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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

(Mark One)

|      |  |                                                                                                                                                          
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|[X]   |  | Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended April
1, 2001.                    
|     
|[   ] |  | Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
_____________ to _______________.

Commission File Number 0-15782

CEC ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)

|                                |  |                    
|------------------------------- |  | -------------------
|Kansas                          |  | 48-0905805         
|                               
|                               
|                               
|                               
|(State or other jurisdiction of |  | (I.R.S. Employer   
|                               
|                               
|                               
|                               
|incorporation or organization)  |  | Identification No.)

4441 West Airport Freeway
Irving, Texas 75062
(Address of principal executive offices,
including zip code)

(972) 258-8507
(Registrants telephone number,
including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [   ]

At April 1, 2001, an aggregate of 27,683,867 shares of the registrants
Common Stock, par value of $.10 each (being the registrants only class of
common stock), were outstanding.

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TABLE OF CONTENTS



|                                       |                                                              |  |  |  |  |  |  | 
|-------------------------------------- | ------------------------------------------------------------ |  |  |  |  |  |  | 
|PART  I  -  FINANCIAL  INFORMATION    
|                                       | Item 1.  Financial Statements                               
|                                       | CONSOLIDATED BALANCE SHEETS                                 
|                                       | CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
|                                       | CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY              
|                                       | CONSOLIDATED STATEMENTS OF CASH FLOWS                       
|                                       | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                  
|Employment Agreement dated May 8, 2001



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##### Table of Contents









PART I   FINANCIAL INFORMATION







Item 1. Financial Statements

CEC ENTERTAINMENT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                             |  |      |   | 
|------------------------------------------------------------ |  | ---- | - | 
|                                                             |  | Page |  
|                                                             |  |      |  
|Consolidated balance sheets                                  |  |      | 3
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Consolidated statements of earnings and comprehensive income |  |      | 4 | 
|                                                            
|Consolidated statement of shareholders equity               |  |      | 5 | 
|                                                            
|Consolidated statements of cash flows                        |  |      | 6 | 
|                                                            
|Notes to consolidated financial statements                   |  |      | 7
|                                                            

2



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CEC ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands, except share amounts)

|                                                                         |                                                                                                                    |                           |         |         |        |             |         |         |              |         |         | 
|------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------ | ------------------------- | ------- | ------- | ------ | ----------- | ------- | ------- | ------------ | ------- | ------- | 
|                                                                         |                                                                                                                    |                           |         |         |        | April 1,    |         |         | December 31, |        
|                                                                         |                                                                                                                    |                           |         |         |        | 2001        |         |         | 2000         |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |         |         |              |        
|                                                                         |                                                                                                                    |                           |         |         |        | (unaudited) |        
|ASSETS                                                                  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Current assets:                                                         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Cash and cash equivalents                                                                                          |                           | $       | 8,616   |        |             | $       | 7,300   |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Accounts receivable                                                                                                |                           |         | 7,691   |        |             |         | 12,778  |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Inventories                                                                                                        |                           |         | 8,968   |        |             |         | 8,436   |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Prepaid expenses                                                                                                   |                           |         | 4,956   |        |             |         | 4,419   |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Deferred tax asset                                                                                                 |                           |         | 1,205   |        |             |         | 1,205   |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Assets held for resale                                                                                             |                           |         | 2,908   |        |             |         | 4,211   |             
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|                                                                         |                                                                                                                    | Total current assets      |         |         | 34,344 |             |         |         | 38,349       |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Property and equipment, net                                              |                                                                                                                    |                           | 355,656 |         |        |             | 338,408 |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Notes receivable from related parties                                    |                                                                                                                    |                           | 1,893   |         |        |             | 1,526   |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Other assets                                                             |                                                                                                                    |                           | 13,559  |         |        |             | 11,092  |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|                                                                         |                                                                                                                    |                           |         |         |        | $           | 405,452 |         |              | $       | 389,375 | 
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                    
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Current liabilities:                                                    
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Current portion of long-term debt                                                                                  |                           | $       | 6,106   |        |             | $       | 6,102   |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Accounts payable and accrued liabilities                                                                           |                           |         | 54,751  |        |             |         | 38,616  |             
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|                                                                         |                                                                                                                    | Total current liabilities |         |         | 60,857 |             |         |         | 44,718       |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Long-term debt, less current portion                                     |                                                                                                                    |                           | 20,584  |         |        |             | 47,030  |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Deferred rent                                                            |                                                                                                                    |                           | 3,457   |         |        |             | 3,491   |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Deferred tax liability                                                   |                                                                                                                    |                           | 9,401   |         |        |             | 7,708   |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Other liabilities                                                        |                                                                                                                    |                           | 1,725   |         |        |             | 1,725   |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Commitments and contingencies                                           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Redeemable preferred stock, $60 par value, redeemable for $2,888 in 2005 |                                                                                                                    |                           | 2,459   |         |        |             | 2,431   |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|Shareholders equity:                                                   
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Common stock, $.10 par value; authorized 100,000,000 shares; 34,920,773
and 34,585,454 shares issued, respectively |                           |         | 3,492   |        |             |         | 3,459   |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Capital in excess of par value                                                                                     |                           |         | 185,353 |        |             |         | 177,828 |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Retained earnings                                                                                                  |                           |         | 200,316 |        |             |         | 175,217 |             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Accumulated other comprehensive loss                                                                               |                           |         | (109    | )      |             |         | (30     | )           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Less treasury shares of 7,236,906 and 7,039,606, respectively, at cost                                             |                           |         | (82,083 | )      |             |         | (74,202 | )           
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|                                                                         |                                                                                                                    |                           |         |         |        |             | 306,969 |         |              |         | 282,272 | 
|                                                                         |                                                                                                                    |                           |         |         |        |             |        
|                                                                         |                                                                                                                    |                           |         |         | $      | 405,452     |         |         | $            | 389,375 |        
|                                                                         |                                                                                                                    |                           |         |         |        |             |        



