Acquisition of Peter Piper Pizza

12 Months Ended

Dec. 28, 2014

Peter Piper Pizza [Member]

Business Acquisition [Line Items]

Acquisition of Peter Piper Pizza

Acquisition of Peter Piper Pizza:

In October 2014, the Company acquired Peter Piper Pizza (“PPP”), a leading pizza and entertainment restaurant chain operating in the southwestern United States and Mexico, for aggregate consideration paid of $113.1 million, net of cash acquired (the “PPP Acquisition”).During Fiscal 2015, the Company made certain adjustments to the initial PPP purchase price allocation related to the final settlement of net working capital, the valuation of favorable and unfavorable lease interests and PPP’s tradename, and the valuation of net operating losses acquired and other tax positions that resulted in a net increase to goodwill of $0.4 million.

The following table summarizes the final allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition, as well as adjustments made during the measurement period (in thousands):

	PPP Preliminary Purchase Price Allocation			Measurement Period Adjustments			PPP Final Purchase Price Allocation
Cash consideration paid	$	118,409		$	663		$	119,072
Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents	5,267			—			5,267
Accounts receivable	511			—			511
Inventories	820			—			820
Other current assets	598			—			598
Property, plant and equipment	14,383			—			14,383
Favorable lease interests	2,000			(1,120		)	880
Peter Piper Pizza's tradename	24,800			1,900			26,700
Franchise agreements	39,300			—			39,300
Other non-current assets	154			—			154
Indebtedness	(120		)	—			(120		)
Unfavorable lease interests	(3,290		)	(580		)	(3,870		)
Deferred taxes	(12,935		)	31			(12,904		)
Other current and non-current liabilities	(4,061		)	—			(4,061		)
Net assets acquired	67,427			231			67,658
Excess purchase price allocated to goodwill	$	50,982		$	432		$	51,414

The measurement period adjustments did not have a significant impact on our Consolidated Statements of Earnings for Fiscal 2015. In addition, these adjustments did not have a significant impact on our Consolidated Balance Sheet as of January 1, 2017. Therefore, we have not retrospectively adjusted this financial information.

As of January 1, 2017, $0.3 million of the goodwill from the PPP Acquisition will be deductible for federal income tax purposes.

Pro Forma Financial Information

The following unaudited pro forma results of operations for the twelve months ended December 28, 2014 assume that the PPP Acquisition had occurred on December 30, 2013, the first day in fiscal year 2014, after giving effect to acquisition accounting adjustments relating to depreciation and amortization of the revalued assets and the identifiable intangible assets resulting from the PPP Acquisition, interest expense associated with the debt paid off in connection with the PPP Acquisition, and other purchase price and transaction-related adjustments in connection with the PPP Acquisition. These unaudited pro forma results are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the Peter Piper Pizza acquisition had taken place at the beginning of the earliest period presented, and exclude one-time, non-recurring costs related to the PPP Acquisition, including transaction costs and executive termination benefits and share-based compensation expense related to the departure of certain Peter Piper Pizza executives. Such pro forma financial information is based on the historical financial statements of Peter Piper Pizza. The pro forma financial information presented below also assumes that the Merger had occurred on December 30, 2013 (see Note 2. “Acquisition of CEC Entertainment, Inc.”). The unaudited pro forma financial information presented below does not reflect any synergies or operating cost reductions that may be achieved.

	Twelve Months Ended
	December 28, 2014
	(in thousands)
Total revenues	$	887,018
Net income (loss)	$	(17,199	)