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 (Do not check if a smaller reporting company) | 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; |
• | our ability to successfully open international franchises and to operate under the United States and foreign anti-corruption laws that govern those international ventures; |
• | risks related to our substantial indebtedness; |
• | failure of our information technology systems to support our current and growing businesses; |
• | disruptions to our commodity distribution system; |
• | our dependence on third-party vendors to provide us with sufficient quantities of new entertainment-related equipment, prizes and merchandise at acceptable prices; |
• | risks from product liability claims and product recalls; |
• | the impact of governmental laws and regulations and the outcomes of legal proceedings; |
• | potential liability under certain state property laws; |
• | fluctuations in our financial results due to new venue openings; |
• | local conditions, natural disasters, terrorist attacks and other events and public health issues; |
• | the seasonality of our business; |
• | inadequate insurance coverage; |
• | labor shortages and immigration reform; |
• | loss of certain personnel; |
• | our ability to adequately protect our trademarks or other proprietary rights; |
• | our ability to pay our fixed rental payments; |
• | our ability to successfully integrate the operations of companies we acquire; |
• | impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets; |
• | our failure to maintain adequate internal controls over our financial and management systems; and |
• | other risks, uncertainties and factors set forth in Part I, Item 1A. “Risk Factors.” |
• | 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 |
• | limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes; |
• | make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the indenture and the agreements governing other indebtedness; |
• | require us to dedicate a substantial portion of our cash flow from operations to the repayment of our indebtedness, thereby reducing funds available to us for other purposes; |
• | limit our flexibility in planning for, or reacting to, changes in our operations or business; |
• | make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage; |
• | impact our rent expense on leased space, which could be significant; |
• | make us more vulnerable to downturns in our business or the economy; |
• | restrict us from making strategic acquisitions, engaging in development activities, introducing new technologies, or exploiting business opportunities; |
• | cause us to make non-strategic divestitures; and |
• | expose us to the risk of increased interest rates, as certain of our borrowings are at variable rates of interest. |
Domestic | Company-operated venues | Franchised venues | Total | |||||
Chuck E. Cheese’s | 509 | 26 | 535 | |||||
Peter Piper Pizza | 42 | 61 | 103 | |||||
Total domestic | 551 | 87 | 638 | |||||
International | ||||||||
Chuck E. Cheese’s | 11 | 59 | 70 | |||||
Peter Piper Pizza | — | 46 | 46 | |||||
Total international | 11 | 105 | 116 | |||||
Total venues in operation | 562 | 192 | 754 |
Domestic | Company- Owned venues | Franchised venues | Total | |||||
Alabama | 8 | 1 | 9 | |||||
Alaska | 1 | — | 1 | |||||
Arizona | 33 | 16 | 49 | |||||
Arkansas | 6 | — | 6 | |||||
California | 81 | 4 | 85 | |||||
Colorado | 9 | — | 9 | |||||
Connecticut | 4 | — | 4 | |||||
Delaware | 2 | — | 2 | |||||
Florida | 33 | — | 33 | |||||
Georgia | 15 | — | 15 | |||||
Hawaii | — | 2 | 2 | |||||
Idaho | 1 | — | 1 | |||||
Illinois | 21 | — | 21 | |||||
Indiana | 13 | — | 13 | |||||
Iowa | 4 | — | 4 | |||||
Kansas | 4 | — | 4 | |||||
Kentucky | 5 | — | 5 | |||||
Louisiana | 10 | 2 | 12 | |||||
Maryland | 15 | — | 15 | |||||
Massachusetts | 10 | — | 10 | |||||
Michigan | 16 | — | 16 | |||||
Minnesota | 8 | — | 8 | |||||
Mississippi | 3 | 2 | 5 | |||||
Missouri | 8 | — | 8 | |||||
Montana | — | 1 | 1 | |||||
Nebraska | 2 | — | 2 | |||||
Nevada | 8 | — | 8 | |||||
New Hampshire | 2 | — | 2 | |||||
New Jersey | 14 | — | 14 | |||||
New Mexico | 7 | 3 | 10 | |||||
New York | 21 | — | 21 | |||||
North Carolina | 13 | 2 | 15 | |||||
North Dakota | — | 1 | 1 | |||||
Ohio | 19 | 1 | 20 | |||||
Oklahoma | 9 | — | 9 | |||||
Oregon | 1 | 2 | 3 | |||||
Pennsylvania | 22 | — | 22 | |||||
Rhode Island | 1 | — | 1 | |||||
South Carolina | 7 | — | 7 | |||||
South Dakota | 2 | — | 2 | |||||
Tennessee | 12 | — | 12 | |||||
Texas | 67 | 46 | 113 | |||||
Utah | 2 | — | 2 | |||||
Virginia | 12 | 3 | 15 | |||||
Washington | 10 | 1 | 11 | |||||
West Virginia | 1 | — | 1 | |||||
Wisconsin | 9 | — | 9 | |||||
Total domestic | 551 | 87 | 638 |
International | Company- Owned venues | Franchised venues | Total | |||||
Canada | 11 | — | 11 | |||||
Chile | — | 7 | 7 | |||||
Colombia | — | 2 | 2 | |||||
Guam | — | 1 | 1 | |||||
Guatemala | — | 2 | 2 | |||||
Honduras | — | 1 | 1 | |||||
Mexico | — | 64 | 64 | |||||
Panama | — | 2 | 2 | |||||
Peru | — | 3 | 3 | |||||
Puerto Rico | — | 3 | 3 | |||||
Trinidad | — | 2 | 2 | |||||
Saudi Arabia | — | 15 | 15 | |||||
United Arab Emirates | — | 3 | 3 | |||||
Total international | 11 | 105 | 116 | |||||
Total venues in operation | 562 | 192 | 754 |
Fiscal Year 2017 | Fiscal Year 2016 | Fiscal Year 2015 (1) | For the 317 Day Period Ended December 28, 2014 (6) | For the 47 Day Period Ended February 14, 2014 (7) | Fiscal Year 2013 | |||||||||||||||||||
Successor (7) | Successor (7) | Successor (7) | Successor (7) | Predecessor (7) | Predecessor (7) | |||||||||||||||||||
(in thousands, except percentages and venue number amounts) | ||||||||||||||||||||||||
Statements of Earnings Data: | ||||||||||||||||||||||||
Company venue sales | $ | 868,888 | $ | 905,314 | $ | 905,110 | $ | 712,098 | $ | 113,556 | $ | 816,739 | ||||||||||||
Total revenues | $ | 886,771 | $ | 923,653 | $ | 922,589 | $ | 718,581 | $ | 114,243 | $ | 821,721 | ||||||||||||
Operating income (loss) | $ | 47,890 | $ | 61,452 | $ | 55,131 | $ | (32,259 | ) | $ | 2,873 | $ | 83,471 | |||||||||||
Interest expense | $ | 69,115 | $ | 67,745 | $ | 70,582 | $ | 60,952 | $ | 1,151 | $ | 7,453 | ||||||||||||
Income taxes | $ | (74,291 | ) | $ | (2,626 | ) | $ | (2,941 | ) | $ | (31,123 | ) | $ | 1,018 | $ | 28,194 | ||||||||
Net income (loss) | $ | 53,066 | $ | (3,667 | ) | $ | (12,510 | ) | $ | (62,088 | ) | $ | 704 | $ | 47,824 | |||||||||
Statement of Cash Flow Data: | ||||||||||||||||||||||||
Operating activities | $ | 104,453 | $ | 118,687 | $ | 100,613 | $ | 48,091 | $ | 22,314 | $ | 138,664 | ||||||||||||
Investing activities | $ | (93,712 | ) | $ | (98,439 | ) | $ | (78,191 | ) | $ | (1,124,285 | ) | $ | (9,659 | ) | $ | (70,942 | ) | ||||||
Financing activities | $ | (5,030 | ) | $ | (10,095 | ) | $ | (81,599 | ) | $ | 1,168,448 | $ | (13,844 | ) | $ | (66,031 | ) | |||||||
Non-GAAP Financial Measures: | ||||||||||||||||||||||||
Adjusted EBITDA (3) | $ | 187,417 | $ | 212,312 | $ | 221,787 | $ | 170,456 | $ | 24,967 | $ | 186,131 | ||||||||||||
Adjusted EBITDA Margin (4) | 21.1 | % | 23.0 | % | 24.0 | % | 23.7 | % | 21.9 | % | 22.7 | % | ||||||||||||
Venue-level Data: | ||||||||||||||||||||||||
Number of venues (end of period): | ||||||||||||||||||||||||
Company-operated | 562 | 559 | 556 | 559 | NM | 522 | ||||||||||||||||||
Franchised | 192 | 188 | 176 | 172 | NM | 55 |
754 | 747 | 732 | 731 | NM | 577 | |||||||||||||||||||
Comparable venues (end of period) (2) | 531 | 529 | 489 | 485 | NM | 485 | ||||||||||||||||||
Comparable venue sales change (2) | (4.8 | )% | 2.8 | % | (0.4 | )% | NM | NM | 0.4 | % | ||||||||||||||
As of | As of | As of | As of | As of | As of | |||||||||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | December 28, 2014 | February 14, 2014 | December 29, 2013 | |||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||
Total assets | $ | 1,695,044 | $1,710,112 | $1,733,035 | $1,836,113 | NM | $ | 791,611 | ||||||||||||||||
Total debt (5) | 986,419 | 989,948 | 994,448 | 999,783 | NM | 382,879 | ||||||||||||||||||
Stockholders’ equity | 262,148 | 206,005 | 208,546 | 292,586 | NM | 160,768 | ||||||||||||||||||
Dividends declared | — | — | 70,000 | — | — | 17,372 |
(1) | We operate on a 52 or 53 week fiscal year ending on the Sunday nearest December 31. Fiscal year 2015 was 53 weeks in length, which resulted in our fourth quarter consisting of 14 weeks. All other fiscal years presented were 52 weeks. |
(2) | We define “comparable venue sales” as sales for our domestic owned company-operated venues that have been open for more than 18 months as of the beginning of each respective fiscal year or for acquired venues we have operated for at least 12 months as of the beginning of each respective fiscal year. We define “comparable venue sales change” as the percentage change in comparable venue sales for each respective period. We believe comparable venue sales change to be a key performance indicator within our industry; it is a critical factor in evaluating our performance, as it is indicative of acceptance of our strategic initiatives and local economic and consumer trends. Our comparable venue sales for Fiscal 2015, and the Successor 2014 period exclude the Peter Piper Pizza venues that were acquired in October 2014 as we had operated them for less than 12 months at the beginning of each respective fiscal year. As a result of the 53 week fiscal year in 2015, our 2016 fiscal year began one calendar week later than our 2015 fiscal year. In order to provide useful information and to better analyze our business, we provided comparable venue sales for our 2016 fiscal year presented on both a fiscal week basis and calendar week basis. Comparable venue sales change for 2016 on a calendar week basis compared the results for the period from January 4, 2016 through January 1, 2017 (weeks 1 through 52 of our 2016 fiscal year) to the results for the period from January 5, 2015 through January 3, 2016 (weeks 2 through 53 of our 2015 fiscal year). We believe comparable venue sales change calculated on a same calendar week basis is more indicative of the operating trends in our business. However, we also recognize that comparable venue sales change calculated on a fiscal week basis is a useful measure when analyzing year-over-year changes in our financial statements. The comparable venue sales change in the table above is presented on a calendar week basis, excluding the additional week of operations in 2015. On a fiscal basis, excluding the additional week of operations in 2015, comparable venue sales change would have been 3.0% in 2016. |
(3) | For our definition of Adjusted EBITDA, see the “Non-GAAP Financial Measures” section below. |
(4) | Adjusted EBITDA Margin is defined by us as Adjusted EBITDA as a percentage of Total revenues. |
(5) | Total debt includes our senior notes, our outstanding borrowings under the term loan facility and the revolving credit facility, net of deferred financing costs, capital leases, and the Predecessor Facility. |
(6) | Results for the Successor 2014 period include the revenues and expenses for Peter Piper Pizza for the 73 day period from October 17, 2014 through December 28, 2014. |
(7) | As a result of the Merger, we applied the acquisition method of accounting and established a new basis of accounting on February 15, 2014. Periods presented prior to and including February 14, 2014 represent the operations of the predecessor company (“Predecessor”) and the periods presented after February 14, 2014 represent the operations of the successor company (“Successor”). The financial results for the period December 29, 2013 through February 14, 2014 represent the 47 day Predecessor period. |
Fiscal 2017 | Fiscal 2016 | Fiscal 2015 | For the 317 Day Period Ended December 28, 2014 | For the 47 Day Period Ended February 14, 2014 | Fiscal 2013 | |||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | |||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Total revenues | $ | 886,771 | $ | 923,653 | $ | 922,589 | $ | 718,581 | $ | 114,243 | $ | 821,721 | ||||||||||||
Net income (loss) as reported | $ | 53,066 | $ | (3,667 | ) | $ | (12,510 | ) | $ | (62,088 | ) | $ | 704 | $ | 47,824 | |||||||||
Interest expense | 69,115 | 67,745 | 70,582 | 60,952 | 1,151 | 7,453 | ||||||||||||||||||
Income tax expense (benefit) | (74,291 | ) | (2,626 | ) | (2,941 | ) | (31,123 | ) | 1,018 | 28,194 | ||||||||||||||
Depreciation and amortization | 109,771 | 119,569 | 119,294 | 118,556 | 9,883 | 79,028 | ||||||||||||||||||
Non-cash impairments, gain or loss on disposal (1) | 9,241 | 10,070 | 8,934 | 9,841 | 294 | 6,360 | ||||||||||||||||||
Non-cash stock-based compensation (2) | 606 | 689 | 838 | 703 | 12,639 | 8,481 | ||||||||||||||||||
Rent expense book to cash (3) | 5,655 | 7,852 | 9,100 | 10,665 | (1,190 | ) | 714 | |||||||||||||||||
Franchise revenue, net cash received (4) | — | 113 | 1,217 | 2,585 | — | — | ||||||||||||||||||
Impact of purchase accounting (5) | 817 | 1,380 | 995 | 1,496 | — | — | ||||||||||||||||||
Venue pre-opening costs (6) | 904 | 1,591 | 792 | 1,166 | 131 | 2,057 | ||||||||||||||||||
One-time and unusual items (7) | 5,916 | 5,146 | 22,448 | 55,060 | (165 | ) | (40 | ) | ||||||||||||||||
Cost savings initiatives (8) | — | 62 | 2,187 | 2,643 | 502 | 6,060 | ||||||||||||||||||
Change in deferred amusement revenue (9) | 6,617 | 4,388 | 851 | — | — | — | ||||||||||||||||||
Adjusted EBITDA | $ | 187,417 | $ | 212,312 | $ | 221,787 | $ | 170,456 | $ | 24,967 | $ | 186,131 | ||||||||||||
Adjusted EBITDA Margin | 21.1 | % | 23.0 | % | 24.0 | % | 23.7 | % | 21.9 | % | 22.7 | % |
(1) | Relates primarily to (i) the impairment of Company-operated venues or impairments of long lived assets; (ii) gains or losses upon disposal of property or equipment; and (iii) inventory obsolescence charges outside of the ordinary course of business. |
(2) | Represents non-cash equity-based compensation expense. |
(3) | Represents (i) the removal of the non-cash portion of rent expense relating to the impact of straight-line rent and the amortization of cash incentives and allowances received from landlords, plus (ii) the actual cash received from landlords incentives and allowances in the period in which it was received. |
(4) | Represents the actual cash received for franchise fees received in the period for post-acquisition franchise development agreements, which are not recorded as revenue until the franchise venue is opened. |
(5) | Represents revenue related to unearned gift cards and unearned franchise fees that were removed in purchase accounting, and therefore were not recorded as revenue. |
(6) | 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. |
(7) | Represents non-recurring income and expenses primarily related to (i) accounting, investment banking, legal and other costs incurred in connection with the Merger, the sale leaseback transaction we completed on August 25, 2014 and the acquisition of Peter Piper Pizza (“PPP Acquisition”); (ii) severance expense, executive termination benefits and executive search fees; (iii) one-time integration costs, including consulting fees, accounting service fees, IT system integration costs and travel expenses incurred in connection with the integration of Peter Piper Pizza; (iv) legal fees, claims and settlements related to litigation in respect of the Merger; (v) legal claims and settlements related to employee class action lawsuits and settlements; (vi) one-time costs incurred in connection with the 2015 relocation of our corporate offices; (vii) cash landlord incentives received in 2015 on our new corporate offices; (viii) sales and use tax refunds that relate to prior periods; (ix) professional fees incurred in connection with one-time strategic corporate and tax initiatives, such as accounting and consulting service fees incurred to obtain sale and use tax refunds from prior periods, to enhance transfer pricing and implement Play Pass, initial fees incurred in connection with the overseas outsourcing of our accounts payable and payroll functions, and costs related to the transition in 2015 to new advertising agencies whereby we were under contract for duplicate advertising costs for a period of time; (x) removing the initial recognition of gift card breakage revenue related to prior years on unredeemed Chuck E. Cheese's gift card balances sold by third parties; (xi) removing insurance recoveries relating to prior year business interruption losses at certain venues, primarily relating to natural disasters, fires and floods; (xii) removing proceeds received related to the early termination of a venue lease by the property landlord pursuant to a decision by the landlord to demolish the shopping mall where the venue was located; and (xiii) one-time training and travel-related costs incurred in connection with training venue employees in connection with the implementation of our Play Pass initiative and non-recoverable account balances written off outside of the ordinary course of business. |
(8) | Relates to estimated net cost savings primarily from (i) cost savings related to our change from public to private ownership and the elimination of public equity securities upon the closing of the Merger, including reductions in investor relations activities, directors fees, and certain legal and other securities and filing costs; (ii) estimated full-year effect of venue-level cost savings initiatives implemented in 2013, such as the installation of |
(9) | Represents the change in the deferred revenue liability relating to unused credits on Play Pass cards through December 31, 2017. The deferred revenue liability built up due to the Play Pass implementation as the shift in the business model from tokens to game play credits impacted revenue recognition. Since Play Pass is now fully deployed in all of our domestic Company-operated venues, the liability should fluctuate in proportion to entertainment and merchandise revenue in future periods. |
• | Presentation of Operating Results; |
• | Executive Summary; |
• | Key Measures of Our Financial Performance and Key Non-GAAP Measure; |
• | 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 31, 2017 | January 1, 2017 | January 3, 2016 | |||||||
Number of Company-operated venues: | |||||||||
Beginning of period | 559 | 556 | 559 | ||||||
New (1) | 6 | 6 | 5 | ||||||
Acquired from franchisee | 2 | — | — | ||||||
Closed (1) | (5 | ) | (3 | ) | (8 | ) | |||
End of period | 562 | 559 | 556 | ||||||
Number of franchised venues: | |||||||||
Beginning of period | 188 | 176 | 172 | ||||||
New (2) | 8 | 16 | 12 | ||||||
Acquired from franchisee | (2 | ) | — | — | |||||
Closed (2) | (2 | ) | (4 | ) | (8 | ) | |||
End of period | 192 | 188 | 176 | ||||||
Total number of venues: | |||||||||
Beginning of period | 747 | 732 | 731 | ||||||
New (3) | 14 | 22 | 17 | ||||||
Acquired from franchisee | — | — | — | ||||||
Closed (3) | (7 | ) | (7 | ) | (16 | ) | |||
End of period | 754 | 747 | 732 |
(1) | The number of new and closed Company-operated venues during 2015 included two venues that were relocated. |
(2) | The number of new and closed franchise venues during 2015 included two venues that were relocated. |
(3) | The number of new and closed venues during 2015 included four venues that were relocated. |
Fiscal Year Ended | ||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | ||||||||||
(in thousands, except venue number amounts) | ||||||||||||
Average sales per comparable venue (1) (2) | $ | 1,561 | $ | 1,636 | $ | 1,563 | ||||||
Number of venues included in our comparable venue base (2) | 531 | 529 | 489 |
(1) | The information for the Fiscal year ended January 3, 2016 is presented on a 52 week basis. Including the 53rd week in Fiscal 2015, the average annual sales per comparable venue in thousands was $1,607. |
(2) | Average annual sales per comparable venue and the comparable venue base for the twelve months ended January 3, 2016 exclude the Peter Piper Pizza branded venues that were acquired in October 2014 as we had operated them for less than 12 months as of the beginning of Fiscal 2015. |
• | Cost of food and beverage includes all direct costs of food, beverages and costs of related paper and birthday supplies, less rebates from suppliers; |
• | Cost of entertainment and merchandise includes all direct costs of prizes provided and merchandise sold to our customers, as well as the cost of tickets dispensed to customers; |
• | Labor expenses consist of salaries and wages, bonuses, related payroll taxes and benefits for venue personnel; |
• | Rent expense includes lease costs for Company-operated venues, excluding common occupancy costs (e.g., common area maintenance (“CAM”) charges and property taxes); and |
• | Other venue operating expenses primarily include utilities, repair and maintenance costs, liability and property insurance, CAM charges, property taxes, credit card processing fees, licenses, preopening expenses, venue asset disposal gains and losses and all other costs directly related to the operation of a venue. |
Fiscal Year Ended | |||||||||||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 (1) | |||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||
Food and beverage sales | $ | 410,609 | 47.3 | % | $ | 415,059 | 45.8 | % | $ | 408,095 | 45.1 | % | |||||||||
Entertainment and merchandise sales | 458,279 | 52.7 | % | 490,255 | 54.2 | % | 497,015 | 54.9 | % | ||||||||||||
Total company venue sales | $ | 868,888 | 100.0 | % | $ | 905,314 | 100.0 | % | $ | 905,110 | 100.0 | % |
(1) | Company venue sales for Fiscal 2015 include the impact of an additional 53rd week of revenues. Excluding the 53rd week in 2015, total company venue sales were approximately $880.7 million. |
Fiscal Year Ended | |||||||||||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | |||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||
Total company venue sales (1) | $ | 868,888 | 98.0 | % | $ | 905,314 | 98.0 | % | $ | 905,110 | 98.1 | % | |||||||||
Franchise fees and royalties | 17,883 | 2.0 | % | 18,339 | 2.0 | % | 17,479 | 1.9 | % | ||||||||||||
Total revenues | 886,771 | 100.0 | % | 923,653 | 100.0 | % | 922,589 | 100.0 | % | ||||||||||||
Company venue operating costs (excluding Depreciation and amortization): | |||||||||||||||||||||
Cost of food and beverage (2) | 97,570 | 23.8 | % | 104,315 | 25.1 | % | 104,434 | 25.6 | % | ||||||||||||
Cost of entertainment and merchandise (3) | 29,948 | 6.5 | % | 32,014 | 6.5 | % | 31,519 | 6.3 | % | ||||||||||||
Total cost of food, beverage, entertainment and merchandise (4) | 127,518 | 14.7 | % | 136,329 | 15.1 | % | 135,953 | 15.0 | % | ||||||||||||
Labor expenses (4) | 248,061 | 28.5 | % | 251,426 | 27.8 | % | 250,584 | 27.7 | % | ||||||||||||
Rent expense (4) | 95,917 | 11.0 | % | 96,006 | 10.6 | % | 96,669 | 10.7 | % | ||||||||||||
Other venue operating expenses (4) | 149,462 | 17.2 | % | 148,869 | 16.4 | % | 143,078 | 15.8 | % | ||||||||||||
Total Company venue operating costs (4) | 620,958 | 71.5 | % | 632,630 | 69.9 | % | 626,284 | 69.2 | % | ||||||||||||
Other costs and expenses: | |||||||||||||||||||||
Advertising expense | 48,379 | 5.5 | % | 46,142 | 5.0 | % | 47,146 | 5.1 | % | ||||||||||||
General and administrative expenses | 56,482 | 6.4 | % | 61,011 | 6.6 | % | 61,945 | 6.7 | % | ||||||||||||
Depreciation and amortization (4) | 109,771 | 12.4 | % | 119,569 | 12.9 | % | 119,294 | 12.9 | % | ||||||||||||
Transaction, severance and related litigation costs | 1,448 | 0.2 | % | 1,299 | 0.1 | % | 11,914 | 1.3 | % | ||||||||||||
Asset impairments | 1,843 | 0.2 | % | 1,550 | 0.2 | % | 875 | 0.1 | % | ||||||||||||
Total operating costs and expenses | 838,881 | 94.6 | % | 862,201 | 93.3 | % | 867,458 | 94.0 | % | ||||||||||||
Operating income | 47,890 | 5.4 | % | 61,452 | 6.7 | % | 55,131 | 6.0 | % | ||||||||||||
Interest expense | 69,115 | 7.8 | % | 67,745 | 7.3 | % | 70,582 | 7.7 | % | ||||||||||||
Loss before income taxes | $ | (21,225 | ) | (2.4 | )% | $ | (6,293 | ) | (0.7 | )% | $ | (15,451 | ) | (1.7 | )% |
(1) | Company venue sales for Fiscal 2015 include the impact of an additional 53rd week of revenues. Excluding the 53rd week in 2015, total company venue sales were approximately $880.7 million. |
(2) | Percent amount expressed as a percentage of Food and beverage sales. |
(3) | Percent amount expressed as a percentage of Entertainment and merchandise sales. |
(4) | Percent amount expressed as a percentage of Company venue sales. |
(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. |
• | 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 are generally due within five to 30 days. |
Fiscal Year Ended | ||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | ||||||||||
(in thousands) | ||||||||||||
Net cash provided by operating activities | $ | 104,453 | $ | 118,687 | $ | 100,613 | ||||||
Net cash used in investing activities | (93,712 | ) | (98,439 | ) | (78,191 | ) | ||||||
Net cash used in financing activities | (5,030 | ) | (10,095 | ) | (81,599 | ) | ||||||
Effect of foreign exchange rate changes on cash | 466 | 216 | (1,163 | ) | ||||||||
Change in cash and cash equivalents | $ | 6,177 | $ | 10,369 | $ | (60,340 | ) | |||||
Interest paid | $ | 64,675 | $ | 64,614 | $ | 73,255 | ||||||
Income taxes paid, net | $ | 7,136 | $ | 10,728 | $ | 13,346 |
December 31, 2017 | January 1, 2017 | |||||||
(in thousands) | ||||||||
Cash and cash equivalents | $ | 67,200 | $ | 61,023 | ||||
Restricted cash | $ | 112 | $ | 268 | ||||
Term loan facility | $ | 731,500 | $ | 739,100 | ||||
Senior notes | $ | 255,000 | $ | 255,000 | ||||
Note payable | $ | — | $ | 13 | ||||
Net availability on undrawn revolving credit facility | $ | 140,100 | $ | 140,100 |
Fiscal Year Ended | ||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | ||||||||||
Growth capital spend (1) | $ | 51,079 | $ | 55,200 | $ | 35,482 | ||||||
Maintenance capital spend (2) | 35,678 | 33,838 | 29,267 | |||||||||
IT capital spend | 7,309 | 10,058 | 13,087 | |||||||||
Total Capital Spend | $ | 94,066 | $ | 99,096 | $ | 77,836 |
(1) | Growth capital spend includes our Play Pass initiative, major remodels, venue expansions, major attractions and new venue development, including relocations and franchise acquisitions. |
(2) | Maintenance capital spend includes game enhancements, general venue capital expenditures and corporate capital expenditures. |
Payments Due by Period | |||||||||||||||||||
Total | Less than 1 Year | 1-3 Years | 4-5 Years | More than 5 Years | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating leases (1) | $ | 932,414 | $ | 91,186 | $ | 175,833 | $ | 169,462 | $ | 495,933 | |||||||||
Capital leases | 26,198 | 2,188 | 4,401 | 4,387 | 15,222 | ||||||||||||||
Purchase obligations (2) | 57,253 | 43,304 | 9,059 | 4,890 | — | ||||||||||||||
Secured credit facilities | 731,500 | 7,600 | 15,200 | 708,700 | — | ||||||||||||||
Senior notes | 255,000 | — | — | 255,000 | — | ||||||||||||||
Interest obligations (3) | 202,653 | 53,851 | 113,810 | 34,992 | — | ||||||||||||||
Sale leaseback obligations | 270,829 | 13,812 | 28,443 | 29,588 | 198,986 | ||||||||||||||
Uncertain tax positions (4) | 1,360 | 1,360 | — | — | — | ||||||||||||||
$ | 2,477,207 | $ | 213,301 | $ | 346,746 | $ | 1,207,019 | $ | 710,141 |
(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) | 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. |
(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 uses interest rates in effect during Fiscal 2017 and assumes we will not have any amounts drawn on our revolving credit facility. |
(4) | Due to the uncertainty related to the settlement of uncertain tax positions, only the current portion of the liability for unrecognized tax benefits (including accrued interest and penalties) has been provided in the table above. The non-current portion of $3.5 million is excluded from the table above. |
December 31, 2017 | January 1, 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 67,200 | $ | 61,023 | ||||
Restricted cash | 112 | 268 | ||||||
Accounts receivable | 20,061 | 19,927 | ||||||
Income taxes receivable | 10,960 | 568 | ||||||
Inventories | 22,000 | 21,677 | ||||||
Prepaid expenses | 20,398 | 21,498 | ||||||
Total current assets | 140,731 | 124,961 | ||||||
Property and equipment, net | 570,021 | 592,886 | ||||||
Goodwill | 484,438 | 483,876 | ||||||
Intangible assets, net | 480,377 | 484,083 | ||||||
Other noncurrent assets | 19,477 | 24,306 | ||||||
Total assets | $ | 1,695,044 | $ | 1,710,112 | ||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||
Current liabilities: | ||||||||
Bank indebtedness and other long-term debt, current portion | $ | 7,600 | $ | 7,613 | ||||
Capital lease obligations, current portion | 596 | 467 | ||||||
Accounts payable | 31,374 | 33,202 | ||||||
Accrued expenses | 36,616 | 40,098 | ||||||
Unearned revenues | 21,050 | 16,381 | ||||||
Accrued interest | 8,277 | 8,155 | ||||||
Other current liabilities | 4,776 | 4,275 | ||||||
Total current liabilities | 110,289 | 110,191 | ||||||
Capital lease obligations, less current portion | 13,010 | 13,602 | ||||||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | 965,213 | 968,266 | ||||||
Deferred tax liability | 114,186 | 186,290 | ||||||
Accrued insurance | 8,311 | 9,183 | ||||||
Other noncurrent liabilities | 221,887 | 216,575 | ||||||
Total liabilities | 1,432,896 | 1,504,107 | ||||||
Stockholder’s equity: | ||||||||
Common stock, $0.01 par value; authorized 1,000 shares; 200 shares issued as of December 31, 2017 and January 1, 2017 | — | — | ||||||
Capital in excess of par value | 359,233 | 357,166 | ||||||
Accumulated deficit | (95,199 | ) | (148,265 | ) | ||||
Accumulated other comprehensive loss | (1,886 | ) | (2,896 | ) | ||||
Total stockholder’s equity | 262,148 | 206,005 | ||||||
Total liabilities and stockholder’s equity | $ | 1,695,044 | $ | 1,710,112 |
Fiscal Year Ended | |||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | |||||||||
REVENUES: | |||||||||||
Food and beverage sales | $ | 410,609 | $ | 415,059 | $ | 408,095 | |||||
Entertainment and merchandise sales | 458,279 | 490,255 | 497,015 | ||||||||
Total company venue sales | 868,888 | 905,314 | 905,110 | ||||||||
Franchise fees and royalties | 17,883 | 18,339 | 17,479 | ||||||||
Total revenues | 886,771 | 923,653 | 922,589 | ||||||||
OPERATING COSTS AND EXPENSES: | |||||||||||
Company venue operating costs (excluding Depreciation and amortization): | |||||||||||
Cost of food and beverage | 97,570 | 104,315 | 104,434 | ||||||||
Cost of entertainment and merchandise | 29,948 | 32,014 | 31,519 | ||||||||
Total cost of food, beverage, entertainment and merchandise | 127,518 | 136,329 | 135,953 | ||||||||
Labor expenses | 248,061 | 251,426 | 250,584 | ||||||||
Rent expense | 95,917 | 96,006 | 96,669 | ||||||||
Other venue operating expenses | 149,462 | 148,869 | 143,078 | ||||||||
Total company venue operating costs | 620,958 | 632,630 | 626,284 | ||||||||
Other costs and expenses: | |||||||||||
Advertising expense | 48,379 | 46,142 | 47,146 | ||||||||
General and administrative expenses | 56,482 | 61,011 | 61,945 | ||||||||
Depreciation and amortization | 109,771 | 119,569 | 119,294 | ||||||||
Transaction, severance and related litigation costs | 1,448 | 1,299 | 11,914 | ||||||||
Asset impairments | 1,843 | 1,550 | 875 | ||||||||
Total operating costs and expenses | 838,881 | 862,201 | 867,458 | ||||||||
Operating income | 47,890 | 61,452 | 55,131 | ||||||||
Interest expense | 69,115 | 67,745 | 70,582 | ||||||||
Loss before income taxes | (21,225 | ) | (6,293 | ) | (15,451 | ) | |||||
Income tax benefit | (74,291 | ) | (2,626 | ) | (2,941 | ) | |||||
Net income (loss) | $ | 53,066 | $ | (3,667 | ) | $ | (12,510 | ) |
Fiscal Year Ended | ||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | ||||||||||
Net income (loss) | $ | 53,066 | $ | (3,667 | ) | $ | (12,510 | ) | ||||
Components of other comprehensive income (loss), net of tax: | ||||||||||||
Foreign currency translation adjustments | 1,010 | 420 | (2,403 | ) | ||||||||
Comprehensive income (loss) | $ | 54,076 | $ | (3,247 | ) | $ | (14,913 | ) |
Common Stock | Capital In Excess of Par Value | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||
Shares | Amount | Total | ||||||||||||||||||||
(in thousands, except share information) | ||||||||||||||||||||||
Balance at December 28, 2014 | 200 | $ | — | $ | 355,587 | $ | (62,088 | ) | $ | (913 | ) | $ | 292,586 | |||||||||
