-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JBXiWRhqQm+6/lAtLP8k6b6hlbeHV7mWaS9cx9hQn9CmYiQrMPbpT5/p0eNCQMkn XUBCCQEk2iBbNzQlHunuxQ== 0000813920-99-000013.txt : 19991231 0000813920-99-000013.hdr.sgml : 19991231 ACCESSION NUMBER: 0000813920-99-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991003 FILED AS OF DATE: 19991230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEC ENTERTAINMENT INC CENTRAL INDEX KEY: 0000813920 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 480905805 STATE OF INCORPORATION: KS FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13687 FILM NUMBER: 99783734 BUSINESS ADDRESS: STREET 1: PO BOX 152077 STREET 2: 4441 W AIRPORT FREEWAY CITY: IRVING STATE: TX ZIP: 75015 BUSINESS PHONE: 2142588507 MAIL ADDRESS: STREET 1: PO BOX 152077 CITY: IRVING STATE: TX ZIP: 75015 FORMER COMPANY: FORMER CONFORMED NAME: SHOWBIZ PIZZA TIME INC DATE OF NAME CHANGE: 19920703 10-Q 1 10QDOCUMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended October 3, 1999. - Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ---------- to -----------. Commission File Number 0-15782 CEC ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) Kansas 48-0905805 (State or other jurisdiction of(I.R.S. Employer incorporation or organization)Identification No.) 4441 West Airport Freeway Irving, Texas 75062 (Address of principal executive offices, including zip code) (972) 258-8507 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No - At October 3, 1999, an aggregate of 27,266,374 shares of the registrant's Common Stock, par value of $.10 each (being the registrant's only class of common stock), were outstanding. PART I - FINANCIAL INFORMATION Item 1. Financial Statements CEC ENTERTAINMENT, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Consolidated balance sheets. . . . . . . . . . . . . . . . . . 2 Consolidated statements of earnings and comprehensive income. . . . . . . . . . . . . . . . . . . . 3 Consolidated statement of shareholders' equity . . . . . . . . 5 Consolidated statements of cash flows . . . . . . . . . . . . 6 Notes to consolidated financial statements . . . . . . . . . . 7 Page 1 CEC ENTERTAINMENT, INC. CONSOLIDATED BALANCE SHEETS (Thousands, except share data) ASSETS October 3, January 3, 1999 1999 --------- --------- (unaudited) Current assets: Cash and cash equivalents . . . . . . . . . . . $ 6,728 $ 3,210 Accounts receivable . . . . . . . . . . . . . . 7,126 4,299 Current portion of notes receivable . . . . . . 13 52 Inventories . . . . . . . . . . . . . . . . . . 5,770 5,842 Prepaid expenses. . . . . . . . . . . . . . . . 4,124 3,643 Current portion of deferred tax asset . . . . . 720 720 ------- ------- Total current assets . . . . . . . . . . . . . 24,481 17,766 ------- ------- Property and equipment, net. . . . . . . . . . . 257,755 228,531 ------- ------- Deferred tax asset . . . . . . . . . . . . . . . 0 1,036 ------- ------- Assets held for resale . . . . . . . . . . . . . 13,878 150 ------- ------- Notes receivable, less current portion, including receivables from related parties of $737 and $361, respectively . . . . . . . . . . . . . . . . . 737 363 ------- ------- Other assets . . . . . . . . . . . . . . . . . . 7,004 4,382 ------- ------- $303,855 $252,228 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt . . . . . . . $ 8,557 $ 9,383 Accounts payable and accrued liabilities. . . . 36,934 32,453 ------- ------- Total current liabilities. . . . . . . . . . 45,491 41,836 ------- ------- Long-term debt, less current portion . . . . . . 34,585 18,922 ------- ------- Deferred rent. . . . . . . . . . . . . . . . . . 4,021 3,915 ------- ------- Other liabilities. . . . . . . . . . . . . . . . 2,402 1,300 ------- ------- Redeemable preferred stock, $60 par value, redeemable for $2,974 in 2005. . . . . . . . . 2,342 2,306 Shareholders' equity: Common stock, $.10 par value; authorized 100,000,000 shares; 33,683,788 and 33,397,955 shares issued, respectively . . . . . . . . . . . . . . . . 3,368 3,341 Capital in excess of par value. . . . . . . . . 165,800 161,991 Retained earnings . . . . . . . . . . . . . . . 112,050 76,157 Deferred compensation . . . . . . . . . . . . . (949) (1,520) Accumulated other comprehensive income . . . 4 6 Less treasury shares of 6,417,414 and 6,352,014, respectively, at cost . . . . . . (65,259) (56,026) ------- ------- 215,014 183,949 ------- ------- $ 303,855 $ 252,228 ======= =======
See notes to consolidated financial statements. Page 2 CEC ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited) (Thousands, except per share data) Three Months Ended Oct. 3, 1999 Oct. 4,1998 ------------ ----------- Food and beverage revenues . . . . . . . . . . $ 73,523 $ 63,403 Games and merchandise revenues . . . . . . . . 41,225 33,807 Franchise fees and royalties . . . . . . . . . 802 780 Interest income, including related party income of $18 and $10, respectively. . . . . 33 116 ------- ------- 115,583 98,106 ------- ------- Costs and expenses: Cost of sales . . . . . . . . . . . . . . . . 51,955 44,842 Selling, general and administrative expenses. . . . . . . . . . . . . . . . . . 16,377 13,990 Depreciation and amortization . . . . . . . . 7,638 7,036 Interest expense. . . . . . . . . . . . . . 569 640 Other operating expenses. . . . . . . . . . . 18,817 17,334 ------- ------- 95,356 83,842 ------- ------- Income before income taxes . . . . . . . . . . 20,227 14,264 ------- ------- Income taxes: Current expense . . . . . . . . . . . . . . . 6,496 1,280 Deferred expense. . . . . . . . . . . . . . . 1,434 4,311 ------- ------- 7,930 5,591 ------- Net income . . . . . . . . . . . . . . . . . . 12,297 8,673 Other comprehensive income, net of tax: Foreign currency translation. . . . . . . . . (42) Comprehensive income . . . . . . . . . . . . . $ 12,255 $ 8,673 ======== ======= Earnings per share: Basic: Net income . . . . . . . . . . . . . . . . . $ .45 $ .32 ======= ======= Weighted average shares outstanding. . . . . 27,001 27,048 ======= ======= Diluted: Net income . . . . . . . . . . . . . . . . $ .44 $ .31 ======= ======= Weighted average shares outstanding. . . . . 28,028 27,626 ======= =======
