UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended October 3, 1999.
- Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition
period from ---------- to -----------.
Commission File Number 0-15782
CEC ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0905805
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
4441 West Airport Freeway
Irving, Texas 75062
(Address of principal executive offices,
including zip code)
(972) 258-8507
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No -
At October 3, 1999, an aggregate of 27,266,374 shares of the
registrant's Common Stock, par value of $.10 each (being the
registrant's only class of common stock), were outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CEC ENTERTAINMENT, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated balance sheets. . . . . . . . . . . . . . . . . . 2
Consolidated statements of earnings and
comprehensive income. . . . . . . . . . . . . . . . . . . . 3
Consolidated statement of shareholders' equity . . . . . . . . 5
Consolidated statements of cash flows . . . . . . . . . . . . 6
Notes to consolidated financial statements . . . . . . . . . . 7
Page 1
CEC ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands, except share data)
ASSETS
<TABLE>
October 3, January 3,
1999 1999
--------- ---------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . $ 6,728 $ 3,210
Accounts receivable . . . . . . . . . . . . . . 7,126 4,299
Current portion of notes receivable . . . . . . 13 52
Inventories . . . . . . . . . . . . . . . . . . 5,770 5,842
Prepaid expenses. . . . . . . . . . . . . . . . 4,124 3,643
Current portion of deferred tax asset . . . . . 720 720
------- -------
Total current assets . . . . . . . . . . . . . 24,481 17,766
------- -------
Property and equipment, net. . . . . . . . . . . 257,755 228,531
------- -------
Deferred tax asset . . . . . . . . . . . . . . . 0 1,036
------- -------
Assets held for resale . . . . . . . . . . . . . 13,878 150
------- -------
Notes receivable, less current portion,
including receivables from
related parties of $737 and $361,
respectively . . . . . . . . . . . . . . . . . 737 363
------- -------
Other assets . . . . . . . . . . . . . . . . . . 7,004 4,382
------- -------
$303,855 $252,228
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . . . . $ 8,557 $ 9,383
Accounts payable and accrued liabilities. . . . 36,934 32,453
------- -------
Total current liabilities. . . . . . . . . . 45,491 41,836
------- -------
Long-term debt, less current portion . . . . . . 34,585 18,922
------- -------
Deferred rent. . . . . . . . . . . . . . . . . . 4,021 3,915
------- -------
Other liabilities. . . . . . . . . . . . . . . . 2,402 1,300
------- -------
Redeemable preferred stock, $60 par value,
redeemable for $2,974 in 2005. . . . . . . . . 2,342 2,306
Shareholders' equity:
Common stock, $.10 par value; authorized
100,000,000 shares; 33,683,788
and 33,397,955 shares issued,
respectively . . . . . . . . . . . . . . . . 3,368 3,341
Capital in excess of par value. . . . . . . . . 165,800 161,991
Retained earnings . . . . . . . . . . . . . . . 112,050 76,157
Deferred compensation . . . . . . . . . . . . . (949) (1,520)
Accumulated other comprehensive income . . . 4 6
Less treasury shares of 6,417,414 and
6,352,014, respectively, at cost . . . . . . (65,259) (56,026)
------- -------
215,014 183,949
------- -------
$ 303,855 $ 252,228
======= =======
</TABLE>
See notes to consolidated financial statements.
Page 2
CEC ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited)
(Thousands, except per share data)
<TABLE>
Three Months Ended
Oct. 3, 1999 Oct. 4,1998
------------ -----------
<S> <C> <C>
Food and beverage revenues . . . . . . . . . . $ 73,523 $ 63,403
Games and merchandise revenues . . . . . . . . 41,225 33,807
Franchise fees and royalties . . . . . . . . . 802 780
Interest income, including related party
income of $18 and $10, respectively. . . . . 33 116
------- -------
115,583 98,106
------- -------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . . 51,955 44,842
Selling, general and administrative
expenses. . . . . . . . . . . . . . . . . . 16,377 13,990
Depreciation and amortization . . . . . . . . 7,638 7,036
Interest expense. . . . . . . . . . . . . . 569 640
Other operating expenses. . . . . . . . . . . 18,817 17,334
------- -------
95,356 83,842
------- -------
Income before income taxes . . . . . . . . . . 20,227 14,264
------- -------
Income taxes:
Current expense . . . . . . . . . . . . . . . 6,496 1,280
Deferred expense. . . . . . . . . . . . . . . 1,434 4,311
------- -------
7,930 5,591
-------
Net income . . . . . . . . . . . . . . . . . . 12,297 8,673
Other comprehensive income, net of tax:
Foreign currency translation. . . . . . . . . (42)
Comprehensive income . . . . . . . . . . . . . $ 12,255 $ 8,673
======== =======
Earnings per share:
Basic:
Net income . . . . . . . . . . . . . . . . . $ .45 $ .32
======= =======
Weighted average shares outstanding. . . . . 27,001 27,048
======= =======
Diluted:
Net income . . . . . . . . . . . . . . . . $ .44 $ .31
======= =======
Weighted average shares outstanding. . . . . 28,028 27,626
======= =======
</TABLE>
See notes to consolidated financial statements.
Page 3
CEC ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited)
(Thousands, except per share data)
<TABLE>
Nine Months Ended
Oct. 3, 1999 Oct. 4, 1998
------------ ------------
<S> <C> <C>
Food and beverage revenues . . . . . . . . . $ 217,308 $ 191,310
Games and merchandise revenues . . . . . . . 119,075 97,782
Franchise fees and royalties . . . . . . . . 2,389 2,479
Interest income, including related party
income of $45 and $70,
respectively . . . . . . . . . . . . . . . 142 485
------- -------
338,914 292,056
------- -------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . 151,394 133,090
Selling, general and administrative
expenses. . . . . . . . . . . . . . . . . 48,698 42,101
Depreciation and amortization . . . . . . . 22,955 20,448
Interest expense. . . . . . . . . . . . . 1,864 2,019
Other operating expenses. . . . . . . . . . 54,547 49,107
------- -------
279,458 246,765
------- -------
Income before income taxes . . . . . . . . . 59,456 45,291
------- -------
Income taxes:
Current expense . . . . . . . . . . . . . . 21,167 8,194
Deferred expense. . . . . . . . . . . . . . 2,140 9,400
------- -------
23,307 17,594
Net income . . . . . . . . . . . . . . . . . 36,149 27,697
======= =======
Other comprehensive income, net of tax:
Foreign currency translation. . . . . . . . (2)
------- -------
Comprehensive income . . . . . . . . . . . . $ 36,147 $ 27,697
======= =======
Earnings per share:
Basic:
Net income . . . . . . . . . . . . . . . . $ 1.33 $ 1.01
======= =======
Weighted average shares outstanding. . . . 27,020 27,156
======= =======
Diluted:
Net income . . . . . . . . . . . . . . . . $ 1.29 $ .98
Weighted average shares outstanding. . . . 27,904 27,887
</TABLE>
See notes to consolidated financial statements.
