QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of Incorporation) | (I.R.S. Employer ID) | ||||
( | |||||
(Address of principal executive offices) (Zip Code) | (Registrant’s telephone number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
x | Accelerated filer | ¨ | ||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ||||||||||||
Emerging Growth Company |
Page | ||||||||
April 30, 2023 | January 29, 2023 | ||||||||||
(Unaudited) | (Audited) | ||||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Inventories | |||||||||||
Prepaid expenses | |||||||||||
Income taxes receivable | |||||||||||
Accounts receivable | |||||||||||
Total current assets | |||||||||||
Property and equipment (net of $ | |||||||||||
Operating lease right of use assets, net | |||||||||||
Deferred tax assets | |||||||||||
Tradenames | |||||||||||
Goodwill | |||||||||||
Other assets and deferred charges | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current Liabilities | |||||||||||
Current installments of long-term debt | $ | $ | |||||||||
Accounts payable | |||||||||||
Accrued liabilities | |||||||||||
Income taxes payable | |||||||||||
Total current liabilities | |||||||||||
Deferred income taxes | |||||||||||
Operating lease liabilities | |||||||||||
Other liabilities | |||||||||||
Long-term debt, net | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, par value $ | |||||||||||
Preferred stock, | |||||||||||
Paid-in capital | |||||||||||
Treasury stock, | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained earnings | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Thirteen Weeks Ended April 30, 2023 | Thirteen Weeks Ended May 1, 2022 | ||||||||||
Entertainment revenues | $ | $ | |||||||||
Food and beverage revenues | |||||||||||
Total revenues | |||||||||||
Cost of entertainment | |||||||||||
Cost of food and beverage | |||||||||||
Total cost of products | |||||||||||
Operating payroll and benefits | |||||||||||
Other store operating expenses | |||||||||||
General and administrative expenses | |||||||||||
Depreciation and amortization expenses | |||||||||||
Pre-opening costs | |||||||||||
Total operating costs | |||||||||||
Operating income | |||||||||||
Interest expense, net | |||||||||||
Income before provision for income taxes | |||||||||||
Provision for income taxes | |||||||||||
Net income | |||||||||||
Unrealized gain on derivatives, net of tax | |||||||||||
Total other comprehensive gain | |||||||||||
Total comprehensive income | $ | $ | |||||||||
Net income per share: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted average shares used in per share calculations: | |||||||||||
Basic | |||||||||||
Diluted |
Thirteen Weeks Ended April 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-In Capital | Treasury Stock At Cost | Accumulated Other Comprehensive Loss | Retained Earnings | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amt. | Shares | Amt. | ||||||||||||||||||||||||||||||||||||||||||||
Balance January 29, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Balance April 30, 2023 | $ | $ | $ | ( | $ | ( | $ | $ |
Thirteen Weeks Ended May 1, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-In Capital | Treasury Stock At Cost | Accumulated Other Comprehensive Loss | Retained Earnings | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amt. | Shares | Amt. | ||||||||||||||||||||||||||||||||||||||||||||
Balance January 30, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Derivatives, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Balance May 01, 2022 | $ | $ | $ | ( | $ | ( | $ | $ |
Thirteen Weeks Ended April 30, 2023 | Thirteen Weeks Ended May 1, 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization expense | |||||||||||
Non-cash interest expense | |||||||||||
Deferred taxes | |||||||||||
Loss on disposal of fixed assets | |||||||||||
Share-based compensation | |||||||||||
Other, net | ( | ||||||||||
Changes in assets and liabilities, net of assets and liabilities acquired: | |||||||||||
Inventories | ( | ( | |||||||||
Prepaid expenses | ( | ( | |||||||||
Income tax receivable | |||||||||||
Other current assets | ( | ||||||||||
