2017 |
||||||
|
(in thousands)
|
||||||||||
Term loan facility (1)
|
$
|
51,150
|
|
|
$
|
39,065
|
|
|
$
|
31,549
|
|
Senior Notes
|
19,957
|
|
|
20,330
|
|
|
20,330
|
|
|||
Capital lease obligations
|
1,485
|
|
|
1,643
|
|
|
1,695
|
|
|||
Sale leaseback obligations
|
10,332
|
|
|
10,488
|
|
|
10,585
|
|
|||
Amortization of debt issuance costs
|
3,659
|
|
|
3,803
|
|
|
4,005
|
|
|||
Other
|
660
|
|
|
954
|
|
|
951
|
|
|||
Total interest expense
|
$
|
87,243
|
|
|
$
|
76,283
|
|
|
$
|
69,115
|
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||||||||||
|
|
Carrying Amount (1)
|
|
Estimated Fair Value
|
|
Carrying Amount (1)
|
|
Estimated Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Bank indebtedness and other long-term debt:
|
|
|
|
|
|
|
|
|
||||||||
Current portion
|
|
$
|
7,600
|
|
|
$
|
7,322
|
|
|
$
|
7,600
|
|
|
$
|
7,051
|
|
Long-term portion
|
|
938,811
|
|
|
937,344
|
|
|
970,147
|
|
|
885,212
|
|
||||
Bank indebtedness and other long-term debt:
|
|
$
|
946,411
|
|
|
$
|
944,666
|
|
|
$
|
977,747
|
|
|
$
|
892,263
|
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
|
|
(in thousands)
|
||||||
Sale leaseback obligations, less current portion (1)
|
|
$
|
170,693
|
|
|
$
|
174,520
|
|
Lease related liabilities (2)
|
|
—
|
|
|
45,195
|
|
||
Accrued insurance
|
|
7,876
|
|
|
9,861
|
|
||
Other
|
|
4,944
|
|
|
6,534
|
|
||
Total other noncurrent liabilities
|
|
$
|
183,513
|
|
|
$
|
236,110
|
|
(1)
|
See Note 14 “Sale Leaseback Transactions” for further discussion on our sale leaseback obligations.
|
(2)
|
Lease liabilities totaling $45.2 million were reclassified to “Operating lease right-of-use assets, net” on our Consolidated Balance Sheets in connection with the adoption of ASU 2016-02 on December 31, 2018. See Note 1. “Description of Business and Summary of Significant Accounting Policies - Recently Adopted Accounting Guidance” and Note 7. “Leases” for further discussion on the adoption of ASU 2016-02.
|
Fiscal 2020
|
$
|
14,360
|
|
Fiscal 2021
|
14,641
|
|
|
Fiscal 2022
|
14,947
|
|
|
Fiscal 2023
|
15,249
|
|
|
Fiscal 2024
|
15,548
|
|
|
Thereafter
|
168,188
|
|
|
|
$
|
242,933
|
|
|
|
Fiscal Year
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
|||||||||||
United States
|
|
$
|
(43,346
|
)
|
|
$
|
(28,731
|
)
|
|
$
|
(25,667
|
)
|
Foreign (including U.S. Possessions)
|
|
4,059
|
|
|
3,249
|
|
|
4,442
|
|
|||
Income (loss) before income taxes
|
|
$
|
(39,287
|
)
|
|
$
|
(25,482
|
)
|
|
$
|
(21,225
|
)
|
|
|
Fiscal Year
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
|||||||||||
Current tax expense (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
3,075
|
|
|
$
|
1,276
|
|
|
$
|
(2,668
|
)
|
State
|
|
312
|
|
|
1,090
|
|
|
(708
|
)
|
|||
Foreign
|
|
759
|
|
|
795
|
|
|
960
|
|
|||
|
|
4,146
|
|
|
3,161
|
|
|
(2,416
|
)
|
|||
Deferred tax expense (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
(12,150
|
)
|
|
(8,382
|
)
|
|
(72,829
|
)
|
|||
State
|
|
(2,360
|
)
|
|
24
|
|
|
(137
|
)
|
|||
Foreign
|
|
—
|
|
|
176
|
|
|
1,091
|
|
|||
|
|
(14,510
|
)
|
|
(8,182
|
)
|
|
(71,875
|
)
|
|||
Income tax expense (benefit)
|
|
$
|
(10,364
