Welcome to your CEC Entertainment teleconference. At this time all participants are in a listen only mode and later we will conduct a question and answer sessions and we’ll give instructions at that time. (Operators Instructions) And as a reminder the conference is being recorded. So we’d like to turn the conference over to our host Mr. Mike Magusiak. Please go ahead.

Welcome to our conference call I’m Mike Magusiak President of the company and I’m joined by Dick Frank our Chairman and CEO and Chris Morris our Executive Vice President and CFO. Before we begin today’s discussion I’d like to make you aware that some of the information presented today may contain forward-looking statements that involves risks and uncertainties that could cause actual results to differ materially from those implied in the forward-looking statements. Information on the company’s risk factors was included in our press release and is also included in the company’s filings with the SEC. Additionally, in today’s discussion we will refer to adjusted EBITDA and free cash flow figures both of which are non-GAAP financial measures. For reconciliation of our reported results as such non-GAAP measures please see the investor’s information section of the company’s website. The primary objectives for today’s call are first to discuss our financial performance during 2007. Second, to summarize our key strategies to increase long term sales, earnings per share and shareholder value. Third, Chris will discuss our outlook for the business and finally Dick will summarize our presentation and we will then conclude the conference call with a question and answer session. Chris will you please review our financial performance last year.

Good afternoon everyone. Before I begin a review of the numbers I would like to call your attention to a change in our income statements presentation. We have moved from a single step formant to a multi-step format. We believe this new presentation will provide investors with more information to analyze our business and understand financial trends. We included a table in today’s earnings release showing our financial result for each fiscal quarter in 2007 and 2006 to assist you with a transition to this new format. I would now like to review fourth quarter financial performance. Total revenue was $175.1 million in both Q4 07 and Q4 06. An increase of nine units in our weighted average unit base was offset by 2.7 % decline in comparable store sales. Cost of sales which primarily includes the cost of food, beverage, prizes and merchandise increased 160 basis points from 15.2% to 16.8%. This increase is primarily due to a $0.70 per pound increase in cheese prices in Q4 07 compared to the same period in the prior year, a beverage rebate received in the prior year benefiting Q4 06 by approximately 50 basis points and other miscellaneous increases. Labor expenses increased 180 basis points from 27.2% to 29% in Q4 07 primarily due to a 5.4% increase in average wage rates for hourly employees coupled with soft sales during the quarter. Depreciation and amortization expenses increased from $16.7 million to $18.8 million representing 120 basis point increase as a percent of revenue. Rent expense increased from $15.2 million to $15.9 million representing a 40 basis point increase as a percent of revenue. Other company store operating expenses as a percent of revenue was 14.4% in both Q4 07 and the same period in the prior year as deleveraging effects associated…

The three broad components of our strategic plan to maximize long term shareholder value is summarized as follows: first to increase comparable store sales; second to grow our concept with company and franchise stores; and third to return capital to shareholders with a share repurchase plan. The first component of our strategic plan of maximizing long term shareholder value is increasing comparable store sales. Although it’s very early in the year with only seven weeks of sells history, year-to-date comparable store sales have increased 2.5%. I believe that this sales trend reflects our new and improved sales initiatives introduced during the later part of 2007 and first quarter 2008. Although we are encouraged by this early sales performance we’d caution you that this is over a short period of time and these results may have been positively impacted by weather. These sales initiatives include an enhanced marketing plan which includes television and internet ads targeting moms, a strong capital plan and enhanced and refocused birthday sales initiatives, a plan to increase school fundraiser sales and an in-store suggestive sales campaign. Our enhanced marketing plan in 2008 is projected to cost approximately $34 million compared to $31 million in 2007. This plan incorporates for the first time in the company’s history includes an online component as part of a multi-media approach communicating to moms. This multi-media effort includes television and online media targeting against moms and is further supported by our traditional free standing insert program. Our overall television media plan combining both our kids and moms by will deliver an increase of 7% more impressions than the year ago. Although it’s difficult to quantify the impact of our enhanced marketing plan over the first seven weeks of 2008 we believe it’s positively impacting our sales performance. The next initiative to…