Page 4
CEC ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
(Thousands, except per share data)
<TABLE>
Amounts Shares
--------- --------
<S> <C> <C>
Common stock and capital in excess of par value
Balance, beginning of year. . . . . . . . . . . . $ 165,332 33,398
Stock options exercised . . . . . . . . . . . . . 2,003 279
Net tax benefit from exercise of options
and stock grants . . . . . . . . . . . . . . . 1,715
Cancellation of fractional shares . . . . . . . . (23) (1)
Stock issued under 401(k) plan. . . . . . . . . . 141 8
------- -------
Balance, October 3, 1999. . . . . . . . . . . . . 169,168 33,684
------- =======
Retained earnings:
Balance, beginning of year. . . . . . . . . . . . 76,157
Net income. . . . . . . . . . . . . . . . . . . . 36,149
Redeemable preferred stock accretion. . . . . . . (77)
Redeemable preferred stock dividend,
$3.60 per share . . . . . . . . . . . . . . . . (179)
-------
Balance, October 3, 1999. . . . . . . . . . . . . 112,050
-------
Deferred compensation:
Balance, beginning of year. . . . . . . . . . . . (1,520)
Amortization of deferred compensation . . . . . . 571
-------
Balance, October 3, 1999. . . . . . . . . . . . . (949)
-------
Accumulated other comprehensive income:
Balance, beginning of year. . . . . . . . . . . . 6
Foreign currency translation. . . . . . . . . . . (2)
-------
Balance, October 3, 1999. . . . . . . . . . . . . 4
-------
Treasury shares:
Balance, beginning of year. . . . . . . . . . . . (56,026) 6,352
Treasury stock acquired . . . . . . . . . . . . . (9,233) 324
------- ------
Balance, October 3, 1999. . . . . . . . . . . . . (65,259) 6,676
------- ------
Total shareholder's equity . . . . . . . . . . . . $ 215,014
=======
</TABLE>
See notes to consolidated financial statements.
Page 5
CEC ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands)
<TABLE>
Nine Months Ended
Oct. 3, 1999 Oct. 4, 1998
-------------- --------------
<S> <S> <S>
Operating activities:
Net income . . . . . . . . . . . . . . . . $36,149 $27,697
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization . . . . . . . 22,955 20,448
Deferred tax expense. . . . . . . . . . . . 2,140 9,400
Compensation expense under stock grant plan 571 570
Other . . . . . . . . . . . . . . . . . . . 63 71
Net change in receivables, inventory,
prepaids, payables and
accrued liabilities. . . . . . . . . . . . 1,245 (2,939)
Cash provided by operations. . . . . . . 63,123 55,247
Investing activities:
Purchases of property and equipment . . . . (51,719) (41,985)
Additions to notes receivable . . . . . . . (1,438) (235)
Payments received on notes receivable . . . 1,103 2,236
Purchase of assets held for resale. . . . . (13,728)
Increase in investments, deferred
charges and other assets. . . . . . . . . (3,039) (1,574)
Cash used in investing activities. . . . . (68,821) (41,558)
Financing activities:
Payments on debt and line of credit . . . . (19,433) (2,532)
Proceeds on long term debt. . . . . . . . . 34,270
Exercise of stock options . . . . . . . . . 2,003 2,511
Redeemable preferred stock dividends. . . . (179) (179)
Treasury stock acquired . . . . . . . . . . (9,233) (10,589)
Other . . . . . . . . . . . . . . . . . . . 1,788 96
------- -------
Cash provided by (used in) financing
activities . . . . . . . . . . . . . . . 9,216 (10,693)
------- -------
Increase in cash and cash equivalents . . . 3,518 2,996
Cash and cash equivalents, beginning of
period . . . . . . . . . . . . . . . . . . 3,210 7,275
------- --------
Cash and cash equivalents, end of period . . $ 6,728 $ 10,271
======= ========
</TABLE>
See notes to consolidated financial statements.
Page 6
CEC ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Interim financial statements:
In the opinion of management, the accompanying financial
statements for the periods ended October 3, 1999 and October 4,
1998 reflect all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the Company's financial
condition, results of operations and cash flows in accordance with
generally accepted accounting principles.
Certain information and footnote disclosures normally included
in the consolidated financial statements prepared in accordance
with generally accepted accounting principles have been omitted.
The unaudited consolidated financial statements referred to above
should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-K filed with the
Securities and Exchange Commission for the year ended January 3,
1999. Results of operations for the periods ended October 3, 1999
and October 4, 1998 are not necessarily indicative of the results
for the year.