|
)
|
|
$
|
(5,021
|
)
|
|
$
|
(74,291
|
)
|
|
Fiscal Year
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Federal statutory rate
|
(21.0
|
)%
|
|
(21.0
|
)%
|
|
(35.0
|
)%
|
State income taxes, net of federal benefit
|
(4.5
|
)%
|
|
2.0
|
%
|
|
(4.5
|
)%
|
Federal employment related income tax credits, net
|
(1.4
|
)%
|
|
(2.9
|
)%
|
|
(1.2
|
)%
|
Merger and litigation related costs
|
(0.1
|
)%
|
|
0.4
|
%
|
|
1.6
|
%
|
Canadian tax rate difference
|
—
|
%
|
|
—
|
%
|
|
0.4
|
%
|
Canadian nondeductible interest
|
—
|
%
|
|
—
|
%
|
|
0.7
|
%
|
Canadian deferred tax valuation adjustment
|
—
|
%
|
|
0.7
|
%
|
|
5.7
|
%
|
Canadian tax reorganization
|
—
|
%
|
|
0.8
|
%
|
|
(7.6
|
)%
|
State tax credit, valuation adjustment
|
0.3
|
%
|
|
1.3
|
%
|
|
2.0
|
%
|
Foreign taxes withheld
|
(0.2
|
)%
|
|
1.4
|
%
|
|
—
|
%
|
Other
|
0.5
|
%
|
|
0.4
|
%
|
|
1.9
|
%
|
Effective tax rate (before impact of Tax Cuts and Jobs Act of 2017 (1)
|
(26.4
|
)%
|
|
(16.9
|
)%
|
|
(36.0
|
)%
|
Adjustment related to the Tax Cuts and Jobs Act of 2017 (1)
|
—
|
%
|
|
(2.8
|
)%
|
|
(314.0
|
)%
|
Adjusted effective tax rate
|
(26.4
|
)%
|
|
(19.7
|
)%
|
|
(350.0
|
)%
|
(i)
|
nondeductible penalties and other expenses;
|
(ii)
|
state income taxes;
|
(iii)
|
foreign income taxes withheld (not offset by foreign tax credits due to the foreign tax credit limitation);
|
(iv)
|
accruals for uncertain tax positions; and
|
(v)
|
an increase in the valuation allowance for deferred tax assets associated with a carryforward of state tax credits that are more than likely to expire before utilized.
|
(i)
|
nondeductible litigation costs related to the Merger;
|
(ii)
|
nondeductible penalties and other expenses;
|
(iii)
|
state income taxes including an increase in our state income tax expense caused by state tax legislation enacted during the second quarter that increased the amount of income subject to state taxation;
|
(iv)
|
foreign income taxes withheld (not offset by foreign tax credits due to the foreign tax credit limitation);
|
(v)
|
accruals for uncertain tax positions;
|
(vi)
|
an increase in the valuation allowance for deferred tax assets associated with a carryforward of state tax credits that are more than likely to expire before utilized; and
|
(vii)
|
an increase in the valuation allowance for deferred tax assets relating to our Canada operations that could expire before they are utilized, partially offset by a favorable one-time adjustment to deferred tax (the tax effect of the cumulative foreign currency translation adjustment existing as of January 1, 2018) resulting from the change in our intent to no longer indefinitely reinvest monies previously loaned to our Canadian
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Accrued compensation
|
$
|
2,213
|
|
|
$
|
1,523
|
|
Unearned revenue
|
3,305
|
|
|
2,360
|
|
||
Deferred rent
|
—
|
|
|
8,272
|
|
||
Operating lease obligations (1)
|
149,782
|
|
|
—
|
|
||
Stock-based compensation
|
912
|
|
|
730
|
|
||
Accrued insurance and employee benefit plans
|
3,284
|
|
|
3,328
|
|
||
Unrecognized tax benefits (2)
|
318
|
|
|
377
|
|
||
NOL and other carryforwards