Net loss | — | — | — | (12,510 | ) | — | (12,510 | ) | ||||||||||||||
Other comprehensive loss | — | — | — | — | (2,403 | ) | (2,403 | ) | ||||||||||||||
Stock-based compensation costs | — | — | 855 | — | — | 855 | ||||||||||||||||
Tax benefit from restricted stock, net | — | — | 18 | — | — | 18 | ||||||||||||||||
Dividends paid | — | — | — | (70,000 | ) | — | (70,000 | ) | ||||||||||||||
Balance at January 3, 2016 | 200 | $ | — | $ | 356,460 | $ | (144,598 | ) | $ | (3,316 | ) | $ | 208,546 | |||||||||
Net loss | — | — | — | (3,667 | ) | — | (3,667 | ) | ||||||||||||||
Other comprehensive income | — | — | — | — | 420 | 420 | ||||||||||||||||
Stock-based compensation costs | — | — | 702 | — | — | 702 | ||||||||||||||||
Tax benefit from restricted stock, net | — | — | 4 | — | — | 4 | ||||||||||||||||
Balance at January 1, 2017 | 200 | $ | — | $ | 357,166 | $ | (148,265 | ) | $ | (2,896 | ) | $ | 206,005 | |||||||||
Net income | — | — | — | 53,066 | — | 53,066 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 1,010 | 1,010 | ||||||||||||||||
Stock-based compensation costs | — | $ | — | $ | 620 | $ | — | $ | — | $ | 620 | |||||||||||
Return of capital | — | $ | — | $ | 1,447 | $ | — | $ | — | $ | 1,447 | |||||||||||
Balance at December 31, 2017 | 200 | $ | — | $ | 359,234 | $ | (95,199 | ) | $ | (1,886 | ) | $ | 262,149 |
Fiscal Year Ended | |||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | 53,066 | $ | (3,667 | ) | $ | (12,510 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 109,771 | 119,569 | 119,294 | ||||||||
Deferred income taxes | (71,875 | ) | (15,521 | ) | (16,748 | ) | |||||
Stock-based compensation expense | 606 | 689 | 838 | ||||||||
Amortization of lease-related liabilities | (632 | ) | (448 | ) | 87 | ||||||
Amortization of original issue discount and deferred financing costs | 4,546 | 4,546 | 4,634 | ||||||||
Loss on asset disposals, net | 7,398 | 8,520 | 7,729 | ||||||||
Asset impairments | 1,843 | 1,550 | 875 | ||||||||
Non-cash rent expenses | 4,884 | 6,873 | 8,218 | ||||||||
Other adjustments | 322 | (70 | ) | (951 | ) | ||||||
Changes in operating assets and liabilities: | |||||||||||
Restricted cash | 156 | (268 | ) | — | |||||||
Accounts receivable | (809 | ) | 2,657 | (4,478 | ) | ||||||
Inventories | (3,964 | ) | (3,413 | ) | (2,012 | ) | |||||
Prepaid expenses | 3,173 | (4,012 | ) | 57 | |||||||
Accounts payable | 3,110 | (7,601 | ) | (2,948 | ) | ||||||
Accrued expenses | (4,744 | ) | 1,733 | 659 | |||||||
Unearned revenues | 5,647 | 5,167 | 1,339 | ||||||||
Accrued interest | (70 | ) | (1,454 | ) | (7,175 | ) | |||||
Income taxes (receivable) payable | (9,554 | ) | 2,169 | 451 | |||||||
Deferred landlord contributions | 1,579 | 1,668 | 3,254 | ||||||||
Net cash provided by operating activities | 104,453 | 118,687 | 100,613 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Acquisition of Peter Piper Pizza | — | — | (663 | ) | |||||||
Purchases of property and equipment | (90,958 | ) | (88,680 | ) | (73,034 | ) | |||||
Development of internal use software | (3,243 | ) | (10,455 | ) | (4,802 | ) | |||||
Proceeds from sale of property and equipment | 489 | 696 | 308 | ||||||||
Net cash used in investing activities | (93,712 | ) | (98,439 | ) | (78,191 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Repayments on senior term loan | (7,600 | ) | (7,600 | ) | (9,500 | ) | |||||
Repayments on note payable | (13 | ) | (50 | ) | (49 | ) | |||||
Proceeds from sale leaseback transaction | 4,073 | — | — | ||||||||
Payments on capital lease obligations | (467 | ) | (421 | ) | (405 | ) | |||||
Payments on sale leaseback obligations | (2,470 | ) | (2,028 | ) | (1,663 | ) | |||||
Dividends paid | — | — | (70,000 | ) | |||||||
Excess tax benefit realized from stock-based compensation | — | 4 | 18 | ||||||||
Equity contribution | 1,447 | — | — | ||||||||
Net cash used in financing activities | (5,030 | ) | (10,095 | ) | (81,599 | ) | |||||
Effect of foreign exchange rate changes on cash | 466 | 216 | (1,163 | ) | |||||||
Change in cash and cash equivalents | 6,177 | 10,369 | (60,340 | ) | |||||||
Cash and cash equivalents at beginning of period | 61,023 | 50,654 | 110,994 | ||||||||
Cash and cash equivalents at end of period | $ | 67,200 | $ | 61,023 | $ | 50,654 | |||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | |||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
Interest paid | $ | 64,675 | $ | 64,614 | $ | 73,255 | |||||
Income taxes paid, net | $ | 7,136 | $ | 10,728 | $ | 13,346 | |||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
Accrued construction costs | $ | 1,007 | $ | 1,651 | $ | 1,270 |
Buildings | 40 years |
Game and ride equipment | 4 to 12 years |
Non-technical play equipment | 15 to 20 years |
Furniture, fixtures and other equipment | 4 to 20 years |
Level 1 – | inputs are quoted prices available for identical assets or liabilities in active markets. |
Level 2 – | inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; or other inputs that are observable or can be corroborated by observable market data. |
Level 3 – | inputs are unobservable and reflect our own assumptions. |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Trade receivables | $ | 8,863 | $ | 7,963 | |||
Vendor rebates | 6,525 | 7,504 | |||||
Other accounts receivable | 4,673 | 4,460 | |||||
Total Accounts receivable | $ | 20,061 | $ | 19,927 |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Food and beverage | $ | 5,440 | $ | 5,347 | |||
Entertainment and merchandise | 16,560 | 16,330 | |||||
Inventories | $ | 22,000 | $ | 21,677 |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Land | $ | 50,135 | $ | 50,135 | |||
Buildings | 56,415 | 54,808 | |||||
Leasehold improvements | 453,167 | 435,691 | |||||
Game and ride equipment | 250,139 | 212,049 | |||||
Furniture, fixtures and other equipment | 150,505 | 134,216 | |||||
Buildings leased under capital leases | 15,067 | 15,062 | |||||
975,428 | 901,961 | ||||||
Less accumulated depreciation and amortization | (414,245 | ) | (328,369 | ) | |||
Net property and equipment in service | 561,183 | 573,592 | |||||
Construction in progress | 8,838 | 19,294 | |||||
Property and equipment, net | $ | 570,021 | $ | 592,886 |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Balance at beginning of period | $ | 483,876 | $ | 483,876 | |||
Goodwill assigned in acquisition of franchisee (1) | 562 | — | |||||
Balance at end of period | $ | 484,438 | $ | 483,876 |
(1) | Represents goodwill related to two franchise stores the Company acquired in the second quarter of 2017. The acquisition did not have a significant impact on our Consolidated Balance Sheet as of December 31, 2017 or on our Consolidated Statements of Earnings for Fiscal 2017. |
December 31, 2017 | January 1, 2017 | ||||||||||||||||||||||||
Weighted Average Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Chuck E. Cheese's tradename | Indefinite | $ | 400,000 | $ | — | $ | 400,000 | $ | 400,000 | $ | — | $ | 400,000 | ||||||||||||
Peter Piper Pizza tradename | Indefinite | 26,700 | — | 26,700 | 26,700 | — | 26,700 | ||||||||||||||||||
Favorable lease agreements (1) | 10 | 14,880 | (7,306 | ) | 7,574 | 14,880 | (5,649 | ) | 9,231 | ||||||||||||||||
Franchise agreements | 25 | 53,300 | (7,197 | ) | 46,103 | 53,300 | (5,148 | ) | 48,152 | ||||||||||||||||
$ | 494,880 | $ | (14,503 | ) | $ | 480,377 | $ | 494,880 | $ | (10,797 | ) | $ | 484,083 |
(1) | In connection with the Merger, as defined in Note 17 “Consolidating Guarantor Financial Information”, and the acquisition of Peter Piper Pizza (“PPP”) in October 2014 (the “PPP Acquisition”), we also recorded unfavorable lease liabilities of $10.2 million and $3.9 million, respectively, which are included in “Other current liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets. Such amounts are being amortized over a weighted average life of 10 years, and are included in “Rent expense” in our Consolidated Statements of Earnings. |
Favorable Lease Agreements | Franchise Agreements | |||||||
Fiscal 2018 | $ | 1,246 | $ | 2,049 | ||||
Fiscal 2019 | 1,102 | 2,049 | ||||||
Fiscal 2020 | 1,050 | 2,088 | ||||||
Fiscal 2021 | 847 | 2,049 | ||||||
Fiscal 2022 | 754 | 2,049 | ||||||
Thereafter | 2,575 | 35,819 | ||||||
$7,574 | $46,103 |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Trade and other amounts payable | $ | 20,492 | $ | 24,615 | |||
Book overdraft | 10,882 | 8,587 | |||||
Accounts Payable | $ | 31,374 | $ | 33,202 |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Current: | |||||||
Salaries and wages | $ | 11,366 | $ | 15,188 | |||
Insurance | 6,614 | 6,629 | |||||
Taxes, other than income taxes | 13,151 | 12,944 | |||||
Other accrued operating expenses | 5,485 | 5,337 | |||||
Accrued expenses | $ | 36,616 | $ | 40,098 | |||
Noncurrent: | |||||||
Insurance | $ | 8,311 | $ | 9,183 |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Term loan facility | $ | 731,500 | $ | 739,100 | |||
Senior notes | 255,000 | 255,000 | |||||
Note payable | — | 13 | |||||
Total debt outstanding | 986,500 | 994,113 | |||||
Less: | |||||||
Unamortized original issue discount | (1,694 | ) | (2,235 | ) | |||
Deferred financing costs, net | (11,993 | ) | (15,999 | ) | |||
Current portion | (7,600 | ) | (7,613 | ) | |||
Bank indebtedness and other long-term debt, less current portion | $ | 965,213 | $ | 968,266 |
One year or less | $ | 7,600 | |
Two years | 7,600 | ||
Three years | 7,600 | ||
Four years | 708,700 | ||
Five years | 255,000 | ||
986,500 | |||
Less: debt financing costs, net | (11,993 | ) | |
Less: unamortized discount | (1,694 | ) | |
$ | 972,813 |
Fiscal Year Ended | |||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | |||||||||
(in thousands) | |||||||||||
Term loan facility (1) | $ | 31,549 | $ | 30,987 | $ | 31,760 | |||||
Senior notes | 20,330 | 19,774 | 21,023 | ||||||||
Capital lease obligations | 1,695 | 1,749 | 1,791 | ||||||||
Sale leaseback obligations | 10,585 | 10,714 | 11,096 | ||||||||
Amortization of debt issuance costs | 4,005 | 4,005 | 4,083 | ||||||||
Other | 951 | 516 | 829 | ||||||||
Total interest expense | $ | 69,115 | $ | 67,745 | $ | 70,582 |
December 31, 2017 | January 1, 2017 | |||||||||||||||
Carrying Amount (1) | Estimated Fair Value | Carrying Amount (1) | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Financial Liabilities: | ||||||||||||||||
Bank indebtedness and other long-term debt: | ||||||||||||||||
Current portion | $ | 7,600 | $ | 7,220 | $ | 7,613 | $ | 7,623 | ||||||||
Long-term portion | 977,206 | 937,662 | 984,265 | 993,311 | ||||||||||||
Bank indebtedness and other long-term debt: | $ | 984,806 | $ | 944,882 | $ | 991,878 | $ | 1,000,934 |
December 31, 2017 | January 1, 2017 | |||||||
(in thousands) | ||||||||
Sale leaseback obligations, less current portion (1) | $ | 177,933 | $ | 176,831 | ||||
Deferred rent liability | 27,951 | 21,784 | ||||||
Deferred landlord contributions | 6,282 | 5,702 | ||||||
Long-term portion of unfavorable leases | 5,453 | 7,308 | ||||||
Other | 4,268 | 4,950 | ||||||
Total other noncurrent liabilities | $ | 221,887 | $ | 216,575 |
(1) | See Note 11 “Sale Leaseback Transaction” for further discussion on our sale leaseback obligations. |
Capital | Operating | ||||||
Fiscal Years | (in thousands) | ||||||
2018 | $ | 2,188 | $ | 91,186 | |||
2019 | 2,185 | 88,751 | |||||
2020 | 2,216 | 87,082 | |||||
2021 | 2,203 | 85,465 | |||||
2022 | 2,184 | 83,997 | |||||
Thereafter | 15,222 | 495,933 | |||||
Future minimum lease payments | 26,198 | 932,414 | |||||
Less amounts representing interest | (12,592 | ) | |||||
Present value of future minimum lease payments | 13,606 | ||||||
Less current portion | (596 | ) | |||||
Capital lease obligations, net of current portion | $ | 13,010 |
Fiscal Year | |||||||||||
2017 | 2016 | 2015 | |||||||||
(in thousands) | |||||||||||
Minimum rentals | $ | 96,927 | $ | 96,953 | $ | 98,023 | |||||
Contingent rentals | 156 | 217 | 338 | ||||||||
$ | 97,083 | $ | 97,170 | $ | 98,361 |
Fiscal Year | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
United States | $ | (25,667 | ) | $ | (11,002 | ) | $ | (18,787 | ) | |||
Foreign (including U.S. Possessions) | 4,442 | 4,709 | 3,336 | |||||||||
Income (loss) before income taxes | $ | (21,225 | ) | $ | (6,293 | ) | $ | (15,451 | ) |
Fiscal Year | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Current tax expense (benefit): | ||||||||||||
Federal | $ | (2,668 | ) | $ | 8,008 | $ | 10,726 | |||||
State | (708 | ) | 3,879 | 1,825 | ||||||||
Foreign | 960 | 1,008 | 1,256 | |||||||||
(2,416 | ) | 12,895 | 13,807 | |||||||||
Deferred tax expense (benefit): | ||||||||||||
Federal | (72,829 | ) | (11,848 | ) | (14,022 | ) | ||||||
State | (137 | ) | (3,274 | ) | (2,203 | ) | ||||||
Foreign | 1,091 | (399 | ) | (523 | ) | |||||||
(71,875 | ) | (15,521 | ) | (16,748 | ) | |||||||
Income tax expense (benefit) | $ | (74,291 | ) | $ | (2,626 | ) | $ | (2,941 | ) |
Fiscal Year | ||||||||
2017 | 2016 | 2015 | ||||||
Federal statutory rate | (35.0 | )% | (35.0 | )% | (35.0 | )% | ||
State income taxes, net of federal benefit | (4.5 | )% | 2.5 | % | 0.2 | % | ||
Federal income tax credits, net | (1.2 | )% | (21.8 | )% | (7.6 | )% | ||
Merger and litigation related costs | 1.6 | % | 5.8 | % | 25.0 | % | ||
Canadian tax rate difference | 0.4 | % | 2.4 | % | 1.0 | % | ||
Canadian nondeductible interest | 0.7 | % | 1.8 | % | 0.6 | % | ||
Canadian deferred tax valuation adjustment | 5.7 | % | — | % | — | % | ||
Canadian tax reorganization | (7.6 | )% | — | % | — | % | ||
State tax credit, valuation adjustment | 2.0 | % | 2.8 | % | (1.3 | )% | ||
Other | 1.9 | % | (0.2 | )% | (1.9 | )% | ||
Effective tax rate (before impact of Tax Cuts and Jobs Act of 2017 (1)) | (36.0 | )% | (41.7 | )% | (19.0 | )% | ||
Adjustment related to the Tax Cuts and Jobs Act of 2017 (1) | (314.0 | )% | — | % | — | % | ||
Adjusted effective tax rate | (350.0 | )% | (41.7 | )% | (19.0 | )% |
December 31, 2017 | January 1, 2017 | ||||||
(in thousands) | |||||||
Deferred tax assets: | |||||||
Accrued compensation | $ | 1,231 | $ | 3,580 | |||
Unearned revenue | 979 | 1,723 | |||||
Deferred rent | 6,914 | 8,148 | |||||
Stock-based compensation | 639 | 746 | |||||
Accrued insurance and employee benefit plans | 3,516 | 5,542 | |||||
Unrecognized tax benefits (1) | 452 | 1,072 | |||||
NOL and other carryforwards | 3,211 | 3,358 | |||||
Loan costs | 577 | 1,170 | |||||
Other | 552 | 914 | |||||
Gross deferred tax assets | 18,071 | 26,253 | |||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | (9,492 | ) | (24,717 | ) | |||
Prepaid assets | (672 | ) | (655 | ) | |||
Intangibles | (117,717 | ) | (180,623 | ) | |||
Favorable/Unfavorable Leases | (65 | ) | (26 | ) | |||
Internal use software and other | (4,311 | ) | (6,522 | ) | |||
Gross deferred tax liabilities | (132,257 | ) | (212,543 | ) | |||
Net deferred tax liability | $ | (114,186 | ) | $ | (186,290 | ) |
(1) | Amount represents the value of future tax benefits that would result if the liabilities for uncertain state tax positions and accrued interest related to uncertain tax positions are settled. |
Fiscal Year | |||||||||||
2017 | 2016 | 2015 | |||||||||
(in thousands) | |||||||||||
Balance at beginning of period | $ | 3,119 | $ | 3,288 | $ | 1,882 | |||||
Additions for tax positions taken in the current year | 1,677 | 74 | 214 | ||||||||
Increases for tax positions taken in prior years | 16 | 1,479 | 1,581 | ||||||||
Decreases for tax positions taken in prior years | (390 | ) | (964 | ) | (184 | ) | |||||
Settlement with tax authorities | (32 | ) | (558 | ) | 79 | ||||||
Expiration of statute of limitations | (537 | ) | (200 | ) | (284 | ) | |||||
Balance at end of period | $ | 3,853 | $ | 3,119 | $ | 3,288 |
Fiscal Year | |||||||||||
2017 | 2016 | 2015 | |||||||||
August 2017 | February 2017 | ||||||||||
Dividend yield | — | % | — | % | — | % | — | % | |||
Volatility for Tranche A | 35 | % | 34 | % | 30 | % | 30 | % | |||
Volatility for Tranches B and C | 34 | % | 33 | % | 30 | % | 30 | % | |||
Risk-free interest rate for Tranche A | 1.39 | % | 1.38 | % | 1.09 | % | 1.30 | % | |||
Risk-free interest rate for Tranches B and C | 1.28 | % | 1.16 | % | 0.99 | % | 1.30 | % | |||
Expected life - years | 1.7 | 2.2 | 3.6 | 3.7 |
Stock Options | Weighted Average Exercise Price (1) | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||
($ per share) | ($ in thousands) | |||||||
Outstanding stock options, January 1, 2017 | 2,400,914 | $8.74 | ||||||
Options Granted | 123,603 | $16.26 | ||||||
Options Forfeited | (175,229 | ) | $10.57 | |||||
Outstanding stock options, December 31, 2017 | 2,349,288 | $9.00 | 6.6 | $ | 13,006 | |||
Stock options expected to vest, December 31, 2017 | 1,745,042 | $9.14 | 6.6 | $ | 9,425 | |||
Exercisable stock options, December 31, 2017 | 410,354 | $8.36 | 6.3 | $ | 2,534 |
Fiscal Year | ||||||||||||
December 31, 2017 | January 1, 2017 | January 3, 2016 | ||||||||||
(in thousands) | ||||||||||||
Stock-based compensation costs | $ | 620 | $ | 702 | $ | 855 | ||||||
Portion capitalized as property and equipment (1) | (14 | ) | (13 | ) | (17 | ) | ||||||
Stock-based compensation expense recognized | $ | 606 | $ | 689 | $ | 838 | ||||||
Tax benefit recognized from stock-based compensation awards | $ | — | $ | 4 | $ | 18 |
CEC Entertainment, Inc. | ||||||||||||||||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||
As of December 31, 2017 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Issuer | Guarantor | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 59,948 | $ | 410 | $ | 6,842 | $ | — | $ | 67,200 | ||||||||||
Restricted cash | — | — | 112 | — | 112 | |||||||||||||||
Accounts receivable | 27,098 | 3,283 | 2,563 | (1,923 | ) | 31,021 | ||||||||||||||
Inventories | 17,104 | 4,614 | 282 | — | 22,000 | |||||||||||||||
Prepaid assets | 13,766 | 5,549 | 1,083 | — | 20,398 | |||||||||||||||
Total current assets | 117,916 | 13,856 | 10,882 | (1,923 | ) | 140,731 | ||||||||||||||
Property and equipment, net | 496,725 | 66,669 | 6,627 | — | 570,021 | |||||||||||||||
Goodwill | 433,024 | 51,414 | — | — | 484,438 | |||||||||||||||
Intangible assets, net | 16,764 | 463,613 | — | — | 480,377 | |||||||||||||||
Intercompany | 90,937 | 10,770 | — | (101,707 | ) | — | ||||||||||||||
Investment in subsidiaries | 462,873 | — | — | (462,873 | ) | — | ||||||||||||||
Other noncurrent assets | 7,913 | 11,359 | 205 | — | 19,477 | |||||||||||||||
Total assets | $ | 1,626,152 | $ | 617,681 | $ | 17,714 | $ | (566,503 | ) | $ | 1,695,044 | |||||||||
Current liabilities: | ||||||||||||||||||||
Bank indebtedness and other long-term debt, current portion | $ | 7,600 | $ | — | $ | — | $ | — | $ | 7,600 | ||||||||||
Capital lease obligations, current portion | 586 | — | 10 | — | 596 | |||||||||||||||
Accounts payable and accrued expenses | 58,014 | 35,134 | 4,169 | — | 97,317 | |||||||||||||||
Other current liabilities | 4,265 | 511 | — | — | 4,776 | |||||||||||||||
Total current liabilities | 70,465 | 35,645 | 4,179 | — | 110,289 | |||||||||||||||
Capital lease obligations, less current portion | 12,956 | — | 54 | — | 13,010 | |||||||||||||||
Bank indebtedness and other long-term debt, less current portion | 965,213 | — | — | — | 965,213 | |||||||||||||||
Deferred tax liability | 99,083 | 16,697 | (1,594 | ) | — | 114,186 | ||||||||||||||
Intercompany | — | 75,052 | 28,578 | (103,630 | ) | — | ||||||||||||||
Other noncurrent liabilities | 216,287 | 13,465 | 446 | — | 230,198 | |||||||||||||||
Total liabilities | 1,364,004 | 140,859 | 31,663 | (103,630 | ) | 1,432,896 | ||||||||||||||
Stockholder's equity: | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Capital in excess of par value | 359,233 | 466,114 | 3,241 | (469,355 | ) | 359,233 | ||||||||||||||
Retained earnings (deficit) | (95,199 | ) | 10,708 | (15,304 | ) | 4,596 | (95,199 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | (1,886 | ) | — | (1,886 | ) | 1,886 | (1,886 | ) | ||||||||||||
Total stockholder's equity | 262,148 | 476,822 | (13,949 | ) | (462,873 | ) | 262,148 | |||||||||||||
Total liabilities and stockholder's equity | $ | 1,626,152 | $ | 617,681 | $ | 17,714 | $ | (566,503 | ) | $ | 1,695,044 |
CEC Entertainment, Inc. | ||||||||||||||||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||
As of January 1, 2017 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Issuer | Guarantor | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 53,088 | $ | 1,158 | $ | 6,777 | $ | — | $ | 61,023 | ||||||||||
Restricted cash | — | — | 268 | — | 268 | |||||||||||||||
Accounts receivable | 16,922 | 3,220 | 2,455 | (2,102 | ) | 20,495 | ||||||||||||||
Inventories | 18,255 | 3,151 | 271 | — | 21,677 | |||||||||||||||
Prepaid assets | 14,294 | 6,077 | 1,127 | — | 21,498 | |||||||||||||||
Total current assets | 102,559 | 13,606 | 10,898 | (2,102 | ) | 124,961 | ||||||||||||||
Property and equipment, net | 538,195 | 47,906 | 6,785 | — | 592,886 | |||||||||||||||
Goodwill | 432,462 | 51,414 | — | — | 483,876 | |||||||||||||||
Intangible assets, net | 19,157 | 464,926 | — | — | 484,083 | |||||||||||||||
Intercompany | 127,107 | 317 | — | (127,424 | ) | — | ||||||||||||||
Investment in subsidiaries | 436,483 | — | — | (436,483 | ) | — | ||||||||||||||
Other noncurrent assets | 6,888 | 17,025 | 393 | — | 24,306 | |||||||||||||||
Total assets | $ | 1,662,851 | $ | 595,194 | $ | 18,076 | $ | (566,009 | ) | $ | 1,710,112 | |||||||||
Current liabilities: | ||||||||||||||||||||
Bank indebtedness and other long-term debt, current portion | $ | 7,600 | $ | 13 | $ | — | $ | — | $ | 7,613 | ||||||||||
Capital lease obligations, current portion | 460 | — | 7 | — | 467 | |||||||||||||||
Accounts payable and accrued expenses | 84,207 | 11,445 | 2,184 | — | 97,836 | |||||||||||||||
Other current liabilities | 3,764 | 511 | — | — | 4,275 | |||||||||||||||
Total current liabilities | 96,031 | 11,969 | 2,191 | — | 110,191 | |||||||||||||||
Capital lease obligations, less current portion | 13,542 | — | 60 | — | 13,602 | |||||||||||||||
Bank indebtedness and other long-term debt, less current portion | 968,266 | — | — | — | 968,266 | |||||||||||||||
Deferred tax liability | 166,064 | 21,234 | (1,008 | ) | — | 186,290 | ||||||||||||||
Intercompany | — | 106,131 | 23,395 | (129,526 | ) | — | ||||||||||||||
Other noncurrent liabilities | 212,943 | 12,484 | 331 | — | 225,758 | |||||||||||||||
Total liabilities | 1,456,846 | 151,818 | 24,969 | (129,526 | ) | 1,504,107 | ||||||||||||||
Stockholder's equity: | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Capital in excess of par value | 357,166 | 466,114 | 3,241 | (469,355 | ) | 357,166 | ||||||||||||||
Retained earnings (deficit) | (148,265 | ) | (22,738 | ) | (7,238 | ) | 29,976 | (148,265 | ) | |||||||||||
Accumulated other comprehensive income (loss) | (2,896 | ) | — | (2,896 | ) | 2,896 | (2,896 | ) | ||||||||||||
Total stockholder's equity | 206,005 | 443,376 | (6,893 | ) | (436,483 | ) | 206,005 | |||||||||||||
Total liabilities and stockholder's equity | $ | 1,662,851 | $ | 595,194 | $ | 18,076 | $ | (566,009 | ) | $ | 1,710,112 |
CEC Entertainment, Inc. | ||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss) | ||||||||||||||||||||
Fiscal Year 2017 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Issuer | Guarantor | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Food and beverage sales | $ | 351,374 | $ | 52,962 | $ | 6,273 | $ | — | $ | 410,609 | ||||||||||
Entertainment and merchandise sales | 406,930 | 41,036 | 10,313 | — | 458,279 | |||||||||||||||
Total company venue sales | 758,304 | 93,998 | 16,586 | — | 868,888 | |||||||||||||||
Franchise fees and royalties | 1,694 | 16,189 | — | 17,883 | ||||||||||||||||
International Association assessments and other fees | 1,684 | 37,743 | 34,366 | (73,793 | ) | — | ||||||||||||||
Total revenues | 761,682 | 147,930 | 50,952 | (73,793 | ) | 886,771 | ||||||||||||||
Operating Costs and Expenses: | ||||||||||||||||||||
Company venue operating costs (excluding Depreciation and amortization): | ||||||||||||||||||||
Cost of food and beverage | 81,420 | 14,137 | 2,013 | — | 97,570 | |||||||||||||||
Cost of entertainment and merchandise | 27,704 | 1,591 | 653 | — | 29,948 | |||||||||||||||
Total cost of food, beverage, entertainment and merchandise | 109,124 | 15,728 | 2,666 | — | 127,518 | |||||||||||||||
Labor expenses | 224,176 | 18,791 | 5,094 | — | 248,061 | |||||||||||||||
Rent expense | 87,342 | 6,375 | 2,200 | — | 95,917 | |||||||||||||||
Other venue operating expenses | 168,991 | 15,122 | 4,802 | (39,453 | ) | 149,462 | ||||||||||||||
Total company venue operating costs | 589,633 | 56,016 | 14,762 | (39,453 | ) | 620,958 | ||||||||||||||
Advertising expense | 35,514 | 5,437 | 41,768 | (34,340 | ) | 48,379 | ||||||||||||||
General and administrative expenses | 20,208 | 35,950 | 324 | — | 56,482 | |||||||||||||||
Depreciation and amortization | 97,789 | 9,900 | 2,082 | — | 109,771 | |||||||||||||||
Transaction, severance and related litigation costs | 974 | 474 | — | — | 1,448 | |||||||||||||||
Asset Impairment | 1,824 | 14 | 5 | — | 1,843 | |||||||||||||||
Total operating costs and expenses | 745,942 | 107,791 | 58,941 | (73,793 | ) | 838,881 | ||||||||||||||
Operating income (loss) | 15,740 | 40,139 | (7,989 | ) | — | 47,890 | ||||||||||||||
Equity in earnings (loss) in affiliates | 25,405 | — | — | (25,405 | ) | — | ||||||||||||||
Interest expense | 64,117 | 4,261 | 737 | — | 69,115 | |||||||||||||||
Income (loss) before income taxes | (22,972 | ) | 35,878 | (8,726 | ) | (25,405 | ) | (21,225 | ) | |||||||||||
Income tax expense (benefit) | (76,038 | ) | 2,407 | (660 | ) | — | (74,291 | ) | ||||||||||||
Net income (loss) | $ | 53,066 | $ | 33,471 | $ | (8,066 | ) | $ | (25,405 | ) | $ | 53,066 | ||||||||
Components of other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustments | 1,010 | — | 1,010 | (1,010 | ) | 1,010 | ||||||||||||||
Comprehensive income (loss) | $ | 54,076 | $ | 33,471 | $ | (7,056 | ) | $ | (26,415 | ) | $ | 54,076 |
CEC Entertainment, Inc. | ||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss) | ||||||||||||||||||||
Fiscal Year 2016 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Issuer | Guarantor | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Food and beverage sales | $ | 361,111 | $ | 48,178 | $ | 5,770 | $ | — | $ | 415,059 | ||||||||||
Entertainment and merchandise sales | 453,362 | 27,059 | 9,834 | — | 490,255 | |||||||||||||||
Total company venue sales | 814,473 | 75,237 | 15,604 | — | 905,314 | |||||||||||||||
Franchise fees and royalties | 2,011 | 16,328 | — | — | 18,339 | |||||||||||||||
International Association assessments and other fees | 1,308 | 36,861 | 36,250 | (74,419 | ) | — | ||||||||||||||
Total revenues | 817,792 | 128,426 | 51,854 | (74,419 | ) | 923,653 | ||||||||||||||
Operating Costs and Expenses: | ||||||||||||||||||||
Company venue operating costs (excluding Depreciation and amortization): | ||||||||||||||||||||
Cost of food and beverage | 89,373 | 12,835 | 2,107 | — | 104,315 | |||||||||||||||
Cost of entertainment and merchandise | 29,668 | 1,690 | 656 | — | 32,014 | |||||||||||||||
Total cost of food, beverage, entertainment and merchandise | 119,041 | 14,525 | 2,763 | — | 136,329 | |||||||||||||||
Labor expenses | 230,526 | 15,865 | 5,035 | — | 251,426 | |||||||||||||||
Rent expense | 88,557 | 5,234 | 2,215 | — | 96,006 | |||||||||||||||
Other venue operating expenses | 170,385 | 12,134 | 4,545 | (38,195 | ) | 148,869 | ||||||||||||||
Total company venue operating costs | 608,509 | 47,758 | 14,558 | (38,195 | ) | 632,630 | ||||||||||||||
Advertising expense | 37,891 | 4,358 | 40,117 | (36,224 | ) | 46,142 | ||||||||||||||
General and administrative expenses | 24,704 | 35,867 | 440 | — | 61,011 | |||||||||||||||
Depreciation and amortization | 109,985 | 7,343 | 2,241 | — | 119,569 | |||||||||||||||
Transaction, severance and related litigation costs | 1,244 | 55 | — | — | 1,299 | |||||||||||||||
Asset Impairment | 1,487 | — | 63 | — | 1,550 | |||||||||||||||
Total operating costs and expenses | 783,820 | 95,381 | 57,419 | (74,419 | ) | 862,201 | ||||||||||||||
Operating income (loss) | 33,972 | 33,045 | (5,565 | ) | — | 61,452 | ||||||||||||||
Equity in earnings (loss) in affiliates | 13,654 | — | — | (13,654 | ) | — | ||||||||||||||
Interest expense | 62,630 | 4,664 | 451 | — | 67,745 | |||||||||||||||
Income (loss) before income taxes | (15,004 | ) | 28,381 | (6,016 | ) | (13,654 | ) | (6,293 | ) | |||||||||||
Income tax expense (benefit) | (11,337 | ) | 10,520 | (1,809 | ) | — | (2,626 | ) | ||||||||||||
Net income (loss) | $ | (3,667 | ) | $ | 17,861 | $ | (4,207 | ) | $ | (13,654 | ) | $ | (3,667 | ) | ||||||
Components of other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustments | 420 | — | 420 | (420 | ) | 420 | ||||||||||||||
Comprehensive income (loss) | $ | (3,247 | ) | $ | 17,861 | $ | (3,787 | ) | $ | (14,074 | ) | $ | (3,247 | ) |
CEC Entertainment, Inc. | ||||||||||||||||||||
Consolidating Statement of Comprehensive Income (Loss) | ||||||||||||||||||||
Fiscal Year 2015 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Issuer | Guarantor | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Food and beverage sales | $ | 353,200 | $ | 48,747 | $ | 6,148 | $ | — | $ | 408,095 | ||||||||||
Entertainment and merchandise sales | 469,741 | 16,864 | 10,410 | — | 497,015 | |||||||||||||||
Total Company venue sales | 822,941 | 65,611 | 16,558 | — | 905,110 | |||||||||||||||
Franchise fees and royalties | 2,280 | 15,199 | — | — | 17,479 | |||||||||||||||
International Association assessments and other fees | 995 | 24,591 | 43,829 | (69,415 | ) | — | ||||||||||||||
Total revenues | 826,216 | 105,401 | 60,387 | (69,415 | ) | 922,589 | ||||||||||||||
Operating Costs and Expenses: | ||||||||||||||||||||
Company venue operating costs (excluding Depreciation and amortization): | ||||||||||||||||||||
Cost of food and beverage | 89,772 | 12,527 | 2,135 | — | 104,434 | |||||||||||||||
Cost of entertainment and merchandise | 29,147 | 1,729 | 643 | — | 31,519 | |||||||||||||||
Total cost of food, beverage, entertainment and merchandise | 118,919 | 14,256 | 2,778 | — | 135,953 | |||||||||||||||
Labor expenses | 230,113 | 14,968 | 5,503 | — | 250,584 | |||||||||||||||
Rent expense | 88,773 | 5,363 | 2,533 | — | 96,669 | |||||||||||||||
Other venue operating expenses | 155,366 | 9,017 | 4,308 | (25,613 | ) | 143,078 | ||||||||||||||
Total Company venue operating costs | 593,171 | 43,604 | 15,122 | (25,613 | ) | 626,284 | ||||||||||||||
Advertising expense | 46,136 | 4,014 | 40,798 | (43,802 | ) | 47,146 | ||||||||||||||
General and administrative expenses | 19,652 | 41,693 | 600 | — | 61,945 | |||||||||||||||
Depreciation and amortization | 110,594 | 6,609 | 2,091 | — | 119,294 | |||||||||||||||
Transaction, severance and related litigation costs | 6 | 11,908 | — | — | 11,914 | |||||||||||||||
Asset Impairment | 766 | 20 | 89 | — | 875 | |||||||||||||||
Total operating costs and expenses | 770,325 | 107,848 | 58,700 | (69,415 | ) | 867,458 | ||||||||||||||
Operating income (loss) | 55,891 | (2,447 | ) | 1,687 | — | 55,131 | ||||||||||||||
Equity in earnings (loss) in affiliates | (4,654 | ) | — | — | 4,654 | — | ||||||||||||||
Interest expense | 65,775 | 4,288 | 519 | — | 70,582 | |||||||||||||||
Income (loss) before income taxes | (14,538 | ) | (6,735 | ) | 1,168 | 4,654 | (15,451 | ) | ||||||||||||
Income tax expense (benefit) | (2,028 | ) | (1,575 | ) | 662 | — | (2,941 | ) | ||||||||||||
Net income (loss) | $ | (12,510 | ) | $ | (5,160 | ) | $ | 506 | $ | 4,654 | $ | (12,510 | ) | |||||||
Components of other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustments | (2,403 | ) | — | (2,403 | ) | 2,403 | (2,403 | ) | ||||||||||||
Comprehensive income (loss) | $ | (14,913 | ) | $ | (5,160 | ) | $ | (1,897 | ) | $ | 7,057 | $ | (14,913 | ) |
CEC Entertainment, Inc. | |||||||||||||||||||||
Consolidating Statement of Cash Flows | |||||||||||||||||||||
Fiscal Year 2017 | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Issuer | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
Cash flows provided by (used in) operating activities: | $ | 73,925 | $ | 29,569 | $ | 959 | $ | — | $ | 104,453 | |||||||||||
Cash flows from investing activities: | |||||||||||||||||||||
Purchases of property and equipment | (62,544 | ) | (27,061 | ) | (1,353 | ) | — | (90,958 | ) | ||||||||||||