See notes to consolidated financial statements.

3



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CEC ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited)
(Thousands, except per share amounts)

|                                                                             |          |                                              |         |                    |        |   |               |   |        | 
|---------------------------------------------------------------------------- | -------- | -------------------------------------------- | ------- | ------------------ | ------ | - | ------------- | - | ------ | 
|                                                                             |          |                                              |         | Three Months Ended |       
|                                                                             |          |                                              |         |                    |       
|                                                                             |          |                                              |         | April 1, 2001      |        |   | April 2, 2000 |  
|                                                                             |          |                                              |         |                    |        |   |               |  
|Food and beverage revenues                                                   |          | $                                            | 110,822 |                    |        | $ | 93,779        |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Games and merchandise revenues                                               |          |                                              | 51,377  |                    |        |   | 46,567        |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Franchise fees and royalties                                                 |          |                                              | 926     |                    |        |   | 942           |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Interest income, including related party income of $42 and $23,
respectively |          |                                              | 83      |                    |        |   | 59            |  
|                                                                             |          |                                              |         |                    |        |  
|                                                                             |          |                                              | 163,208 |                    |        |   | 141,347       |  
|                                                                             |          |                                              |         |                    |        |  
|Costs and expenses:                                                         
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Cost of sales                                |         |                    | 68,467 |   |               |   | 61,550 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Selling, general and administrative expenses |         |                    | 21,298 |   |               |   | 19,996 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Depreciation and amortization                |         |                    | 8,286  |   |               |   | 8,096  | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Interest expense                             |         |                    | 710    |   |               |   | 761    | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Other operating expenses                     |         |                    | 23,161 |   |               |   | 20,318 | 
|                                                                             |          |                                              |         |                    |        |  
|                                                                             |          |                                              | 121,922 |                    |        |   | 110,721       |  
|                                                                             |          |                                              |         |                    |        |  
|Income before income taxes                                                   |          |                                              | 41,286  |                    |        |   | 30,626        |  
|                                                                             |          |                                              |         |                    |        |  
|Income taxes:                                                               
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Current expense                              |         |                    | 14,409 |   |               |   | 10,750 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Deferred expense                             |         |                    | 1,693  |   |               |   | 1,132  | 
|                                                                             |          |                                              |         |                    |        |  
|                                                                             |          |                                              | 16,102  |                    |        |   | 11,882        |  
|                                                                             |          |                                              |         |                    |        |  
|Net income                                                                   |          |                                              | 25,184  |                    |        |   | 18,744        |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Other comprehensive income, net of tax:                                     
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Foreign currency translation                 |         |                    | (79    | ) |               |   | 34     | 
|                                                                             |          |                                              |         |                    |        |  
|Comprehensive income                                                         |          | $                                            | 25,105  |                    |        | $ | 18,778        |  
|                                                                             |          |                                              |         |                    |        |  
|Earnings per share:                                                         
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Basic:  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Net income                                   |         | $                  | .90    |   |               | $ | .69    | 
|                                                                             |          |                                              |         |                    |        |  
|                                                                             |          | Weighted average shares outstanding          |         |                    | 27,745 |   |               |   | 26,868 | 
|                                                                             |          |                                              |         |                    |        |  
|                                                                             | Diluted:
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |          | Net income                                   |         | $                  | .88    |   |               | $ | .68    | 
|                                                                             |          |                                              |         |                    |        |  
|                                                                             |          | Weighted average shares outstanding          |         |                    | 28,521 |   |               |   | 27,639 | 
|                                                                             |          |                                              |         |                    |        |  