|
5,629
|
|
|
5,746
|
|
||
Interest deduction carryforward
|
8,930
|
|
|
—
|
|
||
Loan costs
|
—
|
|
|
394
|
|
||
Other
|
800
|
|
|
722
|
|
||
Gross deferred tax assets
|
175,173
|
|
|
23,452
|
|
||
Less: Valuation allowance (3)
|
2,865
|
|
|
2,896
|
|
||
Net deferred tax asset
|
172,308
|
|
|
20,556
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization (4)
|
(3,465
|
)
|
|
(5,774
|
)
|
||
Prepaid assets
|
(424
|
)
|
|
(621
|
)
|
||
Intangibles
|
(120,534
|
)
|
|
(117,025
|
)
|
||
Operating lease right-of-use assets (1)
|
(137,048
|
)
|
|
—
|
|
||
Favorable/unfavorable Leases
|
—
|
|
|
(172
|
)
|
||
Internal use software and other
|
(3,216
|
)
|
|
(4,022
|
)
|
||
Deferred loan costs
|
(61
|
)
|
|
—
|
|
||
Gross deferred tax liabilities
|
(264,748
|
)
|
|
(127,614
|
)
|
||
Net deferred tax liability
|
$
|
(92,440
|
)
|
|
$
|
(107,058
|
)
|
(1)
|
Cumulative deferred tax assets and liabilities relating to deferred rent, favorable/unfavorable leases, landlord incentives, and cease-use obligations were reclassed to Operating Lease Right-of-Use-Asset/Liability upon the adoption of ASU 2016-02, Leases (Topic 842), at the beginning of Fiscal 2019.
|
(2)
|
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.
|
(3)
|
Valuation allowance for deferred tax assets relating to Canada deferred tax assets (including Canada net operating loss carryforward) and certain state tax credits.
|
(4)
|
Includes the cumulative deferred tax relating to leases accounted for as financing transactions.
|
|
Fiscal Year
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Balance at beginning of period
|
$
|
4,286
|
|
|
$
|
3,853
|
|
|
$
|
3,119
|
|
Additions for tax positions taken in the current year
|
100
|
|
|
114
|
|
|
1,677
|
|
|||
Increases for tax positions taken in prior years
|
826
|
|
|
571
|
|
|
16
|
|
|||
Decreases for tax positions taken in prior years
|
(42
|
)
|
|
(48
|
)
|
|
(390
|
)
|
|||
Settlements with tax authorities
|
(131
|
)
|
|
(5
|
)
|
|
(32
|
)
|
|||
Expiration of statute of limitations
|
(1,060
|
)
|
|
(199
|
)
|
|
(537
|
)
|
|||
Balance at end of period
|
$
|
3,979
|
|
|
$
|
4,286
|
|
|
$
|
3,853
|
|
|
Fiscal Year
|
|||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||
|
September 2019
|
|
January and February 2019
|
|
February 2018
|
|
August 2017
|
|
February 2017
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Volatility for Tranche A
|
35
|
%
|
|
35
|
%
|
|
33
|
%
|
|
35
|
%
|
|
34
|
%
|
Volatility for Tranches B and C
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|
34
|
%
|
|
33
|
%
|
Risk-free interest rate for Tranche A
|
1.75
|
%
|
|
2.60
|
%
|
|
2.70
|
%
|
|
1.39
|
%
|
|
1.38
|
%
|
Risk-free interest rate for Tranches B and C
|
1.82
|
%
|
|
2.65
|
%
|
|
2.42
|
%
|
|
1.28
|
%
|
|
1.16
|
%
|
Expected life - years
|
5.6
|
|
|
5.8
|
|
|
3.7
|
|
|
1.7
|
|
|
2.2
|
|
|
|
Stock Options
|
Weighted Average Exercise Price (1)
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
|||
|
|
|
($ per share)
|
|
($ in thousands)
|
|||
Outstanding stock options, December 30, 2018
|
|
1,987,331
|
|
$8.87
|
|
|
||
Options Granted
|
|
498,566
|
|
$8.81