See notes to consolidated financial statements. Page 3 CEC ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited) (Thousands, except per share data) Nine Months Ended Oct. 3, 1999 Oct. 4, 1998 ------------ ------------ Food and beverage revenues . . . . . . . . . $ 217,308 $ 191,310 Games and merchandise revenues . . . . . . . 119,075 97,782 Franchise fees and royalties . . . . . . . . 2,389 2,479 Interest income, including related party income of $45 and $70, respectively . . . . . . . . . . . . . . . 142 485 ------- ------- 338,914 292,056 ------- ------- Costs and expenses: Cost of sales . . . . . . . . . . . . . . . 151,394 133,090 Selling, general and administrative expenses. . . . . . . . . . . . . . . . . 48,698 42,101 Depreciation and amortization . . . . . . . 22,955 20,448 Interest expense. . . . . . . . . . . . . 1,864 2,019 Other operating expenses. . . . . . . . . . 54,547 49,107 ------- ------- 279,458 246,765 ------- ------- Income before income taxes . . . . . . . . . 59,456 45,291 ------- ------- Income taxes: Current expense . . . . . . . . . . . . . . 21,167 8,194 Deferred expense. . . . . . . . . . . . . . 2,140 9,400 ------- ------- 23,307 17,594 Net income . . . . . . . . . . . . . . . . . 36,149 27,697 ======= ======= Other comprehensive income, net of tax: Foreign currency translation. . . . . . . . (2) ------- ------- Comprehensive income . . . . . . . . . . . . $ 36,147 $ 27,697 ======= ======= Earnings per share: Basic: Net income . . . . . . . . . . . . . . . . $ 1.33 $ 1.01 ======= ======= Weighted average shares outstanding. . . . 27,020 27,156 ======= ======= Diluted: Net income . . . . . . . . . . . . . . . . $ 1.29 $ .98 Weighted average shares outstanding. . . . 27,904 27,887
See notes to consolidated financial statements. Page 4 CEC ENTERTAINMENT, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) (Thousands, except per share data) Amounts Shares --------- -------- Common stock and capital in excess of par value Balance, beginning of year. . . . . . . . . . . . $ 165,332 33,398 Stock options exercised . . . . . . . . . . . . . 2,003 279 Net tax benefit from exercise of options and stock grants . . . . . . . . . . . . . . . 1,715 Cancellation of fractional shares . . . . . . . . (23) (1) Stock issued under 401(k) plan. . . . . . . . . . 141 8 ------- ------- Balance, October 3, 1999. . . . . . . . . . . . . 169,168 33,684 ------- ======= Retained earnings: Balance, beginning of year. . . . . . . . . . . . 76,157 Net income. . . . . . . . . . . . . . . . . . . . 36,149 Redeemable preferred stock accretion. . . . . . . (77) Redeemable preferred stock dividend, $3.60 per share . . . . . . . . . . . . . . . . (179) ------- Balance, October 3, 1999. . . . . . . . . . . . . 112,050 ------- Deferred compensation: Balance, beginning of year. . . . . . . . . . . . (1,520) Amortization of deferred compensation . . . . . . 571 ------- Balance, October 3, 1999. . . . . . . . . . . . . (949) ------- Accumulated other comprehensive income: Balance, beginning of year. . . . . . . . . . . . 6 Foreign currency translation. . . . . . . . . . . (2) ------- Balance, October 3, 1999. . . . . . . . . . . . . 4 ------- Treasury shares: Balance, beginning of year. . . . . . . . . . . . (56,026) 6,352 Treasury stock acquired . . . . . . . . . . . . . (9,233) 324 ------- ------ Balance, October 3, 1999. . . . . . . . . . . . . (65,259) 6,676 ------- ------ Total shareholder's equity . . . . . . . . . . . . $ 215,014 =======
See notes to consolidated financial statements. Page 5 CEC ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Thousands) Nine Months Ended Oct. 3, 1999 Oct. 4, 1998 -------------- -------------- Operating activities: Net income . . . . . . . . . . . . . . . . $36,149 $27,697 Adjustments to reconcile net income to cash provided by operations: Depreciation and amortization . . . . . . . 22,955 20,448 Deferred tax expense. . . . . . . . . . . . 2,140 9,400 Compensation expense under stock grant plan 571 570 Other . . . . . . . . . . . . . . . . . . . 63 71 Net change in receivables, inventory, prepaids, payables and accrued liabilities. . . . . . . . . . . . 1,245 (2,939) Cash provided by operations. . . . . . . 63,123 55,247 Investing activities: Purchases of property and equipment . . . . (51,719) (41,985) Additions to notes receivable . . . . . . . (1,438) (235) Payments received on notes receivable . . . 1,103 2,236 Purchase of assets held for resale. . . . . (13,728) Increase in investments, deferred charges and other assets. . . . . . . . . (3,039) (1,574) Cash used in investing activities. . . . . (68,821) (41,558) Financing activities: Payments on debt and line of credit . . . . (19,433) (2,532) Proceeds on long term debt. . . . . . . . . 34,270 Exercise of stock options . . . . . . . . . 2,003 2,511 Redeemable preferred stock dividends. . . . (179) (179) Treasury stock acquired . . . . . . . . . . (9,233) (10,589) Other . . . . . . . . . . . . . . . . . . . 1,788 96 ------- ------- Cash provided by (used in) financing activities . . . . . . . . . . . . . . . 9,216 (10,693) ------- ------- Increase in cash and cash equivalents . . . 3,518 2,996 Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . 3,210 7,275 ------- -------- Cash and cash equivalents, end of period . . $ 6,728 $ 10,271 ======= ========
See notes to consolidated financial statements. Page 6 CEC ENTERTAINMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Interim financial statements: In the opinion of management, the accompanying financial statements for the periods ended October 3, 1999 and October 4, 1998 reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company's financial condition, results of operations and cash flows in accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles have been omitted. The unaudited consolidated financial statements referred to above should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K filed with the Securities and Exchange Commission for the year ended January 3, 1999. Results of operations for the periods ended October 3, 1999 and October 4, 1998 are not necessarily indicative of the results for the year. 2. Earnings per common share: Earnings per common share were computed based on the weighted average number of common and potential common shares outstanding during the period adjusted retroactively for a three-for-two stock split effected July 23, 1999. Net income available per common share has been adjusted for the items indicated below, and earnings per common and potential common share were computed as follows (thousands, except per share data): Three Months Ended Nine Months Ended -------------------- -------------------- Oct. 3, Oct. 4, Oct. 3, Oct. 4, 1999 1998 1999 1998 -------- -------- -------- -------- Net income . . . . . . . . . . $ 12,297 $ 8,673 $36,149 $27,697 Accretion of redeemable preferred stock . . . . . . (26) (25) (77) (77) Redeemable preferred stock dividends . . . . . . . . . (60) (60) (179) (179) ------- ------- ------- ------- Adjusted income applicable to common and potential common shares . . . . . . . . . . . $12,211 $8,588 $35,893 $27,441 ======= ====== ======= ======= Basic: Weighted average common shares outstanding. . . . . . . . 27,001 27,048 27,020 27,156 ======= ======= ======= ======= Earnings per common share. . . . . . . . . . $ .45 $ .32 $ 1.33 $ 1.01 ====== ====== ====== ====== Diluted: Weighted average common shares outstanding. . . . 27,001 27,048 27,020 27,156 Potential common shares for stock options and stock grants . . . . . . . . . 1,027 578 884 731 ------- ------ ------- ------ Weighted average shares outstanding. . . . . . . 28,028 27,626 27,904 27,887 ======= ======= ======= ======= Earnings per common and potential common share . . . . . $ .44 $ .31 $ 1.29 $ .98 ====== ====== ====== ======