See notes to consolidated financial statements.

4



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CEC ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
(Unaudited)
(Thousands, except per share amounts)

|                                                                           |                                                      |   |         |         |   |        |        |        | 
|-------------------------------------------------------------------------- | ---------------------------------------------------- | - | ------- | ------- | - | ------ | ------ | ------ | 
|                                                                           |                                                      |   | Amounts |         |   | Shares |       
|                                                                           |                                                      |   |         |         |   |        |       
|Common
stock and capital in excess of par value
Balance, beginning of year |                                                      | $ | 181,287 |         |   |        | 34,585 |       
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Stock options exercised                              |   |         | 4,813   |   |        |        | 331    | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Net tax benefit from exercise of stock options       |   |         | 2,571   |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Stock issued under 401(k) plan                       |   |         | 174     |   |        |        | 5      | 
|                                                                           |                                                      |   |         |         |   |       
|                                                                           | Balance, April 1, 2001                               |   |         | 188,845 |   |        |        | 34,921 | 
|                                                                           |                                                      |   |         |         |   |       
|Retained earnings:                                                        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Balance, beginning of year                           |   |         | 175,217 |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Net income                                           |   |         | 25,184  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Redeemable preferred stock accretion                 |   |         | (26     | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Redeemable preferred stock dividend, $1.20 per share |   |         | (59     | )
|                                                                           |                                                      |   |         |         |   |       
|                                                                           | Balance, April 1, 2001                               |   |         | 200,316 |  
|                                                                           |                                                      |   |         |         |   |       
|Accumulated other comprehensive loss:                                     
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Balance, beginning of year                           |   |         | (30     | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Foreign currency translation                         |   |         | (79     | )
|                                                                           |                                                      |   |         |         |   |       
|                                                                           | Balance, April 1, 2001                               |   |         | (109    | )
|                                                                           |                                                      |   |         |         |   |       
|Treasury shares:                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Balance, beginning of year                           |   |         | (74,202 | ) |        |        | 7,040  | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Treasury stock acquired                              |   |         | (7,881  | ) |        |        | 197    | 
|                                                                           |                                                      |   |         |         |   |       
|                                                                           | Balance, April 1, 2001                               |   |         | (82,083 | ) |        |        | 7,237  | 
|                                                                           |                                                      |   |         |         |   |       
|Total shareholders equity                                                 |                                                      | $ | 306,969 |        
|                                                                           |                                                      |   |         |         |   |       

See notes to consolidated financial statements.