|
|
|
||
Options Forfeited
|
|
(128,599
|
)
|
$9.64
|
|
|
||
Outstanding stock options, December 29, 2019
|
|
2,357,298
|
|
$8.79
|
5.4
|
$
|
—
|
|
Stock options expected to vest, December 29, 2019
|
|
1,595,892
|
|
$8.95
|
5.8
|
$
|
—
|
|
Exercisable stock options, December 29, 2019
|
|
584,085
|
|
$8.31
|
4.3
|
$
|
233
|
|
|
|
Fiscal Year
|
||||||||||
|
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
|
|
(in thousands)
|
||||||||||
Stock-based compensation costs related to stock awards
|
|
$
|
2,009
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Stock-based compensation costs related to incentive stock options, net (1)
|
|
$
|
426
|
|
|
$
|
324
|
|
|
$
|
606
|
|
Stock-based compensation expense recognized
|
|
$
|
2,435
|
|
|
$
|
324
|
|
|
$
|
606
|
|
Tax benefit recognized from stock-based compensation awards
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CEC Entertainment, Inc.
|
||||||||||||||||||||
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
As of December 29, 2019
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantor
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
30,122
|
|
|
$
|
1,665
|
|
|
$
|
2,984
|
|
|
$
|
—
|
|
|
$
|
34,771
|
|
Restricted cash
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|||||
Accounts receivable
|
|
18,694
|
|
|
6,979
|
|
|
4,000
|
|
|
(3,331
|
)
|
|
26,342
|
|
|||||
Inventories
|
|
21,273
|
|
|
6,422
|
|
|
288
|
|
|
—
|
|
|
27,983
|
|
|||||
Prepaid assets
|
|
7,400
|
|
|
7,284
|
|
|
977
|
|
|
—
|
|
|
15,661
|
|
|||||
Total current assets
|
|
77,489
|
|
|
22,350
|
|
|
8,267
|
|
|
(3,331
|
)
|
|
104,775
|
|
|||||
Property and equipment, net
|
|
458,069
|
|
|
50,433
|
|
|
4,815
|
|
|
—
|
|
|
513,317
|
|
|||||
Operating lease right-of-use assets
|
|
480,609
|
|
|
42,906
|
|
|
9,398
|
|
|
—
|
|
|
532,913
|
|
|||||
Goodwill
|
|
433,024
|
|
|
51,414
|
|
|
—
|
|
|
—
|
|
|
484,438
|
|
|||||
Intangible assets, net
|
|
7,936
|
|
|
460,770
|
|
|
—
|
|
|
—
|
|
|
468,706
|
|
|||||
Intercompany
|
|
99,502
|
|
|
358
|
|
|
—
|
|
|
(99,860
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
422,561
|
|
|
—
|
|
|
—
|
|
|
(422,561
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
6,290
|
|
|
9,086
|
|
|
24
|
|
|
—
|
|
|
15,400
|
|
|||||
Total assets
|
|
$
|
1,985,480
|
|
|
$
|
637,317
|
|
|
$
|
22,504
|
|
|
$
|
(525,752
|
)
|
|
$
|
2,119,549
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bank indebtedness and other long-term debt, current portion
|
|
$
|
7,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,600
|
|
Operating lease obligations, current portion
|
|
43,747
|
|
|
4,106
|
|
|
1,067
|
|
|
—
|
|
|
48,920
|
|
|||||
Finance lease obligations, current portion
|
|
791
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
810
|
|
|||||
Accounts payable and accrued expenses
|
|
58,270
|
|
|
47,195
|
|
|
4,140
|
|
|
—
|
|
|
109,605
|
|
|||||
Other current liabilities
|
|
3,870
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,870
|
|
|||||
Total current liabilities
|
|
114,278
|
|
|
51,301
|
|
|
5,226
|
|
|
—
|
|
|
170,805
|
|
|||||
Finance lease obligations, less current portion
|
|
11,482