During our last conference call on October 23, 2007 we provided diluted earnings per share guidance in a range of $2.10 to $2.20. We are currently estimating 2008 diluted EPS to be in a range from $2.15 to $2.25 reflecting the growth rate of 10 to 15% excluding asset impairment charges from fiscal year 2007 EPS. Incorporated into this guidance are the following items: comparable store sales growth of flat to up 1% for the year. As Mike stated for the first seven weeks of 08 comparable stores sales are up 2.5%. While we are encouraged with this current positive trend we continue to be cautious in our outlook for 2008 given the current macroenviroment. While very difficult to predict we’re currently assuming the market block price for cheese will be in a range of $1.70 to $1.80 per pound in 2008 compared to $1.75 average in 2007. Labor expenses are expected to add pressure to store level margins driven primarily by minimum wage increases. We’re currently estimating labor as a percent of sales to increase 70 to 90 basis points in 08 compared to 07. We’re targeting six to seven new company units in 2008 and four franchise stores. We’re currently estimating total capital expenditures to be in a range of $80 to $85 million. We’re assuming free cash flow is used for share repurchases throughout the fiscal year. And finally we’re assuming the effective tax rate of 38% for fiscal year 08. For first quarter of 2008 we’re estimating diluted EPS to be in a range of $1.10 to $1.15 representing an EPS growth rate of 16% to 21% over the first quarter of 2007. Dick will now provide concluding remarks.

2008 is off to a solid start with comparable store sales increasing 2.5% in the first seven weeks of the year. This is particularly encouraging when considering that comparable store sales were positive 2.7% of the first seven weeks of 2007 as compared to the same period in the prior year. We believe we have a solid sales plan for the year and view this early sales performance of 2008 as reinforcing our strategy. As Chris shared with you our earnings guidance for the year incorporates comparable store sales of flat to positive 1%. This may prove to be conservative given our sales performance to date but we recognize that seven weeks of performance is a short period of time and that sales during this period may have been positively impacted by weather. Management remains committed to executing all of our strategies in a quality and timely manner and we will continue to update you relative to our progress. At this time Mike, Chris and I will be glad to answer any questions you may have.

Thank you. (Operator Instructions) We do have a question from the line of Robert Derrington. Please go ahead. Robert Derrington – Morgan, Keegan & Company, Inc. : The same store sales trend especially here in this first quarter this looks really encouraging. Mike, can you give us some kind of perspective on how any kind of gut feeling how weather has influenced that? You know was January stronger than the February trend?

I’ll try to give you a perspective on that Bob. I think first of all we’ve really seen very solid sales through both January and February and whenever you look over such a short period of time, seven weeks, you know the sales can move but January was up 1.7% and February through three weeks is up 3.6% so we’ve really seen solid sales throughout the year to get to the 2.5%. And what I would tell you is that there wasn’t one weekend that we looked at last year that was really hit by a wet winter storm. We’ve had a good sales result last year but I think just there has been a lot of rain and it’s difficult to quantify but you know we’re sitting here through seven weeks and the sales results are significantly better than what we anticipated and we think that weather may have been a factor in producing those sales results. But then when you get into each of the components whether it’s the birthday parties, the suggestive sales, the fundraisers, we’re seeing some very positive items from the various components of our strategies so it’s just difficult to quantify what weather may have helped us. Robert Derrington – Morgan, Keegan & Company, Inc. : Sure that’s understandable and then I guess one other piece to it Mike, last year in March, I think you had three weeks where the business fell off dramatically. I think there was concern that the timing in shift of school break holidays, didn’t you have three weeks where comps were down like 15% or, was that the number?

Yes we did have March did drop off and we were hit with some weather last March that negatively impacted us. You know it’s just hard to know with the winter storms on the weekends but as Dick stated the first seven weeks of last year comps were solid. They were up almost 3% in the first seven weeks that we’re going against so far. Robert Derrington – Morgan, Keegan & Company, Inc. : Gotcha and how much menu pricing are in the numbers Mike?

Very little. We have year-to-date 1 to 3/10 of a percent, very minor change in menu prices on a year-to-date basis. Robert Derrington – Morgan, Keegan & Company, Inc. : Is that 1.3%?

No .1% to 3%. We took a slight menu price change latter part of January and so year-to-date it’s not a factor at all. Robert Derrington – Morgan, Keegan & Company, Inc. : Gotcha, okay. And again I’m not sure who to direct this to you know you obviously changed in accounting in the format of your financial statement presentation, can you help us understand what was it that drive that process? You know to kind of understand.