3. Subsequent transaction: In July 1999, the Company acquired for approximately $19 million, 13 owned properties, the rights to seven leased properties, two parcels of undeveloped real estate, and all furniture, fixtures, equipment and intellectual properties owned by Discovery Zone, Inc. The Company plans to convert approximately 10 of the acquired properties to Chuck E. Cheese's restaurants and sell the remaining properties, furniture, fixtures and equipment. Page 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Third Quarter 1999 Compared to Third Quarter 1998 - ------------------------------------------------- A summary of the results of operations of the Company as a percentage of revenues for the third quarters of 1999 and 1998 is shown below. Three Months Ended ----------------------------------- Oct. 3, 1999 Oct. 4, 1998 ------------ ------------ Revenue. . . . . . . . . . . . . . 100.0% 100.0% Costs and expenses: Cost of sales. . . . . . . . 45.0 45.7 Selling, general and administrative . . . . . . . 14.1 14.3 Depreciation and amortization 6.6 7.2 Interest expense . . . . . . . . .5 .7 Other operating expenses 16.3 17.6 ------ ------ 82.5 85.5 ------ ------ Income before income taxes 17.5 14.5 Income tax expense . . . . . . . 6.9 5.7 ------ ------ Net income . . . . . . . . . . . . 10.6% 8.8% ====== ======
Revenues --------- Revenues increased to $115.6 million in the third quarter of 1999 from $98.1 million in the third quarter of 1998 due to an increase in the number of Company-operated stores and an increase of 8.4% in comparable store sales of the Company's Chuck E. Cheese's stores which were open during all of the third quarters of both 1999 and 1998. During 1998, the Company added 25 stores including new stores and existing stores acquired from franchisees or joint venture partners. During the first nine months of 1999, the Company opened or acquired twelve new stores and acquired one store from an existing franchisee. Management believes that several factors contributed to the comparable store sales increase with the primary factor being sales increases at stores upgraded with new game packages. Menu prices did not increase between the periods. Costs and Expenses ------------------- Costs and expenses as a percentage of revenues decreased to 82.5% in the third quarter of 1999 from 85.5% in the third quarter of 1998. Cost of sales decreased as a percentage of revenues to 45.0% in the third quarter of 1999 from 45.7% in the comparable period of 1998. Cost of food, beverage, prize and merchandise items as a percentage of restaurant sales decreased to 15.8% in the third quarter of 1999 from 16.1% in the third quarter of 1998 primarily due to an increase in game sales, reduced costs of certain beverage and prize products, partially offset by higher cheese costs. Store labor expenses as a percentage of store sales decreased slightly to 26.6% in the third quarter of 1999 from 26.7% in the third quarter of 1998 primarily due to the increase in comparable store sales and more effective utilization of hourly employees. Selling, general and administrative expenses as a percentage of revenues decreased slightly to 14.1% in the third quarter of 1999 from 14.3% in the third quarter of 1998 due primarily to a decrease in corporate overhead costs as a percentage of revenues. Depreciation and amortization expenses as a percentage of revenues decreased to 6.6% in the third quarter of 1999 from 7.2% in the third quarter of 1998 primarily due to the increase in comparable store sales. Page 8 Interest expense as a percentage of revenues decreased to .5% in the third quarter of 1999 from .7% in the third quarter of 1998 due to increased revenues and lower interest rates. Interest expense on incremental debt incurred to finance assets held for resale has been allocated to the basis of such assets. Other operating expenses decreased as a percentage of revenues to 16.3% in the third quarter of 1999 from 17.7% in the third quarter of 1998 primarily due a reduction in insurance costs, the increase in comparable store sales and the fact that a significant portion of operating costs are fixed. The Company's effective income tax rate was 39.2% in both the third quarters of 1999 and 1998. Net Income ---------- The Company had net income of $12.3 million in the third quarter of 1999 compared to $8.7 million in the third quarter of 1998 due to the changes in revenues and expenses discussed above. The Company's diluted earnings per share increased to $.44 per share in the third quarter of 1999 from $.31 per share in the third quarter of 1998. First Nine Months of 1999 Compared to First Nine Months of 1998 - --------------------------------------------------------------- A summary of the results of operations of the Company as a percentage of revenues for the first nine months of 1999 and 1998 is shown below. Nine Months Ended --------------------------------- Oct. 3, 1999 Oct. 4, 1998 ------------ ------------ Revenue. . . . . . . . . . . . . 100.0% 100.0% ----- ----- Costs and expenses: Cost of sales . . . . . . . . . . 44.7 45.6 Selling, general and administrative 14.4 14.4 Depreciation and amortization . . 6.8 7.0 Interest expense. . . . . . . . . .5 .7 Other operating expenses 16.1 16.8 ------ ------ 82.5 84.5 ------ ------ Income before income taxes 17.5 15.5 Income tax expense . . . . . . . 6.8 6.0 ------ ------ Net income . . . . . . . . . . . 10.7% 9.5% ====== ======