Development of internal use software | — | (3,243 | ) | — | — | (3,243 | ) | ||||||||||||||
Proceeds from sale of property and equipment | 489 | — | — | — | 489 | ||||||||||||||||
Cash flows provided by (used in) investing activities | (62,055 | ) | (30,304 | ) | (1,353 | ) | — | (93,712 | ) | ||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||
Repayments on senior term loan | (7,600 | ) | — | — | — | (7,600 | ) | ||||||||||||||
Repayments on note payable | — | (13 | ) | — | — | (13 | ) | ||||||||||||||
Proceeds from financing sale-leaseback transaction | 4,073 | — | — | — | 4,073 | ||||||||||||||||
Payments on capital lease obligations | (460 | ) | — | (7 | ) | — | (467 | ) | |||||||||||||
Payments on sale leaseback transactions | (2,470 | ) | — | — | — | — | (2,470 | ) | |||||||||||||
Equity contribution | 1,447 | — | — | — | 1,447 | ||||||||||||||||
Cash flows provided by (used in) financing activities | (5,010 | ) | (13 | ) | (7 | ) | — | (5,030 | ) | ||||||||||||
Effect of foreign exchange rate changes on cash | — | — | 466 | — | 466 | ||||||||||||||||
Change in cash and cash equivalents | 6,860 | (748 | ) | 65 | — | 6,177 | |||||||||||||||
Cash and cash equivalents at beginning of period | 53,088 | 1,158 | 6,777 | — | 61,023 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | 59,948 | $ | 410 | $ | 6,842 | $ | — | $ | 67,200 |
CEC Entertainment, Inc. | ||||||||||||||||||||||||
Consolidating Statement of Cash Flows | ||||||||||||||||||||||||
Fiscal Year 2016 | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Issuer | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||||
Cash flows provided by (used in) operating activities: | $ | 73,722 | $ | 44,608 | $ | 357 | $ | — | $ | 118,687 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Purchases of property and equipment | (69,827 | ) | (18,439 | ) | (414 | ) | — | (88,680 | ) | |||||||||||||||
Development of internal use software | (7,671 | ) | (2,784 | ) | — | — | (10,455 | ) | ||||||||||||||||
Proceeds from sale of property and equipment | 696 | — | — | — | 696 | |||||||||||||||||||
Cash flows provided by (used in) investing activities | (76,802 | ) | — | (21,223 | ) | — | (414 | ) | — | — | — | (98,439 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Repayments on senior term loan | (7,600 | ) | — | — | — | (7,600 | ) | |||||||||||||||||
Repayments on note payable | — | (50 | ) | — | — | (50 | ) | |||||||||||||||||
Intercompany note | 23,974 | (23,974 | ) | — | — | — | ||||||||||||||||||
Payments on capital lease obligations | (417 | ) | — | (4 | ) | — | (421 | ) | ||||||||||||||||
Payments on sale leaseback transactions | (2,028 | ) | — | — | — | (2,028 | ) | |||||||||||||||||
Excess tax benefit realized from stock-based compensation | 4 | — | — | — | 4 | |||||||||||||||||||
Cash flows provided by (used in) financing activities | 13,933 | (24,024 | ) | (4 | ) | — | (10,095 | ) | ||||||||||||||||
Effect of foreign exchange rate changes on cash | — | — | 216 | — | 216 | |||||||||||||||||||
Change in cash and cash equivalents | 10,853 | (639 | ) | 155 | — | 10,369 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 42,235 | 1,797 | 6,622 | — | 50,654 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 53,088 | $ | 1,158 | $ | 6,777 | $ | — | $ | 61,023 |
CEC Entertainment, Inc. | ||||||||||||||||||||||||
Consolidating Statement of Cash Flows | ||||||||||||||||||||||||
Fiscal Year 2015 | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Issuer | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||||
Cash flows provided by (used in) operating activities: | $ | 95,659 | $ | (492 | ) | $ | 5,446 | $ | — | $ | 100,613 | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Acquisition of Peter Piper Pizza | (663 | ) | — | — | — | (663 | ) | |||||||||||||||||
Intercompany note | 2,393 | 2,925 | — | (5,318 | ) | — | ||||||||||||||||||
Purchases of property and equipment | (65,070 | ) | (6,028 | ) | (1,936 | ) | — | (73,034 | ) | |||||||||||||||
Development of internal use software | (2,018 | ) | (2,784 | ) | — | — | (4,802 | ) | ||||||||||||||||
Proceeds from sale of property and equipment | 308 | — | — | — | 308 | |||||||||||||||||||
Cash flows provided by (used in) investing activities | (65,050 | ) | — | (5,887 | ) | — | (1,936 | ) | — | (5,318 | ) | — | (78,191 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Repayments on senior term loan | (9,500 | ) | — | — | — | (9,500 | ) | |||||||||||||||||
Repayments on notes payable | — | (49 | ) | — | — | (49 | ) | |||||||||||||||||
Intercompany note | (3,847 | ) | 1,798 | (3,269 | ) | 5,318 | — | |||||||||||||||||
Payments on capital lease obligations | (402 | ) | — | (3 | ) | — | (405 | ) | ||||||||||||||||
Payments on sale leaseback transactions | (1,663 | ) | — | — | — | (1,663 | ) | |||||||||||||||||
Dividends paid | (70,000 | ) | — | — | — | (70,000 | ) | |||||||||||||||||
Excess tax benefit realized from stock-based compensation | 18 | — | — | — | 18 | |||||||||||||||||||
Cash flows provided by (used in) financing activities | (85,394 | ) | — | 1,749 | — | (3,272 | ) | — | 5,318 | — | (81,599 | ) | ||||||||||||
Effect of foreign exchange rate changes on cash | — | — | (1,163 | ) | — | (1,163 | ) | |||||||||||||||||
Change in cash and cash equivalents | (54,785 | ) | — | (4,630 | ) | — | (925 | ) | — | — | — | (60,340 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 97,020 | 6,427 | 7,547 | — | 110,994 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 42,235 | $ | 1,797 | $ | 6,622 | $ | — | $ | 50,654 |
Quarters in Fiscal Year 2017 | |||||||||||||||
April 2, 2017 | July 2, 2017 | October 1, 2017 | December 31, 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Food and beverage sales | $ | 124,419 | $ | 97,411 | $ | 98,255 | $ | 90,524 | |||||||
Entertainment and merchandise sales | 135,917 | 109,724 | 110,633 | 102,005 | |||||||||||
Company venue sales | 260,336 | 207,135 | 208,888 | 192,529 | |||||||||||
Franchise fees and royalties | 4,623 | 4,649 | 4,459 | 4,152 | |||||||||||
Total revenues | $ | 264,959 | $ | 211,784 | $ | 213,347 | $ | 196,681 | |||||||
Operating income (loss) | $ | 44,659 | $ | 7,814 | $ | 1,138 | $ | (5,721 | ) | ||||||
Income (loss) before income taxes | $ | 27,598 | $ | (9,247 | ) | $ | (16,313 | ) | $ | (23,263 | ) | ||||
Net income (loss) | $ | 17,220 | $ | (5,930 | ) | $ | (11,092 | ) | $ | 52,868 |
Quarters in Fiscal Year 2016 | |||||||||||||||
April 3, 2016 | July 3, 2016 | October 2, 2016 | January 1, 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Food and beverage sales | $ | 122,202 | $ | 97,404 | $ | 101,984 | $ | 93,469 | |||||||
Entertainment and merchandise sales | 147,557 | 114,657 | 121,764 | 106,277 | |||||||||||
Company venue sales | 269,759 | 212,061 | 223,748 | 199,746 | |||||||||||
Franchise fees and royalties | 4,559 | 4,560 | 4,322 | 4,898 | |||||||||||
Total revenues | $ | 274,318 | $ | 216,621 | $ | 228,070 | $ | 204,644 | |||||||
Operating income (loss) | $ | 46,348 | $ | 3,627 | $ | 12,547 | $ | (1,070 | ) | ||||||
Income (loss) before income taxes | $ | 29,287 | $ | (13,494 | ) | $ | (4,690 | ) | $ | (17,396 | ) | ||||
Net income (loss) | $ | 17,915 | $ | (9,052 | ) | $ | (2,404 | ) | $ | (10,126 | ) |
Name | Age | Position(s) | ||
Thomas Leverton | 46 | Chief Executive Officer and Director | ||
J. Roger Cardinale | 58 | President | ||
Dale R. Black | 54 | Executive Vice President and Chief Financial Officer | ||
Lance A. Milken | 42 | Director | ||
Michael Diverio | 35 | Director | ||
Allen R. Weiss | 63 | Director |
Name of Beneficial Owner | Number of Shares of Common Stock | Percentage of Outstanding Common Stock | ||||
Queso Holdings Inc. (1) | 200 | 100 | % | |||
Thomas Leverton | — | — | ||||
J. Roger Cardinale | — | — | ||||
Dale R. Black | — | — | ||||
Lance A. Milken | — | — | ||||
Michael Diverio | — | — | ||||
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 2017 | Fiscal 2016 | |||||||
Audit Fees (1) | $ | 585,000 | $ | 628,500 | ||||
Audit-related Fees (2) | 7,000 | 5,500 | ||||||
Tax fees (3) | — | — | ||||||
All other fees (4) | 2,000 | 2,000 | ||||||
Total | $ | 594,000 | $ | 636,000 |
(1) | “Audit fees” are fees billed by Deloitte & Touche LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements included in the Company’s Form 10-K, the review of the Company’s quarterly consolidated financial statements included in the Company’s Forms 10-Q, and includes fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as consents, comfort letters, statutory audits, attest services and review of documents filed with the Securities and Exchange Commission. |
(2) | “Audit-related fees” are fees billed by Deloitte & Touche LLP for assurance services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements or other attestation services or consultations that are not reported under audit fees. |
(3) | “Tax fees” are fees billed by Deloitte & Touche LLP for professional services rendered for tax compliance, tax planning and tax advice. |
(4) | “All other fees” are fees billed by Deloitte & Touche LLP for any professional services not included in the first three categories. |
Financial Statements. | The financial statements and related notes included in Part II, Item 8. “Financial Statements and Supplementary Data” are filed as a part of this Annual Report on Form 10-K. See “Index to Consolidated Financial Statements.” | |
Financial Statement Schedules. | There are no financial statement schedules filed as a part of this Annual Report on Form 10-K, since the circumstances requiring inclusion of such schedules are not present. | |
Exhibits. | The exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index, which Exhibit Index is incorporated in this Annual Report on Form 10-K by reference. The exhibits include agreements to which the Company is a party or has a beneficial interest. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof. |
Dated: March 28, 2018 | CEC Entertainment, Inc. | |
/s/ Thomas Leverton | ||
Thomas Leverton | ||
Chief Executive Officer and Director |
Signature | Title | Date | ||
/s/ Thomas Leverton | Chief Executive Officer and Director (Principal Executive Officer) | March 28, 2018 | ||
Thomas Leverton | ||||
/s/ Dale R. Black | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | March 28, 2018 | ||
Dale R. Black | ||||
/s/ Laurie E. Priest | Vice President and Controller (Principal Accounting Officer) | March 28, 2018 | ||
Laurie E. Priest | ||||
* | Director | March 28, 2018 | ||
Lance A. Milken | ||||
* | Director | March 28, 2018 | ||
Michael Diverio | ||||
* | Director | March 28, 2018 | ||
Allen R. Weiss | ||||
*By: | ||||
/s/ Rodolfo Rodriguez, Jr. | Executive Vice President, Chief Legal and Human Resources Officer | March 28, 2018 | ||
Rodolfo Rodriguez, Jr. |
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 | ||
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 |
By: | /s/ Temple Weiss Name: Temple Weiss Title: Chief Financial Officer, Executive Vice President |
By: | /s/ Lesley Lehner Name: Lesley Lehner Title: President |
By: | /s/ Jane Schweiger Name: Jane Schweiger Title: Vice President |
By: | /s/ Laurie Priest Name: Laurie Priest Title: Vice President and Controller |
By: | /s/ Blake Huggins Name: Blake Huggins Title: Vice President of CEC Leaseholder #2, LLC |
By: | /s/ Jane Schweiger Name: Jane Schweiger Title: Vice President |
By: | /s/ Laurie Priest Name: Laurie Priest Title: Vice President and Controller |
By: | /s/ Blake Huggins Name: Blake Huggins Title: Vice President |
By: | /s/ Hallie E. Field Name: Hallie E. Field Title: Assistant Vice President |
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 31, 2017 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 28, 2018 | /s/ Thomas Leverton | |
Thomas Leverton | ||
Chief Executive Officer and Director |
1. | I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2017 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 28, 2018 | /s/ Dale R. Black | |
Dale R. Black | ||
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 28, 2018 | /s/ Thomas Leverton |
Thomas Leverton | |
Chief Executive Officer and Director |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in this Report. |
March 28, 2018 | /s/ Dale R. Black |
Dale R. Black | |
Executive Vice President and Chief Financial Officer |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Mar. 19, 2018 |
Jul. 02, 2017 |
|
Document Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | CEC | ||
Entity Registrant Name | CEC ENTERTAINMENT INC | ||
Entity Central Index Key | 0000813920 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 200 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Public Float | $ 0 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 28, 2014 |
Dec. 29, 2013 |
---|---|---|
Successor [Member] | ||
Common stock, par value (in dollars per share) | ||
Common stock, shares authorized | ||
Common stock, shares issued | 200 | |
Treasury stock, shares | 0 | |
Predecessor [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | |
Common stock, shares authorized | 1,000 | |
Common stock, shares issued | 200 | |
Treasury stock, shares | 0 |
Consolidated Statements of Earnings - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Oct. 01, 2017 |
Jul. 02, 2017 |
Apr. 02, 2017 |
Jan. 01, 2017 |
Oct. 02, 2016 |
Jul. 03, 2016 |
Apr. 03, 2016 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
REVENUES: | |||||||||||
Food and beverage sales | $ 90,524 | $ 98,255 | $ 97,411 | $ 124,419 | $ 93,469 | $ 101,984 | $ 97,404 | $ 122,202 | $ 410,609 | $ 415,059 | $ 408,095 |
Entertainment and merchandise sales | 102,005 | 110,633 | 109,724 | 135,917 | 106,277 | 121,764 | 114,657 | 147,557 | 458,279 | 490,255 | 497,015 |
Total Company store sales | 192,529 | 208,888 | 207,135 | 260,336 | 199,746 | 223,748 | 212,061 | 269,759 | 868,888 | 905,314 | 905,110 |
Franchise fees and royalties | 4,152 | 4,459 | 4,649 | 4,623 | 4,898 | 4,322 | 4,560 | 4,559 | 17,883 | 18,339 | 17,479 |
Total revenues | 196,681 | 213,347 | 211,784 | 264,959 | 204,644 | 228,070 | 216,621 | 274,318 | 886,771 | 923,653 | 922,589 |
Company store operating costs: | |||||||||||
Cost of food and beverage (exclusive of items shown separately below) | 97,570 | 104,315 | 104,434 | ||||||||
Cost of entertainment and merchandise (exclusive of items shown separately below) | 29,948 | 32,014 | 31,519 | ||||||||
Total cost of food, beverage, entertainment and merchandise | 127,518 | 136,329 | 135,953 | ||||||||
Labor expenses | 248,061 | 251,426 | 250,584 | ||||||||
Rent expense | 95,917 | 96,006 | 96,669 | ||||||||
Other store operating expenses | 149,462 | 148,869 | 143,078 | ||||||||
Total Company store operating costs | 620,958 | 632,630 | 626,284 | ||||||||
Other costs and expenses: | |||||||||||
Advertising expense | 48,379 | 46,142 | 47,146 | ||||||||
General and administrative expenses | 56,482 | 61,011 | 61,945 | ||||||||
Depreciation, Amortization and Accretion, Net | 109,771 | 119,569 | 119,294 | ||||||||
Transaction and severance costs | 1,448 | 1,299 | 11,914 | ||||||||
Asset impairments | 1,843 | 1,550 | 875 | ||||||||
Total operating costs and expenses | 838,881 | 862,201 | 867,458 | ||||||||
Operating income (loss) | (5,721) | 1,138 | 7,814 | 44,659 | (1,070) | 12,547 | 3,627 | 46,348 | 47,890 | 61,452 | 55,131 |
Interest expense | 69,115 | 67,745 | 70,582 | ||||||||
Income (loss) before income taxes | (23,263) | (16,313) | (9,247) | 27,598 | (17,396) | (4,690) | (13,494) | 29,287 | (21,225) | (6,293) | (15,451) |
Income tax expense (benefit) | (74,291) | (2,626) | (2,941) | ||||||||
Net income (loss) | $ 52,868 | $ (11,092) | $ (5,930) | $ 17,220 | $ (10,126) | $ (2,404) | $ (9,052) | $ 17,915 | $ 53,066 | $ (3,667) | $ (12,510) |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Oct. 01, 2017 |
Jul. 02, 2017 |
Apr. 02, 2017 |
Jan. 01, 2017 |
Oct. 02, 2016 |
Jul. 03, 2016 |
Apr. 03, 2016 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Net income (loss) | $ 52,868 | $ (11,092) | $ (5,930) | $ 17,220 | $ (10,126) | $ (2,404) | $ (9,052) | $ 17,915 | $ 53,066 | $ (3,667) | $ (12,510) |
Components of other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | 1,010 | 420 | (2,403) | ||||||||
Total components of other comprehensive income (loss), net of tax | 1,010 | 420 | (2,403) | ||||||||
Comprehensive income (loss) | $ 54,076 | $ (3,247) | $ (14,913) |
Related Party Transaction - Narrative (details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Parent Company [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0.4 | $ 0.8 | |
Apollo [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0.9 | $ 0.8 | $ 0.7 |
Description of Business and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||
Description of Business and Summary of Significant Accounting Policies: | Description of Business and Summary of Significant Accounting Policies: Description of Business: CEC Entertainment, Inc. and its subsidiaries (the “Company”) operate and franchise Chuck E. Cheese’s and Peter Piper Pizza family dining and entertainment centers (also referred to as “venues”) in a total of 47 states and 13 foreign countries and territories. As of December 31, 2017 we and our franchisees operated a total of 754 venues, of which 562 were Company-operated venues located in 44 states and Canada. Our franchisees operated a total of 192 venues located in 15 states and 12 foreign countries and territories, including Chile, Colombia, Guam, Guatemala, Mexico, Panama, Peru, Puerto Rico, Saudi Arabia, Trinidad & Tobago, and the United Arab Emirates. The use of the terms “CEC Entertainment,” “we,” “us” and “our” throughout these Notes to Consolidated Financial Statements refer to the Company. All of our venues utilize a consistent restaurant-entertainment format that features both family dining and entertainment areas with the same general mix of food, beverages, entertainment and merchandise. The economic characteristics, products and services, preparation processes, distribution methods and types of customers are substantially similar for each of our venues. Therefore, we aggregate each venue’s operating performance into one reportable segment for financial reporting purposes. Basis of Presentation: All intercompany accounts and transactions have been eliminated in consolidation. We reclassified $6.3 million and $4.1 million of Depreciation and amortization in our Consolidated Statements of Earnings for the fiscal years ended January 1, 2017 and January 3, 2016 , respectively, from “General and administrative expenses” to “Depreciation and amortization”, and we reclassified “Depreciation and Amortization” of $113.3 million and $115.2 million for the fiscal years ended January 1, 2017 and January 3, 2016, respectively, in our Consolidated Statements of Earnings from “Company venue operating costs” to “Other costs and expenses” to conform to the current period’s presentation. Additionally, we reclassified $0.6 million of Income taxes receivable in our Consolidated Balance Sheets as at January 1, 2017 from “Accounts receivable” to “Income taxes receivable” to conform to the current period’s presentation. The Company has a controlling financial interest in International Association of CEC Entertainment, Inc. (the “Association”), a VIE. The Association primarily administers the collection and disbursement of funds (the “Association Funds”) used for advertising, entertainment and media programs that benefit both us and our Chuck E. Cheese’s franchisees. We and our franchisees are required to contribute a percentage of gross sales to these funds and could be required to make additional contributions to fund any deficits that may be incurred by the Association. We include the Association in our Consolidated Financial Statements, as we concluded that we are the primary beneficiary of its variable interests because we (a) have the power to direct the majority of its significant operating activities; (b) provide it unsecured lines of credit; and (c) own the majority of the venues that benefit from the Association’s advertising, entertainment and media expenditures. We eliminate the intercompany portion of transactions with VIE’s from our financial results. The assets, liabilities and operating results of the Association are not material to our Consolidated Financial Statements. Because the Association Funds are required to be segregated and used for specified purposes, we do not reflect franchisee contributions to the Association Funds as revenue, but rather record franchisee contributions as an offset to reported advertising expenses. Our contributions to the Association Funds are eliminated in consolidation. This treatment will change for Fiscal 2018 when we adopt the provisions of Accounting Standards Update (“ASU”) 2016-10, Revenue from Contracts with Customers (Topic 606: Identifying Performance Obligations and Licensing (see “Recently Issued Accounting Guidance - Accounting Guidance Not Yet Adopted” below). Cash balances held by the Association are restricted for use in our advertising, entertainment and media programs, and are recorded as “Restricted cash” on our Consolidated Balance Sheets. Fiscal Year: We operate on a 52 or 53 week fiscal year that ends on the Sunday nearest to December 31. Each quarterly period has 13 weeks, except for a 53 week year when the fourth quarter has 14 weeks. Fiscal 2015 consisted of 53 weeks, whereas Fiscal 2017 and Fiscal 2016 consisted of 52 weeks. Use of Estimates and Assumptions: The preparation of these Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents: Cash and cash equivalents are comprised of demand deposits with banks and short-term cash investments with remaining maturities of three months or less from the purchase date. Concentrations of Credit Risk: We have exposure to credit risk to the extent that our cash and cash equivalents exceed amounts covered by the United States and Canada deposit insurance limits, as we currently maintain a significant amount of our cash and cash equivalents balances with two major financial institutions. The individual balances, at times, may exceed the insured limits. We have not experienced any losses in such accounts. In management’s opinion, the capitalization and operating history of the financial institutions are such that the likelihood of a material loss is considered remote. Inventories: Inventories of food, beverages, merchandise, paper products and other supplies needed for our food service and entertainment operations are stated at the lower of cost on a first-in, first-out basis or net realizable value. Property and Equipment: Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are charged to operations using the straight-line method over the assets’ estimated useful lives, which are as follows:
Leasehold improvements are amortized using the straight-line method over the lesser of the lease term or the estimated useful lives of the related assets. We use a consistent lease period (generally, the initial non-cancelable lease term plus renewal option periods provided for in the lease that can be reasonably assured of being exercised) when estimating the depreciable lives of leasehold improvements, in determining classification of our leases as either operating or capital and in recognizing straight-line rent expense. Interest costs incurred during the construction period are capitalized and depreciated based on the estimated useful life of the underlying asset. We review our property and equipment for indicators of impairment on an ongoing basis at the lowest level of cash flows available, which is on a venue-by-venue basis, to assess if the carrying amount may not be recoverable. Potential indicators of impairment may include a significant change in the business climate in a particular market area (for example, due to economic downturn or natural disaster), historical negative cash flows or plans to dispose of or sell the property and equipment before the end of its previously estimated useful life. If an event or change in circumstances occurs, we estimate the future cash flows expected to result from the use of the property and equipment and its eventual disposition. If the sum of the expected future cash flows, undiscounted and without interest, is less than the asset carrying amount (an indication that the carrying amount may not be recoverable), we may be required to recognize an impairment loss. We estimate the fair value of a venue’s property and equipment by discounting the expected future cash flows of the venue over its remaining lease term using a weighted average cost of capital commensurate with the risk. Any impairment loss recognized equals the amount by which the asset carrying amount exceeds its estimated fair value. In the event an asset is impaired, its carrying value is adjusted to the estimated fair value, and any subsequent increases in fair value are not recorded. Additionally, if it is determined that the estimated remaining useful life of the asset should be decreased, any periodic depreciation and amortization expense is adjusted based on the new carrying value of the asset unless the asset is written down to salvage value, at which time depreciation or amortization ceases. In Fiscal 2017, Fiscal 2016 and Fiscal 2015, we recognized asset impairment charges of $1.8 million, $1.6 million, and $0.9 million, respectively. Development of Internal Use Software: We capitalize our internal and external costs that are directly attributable to the development, testing and validation of internal use software, such as our enterprise resource planning (ERP) system and corporate and venue related IT system initiatives. Capitalized internal development costs include the compensation, benefits and various office costs primarily related to our IT department. The capitalization of costs related to a software development project ceases once the software is ready for its intended use and the asset is amortized according to our amortization policies. In Fiscal 2017, Fiscal 2016 and Fiscal 2015, we capitalized costs of $3.2 million, $10.5 million and $4.8 million, respectively, related to the development of internal use software. Capitalized Venue Development Costs: We capitalize our internal department costs that are directly attributable to venue development projects, such as the design and construction of a new venue and the remodeling and expansion of our existing venues. Capitalized internal department costs include certain compensation, benefits and office costs related to our design, construction, facilities and legal departments. We also capitalize interest costs in conjunction with the construction of new venues. Venue development costs are initially accumulated in our construction in progress account until a project is completed. At the time of completion, the costs accumulated to date are then reclassified to property and equipment and depreciated according to our depreciation policies. In Fiscal 2017, Fiscal 2016 and Fiscal 2015, we capitalized internal costs of $3.5 million, $3.4 million and $3.9 million, respectively, related to our venue development activities. Business Combinations: We allocate the purchase price of an acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. We recognize as goodwill the amount by which the purchase price of an acquired entity exceeds the net of the amounts assigned to the assets acquired and liabilities assumed. Fair value measurements are applied based on assumptions that market participants would use in the pricing of the asset or liablity. We initially perform these valuations based upon preliminary estimates and assumptions by management or independent valuation specialists under our supervision, where appropriate, and make revisions as estimates and assumptions are finalized. We record the net assets and results of operations of an acquired entity in our Consolidated Financial Statements from the acquisition date. We expense acquisition-related costs as incurred. Goodwill and Other Intangible Assets: The excess of the purchase price over fair value of net identifiable assets and liabilities of an acquired business (“goodwill”), trademarks, trade names and other indefinite-lived intangible assets are not amortized, but rather tested for impairment, at least annually. We assess the recoverability of the carrying amount of our goodwill and other indefinite-lived intangible assets either qualitatively or quantitatively annually at the beginning of the fourth quarter of each fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. When assessing the recoverability of goodwill and other indefinite-lived intangible assets, we may first assess qualitative factors. If an initial qualitative assessment indicates that it is more likely than not the carrying amount exceeds fair value, a quantitative analysis may be required. We may also elect to skip the qualitative assessment and proceed directly to the quantitative analysis. Recoverability of the carrying value of goodwill is measured at the reporting unit level. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by management. The Company has determined that the operations of Chuck E. Cheese’s and Peter Piper Pizza represent two separate reporting units for purposes of measuring the recoverability of the carrying value of goodwill. In performing a quantitative analysis, we measure the recoverability of goodwill using: (i) a discounted cash flow model incorporating discount rates commensurate with the risks involved, which is classified as a Level 3 fair value measurement, and (ii) a market approach based upon public trading and recent transaction valuation multiples for similar companies. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, tax rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. If the calculated fair value is less than the current carrying amount, impairment of the reporting unit may exist. When the recoverability test indicates potential impairment, we calculate an implied fair value of goodwill for the reporting unit. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. If the implied fair value of goodwill exceeds the carrying amount of goodwill assigned to the reporting unit, there is no impairment. If the carrying amount of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment loss is recorded to write down the carrying amount. In performing a quantitative analysis, recoverability is measured by a comparison of the carrying amount of the indefinite-lived intangible asset over its fair value. Any excess of the carrying amount of the indefinite-lived intangible asset over its fair value is recognized as an impairment loss. We test indefinite-lived intangible assets utilizing the relief from royalty method to determine the estimated fair value for each indefinite-lived intangible asset, which is classified as a Level 3 fair value measurement. The relief from royalty method estimates our theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this model include discount rates, royalty rates, growth rates, tax rates, sales projections and terminal value rates. Discount rates, royalty rates, growth rates and sales projections are the assumptions most sensitive and susceptible to change as they require significant management judgment. Discount rates used are similar to the rates estimated by the weighted average cost of capital considering any differences in company-specific risk factors. Intangible assets with finite lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Estimated weighted average useful lives are 25 years for franchise agreements and 10 years for favorable lease agreements. An impairment loss would be indicated when estimated undiscounted future cash flows from the use of the asset are less than its carrying amount. An impairment loss would be measured as the difference between the fair value (based on discounted future cash flows) and the carrying amount of the asset. Fair Value Disclosures: Fair value is defined as the price that we would expect to receive to sell an asset or pay to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. In determining fair value, GAAP establishes a three-level hierarchy used in measuring fair value, as follows:
