Welcome to the CEC Entertainment conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator instruction) As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr. Mike Magusiak. Please go ahead.

Welcome to our conference call. I am Mike Magusiak, President and CEO of the Company. I am joined by Dick Frank, our Executive Chairman and Chris Morris, our Executive Vice President and Chief Financial Officer. Before we begin today’s discussion, I would like to make you aware that some of the information presented today may contain forward-looking statements that involved risks and uncertainties that could cause actual results to differ materially from those implied in the forward-looking statements. Information regarding 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 may refer to certain non-GAAP financial measures. For reconciliation of our reported results to such non-GAAP financial measures, please see the earnings release filed earlier today or the investor information section of the Company’s website. The primary objectives for today’s call are first, to discuss our financial performance during the third quarter of this year. Second, we will provide you with an in depth review of the effectiveness of our sales initiatives and an analysis of sales trends by geographic area. Third, we will discuss our plans for Q4 2009 and fiscal year 2010 to position the Company for long term sales and earnings per share growth. Fourth, Chris will provide some concluding remarks regarding our business outlook. Finally, Dick will provide some concluding remarks and then I will open the lines for Q&A session. Now, I would like to turn the call over to Chris, who will review our financial performance for the third quarter.

Thanks Mike. Total revenues in the third quarter declined 2% to $197.8 million, primarily due to 3.1% decline in comparable store sales partially offset by an increase of approximately six stores on a weighted average unit base representing the 1.2% increase in store operating weeks. By period in the third quarter, comparable store sales were down 6.1% in period seven, down 3.3% in period eight and $0.01 to 1% in period nine. Cost of food and beverage as a percentage of food and beverage sales decreased 180 basis points and 23% during the third quarter of 2009 and 24.8% in the third quarter of 2008. Primarily due to the declining cheese prices and the effect of a prior year adjustment of our beverage cost. During the third quarter of 2009, the average price per pound of cheese decreased approximately $0.62 or 33% compared to prices paid in the third quarter 2008, resulting in 110 basis point reduction. Cost of food and beverage in the third quarter of 2008 included the effect of a non-recurrent adjustment of vendor rebate allowance which increased beverage cost by approximately 90 basis points during the prior year period. Cost of entertainment merchandise as a percentage of entertainment merchandise sales increased 40 basis points to 8.8% during the third quarter of 2009 from 8.4% in the third quarter of 2008. Primarily due to a 20 basis point increase attributable to additional costs associated with an attraction that dispenses novelty fold photo cards and a 10 basis point increase attributable to additional ticket redemption from an in-store promotion involving our distribution of price redemption tickets. Labor expense as a percent of Company store sales increased 40 basis points to 27.7% during the third quarter of 2009 compared to 27.3% in the third quarter of 2008. Primarily due…

During our last earnings conference call on July 30th, we stated that we performed an extensive review of our business including the effectiveness of our sales strategies and the probable impact that external factors such as the economic recession and the H1N1 had on our performance. We concluded first our sales strategies were sound. Next the Chuck E. Cheese’s were seen as a good value. However, in this difficult economic time, consumers were cutting back on restaurant and entertainment spending. Third, that the H1N1 negatively impacted our business primarily from the last week of April through the first week of June. Fourth, our business continued to generate significant cash flow and we enhanced our financial strength by reducing debt in improving our cost structure. Finally and most important, that we believe that we were poised for sales and earnings per share growth as our business and the economy improves. During our July 30th call, we further shared monthly comparable stores sales as follows: April was down 1.2%; May was (-8.8%); June was (-6.5%); and July was (-6.1%). At that time, you may recall, we went into great detail regarding the impact we believed the H1N1 outbreak and the intensified media coverage was having on our business. Since that time, our comparable store sales trends have materially improved with August being (-3.3%) and September being essentially flat or (-0.1%) following the 6%-8% negative sales performance of the May to July periods. On a quarterly basis, our comparable store sales are summarized as follows: quarter one, we were (-0.1%); quarter two was (-5.4%); and quarter three was (-3.1%). Comparable store sales during October are (-2.2%) which is slightly better than the third quarter sales trend. Since our last earnings conference call on July 30th, comparable store sales for the last 13 weeks…

