UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): ~~March~~April 277, 2020

CEC ENTERTAINMENT, INC.

(Exact name of registrant as specified in charter)




Kansas	1-13687	48-0905805
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)



1707 Market Place Blvd, Suite 200 Irving, Texas		75063
(Address of principal executive offices)		(Zip Code)

(972) 258-8507

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item ~~8.01. Other~~ ~~Events~~2.02 Results of Operations and Financial Condition

~~Operational~~CEC ~~Update~~Entertainment, Inc. (the “Company”), a nationally recognized leader in family entertainment and dining, is reporting that preliminary unaudited comparable venue sales for the first quarter are down 21.9% and Adjusted EBITDA for the first quarter ended March 29, 2020 is estimated to be between $39 - $43 million. As previously reported on March 27, 2020, the Company expects each of its 550 Company-operated Chuck E. Cheese and Peter Piper Pizza venues to sustain a loss while on-premise dining, entertainment and arcade rooms are closed in response to the novel coronavirus (“COVID-19”) pandemic.

The ~~rapid~~information contained in Item 2.02 of this Current Report on Form 8-K is being furnished and ~~widening~~shall ~~spread~~not be deemed to be “filed” for the purposes of Section 18 of the ~~novel~~Securities ~~coronavirus~~Exchange Act of 1934, as amended (the “~~COVID-19~~Exchange Act”), ~~outbreak~~or isotherwise ~~severely~~subject ~~and~~to ~~extensively~~the ~~impacting~~liabilities ~~restaurant~~of ~~and~~that ~~entertainment~~Section. ~~businesses~~Furthermore, ~~given~~the ~~their~~information ~~sensitivity~~contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to ~~consumer~~be ~~demand~~incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.

AsItem ~~previously disclosed on March 16, 2020, CEC Entertainment, Inc~~5. ~~(the “Company”) has suspended on-premise dining, entertainment and arcade rooms at all company-operated Chuck E~~02. ~~Cheese~~Departure ~~and~~of ~~Peter~~Directors ~~Piper~~or ~~Pizza~~Certain ~~venues~~Officers; asElection aof ~~safety~~Directors; ~~precaution~~Appointment inof ~~response~~Certain to the COVID-19 pandemic. The Company now expects this suspension to extend until at least April 10, 2020. Initially, all the Company’s 551 Company-operated Chuck E. Cheese and Peter Piper Pizza venues remained open for carry-out and third-party delivery. The Company has now suspended all operations in 38 venues, primarily due to sales performance and mall closures stemming from the pandemic, and we are considering suspending all operations at approximately 50 additional venues next week. Officers;

~~For~~Compensatory ~~Chuck~~Arrangements ~~E. Cheese, third-party delivery and carry-out have not been a key strategy. However, to retain key personnel (such as venue general managers) and generate some level~~ of ~~revenue,~~Certain ~~the Company has shifted its focus to carry-out and third-party delivery business via third-party services offered by DoorDash, Uber Eats and GrubHub~~Officers. ~~Peter Piper Pizza continues to offer carry-out and third-party delivery via DoorDash and Uber Eats and has debuted additional value-priced packages during this time.~~

~~The~~On ~~Company~~April ~~has~~7, ~~taken several actions to mitigate the impact of venue closures~~2020, ~~including reducing hours of operation and staffing levels at~~ the ~~venues,~~Company’s ~~furloughing~~Board ~~over 50%~~ of ~~its~~Directors ~~support center personnel, suspending all discretionary spend and reducing capital expenditures. In~~ (the ~~near~~“Board”) ~~term,~~appointed ~~the~~Paul ~~Company~~Aronzon ~~expects each venue~~ to ~~sustain~~the aBoard ~~loss while on-premise dining, entertainment and arcade rooms are closed. Also,~~ as ~~the~~a ~~Company~~director ~~cannot reasonably estimate the impact~~ of ~~COVID-19 on its business at this time,~~ the Company isby ~~withdrawing~~unanimous ~~its~~consent, ~~guidance~~effective onas ~~expected~~of ~~capital expenditures for fiscal 2020 provided on its fourth quarter 2019 conference call and in its Annual Report on Form 10-K for~~ the ~~year~~same ~~ended December 29, 2019~~date.