We may also adjust the carrying amount of certain nonfinancial assets to fair value on a non-recurring basis when they are impaired. The fair values of our long-lived assets held and used are determined using Level 3 inputs based on the estimated discounted future cash flows of the respective venue over its expected remaining useful life or lease term. Due to uncertainties in the estimates and assumptions used, actual results could differ from the estimated fair values. See Note 4. “Property and Equipment” for our impairment of long-lived assets disclosures and Note 9. “Fair Value of Financial Instruments” for our fair value disclosures. Self-Insurance Accruals: We are self-insured up to certain limits for certain losses related to workers’ compensation, general liability, property and our Company sponsored employee health insurance programs. We estimate the accrued liabilities for all risk retained by the Company at the end of each reporting period. This estimate is primarily based on historical claims experience and loss reserves, calculated with the assistance of an independent third-party actuary. Our deductibles generally range from $0.2 million to $0.5 million per occurrence. For claims that exceed the deductible amount, we record a gross liability and a corresponding receivable representing expected recoveries pursuant to the stop-loss coverage, since we are not legally relieved of our obligation to the claimant. Contingent Loss Accruals: When a contingency involving uncertainty as to a possible loss occurs, an estimate of the loss may be accrued as a charge to income and a reserve established on the Consolidated Balance Sheets. We perform regular assessments of our contingent losses and develop estimates of the degree of probability for and range of possible settlement. We accrue liabilities for losses we deem probable and for which we can reasonably estimate an amount of settlement. We do not record liabilities for losses we believe are only reasonably possible to result in an adverse outcome, but provide disclosure of the reasonably possible range of loss to the extent it is estimable. Reserve balances may be increased or decreased in the future to reflect further developments. However, there can be no assurance that there will not be a loss different from the amounts accrued. Any such loss, if realized, could have a material effect on our consolidated results of operations in the period during which the underlying matters are resolved. Foreign Currency Translation: Our Consolidated Financial Statements are presented in U.S. dollars. The assets and liabilities of our Canadian subsidiary are translated to U.S. dollars at year-end exchange rates, while revenues and expenses are translated at average exchange rates during the year. Adjustments that result from translating amounts are reported as a component of “Accumulated other comprehensive income (loss)” on our Consolidated Statements of Changes in Stockholder’s Equity and in our Consolidated Statements of Comprehensive Income (Loss). The effect of foreign currency exchange rate changes on cash is reported in our Consolidated Statements of Cash Flows as a separate component of the change in cash and cash equivalents during the period. Stock-Based Compensation: We expense the fair value of stock-based compensation awards granted to our employees and directors in our Consolidated Financial Statements on a straight-line basis over the period that services are required to be provided in exchange for the award (“requisite service period”), which typically is the period over which the award vests. Stock-based compensation is recognized only for awards that vest, and we record forfeitures as they occur. We measure the fair value of compensation cost related to stock options based on third party valuations. Stock-based compensation expense is recorded in “General and administrative expenses” in the Consolidated Statements of Earnings, which is the same financial statement caption where the associated salary expense of employees with stock-based compensation awards is recorded. The gross benefits of tax deductions in excess of the compensation cost recognized from the vesting of stock options are tax effected and classified as cash inflows from financing activities in our Consolidated Statements of Cash Flows. Revenue Recognition – Company Venue Activities: Food, beverage and merchandise revenues are recognized when sold. Game revenues are recognized as game-play tokens and game play credits on game cards are used by guests. We allocate the revenue recognized from the sale of value-priced combination packages, which generally are comprised of food, beverage and game credits (and in some instances, merchandise), between “Food and beverage sales” and “Entertainment and merchandise sales” based upon the price charged for each component when it is sold separately, or in limited circumstances our best estimate of selling price if a component is not sold on a stand-alone basis, which we believe approximates each component’s fair value. Our entertainment revenue includes customer purchases of game play credits on Play Pass game cards which allow our customers to play the games in our venues. We recognize a liability for the estimated amount of unused game play credits, which we believe our customers will redeem or utilize in the future based on credits remaining on Play Pass cards and utilization patterns. Our total estimate of unearned revenue for unused Play Pass credits as of December 31, 2017 and January 1, 2017 was $11.9 million and $5.2 million, respectively, and is included in “Unearned revenues” in our Consolidated Balance Sheets. We sell gift cards to our customers in our venues and through certain third-party distributors, which do not expire and do not incur a service fee on unused balances. Gift card sales are recorded as deferred revenue when sold and are recognized as revenue when: (a) the gift card is redeemed by the guest or (b) the likelihood of the gift card being redeemed by the guest is remote (“gift card breakage”) and we determine that we do not have a legal obligation to remit the value of the unredeemed gift card under applicable state unclaimed property escheat statutes. Gift card breakage is determined based upon historical redemption patterns of our gift cards. Revenue Recognition – Franchise Fees and Royalties: Revenues from franchise activities include area development and initial franchise fees received from franchisees to establish new venues, and once a venue is opened, a franchisee is charged monthly royalties based on a percentage of franchised venues’ sales. These fees are collectively referred to as “Franchise fees and royalties” in our Consolidated Statements of Earnings. Area development and initial franchise fees are recorded as unearned franchise revenue when received and recognized as revenue when we have fulfilled all significant obligations to the franchisee, which is generally when the franchised venues associated with the fees open. Continuing royalties and other miscellaneous sales and fees are recognized in the period earned. Continuing royalties and other miscellaneous sales and fees of $17.9 million, $17.4 million and $16.9 million for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively, are included in “Franchise fees and royalties” in our Consolidated Statements of Earnings. Cost of Food, Beverage, Entertainment and Merchandise: Cost of food and beverage includes all direct costs of food and beverage sold to our guests and related paper and birthday supplies used in our food service operations, less “vendor rebates” described below. Cost of entertainment and merchandise includes the direct cost of prizes provided and merchandise sold to our customers, as well as the cost of tickets dispensed to customers and redeemed for prize items. These amounts exclude any allocation of other operating costs including labor and related costs for venue personnel and depreciation and amortization expense, which are disclosed separately. Vendor Rebates: We receive rebate payments from certain third-party vendors. Pursuant to the terms of volume purchasing and promotional agreements entered into with the vendors, rebates are primarily provided based on the quantity of the vendors’ products we purchase over the term of the agreement. We record these allowances in the period they are earned as a reduction in the cost of the vendors’ products, and when the related inventory is sold, the allowances are recognized in “Cost of food and beverage” in our Consolidated Statements of Earnings. Rent Expense: We recognize rent expense on a straight-line basis over the lease term, including the construction period and lease renewal option periods provided for in the lease that can be reasonably assured at the inception of the lease. The lease term commences on the date when we take possession and have the right to control use of the leased premises. The difference between actual rent payments and rent expense in any period is recorded as a deferred rent liability and included in “Other Noncurrent Liabilities” on our Consolidated Balance Sheets. Construction allowances received from the landlord as a lease incentive intended to reimburse us for the cost of leasehold improvements (“Landlord contributions”) are accrued as deferred landlord contributions. Landlord contributions are amortized on a straight-line basis over the lease term as a reduction to rent expense. Advertising Costs: Production costs for commercials and coupons are expensed in the period in which the commercials are initially aired and the coupons are distributed. All other advertising costs are expensed as incurred. We and our franchisees are required to contribute a percentage of gross sales to administer all the national advertising programs that benefit both us and our franchisees. Because the contributed funds are required to be segregated and used for specified purposes, we do not reflect franchisee contributions as revenue, but rather record franchisee contributions as an offset to reported advertising expenses. Our advertising contributions for Chuck E. Cheese’s franchise venues are paid to the Association and are eliminated in consolidation. Advertising contributions from our franchisees were $2.1 million in Fiscal 2017, $2.2 million in Fiscal 2016 and $2.1 million in Fiscal 2015. Income Taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. A valuation allowance is applied against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We maintain tax reserves for federal, state and foreign income taxes when we believe a position may not be fully sustained upon review by taxing authorities. Although we believe that our tax positions are fully supported by the applicable tax laws and regulations, there are matters for which the ultimate outcome is uncertain. We recognize the benefit from an uncertain tax position in our Consolidated Financial Statements when the position is at least more-likely-than-not (a greater than 50 percent chance of being sustained). The amount recognized is measured using a probability weighted approach and is the largest amount of benefit that is greater than 50 percent likelihood of being realized upon settlement or ultimate resolution with the taxing authority. We routinely assess the adequacy of the estimated liability for unrecognized tax benefits, which may be affected by changing interpretations of laws, rulings by tax authorities and administrative policies, certain changes and/or developments with respect to audits and expirations of the statute of limitations. In our Consolidated Statements of Earnings, we include interest expense related to unrecognized tax benefits in “Interest expense” and include penalties in “General and administrative expenses.” On our Consolidated Balance Sheets, we include current interest related to unrecognized tax benefits in “Accrued interest,” current penalties in “Accrued expenses” and noncurrent accrued interest and penalties in “Other noncurrent liabilities.” Recently Issued Accounting Guidance: Accounting Guidance Adopted: Effective January 2, 2017 we adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This amendment requires entities to measure most inventory at the “lower of cost or net realizable value,” thereby simplifying the former guidance under which entities measured inventory at the lower of cost or market (market in this context was defined as one of three different measures, one of which was net realizable value). The adoption of this amendment did not have a significant impact on our Consolidated Financial Statements. Effective January 2, 2017 we adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718). This amendment requires that (i) all excess tax benefits and deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit on the income statement, (ii) the tax effects of exercised or vested awards be treated as discrete items in the reporting period in which they occur, and (iii) an entity recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period or not. On the statement of cash flows excess tax benefits are classified along with other income tax cash flows as an operating activity. As allowed by the amendment we have elected to account for forfeitures when they occur. The threshold for an award to qualify for equity classification permits withholding up to the maximum statutory tax rate in applicable jurisdictions, and the cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. The adoption of this amendment did not have a significant impact on our Consolidated Financial Statements. Accounting Guidance Not Yet Adopted: In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). This new standard introduces a new lease model that requires the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about leasing arrangements. While this new standard retains most of the principles of the existing lessor model under U.S. GAAP, it aligns many of those principles with Accounting Standards Codification (“ASC”) 606: Revenue from Contracts with Customers. The new guidance will be effective for us beginning on December 31, 2018. We are currently evaluating the impact of the adoption of this guidance on our Consolidated Financial Statements, but we expect this will have a material effect on our balance sheet since the Company has a significant amount of operating and capital lease arrangements. In March 2016, the FASB issued ASU 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20). This amendment provides a narrow scope exception to Liabilities—Extinguishment of Liabilities (Subtopic 405-20) that requires breakage for those liabilities to be accounted for in accordance with the breakage guidance in Revenue From Contracts With Customers (Topic 606). There is currently no guidance in GAAP, or pending guidance, regarding the derecognition of prepaid stored-value product liabilities within the scope of the amendments in this update. Under the new guidance, if an entity expects to be entitled to a breakage amount for a liability resulting from the sale of a prepaid stored-value product, the entity shall derecognize the amount related to the expected breakage in proportion to the pattern of rights expected to be exercised by the product holder only to the extent that it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. If an entity does not expect to be entitled to a breakage amount for a prepaid stored-value product, the entity shall derecognize the amount related to the breakage when the likelihood of the product holder exercising its remaining rights becomes remote. This change to an entity's estimated breakage amount shall be accounted for as a change in accounting estimate. The amendments in this update are effective for the Company in Fiscal 2018. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This amendment updates the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property, changing the FASB's previous proposals on right-of-use licenses and contractual restrictions. For an entity that licenses intellectual property, the amount or timing of revenue recognition and the timing and pattern of revenue recognition for intellectual property licenses, including the application of the sale- and usage-based royalties exception, may be significantly different from current practice. We have completed our initial assessment of all potential impacts of this amendment on our revenues, including: (i) our accounting for franchise and development fees, and (ii) accounting for our national advertising costs under the Association Funds. Specifically, we expect the adoption of this amendment will require us to recognize initial and renewal franchise and development fees on a straight-line basis over the life of the franchise agreement. Historically, we have recognized revenue from initial franchise and development fees upon the opening of a franchised restaurant when we have completed all of our material obligations and initial services. Additionally, we expect to account for our national advertising fund revenues on a gross basis, instead of net. We do not expect the impact of recognizing initial franchise fees over the franchise agreement period and recognizing advertising expense upon adoption of this standard to have a material effect on our consolidated financial statements. We have determined that this amendment will not have an impact on our recognition of revenue related to our franchise royalties, which are based on a percentage of franchise sales and revenue from Company-operated venues. We will adopt the guidance in this amendment beginning with our fiscal first quarter 2018 and will apply the guidance using the modified retrospective method, recognizing the cumulative effect of applying the new standard to new contracts and contracts that are not considered completed as of January 1, 2018, with no restatement of the comparative periods presented. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This amendment changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The amendments in this update are effective for the Company for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Entities may early adopt the amendments in this update as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This amendment reduces diversity in practice in how certain transactions are classified in the statement of cash flows. Current GAAP either is unclear or does not include specific guidance on eight cash flow classification issues addressed in this amendment, including (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of insurance claims; (iii) separately identifiable cash flows and application of the predominance principle; and (iv) contingent consideration payments made after a business combination. This amendment is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (Topic 805). The amendments in this update clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill and consolidation. This ASU will be effective for us for annual and interim reporting periods beginning on January 1, 2018. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This amendment eliminates Step 2, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill, from the goodwill impairment test. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This ASU is effective for us for our annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2020 and will be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815). This amendment expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. It also includes certain targeted improvements to simplify the application of current guidance related to hedge accounting. This ASU will be effective for us for annual and interim reporting periods beginning on December 31, 2019, with early adoption permitted. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. |
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Accounts Receivable | Accounts Receivable: Accounts receivable consisted of the following at the dates presented:
Trade receivables consist primarily of debit and credit card receivables due from third-party financial institutions. The other accounts receivable balance consists primarily of lease incentives, amounts due from our franchisees and amounts expected to be recovered from third-party insurers. |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories: Inventories consisted of the following at the dates presented:
Food and beverage inventories include food, beverage, paper products and other supplies needed for our food service operations. Entertainment and merchandise inventories consist primarily of novelty toy items, used as redemption prizes for certain games, sold directly to our guests or used as part of our birthday party packages. In addition, entertainment and merchandise inventories also consist of other supplies used in our entertainment operations. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment:
Buildings includes certain venues leased under capital leases. Accumulated amortization related to these assets was $4.0 million and $2.9 million as of December 31, 2017 and January 1, 2017, respectively. Amortization of assets under capital leases is included in “Depreciation and amortization” in our Consolidated Statements of Earnings. Asset Impairments During Fiscal 2017, we recognized an asset impairment charge of $1.8 million primarily related to four venues. During Fiscal 2016 and Fiscal 2015, we recognized an asset impairment charge of $1.6 million and $0.9 million, respectively, primarily related to five venues and four venues, respectively. These impairment charges were the result of a decline in the venues’ financial performance, primarily related to various economic factors in the markets in which the venues are located. As of December 31, 2017, the aggregate carrying value of the property and equipment at impaired venues, after the impairment charges, was $1.9 million for venues impaired in 2017. |
Goodwill and Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net: The following table presents changes in the carrying value of goodwill for the periods ended December 31, 2017 and January 1, 2017:
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The following table presents our indefinite and definite-lived intangible assets at December 31, 2017 and January 1, 2017:
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Our estimated future amortization expense related to the favorable lease agreements and franchise agreements is set forth as follows (in thousands):
Amortization expense related to favorable lease agreements was $1.6 million for Fiscal 2017, $2.0 million for Fiscal 2016 and $2.0 million for Fiscal 2015, respectively, and is included in “Rent expense” in our Consolidated Statements of Earnings. Amortization expense related to franchise agreements was $2.0 million for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively, and is included in “Depreciation and amortization” in our Consolidated Statements of Earnings. |
Accounts Payable Accounts Payable (Notes) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable | Accounts Payable: Accounts payable consisted of the following as of the dates presented:
Trade and other amounts payable represents amounts payable to our vendors, legal fee accruals and settlements payable. The book overdraft balance represents checks issued but not yet presented to banks. Accrued Expenses: Accrued expenses consisted of the following as of the dates presented:
Accrued current and noncurrent insurance represents estimated claims incurred but unpaid under our self-insurance programs for general liability, workers’ compensation, health benefits and certain other insured risks. |
Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accounts Payable: Accounts payable consisted of the following as of the dates presented:
Trade and other amounts payable represents amounts payable to our vendors, legal fee accruals and settlements payable. The book overdraft balance represents checks issued but not yet presented to banks. Accrued Expenses: Accrued expenses consisted of the following as of the dates presented:
Accrued current and noncurrent insurance represents estimated claims incurred but unpaid under our self-insurance programs for general liability, workers’ compensation, health benefits and certain other insured risks. |
Indebtedness and Interest Expense |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness and Interest Expense | Indebtedness and Interest Expense: Our long-term debt consisted of the following for the periods presented:
We were in compliance with the debt covenants in effect as of December 31, 2017 for both the secured credit facilities and the senior notes. For further discussion regarding the debt covenants, see Secured Credit Facilities and Senior Unsecured Notes sections below. Secured Credit Facilities In connection with the Merger on February 14, 2014, we entered into new senior secured credit facilities, which include an initial $760.0 million term loan facility with a maturity date of February 14, 2021 (the “term loan facility”) and a $150.0 million senior secured revolving credit facility with a maturity date of February 14, 2019, which includes a letter of credit sub-facility and a $30.0 million swingline loan sub-facility (the “revolving credit facility” and, together with the term loan facility, the “secured credit facilities”). As of December 31, 2017 and January 1, 2017, we had no borrowings outstanding under the revolving credit facility and $9.9 million of letters of credit issued but undrawn under the facility as of December 31, 2017 and January 1, 2017. We received net proceeds from the term loan facility of $756.2 million, net of original issue discount of $3.8 million, which were used to fund a portion of the Acquisition. We paid $17.8 million and $3.4 million in debt issuance costs related to the term loan facility and revolving credit facility, respectively, which we capitalized in “Bank indebtedness and other long-term debt, net of deferred financing costs” on our Consolidated Balance Sheets. The original issue discount and deferred financing costs are amortized over the lives of the facilities and are included in “Interest expense” on our Consolidated Statements of Earnings. We may request one or more incremental term loan facilities and/or increase commitments under our revolving credit facility in an aggregate amount of up to the sum of (a) $200.0 million plus (b) such additional amount so long as, (i) in the case of loans under additional credit facilities that rank equally and without preference with the liens on the collateral securing the secured credit facilities, our consolidated net first lien senior secured leverage ratio would be no greater than 4.25 to 1.00 and (ii) in the case of loans under additional credit facilities that rank junior to the liens on the collateral securing the secured credit facilities, our consolidated total net secured leverage ratio would be no greater than 5.25 to 1.00, subject to certain conditions, and receipt of commitments by existing or additional lenders. We may voluntarily repay outstanding loans under the secured credit facilities at any time, without prepayment premium or penalty, except in connection with a repricing event as described below, subject to customary “breakage” costs with respect to London Interbank Offered Rate (“LIBOR”) loans. The secured credit facilities require scheduled quarterly payments on the term loan equal to 0.25% of the original principal amount of the term loan from July 2014 to December 2020, with the remaining balance paid at maturity, February 14, 2021. The secured credit facilities include customary mandatory prepayment requirements based on defined events, such as certain asset sales and debt issuances. In addition, a mandatory prepayment equal to 25% of excess cash flow (as defined in our term loan facility) that exceeds $10.0 million is required if our net first lien senior secured leverage ratio exceeds 3.50 to 1.00. Borrowings under the secured credit facilities bear interest at a rate equal to, at our option, either (a) LIBOR determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowings, adjusted for certain additional costs, subject to a 1.00% floor in the case of term loans or (b) a base rate determined by reference to the highest of (i) the federal funds effective rate plus 0.50%; (ii) the prime rate of Deutsche Bank AG New York Branch; and (iii) the one-month adjusted LIBOR plus 1.00%, in each case plus an applicable margin. The applicable margin for borrowings is 3.25% with respect to LIBOR borrowings and 2.25% with respect to base rate borrowings under the term loan facility and base rate borrowings and swingline borrowings under the revolving credit facility. The applicable margin for borrowings under the term loan facility is subject to one step down to 3.00% based on our net first lien senior secured leverage ratio, and the applicable margin for borrowings under the revolving credit facility is subject to two step-downs to 3.00% and 2.75% based on our net first lien senior secured leverage ratio. Effective March 4, 2016, the applicable margin for both our term loan facility and revolving credit facilities stepped down to 3.0%. Effective November 16, 2017, the applicable margin for LIBOR borrowings under both the term loan facility and the revolving credit facility returned to their previous level of 3.25%. During Fiscal 2017, the federal funds rate ranged from 0.55% to 1.42%, the prime rate ranged from 3.75% to 4.50% and the one-month LIBOR ranged from 0.76% to 1.57%. The weighted average effective interest rate incurred on our borrowings under our secured credit facilities was 4.7% for the 2017 fiscal year, 4.6% for both the 2016 and 2015 fiscal years, which includes amortization of debt issuance costs related to our secured credit facilities, amortization of our term loan facility original issue discount, and commitment and other fees related to our secured credit facilities. All borrowings under our revolving credit facility are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties. In addition to paying interest on outstanding principal under the secured credit facilities, we are required to pay a commitment fee equal to 0.50% per annum to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder. The applicable commitment fee under the revolving credit facility is subject to one step-down to 0.375% based on our net first lien senior secured leverage ratio. Effective March 4, 2016, the commitment fee rate stepped down to 0.375%. Effective November 16, 2017, the commitment fee rate returned to it previous level of 0.50%. We are also required to pay customary agency fees, as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR rate borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee computed at a rate equal to 0.125% per annum on the daily stated amount of each letter of credit. Obligations under the secured credit facilities are unconditionally guaranteed by Parent on a limited-recourse basis and each of our existing and future direct and indirect material, wholly owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by a pledge of our capital stock and substantially all of our assets and those of each subsidiary guarantor, including capital stock of the subsidiary guarantors and 65.0% of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to exceptions. Such security interests will consist of a first-priority lien with respect to the collateral. The secured credit facilities also contain customary covenants and events of default. The covenants limit our ability to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) create liens on certain assets; (iii) make certain loans or investments (including acquisitions); (iv) pay dividends on or make distributions in respect of our capital stock or make other restricted payments; (v) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; (vi) sell assets; enter into certain transactions with our affiliates; (vii) enter into sale-leaseback transactions; (viii) change our lines of business; restrict dividends from our subsidiaries or restrict liens; (ix) change our fiscal year; and (x) modify the terms of certain debt or organizational agreements. The PPP acquisition and the sale leaseback transactions discussed in Note 5. “Goodwill and Intangible Assets, Net” and Note 11. “Sale Leaseback Transactions” were permitted under the secured credit facilities agreement. Our revolving credit facility includes a springing financial maintenance covenant that requires our net first lien senior secured leverage ratio not to exceed 6.25 to 1.00 (the ratio of consolidated net debt secured by first-priority liens on the collateral to last twelve month’s EBITDA, as defined in the Senior Credit Facilities). The covenant will be tested quarterly when the revolving credit facility is more than 30.0% drawn (excluding outstanding letters of credit) and will be a condition to drawings under the revolving credit facility that would result in more than 30.0% drawn thereunder. Senior Unsecured Notes On February 19, 2014, we issued $255.0 million aggregate principal amount of 8.000% Senior Notes due 2022 which mature on February 15, 2022 (the “senior notes”) in a private offering. On December 2, 2014 we completed an exchange offer whereby the original senior notes were exchanged for new notes (the “exchange notes”) which are identical to the initial senior notes except that the issuance of the exchange notes is registered under the Securities Act, the exchange notes do not bear legends restricting their transfer and they are not entitled to registration rights under our registration rights agreement. We refer to the senior notes and the exchange notes collectively as the “senior notes.” We may redeem some or all of the senior notes at certain redemption prices set forth in the indenture governing the senior notes (the “indenture”). We paid $6.4 million in debt issuance costs related to the senior notes, which we recorded as an offset to “Bank indebtedness and other long-term debt, net of deferred financing costs” on our Consolidated Balance Sheets. The deferred financing costs are being amortized over the life of the senior notes to “Interest expense” on our Consolidated Statements of Earnings. Our obligations under the senior notes are fully and unconditionally guaranteed, jointly and severally, by our present and future direct and indirect wholly-owned material domestic subsidiaries that guarantee our secured credit facilities. The indenture contains restrictive covenants that limit our ability to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) create liens on certain assets; (iii) make certain loans or investments (including acquisitions); (iv) pay dividends on or make distributions in respect of our capital stock or make other restricted payments; (v) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; (vi) sell assets; (vii) enter into certain transactions with our affiliates; and (viii) restrict dividends from our subsidiaries. The weighted average effective interest rate incurred on borrowings under our senior notes was 8.2% for both the 2017 and 2016 fiscal years, and 8.3% for the 2015 fiscal year, which included amortization of debt issuance costs and other fees related to our senior notes. Debt Obligations The following table sets forth our future debt payment obligations as of December 31, 2017 (in thousands):