We continue to believe in our strategic plan for 2009 and that our focused execution of the plan is working to mitigate the effects of the challenging consumer environment. We are particularly pleased with the improvement in our recent comparable store sales trends, considering the unique external factors related to the recent outbreak of Influenza creating additional head wins for the Company. Predicting sales growth for the fourth quarter is always difficult as the low seasonal sales base has the potential to exaggerate relatively minor fluctuations in business. For the first four weeks of the fourth quarter, comparable store sales are down 2.2%. If this trend continues throughout the balance of the year we would expect fiscal year 2009 diluted earnings per share to be in the range of $2.63 to $2.67.The following assumptions are incorporated into this assessment. We are estimating the average cheddar block price per cheese at approximately $1.50 per pound in the fourth quarter. We are on target to open two new Company units in the last period of the year. We are assuming our effective tax rate in the fourth quarter will be in the range of 37.7% to 38.5%. We are currently estimating total capital expenditures in the 2009 year to be approximately $70 million and we are estimating the extra week in our 53 week 2009 year to benefit diluted EPS by approximately $0.10. We believe our strategies have positioned as well for sustainable sales growth as the economic environment improves and the influenza activity abates. In light of the poor visibility with respect to 2010, it is difficult to forecast sales results with any meaningful degree of certainty. However our best estimate based on the information available today, this fiscal year 2010 comparable store sales growth will be in the range of flat to up 1% and 2010 diluted earnings per share will be in the range of $2.70 to $2.80 representing a growth rate of 6% to 10% excluding a benefit of the extra week from fiscal 2009. The following assumptions are incorporated into this estimate. We are estimating the average cheddar block price per cheese for fiscal 2010 to be in the range by $1.50 to $1.60 per pound. We are targeting 5 to 6 new Company units in 2010 including two relocations. We are assuming our effective tax rate will be in the range of 37.7% to 38.5% for the year. We are currently estimating total capital expenditures in 2010 to be in the range of $90 million to $95 million and finally we are assuming the Company will use its free cash flow to opportunistically buy Company stocks. With that I will turn it over to Dick.

From a top line perspective many of the external head wins we experienced in the second quarter of the year, carried over into the third quarter as well. Comparable store sales declined 3.1% during the quarter as we believe we were negatively impacted by the economy and the H1N1 outbreak. Although clearly disappointed anytime comparable store sales are negative, we are somewhat encouraged by the improvement in our recent comparable store sales trend. Given the current operating environment, providing guidance for the fourth quarter in 2010 is extremely challenging. Yet our primary focus is not on the external environment but rather on the involving in improving our concept and financial model to insure that as the environment improves that CEC is well positioned to participate in that recovery. Mike has showed you in detail our strategies going forward and we continue to believe that they are solid and are providing us reasonable financial performance in this difficult consumer environment. The Company remains financially strong as evidenced by our ability to reduce debt by $62 million. We purchased approximately $34 million of the Company’s treasury stock while re-investing $51 million in our co-stores in one new location during the first 9 months of 2009. This financial strength coupled with a long term belief in the global prospects for our brand were key factors in the Board of Directors’ recent decision to increase the Company’s buybacks authorization by $200 million. It is impossible for us to know exactly when the consumer environment will emerge from this downturn. While our approach is to exit financially stronger with a better product positioned for growth. We look forward to sharing our future results with you, and at this time Mike, Chris and I would be glad to answer any questions you may have.

(Operator Instructions) Our first question comes from the line of Robert Derrington with Morgan Keegan please go ahead Robert Derrington – Morgan Keegan & Company, Inc.: I am just curious, Dick if you could tell us for a second, what was it that kept you from authorizing the repurchase sooner than what you did? Was it just the uncertainty of the environment?

You mean the additional $200 million? Robert Derrington – Morgan Keegan & Company, Inc.: Yes.

