CEC Entertainment Reports Results for Fourth Quarter and Fiscal Year-End 2008

Diluted earnings per share were $0.11 for the fourth quarter of 2008, as compared to $(0.02) in the fourth quarter of 2007. Total quarterly revenues of $175.0 million for the fourth quarter of 2008 were down slightly from revenues of $175.1 million for the fourth quarter of 2007, due primarily to a 1.5% decline in comparable store sales.

Company store operating costs for the fourth quarter of 2008 increased $5.0 million as compared to the prior year, primarily due to adjustments to our self-insured reserves, increased merchandise costs and a favorable $1.5 million adjustment recorded in the fourth quarter of 2007 with respect to business interruption insurance. The fourth quarter of 2008 benefited from a $1.7 million reduction in the Company's contingency reserve for ongoing legal matters and an $8.2 million decrease in asset impairment charges as compared to the fourth quarter of 2007.

Net earnings for the full fiscal year 2008 were $56.5 million, as compared to $55.9 million for fiscal year 2007. Diluted earnings per share were $2.37 for fiscal year 2008, as compared to $1.76 for fiscal year 2007, representing growth of approximately 35%. Fiscal year 2008 diluted earnings per share growth benefited from the Company's cumulative share repurchase of $408.9 million during the 2007 and 2008 fiscal years. Total revenues for the full fiscal year 2008 increased 3.7% to $814.5 million, as compared to total revenues of $785.3 million for fiscal year 2007, primarily due to a 2.3% increase in comparable store sales.

Michael Magusiak, President and Chief Executive Officer, stated that, 'Despite the challenges we encountered throughout 2008, we are pleased with the strong financial results for the 2008 fiscal year. We believe that our comparable store sales increase of 2.3% for fiscal year 2008 is attributable to our sales initiatives implemented during 2008, including our capital plan with respect to existing stores, the development of an enhanced marketing plan, and focused sales efforts regarding birthday parties and school fundraising events. We remain confident in our sales strategies and our ability to execute our 2009 strategic plan. The marketplace in which we operate has weakened in the latter part of 2008 and has continued in 2009. Clearly, the economy is impacting comparable store sales which are down 1.4% through the first seven weeks of 2009. Sales in California and Florida are very soft, however, we are experiencing strong sales results in a number of other markets. From my perspective, given the economic environment, our sales are holding up reasonably well, and I believe this is a direct result of our sales building initiatives.'

The Company revised its previously announced date for the release of financial results for the fourth quarter and fiscal year-end 2008. This decision was made because of the discovery over the weekend of an inadvertent disclosure of certain preliminary fiscal year 2008 financial information through a communication sent to an outside charitable organization. Due to this unusual circumstance, the Company decided to announce its financial results earlier than previously scheduled.

Business Outlook:

The outlook for the consumer economic environment is markedly negative. The Company believes that the weakening of the economy has led to and will continue to lead to a restraint in consumer discretionary spending. While the Company remains confident in its sales strategies, it believes that forecasting earnings and comparable store sales in this environment is challenging. The Company is currently forecasting 2009 diluted earnings per share in a range of $2.53 to $2.65, reflecting a 7% to 12% growth rate from 2008. Incorporated into the fiscal year 2009 guidance are the following assumptions:

• comparable store sales decrease of 1% to 2%,

• fiscal year 2009 is a 53 week year, the Company expects the addition of the extra week will benefit diluted earnings per share by approximately $0.10,

• average price per pound of block cheese will be in a range of $1.40 to $1.45,

• five new Company stores, including one relocation, and two new franchises will open during fiscal year 2009,

• effective tax rate will approximate 38.5%,

• total capital expenditures will range from $70.0 million to $75.0 million, and

• free cash flow will be used to reduce borrowings outstanding on the credit facility, however, the economic environment and the Company's financial performance will impact the Company's decision with respect to free cash flow as it may be used to build cash reserves and/or to conduct opportunistic repurchases of its common stock.





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