Interest Expense Interest expense consisted of the following for the periods presented:
__________________ (1) Includes amortization of original issue discount The weighted average effective interest rate incurred on our borrowings under our secured credit facilities and senior notes (including amortized debt issuance costs, amortization of original issue discount, commitment and other fees related to the secured credit facilities and senior notes) was 5.6% for the 2017 fiscal year, and 5.5% for both the 2016 and 2015 fiscal years. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments: Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy) has been established. The following table presents information on our financial instruments as of the dates presented:
__________________ (1) Excluding net deferred financing costs. Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, our secured credit facilities and our senior notes. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of their short maturities. The estimated fair value of our secured credit facilities' term loan facility and senior notes was determined by using the respective average of the ask and bid price of our outstanding borrowings under our term loan facility and our senior notes as of the nearest open market date preceding the reporting period end. The average of the ask and bid price are classified as Level 2 in the fair value hierarchy. Our non-financial assets, which include long-lived assets, including property, plant and equipment, goodwill and intangible assets, are reported at carrying value and are not required to be measured at fair value on a recurring basis. However, on a periodic basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, we assess our long-lived assets for impairment. During Fiscal 2017 and Fiscal 2016, there were no significant transfers among level 1, 2 or 3 fair value determinations. |
Other Non-current Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Noncurrent Liabilities | Other Noncurrent Liabilities: Other noncurrent liabilities consisted of the following as of the dates presented:
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Sale Leaseback Transaction |
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Dec. 31, 2017 | |
Leases [Abstract] | |
Sale Leaseback Transaction | Sale Leaseback Transactions: On August 25, 2014, we completed a sale leaseback transaction (the “Sale Leaseback”) with National Retail Properties, Inc. (“NRP”). Pursuant to the Sale Leaseback, we sold 49 properties located throughout the United States to NRP, and we leased each of the 49 properties back from NRP pursuant to two separate master leases on a triple-net basis for their continued use as Chuck E. Cheese’s family dining and entertainment venues. On April 25, 2017, we completed an additional sale leaseback transaction with NADG NNN Acquisitions, Inc. (“NADG NNN”), pursuant to which we sold our property located in Conyers, Georgia to NADG NNN (the “Conyers Sale Leaseback”, and together with the Sale Leaseback, the “Sale Leasebacks”), and we leased the property back from NADG NNN pursuant to a master lease on a triple-net basis for its continued use as Chuck-E-Cheese’s family dining and entertainment venue. The leases in the Sale Leasebacks have an initial term of 20 years, with four five-year options to renew. For accounting purposes, these sale-leaseback transactions are accounted for under the financing method, rather than as completed sales. Under the financing method, we (i) include the sales proceeds received in other long-term liabilities until our continuing involvement with the properties is terminated, (ii) report the associated property as owned assets, (iii) continue to depreciate the assets over their remaining useful lives, and (iv) record the rental payments as interest expense and a reduction of the sale leaseback obligation. When and if our continuing involvement with a property terminates and the sale of that property is recognized for accounting purposes, we expect to record a gain equal to the excess of the proceeds received over the remaining net book value of the property. The aggregate purchase price for the properties in connection with the Sale Leaseback was $183.7 million in cash, and the proceeds, net of taxes and transaction costs, realized by the Company were $143.2 million. A portion of the proceeds from the Sale Leaseback was used for the PPP Acquisition. We used the remaining net proceeds from the Sale Leaseback for capital expenditure needs and other general corporate purposes. The aggregate purchase price for the property in connection with the Conyers Sale Leaseback transaction was approximately $4.1 million million in cash, and the net proceeds realized were approximately $3.9 million. The long-term and current portions of our obligations under the Sale Leasebacks were $177.9 million and $2.9 million, respectively, as of December 31, 2017, and are included in “Other noncurrent liabilities” and “Other current liabilities” in our Consolidated Balance Sheets. The net book value of the associated assets, which is included in “Property and equipment, net” in our Consolidated Balance Sheets, was $79.3 million and $81.3 million as of December 31, 2017 and January 1, 2017, respectively. Our future minimum lease commitments related to the Sale Leasebacks, as of December 31, 2017 for fiscal years 2018, 2019, 2020, 2021, 2022 and thereafter are, in thousands, $13,812, $14,083, $14,360, $14,641, $14,947 and $198,986. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies: Leases We lease certain venues under operating and capital leases that expire at various dates through 2035 with renewal options that expire at various dates through 2054. The leases generally require us to pay a minimum rent, property taxes, insurance, other maintenance costs and, in some instances, additional rent equal to the amount by which a percentage of the venue’s revenues exceed certain thresholds as stipulated in the respective lease agreement. The leases generally have initial terms of 10 to 20 years with various renewal options. The annual future lease commitments under capital lease obligations and non-cancelable operating leases, including reasonably assured option periods but excluding contingent rent, as of December 31, 2017, are as follows:
Rent expense, including contingent rent based on a percentage of venues’ sales, when applicable, was comprised of the following:
Rent expense of $1.2 million in 2017, $1.2 million in 2016 and $1.6 million in 2015, related to our corporate offices and warehouse facilities and was included in “General and administrative expenses” in our Consolidated Statements of Earnings. Unconditional Purchase Obligations Our unconditional purchase obligations consist of agreements to purchase goods or services that are enforceable and legally binding on us and that specify 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 with terms in excess of one year totaled $13.9 million at December 31, 2017 and consisted primarily of obligations associated with the modernization of various information technology platforms and information technology data security service agreements, and the fixed price purchase agreements relating to beverage products. These purchase obligations exclude agreements that can be canceled without significant penalty. Legal Proceedings From time to time, we are involved in various inquiries, investigations, claims, lawsuits and other legal proceedings that are incidental to the conduct of our business. These matters typically involve claims from customers, employees or other third parties involved in operational issues common to the retail, restaurant and entertainment industries. Such matters typically represent actions with respect to contracts, intellectual property, taxation, employment, employee benefits, personal injuries and other matters. A number of such claims may exist at any given time, and there are currently a number of claims and legal proceedings pending against us. In the opinion of our management, after consultation with legal counsel, the amount of liability with respect to claims or proceedings currently pending against us is not expected to have a material effect on our consolidated financial condition, results of operations or cash flows. All necessary loss accruals based on the probability and estimate of loss have been recorded. Employment-Related Litigation: On October 10, 2014, former venue General Manager Richard Sinohui filed a purported class action lawsuit against CEC Entertainment in the Superior Court of California, Riverside County (the “Sinohui Litigation”), claiming to represent other similarly-situated current and former General Managers of CEC Entertainment in California during the period October 10, 2010 to the present. The lawsuit sought an unspecified amount in damages and to certify a class based on allegations that CEC Entertainment wrongfully classified current and former California General Managers as exempt from overtime protections; that such General Managers worked more than 40 hours a week without overtime premium pay, paid rest periods, and paid meal periods; and that CEC Entertainment failed to provide accurate itemized wage statements or to pay timely wages upon separation from employment, in violation of the California Labor Code, California Business and Professions Code, and the applicable Wage Order issued by the California Industrial Welfare Commission. The plaintiff also alleged that CEC Entertainment failed to reimburse General Managers for certain business expenses, including for personal cell phone usage and mileage, in violation of the California Labor Code; he also asserted a claim for civil penalties under the California Private Attorneys General Act (“PAGA”). On December 5, 2014, CEC Entertainment removed the Sinohui Litigation to the U.S. District Court for the Central District of California, Southern Division. On March 16, 2016, the Court issued an order denying in part and granting in part Plaintiff’s Motion for Class Certification. Specifically, the Court denied Plaintiff’s motion to the extent that he sought to certify a class on Plaintiff’s misclassification and wage statement claims, but certified a class with respect to Plaintiff’s claims that CEC Entertainment had wrongfully failed to reimburse him for cell phone expenses and/or mileage. On June 14, 2016, the Court dismissed Sinohui’s PAGA claim. After participating in mediation on April 19, 2017, the parties agreed to settle all of Sinohui’s individual and class claims. Pursuant to the basic terms of their settlement, Sinohui will grant a complete release to CEC Entertainment on behalf of himself and the class of all claims that he asserted or could have asserted against the Company, based on the facts that gave rise to the certified reimbursement claim in the Sinohui Litigation, in exchange for the Company’s settlement payment. On December 13, 2017, the Court entered its order granting preliminary approval of the parties’ settlement and setting a final fairness hearing for June 15, 2018. The order requires Plaintiff to file his motion for final approval of the parties’ settlement no later than April 27, 2018. Based on the Court’s order, the settlement of this lawsuit should be funded and concluded during the second quarter of 2018. The settlement of this action will not have a material adverse effect on our results of operations, financial position, liquidity or capital resources. After the Court in the Sinohui Litigation issued its order denying certification of a class of California-based general managers on misclassification and wage statement claims, six lawsuits were filed against the Company in California state court (the “California General Manager Litigation”). The plaintiffs in these actions include nine current and 12 former California General Managers asserting individual misclassification, wage statement, and expense reimbursement claims. Between December 20, 2016 and April 21, 2017 the Company filed initial responses to each of the lawsuits and removed them all to Federal District Court. As part of the settlement reached by the parties in the Sinohui Litigation, described above, the parties also agreed to settle the California General Manager Litigation. Pursuant to the basic terms of their comprehensive settlement, each of the Plaintiffs granted a complete release to CEC Entertainment of all claims that he or she asserted or could have asserted against the Company based on the facts that gave rise to the California General Manager Litigation in exchange for the Company’s settlement payments to each of them. The comprehensive settlement of these lawsuits was concluded and each of these cases was dismissed in August 2017. The settlement of these actions did not have a material adverse effect on our results of operations, financial position, liquidity or capital resources. On January 30, 2017, former Technical Manager Kevin French filed a purported class action lawsuit against the Company in the U.S. District Court for the Northern District of California (the “French Federal Court Lawsuit”), alleging that CEC Entertainment failed to pay overtime wages, failed to issue accurate itemized wage statements, failed to pay wages due upon separation of employment, and failed to reimburse for certain business expenses, including for mileage and personal cell phone usage, in violation of the California Labor Code and federal law, and seeking to certify separate classes on his federal and state claims. On October 30, 2017, the parties conducted a mediation. At the conclusion of the mediation, the parties agreed to settle all of French’s class and individual claims. Pursuant to the parties’ agreement, on November 14, 2017, the Federal Court Lawsuit was dismissed, and on November 15, 2017, Plaintiff filed a new lawsuit in Superior Court of San Bernadino County, California (the “French State Court Lawsuit”). The French State Court Lawsuit carried forward only the California state law claims alleging a failure to reimburse for business expenses, and sought to certify a class of CEC California Senior Assistant Managers, Assistant Managers, Technical Managers and Assistant Technical Managers who were authorized to drive on behalf of CEC from January 30, 2013 through April 27, 2018. On December 20, 2017, further pursuant to the parties’ settlement, Plaintiff filed a Notice of Settlement. We expect that the settlement will be concluded and the case dismissed by the end of the third quarter of 2018. The settlement of this action will not have a material adverse effect on our results of operations, financial position, liquidity or capital resources. Litigation Related to the Merger: Following the January 16, 2014 announcement that CEC Entertainment had entered into an agreement (“Merger Agreement”), pursuant to which an entity controlled by Apollo Global Management, LLC (“Apollo”) and its subsidiaries merged with and into CEC Entertainment, with CEC Entertainment surviving the merger (the “Merger”), four putative shareholder class actions were filed in the District Court of Shawnee County, Kansas, on behalf of purported stockholders of CEC Entertainment, against A.P. VIII Queso Holdings, L.P., CEC Entertainment, CEC Entertainment's directors, Apollo and Merger Sub (as defined in the Merger Agreement), in connection with the Merger Agreement and the transactions contemplated thereby. These actions were consolidated into one action (the “Consolidated Shareholder Litigation”) in March 2014, and on July 21, 2015, a consolidated class action petition was filed as the operative consolidated complaint, asserting claims against CEC’s former directors, adding The Goldman Sachs Group (“Goldman Sachs”) as a defendant, and removing all Apollo entities as defendants (the “Consolidated Class Action Petition”). The Consolidated Class Action Petition alleges that CEC Entertainment’s directors breached their fiduciary duties to CEC Entertainment’s stockholders in connection with their consideration and approval of the Merger Agreement by, among other things, conducting a deficient sales process, agreeing to an inadequate tender price, agreeing to certain provisions in the Merger Agreement, and filing materially deficient disclosures regarding the transaction. The Consolidated Class Action Petition also alleges that two members of CEC Entertainment’s board who also served as the senior managers of CEC Entertainment had material conflicts of interest and that Goldman Sachs aided and abetted the board’s breaches as a result of various conflicts of interest facing the bank. The Consolidated Class Action Petition seeks, among other things, to recover damages, attorneys’ fees and costs. The Company assumed the defense of the Consolidated Shareholder Litigation on behalf of CEC’s named former directors and Goldman Sachs pursuant to existing indemnity agreements. On March 23, 2016, the Court conducted a hearing on the defendants’ Motion to Dismiss the Consolidated Class Action Petition and on March 1, 2017, the Special Master appointed by the Court issued a report recommending to the Court that the Consolidated Class Action Petition be dismissed in its entirety. On March 17, 2017, Plaintiffs filed objections to the Special Master’s report and recommendation with the Kansas court and separately filed a motion with the Special Master to amend the complaint as to Goldman Sachs, but not objecting to the dismissal of CEC or its former directors. On November 20, 2017, the Special Master filed a Supplemental Report recommending to the Court that Plaintiffs’ motion for leave to amend be denied; if the District Court accepts the Special Master’s supplemental recommendations, the case will be dismissed in its entirety. Both remaining parties (Plaintiffs and Goldman Sachs) filed objections to the Supplemental Report on December 22, 2017, and the parties filed responses to these objections on February 16, 2018. The District Court has not yet set this case for trial. While no assurance can be given as to the ultimate outcome of the consolidated matter, we currently believe that the final resolution of the action will not have a material adverse effect on our results of operations, financial position, liquidity or capital resources. Peter Piper, Inc. Litigation: On September 8, 2016, Diane Jacobson filed a purported class action lawsuit against Peter Piper, Inc. (“Peter Piper”) in the U.S. District Court for the District of Arizona, Tucson Division (the “Jacobson Litigation”). The plaintiff claims to represent other similarly-situated consumers who, within the two years prior to the filing of the Jacobson Litigation, received a printed receipt on which Peter Piper allegedly printed more than the last five digits of the consumer’s credit/debit card number, in violation of the Fair and Accurate Credit Transactions Act. On November 11, 2016, Peter Piper filed a motion to dismiss the Jacobson Litigation. After the plaintiff filed her opposition to the Motion to Dismiss and Peter Piper filed its reply in support thereof, the motion was submitted to the Court for ruling on December 22, 2016. On February 2, 2017, the Court stayed the Jacobson Litigation pending the decision of the U.S. Ninth Circuit Court of Appeals in Noble v. Nevada Check Cab Corp., a case that presented an issue for decision that is relevant to Peter Piper’s motion to dismiss. On March 9, 2018, the Ninth Circuit issued its decision in the Noble case, setting precedent that favors Peter Piper’s position in the Jacobson Litigation. Based on the appellate court’s decision in that case, on March 15, 2018 Peter Piper filed a motion to lift the stay and requesting that the trial court grant its motion to dismiss. We believe Peter Piper has meritorious defenses to this lawsuit and, should the Court overrule the motion to dismiss we intend to vigorously defend it. Since the litigation is in its earliest stages, the Company does not yet have sufficient information to reach a good faith determination on Peter Piper’s potential liability or exposure in the event that its defense is unsuccessful. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes: For financial reporting purposes, income (loss) before income taxes includes the following components:
Our income tax expense (benefit) consists of the following for the periods presented:
A reconciliation of the federal statutory income tax rate to our effective tax rate is as follows:
_________________ (1) The Tax Cuts and Jobs Act of 2017 (enacted on December 22, 2017) resulted in a decrease of our net deferred tax liability of $66.6 million and a corresponding benefit to our deferred federal income taxes for Fiscal 2017. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA includes a number of provisions impacting us, including the lowering of the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, 100% bonus depreciation for qualifying capital expenditures acquired and placed into service after September 27, 2017, establishment of a territorial-style system for taxing foreign-source income, limitations on the deductibility of interest expense and increased limitations on compensation paid to the Chief Executive Officer, Chief Financial Officer, and next three highest compensated executive officers (Internal Revenue Code Section 162(m)) effective January 1, 2018. The TCJA’s reduction in the U.S. corporate tax rate from 35% to 21% (effective for Fiscal 2018) and increased allowance for bonus depreciation will have a favorable impact on our future after tax net income and cash flows. While we were able to make provisional estimates for the impact of the TJCA, the actual results may differ from these estimates, due to, among other things, changes in our interpretations and assumptions relating to the changes made by the TCJA and additional guidance that is anticipated to be issued by the U.S. Treasury and Internal Revenue Service relating to (i) the newly enacted increase in bonus depreciation for qualifying assets acquired and placed in service after September 27, 2017, (ii) the expansion of the limitation under Section 162(m) relating to the deductibility of executive compensation in excess of $1.0 million, and (iii) the one-time transition tax, net of foreign tax credits and operating losses, on earnings of foreign subsidiaries that were previously deferred from U.S. tax. Deferred income tax assets and liabilities consisted of the following at the dates presented:
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As of December 31, 2017, we have $9.9 million of federal net operating loss carryforwards (expiring at the end of tax years 2030 through 2037), $9.5 million of state net operating loss carryforwards (expiring at the end of tax years 2022 through 2037), and $0.5 million of Alternative Minimum Tax credit carryforwards (with an indefinite carryforward period). As of December 31, 2017, we also have state income tax credit carryforwards of $0.9 million net of their related valuation allowance (which expire at the end of 2022 through 2026) and $1.6 million of Canadian net operating loss carryforwards (expiring at the end of tax years 2034 through 2037), for which a full valuation allowance has been recorded. We file numerous federal, state, and local income tax returns in the U.S. and some foreign jurisdictions. As a matter of ordinary course, we are subject to regular examination by various tax authorities. Certain of our federal and state income tax returns are currently under examination and are in various stages of the audit/appeals process. In general, the U.S. federal statute of limitations has expired for our federal income tax returns filed for tax years ended before 2014 with the exception of the Peter Piper Pizza federal income tax returns with net operating losses which have been carried forward to open tax years (whereas, adjustments can be made to these prior returns until the respective statute of limitations expire for the particular tax years the net operating losses are utilized). In general, our state income tax statutes of limitations have expired for tax years ended before 2013. In general, the statute of limitations for our Canada income tax returns has expired for tax years ended before 2013. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Our liability for uncertain tax positions (excluding interest and penalties) was $3.9 million and $3.1 million as of December 31, 2017 and January 1, 2017, respectively, and if recognized would decrease our provision for income taxes by $2.6 million. Within the next twelve months, we could settle or otherwise conclude certain ongoing income tax audits. As such, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $1.1 million as a result of settlements with certain taxing authorities and expiring statutes of limitations within the next twelve months. The total accrued interest and penalties related to unrecognized tax benefits as of December 31, 2017 and January 1, 2017, was $1.0 million and $1.2 million, respectively. On the Consolidated Balance Sheets, we include current accrued interest related to unrecognized tax benefits in “Accrued interest,” current accrued penalties in “Accrued expenses” and non-current accrued interest and penalties in “Other noncurrent liabilities.” |
Stock-Based Compensation Arrangements |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Arrangements | Stock-Based Compensation Arrangements: 2014 Equity Incentive Plan The 2014 Equity Incentive Plan provides Parent authority to grant equity incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards or performance compensation awards to certain directors, officers or employees of the Company. During 2017, 2016 and 2015, Parent granted options to purchase 123,603 shares, 101,110 shares and 519,414 shares, respectively, of its common stock to certain directors, officers and employees of the Company. The options are subject to certain service and performance based vesting criteria, and were split evenly between Tranches A, B and C, which have different vesting requirements. The options in Tranche A are service based, and vest and become exercisable in equal installments on each of the first five anniversaries of the respective grant dates. The Black-Scholes model was used to estimate the fair value of Tranche A stock options. Tranche B and Tranche C options are performance based and vest and become exercisable when certain return thresholds are achieved. The Monte Carlo simulation model was used to estimate the fair value of Tranche B and Tranche C stock options. Unvested Tranche A options are also subject to accelerated vesting and exercisability on the first anniversary of a change in control of Queso Holdings Inc. or within 12 months following such a change in control. Tranche B and C options may also vest and become exercisable if applicable hurdles are achieved in connection with an initial public offering. Compensation costs related to options in the Parent were recorded by the Company. The weighted-average fair value of the options granted in 2017, 2016 and 2015 was estimated at $3.71, $2.28 and $1.28 per option, $2.99, $1.68 and $0.87 per option and $2.83, $1.44 and $0.84 per option, respectively, for Tranches A, B and C, respectively, on the date of grant based on the following assumptions:
A summary of the option activity under the equity incentive plan as of December 31, 2017 and the activity for 2017 is presented below:
_________________ (1) The weighted average exercise price reflects the original grant date fair value per option as adjusted for the dividend payment made in August 2015. As of December 31, 2017, we had $1.6 million of total unrecognized share based compensation expense related to unvested options, net of expected forfeitures, which is expected to be amortized over the remaining weighted average period of 1.2 years. In February 2018, the Parent granted additional options to purchase 112,769 shares of its common stock to certain officers and employees of the Company. A summary of stock based compensation costs recognized and capitalized is presented below:
__________________ (1)We capitalize the portion of stock-based compensation costs related to our design, construction, facilities and legal departments that are directly attributable to our venue development projects, such as the design and construction of a new venue and the remodeling and expansion of our existing venues. Capitalized stock-based compensation costs attributable to our venue development projects are included in “Property and equipment, net” in the Consolidated Balance Sheets. |
Stockholders' Equity |
12 Months Ended |
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Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders’ Equity: | Stockholder’s Equity: We have one class of common capital stock, as disclosed on our Consolidated Balance Sheets. All outstanding common stock is owned by Queso Holdings, Inc. As of December 31, 2017 and January 1, 2017, we have 200 shares issued and outstanding. Cash Dividends In accordance with our credit facilities, our ability to declare dividends is restricted. We declared and paid a cash dividend to Parent during 2015 of $70 million. |
Related Party Transaction Related Party Transaction |
12 Months Ended |