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CEC ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands)

|                                                                                   |                                                                     |                                   |        |                    |         |   |               |         |         |  
|---------------------------------------------------------------------------------- | ------------------------------------------------------------------- | --------------------------------- | ------ | ------------------ | ------- | - | ------------- | ------- | ------- | -
|                                                                                   |                                                                     |                                   |        | Three Months Ended |        
|                                                                                   |                                                                     |                                   |        |                    |        
|                                                                                   |                                                                     |                                   |        | April 1, 2001      |         |   | April 2, 2000 |        
|                                                                                   |                                                                     |                                   |        |                    |         |   |               |        
|Operating activities:                                                             
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Net income                                                          |                                   | $      | 25,184             |         |   | $             | 18,744  |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Adjustments to reconcile net income to cash provided
by operations:
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Depreciation and amortization                                                      |                                                                     |                                   | 8,286  |                    |         |   | 8,096         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Deferred income tax expense                                                        |                                                                     |                                   | 1,693  |                    |         |   | 1,132         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Tax benefit from exercise of stock options and stock grants                        |                                                                     |                                   | 2,571  |                    |         |   | 66            |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Compensation expense under stock grant plan                                        |                                                                     |                                   |        |                    |         |   | 190           |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Other                                                                              |                                                                     |                                   | 242    |                    |         |   | (6            | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Net change in receivables, inventories, prepaids, payables and
accrued liabilities |                                                                     |                                   | 20,450 |                    |         |   | 14,837        |        
|                                                                                   |                                                                     |                                   |        |                    |         |   |              
|                                                                                   |                                                                     | Cash provided by operations       |        |                    | 58,426  |   |               |         | 43,059  |  
|                                                                                   |                                                                     |                                   |        |                    |         |   |              
|Investing activities:                                                             
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Purchases of property and equipment                                 |                                   |        | (26,203            | )       |   |               | (18,849 | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Additions to notes receivable                                       |                                   |        | (1,100             | )       |   |               | (696    | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Payments received on notes receivable                               |                                   |        | 733                |         |   |               | 206     |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | (Increase) decrease in assets held for resale and other assets      |                                   |        | (1,068             | )       |   |               | 1,725   |        
|                                                                                   |                                                                     |                                   |        |                    |         |   |              
|                                                                                   |                                                                     | Cash used in investing activities |        |                    | (27,638 | ) |               |         | (17,614 | )
|                                                                                   |                                                                     |                                   |        |                    |         |   |              
|Financing activities:                                                             
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Payments on debt and line of credit                                 |                                   |        | (26,442            | )       |   |               | (13,696 | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Exercise of stock options                                           |                                   |        | 4,813              |         |   |               | 484     |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Redeemable preferred stock dividends                                |                                   |        | (59                | )       |   |               | (59     | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Purchase of treasury stock                                          |                                   |        | (7,881             | )       |   |               | (5,980  | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other                                                               |                                   |        | 97                 |         |   |               | 121     |        
|                                                                                   |                                                                     |                                   |        |                    |         |   |              
|                                                                                   |                                                                     | Cash used in financing activities |        |                    | (29,472 | ) |               |         | (19,130 | )
|                                                                                   |                                                                     |                                   |        |                    |         |   |              
|Increase in cash and cash equivalents                                              |                                                                     |                                   | 1,316  |                    |         |   | 6,315         |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Cash and cash equivalents, beginning of period                                     |                                                                     |                                   | 7,300  |                    |         |   | 2,731         |        
|                                                                                   |                                                                     |                                   |        |                    |         |   |              
|Cash and cash equivalents, end of period                                           |                                                                     | $                                 | 8,616  |                    |         | $ | 9,046         |        
|                                                                                   |                                                                     |                                   |        |                    |         |   |              



See notes to consolidated financial statements.

6



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CEC ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.   Interim financial statements:

In the opinion of management, the accompanying financial statements for
the periods ended April 1, 2001 and April 2, 2000 reflect all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the Companys financial condition, results of operations and cash flows in
accordance with generally accepted accounting principles.

Certain information and footnote disclosures normally included in the
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been omitted. The unaudited consolidated
financial statements referred to above should be read in conjunction with the
financial statements and notes thereto included in the Companys Form 10-K
filed with the Securities and Exchange Commission for the year ended December
31, 2000. Results of operations for the periods ended April 1, 2001 and April
2, 2000 are not necessarily indicative of the results for the year.