The process we went through is we wanted to provide the best information to investors and the approach that we’ve used historically has been a single step approach which really just simply shows total revenues including things such as interest income in the tope line and then just you know several large items on the expense side and then pre-tax income. And so just in an effort to improve the quality of our communications with investment community we really wanted to revise the format of our P&L and give investors more detailed information that would allow them to understand our business trends, benchmark our company against others in the restaurant industry or maybe in the entertainment industry and be able to show things like total store level costs, operating income. You know those are the things that we’re going to be disclosing now that we haven’t in the past and then we also wanted to show a little bit more detailed information on the store operating cost side for instance for breaking out rent expenses as a separate line item and that will assist investors benchmark our unit level margins against others and put us on an apples-to-apples basis by adding back in rent for other company’s that may have more pieces of property than what we have. Robert Derrington – Morgan, Keegan & Company, Inc. : Sure that makes sense. Can you help me just use one quarter as an example, for example last year in the third quarter you sited in your P&L, G&A of approximately $25.3 million and this year we’ve got advertising and G&A which together add up to about $20 million so there’s about a $5 million reclassification. Could you, where did that $5 million go?

It primarily went into other operating costs. Our SG&A line item used to be the combination of three things, advertising, corporate over head costs and then certain store level operating costs and so now G&A just simply reflects corporate overhead and those store level operating costs are including in the store operating cost section.

Thank you. And next we have a question from the line of Michael Gallo with C.L. King. Please go ahead. Michael Gallo – C. L. King & Associates, Inc.: Two questions if I may, first I guess as you look into March this year versus last year I was wondering if you see anything unusual in terms of how the spring break calendar lines up this year versus last year and also as you start to look further out into the summer months what are you seeing on the kids movie calendar side? It would seem that at least from what we’ve seen so far that it looks like this year that there aren’t nearly as many big kids movie releases as there were in 2007.

In 2008 Easter will fall in the fourth week of our third period so Easter is going to fall in the first quarter this year. In 2007 Easter fell in the second quarter. What we’ve learned over the past few years is that schools typically schedule spring breaks around the time of Easter. We’ve also been able to compile some data from some research that’s done soliciting information from schools. Based on our analysis it appears to us that there will be more spring breaks that occur in the first quarter of 08 versus the first quarter of 07 so that should provide a benefit to Q1 but of course in Q2 that will offset. So over the course of a 12 month period it really evens itself out.

As far as the movie trends what we’re hearing in in you know we’re not experts on the movies but what we’re hearing is there actually, we’re expecting fewer movies this year than last year. One of the surprising things that when we look just again over a short period of time this year is that if you look through January movies were $83 million versus $84 million the prior January so they’re is essentially flat. The first two weeks in February on movies have really increased quite a bit from $21 million to about $66 million and the big increase there was from the Hannah Montana concert tour movie. Now that’s only over a two week period but overall what we’re hearing is that the movies we actually anticipate at last year’s levels or below last year’s levels.

(Operators Instructions) Okay and we do have a few questions in the queue first from the line of Margo Murtaugh with Snyder Capital. Please go ahead. Margo Murtaugh – Synder Capital Management : A couple of questions. You said is your net debt is $316 million or is that your debt less cash or can you?

That would be $317 million represents the outstanding borrowings on our line of credit. Margo Murtaugh – Synder Capital Management : Okay, what kind of short term debt do you have then besides that?

The only other capital lease obligations which total right around $12 million and then of course when we look at our adjusted leverage ratio we’re also adding in outstanding letters of credit which are also another $12 million. So total of debt you should add $25 million to that $317. Margo Murtaugh – Synder Capital Management : Okay great. Is there any cash at all?

Cash balance at the end of the year is right around $18 million. Margo Murtaugh – Synder Capital Management : Okay now in your estimate for this year did you assume share buy back in your estimate of $2.15 to $2.25? You know proportionately you said you get done over three years so did you assume in your estimate something about share buy backs?

We did. We assumed that the free cash flow that we generate in 2008 will be used to repurchase shares. Margo Murtaugh – Synder Capital Management : Okay and what are your ending shares outstanding, your average shares are 28.2 but what are the ending shares in the quarter?

The actual share count? Margo Murtaugh – Synder Capital Management : Yes.