In ~~the~~connection ~~first~~with ~~quarter,~~his ~~which~~appointment isto ~~traditionally~~the Board, the ~~Company’s~~Board ~~busiest~~appointed ~~quarter~~Mr. ~~from~~Aronzon to chair a ~~seasonality~~special ~~perspective,~~committee ~~quarter~~of the Board created to ~~date~~explore ~~comparable~~restructuring ~~venue~~and ~~sales~~financing ~~through~~opportunities ~~March~~for 26the Company (the “Restructuring Committee”), also effective as of April 7, 2020. ~~are~~The ~~down~~Board ~~approximately~~also ~~18%~~appointed ~~compared~~independent directors Peter Brown and Allen Weiss to the ~~comparable~~Restructuring ~~period~~Committee. ~~for~~The ~~last~~Restructuring ~~year~~Committee is authorized to, ~~and~~among ~~down~~other ~~approximately~~things, ~~43%~~consider, ~~for~~evaluate ~~the~~and ~~month~~approve tostrategic ~~date~~alternatives ~~period~~including ~~through~~financings, ~~the~~refinancings, ~~same~~amendments, ~~date.~~waivers, ~~Comparable~~forbearances, ~~venue~~asset sales, ~~from~~debt ~~March~~issuances, 17exchanges ~~(when~~and onpurchases, out-~~premise~~of-court ~~dining~~or ~~and~~in-court ~~game~~restructurings ~~play~~(pursuant ~~were~~to ~~suspended)~~which ~~through~~the ~~March~~Company ~~26,~~may ~~2020~~seek ~~are~~relief ~~down~~under ~~approximately~~the ~~94%.~~Bankruptcy ~~The~~Code), ~~duration~~non-ordinary-course oftransactions ~~closures~~ and/or ~~pace~~similar oftransactions ainvolving ~~rebound~~the ~~once~~Company, ~~venues~~none ~~reopen~~of iswhich ~~uncertain~~have been implemented at this time.

As ~~previously~~The ~~disclosed~~Company onand ~~March~~Mr. 18Aronzon entered into a Director Agreement dated April 7, 2020, ~~the~~pursuant ~~Company~~to ~~borrowed~~which ~~$105~~Mr. ~~million~~Aronzon ~~that~~will ~~was~~be ~~available~~paid ~~under~~a ~~the~~fee ~~Company’s~~of ~~senior~~$45,000 ~~secured~~per ~~revolving~~month ~~credit~~for ~~facility~~a ~~(the~~minimum ~~“Revolving~~of ~~Credit~~four ~~Facility”)~~months. The ~~material~~Director ~~terms~~Agreement ~~relating~~further provides that Mr. Aronzon is to ~~the~~be ~~Company’s~~paid ~~senior~~an ~~secured~~additional ~~credit~~fee ~~facilities~~of $5,000 ~~including~~per ~~the~~day ~~Revolving~~in ~~Credit~~which ~~Facility~~he is required to spend at least four hours addressing matters outside of routine and customary Board matters, ~~are~~such ~~described~~as participating in ~~Note~~court-related 11proceedings. ~~(“Indebtedness~~Mr. ~~and~~Aronzon ~~Interest~~will ~~Expense”)~~also be entitled to ~~the~~reimbursement ~~Company’s~~of ~~consolidated~~his ~~financial~~reasonable ~~statements~~and ~~included~~necessary expenses incurred in ~~the~~connection ~~Company’s~~with ~~Annual~~his ~~Report~~Board onservice ~~Form~~upon ~~10-K~~provision ~~for~~of ~~the~~supporting ~~fiscal~~documentation ~~year~~to ~~ended~~the ~~December~~Company. 29In addition, ~~2019~~the ~~that~~Company ~~was~~will ~~filed~~compensate ~~with~~both ~~the~~Messrs. ~~Securities~~Brown and ~~Exchange~~Weiss ~~Commission~~$25,000 onper ~~March~~month ~~12,~~for ~~2020,~~their ~~and~~service on the ~~Form~~Restructuring ~~8-K~~Committee ~~that~~for ~~was~~as ~~filed~~long onas ~~March~~the 18Restructuring Committee is active, ~~2020.~~in addition to their annual Board retainer.

