CEC Entertainment Reports Financial Results for the Second Quarter of Fiscal 2009

Diluted earnings per share decreased to $0.39 for the second quarter of 2009, compared to $0.47 in the second quarter of 2008. The decrease in diluted earnings per share between the two quarters was impacted by our repurchase of approximately 3.4 million shares of our common stock since the beginning of the second quarter of 2008. Total quarterly revenues decreased 4.0% to $184.8 million during the second quarter of 2009 from total quarterly revenues of $192.5 million in the second quarter of 2008. Comparable store sales for the second quarter of 2009 declined 5.4%.

Net earnings for the first six months of 2009 were $43.0 million compared to net earnings of $44.2 million in the first six months of 2008. Diluted earnings per share increased to $1.86 for the first six months of 2009, compared to $1.75 in the first six months of 2008. The increase in diluted earnings per share between the two periods was impacted by our repurchase of approximately 5.6 million shares of our common stock since the beginning of the first quarter of 2008. Total revenues for the first six months of 2009 were $432.9 million compared to total revenues of $437.7 million in the first six months of 2008. Comparable store sales for the first six months of 2009 declined 2.4%.

Michael Magusiak, President and Chief Executive Officer, stated that, 'We believe our sales performance for the second quarter of 2009 reflects the impact of unprecedented negative external challenges including the difficult economic environment, as well as the impact of the Swine Flu during a portion of the second quarter. Our strategic approach to operating our business during these difficult times is to exit the recession financially stronger and with a better product, poised for growth as the economy improves. Despite the challenging external environment, during the first six months of 2009 we have grown our diluted earnings per share over 6%, used $20.0 million to repurchase our shares, and reduced our outstanding debt by $54.3 million. We believe the combination of less debt, fewer shares and a substantially improved product through capital reinvestments and concept evolution, will position us well for the future.'

Business Outlook:

Due to the effects of the current difficult economic environment, sales visibility is low and the business outlook is uncertain. To assist investors with their financial models and illustrate the amount of cash flow the Company could generate despite a challenging economic environment, the Company has provided the following cash flow sensitivity analysis: assuming comparable store sales are in a range of down 2% to 6% for the remainder of fiscal 2009, the Company would expect operating cash flow and free cash flow for fiscal year 2009 to be in a range of $148 million to $157 million, and $83 million and $87 million, respectively. It should be noted the Company is not projecting comparable store sales to be in this range, but rather providing the range solely for the purpose of the sensitivity analysis. The comparable store sales range was developed considering 2% is slightly better than the first half of fiscal 2009, and 6% is slightly worse than the second quarter of 2009. Incorporated into this analysis are the following assumptions:

• USDA forecast for cheddar block prices of $1.21 and $1.32 per pound in the third quarter and fourth quarter, respectively;

• two new Company stores during the last six months of fiscal 2009, for a total of three new Company stores during 2009;

• effective tax rate of 37.7% to 38.2% for the remainder of fiscal 2009;

• total capital expenditures will range from $65.0 million to $70.0 million;

• no changes in working capital associated with timing differences; and

• fiscal year 2009 will be a 53 week year.


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