No. We think the timing was appropriate, we still have $37.8 million remaining on the past authorization, and just as that sort of balance came down the Board just felt it appropriate to look longer term, and again based on the factors we went through on the call, decided it was time to increase that authorization. Robert Derrington – Morgan Keegan & Company, Inc.: Sure I applaud the move. Could you give a little bit of well, Dick I am not sure whether this is best for Mike, but kind of looking at the trend in the revenue mix, the entertainment merged sales, clearly this past quarter we saw continued shift. It is higher as a percent of your overall revenue. Can you help us understand what is going on there and kind of what the strategy is around that piece of the business? Is it that food sales are falling or how should we think about that?

The shift, that 1.6% shift in the revenue mix is a combination of two things. Number one and this is the bigger of the two. Number one, the packaged products that we sold in the third quarter of 2009 compared to the third quarter of 2008, simply had a heavier weighting towards entertainment and merged. So it is really just a function of the mix of all of our package products, birthday parties, coupons, value meals, and et cetera, and this year compared to last year there were just a heavier weighting towards entertainment and merged. So it is really not a function of a shift in customer behavior, and then to a lesser extent, there has just been a slight mix shift this year in entertainment and merged revenue in the third quarter of 2009. Robert Derrington – Morgan Keegan & Company, Inc.: Got you and last question if I could, the birthday Star Blast Capsules, can you give us a little bit of sense of what kind of results you have seen in testing in Dallas, are there any reads early on, on the 20 stores on which you rolled it?

Yes Bob I will take that one. First on the 20 stores that we rolled with the exception of Dallas, we just rolled out the birthday or the Ticket Blaster about two weeks ago so it is really early in the vast majority of the store. What we are testing is really the acceptance from our guests and the excitement from our guests and the very early read is our guests really liked it. From our perspective that is the number one item that will impact our decision to potentially roll it out system wide, is how much of a positive impact we can have on our guests. It is way too early to evaluate sales results, but a very early analysis is that our guests really like the ticket blaster and that is the primary purpose for our tests. Robert Derrington – Morgan Keegan & Company, Inc.: Have you figured out Mike, how to best capture the guest excitement and how it affects the revenue piece of the business? In other words will it only be offered through the scheduled program as opposed to the walk-in program, can you up-sell additional features to it?

We have had several discussions on that point Bob. I think the number one opportunity that we see is that, first of all for the marketing perspective, it is a call to action. We believe that if we produce a national TV commercial, showing a kid in a Ticket Blaster, winning tickets, that we believe that we can increase the number of birthday parties throughout the United States. We also believe that as kids are experiencing the Ticket Blaster that their friends will also see it and encourage them to want to book their birthday party at Chuck E. Cheese so that would be the primary method for us to increase our birthday sales and then we have also considered potentially up-charging for walk-in birthdays.

Our next question comes from the line of Brad Ludington with Keybanc Capital Markets, please go ahead. Brad Ludington – Keybanc Capital Markets: I want to start up just talking about the attendance at parties, you said in the second quarter that the number of birthday party bookings was relatively stable, that attendance was down. Is that still the case or has that stabilized some here in this quarter?

I will take that one Brad. Our birthday parties have continued to trend down throughout this quarter but what we have seen is that birthday sales during the month of September were down only about 4% so we have seen an improvement in birthday sales during September and then during October, the number of reservations that we have taken in our call center and over the web for three of the last four weeks have increased. So we have seen deterioration for a few months but it is starting to come back in September and now at least in the four weeks of October we have seen positive reservations. Brad Ludington – Keybanc Capital Markets: When you talk about the potential rollout of the Ticket Blaster system wide, if this test continues to go successful here in the fourth quarter, what kind of timeframe do you think you would be looking out for the 2010 rollout?

We believe that we have a very good read on the Ticket Blaster in the month of November because our birthday parties in November are seasonally high, so we will continue to evaluate it here over the next couple of months. At this point in time it is too early to provide you with the potential roll out date for that Ticket Blaster. Brad Ludington – Keybanc Capital Markets: Ok, and you are talking about the month of October specifically we have heard a few companies say that Halloween falling on a Saturday is going to probably hurt their same store sales, is that the same with you guys?