2.   Earnings per common share:

Earnings per common share were computed based on the weighted average
number of common and potential common shares outstanding during the period. Net
income available per common share has been adjusted for the items indicated
below, and earnings per common and potential common share were computed as
follows (thousands, except per share data):

|                                                                 |                                                            |   |                    |        |  |          |        |        | 
|---------------------------------------------------------------- | ---------------------------------------------------------- | - | ------------------ | ------ |  | -------- | ------ | ------ | 
|                                                                 |                                                            |   | Three Months Ended |       
|                                                                 |                                                            |   |                    |       
|                                                                 |                                                            |   | April 1,           |        |  | April 2, |       
|                                                                 |                                                            |   | 2001               |        |  | 2000     |       
|                                                                 |                                                            |   |                    |        |  |          |       
|Net income                                                       |                                                            | $ | 25,184             |        |  | $        | 18,744 |       
|                                                                
|                                                                
|                                                                
|                                                                
|Accretion of redeemable preferred stock                          |                                                            |   | (26                | )      |  |          | (26    | )     
|                                                                
|                                                                
|                                                                
|                                                                
|Redeemable preferred stock dividends                             |                                                            |   | (59                | )      |  |          | (59    | )     
|                                                                 |                                                            |   |                    |        |  |         
|Adjusted income applicable to common
and potential common shares |                                                            | $ | 25,099             |        |  | $        | 18,659 |       
|                                                                 |                                                            |   |                    |        |  |         
|Basic:                                                          
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Weighted average common shares outstanding                 |   |                    | 27,745 |  |          |        | 26,868 | 
|                                                                 |                                                            |   |                    |        |  |         
|                                                                 | Earnings per common share                                  |   | $                  | .90    |  |          | $      | .69    | 
|                                                                 |                                                            |   |                    |        |  |         
|Diluted:                                                        
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Weighted average common shares outstanding                 |   |                    | 27,745 |  |          |        | 26,868 | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Potential common shares for stock options
and stock grants |   |                    | 776    |  |          |        | 771    | 
|                                                                 |                                                            |   |                    |        |  |         
|                                                                 | Weighted average shares outstanding                        |   |                    | 28,521 |  |          |        | 27,639 | 
|                                                                 |                                                            |   |                    |        |  |         
|                                                                 | Earnings per common and potential
common share             |   | $                  | .88    |  |          | $      | .68    | 
|                                                                 |                                                            |   |                    |        |  |         

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##### Table of Contents



Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

First Quarter 2001 Compared to First Quarter 2000

A summary of the results of operations of the Company as a percentage of
revenues for the first quarters of 2001 and 2000 is shown below.

| |                            |                                     |      |                    |      |  |               |       |      | 
| | -------------------------- | ----------------------------------- | ---- | ------------------ | ---- |  | ------------- | ----- | ---- | 
| |                            |                                     |      | Three Months Ended |     
| |                            |                                     |      |                    |     
| |                            |                                     |      | April 1, 2001      |      |  | April 2, 2000 |      
| |                            |                                     |      |                    |      |  |               |      
| | Revenues                   |                                     |      | 100.0              | %    |  |               | 100.0 | %   
| |                            |                                     |      |                    |      |  |              
| | Costs and expenses:       
|
|
|
|
| |                            | Cost of sales                       |      |                    | 42.0 |  |               |       | 43.6 | 
|
|
|
|
| |                            | Selling, general and administrative |      |                    | 13.0 |  |               |       | 14.1 | 
|
|
|
|
| |                            | Depreciation and amortization       |      |                    | 5.1  |  |               |       | 5.7  | 
|
|
|
|
| |                            | Interest expense                    |      |                    | .4   |  |               |       | .5   | 
|
|
|
|
| |                            | Other operating expenses            |      |                    | 14.2 |  |               |       | 14.4 | 
| |                            |                                     |      |                    |      |  |              
| |                            |                                     | 74.7 |                    |      |  | 78.3          |      
| |                            |                                     |      |                    |      |  |              
| | Income before income taxes |                                     |      | 25.3               |      |  |               | 21.7  |     
|
|
|
|
| | Income tax expense         |                                     |      | 9.9                |      |  |               | 8.4   |     
| |                            |                                     |      |                    |      |  |              
| | Net income                 |                                     |      | 15.4               | %    |  |               | 13.3  | %   
| |                            |                                     |      |                    |      |  |              

Revenues

Revenues increased to $163.2 million in the first quarter of 2001 from
$141.3 million in the first quarter of 2000 due to an increase in the number
of Company-operated restaurants and an increase of 5.9% in comparable store
sales of the Companys Chuck E. Cheeses restaurants which were open during
all of the first quarters of both 2001 and 2000. During 2000, the Company
opened 31 new restaurants and closed one restaurant. During the first three
months of 2001, the Company opened four new stores, acquired one restaurant
from a franchisee and closed one restaurant. Menu prices increased 2.4%
between the periods.