2. Earnings per common share:
Earnings per common share were computed based on the weighted
average number of common and potential common shares outstanding
during the period adjusted retroactively for a three-for-two stock
split effected July 23, 1999. Net income available per common
share has been adjusted for the items indicated below, and earnings
per common and potential common share were computed as follows
(thousands, except per share data):
<TABLE>
Three Months Ended Nine Months Ended
-------------------- --------------------
Oct. 3, Oct. 4, Oct. 3, Oct. 4,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income . . . . . . . . . . $ 12,297 $ 8,673 $36,149 $27,697
Accretion of redeemable
preferred stock . . . . . . (26) (25) (77) (77)
Redeemable preferred stock
dividends . . . . . . . . . (60) (60) (179) (179)
------- ------- ------- -------
Adjusted income applicable to
common and potential common
shares . . . . . . . . . . . $12,211 $8,588 $35,893 $27,441
======= ====== ======= =======
Basic:
Weighted average common shares
outstanding. . . . . . . . 27,001 27,048 27,020 27,156
======= ======= ======= =======
Earnings per common
share. . . . . . . . . . $ .45 $ .32 $ 1.33 $ 1.01
====== ====== ====== ======
Diluted:
Weighted average common
shares outstanding. . . . 27,001 27,048 27,020 27,156
Potential common shares for
stock options and stock
grants . . . . . . . . . 1,027 578 884 731
------- ------ ------- ------
Weighted average shares
outstanding. . . . . . . 28,028 27,626 27,904 27,887
======= ======= ======= =======
Earnings per common and potential
common share . . . . . $ .44 $ .31 $ 1.29 $ .98
====== ====== ====== ======
</TABLE>
3. Subsequent transaction:
In July 1999, the Company acquired for approximately $19
million, 13 owned properties, the rights to seven leased
properties, two parcels of undeveloped real estate, and all
furniture, fixtures, equipment and intellectual properties owned by
Discovery Zone, Inc. The Company plans to convert approximately 10
of the acquired properties to Chuck E. Cheese's restaurants and
sell the remaining properties, furniture, fixtures and equipment.
Page 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Third Quarter 1999 Compared to Third Quarter 1998
- -------------------------------------------------
A summary of the results of operations of the Company as a
percentage of revenues for the third quarters of 1999 and 1998 is
shown below.
<TABLE>
Three Months Ended
-----------------------------------
Oct. 3, 1999 Oct. 4, 1998
------------ ------------
<S> <C> <C>
Revenue. . . . . . . . . . . . . . 100.0% 100.0%
Costs and expenses:
Cost of sales. . . . . . . . 45.0 45.7
Selling, general and
administrative . . . . . . . 14.1 14.3
Depreciation and amortization 6.6 7.2
Interest expense . . . . . . . . .5 .7
Other operating expenses 16.3 17.6
------ ------
82.5 85.5
------ ------
Income before income taxes 17.5 14.5
Income tax expense . . . . . . . 6.9 5.7
------ ------
Net income . . . . . . . . . . . . 10.6% 8.8%
====== ======
</TABLE>
Revenues
---------
Revenues increased to $115.6 million in the third quarter of
1999 from $98.1 million in the third quarter of 1998 due to an
increase in the number of Company-operated stores and an increase
of 8.4% in comparable store sales of the Company's Chuck E.
Cheese's stores which were open during all of the third quarters of
both 1999 and 1998. During 1998, the Company added 25 stores
including new stores and existing stores acquired from franchisees
or joint venture partners. During the first nine months of 1999,
the Company opened or acquired twelve new stores and acquired one
store from an existing franchisee. Management believes that several
factors contributed to the comparable store sales increase with the
primary factor being sales increases at stores upgraded with new
game packages. Menu prices did not increase between the periods.
Costs and Expenses
-------------------
Costs and expenses as a percentage of revenues decreased to
82.5% in the third quarter of 1999 from 85.5% in the third quarter
of 1998.
Cost of sales decreased as a percentage of revenues to 45.0% in
the third quarter of 1999 from 45.7% in the comparable period of
1998. Cost of food, beverage, prize and merchandise items as a
percentage of restaurant sales decreased to 15.8% in the third
quarter of 1999 from 16.1% in the third quarter of 1998 primarily
due to an increase in game sales, reduced costs of certain beverage
and prize products, partially offset by higher cheese costs. Store
labor expenses as a percentage of store sales decreased slightly
to 26.6% in the third quarter of 1999 from 26.7% in the third
quarter of 1998 primarily due to the increase in comparable store
sales and more effective utilization of hourly employees.
Selling, general and administrative expenses as a percentage of
revenues decreased slightly to 14.1% in the third quarter of 1999
from 14.3% in the third quarter of 1998 due primarily to a decrease
in corporate overhead costs as a percentage of revenues.
Depreciation and amortization expenses as a percentage of
revenues decreased to 6.6% in the third quarter of 1999 from 7.2%
in the third quarter of 1998 primarily due to the increase in
comparable store sales.
Page 8
Interest expense as a percentage of revenues decreased to .5% in
the third quarter of 1999 from .7% in the third quarter of 1998 due
to increased revenues and lower interest rates. Interest expense
on incremental debt incurred to finance assets held for resale has
been allocated to the basis of such assets.
Other operating expenses decreased as a percentage of revenues
to 16.3% in the third quarter of 1999 from 17.7% in the third
quarter of 1998 primarily due a reduction in insurance costs, the
increase in comparable store sales and the fact that a significant
portion of operating costs are fixed.
The Company's effective income tax rate was 39.2% in both the
third quarters of 1999 and 1998.
Net Income
----------
The Company had net income of $12.3 million in the third quarter
of 1999 compared to $8.7 million in the third quarter of 1998 due
to the changes in revenues and expenses discussed above. The
Company's diluted earnings per share increased to $.44 per share in
the third quarter of 1999 from $.31 per share in the third quarter
of 1998.
First Nine Months of 1999 Compared to First Nine Months of 1998
- ---------------------------------------------------------------
A summary of the results of operations of the Company as a
percentage of revenues for the first nine months of 1999 and 1998
is shown below.