Revenues -------- Revenues increased to $338.9 million in the first nine months of 1999 from $292.1 million in the first nine months of 1998 primarily due an increase in the number of Company-operated stores and an increase of 5.6% in comparable store sales of the Company's Chuck E. Cheese's restaurants which were open during all of the first nine months of both 1999 and 1998. During 1998, the Company added 25 stores including new stores and existing stores acquired from franchisees or joint venture partners. During the first nine months of 1999, the Company opened or acquired twelve new stores and acquired one from an existing franchisee. Management believes that several factors contributed to the comparable store sales increase with the primary factor being sales increases at stores upgraded with new game packages. Menu prices increased approximately .5% between the periods. Costs and Expenses ------------------ Costs and expenses as a percentage of revenues decreased to 82.5% in the first nine months of 1999 from 84.5%in the first nine months of 1998. Page 9 Cost of sales decreased as a percentage of revenues to 44.7% in the first nine months of 1999 from 45.6% in the comparable period of 1998. Cost of food, beverage, prize and merchandise items as a percentage of restaurant sales decreased to 15.5% in the first nine months of 1999 from 16.0% in the first nine months of 1998 primarily due to an increase in game sales, reduced costs of certain beverage and prize products and an increase in menu prices. Store labor expenses as a percentage of restaurant sales decreased slightly to 26.4% during the first nine months of 1999 from 26.6% in the first nine months of 1998 primarily due to an increase in comparable store sales and more effective utilization of hourly employees. Selling, general and administrative expenses as a percentage of revenues were 14.4% in both the first nine months of 1999 and the first nine months of 1998. Depreciation and amortization expenses as a percentage of revenues declined to 6.8% in the first nine months of 1999 from 7.0% in the first nine months of 1998 primarily due to the increase in comparable store sales. Interest expense as a percentage of revenues decreased to .5% in the first nine months of 1999 from .7% in the first nine months of 1998 due to increased revenues and lower interest rates. Interest expense on incremental debt incurred to finance assets held for resale has been allocated to the basis of such assets. Other operating expenses decreased as a percentage of revenues to 16.1% in the first nine months of 1999 from 16.8% in the first nine months of 1998 primarily due to the increase in comparable store sales and the fact that a significant portion of operating costs are fixed. The Company's effective income tax rate was 39.2% in the first nine months of 1999 compared to 38.8% in the first nine months of 1998 due to a credit recorded in 1998 for state income taxes. Net Income ---------- The Company had net income of $36.1 million in the first nine months of 1999 compared to $27.7 million in the first nine months of 1998 due to the changes in revenues and expenses discussed above. The Company's diluted earnings per share was $1.29 per share in the first nine months of 1999 compared to $.98 per share in the first nine months of 1998. Financial Condition, Liquidity and Capital Resources Cash provided by operations increased to $63.1 million in the first nine months of 1999 from $55.2 million in the comparable period of 1998. Cash outflows from investing activities for the first nine months of 1999 were $68.8 million primarily related to capital expenditures and the purchase of assets held for resale. Cash inflows from financing activities for the first nine months of 1999 were $9.2 million primarily related to borrowings on the Company's line of credit. The Company's primary requirements for cash relate to planned capital expenditures, the repurchase of the Company's common stock and debt service. The Company expects that it will satisfy such requirements from cash provided by operations and, if necessary, funds available under its line of credit. In July 1999, the Company acquired for approximately $19 million, 13 owned properties, the rights to seven leased properties, two parcels of undeveloped real estate, and all furniture, fixtures, equipment and intellectual properties owned by Discovery Zone, Inc. The Company plans to convert approximately 10 of the acquired properties to Chuck E. Cheese's restaurants and sell the remaining properties, furniture, fixtures and equipment. In 1999, the Company plans to add 28 to 30 stores including new stores and acquisitions of existing stores from franchisees. The Company currently anticipates its cost of opening such new stores to average approximately $1.5 million per store which will vary depending upon many factors including the size of the stores and whether the store is an in-line or freestanding building. In addition to such new store openings, the Company plans to expand the customer area of 15 to 20 high sales volume stores in 1999. The Company completed its Phase II upgrade program in 1999 at an average cost of approximately $160,000 per store. A Phase II upgrade consists of a new game package, enhanced prize and merchandise offerings, and improved product presentation and service. During the first nine months of 1999, the Company opened nine new restaurants, acquired four existing restaurants, expanded 17 restaurants and completed Phase II upgrades in 26 restaurants. The Company currently estimates that capital expenditures in 1999, including expenditures for upgrading existing stores, new store openings, existing store expansions and equipment investments, will be approximately $65 million, excluding the $19 million acquisition of assets from Discovery Zone, Inc. The Company plans to finance these expenditures through cash flow from operations and borrowings under the Company's line of credit. Page 10 In July 1998, the Company announced that it planned to purchase shares of the Company's common stock at an aggregate purchase price of up to $15 million. In September 1999, the Company completed this plan and announced an additional plan to purchase shares of the Company's common stock at an aggregate purchase price of up to $25 million. As of November 11, 1999, the Company has purchased shares of its common stock under the $25 million plan at an aggregate purchase price of approximately $1.5 million. The Company's total credit facility of $59.5 million consists of $15.3 million in term notes and a $45 million line of credit. Term notes totaling $12 million with annual principal payments of $6 million and annual interest of 10.02% mature in 2001. Term notes totaling $2.5 million with quarterly principal payments of $833,000 and annual interest equal to LIBOR plus 3.5% mature in 2000. Interest under the $45 million line of credit is dependent on earnings and debt levels of the Company and ranges from prime minus 0.5% to plus 0.5% or, at the Company's option, LIBOR plus 1% to 2.5%. Currently, any borrowings under this line of credit would be at prime rate minus 0.5% or LIBOR plus 1%. The Company's line of credit agreement matures June 2001. As of October 3, 1999, $27.9 million was borrowed under the