Give me a minute I can get that for you. I don’t have that with me. Margo Vertock – Snyder Capital: Okay.

If you want to call me after the call. Margo Murtaugh – Synder Capital Management : Sure and D&A should be about $76 million or so. Do you think?

Yes I think that’s a good estimate. Margo Vertock – Snyder Capital: Okay and again in your outlook for 2008 you talked about labor cost being higher. Are there any offsetting factors, cost factors that will help margins in 2008? In broad terms.

In broad terms, the first thing that comes to my mind is that we have taken a slight menu price increase Mike just mentioned here at the end of January. Once that fully rolls in that’s going to be about a point and a half so that 1.5% increase in menu prices will certainly offset some of the labor pressure from an operational stand point. Mike do you want to?

Yes I by far the biggest think Margo is sales. We believe that even though there are cost pressure today that if we’re successful of increasing comparable store sales 1% and highly confident that if there around 2% increase that we can start improving our margins. So number one thing that you can see that we’re focusing on is the comparable store sales line and you know if we’re successful with achieving 2% or more comparable store sales we would anticipate that our margins would improve. Margo Murtaugh – Synder Capital Management : Okay and you referred to making some improvements in your birthday business. Can you refresh my memory as to what percentage of sales it is now? And whether you have a goal and why it’s fallen behind your expectations do you think?

Our birthday sales roughly represent about 12% of sales and what we, the success that we’ve had so far this year is just a refocused effort on opening up our birthday parameters, working the wait on the weekends from both walk-in to birthday parties and then also making a very concentrated effort to confirm birthday reservations and when you reduce the number of no shows you’re able to rebook those parties on the weekend in a busy first quarter. And so I think that’s what we’ve done so far. As far as our improved birthday party, we have not been discussing the very specifics components of the birthday party other than the fact that we really believe that we’re upping the recognition of kids, birthday kids and so we have reworked our birthday party fairly significantly and then we are planning on promoting that with a national advertising TV campaign.

Thank you and our next question is from the line of Bill Baldwin with Baldwin Anthony Securities. Please go ahead. Bill Baldwin – Baldwin Anthony Securities: Mike you mentioned three or four initiatives on increase in the same store sales and I picked up on all of them but I couldn’t understand what you were saying or trying to describe. What I believe you said suggestive or suggestive types of promotions. I didn’t pick up on your terminology there. Is this ringing a bell with you to what I’m trying to refer to?

It sure is Bill. What we are doing is one of the best values that we can give our guests is our token deals and the value meals on the package of food a large pizza, drinks and tokens package together. It’s a great value to our guests and we are running a contest, it’s a nationwide contest that is promoting the sale of our higher ticket items that provide our guests with the better value and it also increases our average ticket price. That cast is only now we’re in our fourth week but what we’re seeing is a significant trend and increase in the token deals and value meals and so what we believe we will achieve with that is a higher ticket price by up selling a very good value to our guests. Bill Baldwin – Baldwin Anthony Securities: And is this all done Mike with in store type initiatives. I mean there’s not anything, are you sending out e-mails or inserts on this or is this all done once the customer comes to the store and then the person behind the counter attempts to do what you’re talking about here?

That’s exactly how it’s working. We made a very concentrated effort, we sat down with out regional vice presidents, our district managers, our general managers and the stores are incentives, the winners of the contest will be the stores that increase value meals and token value deals by the greatest percentage. So we’ve laid that out to our operators and it has really energized our stores because they have an opportunity to win prizes and from our perspective we think that it will increase our average ticket price. Bill Baldwin – Baldwin Anthony Securities: Now when you say it’s in the fourth week of a test does that mean you’re doing it just in certain stores right now?

I will correct myself there; it’s in the fourth week of the program it is already in every one of our company stores. Bill Baldwin – Baldwin Anthony Securities: It’s in all the stores? Okay.

That’s correct. Bill Baldwin – Baldwin Anthony Securities: Mike is there a time frame on how long this program will run like this?

Yes what we’re attempting to do is that we’re running it for eight weeks, we’re going to reevaluate it and then if this is successful we would intend to potentially do that in other areas of our business to drive sales. Just for competitive reasons we’re not announcing that yet but we’ve some very specific thoughts on how we might be able to use this suggestive sales program later in the year. Bill Baldwin – Baldwin Anthony Securities: To focus on other products within the store?