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
11,502
|
|
|||||
Operating lease obligations, less current portion
|
|
462,593
|
|
|
54,235
|
|
|
8,707
|
|
|
—
|
|
|
525,535
|
|
|||||
Bank indebtedness and other long-term debt, less current portion
|
|
921,968
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
921,968
|
|
|||||
Deferred tax liability
|
|
81,673
|
|
|
12,733
|
|
|
(1,966
|
)
|
|
—
|
|
|
92,440
|
|
|||||
Intercompany
|
|
—
|
|
|
75,556
|
|
|
27,635
|
|
|
(103,191
|
)
|
|
—
|
|
|||||
Other noncurrent liabilities
|
|
179,700
|
|
|
3,813
|
|
|
—
|
|
|
—
|
|
|
183,513
|
|
|||||
Total liabilities
|
|
1,771,694
|
|
|
197,638
|
|
|
39,622
|
|
|
(103,191
|
)
|
|
1,905,763
|
|
|||||
Stockholder's equity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital in excess of par value
|
|
360,005
|
|
|
391,114
|
|
|
3,241
|
|
|
(394,355
|
)
|
|
360,005
|
|
|||||
Retained earnings (deficit)
|
|
(144,583
|
)
|
|
48,565
|
|
|
(18,723
|
)
|
|
(29,842
|
)
|
|
(144,583
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
|
(1,636
|
)
|
|
—
|
|
|
(1,636
|
)
|
|
1,636
|
|
|
(1,636
|
)
|
|||||
Total stockholder's equity
|
|
213,786
|
|
|
439,679
|
|
|
(17,118
|
)
|
|
(422,561
|
)
|
|
213,786
|
|
|||||
Total liabilities and stockholder's equity
|
|
$
|
1,985,480
|
|
|
$
|
637,317
|
|
|
$
|
22,504
|
|
|
$
|
(525,752
|
)
|
|
$
|
2,119,549
|
|
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
|
|
Finance 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
|
|
|||||
Finance 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.
|
||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss)
|
||||||||||||||||||||
Fiscal Year 2019
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Issuer
|
|
Guarantor
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Food and beverage sales
|
|
$
|
331,077
|
|
|
$
|
54,702
|
|
|
$
|
5,112
|
|
|
$
|
—
|
|
|
$
|
390,891
|
|
Entertainment and merchandise sales
|
|
444,780
|
|
|
44,361
|
|
|
10,063
|
|
|
—
|
|
|
499,204
|
|
|||||
Total company venue sales
|
|
775,857
|
|
|
99,063
|
|
|
15,175
|
|
|
—
|
|
|
890,095
|
|
|||||
Franchise fees and royalties
|
|
2,191
|
|
|
17,984
|
|
|
2,595
|
|
|
—
|
|
|
22,770
|
|
|||||
International Association assessments and other fees
|
|
1,150
|
|
|
42,518
|
|
|
36,963
|
|
|
(80,631
|
)
|
|
—
|
|
|||||
Total revenues
|
|
779,198
|
|
|
159,565
|
|
|
54,733
|
|
|
(80,631
|
)
|
|
912,865
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company venue operating costs (excluding Depreciation and amortization):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of food and beverage
|
|
74,567
|
|
|
14,286
|
|
|
1,729
|
|
|
—
|
|
|
90,582
|
|
|||||
Cost of entertainment and merchandise
|
|
38,380
|
|
|
1,624
|
|
|
963
|
|
|
—
|
|
|
40,967
|
|
|||||
Total cost of food, beverage, entertainment and merchandise
|
|
112,947
|
|
|
15,910
|
|
|
2,692
|
|
|
—
|
|
|
131,549
|
|
|||||
Labor expenses
|
|
239,810
|
|
|
19,267
|
|
|
4,821
|
|
|
—
|
|
|
263,898
|
|
|||||
Lease costs
|
|
99,314
|
|
|
7,412
|
|
|
2,317
|
|
|
|
|
109,043
|
|
||||||
Other venue operating expenses
|
|
159,213
|
|
|
15,899
|
|
|
3,322
|
|
|