<TABLE>
Nine Months Ended
---------------------------------
Oct. 3, 1999 Oct. 4, 1998
------------ ------------
<S> <C> <C>
Revenue. . . . . . . . . . . . . 100.0% 100.0%
----- -----
Costs and expenses:
Cost of sales . . . . . . . . . . 44.7 45.6
Selling, general and administrative 14.4 14.4
Depreciation and amortization . . 6.8 7.0
Interest expense. . . . . . . . . .5 .7
Other operating expenses 16.1 16.8
------ ------
82.5 84.5
------ ------
Income before income taxes 17.5 15.5
Income tax expense . . . . . . . 6.8 6.0
------ ------
Net income . . . . . . . . . . . 10.7% 9.5%
====== ======
</TABLE>
Revenues
--------
Revenues increased to $338.9 million in the first nine months of
1999 from $292.1 million in the first nine months of 1998 primarily
due an increase in the number of Company-operated stores and an
increase of 5.6% in comparable store sales of the Company's Chuck
E. Cheese's restaurants which were open during all of the first
nine months of both 1999 and 1998. During 1998, the Company added
25 stores including new stores and existing stores acquired from
franchisees or joint venture partners. During the first nine
months of 1999, the Company opened or acquired twelve new stores
and acquired one from an existing franchisee. Management believes
that several factors contributed to the comparable store sales
increase with the primary factor being sales increases at stores
upgraded with new game packages. Menu prices increased
approximately .5% between the periods.
Costs and Expenses
------------------
Costs and expenses as a percentage of revenues decreased to
82.5% in the first nine months of 1999 from 84.5%in the first nine
months of 1998.
Page 9
Cost of sales decreased as a percentage of revenues to 44.7% in
the first nine months of 1999 from 45.6% in the comparable period
of 1998. Cost of food, beverage, prize and merchandise items as a
percentage of restaurant sales decreased to 15.5% in the first nine
months of 1999 from 16.0% in the first nine months of 1998
primarily due to an increase in game sales, reduced costs of
certain beverage and prize products and an increase in menu prices.
Store labor expenses as a percentage of restaurant sales decreased
slightly to 26.4% during the first nine months of 1999 from 26.6%
in the first nine months of 1998 primarily due to an increase in
comparable store sales and more effective utilization of hourly
employees.
Selling, general and administrative expenses as a percentage of
revenues were 14.4% in both the first nine months of 1999 and the
first nine months of 1998.
Depreciation and amortization expenses as a percentage of
revenues declined to 6.8% in the first nine months of 1999 from
7.0% in the first nine months of 1998 primarily due to the increase
in comparable store sales.
Interest expense as a percentage of revenues decreased to .5% in
the first nine months of 1999 from .7% in the first nine months of
1998 due to increased revenues and lower interest rates. Interest
expense on incremental debt incurred to finance assets held for
resale has been allocated to the basis of such assets.
Other operating expenses decreased as a percentage of revenues
to 16.1% in the first nine months of 1999 from 16.8% in the first
nine months of 1998 primarily due to the increase in comparable
store sales and the fact that a significant portion of operating
costs are fixed.
The Company's effective income tax rate was 39.2% in the first
nine months of 1999 compared to 38.8% in the first nine months of
1998 due to a credit recorded in 1998 for state income taxes.
Net Income
----------
The Company had net income of $36.1 million in the first nine
months of 1999 compared to $27.7 million in the first nine months
of 1998 due to the changes in revenues and expenses discussed
above. The Company's diluted earnings per share was $1.29 per
share in the first nine months of 1999 compared to $.98 per share
in the first nine months of 1998.
Financial Condition, Liquidity and Capital Resources
Cash provided by operations increased to $63.1 million in the
first nine months of 1999 from $55.2 million in the comparable
period of 1998. Cash outflows from investing activities for the
first nine months of 1999 were $68.8 million primarily related to
capital expenditures and the purchase of assets held for resale.
Cash inflows from financing activities for the first nine months of
1999 were $9.2 million primarily related to borrowings on the
Company's line of credit. The Company's primary requirements for
cash relate to planned capital expenditures, the repurchase of the
Company's common stock and debt service. The Company expects that
it will satisfy such requirements from cash provided by operations
and, if necessary, funds available under its line of credit.
In July 1999, the Company acquired for approximately $19
million, 13 owned properties, the rights to seven leased
properties, two parcels of undeveloped real estate, and all
furniture, fixtures, equipment and intellectual properties owned by
Discovery Zone, Inc. The Company plans to convert approximately 10
of the acquired properties to Chuck E. Cheese's restaurants and
sell the remaining properties, furniture, fixtures and equipment.
In 1999, the Company plans to add 28 to 30 stores including new
stores and acquisitions of existing stores from franchisees. The
Company currently anticipates its cost of opening such new stores
to average approximately $1.5 million per store which will vary
depending upon many factors including the size of the stores and
whether the store is an in-line or freestanding building. In
addition to such new store openings, the Company plans to expand
the customer area of 15 to 20 high sales volume stores in 1999.
The Company completed its Phase II upgrade program in 1999 at an
average cost of approximately $160,000 per store. A Phase II
upgrade consists of a new game package, enhanced prize and
merchandise offerings, and improved product presentation and
service. During the first nine months of 1999, the Company opened
nine new restaurants, acquired four existing restaurants, expanded
17 restaurants and completed Phase II upgrades in 26 restaurants.
The Company currently estimates that capital expenditures in 1999,
including expenditures for upgrading existing stores, new store
openings, existing store expansions and equipment investments, will
be approximately $65 million, excluding the $19 million acquisition
of assets from Discovery Zone, Inc. The Company plans to finance
these expenditures through cash flow from operations and borrowings
under the Company's line of credit.
Page 10
In July 1998, the Company announced that it planned to purchase
shares of the Company's common stock at an aggregate purchase price
of up to $15 million. In September 1999, the Company completed
this plan and announced an additional plan to purchase shares of
the Company's common stock at an aggregate purchase price of up to
$25 million. As of November 11, 1999, the Company has purchased
shares of its common stock under the $25 million plan at an
aggregate purchase price of approximately $1.5 million.
The Company's total credit facility of $59.5 million consists of
$15.3 million in term notes and a $45 million line of credit. Term
notes totaling $12 million with annual principal payments of $6
million and annual interest of 10.02% mature in 2001. Term notes
totaling $2.5 million with quarterly principal payments of $833,000
and annual interest equal to LIBOR plus 3.5% mature in 2000.
Interest under the $45 million line of credit is dependent on
earnings and debt levels of the Company and ranges from prime minus
0.5% to plus 0.5% or, at the Company's option, LIBOR plus 1% to
2.5%. Currently, any borrowings under this line of credit would be
at prime rate minus 0.5% or LIBOR plus 1%. The Company's line of
credit agreement matures June 2001. As of October 3, 1999, $27.9
million was borrowed under the line of credit. The Company is
required to comply with certain financial ratio tests during the
terms of the loan agreements.