That’s exactly right. Bill Baldwin – Baldwin Anthony Securities: Lastly Mike do you all benefit at all here in the early part of the year from gift certificates that might have been sold during the holiday season that are getting cashed in now in January and February? Does that have any impact on your business?

It potentially could Bill. I read that a lot in a lot of the retailers. I don’t believe that it’s material but there could be some of that. Bill Baldwin – Baldwin Anthony Securities: Okay but probably not a significant impact on the numbers we’re seeing here?

That’s right. Our belief is that the primary areas are the areas that we shared with you.

And we have a question from the line of Mike Christodolu with Inwood Capital. Please go ahead. Mike Christodoulou – Inwood Capital: I’ve got a few questions regarding the change in presentation format in the highlighting of your store operating profit I have to imagine that its really helping in potentially selling some of these franchise operations and I was wondering if you could talk a bit about that and if there’s a time frame for selling out these 40 smaller market locations?

Yes Mike I’ll tell you on our franchise community has really wanted to develop for a number of years and just by the mere fact that you know we shared with you we’ve started it and we’ve already sold 13 stores, four of which we anticipate opening this year. The franchisees have really wanted to develop stores and what we looked at was we looked at the total United States and the potential stores that we could develop and the stores that we did not anticipate developing within the next five years, we felt that we had an opportunity to collect franchise fees and ongoing royalties and contributions to our national advertising plan. So I think it’s just another stream of revenue that we will recognize over the next five years. So I don’t think that the format of the P&L will change that in our UFOC we have already provided them with information that shows sales volumes and cash flow and so forth and the franchisees now that the cash flow that their getting from there existing stores. I think the P&L format is a better format; it’s more transparent to our business. I think Chris and his team have done a real good job with that format but it really wasn’t tied to the franchise sales. Mike Christodoulou – Inwood Capital: Okay. I agree it is a good format. Also are there any additional, do you foresee any additional overhead costs for needing to bulk up your franchises operation? Or do you pretty much have the ability to sell 40 or more franchises with the people you have in place?

On domestic franchises we see very minimal cost there. Mike Christodoulou – Inwood Capital: Okay and on your bank line I was wondering if you were thinking at all about swapping any of that to fixed given that LIBOR has fallen 200 basis points? In the last several months.

Right Michael and yes we are. That’s a project that we’re going to be focused on as soon as we get our 10K filed. Mike Christodoulou – Inwood Capital: Okay. When’s the filing of the K?

February 28th is the date it’s due. Mike Christodoulou – Inwood Capital: Okay. Very good. And a question on the SSI advertising portion of your component of your advertising per plan, my understanding is that price war between [inaudible] and News America is more vicious than ever and I didn’t know if you were seeing, you mentioned you were going to be in touch with more eyeballs basically, but I didn’t know if you were seeing those rate reductions in your SSI purchased or if you we’re going to maybe bundling with those two providers because they also do a lot of direct mail and I hear there’s some real good deals to be had between an SSI and a direct package?

That’s a very good point and we will negotiate the best prices we can get off of all our SSIs and coupons, but that’s a very good point Mike. Mike Christodoulou – Inwood Capital: Very good well gentleman keep up the good work and I think the [inaudible] it’s going to be worth closer to a billion than the $640 million that you currently have a market cap of. So good luck.

Thank you and we do have a follow up question from the line of Robert Derrington with Morgan Keegan. Go ahead. Robert Derrington – Morgan, Keegan & Company, Inc. : Chris can you, what is the within your guidance for this year what do you have factored in as your borrowing cost currently?

It’s somewhere between 4% and 5% Bob. Robert Derrington – Morgan Keegan: Okay. Alright. And then looking at your P&L presentation you know you previously used to provide us with a breakdown in revenue between food and beverage gains and merchandise mix etcetera. Is that not going to be provided anymore or what’s the thought there?

Yes. We will not be providing that breakdown going forward we’ll just simply be showing total store revenue and the thinking there is that we don’t manage our business based on two discreet segments. We manage it based on the total so we just wanted our P&L to reflect the way that we view our business.

Thank you and there are no other questions on the phone line.

We appreciate your questions and if you would have any additional questions please feel free to call Chris, Dick or myself. Thanks a lot. Bye.

Thank you and ladies and gentlemen that does conclude your conference for today. Thanks for your participation and you may now disconnect.