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Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions: CEC Entertainment reimburses Apollo Management, L.P. for certain out-of-pocket expenses incurred in connection with travel and Board of Directors related expenses. Expense reimbursements by CEC Entertainment to Apollo Management, L.P. totaled $0.4 million and $0.8 million for Fiscal 2017 and Fiscal 2016, respectively, and are included in “General and administrative expenses” in our Consolidated Statements of Earnings. CEC Entertainment engages an Apollo portfolio company to provide security services to its venues. CEC Entertainment incurred expenses totaling $0.9 million, $0.8 million and $0.7 million for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively, in connection with services provided by this Apollo portfolio company. These expenses are included in “Other venue operating expenses” in our Consolidated Statements of Earnings. |
Consolidating Guarantor Financial Information |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Guarantor Financial Information | Consolidating Guarantor Financial Information: On February 14, 2014, CEC Entertainment, Inc. (the “Issuer”), 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 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:
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Quarterly Results of Operations (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results of Operations (Unaudited) | Quarterly Results of Operations (Unaudited): The following table summarizes our unaudited quarterly condensed consolidated results of operations in 2017 and 2016:
Quarterly operating results are not necessarily representative of operations for a full year. |
Subsequent Events |
12 Months Ended |
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Dec. 28, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events: [To be updated for any reportable subsequent events after year end] |
Description of Business and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||
Basis of Presentation | Basis of Presentation: All intercompany accounts and transactions have been eliminated in consolidation. We reclassified $6.3 million and $4.1 million of Depreciation and amortization in our Consolidated Statements of Earnings for the fiscal years ended January 1, 2017 and January 3, 2016 , respectively, from “General and administrative expenses” to “Depreciation and amortization”, and we reclassified “Depreciation and Amortization” of $113.3 million and $115.2 million for the fiscal years ended January 1, 2017 and January 3, 2016, respectively, in our Consolidated Statements of Earnings from “Company venue operating costs” to “Other costs and expenses” to conform to the current period’s presentation. Additionally, we reclassified $0.6 million of Income taxes receivable in our Consolidated Balance Sheets as at January 1, 2017 from “Accounts receivable” to “Income taxes receivable” to conform to the current period’s presentation. The Company has a controlling financial interest in International Association of CEC Entertainment, Inc. (the “Association”), a VIE. The Association primarily administers the collection and disbursement of funds (the “Association Funds”) used for advertising, entertainment and media programs that benefit both us and our Chuck E. Cheese’s franchisees. We and our franchisees are required to contribute a percentage of gross sales to these funds and could be required to make additional contributions to fund any deficits that may be incurred by the Association. We include the Association in our Consolidated Financial Statements, as we concluded that we are the primary beneficiary of its variable interests because we (a) have the power to direct the majority of its significant operating activities; (b) provide it unsecured lines of credit; and (c) own the majority of the venues that benefit from the Association’s advertising, entertainment and media expenditures. We eliminate the intercompany portion of transactions with VIE’s from our financial results. The assets, liabilities and operating results of the Association are not material to our Consolidated Financial Statements. |
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Fiscal Year | Fiscal Year: We operate on a 52 or 53 week fiscal year that ends on the Sunday nearest to December 31. Each quarterly period has 13 weeks, except for a 53 week year when the fourth quarter has 14 weeks. Fiscal 2015 consisted of 53 weeks, whereas Fiscal 2017 and Fiscal 2016 consisted of 52 weeks. |
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Use of Estimates and Assumptions | Use of Estimates and Assumptions: The preparation of these Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Cash and Cash Equivalents | Cash and Cash Equivalents: Cash and cash equivalents are comprised of demand deposits with banks and short-term cash investments with remaining maturities of three months or less from the purchase date. |
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Concentration of Credit Risk | Concentrations of Credit Risk: We have exposure to credit risk to the extent that our cash and cash equivalents exceed amounts covered by the United States and Canada deposit insurance limits, as we currently maintain a significant amount of our cash and cash equivalents balances with two major financial institutions. The individual balances, at times, may exceed the insured limits. We have not experienced any losses in such accounts. In management’s opinion, the capitalization and operating history of the financial institutions are such that the likelihood of a material loss is considered remote. |
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Inventories | Inventories: Inventories of food, beverages, merchandise, paper products and other supplies needed for our food service and entertainment operations are stated at the lower of cost on a first-in, first-out basis or net realizable value. |
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Property and Equipment | Property and Equipment: Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are charged to operations using the straight-line method over the assets’ estimated useful lives, which are as follows:
Leasehold improvements are amortized using the straight-line method over the lesser of the lease term or the estimated useful lives of the related assets. We use a consistent lease period (generally, the initial non-cancelable lease term plus renewal option periods provided for in the lease that can be reasonably assured of being exercised) when estimating the depreciable lives of leasehold improvements, in determining classification of our leases as either operating or capital and in recognizing straight-line rent expense. Interest costs incurred during the construction period are capitalized and depreciated based on the estimated useful life of the underlying asset. We review our property and equipment for indicators of impairment on an ongoing basis at the lowest level of cash flows available, which is on a venue-by-venue basis, to assess if the carrying amount may not be recoverable. Potential indicators of impairment may include a significant change in the business climate in a particular market area (for example, due to economic downturn or natural disaster), historical negative cash flows or plans to dispose of or sell the property and equipment before the end of its previously estimated useful life. If an event or change in circumstances occurs, we estimate the future cash flows expected to result from the use of the property and equipment and its eventual disposition. If the sum of the expected future cash flows, undiscounted and without interest, is less than the asset carrying amount (an indication that the carrying amount may not be recoverable), we may be required to recognize an impairment loss. We estimate the fair value of a venue’s property and equipment by discounting the expected future cash flows of the venue over its remaining lease term using a weighted average cost of capital commensurate with the risk. Any impairment loss recognized equals the amount by which the asset carrying amount exceeds its estimated fair value. In the event an asset is impaired, its carrying value is adjusted to the estimated fair value, and any subsequent increases in fair value are not recorded. Additionally, if it is determined that the estimated remaining useful life of the asset should be decreased, any periodic depreciation and amortization expense is adjusted based on the new carrying value of the asset unless the asset is written down to salvage value, at which time depreciation or amortization ceases. |
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Capitalized Store Development Costs | Capitalized Venue Development Costs: We capitalize our internal department costs that are directly attributable to venue development projects, such as the design and construction of a new venue and the remodeling and expansion of our existing venues. Capitalized internal department costs include certain compensation, benefits and office costs related to our design, construction, facilities and legal departments. We also capitalize interest costs in conjunction with the construction of new venues. Venue development costs are initially accumulated in our construction in progress account until a project is completed. At the time of completion, the costs accumulated to date are then reclassified to property and equipment and depreciated according to our depreciation policies. |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets: The excess of the purchase price over fair value of net identifiable assets and liabilities of an acquired business (“goodwill”), trademarks, trade names and other indefinite-lived intangible assets are not amortized, but rather tested for impairment, at least annually. We assess the recoverability of the carrying amount of our goodwill and other indefinite-lived intangible assets either qualitatively or quantitatively annually at the beginning of the fourth quarter of each fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. When assessing the recoverability of goodwill and other indefinite-lived intangible assets, we may first assess qualitative factors. If an initial qualitative assessment indicates that it is more likely than not the carrying amount exceeds fair value, a quantitative analysis may be required. We may also elect to skip the qualitative assessment and proceed directly to the quantitative analysis. Recoverability of the carrying value of goodwill is measured at the reporting unit level. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by management. The Company has determined that the operations of Chuck E. Cheese’s and Peter Piper Pizza represent two separate reporting units for purposes of measuring the recoverability of the carrying value of goodwill. In performing a quantitative analysis, we measure the recoverability of goodwill using: (i) a discounted cash flow model incorporating discount rates commensurate with the risks involved, which is classified as a Level 3 fair value measurement, and (ii) a market approach based upon public trading and recent transaction valuation multiples for similar companies. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, tax rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. If the calculated fair value is less than the current carrying amount, impairment of the reporting unit may exist. When the recoverability test indicates potential impairment, we calculate an implied fair value of goodwill for the reporting unit. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. If the implied fair value of goodwill exceeds the carrying amount of goodwill assigned to the reporting unit, there is no impairment. If the carrying amount of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment loss is recorded to write down the carrying amount. In performing a quantitative analysis, recoverability is measured by a comparison of the carrying amount of the indefinite-lived intangible asset over its fair value. Any excess of the carrying amount of the indefinite-lived intangible asset over its fair value is recognized as an impairment loss. We test indefinite-lived intangible assets utilizing the relief from royalty method to determine the estimated fair value for each indefinite-lived intangible asset, which is classified as a Level 3 fair value measurement. The relief from royalty method estimates our theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this model include discount rates, royalty rates, growth rates, tax rates, sales projections and terminal value rates. Discount rates, royalty rates, growth rates and sales projections are the assumptions most sensitive and susceptible to change as they require significant management judgment. Discount rates used are similar to the rates estimated by the weighted average cost of capital considering any differences in company-specific risk factors. Intangible assets with finite lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Estimated weighted average useful lives are 25 years for franchise agreements and 10 years for favorable lease agreements. An impairment loss would be indicated when estimated undiscounted future cash flows from the use of the asset are less than its carrying amount. An impairment loss would be measured as the difference between the fair value (based on discounted future cash flows) and the carrying amount of the asset. |
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Fair Value Disclosures | Fair Value Disclosures: Fair value is defined as the price that we would expect to receive to sell an asset or pay to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. In determining fair value, GAAP establishes a three-level hierarchy used in measuring fair value, as follows:
We may also adjust the carrying amount of certain nonfinancial assets to fair value on a non-recurring basis when they are impaired. The fair values of our long-lived assets held and used are determined using Level 3 inputs based on the estimated discounted future cash flows of the respective venue over its expected remaining useful life or lease term. Due to uncertainties in the estimates and assumptions used, actual results could differ from the estimated fair values. See Note 4. “Property and Equipment” for our impairment of long-lived assets disclosures and Note 9. “Fair Value of Financial Instruments” for our fair value disclosures. |
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Self Insurance Accruals | Self-Insurance Accruals: We are self-insured up to certain limits for certain losses related to workers’ compensation, general liability, property and our Company sponsored employee health insurance programs. We estimate the accrued liabilities for all risk retained by the Company at the end of each reporting period. This estimate is primarily based on historical claims experience and loss reserves, calculated with the assistance of an independent third-party actuary. Our deductibles generally range from $0.2 million to $0.5 million per occurrence. For claims that exceed the deductible amount, we record a gross liability and a corresponding receivable representing expected recoveries pursuant to the stop-loss coverage, since we are not legally relieved of our obligation to the claimant. |
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Contingent Loss Accruals | Contingent Loss Accruals: When a contingency involving uncertainty as to a possible loss occurs, an estimate of the loss may be accrued as a charge to income and a reserve established on the Consolidated Balance Sheets. We perform regular assessments of our contingent losses and develop estimates of the degree of probability for and range of possible settlement. We accrue liabilities for losses we deem probable and for which we can reasonably estimate an amount of settlement. We do not record liabilities for losses we believe are only reasonably possible to result in an adverse outcome, but provide disclosure of the reasonably possible range of loss to the extent it is estimable. Reserve balances may be increased or decreased in the future to reflect further developments. However, there can be no assurance that there will not be a loss different from the amounts accrued. Any such loss, if realized, could have a material effect on our consolidated results of operations in the period during which the underlying matters are resolved. |
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Foreign Currency Translations | Foreign Currency Translation: Our Consolidated Financial Statements are presented in U.S. dollars. The assets and liabilities of our Canadian subsidiary are translated to U.S. dollars at year-end exchange rates, while revenues and expenses are translated at average exchange rates during the year. Adjustments that result from translating amounts are reported as a component of “Accumulated other comprehensive income (loss)” on our Consolidated Statements of Changes in Stockholder’s Equity and in our Consolidated Statements of Comprehensive Income (Loss). The effect of foreign currency exchange rate changes on cash is reported in our Consolidated Statements of Cash Flows as a separate component of the change in cash and cash equivalents during the period. |
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Stock-based Compensation | Stock-Based Compensation: We expense the fair value of stock-based compensation awards granted to our employees and directors in our Consolidated Financial Statements on a straight-line basis over the period that services are required to be provided in exchange for the award (“requisite service period”), which typically is the period over which the award vests. Stock-based compensation is recognized only for awards that vest, and we record forfeitures as they occur. We measure the fair value of compensation cost related to stock options based on third party valuations. Stock-based compensation expense is recorded in “General and administrative expenses” in the Consolidated Statements of Earnings, which is the same financial statement caption where the associated salary expense of employees with stock-based compensation awards is recorded. The gross benefits of tax deductions in excess of the compensation cost recognized from the vesting of stock options are tax effected and classified as cash inflows from financing activities in our Consolidated Statements of Cash Flows. |
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Revenue Recognition – Company Store Activities | Revenue Recognition – Company Venue Activities: Food, beverage and merchandise revenues are recognized when sold. Game revenues are recognized as game-play tokens and game play credits on game cards are used by guests. We allocate the revenue recognized from the sale of value-priced combination packages, which generally are comprised of food, beverage and game credits (and in some instances, merchandise), between “Food and beverage sales” and “Entertainment and merchandise sales” based upon the price charged for each component when it is sold separately, or in limited circumstances our best estimate of selling price if a component is not sold on a stand-alone basis, which we believe approximates each component’s fair value. Our entertainment revenue includes customer purchases of game play credits on Play Pass game cards which allow our customers to play the games in our venues. We recognize a liability for the estimated amount of unused game play credits, which we believe our customers will redeem or utilize in the future based on credits remaining on Play Pass cards and utilization patterns. Our total estimate of unearned revenue for unused Play Pass credits as of December 31, 2017 and January 1, 2017 was $11.9 million and $5.2 million, respectively, and is included in “Unearned revenues” in our Consolidated Balance Sheets. We sell gift cards to our customers in our venues and through certain third-party distributors, which do not expire and do not incur a service fee on unused balances. Gift card sales are recorded as deferred revenue when sold and are recognized as revenue when: (a) the gift card is redeemed by the guest or (b) the likelihood of the gift card being redeemed by the guest is remote (“gift card breakage”) and we determine that we do not have a legal obligation to remit the value of the unredeemed gift card under applicable state unclaimed property escheat statutes. Gift card breakage is determined based upon historical redemption patterns of our gift cards. |
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Revenue Recognition – Franchise Fees and Royalties | Revenue Recognition – Franchise Fees and Royalties: Revenues from franchise activities include area development and initial franchise fees received from franchisees to establish new venues, and once a venue is opened, a franchisee is charged monthly royalties based on a percentage of franchised venues’ sales. These fees are collectively referred to as “Franchise fees and royalties” in our Consolidated Statements of Earnings. Area development and initial franchise fees are recorded as unearned franchise revenue when received and recognized as revenue when we have fulfilled all significant obligations to the franchisee, which is generally when the franchised venues associated with the fees open. Continuing royalties and other miscellaneous sales and fees are recognized in the period earned. |
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Cost of Food, Beverage, Entertainment and Merchandise | Cost of Food, Beverage, Entertainment and Merchandise: Cost of food and beverage includes all direct costs of food and beverage sold to our guests and related paper and birthday supplies used in our food service operations, less “vendor rebates” described below. Cost of entertainment and merchandise includes the direct cost of prizes provided and merchandise sold to our customers, as well as the cost of tickets dispensed to customers and redeemed for prize items. These amounts exclude any allocation of other operating costs including labor and related costs for venue personnel and depreciation and amortization expense, which are disclosed separately. |
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Vendor Rebates | Vendor Rebates: We receive rebate payments from certain third-party vendors. Pursuant to the terms of volume purchasing and promotional agreements entered into with the vendors, rebates are primarily provided based on the quantity of the vendors’ products we purchase over the term of the agreement. We record these allowances in the period they are earned as a reduction in the cost of the vendors’ products, and when the related inventory is sold, the allowances are recognized in “Cost of food and beverage” in our Consolidated Statements of Earnings. |
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Rent Expense | Rent Expense: We recognize rent expense on a straight-line basis over the lease term, including the construction period and lease renewal option periods provided for in the lease that can be reasonably assured at the inception of the lease. The lease term commences on the date when we take possession and have the right to control use of the leased premises. The difference between actual rent payments and rent expense in any period is recorded as a deferred rent liability and included in “Other Noncurrent Liabilities” on our Consolidated Balance Sheets. Construction allowances received from the landlord as a lease incentive intended to reimburse us for the cost of leasehold improvements (“Landlord contributions”) are accrued as deferred landlord contributions. Landlord contributions are amortized on a straight-line basis over the lease term as a reduction to rent expense. |
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Advertising Costs | Advertising Costs: Production costs for commercials and coupons are expensed in the period in which the commercials are initially aired and the coupons are distributed. All other advertising costs are expensed as incurred. We and our franchisees are required to contribute a percentage of gross sales to administer all the national advertising programs that benefit both us and our franchisees. Because the contributed funds are required to be segregated and used for specified purposes, we do not reflect franchisee contributions as revenue, but rather record franchisee contributions as an offset to reported advertising expenses. Our advertising contributions for Chuck E. Cheese’s franchise venues are paid to the Association and are eliminated in consolidation. Advertising contributions from our franchisees were $2.1 million in Fiscal 2017, $2.2 million in Fiscal 2016 and $2.1 million in Fiscal 2015. |
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Income Taxes | Income Taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. A valuation allowance is applied against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We maintain tax reserves for federal, state and foreign income taxes when we believe a position may not be fully sustained upon review by taxing authorities. Although we believe that our tax positions are fully supported by the applicable tax laws and regulations, there are matters for which the ultimate outcome is uncertain. We recognize the benefit from an uncertain tax position in our Consolidated Financial Statements when the position is at least more-likely-than-not (a greater than 50 percent chance of being sustained). The amount recognized is measured using a probability weighted approach and is the largest amount of benefit that is greater than 50 percent likelihood of being realized upon settlement or ultimate resolution with the taxing authority. We routinely assess the adequacy of the estimated liability for unrecognized tax benefits, which may be affected by changing interpretations of laws, rulings by tax authorities and administrative policies, certain changes and/or developments with respect to audits and expirations of the statute of limitations. In our Consolidated Statements of Earnings, we include interest expense related to unrecognized tax benefits in “Interest expense” and include penalties in “General and administrative expenses.” On our Consolidated Balance Sheets, we include current interest related to unrecognized tax benefits in “Accrued interest,” current penalties in “Accrued expenses” and noncurrent accrued interest and penalties in “Other noncurrent liabilities.” |
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Recently Issued Accounting Guidance | Recently Issued Accounting Guidance: Accounting Guidance Adopted: Effective January 2, 2017 we adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This amendment requires entities to measure most inventory at the “lower of cost or net realizable value,” thereby simplifying the former guidance under which entities measured inventory at the lower of cost or market (market in this context was defined as one of three different measures, one of which was net realizable value). The adoption of this amendment did not have a significant impact on our Consolidated Financial Statements. Effective January 2, 2017 we adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718). This amendment requires that (i) all excess tax benefits and deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit on the income statement, (ii) the tax effects of exercised or vested awards be treated as discrete items in the reporting period in which they occur, and (iii) an entity recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period or not. On the statement of cash flows excess tax benefits are classified along with other income tax cash flows as an operating activity. As allowed by the amendment we have elected to account for forfeitures when they occur. The threshold for an award to qualify for equity classification permits withholding up to the maximum statutory tax rate in applicable jurisdictions, and the cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. The adoption of this amendment did not have a significant impact on our Consolidated Financial Statements. Accounting Guidance Not Yet Adopted: In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). This new standard introduces a new lease model that requires the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about leasing arrangements. While this new standard retains most of the principles of the existing lessor model under U.S. GAAP, it aligns many of those principles with Accounting Standards Codification (“ASC”) 606: Revenue from Contracts with Customers. The new guidance will be effective for us beginning on December 31, 2018. We are currently evaluating the impact of the adoption of this guidance on our Consolidated Financial Statements, but we expect this will have a material effect on our balance sheet since the Company has a significant amount of operating and capital lease arrangements. In March 2016, the FASB issued ASU 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20). This amendment provides a narrow scope exception to Liabilities—Extinguishment of Liabilities (Subtopic 405-20) that requires breakage for those liabilities to be accounted for in accordance with the breakage guidance in Revenue From Contracts With Customers (Topic 606). There is currently no guidance in GAAP, or pending guidance, regarding the derecognition of prepaid stored-value product liabilities within the scope of the amendments in this update. Under the new guidance, if an entity expects to be entitled to a breakage amount for a liability resulting from the sale of a prepaid stored-value product, the entity shall derecognize the amount related to the expected breakage in proportion to the pattern of rights expected to be exercised by the product holder only to the extent that it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. If an entity does not expect to be entitled to a breakage amount for a prepaid stored-value product, the entity shall derecognize the amount related to the breakage when the likelihood of the product holder exercising its remaining rights becomes remote. This change to an entity's estimated breakage amount shall be accounted for as a change in accounting estimate. The amendments in this update are effective for the Company in Fiscal 2018. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This amendment updates the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property, changing the FASB's previous proposals on right-of-use licenses and contractual restrictions. For an entity that licenses intellectual property, the amount or timing of revenue recognition and the timing and pattern of revenue recognition for intellectual property licenses, including the application of the sale- and usage-based royalties exception, may be significantly different from current practice. We have completed our initial assessment of all potential impacts of this amendment on our revenues, including: (i) our accounting for franchise and development fees, and (ii) accounting for our national advertising costs under the Association Funds. Specifically, we expect the adoption of this amendment will require us to recognize initial and renewal franchise and development fees on a straight-line basis over the life of the franchise agreement. Historically, we have recognized revenue from initial franchise and development fees upon the opening of a franchised restaurant when we have completed all of our material obligations and initial services. Additionally, we expect to account for our national advertising fund revenues on a gross basis, instead of net. We do not expect the impact of recognizing initial franchise fees over the franchise agreement period and recognizing advertising expense upon adoption of this standard to have a material effect on our consolidated financial statements. We have determined that this amendment will not have an impact on our recognition of revenue related to our franchise royalties, which are based on a percentage of franchise sales and revenue from Company-operated venues. We will adopt the guidance in this amendment beginning with our fiscal first quarter 2018 and will apply the guidance using the modified retrospective method, recognizing the cumulative effect of applying the new standard to new contracts and contracts that are not considered completed as of January 1, 2018, with no restatement of the comparative periods presented. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This amendment changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The amendments in this update are effective for the Company for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Entities may early adopt the amendments in this update as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This amendment reduces diversity in practice in how certain transactions are classified in the statement of cash flows. Current GAAP either is unclear or does not include specific guidance on eight cash flow classification issues addressed in this amendment, including (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of insurance claims; (iii) separately identifiable cash flows and application of the predominance principle; and (iv) contingent consideration payments made after a business combination. This amendment is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (Topic 805). The amendments in this update clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill and consolidation. This ASU will be effective for us for annual and interim reporting periods beginning on January 1, 2018. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This amendment eliminates Step 2, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill, from the goodwill impairment test. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This ASU is effective for us for our annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2020 and will be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815). This amendment expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. It also includes certain targeted improvements to simplify the application of current guidance related to hedge accounting. This ASU will be effective for us for annual and interim reporting periods beginning on December 31, 2019, with early adoption permitted. We do not expect the adoption of this amendment to have a significant impact on our Consolidated Financial Statements. |