line of credit. The Company is required to comply with certain financial ratio tests during the terms of the loan agreements. In 1998, the Company purchased computer software which is Year 2000 compliant. The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Previous systems may have been unable to accurately process certain date-based information. The cost of the new software has been recorded as an asset and is being amortized over its estimated useful life. Other maintenance or modification costs have been expensed as incurred. Accordingly, the Company does not expect the amounts required to be expensed to have a material effect on its financial position, results of operations or cash flows. The Company has substantially completed its Year 2000 date conversion project and expects any remaining projects to be completed prior to the end of 1999. The Company has initiated formal communication with significant vendors and suppliers to determine their efforts to remediate the Year 2000 issues. Forward-Looking Statements Certain statements may constitute "forward-looking statements" which are subject to known and unknown risks and uncertainties including, among other things, certain economic conditions, competition, development factors and operating costs that may cause the actual results to differ materially from results implied by such forward-looking statements. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company is subject to market risk in the form of interest risk and foreign currency risk. Both interest risk and foreign currency risk are immaterial to the Company. Page 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings. There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is the subject. Item 2. Changes in Securities. None to report during quarter for which this report is filed. Item 3. Defaults Upon Senior Securities. None to report during quarter for which this report is filed. Item 4. Submission of Matters to a Vote of Security Holders None to report during quarter for which this report is filed. Item 5. Other Information. None to report during quarter for which this report is filed. Item 6. Exhibits and Reports on Form 8-K. a)Exhibits 10(b)(1) Fourth Modification and Extension Agreement, in the stated amount of $45,000,000, dated July 16, 1999, between Bank One, Texas, N.A. and the Company. 10(b)(2) Fourth Restated Revolving Credit Note, in the stated amount of $45,000,000, dated July 16, 1999, between Bank One, Texas, N.A. and the Company. b) Reports on Form 8-K None filed during the quarter for which this report is filed. Page 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CEC ENTERTAINMENT, INC. Dated: November 11, 1999 By: /s/ Larry G. Page ---------------------- Larry G. Page Executive Vice President and Chief Financial Officer Page 13 EXHIBIT INDEX Exhibit Number Description Page No. - ------ ----------- ----- 10(b)(1) Fourth Modification and Extension Agreement, in the stated amount of $45,000,000.00, dated July 16, 1999, between Bank One, Texas, N.A. and the Company. 15 10(b)(2) Fourth Restated Revolving Credit Note, in the stated amount of $45,000,000.00, dated July 16, 1999, between Bank One, Texas, N.A. and the Company. 24 Page 14 EX-1.1 2 Exhibit 10(b)(1) FOURTH MODIFICATION AND EXTENSION AGREEMENT Date: Effective July 16, 1999 Bank One: BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking association Bank One's Address: 1717 Main Street, 3rd Floor Dallas, Texas 75201 Company: CEC ENTERTAINMENT, INC. (f/k/a ShowBiz Pizza Time, Inc.), a Kansas corporation Company's Address: 4441 W. Airport Freeway Irving, Texas 75062 R E C I T A L S: A. Bank One and Company entered into a Loan evidenced, inter alia, by the following documents: 1. Loan Agreement dated as of June 27, 1995 by and between Company and Bank One for an aggregate Loan in the amount of $5,000,000. 2. Revolving Credit Note dated June 27, 1995 in the original principal amount of $5,000,000 signed by Company and payable to Bank One. B. Bank One and Company modified the Loan to increase its principal balance to $15,000,000, extend the maturity date to June 15, 1998 and make certain other changes in the terms and conditions of the Loan evidenced, inter alia, by the following documents: 1. Modification and Extension Agreement dated August 1, 1996 by and between Company and Bank One for an aggregate Loan in the amount of $15,000,000. 2. Restated Revolving Credit Note dated August 1, 1996 in the original principal amount of $15,000,000 signed by Company and payable to Bank One. C. Bank One and Company modified the Loan to allow for transfer of certain assets and make certain other changes in the terms and conditions of the Loan evidenced, inter alia, by the following documents: 1. Supplemental Agreement dated as of September 29, 1997 by and between Company and Bank One. 2. Guarantee Agreement - ShowBiz Nevada, Inc. dated as of September 29, 1997 made by ShowBiz Nevada, Inc. in favor of Bank One. 3. Guarantee Agreement - ShowBiz Merchandising, Inc. dated as of September 29, 1997 made by ShowBiz Merchandising, Inc. in favor of Bank One. 4. Guarantee Agreement - SPT Properties Company, Inc. dated as of September 29, 1997 made by SPT Properties Company, Inc. in favor of Bank One. 5. Guarantee Agreement - ShowBiz Cayman Islands, Inc. dated as of September 29, 1997 made by ShowBiz Cayman Islands, Inc. in favor of Bank One. D. Bank One and Company modified the Loan to extend the maturity date to June 1, 2000 and make certain other changes in the terms and conditions of the Loan evidenced, inter alia, by the following documents: 1. Second Modification and Extension Agreement dated effective June 14, 1998 by and between Company and Bank One for an aggregate Loan in the amount of $15,000,000.00. 2. Second Restated Revolving Credit Note dated effective June 14, 1998 in the original principal amount of $15,000,000.00 signed by Company and payable to Bank One. E. Bank One and Company modified the Loan to increase its principal balance to $30,000,000.00 and make certain other changes in the terms and conditions of the Loan evidenced, inter alia, by the following documents: 1. Third Modification dated effective December 4, 1998 by and between Company and Bank One for an aggregate Loan in the amount of $30,000,000.00. 