(43,694
|
)
|
|
134,740
|
|
|||||
Total company venue operating costs
|
|
611,284
|
|
|
58,488
|
|
|
13,152
|
|
|
(43,694
|
)
|
|
639,230
|
|
|||||
Advertising expense
|
|
36,923
|
|
|
5,386
|
|
|
39,373
|
|
|
(36,937
|
)
|
|
44,745
|
|
|||||
General and administrative expenses
|
|
18,701
|
|
|
38,610
|
|
|
(351
|
)
|
|
—
|
|
|
56,960
|
|
|||||
Depreciation and amortization
|
|
86,243
|
|
|
9,820
|
|
|
1,566
|
|
|
—
|
|
|
97,629
|
|
|||||
Transaction, severance and related litigation costs
|
|
770
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
770
|
|
|||||
Asset Impairments
|
|
3,134
|
|
|
20,199
|
|
|
—
|
|
|
—
|
|
|
23,333
|
|
|||||
Total operating costs and expenses
|
|
757,055
|
|
|
132,503
|
|
|
53,740
|
|
|
(80,631
|
)
|
|
862,667
|
|
|||||
Operating income
|
|
22,143
|
|
|
27,062
|
|
|
993
|
|
|
—
|
|
|
50,198
|
|
|||||
Equity in earnings (loss) in affiliates
|
|
20,409
|
|
|
—
|
|
|
—
|
|
|
(20,409
|
)
|
|
—
|
|
|||||
Interest expense
|
|
81,969
|
|
|
4,557
|
|
|
717
|
|
|
—
|
|
|
87,243
|
|
|||||
Loss on extinguishment of debt
|
|
2,242
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,242
|
|
|||||
Income (loss) before income taxes
|
|
(41,659
|
)
|
|
22,505
|
|
|
276
|
|
|
(20,409
|
)
|
|
(39,287
|
)
|
|||||
Income tax expense (benefit)
|
|
(12,736
|
)
|
|
2,480
|
|
|
(108
|
)
|
|
—
|
|
|
(10,364
|
)
|
|||||
Net income (loss)
|
|
$
|
(28,923
|
)
|
|
$
|
20,025
|
|
|
$
|
384
|
|
|
$
|
(20,409
|
)
|
|
$
|
(28,923
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Components of other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments
|
|
(297
|
)
|
|
—
|
|
|
(297
|
)
|
|
297
|
|
|
(297
|
)
|
|||||
Comprehensive income (loss)
|
|
$
|
(29,220
|
)
|
|
$
|
20,025
|
|
|
$
|
87
|
|
|
$
|
(20,112
|
)
|
|
$
|
(29,220
|
)
|
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
|
|
|||||
Lease costs
|
|
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 Impairments
|
|
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 Cash Flows
|
|||||||||||||||||
Fiscal Year 2019
|
|||||||||||||||||
(in thousands)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Consolidated
|
|||||||||
Cash flows provided by operating activities:
|
|
$
|
107,867
|
|
|
$
|
1,473
|
|
|
$
|
1,802
|
|
|
$
|
111,142
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||||||||
Purchases of property and equipment
|
|
(80,476
|
)
|
|
(5,937
|
)
|
|
(605
|
)
|
|
(87,018
|
)
|
|||||
Development of internal use software
|
|
(174
|
)
|
|
(596
|
)
|
|
—
|
|
|
(770
|
)
|
|||||
Proceeds from sale of property and equipment
|
|
204
|
|
|
—
|
|
|
—
|
|
|
204
|
|
|||||
Cash flows used in investing activities
|
|
(80,446
|
)
|
|
|
(6,533
|
)
|
|
(605
|
)
|
|
(87,584
|
)
|
||||
|
|
|
|
|
|
|
|
|
|||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||||||||
Proceeds from refinancing of senior term loan
|
|
479,449
|
|
|
—
|
|
|
—
|
|
|
479,449
|
|
|||||
Repayments on senior term loan
|
|
(473,749
|
)
|
|
—
|
|
|
—
|
|
|
(473,749
|
)
|
|||||
Repurchase of Senior Notes
|
|
(38,337
|
)
|
|
—
|
|
|
—
|
|
|
(38,337
|
)
|
|||||
Payment of debt financing costs
|
|
(15,375
|
)
|
|
—
|
|
|
—
|
|
|
(15,375