Probably a little bit. Brad Ludington – Keybanc Capital Markets: Just briefly and I will jump back in the queue, on the opening 5 to 6 next year, 5 to 7 2011, should we expect that you may want to continue to accelerate that rate when you look at 2012 and beyond?

That is probably a decent assumption that we would increase it slightly. Right now we are focusing on gearing up in 2010 and 2011, but going out three years or maybe a couple more stores maybe appropriate.

Our next question comes from the line of Michael Gallo with C. L. King. Please go ahead. Mr. Gallo, your line is open. Okay, we will move on to the next one. Greg Ruedy with Stephens, please go ahead. Greg Ruedy – Stephens Inc.: Mike, you discussed the birthday sales are sequentially improving here in October. The October sales trends have [dizzled] just slightly. Can you then help us maybe breakout the walking business and what deceleration is there?

It is very difficult over a short period of time. What we are trying to do is, would give you four weeks in October that are (-2.2%). We compared that to the third quarter with comps that were (-3.1%) so, slightly better than the third quarter and with such a small change over such a short period of time. I would not draw any conclusions on walk-in parties and so forth. We believe that our business despite the economy and despite H1N1 continues to do relatively well in the early part of the fourth quarter, but reading between birthday parties and walk-in business over such a short period of time is very difficult. Greg Ruedy – Stephens Inc.: Okay, fair enough. You did mention in the script that you are going to look at maybe pulling back on the discounts, on the coupon, and going after a little better check. Can we assume that maybe next we will move back towards the food and ease up on the tokens? Any else you can share there?

Yes, it is hard to project the mix going forward. But we do not really see a material change in our mix in the fourth quarter for that matter next year. Your observation on the third quarter was right but that was only for one quarter. We believe we have an opportunity to do with our coupons is that we have been very successful increasing the [PPA] of coupons throughout this year. We offer our guests an unbelievable value with coupons and value meals and also with the capital that we have reinvested in our stores. We believe we have a very, very good value equation and we think that we can fine tune that somewhat to increase our average ticket a little bit more and we are going to testing that in the first quarter of next year. Greg Ruedy – Stephens Inc.: Okay, moving on the capital plan. I appreciate the color on 2010. When we think about those expansions, how many do you have locked down now with the landlords? What kind of favorability, if any, do you stand to realize?

We have not lease assigned but maybe one or two stores but very deep in to the negotiations or agreed upon prices of almost 30 of the 35 stores. Then, we are looking at another 30 plus stores having serious landlord discussions with and then we have identified probably another 70 to 80 stores on top of that. So, we are well into the process and we believe that we able to execute the 35 expansions and more than anything else, we just believe that those will provide our investors with an excellent return on investments. Greg Ruedy – Stephens Inc.: So, with the respect to terms that you are negotiating now versus what you put place over the last three years, any delta that you care to discuss?

We feel good about the 35 stores that we have shared with you for 2010 and then as we have also said, we anticipate the increase set in 2011 to 40 to 50 expansions and there is not much more to share with you regarding our expansion plans.

(Operator instructions). with : ,: Margo Murtaugh – Snyder Capital : In the $95 million CapEx for next year, can you just break that down completely? I know you talked about $60 million to $65 million touching the 200 locations? Where the rest of it will be going? What you regard as your maintenance CapEx just to keep the stores in shape? Or what is the normal remodeling or what is the normal cycle for keeping the games up-to-date etc? I am just trying to get a sense of what free-cash flow is after really not necessarily expenditures to keep the business healthy.

Margo Murtaugh – Snyder Capital : Okay. How much of that goes for expansions, for example the $60 million to $65 million, how much is for expansions?

On average, our capital CapEx first store for an expansion has run to $1 million to $35 million. Margo Murtaugh – Snyder Capital : Okay, all right. So the increase in CapEx next year is coming from more expansions?

In large part it is more expansion. Margo Murtaugh – Snyder Capital : Yes, okay. What is your debt to EBITDA target? It is sounds like you just going to buy back stocks from free-cash flows, is that the case? What level of debt to EBITDA do you feel comfortable with?