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Sale Leaseback Transactions | For accounting purposes, these sale-leaseback transactions are accounted for under the financing method, rather than as completed sales. Under the financing method, we (i) include the sales proceeds received in other long-term liabilities until our continuing involvement with the properties is terminated, (ii) report the associated property as owned assets, (iii) continue to depreciate the assets over their remaining useful lives, and (iv) record the rental payments as interest expense and a reduction of the sale leaseback obligation. When and if our continuing involvement with a property terminates and the sale of that property is recognized for accounting purposes, we expect to record a gain equal to the excess of the proceeds received over the remaining net book value of the property. |
Description of Business and Summary of Significant Accounting Policies (Tables) |
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Schedule Of Property Plant And Equipment Estimated Useful Lives | Depreciation and amortization are charged to operations using the straight-line method over the assets’ estimated useful lives, which are as follows:
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Accounts Receivable (Tables) |
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Schedule of Accounts Receivable | Accounts receivable consisted of the following at the dates presented:
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Inventories (Tables) |
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Schedule of Inventory | Inventories consisted of the following at the dates presented:
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Property and Equipment (Tables) |
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Schedule of Property and Equipment |
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Goodwill and Intangible Assets, Net (Tables) |
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Schedule of Goodwill Activity | The following table presents changes in the carrying value of goodwill for the periods ended December 31, 2017 and January 1, 2017:
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Schedule of Indefinite-Lived Intangible Assets | The following table presents our indefinite and definite-lived intangible assets at December 31, 2017 and January 1, 2017:
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Schedule of Finite-Lived Intangible Assets | The following table presents our indefinite and definite-lived intangible assets at December 31, 2017 and January 1, 2017:
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Schedule of Estimated Future Amortization Expense | Our estimated future amortization expense related to the favorable lease agreements and franchise agreements is set forth as follows (in thousands):
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Accounts Payable (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable | Accounts payable consisted of the following as of the dates presented:
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Accrued Expenses (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses consisted of the following as of the dates presented:
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Indebtedness and Interest Expense (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Our long-term debt consisted of the following for the periods presented:
We were in compliance with the debt covenants in effect as of December 31, 2017 for both the secured credit facilities and the senior notes. For further discussion regarding the debt covenants, see Secured Credit Facilities and Senior Unsecured Notes sections below. |
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Schedule of Future Debt Payment Obligations | The following table sets forth our future debt payment obligations as of December 31, 2017 (in thousands):
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Schedule of Interest Expense | Interest expense consisted of the following for the periods presented:
__________________ (1) Includes amortization of original issue discount |
Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value by Balance Sheet Grouping | The following table presents information on our financial instruments as of the dates presented:
__________________ (1) Excluding net deferred financing costs. |
Other Non-current Liabilities (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Noncurrent Liabilities | Other noncurrent liabilities consisted of the following as of the dates presented:
_________________
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Commitments and Contingencies (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | Leases We lease certain venues under operating and capital leases that expire at various dates through 2035 with renewal options that expire at various dates through 2054. The leases generally require us to pay a minimum rent, property taxes, insurance, other maintenance costs and, in some instances, additional rent equal to the amount by which a percentage of the venue’s revenues exceed certain thresholds as stipulated in the respective lease agreement. The leases generally have initial terms of 10 to 20 years with various renewal options. The annual future lease commitments under capital lease obligations and non-cancelable operating leases, including reasonably assured option periods but excluding contingent rent, as of December 31, 2017, are as follows:
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Schedule of Future Minimum Lease Payments for Capital Leases | The annual future lease commitments under capital lease obligations and non-cancelable operating leases, including reasonably assured option periods but excluding contingent rent, as of December 31, 2017, are as follows:
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Schedule of Rent Expense | Rent expense, including contingent rent based on a percentage of venues’ sales, when applicable, was comprised of the following:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign | For financial reporting purposes, income (loss) before income taxes includes the following components:
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Schedule of Components of Income Tax Expense (Benefit) | Our income tax expense (benefit) consists of the following for the periods presented:
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Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the federal statutory income tax rate to our effective tax rate is as follows:
_________________ (1) The Tax Cuts and Jobs Act of 2017 (enacted on December 22, 2017) resulted in a decrease of our net deferred tax liability of $66.6 million and a corresponding benefit to our deferred federal income taxes for Fiscal 2017. |
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Schedule of Deferred Tax Assets and Liabilities | Deferred income tax assets and liabilities consisted of the following at the dates presented:
_________________
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Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Stock-Based Compensation Arrangements (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | 2014 Equity Incentive Plan The 2014 Equity Incentive Plan provides Parent authority to grant equity incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards or performance compensation awards to certain directors, officers or employees of the Company. During 2017, 2016 and 2015, Parent granted options to purchase 123,603 shares, 101,110 shares and 519,414 shares, respectively, of its common stock to certain directors, officers and employees of the Company. The options are subject to certain service and performance based vesting criteria, and were split evenly between Tranches A, B and C, which have different vesting requirements. The options in Tranche A are service based, and vest and become exercisable in equal installments on each of the first five anniversaries of the respective grant dates. The Black-Scholes model was used to estimate the fair value of Tranche A stock options. Tranche B and Tranche C options are performance based and vest and become exercisable when certain return thresholds are achieved. The Monte Carlo simulation model was used to estimate the fair value of Tranche B and Tranche C stock options. Unvested Tranche A options are also subject to accelerated vesting and exercisability on the first anniversary of a change in control of Queso Holdings Inc. or within 12 months following such a change in control. Tranche B and C options may also vest and become exercisable if applicable hurdles are achieved in connection with an initial public offering. Compensation costs related to options in the Parent were recorded by the Company. The weighted-average fair value of the options granted in 2017, 2016 and 2015 was estimated at $3.71, $2.28 and $1.28 per option, $2.99, $1.68 and $0.87 per option and $2.83, $1.44 and $0.84 per option, respectively, for Tranches A, B and C, respectively, on the date of grant based on the following assumptions:
A summary of the option activity under the equity incentive plan as of December 31, 2017 and the activity for 2017 is presented below:
_________________ (1) The weighted average exercise price reflects the original grant date fair value per option as adjusted for the dividend payment made in August 2015. As of December 31, 2017, we had $1.6 million of total unrecognized share based compensation expense related to unvested options, net of expected forfeitures, which is expected to be amortized over the remaining weighted average period of 1.2 years. In February 2018, the Parent granted additional options to purchase 112,769 shares of its common stock to certain officers and employees of the Company. |
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Schedule of Stock-Based Compensation Expense and Associated Tax Benefits Recognized | _________________ (1) The weighted average exercise price reflects the original grant date fair value per option as adjusted for the dividend payment made in August 2015. As of December 31, 2017, we had $1.6 million of total unrecognized share based compensation expense related to unvested options, net of expected forfeitures, which is expected to be amortized over the remaining weighted average period of 1.2 years. In February 2018, the Parent granted additional options to purchase 112,769 shares of its common stock to certain officers and employees of the Company. A summary of stock based compensation costs recognized and capitalized is presented below:
__________________ (1)We capitalize the portion of stock-based compensation costs related to our design, construction, facilities and legal departments that are directly attributable to our venue development projects, such as the design and construction of a new venue and the remodeling and expansion of our existing venues. Capitalized stock-based compensation costs attributable to our venue development projects are included in “Property and equipment, net” in the Consolidated Balance Sheets. |
Consolidating Guarantor Financial Information (Tables) |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheet |
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Condensed Consolidating Income Statement |
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Condensed Financial Statements [Text Block] | Consolidating Guarantor Financial Information: On February 14, 2014, CEC Entertainment, Inc. (the “Issuer”), 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 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:
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Quarterly Results of Operations (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Results of Operations (Unaudited) | The following table summarizes our unaudited quarterly condensed consolidated results of operations in 2017 and 2016:
Quarterly operating results are not necessarily representative of operations for a full year. |
Description of Business and Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Franchise Agreements [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated weighted average useful lives | 25 years |
Favorable Lease Agreements [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated weighted average useful lives | 10 years |
Description of Business and Summary of Significant Accounting Policies - Schedule of continuing franchise royalties and miscellaneous fees (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Franchisor Disclosure [Line Items] | |||
Advertising contributions from franchisees | $ 2.1 | $ 2.2 | $ 2.1 |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
---|---|---|
Receivables [Abstract] | ||
Trade receivables | $ 8,863 | $ 7,963 |
Vendor rebates | 6,525 | 7,504 |
Income taxes receivable | 10,960 | 568 |
Other accounts receivable | 4,673 | 4,460 |
Total Accounts Receivable | $ 20,061 | $ 19,927 |
Inventories (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Food and beverage | $ 5,440 | $ 5,347 |
Entertainment and merchandise | 16,560 | 16,330 |
Total Inventory | $ 22,000 | $ 21,677 |
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Land | $ 50,135 | $ 50,135 |
Buildings | 56,415 | 54,808 |
Leasehold improvements | 453,167 | 435,691 |
Game and ride equipment | 250,139 | 212,049 |
Furniture, fixtures and other equipment | 150,505 | 134,216 |
Buildings leased under capital leases | 15,067 | 15,062 |
Property and equipment, gross | 975,428 | 901,961 |
Less accumulated depreciation and amortization | (414,245) | (328,369) |
Net property and equipment in service | 561,183 | 573,592 |
Construction in progress | 8,838 | 19,294 |
Property and equipment, net | $ 570,021 | $ 592,886 |
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Property, Plant and Equipment [Line Items] | |||
Accumulated depreciation of capital leases | $ 4,000 | $ 2,900 | |
Depreciation and amortization | 109,771 | 119,569 | $ 119,294 |
Asset Impairment | 1,843 | $ 1,550 | $ 875 |
Property and equipment, net | $ 1,900 |
Goodwill and Intangible Assets, Net - Schedule of Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
|||
Goodwill [Roll Forward] | ||||
Goodwill | $ 483,876 | |||
Goodwill | 484,438 | $ 483,876 | ||
Peter Piper Pizza [Member] | ||||
Goodwill [Roll Forward] | ||||
Additions | $ 0 | |||
Goodwill, Period Increase (Decrease) | [1] | $ 562 | ||
|
Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($) |
2 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Feb. 14, 2014 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 29, 2013 |
|
Favorable Lease Agreements [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of Intangible Assets | $ 0 | $ 1,600,000 | $ 2,000,000 | $ 2,000,000 | $ 0 |
Franchise Agreements [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of Intangible Assets | 0 | 2,000,000 | 0 | ||
Trade Names [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of Intangible Assets | $ 0 | $ 0 | |||
Successor [Member] | Favorable Lease Agreements [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | 14,880,000 | 14,880,000 | |||
Successor [Member] | Franchise Agreements [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | $ 53,300,000 | $ 53,300,000 |
Goodwill and Intangible Assets, Net - Schedule of Estimated Future Amortization Expense (Details) - USD ($) |
2 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Feb. 14, 2014 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 29, 2013 |
|
Trade Names [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of Intangible Assets | $ 0 | $ 0 | |||
Favorable Lease Agreements [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Fiscal 2018 | $ 1,246,000 | ||||
Fiscal 2019 | 1,102,000 | ||||
Fiscal 2020 | 1,050,000 | ||||
Fiscal 2021 | 847,000 | ||||
Fiscal 2022 | 754,000 | ||||
Thereafter | 2,575,000 | ||||
Finite-lived intangible assets - Net Carrying Amount | 7,574,000 | ||||
Amortization of Intangible Assets | 0 | 1,600,000 | $ 2,000,000 | $ 2,000,000 | 0 |
Franchise Agreements [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Fiscal 2018 | 2,049,000 | ||||
Fiscal 2019 | 2,049,000 | ||||
Fiscal 2020 | 2,088,000 | ||||
Fiscal 2021 | 2,049,000 | ||||
Fiscal 2022 | 2,049,000 | ||||
Thereafter | 35,819,000 | ||||
Finite-lived intangible assets - Net Carrying Amount | 46,103,000 | ||||
Amortization of Intangible Assets | $ 0 | $ 2,000,000 | $ 0 |
Accounts Payable (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts Payable, Trade | $ 20,492 | $ 24,615 |
Bank Overdrafts | 10,882 | 8,587 |
Accounts Payable, Current | $ 31,374 | $ 33,202 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Salaries and wages | $ 11,366 | $ 15,188 |
Insurance | 6,614 | 6,629 |
Taxes, other than income taxes | 13,151 | 12,944 |
Other accrued operating expenses | 5,485 | 5,337 |
Total Accrued Expenses | 36,616 | 40,098 |
Accrued insurance | $ 8,311 | $ 9,183 |
Indebtedness and Interest Expense - Schedule of Debt Obligations (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
|
Debt Instrument [Line Items] | ||
One year or less | $ 7,600 | |
Two years | 7,600 | |
Three years | 7,600 | |
Four years | 708,700 | |
Five years | 255,000 | |
Long-term debt, gross | 986,500 | $ 994,113 |
Amortization of debt issuance costs | (11,993) | |
Less: unamortized discount | (1,694) | $ (2,235) |
Long-term debt | $ 972,813 | |
Secured Credit Facilities, Bridge Loan Facility and Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate During Period | 5.60% | 5.50% |
Indebtedness and Interest Expense - Interest Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Feb. 19, 2014 |
|||
Debt Instrument [Line Items] | ||||||
Amortization of debt issuance costs | $ 4,005 | $ 4,005 | $ 4,083 | |||
Interest expense | 69,115 | 67,745 | 70,582 | |||
Term Loan Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest expense | [1] | 31,549 | 30,987 | 31,760 | ||
Other | 951 | 516 | 829 | |||
Senior Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest expense, excluding amortization | 20,330 | 19,774 | 21,023 | |||
Capital Lease Obligations [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Capital Leases, Income Statement, Interest Expense | 1,695 | 1,749 | 1,791 | |||
Sale Leaseback Obligations [Member] | ||||||
Debt Instrument [Line Items] | ||||||
InteretExpenseSaleLeaseback | $ 10,585 | $ 10,714 | $ 11,096 | |||
Senior Notes due 2022 [Member] | Senior Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt, Weighted Average Interest Rate | 8.20% | 8.30% | ||||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | |||||
The Senior Secured Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Additional margin on variable rate | 3.00% | |||||
London Interbank Offered Rate (LIBOR) [Member] | The Senior Secured Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Additional margin on variable rate | 3.25% | |||||
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | The Senior Secured Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Additional margin on variable rate | 3.00% | |||||
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | The Senior Secured Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Additional margin on variable rate | 2.75% | |||||
|
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
|||
---|---|---|---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Current portion | $ 7,600 | $ 7,613 | |||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | 965,213 | 968,266 | |||
debt, net of unamortized issue discount | 984,806 | 991,878 | |||
Debt Instrument, Fair Value Disclosure | 944,882 | 1,000,934 | |||
Carrying Amount [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Current portion | [1] | 7,600 | 7,613 | ||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | [1] | 977,206 | 984,265 | ||
Estimate of Fair Value [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Short-term Debt, Fair Value | [1] | 7,220 | 7,623 | ||
Long-term Debt, Fair Value | [1] | $ 937,662 | $ 993,311 | ||
|
Other Non-current Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
||
---|---|---|---|---|
Other Noncurrent Liabilities [Line Items] | ||||
Sale Leaseback Obligations, current portion | $ 2,900 | |||
Sale leaseback obligations, less current portion | [1] | 177,933 | $ 176,831 | |
Deferred rent liability | 27,951 | 21,784 | ||
Deferred landlord contributions | 6,282 | 5,702 | ||
Long-term portion of unfavorable leases | 5,453 | 7,308 | ||
Other | 4,268 | 4,950 | ||
Other noncurrent liabilities | 221,887 | $ 216,575 | ||
Minimum [Member] | ||||
Other Noncurrent Liabilities [Line Items] | ||||
general insurance deductible | 200 | |||
Maximum [Member] | ||||
Other Noncurrent Liabilities [Line Items] | ||||
general insurance deductible | $ 500 | |||
|
Sale Leaseback Transaction (Details) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Aug. 25, 2014
USD ($)
property
extension
|
Dec. 31, 2017
USD ($)
|
Jan. 01, 2017
USD ($)
|
Jan. 03, 2016
USD ($)
|
|||
Sale Leaseback Transaction [Line Items] | ||||||
Number of properties sold | property | 49 | |||||
Number of properties leased | property | 49 | |||||
Initial lease term | 20 years | |||||
Number of extension options | extension | 4 | |||||
Duration of extension option | 5 years | |||||
Sale leaseback obligations, less current portion | [1] | $ 177,933 | $ 176,831 | |||
Sale leaseback obligations, current portion | 2,900 | |||||
Net proceeds | $ 143,200 | |||||
Proceeds from sale leaseback transaction | 183,700 | 4,073 | 0 | $ 0 | ||
Net book value | $ 79,300 | $ 81,300 | ||||
Conyers Sale Leaseback Transaction [Member] | ||||||
Sale Leaseback Transaction [Line Items] | ||||||
Net proceeds | 3,900 | |||||
Proceeds from sale leaseback transaction | $ 4,100 | |||||
|
Sale Leaseback Transaction - Future Payments (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
||
---|---|---|---|---|
Sale Leaseback Transaction [Line Items] | ||||
Sale Leaseback Obligations, Noncurrent | [1] | $ 177,933 | $ 176,831 | |
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract] | ||||
2018 | 13,812 | |||
2019 | 14,083 | |||
2020 | 14,360 | |||
2021 | 14,641 | |||
2022 | 14,947 | |||
Thereafter | $ 198,986 | |||
|
Commitments and Contingencies - Leases (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 30, 2012 |
Dec. 28, 2014 |
|
Capital Leases, Future Minimum Payments Due | |||||
2015 | $ 2,188 | ||||
2016 | 2,185 | ||||
2017 | 2,216 | ||||
2018 | 2,203 | ||||
2019 | 2,184 | ||||
Thereafter | 15,222 | ||||
Future minimum lease payments | 26,198 | ||||
Less amounts representing interest | (12,592) | ||||
Present value of future minimum lease payments | 13,606 | ||||
Less current portion | (596) | $ (467) | |||
Capital lease obligations, net of current portion | 13,010 | 13,602 | |||
Operating Leases, Future Minimum Payments Due | |||||
2015 | 91,186 | ||||
2016 | 88,751 | ||||
2017 | 87,082 | ||||
2018 | 85,465 | ||||
2019 | 83,997 | ||||
Thereafter | 495,933 | ||||
Future minimum lease payments | 932,414 | ||||
General and Administrative Expense [Member] | |||||
Rent Expense | |||||
Total Rent Expense | $ 1,200 | 1,200 | $ 1,600 | $ 1,000 | |
Minimum [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Lease Expiration Date | Dec. 31, 2035 | ||||
Lease terms | 10 years | ||||
Capital Leases, Future Minimum Payments Due | |||||
Capital lease interest rate (percent) | 2.99% | ||||
Maximum [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Lease Expiration Date | Dec. 31, 2054 | ||||
Lease terms | 20 years | ||||
Capital Leases, Future Minimum Payments Due | |||||
Capital lease interest rate (percent) | 99.09% | ||||
Successor [Member] | |||||
Rent Expense | |||||
Minimum rentals | $ 96,927 | 96,953 | 98,023 | ||
Contingent rentals | 156 | 217 | 338 | ||
Total Rent Expense | $ 97,083 | $ 97,170 | $ 98,361 |
Commitments and Contingencies - Unconditional Purchase Obligations (Details) $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Long-term Purchase Commitment [Line Items] | |
Commitments and Contingencies | $ 13.9 |
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Current tax expense (benefit): | |||
Federal | $ (2,668) | $ 8,008 | $ 10,726 |
State | (708) | 3,879 | 1,825 |
Foreign | 960 | 1,008 | 1,256 |
Total current tax expense | (2,416) | 12,895 | 13,807 |
Deferred tax expense (benefit): | |||
Federal | (72,829) | (11,848) | (14,022) |
State | (137) | (3,274) | (2,203) |
Foreign | 1,091 | (399) | (523) |
Total deferred tax expense (benefit) | (71,875) | (15,521) | (16,748) |
Income tax expense (benefit) | $ (74,291) | $ (2,626) | $ (2,941) |
Income Taxes - Effective Income Tax Reconciliation (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Income Taxes [Line Items] | |||
Tax Cuts And Jobs Act Of 2017, Incomplete Accounting, Change In Tax Rate, Deferred Tax Asset, Income Tax Expense | $ 66.6 | ||
Federal statutory rate | (35.00%) | (35.00%) | (35.00%) |
State income taxes, net of federal benefit | (4.50%) | 2.50% | 0.20% |
Federal income tax credits, net | (1.20%) | (21.80%) | (7.60%) |
Merger and litigation related costs | 1.60% | 5.80% | 25.00% |
Effective Income Tax Rate Reconciliation, Tax Settlement, Foreign, Percent | 0.40% | 2.40% | 1.00% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Percent | 0.70% | 1.80% | 0.60% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 5.70% | (0.00%) | (0.00%) |
Effective Income Tax Rate Reconciliation, Tax Reorganization, Percent | (7.60%) | (0.00%) | (0.00%) |
State tax credit, valuation adjustment | 2.00% | 2.80% | (1.30%) |
Other | 1.90% | (0.20%) | (1.90%) |
Effective income tax rate | (36.00%) | (41.70%) | (19.00%) |
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent | (314.00%) | (0.00%) | (0.00%) |
Effective Income Tax Rate Reconciliation, Adjusted, Percent | (350.00%) | (41.70%) | (19.00%) |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Tax Credit Carryforward [Line Items] | ||||
Effective income tax rate | 36.00% | 41.70% | 19.00% | |
Alternative minimum tax credit carryforward | $ 500 | |||
Net deferred tax liability | 114,186 | $ 186,290 | ||
Deferred income taxes | 71,875 | 15,521 | $ 16,748 | |
Unrecognized tax benefits | 3,853 | 3,119 | $ 3,288 | $ 1,882 |
Unrecognized tax benefits that would decrease effective tax rate and provision for income taxes, if recognized | 2,600 | |||
Expected decrease in unrecognized tax benefits within next twelve months | 1,100 | |||
Total amount of interest and penalties accrued related to unrecognized tax benefits | 1,000 | $ 1,200 | ||
Federal [Member] | ||||
Tax Credit Carryforward [Line Items] | ||||
Net operating loss carryforwards | 9,900 | |||
State [Member] | ||||
Tax Credit Carryforward [Line Items] | ||||
Net operating loss carryforwards | 9,500 | |||
Tax credit carryforward | $ 900 |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
---|---|---|
Operating Loss Carryforwards [Line Items] | ||
Deferred Tax Assets, Tax Credit Carryforwards, Alternative Minimum Tax | $ 500 | |
Deferred Tax Assets | ||
Accrued compensation | 1,231 | $ 3,580 |
Unearned revenue | 979 | 1,723 |
Deferred rent | 6,914 | 8,148 |
Stock-based compensation | 639 | 746 |
Accrued insurance and employee benefit plans | 3,516 | 5,542 |
Unrecognized tax benefits | 452 | 1,072 |
NOL and other carryforwards | 3,211 | 3,358 |
Loan costs | 577 | 1,170 |
Other | 552 | 914 |
Gross deferred tax assets | 18,071 | 26,253 |
Deferred Tax Liabilities | ||
Depreciation and amortization | (9,492) | (24,717) |
Prepaid assets | (672) | (655) |
Intangibles | (117,717) | (180,623) |
Favorable/Unfavorable Leases | (65) | (26) |
Internal use software and other | (4,311) | (6,522) |
Gross deferred tax liabilities | (132,257) | (212,543) |
Net deferred tax liability | (114,186) | (186,290) |
Net deferred tax liability | (114,186) | $ (186,290) |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Tax Credit Carryforward, Amount | 900 | |
Foreign Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Tax Credit Carryforward, Amount | $ 1,600 |
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning of period | $ 3,119 | $ 3,288 | $ 1,882 |
Additions for tax positions taken in the current year | 1,677 | 74 | 214 |
Increases for tax positions taken in prior years | 16 | 1,479 | 1,581 |
Decreases for tax positions taken in prior years | (390) | (964) | (184) |
Settlement with tax authorities | (32) | (558) | |
Settlement with tax authorities | 79 | ||
Expiration of statute of limitations | (537) | (200) | (284) |
Balance at end of period | $ 3,853 | $ 3,119 | $ 3,288 |
Income Taxes Income before income taxes domestic and foreign (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Oct. 01, 2017 |
Jul. 02, 2017 |
Apr. 02, 2017 |
Jan. 01, 2017 |
Oct. 02, 2016 |
Jul. 03, 2016 |
Apr. 03, 2016 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Income (Loss) from Continuing Operations before Income Taxes, Domestic | $ (25,667) | $ (11,002) | $ (18,787) | ||||||||
Income (Loss) from Continuing Operations before Income Taxes, Foreign | 4,442 | 4,709 | 3,336 | ||||||||
Income (loss) before income taxes | $ (23,263) | $ (16,313) | $ (9,247) | $ 27,598 | $ (17,396) | $ (4,690) | $ (13,494) | $ 29,287 | $ (21,225) | $ (6,293) | $ (15,451) |
Income Taxes -Components of Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
schedule of income before income taxes domestic and foreign [Line Items] | |||
Income (Loss) from Continuing Operations before Income Taxes, Domestic | $ (25,667) | $ (11,002) | $ (18,787) |
Stock-Based Compensation Arrangements - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Feb. 23, 2016 |
Aug. 21, 2014 |
Aug. 31, 2017 |
Feb. 28, 2017 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% | 0.00% | 0.00% | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 1 year 8 months 26 days | 2 years 2 months 26 days | 3 years 7 months 2 days | 3 years 8 months | |||
Tranche B and C [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 0.00% | 0.00% | 0.00% | 0.00% | |||
Tranche B [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 2.28 | $ 1.68 | $ 1.44 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.00% | 0.00% | 0.99% | 1.30% | |||
Tranche C [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 1.28 | $ 0.87 | $ 0.84 | ||||
Employee Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | 123,603 | ||||||
