Stock option correction to cost Chuck E. Cheese's Pizza about $25 million

 
Nov. 14, 2006
IRVING, Texas — CEC Entertainment Inc., parent of Chuck E. Cheese's Pizza, announced in a regulatory filing that it will restate past financial statements to correct accounting errors related to stock-based compensation.
 
"Accordingly, investors should not rely on the company's historical financial statements," the company said.
 
Earlier this year, CEC said its audit committee was reviewing its stock-option granting practices relative to Securities and Exchange Commission guidelines to determine whether they had been mishandled. CEC said that the review is still in progress, but that it estimates it will absorb between $20 million and $30 million in additional taxes tied to past-granted options.
 
According to regulatory filings, that sum would negate about two quarters' profit for the company.
 
CEC operates a system of 524 Chuck E. Cheese's restaurants in 48 states, of which 479 are company owned.

Topics: Chuck E. Cheese's Pizza , Operations Management , Public Companies


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