Costs and Expenses

Costs and expenses as a percentage of revenues decreased to 74.7% in the
first quarter of 2001 from 78.3% in the first quarter of 2000.

Cost of sales decreased as a percentage of revenues to 42.0% in the first
quarter of 2001 from 43.6% in the comparable period of 2000. Cost of food,
beverage, prize and merchandise items as a percentage of revenues decreased to
13.9% in the first quarter of 2001 from 14.7% in the first quarter of 2000
primarily due to the increase in menu prices which was partially offset by
higher cheese costs. Store labor expenses as a percentage of store sales
decreased to 25.2% in the first quarter of 2001 from 25.7% in the first
quarter of 2000 primarily due to the increase in comparable store sales.

Selling, general and administrative expenses as a percentage of revenues
decreased to 13.0% in the first quarter of 2001 from 14.1% in the first
quarter of 2000 due primarily to a decrease in advertising and corporate
overhead costs as a percentage of revenues.

Depreciation and amortization expenses as a percentage of revenues
decreased to 5.1% in the first quarter of 2001 from 5.7% in the first quarter
of 2000 primarily due to the increase in comparable store sales and a change
in selected depreciable lives. During the first quarter of 2001, the
estimated remaining useful lives of certain fixed assets were changed based on
a review of historical asset utilization. This change in estimate resulted in
a reduction of depreciation expense of approximately $550,000 or $.01 per
share after tax in the first quarter of 2001.

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##### Table of Contents



Interest expense as a percentage of revenues decreased to .4% in the
first quarter of 2001 from .5% in the first quarter of 2000 due to increased
revenues.

Other operating expenses decreased as a percentage of revenues to 14.2%
in the first quarter of 2001 from 14.4% in the first quarter of 2000
primarily due to lower insurance costs, rent and repairs expense as a
percentage of revenues which was partially offset by higher utility costs.

The Companys effective income tax rate was 39.0% in the first quarter
of 2001 compared to 38.8% in the first quarter of 2000 primarily due to
higher estimated state tax rates.

Net Income

The Company had net income of $25.2 million in the first quarter of 2001
compared to $18.7 million in the first quarter of 2000 due to the changes in
revenues and expenses discussed above. The Companys diluted earnings per
share increased to $.88 per share in the first quarter of 2001 from $.68 per
share in the first quarter of 2000.

Financial Condition, Liquidity and Capital Resources

Cash provided by operations increased to $58.4 million in the first
three months of 2001 from $43.1 million in the comparable period of 2000.
Cash outflows from investing activities for the first three months of 2001
were $27.6 million primarily related to capital expenditures. Cash outflows
from financing activities for the first three months of 2001 were $29.5
million primarily related to repayment of borrowings on the Companys line of
credit and the repurchase of the Companys common stock. The Companys
primary requirements for cash relate to planned capital expenditures, the
repurchase of the Companys common stock and debt service. The Company
expects that it will satisfy such requirements from cash provided by
operations and, if necessary, funds available under its line of credit.

In 2001, the Company plans to add 30 to 34 stores including new stores
and acquisitions of existing stores from franchisees. The Company currently
anticipates its cost of opening such new stores to average approximately $1.8
million per store, which will vary depending upon many factors including the
size of the stores and whether the Company acquires land or the store is an
in-line or freestanding building. In addition to such new store openings,
the Company plans to expand the seating capacity of 10 to 15 high sales
volume stores in 2001, including stores which will receive an enhanced
showroom package. The Company also plans to complete Phase III upgrades in
approximately 100 stores this year at an average cost of approximately
$210,000 to $225,000 per store. A Phase III upgrade generally includes a new
toddler play area, skill games and rides, kiddie games and rides, sky-tube
enhancements, and prize area enhancement with ticket counting machines.
During the first three months of 2001, the Company opened four new
restaurants, acquired one restaurant from a franchisee, expanded one
restaurant and completed Phase III upgrades in 30 restaurants. The Company
currently estimates that capital expenditures in 2001, including expenditures
for new store openings, existing store expansions and equipment investments,
will be approximately $104 million. The Company plans to finance these
expenditures through cash flow from operations and borrowings under the
Companys line of credit.