Employee Stock Option [Member] | Successor [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | 112,769 | 101,110 | 519,414 | ||||
Unrecognized share-based compensation | $ 1.6 | ||||||
Unrecognized share-based compensation period of recognition (in years) | 1 year 1 month 27 days | ||||||
Employee Stock Option [Member] | Successor [Member] | Tranche A [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 5 years | ||||||
ShareBasedCompensationArrangmentbyShareBasedPaymentAward,Options,PeriodtoExercisefollowingChangeinControl | 12 months | ||||||
Tranche A [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 3.71 | $ 2.99 | $ 2.83 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 0.00% | 0.00% | 0.00% | 0.00% | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.39% | 1.38% | 0.00% | 0.00% |
Stock-Based Compensation Arrangements - Summary of Stock-Based Compensation Expense and Associated Tax Benefit Recognized (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 9.00 | $ 8.74 | ||||||
Stock-based compensation costs | $ 620 | $ 702 | $ 855 | |||||
Portion capitalized as property and equipment | [1] | (14) | (13) | (17) | ||||
Stock-based compensation expense recognized | 606 | 689 | 838 | |||||
Tax benefit recognized from stock-based compensation awards | $ 0 | $ 4 | [2] | $ 18 | ||||
|
Stock-Based Compensation Arrangements - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Feb. 23, 2016 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 13,006 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 9.00 | $ 8.74 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 2,349,288 | 2,400,914 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 2,534 | |||
ShareBasedCompensationArrangementbyShareBasedPaymentAwarad,Options,Outstanding,WeightedAverageRemainingContractualLife | 6 years 7 months 6 days | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | $ 9,425 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||||
Share-BasedCompensationArrangementbyShareBasedPaymentAward,Options,GrantedinPeriod,WeightedAverageExercisePrice | $ 16.26 | |||
Forfeited (in shares) | (175,229) | |||
ShareBasedCompensationArrangementbyShareBasedPaymentAward,Options,NonvestedForfeited,WeightedAverageExercisePrice | $ 10.57 | |||
Stock options expected to vest, December 28, 2014 (in shares) | 1,745,042 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ 9.14 | |||
ShareBasedCompensationArrangementbyShareBasedPaymentAward,Options,ExpectedtoVest,WeightedAverageRemainingContractualTerm | 6 years 7 months 6 days | |||
Exercisable stock options, December 28, 2014 (in shares) | 410,354 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 8.36 | |||
ShareBasedCompensationArrangementbyShareBasedPaymentAward,Options,Exercisable,WeightedAverageRemainingContractualLife | 6 years 3 months 18 days | |||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||||
Granted (in shares) | 123,603 | |||
Successor [Member] | Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||||
Granted (in shares) | 112,769 | 101,110 | 519,414 |
Stockholders' Equity - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2016 |
Dec. 31, 2017 |
Dec. 29, 2013 |
|
Equity, Class of Treasury Stock [Line Items] | |||
Common stock issued (shares) | 200 | ||
Dividends payable | $ 70 | ||
Preferred Class B [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Preferred stock outstanding (shares) | 0 |
Consolidating Guarantor Financial Information - Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
---|---|---|---|---|
Current assets: | ||||
Cash and cash equivalents | $ 67,200 | $ 61,023 | $ 50,654 | $ 110,994 |
Restricted Cash | 268 | |||
Restricted Cash and Cash Equivalents | 112 | |||
Accounts receivable | 31,021 | 20,495 | ||
Inventories | 22,000 | 21,677 | ||
Prepaid assets | 20,398 | 21,498 | ||
Total current assets | 140,731 | 124,961 | ||
Property and equipment, net | 570,021 | 592,886 | ||
Goodwill | 484,438 | 483,876 | $ 483,876 | |
Intangible assets, net | 480,377 | 484,083 | ||
Intercompany | 0 | 0 | ||
Investment in subsidiaries | 0 | 0 | ||
Other noncurrent assets | 19,477 | 24,306 | ||
Total assets | 1,695,044 | 1,710,112 | ||
Current liabilities: | ||||
Bank indebtedness and other long-term debt, current portion | 7,600 | 7,613 | ||
Capital lease obligations, current portion | 596 | 467 | ||
Accounts payable and accrued expenses | 97,317 | 97,836 | ||
Other current liabilities | 4,776 | 4,275 | ||
Total current liabilities | 110,289 | 110,191 | ||
Capital lease obligations, less current portion | 13,010 | 13,602 | ||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | 965,213 | 968,266 | ||
Deferred tax liability | 114,186 | 186,290 | ||
Intercompany | 0 | 0 | ||
Other noncurrent liabilities | 230,198 | 225,758 | ||
Total liabilities | 1,432,896 | 1,504,107 | ||
Stockholder’s equity: | ||||
Common stock | 0 | 0 | ||
Capital in excess of par value | 359,233 | 357,166 | ||
Accumulated deficit | (95,199) | (148,265) | ||
Accumulated other comprehensive loss | (1,886) | (2,896) | ||
Total stockholder’s equity | 262,148 | 206,005 | ||
Total liabilities and stockholder’s equity | 1,695,044 | 1,710,112 | ||
Reportable Legal Entities [Member] | Issuer [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 59,948 | 53,088 | 42,235 | |
Restricted Cash | 0 | |||
Restricted Cash and Cash Equivalents | 0 | |||
Accounts receivable | 27,098 | 16,922 | ||
Inventories | 17,104 | 18,255 | ||
Prepaid assets | 13,766 | 14,294 | ||
Total current assets | 117,916 | 102,559 | ||
Property and equipment, net | 496,725 | 538,195 | ||
Goodwill | 433,024 | 432,462 | ||
Intangible assets, net | 16,764 | 19,157 | ||
Intercompany | 90,937 | 127,107 | ||
Investment in subsidiaries | 462,873 | 436,483 | ||
Other noncurrent assets | 7,913 | 6,888 | ||
Total assets | 1,626,152 | 1,662,851 | ||
Current liabilities: | ||||
Bank indebtedness and other long-term debt, current portion | 7,600 | 7,600 | ||
Capital lease obligations, current portion | 586 | 460 | ||
Accounts payable and accrued expenses | 58,014 | 84,207 | ||
Other current liabilities | 4,265 | 3,764 | ||
Total current liabilities | 70,465 | 96,031 | ||
Capital lease obligations, less current portion | 12,956 | 13,542 | ||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | 965,213 | 968,266 | ||
Deferred tax liability | 99,083 | 166,064 | ||
Intercompany | 0 | 0 | ||
Other noncurrent liabilities | 216,287 | 212,943 | ||
Total liabilities | 1,364,004 | 1,456,846 | ||
Stockholder’s equity: | ||||
Common stock | 0 | 0 | ||
Capital in excess of par value | 359,233 | 357,166 | ||
Accumulated deficit | (95,199) | (148,265) | ||
Accumulated other comprehensive loss | (1,886) | (2,896) | ||
Total stockholder’s equity | 262,148 | 206,005 | ||
Total liabilities and stockholder’s equity | 1,626,152 | 1,662,851 | ||
Reportable Legal Entities [Member] | Guarantor [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 410 | 1,158 | 1,797 | |
Restricted Cash | 0 | |||
Restricted Cash and Cash Equivalents | 0 | |||
Accounts receivable | 3,283 | 3,220 | ||
Inventories | 4,614 | 3,151 | ||
Prepaid assets | 5,549 | 6,077 | ||
Total current assets | 13,856 | 13,606 | ||
Property and equipment, net | 66,669 | 47,906 | ||
Goodwill | 51,414 | 51,414 | ||
Intangible assets, net | 463,613 | 464,926 | ||
Intercompany | 10,770 | 317 | ||
Investment in subsidiaries | 0 | 0 | ||
Other noncurrent assets | 11,359 | 17,025 | ||
Total assets | 617,681 | 595,194 | ||
Current liabilities: | ||||
Bank indebtedness and other long-term debt, current portion | 0 | 13 | ||
Capital lease obligations, current portion | 0 | 0 | ||
Accounts payable and accrued expenses | 35,134 | 11,445 | ||
Other current liabilities | 511 | 511 | ||
Total current liabilities | 35,645 | 11,969 | ||
Capital lease obligations, less current portion | 0 | 0 | ||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | 0 | 0 | ||
Deferred tax liability | 16,697 | 21,234 | ||
Intercompany | 75,052 | 106,131 | ||
Other noncurrent liabilities | 13,465 | 12,484 | ||
Total liabilities | 140,859 | 151,818 | ||
Stockholder’s equity: | ||||
Common stock | 0 | 0 | ||
Capital in excess of par value | 466,114 | 466,114 | ||
Accumulated deficit | 10,708 | (22,738) | ||
Accumulated other comprehensive loss | 0 | 0 | ||
Total stockholder’s equity | 476,822 | 443,376 | ||
Total liabilities and stockholder’s equity | 617,681 | 595,194 | ||
Reportable Legal Entities [Member] | Non-Guarantors [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 6,842 | 6,777 | $ 6,622 | |
Restricted Cash | 268 | |||
Restricted Cash and Cash Equivalents | 112 | |||
Accounts receivable | 2,563 | 2,455 | ||
Inventories | 282 | 271 | ||
Prepaid assets | 1,083 | 1,127 | ||
Total current assets | 10,882 | 10,898 | ||
Property and equipment, net | 6,627 | 6,785 | ||
Goodwill | 0 | 0 | ||
Intangible assets, net | 0 | 0 | ||
Intercompany | 0 | 0 | ||
Investment in subsidiaries | 0 | 0 | ||
Other noncurrent assets | 205 | 393 | ||
Total assets | 17,714 | 18,076 | ||
Current liabilities: | ||||
Bank indebtedness and other long-term debt, current portion | 0 | 0 | ||
Capital lease obligations, current portion | 10 | 7 | ||
Accounts payable and accrued expenses | 4,169 | 2,184 | ||
Other current liabilities | 0 | 0 | ||
Total current liabilities | 4,179 | 2,191 | ||
Capital lease obligations, less current portion | 54 | 60 | ||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | 0 | 0 | ||
Deferred tax liability | (1,594) | (1,008) | ||
Intercompany | 28,578 | 23,395 | ||
Other noncurrent liabilities | 446 | 331 | ||
Total liabilities | 31,663 | 24,969 | ||
Stockholder’s equity: | ||||
Common stock | 0 | 0 | ||
Capital in excess of par value | 3,241 | 3,241 | ||
Accumulated deficit | (15,304) | (7,238) | ||
Accumulated other comprehensive loss | (1,886) | (2,896) | ||
Total stockholder’s equity | (13,949) | (6,893) | ||
Total liabilities and stockholder’s equity | 17,714 | 18,076 | ||
Eliminations [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted Cash | 0 | |||
Restricted Cash and Cash Equivalents | 0 | |||
Accounts receivable | (1,923) | (2,102) | ||
Inventories | 0 | 0 | ||
Prepaid assets | 0 | 0 | ||
Total current assets | (1,923) | (2,102) | ||
Property and equipment, net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Intangible assets, net | 0 | 0 | ||
Intercompany | (101,707) | (127,424) | ||
Investment in subsidiaries | (462,873) | (436,483) | ||
Other noncurrent assets | 0 | 0 | ||
Total assets | (566,503) | (566,009) | ||
Current liabilities: | ||||
Bank indebtedness and other long-term debt, current portion | 0 | 0 | ||
Capital lease obligations, current portion | 0 | 0 | ||
Accounts payable and accrued expenses | 0 | 0 | ||
Other current liabilities | 0 | 0 | ||
Total current liabilities | 0 | 0 | ||
Capital lease obligations, less current portion | 0 | 0 | ||
Bank indebtedness and other long-term debt, net of deferred financing costs, less current portion | 0 | 0 | ||
Deferred tax liability | 0 | 0 | ||
Intercompany | (103,630) | (129,526) | ||
Other noncurrent liabilities | 0 | 0 | ||
Total liabilities | (103,630) | (129,526) | ||
Stockholder’s equity: | ||||
Common stock | 0 | 0 | ||
Capital in excess of par value | (469,355) | (469,355) | ||
Accumulated deficit | 4,596 | 29,976 | ||
Accumulated other comprehensive loss | 1,886 | 2,896 | ||
Total stockholder’s equity | (462,873) | (436,483) | ||
Total liabilities and stockholder’s equity | (566,503) | (566,009) | ||
Successor [Member] | ||||
Current assets: | ||||
Intangible assets, net | $ 480,377 | $ 484,083 |
Consolidating Guarantor Financial Information - Consolidating Statement of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Oct. 01, 2017 |
Jul. 02, 2017 |
Apr. 02, 2017 |
Jan. 01, 2017 |
Oct. 02, 2016 |
Jul. 03, 2016 |
Apr. 03, 2016 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Payments to Acquire Businesses, Gross | $ 0 | $ 0 | $ 663 | ||||||||
REVENUES: | |||||||||||
Food and beverage sales | $ 90,524 | $ 98,255 | $ 97,411 | $ 124,419 | $ 93,469 | $ 101,984 | $ 97,404 | $ 122,202 | 410,609 | 415,059 | 408,095 |
Entertainment and merchandise sales | 102,005 | 110,633 | 109,724 | 135,917 | 106,277 | 121,764 | 114,657 | 147,557 | 458,279 | 490,255 | 497,015 |
Total Company store sales | 192,529 | 208,888 | 207,135 | 260,336 | 199,746 | 223,748 | 212,061 | 269,759 | 868,888 | 905,314 | 905,110 |
Franchise fees and royalties | 4,152 | 4,459 | 4,649 | 4,623 | 4,898 | 4,322 | 4,560 | 4,559 | 17,883 | 18,339 | 17,479 |
International Association assessments and other fees | 0 | 0 | 0 | ||||||||
Total revenues | 196,681 | 213,347 | 211,784 | 264,959 | 204,644 | 228,070 | 216,621 | 274,318 | 886,771 | 923,653 | 922,589 |
Company store operating costs: | |||||||||||
Cost of food and beverage (exclusive of items shown separately below) | 97,570 | 104,315 | 104,434 | ||||||||
Cost of entertainment and merchandise (exclusive of items shown separately below) | 29,948 | 32,014 | 31,519 | ||||||||
Total cost of food, beverage, entertainment and merchandise | 127,518 | 136,329 | 135,953 | ||||||||
Labor expenses | 248,061 | 251,426 | 250,584 | ||||||||
Rent expense | 95,917 | 96,006 | 96,669 | ||||||||
Other store operating expenses | 149,462 | 148,869 | 143,078 | ||||||||
Total Company store operating costs | 620,958 | 632,630 | 626,284 | ||||||||
Other costs and expenses: | |||||||||||
Advertising expense | 48,379 | 46,142 | 47,146 | ||||||||
General and administrative expenses | 56,482 | 61,011 | 61,945 | ||||||||
Depreciation, Amortization and Accretion, Net | 109,771 | 119,569 | 119,294 | ||||||||
Transaction and severance costs | 1,448 | 1,299 | 11,914 | ||||||||
Asset Impairment | 1,843 | 1,550 | 875 | ||||||||
Total operating costs and expenses | 838,881 | 862,201 | 867,458 | ||||||||
Operating Income (Loss) | (5,721) | 1,138 | 7,814 | 44,659 | (1,070) | 12,547 | 3,627 | 46,348 | 47,890 | 61,452 | 55,131 |
Equity in earnings (loss) in affiliates | 0 | 0 | 0 | ||||||||
Interest expense | 69,115 | 67,745 | 70,582 | ||||||||
Income (loss) before income taxes | (21,225) | (6,293) | (15,451) | ||||||||
Income tax expense (benefit) | (74,291) | (2,626) | (2,941) | ||||||||
Net income (loss) | $ 52,868 | $ (11,092) | $ (5,930) | $ 17,220 | $ (10,126) | $ (2,404) | $ (9,052) | $ 17,915 | 53,066 | (3,667) | (12,510) |
Components of other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | 1,010 | 420 | (2,403) | ||||||||
Comprehensive income (loss) | 54,076 | (3,247) | (14,913) | ||||||||
Reportable Legal Entities [Member] | Parent Company [Member] | |||||||||||
REVENUES: | |||||||||||
Food and beverage sales | 351,374 | 361,111 | 353,200 | ||||||||
Entertainment and merchandise sales | 406,930 | 453,362 | 469,741 | ||||||||
Total Company store sales | 758,304 | 814,473 | 822,941 | ||||||||
Franchise fees and royalties | 1,694 | 2,011 | 2,280 | ||||||||
International Association assessments and other fees | 1,684 | 1,308 | 995 | ||||||||
Total revenues | 761,682 | 817,792 | 826,216 | ||||||||
Company store operating costs: | |||||||||||
Cost of food and beverage (exclusive of items shown separately below) | 81,420 | 89,373 | 89,772 | ||||||||
Cost of entertainment and merchandise (exclusive of items shown separately below) | 27,704 | 29,668 | 29,147 | ||||||||
Total cost of food, beverage, entertainment and merchandise | 109,124 | 119,041 | 118,919 | ||||||||
Labor expenses | 224,176 | 230,526 | 230,113 | ||||||||
Rent expense | 87,342 | 88,557 | 88,773 | ||||||||
Other store operating expenses | 168,991 | 170,385 | 155,366 | ||||||||
Total Company store operating costs | 589,633 | 608,509 | 593,171 | ||||||||
Other costs and expenses: | |||||||||||
Advertising expense | 35,514 | 37,891 | 46,136 | ||||||||
General and administrative expenses | 20,208 | 24,704 | 19,652 | ||||||||
Depreciation, Amortization and Accretion, Net | 97,789 | 109,985 | 110,594 | ||||||||
Transaction and severance costs | 974 | 1,244 | 6 | ||||||||
Asset Impairment | 1,824 | 1,487 | 766 | ||||||||
Total operating costs and expenses | 745,942 | 783,820 | 770,325 | ||||||||
Operating Income (Loss) | 15,740 | 33,972 | 55,891 | ||||||||
Equity in earnings (loss) in affiliates | 25,405 | 13,654 | (4,654) | ||||||||
Interest expense | 64,117 | 62,630 | 65,775 | ||||||||
Income (loss) before income taxes | (22,972) | (15,004) | (14,538) | ||||||||
Income tax expense (benefit) | (76,038) | (11,337) | (2,028) | ||||||||
Net income (loss) | 53,066 | (3,667) | (12,510) | ||||||||
Components of other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | 1,010 | 420 | (2,403) | ||||||||
Comprehensive income (loss) | 54,076 | (3,247) | (14,913) | ||||||||
Reportable Legal Entities [Member] | Guarantor [Member] | |||||||||||
REVENUES: | |||||||||||
Food and beverage sales | 52,962 | 48,178 | 48,747 | ||||||||
Entertainment and merchandise sales | 41,036 | 27,059 | 16,864 | ||||||||
Total Company store sales | 93,998 | 75,237 | 65,611 | ||||||||
Franchise fees and royalties | 16,189 | 16,328 | 15,199 | ||||||||
International Association assessments and other fees | 37,743 | 36,861 | 24,591 | ||||||||
Total revenues | 147,930 | 128,426 | 105,401 | ||||||||
Company store operating costs: | |||||||||||
Cost of food and beverage (exclusive of items shown separately below) | 14,137 | 12,835 | 12,527 | ||||||||
Cost of entertainment and merchandise (exclusive of items shown separately below) | 1,591 | 1,690 | 1,729 | ||||||||
Total cost of food, beverage, entertainment and merchandise | 15,728 | 14,525 | 14,256 | ||||||||
Labor expenses | 18,791 | 15,865 | 14,968 | ||||||||
Rent expense | 6,375 | 5,234 | 5,363 | ||||||||
Other store operating expenses | 15,122 | 12,134 | 9,017 | ||||||||
Total Company store operating costs | 56,016 | 47,758 | 43,604 | ||||||||
Other costs and expenses: | |||||||||||
Advertising expense | 5,437 | 4,358 | 4,014 | ||||||||
General and administrative expenses | 35,950 | 35,867 | 41,693 | ||||||||
Depreciation, Amortization and Accretion, Net | 9,900 | 7,343 | 6,609 | ||||||||
Transaction and severance costs | 474 | 55 | 11,908 | ||||||||
Asset Impairment | 14 | 0 | 20 | ||||||||
Total operating costs and expenses | 107,791 | 95,381 | 107,848 | ||||||||
Operating Income (Loss) | 40,139 | 33,045 | (2,447) | ||||||||
Equity in earnings (loss) in affiliates | 0 | 0 | 0 | ||||||||
Interest expense | 4,261 | 4,664 | 4,288 | ||||||||
Income (loss) before income taxes | 35,878 | 28,381 | (6,735) | ||||||||
Income tax expense (benefit) | 2,407 | 10,520 | (1,575) | ||||||||
Net income (loss) | 33,471 | 17,861 | (5,160) | ||||||||
Components of other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | 0 | 0 | 0 | ||||||||
Comprehensive income (loss) | 33,471 | 17,861 | (5,160) | ||||||||
Reportable Legal Entities [Member] | Non-Guarantors [Member] | |||||||||||
REVENUES: | |||||||||||
Food and beverage sales | 6,273 | 5,770 | 6,148 | ||||||||
Entertainment and merchandise sales | 10,313 | 9,834 | 10,410 | ||||||||
Total Company store sales | 16,586 | 15,604 | 16,558 | ||||||||
Franchise fees and royalties | 0 | 0 | 0 | ||||||||
International Association assessments and other fees | 34,366 | 36,250 | 43,829 | ||||||||
Total revenues | 50,952 | 51,854 | 60,387 | ||||||||
Company store operating costs: | |||||||||||
Cost of food and beverage (exclusive of items shown separately below) | 2,013 | 2,107 | 2,135 | ||||||||
Cost of entertainment and merchandise (exclusive of items shown separately below) | 653 | 656 | 643 | ||||||||
Total cost of food, beverage, entertainment and merchandise | 2,666 | 2,763 | 2,778 | ||||||||
Labor expenses | 5,094 | 5,035 | 5,503 | ||||||||
Rent expense | 2,200 | 2,215 | 2,533 | ||||||||
Other store operating expenses | 4,802 | 4,545 | 4,308 | ||||||||
Total Company store operating costs | 14,762 | 14,558 | 15,122 | ||||||||
Other costs and expenses: | |||||||||||
Advertising expense | 41,768 | 40,117 | 40,798 | ||||||||
General and administrative expenses | 324 | 440 | 600 | ||||||||
Depreciation, Amortization and Accretion, Net | 2,082 | 2,241 | 2,091 | ||||||||
Transaction and severance costs | 0 | 0 | 0 | ||||||||
Asset Impairment | 5 | 63 | 89 | ||||||||
Total operating costs and expenses | 58,941 | 57,419 | 58,700 | ||||||||
Operating Income (Loss) | (7,989) | (5,565) | 1,687 | ||||||||
Equity in earnings (loss) in affiliates | 0 | 0 | 0 | ||||||||
Interest expense | 737 | 451 | 519 | ||||||||
Income (loss) before income taxes | (8,726) | (6,016) | 1,168 | ||||||||
Income tax expense (benefit) | (660) | (1,809) | 662 | ||||||||
Net income (loss) | (8,066) | (4,207) | 506 | ||||||||
Components of other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | 1,010 | 420 | (2,403) | ||||||||
Comprehensive income (loss) | (7,056) | (3,787) | (1,897) | ||||||||
Eliminations [Member] | |||||||||||
REVENUES: | |||||||||||
Food and beverage sales | 0 | 0 | 0 | ||||||||
Entertainment and merchandise sales | 0 | 0 | 0 | ||||||||
Total Company store sales | 0 | 0 | 0 | ||||||||
Franchise fees and royalties | 0 | 0 | |||||||||
International Association assessments and other fees | (73,793) | (74,419) | (69,415) | ||||||||
Total revenues | (73,793) | (74,419) | (69,415) | ||||||||
Company store operating costs: | |||||||||||
Cost of food and beverage (exclusive of items shown separately below) | 0 | 0 | 0 | ||||||||
Cost of entertainment and merchandise (exclusive of items shown separately below) | 0 | 0 | 0 | ||||||||
Total cost of food, beverage, entertainment and merchandise | 0 | 0 | 0 | ||||||||
Labor expenses | 0 | 0 | 0 | ||||||||
Rent expense | 0 | 0 | 0 | ||||||||
Other store operating expenses | (39,453) | (38,195) | (25,613) | ||||||||
Total Company store operating costs | (39,453) | (38,195) | (25,613) | ||||||||
Other costs and expenses: | |||||||||||
Advertising expense | (34,340) | (36,224) | (43,802) | ||||||||
General and administrative expenses | 0 | 0 | 0 | ||||||||
Depreciation, Amortization and Accretion, Net | 0 | 0 | 0 | ||||||||
Transaction and severance costs | 0 | 0 | 0 | ||||||||
Asset Impairment | 0 | 0 | 0 | ||||||||
Total operating costs and expenses | (73,793) | (74,419) | (69,415) | ||||||||
Operating Income (Loss) | 0 | 0 | 0 | ||||||||
Equity in earnings (loss) in affiliates | (25,405) | (13,654) | 4,654 | ||||||||
Interest expense | 0 | 0 | 0 | ||||||||
Income (loss) before income taxes | (25,405) | (13,654) | 4,654 | ||||||||
Income tax expense (benefit) | 0 | 0 | 0 | ||||||||
Net income (loss) | (25,405) | (13,654) | 4,654 | ||||||||
Components of other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | (1,010) | (420) | 2,403 | ||||||||
Comprehensive income (loss) | $ (26,415) | $ (14,074) | $ 7,057 |
Consolidating Guarantor Financial Information - Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Aug. 25, 2014 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Cash flows provided by (used in) operating activities: | |||||
Cash flows provided by (used in) operating activities: | $ 104,453 | $ 118,687 | $ 100,613 | ||
Cash flows provided by (used in) investing activities: | |||||
Payments to Acquire Businesses, Gross | 0 | 0 | 663 | ||
Acquisition of Franchise | (663) | ||||
Intercompany note | 0 | ||||
Development of internal use software | (3,243) | (10,455) | (4,802) | ||
Proceeds from sale of property and equipment | 489 | 696 | 308 | ||
Net cash used in investing activities | (93,712) | (98,439) | (78,191) | ||
Net repayments on revolving credit facility | (49) | ||||
Cash flows from financing activities: | |||||
Repayments on senior term loan | (7,600) | (7,600) | (9,500) | ||
Repayments of Notes Payable | (13) | (50) | (49) | ||
Intercompany Note | 0 | 0 | |||
Proceeds from sale leaseback transaction | $ 183,700 | 4,073 | 0 | 0 | |
Payments on capital lease obligations | (467) | (421) | (405) | ||
Payments on sale leaseback obligations | (2,470) | (2,028) | (1,663) | ||
Dividends paid | 0 | 0 | (70,000) | ||
Excess tax benefit realized from stock-based compensation | 0 | 4 | 18 | ||
Equity contribution | 1,447 | 0 | 0 | ||
Net cash used in financing activities | (5,030) | (10,095) | (81,599) | ||
Effect of foreign exchange rate changes on cash | 466 | 216 | (1,163) | ||
Change in cash and cash equivalents | 6,177 | 10,369 | (60,340) | ||
Cash and cash equivalents at beginning of period | 61,023 | 50,654 | 110,994 | ||
Cash and cash equivalents at end of period | 67,200 | 61,023 | 50,654 | ||
Payments to Acquire Property, Plant, and Equipment | (90,958) | (88,680) | (73,034) | ||
Cash Equivalents, at Carrying Value | 61,023 | 50,654 | $ 110,994 | ||
Reportable Legal Entities [Member] | Parent Company [Member] | |||||
Cash flows provided by (used in) operating activities: | |||||
Cash flows provided by (used in) operating activities: | 73,925 | 73,722 | 95,659 | ||
Cash flows provided by (used in) investing activities: | |||||
Acquisition of Franchise | (663) | ||||
Intercompany note | 2,393 | ||||
Development of internal use software | 0 | (7,671) | (2,018) | ||
Proceeds from sale of property and equipment | 489 | 696 | 308 | ||
Net cash used in investing activities | (62,055) | (76,802) | (65,050) | ||
Net repayments on revolving credit facility | 0 | ||||
Cash flows from financing activities: | |||||
Repayments on senior term loan | (7,600) | (7,600) | (9,500) | ||
Repayments of Notes Payable | 0 | 0 | |||
Intercompany Note | 23,974 | (3,847) | |||
Proceeds from sale leaseback transaction | 4,073 | ||||
Payments on capital lease obligations | (460) | (417) | (402) | ||
Payments on sale leaseback obligations | (2,470) | (2,028) | (1,663) | ||
Dividends paid | (70,000) | ||||
Excess tax benefit realized from stock-based compensation | 4 | 18 | |||
Equity contribution | 1,447 | ||||
Net cash used in financing activities | (5,010) | 13,933 | (85,394) | ||
Effect of foreign exchange rate changes on cash | 0 | 0 | 0 | ||
Change in cash and cash equivalents | 6,860 | 10,853 | (54,785) | ||
Cash and cash equivalents at beginning of period | 53,088 | 42,235 | |||
Cash and cash equivalents at end of period | 59,948 | 53,088 | 42,235 | ||
Payments to Acquire Property, Plant, and Equipment | (62,544) | (69,827) | (65,070) | ||
Cash Equivalents, at Carrying Value | 42,235 | 97,020 | |||
Reportable Legal Entities [Member] | Guarantor [Member] | |||||
Cash flows provided by (used in) operating activities: | |||||
Cash flows provided by (used in) operating activities: | 29,569 | 44,608 | (492) | ||
Cash flows provided by (used in) investing activities: | |||||
Acquisition of Franchise | 0 | ||||
Intercompany note | 2,925 | ||||
Development of internal use software | (3,243) | (2,784) | (2,784) | ||
Proceeds from sale of property and equipment | 0 | 0 | 0 | ||
Net cash used in investing activities | (30,304) | (21,223) | (5,887) | ||
Net repayments on revolving credit facility | (49) | ||||
Cash flows from financing activities: | |||||
Repayments on senior term loan | 0 | 0 | 0 | ||
Repayments of Notes Payable | (13) | (50) | |||
Intercompany Note | (23,974) | 1,798 | |||
Proceeds from sale leaseback transaction | 0 | ||||
Payments on capital lease obligations | 0 | 0 | 0 | ||
Payments on sale leaseback obligations | 0 | 0 | 0 | ||
Dividends paid | 0 | ||||
Excess tax benefit realized from stock-based compensation | 0 | 0 | |||
Equity contribution | 0 | ||||
Net cash used in financing activities | (13) | (24,024) | 1,749 | ||
Effect of foreign exchange rate changes on cash | 0 | 0 | 0 | ||
Change in cash and cash equivalents | (748) | (639) | (4,630) | ||
Cash and cash equivalents at beginning of period | 1,158 | 1,797 | |||
Cash and cash equivalents at end of period | 410 | 1,158 | 1,797 | ||
Payments to Acquire Property, Plant, and Equipment | (27,061) | (18,439) | (6,028) | ||
Cash Equivalents, at Carrying Value | 1,797 | 6,427 | |||
Reportable Legal Entities [Member] | Non-Guarantors [Member] | |||||
Cash flows provided by (used in) operating activities: | |||||
Cash flows provided by (used in) operating activities: | 959 | 357 | 5,446 | ||
Cash flows provided by (used in) investing activities: | |||||
Acquisition of Franchise | 0 | ||||
Intercompany note | 0 | ||||
Development of internal use software | 0 | 0 | 0 | ||
Proceeds from sale of property and equipment | 0 | 0 | 0 | ||
Net cash used in investing activities | (1,353) | (414) | (1,936) | ||
Net repayments on revolving credit facility | 0 | ||||
Cash flows from financing activities: | |||||
Repayments on senior term loan | 0 | 0 | 0 | ||
Repayments of Notes Payable | 0 | 0 | |||
Intercompany Note | 0 | (3,269) | |||
Proceeds from sale leaseback transaction | 0 | ||||
Payments on capital lease obligations | (7) | (4) | (3) | ||
Payments on sale leaseback obligations | 0 | 0 | 0 | ||
Dividends paid | 0 | ||||
Excess tax benefit realized from stock-based compensation | 0 | 0 | |||
Equity contribution | 0 | ||||
Net cash used in financing activities | (7) | (4) | (3,272) | ||
Effect of foreign exchange rate changes on cash | 466 | 216 | (1,163) | ||
Change in cash and cash equivalents | 65 | 155 | (925) | ||
Cash and cash equivalents at beginning of period | 6,777 | 6,622 | |||
Cash and cash equivalents at end of period | 6,842 | 6,777 | 6,622 | ||
Payments to Acquire Property, Plant, and Equipment | (1,353) | (414) | (1,936) | ||
Cash Equivalents, at Carrying Value | 6,622 | 7,547 | |||
Eliminations [Member] | |||||
Cash flows provided by (used in) operating activities: | |||||
Cash flows provided by (used in) operating activities: | 0 | 0 | 0 | ||
Cash flows provided by (used in) investing activities: | |||||
Acquisition of Franchise | 0 | ||||
Intercompany note | (5,318) | ||||
Development of internal use software | 0 | 0 | 0 | ||
Proceeds from sale of property and equipment | 0 | 0 | 0 | ||
Net cash used in investing activities | 0 | 0 | (5,318) | ||
Net repayments on revolving credit facility | 0 | ||||
Cash flows from financing activities: | |||||
Repayments on senior term loan | 0 | 0 | 0 | ||
Repayments of Notes Payable | 0 | 0 | |||
Intercompany Note | 0 | 5,318 | |||
Proceeds from sale leaseback transaction | 0 | ||||
Payments on capital lease obligations | 0 | 0 | 0 | ||
Payments on sale leaseback obligations | 0 | 0 | 0 | ||
Dividends paid | 0 | ||||
Excess tax benefit realized from stock-based compensation | 0 | 0 | |||
Equity contribution | 0 | ||||
Net cash used in financing activities | 0 | 0 | 5,318 | ||
Effect of foreign exchange rate changes on cash | 0 | 0 | 0 | ||
Change in cash and cash equivalents | 0 | 0 | 0 | ||
Cash and cash equivalents at beginning of period | 0 | ||||
Cash and cash equivalents at end of period | 0 | 0 | |||
Payments to Acquire Property, Plant, and Equipment | $ 0 | 0 | 0 | ||
Cash Equivalents, at Carrying Value | $ 0 | $ 0 | $ 0 |
Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Oct. 01, 2017 |
Jul. 02, 2017 |
Apr. 02, 2017 |
Jan. 01, 2017 |
Oct. 02, 2016 |
Jul. 03, 2016 |
Apr. 03, 2016 |
Dec. 31, 2017 |
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Quarterly Results of Operations [Line Items] | |||||||||||
Food and beverage sales | $ 90,524 | $ 98,255 | $ 97,411 | $ 124,419 | $ 93,469 | $ 101,984 | $ 97,404 | $ 122,202 | $ 410,609 | $ 415,059 | $ 408,095 |
Entertainment and merchandise sales | 102,005 | 110,633 | 109,724 | 135,917 | 106,277 | 121,764 | 114,657 | 147,557 | 458,279 | 490,255 | 497,015 |
Total Company store sales | 192,529 | 208,888 | 207,135 | 260,336 | 199,746 | 223,748 | 212,061 | 269,759 | 868,888 | 905,314 | 905,110 |
Franchise fees and royalties | 4,152 | 4,459 | 4,649 | 4,623 | 4,898 | 4,322 | 4,560 | 4,559 | 17,883 | 18,339 | 17,479 |
Total revenues | 196,681 | 213,347 | 211,784 | 264,959 | 204,644 | 228,070 | 216,621 | 274,318 | 886,771 | 923,653 | 922,589 |
Operating Income (Loss) | (5,721) | 1,138 | 7,814 | 44,659 | (1,070) | 12,547 | 3,627 | 46,348 | 47,890 | 61,452 | 55,131 |
Income (loss) before income taxes | (23,263) | (16,313) | (9,247) | 27,598 | (17,396) | (4,690) | (13,494) | 29,287 | (21,225) | (6,293) | (15,451) |
Net income (loss) | $ 52,868 | $ (11,092) | $ (5,930) | $ 17,220 | $ (10,126) | $ (2,404) | $ (9,052) | $ 17,915 | $ 53,066 | $ (3,667) | $ (12,510) |
Label | Element | Value |
---|---|---|
Successor [Member] | ||
Construction in Progress Expenditures Incurred but Not yet Paid | us-gaap_ConstructionInProgressExpendituresIncurredButNotYetPaid | $ 1,270,000 |
Interest Paid | us-gaap_InterestPaid | 73,255,000 |
Income Taxes Paid, Net | us-gaap_IncomeTaxesPaidNet | $ 13,346,000 |
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