Our targeted capital structure is debt to EBITDA of two the one. That is the announcement that we made back in October 2007. What we have always said is over the long run we want to manage the business around the two to one leverage ratio. Here in 2009, we are just a touch below there; we are at [1 to .87]. But over the long run, we intend to get our leverage ratio back up to that two to one.

Our next question comes from the line of Greg Schroeder with Jesup & Lamont, please go ahead. Greg Schroeder – Jesup & Lamont: First question was on the international development. Just so I understand this right, you are going to make further announcement in November so I am taking that will be probably go to the definitive in November? But, right now you got two development agreements and one franchise agreement that encompasses about 34 stores? You are probably looking at 2011 before those stores start to open, is that correct?

We will open at least one store next year. And you are right. We plan on announcing the signing of the development agreement in Chile and also in the Middle East during November. We actually have a site that we have approved and Riyadh that I am personally going to see in January of next year. Our franchise partners are looking at another store in Abu Dhabi. Next week, Mark Gordon, our Senior Vice President in-charge of International Development that we brought on our team to utilize all of his vast international experience. Mark and I are going to look the sites next week in Santiago, Chile. We believe that we have good franchise partners and we also believe that over the long term this is a significant opportunity for us to grow our business. Greg Schroeder – Jesup & Lamont: Do you think you have your hands full here with the agreement that you are putting in the place right now or you are looking for additional agreements there?

There is no doubt. We are in the process of developing a worldwide strategic plan. We are focusing on quality franchise partners; we are identifying areas of the world that we are going to target first. It is going to be very fairly narrow target based on quality development and based on what we are seeing in our international stores now from both the sales and cash flow perspective. We believe that we have a really solid earnings model that will take some time to open the stores throughout the world, but we do see over a long period of time a significant growth opportunity for our Company. Greg Schroeder – Jesup & Lamont: Yes, the terms on those, will they similar to a typical franchise agreement in the US with the opening key and a royalty?

That is correct. Just in round numbers… this November we anticipate to collect upfront cash between $2 million to $2.5 million for those agreements, and then going forward, a store fee as the store is open and the royalty fee for our efforts in assisting our franchisees to build their sales and to build their cash flow. Greg Schroeder - Jesup & Lamont: Okay, $2 million to $2.5 million upfront fee collected in November? Then, the remainder depends on the timing of the opening?

That is correct. Greg Schroeder - Jesup & Lamont: Okay, and the final thing…I know you got a handful, I think, 14 stores in Canada that you operate as a Company. Can you continue to operate those or look for franchise there?

We are continuing to operate our stores in Canada and we are very encouraged with that. I have talked to number of international executives. A lot of companies have had a hard time making money in Canada and we are fairly successful in Canada so, we see that as a positive as we go to another part of the world. You probably already know this, but the money that we collect upfront is not going to go to income, that will be amortized over the opening of the store. But the important part is we will have a couple of million dollars that we can utilize to purchase our stock or for other corporate purposes.

It looks like we have a follow up from Robert Derrington with Morgan Keegan, please go ahead. Robert Derrington – Morgan Keegan & Company, Inc.: Yes, Mike thanks for the additional clarification on that $2 million to $2.5 million amortization. What is the collective numbers? Is that for, in total, 35 restaurants?

For the actual 34 restaurant, that is correct Bob. That is for our franchisees to develop those territories. Robert Derrington – Morgan Keegan & Company, Inc.: Yes, and then typically there is an additional and again, that is booked as income as those stores open right?

That is correct. We amortize that development. The over the store opening period and in addition to that upfront development fee, we also charge a franchise fee that we receive and is recorded to income as those stores open. And from our perspective, the biggest opportunity is a royalty fee as we open a number of stores that is consistent from quarter to quarter. We are really excited to work with our franchise partners to make them successful, for them to build sales, and for them to receive a very good return on investment. Robert Derrington – Morgan Keegan & Company, Inc.: When we would we expect to see the first beginning of this openings to occur, Mike?