Pursuant to the Companys $25 million stock repurchase plan announced in
1999, the Company has purchased shares of its common stock at an aggregate
purchase price of approximately $21.7 million as of May 15, 2001.

The Companys total credit facilities of $81 million consist of $6
million in term notes and a $75 million line of credit. Term notes totaling
$6 million with annual principal payments of $6 million and annual interest
of 10.02% mature in 2001. Interest under the $75 million line of credit is
dependent on earnings and debt levels of the Company and ranges from prime
or, at the Companys option, LIBOR plus 1% to 1.75%. Currently, any
borrowings under this line of credit would be at the prime rate or LIBOR plus
1%. As of May 15, 2001, there was $21.9 million in borrowings under this
line of credit. The Company is required to comply with certain financial
ratio tests during the terms of the loan agreements.

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##### Table of Contents



Certain statements in this report, other than historical information,
may be considered forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995,
and are subject to various risks, uncertainties and assumptions. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may differ from those
anticipated, estimated or expected. Among the key factors that may have a
direct bearing on the Companys operating results, performance or financial
condition are its ability to implement its growth strategies, national,
regional and local economic conditions affecting the restaurant/entertainment
industry, competition within each of the restaurants and entertainment
industries, success of its franchise operations, negative publicity,
fluctuations in quarterly results of operations, including seasonality and
government regulations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is subject to market risk in the form of interest risk and
foreign currency risk. Both interest risk and foreign currency risk are
immaterial to the Company.

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##### Table of Contents



PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

On June 2, 2000, a purported class action lawsuit against the Company,
entitled Freddy Gavarrete, et al. v. CEC Entertainment, Inc., dba Chuck E.
Cheeses, et al., Cause No. 00-08132 FMC (RZx) (Gavarrete), was filed in the
Superior Court of the State of California in the County of Los Angeles. On
July 27, 2000, the lawsuit was removed to the United States District Court for
the Central District of California. The lawsuit was filed by one former
restaurant manager purporting to represent restaurant managers of the Company
in California from 1996 to the present. No class of plaintiffs has been
certified in this lawsuit. The lawsuit alleges violations of state wage and
hour laws involving unpaid overtime wages and seeks an unspecified amount in
damages. The Company believes the lawsuit is without merit and intends to
vigorously defend it.

Item 2. Changes in Securities.

None to report during quarter for which this report is filed.

Item 3. Defaults Upon Senior Securities.

None to report during quarter for which this report is filed.

Item 4. Submission of Matters to a Vote of Security
Holders.

None to report during quarter for which this report is filed.

Item 5. Other Information.

None to report during quarter for which this report is filed.

Item 6. Exhibits and Reports on Form 8-K.

a) Exhibits

10 (a) Employment Agreement dated May 8, 2001, between Michael H. Magusiak
and the Company.

b) Reports on Form 8-K

None filed during the quarter for which this report is filed.

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##### Table of Contents



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

CEC ENTERTAINMENT, INC.

|                    |  |                                                                                                                
|------------------- |  | ---------------------------------------------------------------------------------------------------------------
|Dated: May 15, 2001 |  | By: /s/ Rodney Carter
    Rodney Carter
    Executive Vice President, Chief Financial Officer and
    Treasurer

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##### Table of Contents



EXHIBIT INDEX

|            |  |                                                                                      |  |          |  | 
|----------- |  | ------------------------------------------------------------------------------------ |  | -------- |  | 
|Exhibit No. |  | Description                                                                          |  | Page No. | 
|           
|10(a)       |  | Employment Agreement dated May 8, 2001, between Michael H. Magusiak
and the Company. |  | 14       | 

13