2. Third Restated Revolving Credit Note dated effective December 4, 1998 in the original principal amount of $30,000,000.00 signed by Company and payable to Bank One. F. Bank One is the owner and holder of the Note, Loan Agreement, and other Loan Documents. G. Company has requested that Bank One (i) increase the principal amount of the Note to $45,000,000.00, and (ii) extend the maturity date to June 1, 2001, and Bank One is willing to do so on the terms set out in this Agreement. IT IS AGREED: 1. Definitions. The definition of terms used in the Loan Agreement and Supplemental Agreement shall have the same meanings in this Agreement unless otherwise defined. The term "Loan Documents" in Section 1.1 of the Loan Agreement shall be amended to include all the documents described above and this Agreement. 2. Principal Balance. Bank One and Company acknowledge that as of the date hereof the outstanding principal balance of the Note is Five Million Seventy-Three Thousand Six Hundred and No/100 Dollars ($5,073,600.00). 3. Revolving Credit Commitment. The definition of "Revolving Credit Commitment" in Section 1.1. Defined Terms of the Loan Agreement shall be amended as follows: "Revolving Credit Commitment" shall mean an amount equal to Forty-Five Million and No/100 Dollars ($45,000,000.00) less the Unsecured LC Exposure Amount, as the same may be reduced from time to time or terminated pursuant to Sections 2.4, 2.11 or 9.1 hereof. 4. Extension of Maturity of Note and Loan Documents. The definition of Initial Term in Section 1.1 of the Loan Agreement shall be amended as follows: "Initial Term" shall mean the period of the Effective Date to and including June 1, 2001. 5. Restated Note. The Note shall be restated in a form entitled "Fourth Restated Revolving Credit Note" which shall state its original principal amount as being Forty-Five Million and No/100 Dollars ($45,000,000.00) to conform to the amended definition of "Revolving Credit Commitment" stated in this Agreement, a copy of the form of Note is attached as Exhibit "A". The terms "Note(s)" or "Revolving Credit Note(s)" shall include the Fourth Restated Revolving Credit Note for all purposes and in all Loan Documents. Bank One shall retain the written instrument evidencing the original Revolving Credit Note dated June 27, 1995 in the original principal amount of $5,000,000, the original Restated Revolving Credit Note dated August 1, 1996 in the original principal amount of $15,000,000, the original Second Restated Revolving Credit Note dated effective June 14, 1988 in the original principal amount of $15,000,000, and the original Third Restated Revolving Credit Note dated December 4, 1998 in the original principal amount of $30,000,000, all of which shall be deemed to be superseded by the written instrument evidencing the Fourth Restated Revolving Credit Note dated on even date with this Agreement in the original principal amount of $45,000,000. Each such superseded note shall be marked "SUPERSEDED BY THE WRITTEN INSTRUMENT EVIDENCING THE FOURTH RESTATED REVOLVING CREDIT NOTE DATED EFFECTIVE JULY 16, 1999" and copies of such notes will be delivered to Company contemporaneously with the execution of this Agreement. 6. Acknowledgment of Indebtedness. Company acknowledges that as of the date of this Agreement, it is well and truly indebted to Bank One pursuant to the terms of the Note, as modified hereby. Company hereby promises to pay to Bank One the indebtedness evidenced by the Note in accordance with the terms thereof, as modified hereby, and shall observe, comply with, and perform all of the obligations, terms, and conditions under or in connection with the Note and all other Loan Documents. 7. Ratification of Loan Documents. Except as provided herein, the terms and provisions of the Note and the other Loan Documents shall remain unchanged and shall remain in full force and effect. Any modification herein of the Note, Loan Agreement and the other Loan Documents shall in no way impair the security of the Loan Documents for the payment of the Note. The promissory notes defined herein and in all other Loan Documents as the "Note" or "Revolving Credit Note(s)" shall hereafter mean the Note as modified by this Agreement. The Loan Agreement, the Note and the other Loan Documents as modified and amended hereby are hereby ratified and confirmed in all respects. 8. Ratification by Guarantors. Each of ShowBiz Nevada, Inc., a Nevada corporation, ShowBiz Merchandising, Inc., a Nevada corporation, SPT Properties Company, Inc., a Nevada corporation, and ShowBiz Cayman Islands, Inc., a Cayman Islands corporation, ratifies and confirms its respective Guarantee Agreements dated as of September 29, 1997, as being binding and continuing and consent to the terms of this Agreement. 9. No Waiver. Company acknowledges that the execution of this Agreement by Bank One is not intended nor shall it be construed as (i) an actual or implied waiver of any default under the Note or any other Loan Document or (ii) an actual or implied waiver of any condition or obligation imposed upon Company pursuant to the Note or any other Loan Document, except to the extent expressly set forth herein. 10. Expenses. Contemporaneously with the execution and delivery hereof, Company shall pay, or cause to be paid, all reasonable costs and expenses incident to the preparation hereof and the consummation of the transactions specified herein, including without limitation fees and expenses of legal counsel to Bank One. 11. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument; but in making proof hereof it shall only be necessary to produce one such counterpart. 12. Benefit. The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto, their heirs, representatives, successors and permitted assigns. 13. Release and Waiver of Usury Claim. Company hereby releases Bank One, its successors and assigns, from all claims, demands, liabilities and causes of action which Company may be entitled to assert (although no such claims are known to exist) against Bank One by reason of Bank One's contracting, charging or receiving for the use, forbearance or detention of money, interest on the Loan evidenced by the Note prior to the execution of this Agreement in excess of that permitted to be charged to Company under applicable law. 14. Release and Waiver of Other Claims. In consideration of the terms, conditions and provisions of this Agreement and the other benefits received by Company hereunder, Company further hereby releases, relinquishes and forever discharges Bank One, as well as its parent and subsidiary corporations, predecessors, successors, assigns, agents, officers, directors, employees, representatives, attorneys and accountants of and from any and all claims, demands, actions, causes of action of any and every kind or character, whether known or unknown, which Company may have against Bank One and its parent and subsidiary corporations, predecessors, successors, assigns, agents, officers, directors, employees, representatives, attorneys or accountants arising