We expect for sure one store in 2010 as I have said earlier. We have approved the Riyadh site and Mark and I are going over there to assist the net opening in January. Robert Derrington - Morgan Keegan & Company, Inc.: And then it is likely 2% licensed royalty that you collect?

We do not get into the terms of the royalty but I would tell you that it is significantly higher than that. Robert Derrington – Morgan Keegan & Company, Inc.: That is great, that is terrific.

We are charging competitive rates because our earnings model allows us to do so. Robert Derrington – Morgan Keegan & Company, Inc.: Sure. Switching gears for a second, you gave us the regional sales trend across the system. Did you see, Mike, or could you tell whether there was much impact from swine flu either later in the third quarter or here into the fourth quarter? Should we just dismiss this as it is gone or it is not an issue or how should we think about it?

I would not think of it as that Bob, I wish we could. We have had a lot of discussion on the swine flu as an executive team. You can look at our sales trends over the last 13 weeks that our comparable store sales are (-1.8%) and you can see an improvement in our sales trends versus in the past 4 to 5 months. From that perspective the economy has not materially improved and so with sales trends improving, the swine flu has not had an impact in our business. When we just step back and we use our common sense, at least our belief, we have a number of kids that are home sick with the H1N1. And so our belief is, it is hitting our business today. In October our comps were (-2.2%) so, it is hard to know exactly what it is hitting us. One of our observation though, and again this is again our belief, is when we compare it back to the second quarter, there appeared from our perspective to have some almost panic with the swine flu. It does not appear to have that but we do believe that it is negatively impacting us and we believe that it will continue to negatively impact us this year and we will just deal with it, we have done everything we can to protect our guests and our employees and as the swine flu ends we hope to benefit from our comparisons of comfortable store sales next year, going against that hit this year. Robert Derrington – Morgan Keegan & Company, Inc.: Mike, one thing that you talked with us before about was how the trend especially, out in your Western region, particularly California. As you came in September, you were coming over the top of materially weaker numbers. How much of that is contributing to the improvement and the trend that we were seeing?

Not much, Bob. If we look at California during the third quarter versus year-to-date during the first two quarters, it is almost flat. We did see somewhat of an improvement in Florida, last week California had a relatively good week versus the prior trend. But today, I think things were still tough up in California. We do believe over the period of time going against these our comparable store sales will help us. We can continue to reinvest in California despite declining sales trends in California, it still generates a lot of cash flow and a lot of profit. We believe sooner or later it is going to turn around. I think the economy in California is still pretty difficult. Robert Derrington – Morgan Keegan & Company, Inc.: Last question if I may. You also had talked with us, Mike, about some incremental coupon drops around a number of your restaurants. Can you give us those were printings like [Ad Bower]; I think Clipper Magazine or things like that? Can you give us any kind of feed or read? Are those complete? Did they work? Were you satisfied with those?

They are not complete, Bob. We have had a fairly successful redemption rate on those coupons. What we have not seen is a correlation to increased redemptions and increased sales. So, we are in the process of evaluating the redemptions and the correlations of sales but to date we have not seen a significant correlation that those redemptions have increased total sales. We are in the middle of that direct mail tasks; we are going to continue to evaluate it. So, at this point in time, it is not conclusive.

We have a follow up from Brad Ludington with Keybanc Capital Markets, please go ahead. Brad Ludington – Keybanc Capital Markets: Bob just covered my question, thank you.

We have follow-up question from Greg Schroeder with Jesup & Lamont, please go ahead. Greg Schroeder – Jesup & Lamont: I just wanted to clarify one thing on the international development. There are no capital outlays on your part and on those deals, is that correct?

For these 34 stores, that is exactly correct. They are franchise locations. Greg Schroeder – Jesup & Lamont: Okay. I have been reading a little bit about Disney and some of their plans to invest some capital onto their stores and have some interactive activities and I am just curious if you have any overlap with Disney or you are more suburban, they are more urban? Does that make sense?

We are not familiar exactly where Disney is looking to make any investments.

There are no further questions, please continue.

Thank you for your participation, if you have any further questions please feel free to call Chris, Dick or myself. Thank you, bye.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.