In 1998, the Company purchased computer software which is Year
2000 compliant. The Year 2000 issue is the result of computer
programs being written using two digits rather than four to define
the applicable year. Previous systems may have been unable to
accurately process certain date-based information. The cost of the
new software has been recorded as an asset and is being amortized
over its estimated useful life. Other maintenance or modification
costs have been expensed as incurred. Accordingly, the Company
does not expect the amounts required to be expensed to have a
material effect on its financial position, results of operations or
cash flows. The Company has substantially completed its Year 2000
date conversion project and expects any remaining projects to be
completed prior to the end of 1999. The Company has initiated
formal communication with significant vendors and suppliers to
determine their efforts to remediate the Year 2000 issues.
Forward-Looking Statements
Certain statements may constitute "forward-looking statements"
which are subject to known and unknown risks and uncertainties
including, among other things, certain economic conditions,
competition, development factors and operating costs that may cause
the actual results to differ materially from results implied by
such forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is subject to market risk in the form of interest
risk and foreign currency risk. Both interest risk and foreign
currency risk are immaterial to the Company.
Page 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
the Company or any of its subsidiaries is a party or of which any
of their property is the subject.
Item 2. Changes in Securities.
None to report during quarter for which this report is filed.
Item 3. Defaults Upon Senior Securities.
None to report during quarter for which this report is filed.
Item 4. Submission of Matters to a Vote of Security Holders
None to report during quarter for which this report is filed.
Item 5. Other Information.
None to report during quarter for which this report is filed.
Item 6. Exhibits and Reports on Form 8-K.
a)Exhibits
10(b)(1) Fourth Modification and Extension
Agreement, in the stated amount of
$45,000,000, dated July 16, 1999,
between Bank One, Texas, N.A. and the
Company.
10(b)(2) Fourth Restated Revolving Credit
Note, in the stated amount of
$45,000,000, dated July 16, 1999,
between Bank One, Texas, N.A. and
the Company.
b) Reports on Form 8-K
None filed during the quarter for which this report is filed.
Page 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CEC ENTERTAINMENT, INC.
Dated: November 11, 1999 By: /s/ Larry G. Page
----------------------
Larry G. Page
Executive Vice President
and Chief Financial Officer
Page 13
EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------ ----------- -----
10(b)(1) Fourth Modification and Extension Agreement, in the
stated amount of $45,000,000.00, dated July 16,
1999, between Bank One, Texas, N.A. and the
Company. 15
10(b)(2) Fourth Restated Revolving Credit Note, in the
stated amount of $45,000,000.00, dated July 16,
1999, between Bank One, Texas, N.A. and the
Company. 24
Page 14
Exhibit 10(b)(1)
FOURTH MODIFICATION AND EXTENSION AGREEMENT
Date: Effective July 16, 1999
Bank One:
BANK ONE, TEXAS, NATIONAL ASSOCIATION,
a national banking association
Bank One's Address: 1717 Main Street, 3rd Floor
Dallas, Texas 75201
Company: CEC ENTERTAINMENT, INC.
(f/k/a ShowBiz Pizza Time, Inc.),
a Kansas corporation
Company's Address: 4441 W. Airport Freeway
Irving, Texas 75062
R E C I T A L S:
A. Bank One and Company entered into a Loan evidenced, inter alia,
by the following documents:
1. Loan Agreement dated as of June 27, 1995 by and between
Company and Bank One for an aggregate Loan in the amount of
$5,000,000.
2. Revolving Credit Note dated June 27, 1995 in the
original principal amount of $5,000,000 signed by Company and
payable to Bank One.
B. Bank One and Company modified the Loan to increase its principal
balance to $15,000,000, extend the maturity date to June 15, 1998
and make certain other changes in the terms and conditions of the
Loan evidenced, inter alia, by the following documents:
1. Modification and Extension Agreement dated August 1,
1996 by and between Company and Bank One for an aggregate Loan in
the amount of $15,000,000.
2. Restated Revolving Credit Note dated August 1, 1996 in
the original principal amount of $15,000,000 signed by Company and
payable to Bank One.
C. Bank One and Company modified the Loan to allow for transfer of
certain assets and make certain other changes in the terms and
conditions of the Loan evidenced, inter alia, by the following
documents:
1. Supplemental Agreement dated as of September 29, 1997 by
and between Company and Bank One.
2. Guarantee Agreement - ShowBiz Nevada, Inc. dated as of
September 29, 1997 made by ShowBiz Nevada, Inc. in favor of Bank
One.
3. Guarantee Agreement - ShowBiz Merchandising, Inc. dated
as of September 29, 1997 made by ShowBiz Merchandising, Inc. in
favor of Bank One.
4. Guarantee Agreement - SPT Properties Company, Inc. dated
as of September 29, 1997 made by SPT Properties Company, Inc. in
favor of Bank One.
5. Guarantee Agreement - ShowBiz Cayman Islands, Inc. dated
as of September 29, 1997 made by ShowBiz Cayman Islands, Inc. in
favor of Bank One.
D. Bank One and Company modified the Loan to extend the maturity
date to June 1, 2000 and make certain other changes in the terms
and conditions of the Loan evidenced, inter alia, by the following
documents:
1. Second Modification and Extension Agreement dated
effective June 14, 1998 by and between Company and Bank One for an
aggregate Loan in the amount of $15,000,000.00.
2. Second Restated Revolving Credit Note dated effective
June 14, 1998 in the original principal amount of $15,000,000.00
signed by Company and payable to Bank One.
E. Bank One and Company modified the Loan to increase its principal
balance to $30,000,000.00 and make certain other changes in the
terms and conditions of the Loan evidenced, inter alia, by the
following documents:
1. Third Modification dated effective December 4, 1998 by
and between Company and Bank One for an aggregate Loan in the
amount of $30,000,000.00.
2. Third Restated Revolving Credit Note dated effective
December 4, 1998 in the original principal amount of $30,000,000.00
signed by Company and payable to Bank One.