out of or with respect to any and all transactions solely relating to the Note or any renewal thereof, and/or the Loan Documents, but excluding any other transactions between the parties, occurring prior to the date hereof, including any other loss, expense and/or detriment, of any kind or character, growing out of or in any way connected with or in any way resulting from the acts, actions or omissions of Bank One and its parent and subsidiary corporations, predecessors, successors, assigns, agents, officers, directors, employees, representatives, attorneys, or accountants, and including any loss, cost or damage in connection with any breach of fiduciary duty, breach of any duty of fair dealing, breach of confidence, breach of funding commitment, undue influence, duress, economic coercion, conflict of interest, negligence, bad faith, malpractice, violations of the racketeer influenced and corrupt organizations act, intentional or negligent infliction of mental duress, tortuous interference with contractual relations, tortuous interference with corporate governance or prospective business advantage, breach of contract, deceptive trade practices, libel, slander or conspiracy. 15. Construction. The parties acknowledge that the parties and their counsel have reviewed and had the opportunity to revise this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or exhibits hereto. 16. Entire Agreement. THIS AGREEMENT, THE NOTE AND THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, this Agreement is executed effective as of the date first above written. BANK ONE, TEXAS, National Association By: ----------------------- Name: Paul C. Koch Title: Vice President CEC ENTERTAINMENT, INC. By: ----------------------- Name: Larry G. Page Title: Executive Vice President, Chief Financial Officer and Treasurer SHOWBIZ NEVADA, INC. By: __________________________________________ Name: Don McKechnie Title: Director and President SHOWBIZ MERCHANDISING, INC. By: __________________________________________ Name: Don McKechnie Title: Director and President SPT PROPERTIES COMPANY, INC. By: __________________________________________ Name: Don McKechnie Title: Director and President SHOWBIZ CAYMAN ISLANDS, INC. By: __________________________________________ Name: Don McKechnie Title: Director and President STATE OF TEXAS & & COUNTY OF DALLAS & This instrument was acknowledged before me on July ----, 1999, by Paul C. Koch, Vice President of BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking association, on behalf of said national association. --------------------------------- Notary Public, State of Texas (SEAL) - ----------------------------- Please Print Name of Notary) My Commission expires: - ----------------- STATE OF TEXAS & & COUNTY OF DALLAS & This instrument was acknowledged before me on July ----, 1999, by Larry G. Page, Executive Vice President, Chief Financial Officer and Treasurer of CEC ENTERTAINMENT, INC., a Kansas corporation, on behalf of said corporation. ----------------------------- Notary Public, State of Texas (SEAL) - ---------------------------------- (Please Print Name of Notary) My Commission expires: - --------------------------- STATE OF TEXAS & & COUNTY OF DALLAS & This instrument was acknowledged before me on July ----, 1999, by Don McKechnie, Director and President of SHOWBIZ NEVADA, INC. a Nevada corporation, on behalf of said corporation. ------------------------------ Notary Public, State of Texas (SEAL) ------------------------------ (Please Print Name of Notary) My Commission expires: ----------------------- STATE OF TEXAS & & COUNTY OF DALLAS & This instrument was acknowledged before me on July ____, 1999, by Don McKechnie, Director and President of SHOWBIZ MERCHANDISING, INC. a Nevada corporation, on behalf of said corporation. ----------------------------------- Notary Public, State of Texas (SEAL) ----------------------------------- (Please Print Name of Notary) My Commission expires: -------------------------- STATE OF TEXAS & & COUNTY OF DALLAS & This instrument was acknowledged before me on July ----, 1999, by Don McKechnie, Director and President of SPT PROPERTIES COMPANY, INC. a Nevada corporation, on behalf of said corporation. ----------------------------- Notary Public, State of Texas (SEAL) ----------------------------- (Please Print Name of Notary) My Commission expires: ---------------------- STATE OF TEXAS & & COUNTY OF DALLAS & This instrument was acknowledged before me on July ----, 1999, by Don McKechnie, Director and President of SHOWBIZ CAYMAN ISLANDS, INC. a Cayman Islands corporation, on behalf of said corporation. ---------------------------- Notary Public, State of Texas (SEAL) ---------------------------- (Please Print Name of Notary) My Commission expires: ---------------------------- FOURTH RESTATED REVOLVING CREDIT NOTE $45,000,000.00 Dallas, Texas July 16, 1999 FOR VALUE RECEIVED, the undersigned, CEC ENTERTAINMENT, INC. (f/k/a SHOWBIZ PIZZA TIME, INC.), a Kansas corporation ("Company"), hereby unconditionally promises to pay to the order of BANK ONE, TEXAS, National Association ("Bank One") at the office of Bank One or any successor, currently located at 1717 Main Street, Third Floor, Dallas, Texas 75201, on June 1, 2001 (or on any annual anniversary thereof agreed to in writing by Bank One and the Company), in lawful money of the United States of America and immediately available funds, an amount equal to the lesser of (a) FORTY-FIVE MILLION AND NO/100 DOLLARS ($45,000,000.00), or (b) the aggregate unpaid principal amount of all Revolving Credit Loans made by Bank One to the Company pursuant to Section 2.1 of the Loan Agreement, dated as of June 27, 1995, between Bank One and the Company (as amended, modified or supplemented from time to time in accordance with its terms, the "Loan Agreement"). The Company further promises to pay interest (computed on the basis of a 365-day year for the actual days elapsed) in like money on the unpaid principal balance of this Note from time to time outstanding at the annual rates provided in the Loan Agreement. Interest shall be payable at the times and in the manner provided in the Loan Agreement. All Revolving Credit Loans made by Bank One pursuant to Section 2.1 of the Loan Agreement and all payments of the principal thereof shall be endorsed by the holder of this Note on the schedule annexed hereto (including any additional pages such holder may add to such schedule), which endorsement shall constitute prima facie evidence of the accuracy of the information so endorsed; provided, however, that the failure of the holder of this Note to insert any date or amount or other information on such