The ~~Company~~foregoing ~~increased~~description ~~its~~of ~~borrowings~~the ~~under~~Director ~~its~~Agreement ~~Revolving~~is ~~Credit~~qualified ~~Facility~~in asits aentirety ~~precautionary~~by ~~measure~~reference ~~in order~~ to ~~increase~~the ~~its~~Director ~~cash~~Agreement, ~~position~~which ~~and~~will ~~preserve~~be ~~financial~~filed ~~flexibility~~as inan ~~light~~exhibit ofto ~~current~~the ~~uncertainty~~Company’s inQuarterly ~~the~~Report ~~global~~on ~~markets~~Form ~~resulting~~10-Q ~~from~~for the ~~COVID-19~~quarter ~~outbreak.~~ending March 29, 2020.

~~The~~There ~~Revolving~~are ~~Credit~~no ~~Facility~~related-party ~~includes~~transactions abetween ~~springing financial maintenance covenant that requires~~ the Company’s ~~net~~and ~~first lien senior secured leverage ratio (as defined in the Revolving Credit Facility) not to exceed 5~~Mr.25 toAronzon ~~1.00.~~that ~~This~~are ~~covenant is~~ required to be ~~tested~~disclosed ~~quarterly~~under ifItem ~~the Revolving Credit Facility is more than 30% drawn~~ 404(~~excluding outstanding letters of credit~~a) ~~and will be a condition to drawings under the Revolving Credit Facility that would result in more than 30% being drawn thereunder. As a result~~ of ~~borrowing~~Regulation ~~more than 30% under the Revolving Credit Facility, the Company is now required to satisfy the springing maintenance covenant at the end of each quarter~~S-K.

~~Due~~Item ~~to the uncertainties associated with the COVID-19 pandemic, the Company cannot provide further guidance at this time~~8.01 ~~The~~Other ~~Company will provide a further update during its first quarter earnings release and call.~~ Events

Operational Update:

The Company cannot reasonably estimate the impact of COVID-19 on its business at this time, and has taken several actions to mitigate the impact of venue closures, including operating 520 of its 550 Chuck E. Cheese and Peter Piper Pizza Company-operated venues in a third-party delivery and take-out capacity, reducing hours of operation and staffing levels at its venues, furloughing most of its hourly employees and approximately 65% of its support center personnel, suspending all discretionary spend, deferring rental payments on its Company-operated venues, and reducing capital expenditures. The Company has suspended all operations in 30 of its Company-operated venues primarily due to sales performance and mall closures stemming from the pandemic.

The Company’s debt service requires cash outflows on a quarterly basis and the Company is not currently paying rent, which approximates $7 million per month. There are additional disclosures on both the Company’s debt and rent obligations in the section entitled “Risk ~~Factor~~Factors” ~~Update~~and in the notes to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 29, 2019 that was filed with the Securities and Exchange Commission on March 12, 2020.

~~The~~Since ~~following~~the ~~risk~~Company’s ~~factor~~last isoperational ~~intended~~update toincluded bein ana ~~update~~Form to8-K ~~the~~filed ~~Risk~~on ~~Factors~~March ~~found~~27, in2020, the Company’s ~~2019~~has ~~Annual~~engaged ~~Report. For~~in, ~~additional~~and ~~risks~~is ~~impacting~~continuing ~~the~~to engage in, discussions with various advisors to explore financing opportunities to enhance liquidity. The Company ~~see~~has ~~the~~engaged ~~section~~PJT ~~entitled~~Partners ~~“Risk~~LP, ~~Factors~~a financial advisory firm,” ~~including~~and ~~risk~~Weil ~~factors~~Gotshal ~~regarding~~& ~~our~~Manges ~~indebtedness~~LLP, inas legal counsel, to assist the Company’s ~~Annual~~and ~~Report~~its onRestructuring ~~Form~~Committee ~~10-K~~in ~~for~~considering the ~~fiscal~~strategic ~~year~~alternatives ~~ended~~mentioned ~~December~~above.The ~~29,~~Company ~~2019~~has ~~that~~also ~~was~~engaged ~~filed~~real ~~with~~estate advisors Hilco Real Estate to assist in evaluating the ~~Securities~~viability of its fleet of venues and ~~Exchange~~secure ~~Commission~~necessary onrent ~~March~~concessions ~~12,~~from ~~2020~~landlords.