F. Bank One is the owner and holder of the Note, Loan Agreement,
and other Loan Documents.
G. Company has requested that Bank One (i) increase the principal
amount of the Note to $45,000,000.00, and (ii) extend the maturity
date to June 1, 2001, and Bank One is willing to do so on the terms
set out in this Agreement.
IT IS AGREED:
1. Definitions. The definition of terms used in the Loan
Agreement and Supplemental Agreement shall have the same meanings
in this Agreement unless otherwise defined. The term "Loan
Documents" in Section 1.1 of the Loan Agreement shall be amended to
include all the documents described above and this Agreement.
2. Principal Balance. Bank One and Company acknowledge
that as of the date hereof the outstanding principal balance of the
Note is Five Million Seventy-Three Thousand Six Hundred and No/100
Dollars ($5,073,600.00).
3. Revolving Credit Commitment. The definition of
"Revolving Credit Commitment" in Section 1.1. Defined Terms of the
Loan Agreement shall be amended as follows:
"Revolving Credit Commitment" shall mean an amount equal to
Forty-Five Million and No/100 Dollars ($45,000,000.00) less the
Unsecured LC Exposure Amount, as the same may be reduced from time
to time or terminated pursuant to Sections 2.4, 2.11 or 9.1 hereof.
4. Extension of Maturity of Note and Loan Documents. The
definition of Initial Term in Section 1.1 of the Loan Agreement
shall be amended as follows:
"Initial Term" shall mean the period of the Effective Date to
and including June 1, 2001.
5. Restated Note. The Note shall be restated in a form
entitled "Fourth Restated Revolving Credit Note" which shall state
its original principal amount as being Forty-Five Million and
No/100 Dollars ($45,000,000.00) to conform to the amended
definition of "Revolving Credit Commitment" stated in this
Agreement, a copy of the form of Note is attached as Exhibit "A".
The terms "Note(s)" or "Revolving Credit Note(s)" shall include the
Fourth Restated Revolving Credit Note for all purposes and in all
Loan Documents. Bank One shall retain the written instrument
evidencing the original Revolving Credit Note dated June 27, 1995
in the original principal amount of $5,000,000, the original
Restated Revolving Credit Note dated August 1, 1996 in the original
principal amount of $15,000,000, the original Second Restated
Revolving Credit Note dated effective June 14, 1988 in the original
principal amount of $15,000,000, and the original Third Restated
Revolving Credit Note dated December 4, 1998 in the original
principal amount of $30,000,000, all of which shall be deemed to be
superseded by the written instrument evidencing the Fourth Restated
Revolving Credit Note dated on even date with this Agreement in the
original principal amount of $45,000,000. Each such superseded
note shall be marked "SUPERSEDED BY THE WRITTEN INSTRUMENT
EVIDENCING THE FOURTH RESTATED REVOLVING CREDIT NOTE DATED
EFFECTIVE JULY 16, 1999" and copies of such notes will be delivered
to Company contemporaneously with the execution of this Agreement.
6. Acknowledgment of Indebtedness. Company acknowledges
that as of the date of this Agreement, it is well and truly
indebted to Bank One pursuant to the terms of the Note, as modified
hereby. Company hereby promises to pay to Bank One the
indebtedness evidenced by the Note in accordance with the terms
thereof, as modified hereby, and shall observe, comply with, and
perform all of the obligations, terms, and conditions under or in
connection with the Note and all other Loan Documents.
7. Ratification of Loan Documents. Except as provided
herein, the terms and provisions of the Note and the other Loan
Documents shall remain unchanged and shall remain in full force and
effect. Any modification herein of the Note, Loan Agreement and
the other Loan Documents shall in no way impair the security of the
Loan Documents for the payment of the Note. The promissory notes
defined herein and in all other Loan Documents as the "Note" or
"Revolving Credit Note(s)" shall hereafter mean the Note as
modified by this Agreement. The Loan Agreement, the Note and the
other Loan Documents as modified and amended hereby are hereby
ratified and confirmed in all respects.
8. Ratification by Guarantors. Each of ShowBiz Nevada,
Inc., a Nevada corporation, ShowBiz Merchandising, Inc., a Nevada
corporation, SPT Properties Company, Inc., a Nevada corporation,
and ShowBiz Cayman Islands, Inc., a Cayman Islands corporation,
ratifies and confirms its respective Guarantee Agreements dated as
of September 29, 1997, as being binding and continuing and consent
to the terms of this Agreement.
9. No Waiver. Company acknowledges that the execution of
this Agreement by Bank One is not intended nor shall it be
construed as (i) an actual or implied waiver of any default under
the Note or any other Loan Document or (ii) an actual or implied
waiver of any condition or obligation imposed upon Company pursuant
to the Note or any other Loan Document, except to the extent
expressly set forth herein.
10. Expenses. Contemporaneously with the execution and
delivery hereof, Company shall pay, or cause to be paid, all
reasonable costs and expenses incident to the preparation hereof
and the consummation of the transactions specified herein,
including without limitation fees and expenses of legal counsel to
Bank One.
11. Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties
hereto had signed the same document. All such counterparts shall
be construed together and shall constitute one instrument; but in
making proof hereof it shall only be necessary to produce one such
counterpart.
12. Benefit. The terms and provisions hereof shall be
binding upon and inure to the benefit of the parties hereto, their
heirs, representatives, successors and permitted assigns.
13. Release and Waiver of Usury Claim. Company hereby
releases Bank One, its successors and assigns, from all claims,
demands, liabilities and causes of action which Company may be
entitled to assert (although no such claims are known to exist)
against Bank One by reason of Bank One's contracting, charging or
receiving for the use, forbearance or detention of money, interest
on the Loan evidenced by the Note prior to the execution of this
Agreement in excess of that permitted to be charged to Company
under applicable law.