schedule shall not in any manner affect the obligation of the Company to repay any Revolving Credit Loans in accordance with the terms of the Loan Agreement. On and after the stated or any accelerated maturity hereof, this Note shall bear interest until paid in full (whether before or after the occurrence of any Event of Default described in Sections 9.1(g) and 9.1(h) of the Loan Agreement) at a rate of 2.5% per annum in excess of the Prime Rate, payable on demand, but in no event in excess of the maximum rate of interest permitted under applicable law. Such interest rate shall change when and as the Prime Rate changes. This Note is a Revolving Credit Note referred to in the Loan Agreement, is entitled to the benefits thereof and is subject to optional and mandatory prepayment, in whole or in part, as provided therein. Reference is herein made to the Loan Agreement for the rights of the holder to accelerate the unpaid balance hereof prior to maturity. The Company hereby waives diligence, demand, presentment, protest and notice of any kind, release, surrender or substitution of security, or forbearance or other indulgence, without notice. This Note and all of the other Loan Documents are intended to be performed in accordance with, and only to the extent permitted by, all applicable usury laws. If any provision hereof or of any of the other Loan Documents or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, neither the application of such provision to any other person or circumstance nor the remainder of the instrument in which such provision is contained shall be affected thereby and shall be enforced to the greatest extent permitted by law. It is expressly stipulated and agreed to be the intent of Bank One at all times to comply with the usury and other applicable laws now or hereafter governing the interest payable on the Indebtedness evidenced by this Note. If the applicable law is ever revised, repealed or interpreted so as to render usurious any amount called for under this Note or any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to the Indebtedness evidenced by this Note, or if Bank One's exercise of the option to accelerate the maturity of this Note, or if any prepayment by the Company results in the Company's having paid any interest in excess of that permitted by law, then it is the express intent of the Company and Bank One that all excess amounts theretofore collected by Bank One be credited on the principal balance of this Note (or, if this Note and all other Indebtedness arising under or pursuant to the other Loan Documents have been paid in full, refunded to the Company), and the provisions of this Note and the other Loan Documents immediately be deemed reformed and the amounts thereafter collectable hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder. All sums paid, or agreed to be paid, by the Company for the use, forbearance, detention, taking, charging, receiving or reserving of the Indebtedness of the Company to Bank One under this Note or arising under of pursuant to the other Loan Documents shall, to the maximum extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such Indebtedness until payment in full so that the rate or amount of interest on account of such Indebtedness does not exceed the usury ceiling from time to time in effect and applicable to such Indebtedness for so long as such Indebtedness is outstanding. To the extent federal law permits Bank One to contract for, charge, or receive a greater amount of interest, Bank One will rely upon federal law instead of the Texas Finance Code, as supplemented by the Texas Credit Title, for the purpose of determining the maximum rate or amount. Additionally, to the maximum extent permitted by applicable law now or hereafter in effect, Bank One may, at its option and from time to time, implement any other method of computing the maximum rate under the Texas Finance Code, as supplemented by the Texas Credit Title, or under other applicable law by giving notice, if required, to the Company as provided by applicable law now or hereafter in effect. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Bank One to accelerate the maturity of any interest that has accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Loan Agreement. This Note may not be changed, modified, or terminated orally, but only by an agreement in writing signed by the party to be charged. IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS REVOLVING CREDIT NOTE, COMPANY WAIVES (TO THE EXTENT PERMITTED BY LAW) THE RIGHT TO A TRIAL BY JURY, ALL RIGHTS OF SETOFF AND RIGHTS TO INTERPOSE COUNTERCLAIMS AND CROSS-CLAIMS (UNLESS SUCH SETOFF, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION) AND THE DEFENSES OF FORUM NON CONVENIENS AND IMPROPER VENUE. COMPANY HEREBY IRREVOCABLY CONSENTS TO THE NON- EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT LOCATED IN DALLAS, TEXAS, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS REVOLVING CREDIT NOTE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW AND SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF COMPANY AND INURE TO THE BENEFIT OF BANK ONE AND ITS SUCCESSORS AND ASSIGNS. If any term or provision of this Revolving Credit Note shall be held invalid, illegal or unenforceable, the validity of all other terms and provisions herein shall in no way be affected thereby. This Note is restated in accordance with the terms of that certain Fourth Modification and Extension Agreement dated on even date herewith by and between Company and Bank One to conform the terms of this Note to the amended definition of "Revolving Credit Commitment" contained in the Fourth Modification and Extension Agreement. IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the date first written above. CEC ENTERTAINMENT, INC. By: ---------------------------------------- Name: Larry G. Page Title: Executive Vice President, Chief Financial Officer and Treasurer STATE OF TEXAS & & COUNTY OF DALLAS & This instrument was acknowledged before me on July ____, 1999, by Larry G. Page, Executive Vice President, Chief Financial Officer and Treasurer of CEC ENTERTAINMENT, INC., a Kansas corporation, on behalf of said corporation. -------------------------------------- Notary Public, State of Texas (SEAL) -------------------------------------- (Please Print Name of Notary) My Commission expires: ---------------------------------- EX-27 3
5 3-MOS JAN-03-1998 OCT-04-1998 10,271 0 6,002 63 5,351 27,857 336,531 125,663 244,428 42,751 15,289 2,226 2,287 0 176,511 244,428 289,092 292,056 133,090 246,765 0 0 2,019 45,291 17,594 27,697 0 0 0 27,697 1.52 1.48
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