Condensed Consolidating Schedules

9 Months Ended

Oct. 01, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

Consolidating Guarantor Financial Information:

On February 14, 2014, CEC Entertainment, Inc. merged with and into an entity controlled by Apollo Global Management, LLC and its subsidiaries, which we refer to as the “Merger”. The senior notes issued by CEC Entertainment, Inc. (the “Issuer”), in conjunction with the Merger, are our unsecured obligations and are fully and unconditionally, jointly and severally guaranteed by all of our 100% wholly-owned U.S. subsidiaries (the “Guarantors”). Our wholly-owned foreign subsidiaries and our less-than-wholly-owned U.S. subsidiaries are not a party to the guarantees (the “Non-Guarantors”). The following schedules present the condensed consolidating financial statements of the Issuer, Guarantors and Non-Guarantors, as well as consolidated results, for the periods presented:

CEC Entertainment, Inc.
Consolidating Statement of Comprehensive Income (Loss)
For the Nine Months Ended October 1, 2017
(in thousands)
	Issuer			Guarantors		Non-Guarantors			Eliminations			Consolidated
Revenues:
Food and beverage sales	$	274,411		$	40,959	$	4,715		$	—		$	320,085
Entertainment and merchandise sales	296,197			52,097		7,980			—			356,274
Total company venue sales	570,608			93,056		12,695			—			676,359
Franchise fees and royalties	1,411			12,320		—			—			13,731
International Association assessments and other fees	1,054			28,791		26,900			(56,745		)	—
Total revenues	573,073			134,167		39,595			(56,745		)	690,090
Operating Costs and Expenses:
Company venue operating costs:
Cost of food and beverage	62,847			10,671		1,496			—			75,014
Cost of entertainment and merchandise	21,037			1,236		498			—			22,771
Total cost of food, beverage, entertainment and merchandise	83,884			11,907		1,994			—			97,785
Labor expenses	170,089			14,108		3,761			—			187,958
Depreciation and amortization	73,162			2,946		1,384			—			77,492
Rent expense	65,168			4,678		1,638			—			71,484
Other venue operating expenses	129,415			10,360		3,373			(29,871		)	113,277
Total company venue operating costs	521,718			43,999		12,150			(29,871		)	547,996
Advertising expense	27,921			4,345		32,310			(26,874		)	37,702
General and administrative expenses	15,672			32,194		371			—			48,237
Transaction, severance and related litigation costs	698			—		—			—			698
Asset Impairments	1,824			14		5			—			1,843
Total operating costs and expenses	567,833			80,552		44,836			(56,745		)	636,476
Operating income (loss)	5,240			53,615		(5,241		)	—			53,614
Equity in earnings (loss) in affiliates	28,096			—		—			(28,096		)	—
Interest expense	47,730			3,345		499			—			51,574
Income (loss) before income taxes	(14,394		)	50,270		(5,740		)	(28,096		)	2,040
Income tax expense (benefit)	(14,594		)	18,263		(1,829		)	—			1,840
Net income (loss)	$	200		$	32,007	$	(3,911	)	$	(28,096	)	$	200
Components of other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	1,187			—		1,187			(1,187		)	1,187
Comprehensive income (loss)	$	1,387		$	32,007	$	(2,724	)	$	(29,283	)	$	1,387