14. Release and Waiver of Other Claims. In consideration of
the terms, conditions and provisions of this Agreement and the
other benefits received by Company hereunder, Company further
hereby releases, relinquishes and forever discharges Bank One, as
well as its parent and subsidiary corporations, predecessors,
successors, assigns, agents, officers, directors, employees,
representatives, attorneys and accountants of and from any and all
claims, demands, actions, causes of action of any and every kind or
character, whether known or unknown, which Company may have against
Bank One and its parent and subsidiary corporations, predecessors,
successors, assigns, agents, officers, directors, employees,
representatives, attorneys or accountants arising out of or with
respect to any and all transactions solely relating to the Note or
any renewal thereof, and/or the Loan Documents, but excluding any
other transactions between the parties, occurring prior to the date
hereof, including any other loss, expense and/or detriment, of any
kind or character, growing out of or in any way connected with or
in any way resulting from the acts, actions or omissions of Bank
One and its parent and subsidiary corporations, predecessors,
successors, assigns, agents, officers, directors, employees,
representatives, attorneys, or accountants, and including any loss,
cost or damage in connection with any breach of fiduciary duty,
breach of any duty of fair dealing, breach of confidence, breach of
funding commitment, undue influence, duress, economic coercion,
conflict of interest, negligence, bad faith, malpractice,
violations of the racketeer influenced and corrupt organizations
act, intentional or negligent infliction of mental duress, tortuous
interference with contractual relations, tortuous interference with
corporate governance or prospective business advantage, breach of
contract, deceptive trade practices, libel, slander or conspiracy.
15. Construction. The parties acknowledge that the parties
and their counsel have reviewed and had the opportunity to revise
this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this Agreement
or any amendments or exhibits hereto.
16. Entire Agreement. THIS AGREEMENT, THE NOTE AND THE
WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Agreement is executed effective as of
the date first above written.
BANK ONE, TEXAS, National Association
By: -----------------------
Name: Paul C. Koch
Title: Vice President
CEC ENTERTAINMENT, INC.
By: -----------------------
Name: Larry G. Page
Title: Executive Vice President, Chief Financial
Officer and Treasurer
SHOWBIZ NEVADA, INC.
By: __________________________________________
Name: Don McKechnie
Title: Director and President
SHOWBIZ MERCHANDISING, INC.
By: __________________________________________
Name: Don McKechnie
Title: Director and President
SPT PROPERTIES COMPANY, INC.
By: __________________________________________
Name: Don McKechnie
Title: Director and President
SHOWBIZ CAYMAN ISLANDS, INC.
By: __________________________________________
Name: Don McKechnie
Title: Director and President
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on July ----, 1999,
by Paul C. Koch, Vice President of BANK ONE, TEXAS, NATIONAL
ASSOCIATION, a national banking association, on behalf of said
national association.
---------------------------------
Notary Public, State of Texas
(SEAL)
- -----------------------------
Please Print Name of Notary)
My Commission expires:
- -----------------
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on July ----, 1999,
by Larry G. Page, Executive Vice President, Chief Financial Officer
and Treasurer of CEC ENTERTAINMENT, INC., a Kansas corporation, on
behalf of said corporation.
-----------------------------
Notary Public, State of Texas
(SEAL)
- ----------------------------------
(Please Print Name of Notary)
My Commission expires:
- ---------------------------
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on July ----, 1999,
by Don McKechnie, Director and President of SHOWBIZ NEVADA, INC. a
Nevada corporation, on behalf of said corporation.
------------------------------
Notary Public, State of Texas
(SEAL)
------------------------------
(Please Print Name of Notary)
My Commission expires:
-----------------------
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on July ____, 1999,
by Don McKechnie, Director and President of SHOWBIZ MERCHANDISING,
INC. a Nevada corporation, on behalf of said corporation.
-----------------------------------
Notary Public, State of Texas
(SEAL)
-----------------------------------
(Please Print Name of Notary)
My Commission expires:
--------------------------
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on July ----, 1999,
by Don McKechnie, Director and President of SPT PROPERTIES COMPANY,
INC. a Nevada corporation, on behalf of said corporation.
-----------------------------
Notary Public, State of Texas
(SEAL)
-----------------------------
(Please Print Name of Notary)
My Commission expires:
----------------------
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on July ----, 1999,
by Don McKechnie, Director and President of SHOWBIZ CAYMAN ISLANDS,
INC. a Cayman Islands corporation, on behalf of said corporation.
----------------------------
Notary Public, State of Texas
(SEAL)
----------------------------
(Please Print Name of Notary)
My Commission expires:
----------------------------
<Exhibit 10(b)(2)>
FOURTH RESTATED REVOLVING CREDIT NOTE
$45,000,000.00 Dallas, Texas July 16, 1999
FOR VALUE RECEIVED, the undersigned, CEC ENTERTAINMENT, INC.
(f/k/a SHOWBIZ PIZZA TIME, INC.), a Kansas corporation ("Company"),
hereby unconditionally promises to pay to the order of BANK ONE,
TEXAS, National Association ("Bank One") at the office of Bank One
or any successor, currently located at 1717 Main Street, Third
Floor, Dallas, Texas 75201, on June 1, 2001 (or on any annual
anniversary thereof agreed to in writing by Bank One and the
Company), in lawful money of the United States of America and
immediately available funds, an amount equal to the lesser of (a)
FORTY-FIVE MILLION AND NO/100 DOLLARS ($45,000,000.00), or (b) the
aggregate unpaid principal amount of all Revolving Credit Loans
made by Bank One to the Company pursuant to Section 2.1 of the Loan
Agreement, dated as of June 27, 1995, between Bank One and the
Company (as amended, modified or supplemented from time to time in
accordance with its terms, the "Loan Agreement").
The Company further promises to pay interest (computed on the
basis of a 365-day year for the actual days elapsed) in like money
on the unpaid principal balance of this Note from time to time
outstanding at the annual rates provided in the Loan Agreement.
Interest shall be payable at the times and in the manner provided
in the Loan Agreement.
All Revolving Credit Loans made by Bank One pursuant to Section
2.1 of the Loan Agreement and all payments of the principal thereof
shall be endorsed by the holder of this Note on the schedule
annexed hereto (including any additional pages such holder may add
to such schedule), which endorsement shall constitute prima facie
evidence of the accuracy of the information so endorsed; provided,
however, that the failure of the holder of this Note to insert any
date or amount or other information on such schedule shall not in
any manner affect the obligation of the Company to repay any
Revolving Credit Loans in accordance with the terms of the Loan
Agreement.