|
)
|
|||||
Payments on capital lease obligations
|
|
(683
|
)
|
|
—
|
|
|
(14
|
)
|
|
(697
|
)
|
|||||
Payments on sale leaseback transactions
|
|
(3,379
|
)
|
—
|
|
—
|
|
|
—
|
|
|
(3,379
|
)
|
||||
Cash flows used in financing activities
|
|
(52,074
|
)
|
|
|
—
|
|
|
(14
|
)
|
|
(52,088
|
)
|
||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Change in cash, cash equivalents and restricted cash
|
|
(24,653
|
)
|
|
|
(5,060
|
)
|
|
1,181
|
|
|
(28,532
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
54,775
|
|
|
6,725
|
|
|
1,821
|
|
|
63,321
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
30,122
|
|
|
|
$
|
1,665
|
|
|
$
|
3,002
|
|
|
$
|
34,789
|
|
CEC Entertainment, Inc.
|
|||||||||||||||||||
Consolidating Statement of Cash Flows
|
|||||||||||||||||||
Fiscal Year 2018
|
|||||||||||||||||||
(in thousands)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
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 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 used in financing activities
|
|
(11,538
|
)
|
|
—
|
|
|
(9
|
)
|
|
(11,547
|
)
|
|||||||
Effect of foreign exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
50
|
|
|
50
|
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||||||
Change in cash and cash equivalents and restricted cash
|
|
(5,173
|
)
|
|
6,315
|
|
|
(5,133
|
)
|
|
(3,991
|
)
|
|||||||
Cash and cash equivalents and restricted cash at beginning of period
|
|
59,948
|
|
|
410
|
|
|
6,954
|
|
|
67,312
|
|
|||||||
Cash and 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)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Successor
|
|||||||||||||||||
|
|
Issuer
|
|
Guarantors
|
|
Non-Guarantors
|
|
Consolidated
|
|||||||||||
Cash flows provided by 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 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 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
|
|
|
Quarters in Fiscal Year 2019
|
||||||||||||||
|
March 31,
2019 |
|
June 30
2019 |
|
September 29, 2019
|
|
December 29, 2019
|
||||||||
|
(in thousands)
|
||||||||||||||
Food and beverage sales
|
$
|
117,815
|
|
|
$
|
91,650
|
|
|
$
|
92,645
|
|
|
$
|
88,781
|
|
Entertainment and merchandise sales
|
149,677
|
|
|
117,413
|
|
|
119,688
|
|
|
112,426
|
|
||||
Company venue sales
|
267,492
|
|
|
209,063
|
|
|
212,333
|
|
|
201,207
|
|
||||
Franchise fees and royalties
|
5,820
|
|
|
6,113
|
|
|
5,261
|
|
|
5,576
|
|
||||
Total revenues
|
$
|
273,312
|
|
|
$
|
215,176
|
|
|
$
|
217,594
|
|
|
$
|
206,783
|
|
Operating income (loss)
|
$
|
48,232
|
|
|
$
|
9,258
|
|
|
$
|
3,772
|
|
|
$
|
(11,064
|
)
|
Income (loss) before income taxes
|
$
|
28,424
|
|
|
$
|
(10,721
|
)
|
|
$
|
(21,167
|
)
|
|
$
|
(35,823
|
)
|
Net income (loss)
|
$
|
21,246
|
|
|
$
|
(8,734
|
)
|
|
$
|
(15,334
|
)
|
|
$
|
(26,101
|
)
|
|
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
|
$
|
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
|
)
|
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
David McKillips
|
|
48
|
|
Chief Executive Officer and Director
|
J. Roger Cardinale
|
|
60
|
|
President
|
James A. Howell
|
|
54
|
|