CEC Entertainment, Inc.
Consolidating Statement of Comprehensive Income (Loss)
For the Nine Months Ended October 2, 2016
(in thousands)
	Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated
Revenues:
Food and beverage sales	$	280,391		$	36,779		$	4,421		$	—		$	321,591
Entertainment and merchandise sales	358,192			18,151			7,635			—			383,978
Total company venue sales	638,583			54,930			12,056			—			705,569
Franchise fees and royalties	1,561			11,879			—			—			13,440
International Association assessments and other fees	735			1,845			28,746			(31,326		)	—
Total revenues	640,879			68,654			40,802			(31,326		)	719,009
Operating Costs and Expenses:
Company venue operating costs:
Cost of food and beverage	69,431			9,632			1,639			—			80,702
Cost of entertainment and merchandise	23,149			1,329			526			—			25,004
Total cost of food, beverage, entertainment and merchandise	92,580			10,961			2,165			—			105,706
Labor expenses	175,495			11,842			3,833			—			191,170
Depreciation and amortization	81,661			1,884			1,484			—			85,029
Rent expense	66,601			4,043			1,674			—			72,318
Other venue operating expenses	104,297			7,568			2,884			(2,606		)	112,143
Total company venue operating costs	520,634			36,298			12,040			(2,606		)	566,366
Advertising expense	30,188			3,548			31,761			(28,720		)	36,777
General and administrative expenses	19,669			30,996			557			—			51,222
Transaction, severance and related litigation costs	1,294			55			—			—			1,349
Asset impairment	709			—			63			—			772
Total operating costs and expenses	572,494			70,897			44,421			(31,326		)	656,486
Operating income (loss)	68,385			(2,243		)	(3,619		)	—			62,523
Equity in earnings (loss) in affiliates	(8,096		)	—			—			8,096			—
Interest expense	47,765			3,328			326			—			51,419
Income (loss) before income taxes	12,524			(5,571		)	(3,945		)	8,096			11,104
Income tax expense (benefit)	6,065			(185		)	(1,235		)	—			4,645
Net income (loss)	$	6,459		$	(5,386	)	$	(2,710	)	$	8,096		$	6,459
Components of other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	703			—			703			(703		)	703
Comprehensive income (loss)	$	7,162		$	(5,386	)	$	(2,007	)	$	7,393		$	7,162

CEC Entertainment, Inc.
Consolidating Statement of Cash Flows
For the Nine Months Ended October 1, 2017
(in thousands)
	Issuer			Guarantors			Non-Guarantors			Eliminations		Consolidated
Cash flows provided by operating activities:	$	68,568		$	24,632		$	1,040		$	—	$	94,240
Cash flows from investing activities:
Purchases of property and equipment	(49,735		)	(21,407		)	(768		)	—		(71,910		)
Development of internal use software	—			(2,520		)	—			—		(2,520		)
Proceeds from sale of property and equipment	424			—			—			—		424
Cash flows provided by (used in) investing activities	(49,311		)	(23,927		)	(768		)	—		(74,006		)
Cash flows from financing activities:
Repayments on senior term loan	(5,700		)	—			—			—		(5,700		)
Repayments on note payable	—			(13		)	—			—		(13		)
Proceeds from sale-leaseback transaction	4,073			—			—			—		4,073
Payments on capital lease obligations	(335		)	—			(5		)	—		(340		)
Payments on sale leaseback transactions	(1,789		)	—			—			—		(1,789		)
Return of capital	1,447			—			—			—		1,447
Cash flows provided by (used in) financing activities	(2,304		)	(13		)	(5		)	—		(2,322		)
Effect of foreign exchange rate changes on cash	—			—			492			—		492
Change in cash and cash equivalents	16,953			692			759			—		18,404
Cash and cash equivalents at beginning of period	53,088			1,158			6,777			—		61,023
Cash and cash equivalents at end of period	$	70,041		$	1,850		$	7,536		$	—	$	79,427

CEC Entertainment, Inc.
Consolidating Statement of Cash Flows
For the Nine Months Ended October 2, 2016
(in thousands)
	Issuer				Guarantors				Non-Guarantors				Eliminations			Consolidated
Cash flows provided by (used in) operating activities:	$	93,340			$	17,674			$	240			$	—		$	111,254
Cash flows from investing activities:
Purchases of property and equipment	(50,823		)		(15,506		)		(206		)		—			(66,535		)
Development of internal use software	(6,004		)		(2,784		)		—				—			(8,788		)
Proceeds from the sale of property and equipment	426				—				—				—			426
Cash flows provided by (used in) investing activities	(56,401		)	—	(18,290		)	—	(206		)	—	—		—	(74,897		)
Cash flows from financing activities:
Repayments on senior term loan	(5,700		)		—				—				—			(5,700		)
Repayments on note payable	—				(37		)		—				—			(37		)
Payments on capital lease obligations	(308		)		—				(3		)		—			(311		)
Payments on sale leaseback transactions	(1,466		)		—				—				—			(1,466		)
Excess tax benefit realized from stock-based compensation	4				—				—				—			4
Cash flows provided by (used in) financing activities	(7,470		)	—	(37		)	—	(3		)	—	—		—	(7,510		)
Effect of foreign exchange rate changes on cash	—				—				356				—			356
Change in cash and cash equivalents	29,469			—	(653		)	—	387			—	—		—	29,203
Cash and cash equivalents at beginning of period	42,235				1,797				6,622				—			50,654
Cash and cash equivalents at end of period	$	71,704			$	1,144			$	7,009			$	—		$	79,857