On and after the stated or any accelerated maturity hereof, this
Note shall bear interest until paid in full (whether before or
after the occurrence of any Event of Default described in Sections
9.1(g) and 9.1(h) of the Loan Agreement) at a rate of 2.5% per
annum in excess of the Prime Rate, payable on demand, but in no
event in excess of the maximum rate of interest permitted under
applicable law. Such interest rate shall change when and as the
Prime Rate changes.
This Note is a Revolving Credit Note referred to in the Loan
Agreement, is entitled to the benefits thereof and is subject to
optional and mandatory prepayment, in whole or in part, as provided
therein. Reference is herein made to the Loan Agreement for the
rights of the holder to accelerate the unpaid balance hereof prior
to maturity.
The Company hereby waives diligence, demand, presentment,
protest and notice of any kind, release, surrender or substitution
of security, or forbearance or other indulgence, without notice.
This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by,
all applicable usury laws. If any provision hereof or of any of
the other Loan Documents or the application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid
or unenforceable, neither the application of such provision to any
other person or circumstance nor the remainder of the instrument in
which such provision is contained shall be affected thereby and
shall be enforced to the greatest extent permitted by law. It is
expressly stipulated and agreed to be the intent of Bank One at all
times to comply with the usury and other applicable laws now or
hereafter governing the interest payable on the Indebtedness
evidenced by this Note. If the applicable law is ever revised,
repealed or interpreted so as to render usurious any amount called
for under this Note or any of the other Loan Documents, or
contracted for, charged, taken, reserved or received with respect
to the Indebtedness evidenced by this Note, or if Bank One's
exercise of the option to accelerate the maturity of this Note, or
if any prepayment by the Company results in the Company's having
paid any interest in excess of that permitted by law, then it is
the express intent of the Company and Bank One that all excess
amounts theretofore collected by Bank One be credited on the
principal balance of this Note (or, if this Note and all other
Indebtedness arising under or pursuant to the other Loan Documents
have been paid in full, refunded to the Company), and the
provisions of this Note and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectable hereunder
and thereunder reduced, without the necessity of the execution of
any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called
for hereunder or thereunder. All sums paid, or agreed to be paid,
by the Company for the use, forbearance, detention, taking,
charging, receiving or reserving of the Indebtedness of the Company
to Bank One under this Note or arising under of pursuant to the
other Loan Documents shall, to the maximum extent permitted by
applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Indebtedness until payment in full
so that the rate or amount of interest on account of such
Indebtedness does not exceed the usury ceiling from time to time in
effect and applicable to such Indebtedness for so long as such
Indebtedness is outstanding. To the extent federal law permits
Bank One to contract for, charge, or receive a greater amount of
interest, Bank One will rely upon federal law instead of the Texas
Finance Code, as supplemented by the Texas Credit Title, for the
purpose of determining the maximum rate or amount. Additionally,
to the maximum extent permitted by applicable law now or hereafter
in effect, Bank One may, at its option and from time to time,
implement any other method of computing the maximum rate under the
Texas Finance Code, as supplemented by the Texas Credit Title, or
under other applicable law by giving notice, if required, to the
Company as provided by applicable law now or hereafter in effect.
Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Bank One to
accelerate the maturity of any interest that has accrued at the
time of such acceleration or to collect unearned interest at the
time of such acceleration.
Capitalized terms used herein and not otherwise defined shall
have the meaning ascribed to them in the Loan Agreement.
This Note may not be changed, modified, or terminated orally,
but only by an agreement in writing signed by the party to be
charged.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS REVOLVING
CREDIT NOTE, COMPANY WAIVES (TO THE EXTENT PERMITTED BY LAW) THE
RIGHT TO A TRIAL BY JURY, ALL RIGHTS OF SETOFF AND RIGHTS TO
INTERPOSE COUNTERCLAIMS AND CROSS-CLAIMS (UNLESS SUCH SETOFF,
COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE
FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED
IN ANY OTHER ACTION) AND THE DEFENSES OF FORUM NON CONVENIENS AND
IMPROPER VENUE. COMPANY HEREBY IRREVOCABLY CONSENTS TO THE NON-
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF
ANY FEDERAL COURT LOCATED IN DALLAS, TEXAS, IN CONNECTION WITH ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS REVOLVING
CREDIT NOTE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW AND SHALL BE BINDING UPON THE
SUCCESSORS AND ASSIGNS OF COMPANY AND INURE TO THE BENEFIT OF BANK
ONE AND ITS SUCCESSORS AND ASSIGNS.
If any term or provision of this Revolving Credit Note shall be
held invalid, illegal or unenforceable, the validity of all other
terms and provisions herein shall in no way be affected thereby.
This Note is restated in accordance with the terms of that
certain Fourth Modification and Extension Agreement dated on even
date herewith by and between Company and Bank One to conform the
terms of this Note to the amended definition of "Revolving Credit
Commitment" contained in the Fourth Modification and Extension
Agreement.
IN WITNESS WHEREOF, the Company has executed and delivered this
Note as of the date first written above.
CEC ENTERTAINMENT, INC.
By: ----------------------------------------
Name: Larry G. Page
Title: Executive Vice President, Chief Financial
Officer and Treasurer
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on July ____, 1999,
by Larry G. Page, Executive Vice President, Chief Financial Officer
and Treasurer of CEC ENTERTAINMENT, INC., a Kansas corporation, on
behalf of said corporation.
--------------------------------------
Notary Public, State of Texas
(SEAL)
--------------------------------------
(Please Print Name of Notary)
My Commission expires:
----------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> OCT-04-1998
<CASH> 10,271
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<RECEIVABLES> 6,002
<ALLOWANCES> 63
<INVENTORY> 5,351
<CURRENT-ASSETS> 27,857
<PP&E> 336,531
<DEPRECIATION> 125,663
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<CURRENT-LIABILITIES> 42,751
<BONDS> 15,289
<COMMON> 2,226
2,287
0
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<TOTAL-LIABILITY-AND-EQUITY> 244,428
<SALES> 289,092
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<CGS> 133,090
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