Executive Vice President and Chief Financial Officer
|
Andrew S. Jhawar
|
|
48
|
|
Chairman
|
Peter C. Brown
|
|
61
|
|
Director
|
Naveen R. Shahani
|
|
29
|
|
Director
|
Allen R. Weiss
|
|
65
|
|
Director
|
Name of Beneficial Owner
|
|
Number of Shares of Common Stock
|
|
Percentage of Outstanding Common Stock
|
||
Queso Holdings Inc. (1)
|
|
200
|
|
|
100
|
%
|
David McKillips
|
|
—
|
|
|
—
|
|
J. Roger Cardinale
|
|
—
|
|
|
—
|
|
James A. Howell
|
|
—
|
|
|
—
|
|
Andrew S. Jhawar
|
|
—
|
|
|
—
|
|
Peter C. Brown
|
|
—
|
|
|
—
|
|
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 2019
|
|
Fiscal 2018
|
||||
Audit Fees (1)
|
|
$
|
600,000
|
|
|
$
|
585,000
|
|
Audit-related Fees (2)
|
|
10,000
|
|
|
10,000
|
|
||
Tax fees (3)
|
|
—
|
|
|
—
|
|
||
All other fees (4)
|
|
2,000
|
|
|
3,000
|
|
||
Total
|
|
$
|
612,000
|
|
|
$
|
598,000
|
|
(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.
|
|
|
|
1. Consolidated Financial Statements.
|
||
The consolidated 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.”
|
||
|
|
|
2. 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.
|
||
|
|
|
3. Exhibits.
|
|
|
See the Exhibit Index beginning on page 99.
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.
|
Exhibit
Number
|
|
Description
|
2.1
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
.
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
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
|
|
||
|
|
|
Dated: March 12, 2020
|
|
CEC Entertainment, Inc.
|
|
|
|
|
|
/s/ David McKillips
|
|
|
David McKillips
|
|
|
Chief Executive Officer and Director
|
|
||||
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ David McKillips
|
|
Chief Executive Officer and Director (Principal Executive Officer)
|
|
March 12, 2020
|
David McKillips
|
|
|
|
|
|
|
|
||
/s/ James A. Howell
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
March 12, 2020
|
James A. Howell
|
|
|
|
|
|
|
|
||
/s/ Tony Howard
|
|
Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)
|
|
March 12, 2020
|
Tony Howard
|
|
|
|
|
|
|
|
||
*
|
|
Director
|
|
March 12, 2020
|
Andrew S. Jhawar
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 12, 2020
|
Peter C. Brown
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 12, 2020
|
Naveen R. Shahani
|
|
|
|
|
|
|
|
||
*
|
|
Director
|
|
March 12, 2020
|
Allen R. Weiss
|
|
|
|
|
|
|
|
||
*By:
|
|
|
|
|
/s/ Rodolfo Rodriguez, Jr.
|
|
Executive Vice President, Chief Legal and Human Resources Officer
|
|
March 12, 2020
|
Rodolfo Rodriguez, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 29, 2019 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 12, 2020
|
|
/s/ David McKillips
|
|
|
David McKillips
|
|
|
Chief Executive Officer and Director
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended December 29, 2019 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 12, 2020
|
|
/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 12, 2020
|
/s/ David McKillips
|
|
David McKillips
|
|
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 12, 2020
|
/s/ James A. Howell
|
|
James A. Howell
|
|
Executive Vice President and Chief Financial Officer
|