~~Public~~Organizational ~~health issues could adversely affect our consolidated financial results.~~Update:

~~Our~~The ~~business~~Company ~~may~~has bepromoted ~~impacted~~Sherri byLandry ~~certain~~to ~~public~~Chief ~~health~~Marketing ~~issues including epidemics~~Officer, ~~pandemics~~replacing ~~and~~Ashley ~~the rapid spread of certain illnesses and contagious diseases. Such public health issues~~Zickefoose, ~~including~~who ~~those~~recently ~~outside~~left of the UCompany.S Ms., ~~may~~Landry ~~(i)~~has ~~make travel to particular regions~~ more ~~difficult,~~than ~~impacting~~20 ~~our~~years ~~ability~~of tobrand ~~pursue~~marketing ~~opportunities~~experience inand ~~those~~is ~~areas~~a ~~(ii)~~strategic ~~impact our supply chain;~~ and ~~(iii)~~innovative ~~limit~~executive ~~our~~with ~~access~~proven tobusiness ~~labor~~results inacross ~~areas~~brand ~~impacted~~development, bymarketing ~~the health issues. Also~~strategy, tonew ~~the~~product ~~extent our customers feel uncomfortable visiting public locations~~introductions, ~~particularly~~marketing ~~locations~~research ~~with~~and aconsumer ~~large~~behavior. ~~number~~She ofhas ~~children,~~contributed ~~due~~ to asuch ~~perceived~~recognized ~~risk~~companies ofas ~~public~~Procter ~~exposure~~and toGamble, aSara ~~public~~Lee, ~~health~~Pizza ~~issue~~Hut, weT.G.I. ~~could~~Fridays, ~~experience~~Main aEvent ~~reduction~~Entertainment inand ~~customer~~most ~~traffic.~~recently ~~Government~~Peter ~~agencies~~Piper ~~may~~Pizza, ~~also~~where ~~issue~~she ~~guidance~~continues orto ~~warnings~~serve ~~that~~as ~~could~~the ~~discourage~~Chief ~~guests~~Marketing orOfficer ~~cast~~in ~~members~~addition ~~from traveling~~ to ~~our~~her ~~venues.~~new ~~Any~~role ofwith ~~these~~the ~~factors may adversely affect our consolidated financial results~~Company.

For example, the outbreak of the novel coronavirus (“COVID-19”) has disrupted the Company’s restaurant operations beginning in February 2020. As of the time of this Form 8-K, most of our 550 Company-operated venues are open for carry-out and third-party delivery orders only. We have suspended all operations in 38 venues, primarily due to sales performance and mall closures, and we are considering suspending all operations at approximately 50 additional venues next week. Governmental restrictions, health agency guidance regarding social distancing and public perceptions of the risks associated with the COVID-19 pandemic have caused and may continue to cause a suspension of on-premise dining, entertainment and arcade rooms, and as a consequence a steep reduction in customer traffic. We expect the COVID-19 pandemic to negatively impact our financial results and such impact will be significant to our financial results in 2020. The degree of significance is dependent upon the longevity and severity of the pandemic and the pace of the rebound once this pandemic is over. The pandemic could also be material to our longer-term financial results and condition based upon the same factors.

Cautionary Statement Regarding Forward-Looking Statements

The Company has made statements in this filing and other reports, filings, and other public written and verbal announcements that are forward-looking and therefore subject to risks and uncertainties. All statements, other than statements of historical fact, included in this document are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. Any forward-looking statement made in this filing speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. Forward-looking statements can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. The Company cautions that these statements are subject to risks and uncertainties, many of which are outside of the Company’s control and could cause future events or results to be materially different from those stated or implied in this document, or to occur at all, including among others, risk factors that are described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019 that was filed with the Securities and Exchange Commission on March 12, 2020, and other filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.

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 hereunto duly authorized.

CEC ENTERTAINMENT, INC.

Date: March 27, 2020

/s/ James A. Howell

Date: April 10, 2020

/s/ James A. Howell

James A. Howell

Executive Vice President and Chief Financial Officer

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