Other assets and deferred charges | |||||||||||
Accounts payable | ( | ( | |||||||||
Accrued liabilities | ( | ||||||||||
Income taxes payable | |||||||||||
Other liabilities | ( | ||||||||||
Net cash provided by operating activities: | |||||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | ( | ( | |||||||||
Proceeds from sales of property and equipment | |||||||||||
Net cash used in investing activities: | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from debt | |||||||||||
Payments of debt | ( | ( | |||||||||
Proceeds from the exercise of stock options | |||||||||||
Repurchases of common stock under share repurchase program | ( | ||||||||||
Repurchases of common stock to satisfy employee withholding tax obligations | ( | ( | |||||||||
Net cash provided by (used in) financing activities: | ( | ||||||||||
Increase (decrease) in cash and cash equivalents | ( | ||||||||||
Beginning cash and cash equivalents | |||||||||||
Ending cash and cash equivalents | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Change in fixed asset accounts payable | $ | $ | |||||||||
Cash paid (refund received) for income taxes, net | $ | $ | ( | ||||||||
Cash paid for interest, net | $ | $ |
April 30, 2023 | January 29, 2023 | ||||||||||
Revolving credit facility | $ | ||||||||||
Term loan | |||||||||||
Senior secured notes | |||||||||||
$ | $ |
Thirteen Weeks Ended April 30, 2023 | Thirteen Weeks Ended May 1, 2022 | ||||||||||
Entertainment | $ | $ | |||||||||
Other (1) | |||||||||||
Entertainment revenues (2) | $ | $ | |||||||||
Food and nonalcoholic beverages | $ | $ | |||||||||
Alcoholic beverages | |||||||||||
Food and beverage revenues | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2023 | May 1, 2022 | ||||||||||
Basic weighted average shares outstanding | |||||||||||
Weighted average dilutive impact of awards | |||||||||||
Diluted weighted average shares outstanding |
Amount | |||||
Gross cash consideration | $ | ||||
Contingent consideration (1) | |||||
Less: cash acquired | ( | ||||
Total consideration paid | $ | ||||
Assets: | |||||
Current assets | |||||
Property and equipment | |||||
Operating lease right of use assets | |||||
Tradename | |||||
Other assets and deferred charges | |||||
Liabilities: | |||||
Accounts payable | |||||
Current portion of operating lease liabilities | |||||
Accrued liabilities | |||||
Operating lease liabilities | |||||
Deferred tax liabilities | |||||
Other liabilities | |||||
Net assets acquired, excluding goodwill | $ | ||||
Goodwill | $ |
Thirteen Weeks Ended | |||||
May 1, 2022 | |||||
Revenues | $ | ||||
Net income | $ |
Goodwill | Tradename | ||||||||||
Balance at January 30, 2022 | $ | $ | |||||||||
Acquisition of Main Event (1) | |||||||||||
Balance at January 29, 2023 | $ | $ | |||||||||
Adjustments to Main Event goodwill (1)(2) | ( | ||||||||||
Foreign currency translation | |||||||||||
Balance at April 30, 2023 | $ | $ |
April 30, 2023 | January 29, 2023 | ||||||||||
Deferred entertainment revenue | $ | $ | |||||||||
Compensation and benefits | |||||||||||
Accrued interest | |||||||||||
Deferred gift card revenue | |||||||||||
Customer deposits | |||||||||||
Property taxes | |||||||||||
Sales and use and other taxes | |||||||||||
Occupancy and variable rent costs | |||||||||||
Utilities | |||||||||||
Current portion of long-term insurance | |||||||||||
Other | |||||||||||
Total accrued liabilities | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2023 | May 1, 2022 | ||||||||||
Operating lease cost | $ | $ | |||||||||
Variable lease cost | |||||||||||
Short-term lease cost | |||||||||||
Total | $ | $ |
April 30, 2023 | January 29, 2023 | ||||||||||
Credit facility—revolver | $ | $ | |||||||||
Credit facility—term loan | |||||||||||
Senior secured notes | |||||||||||
Total debt outstanding | |||||||||||
Less current installments of long-term debt | ( | ( | |||||||||
Less issue discount on term loan | ( | ( | |||||||||
Less debt issuance costs | ( | ( | |||||||||
Long-term debt, net | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2023 | May 1, 2022 | ||||||||||
General and administrative expenses | $ | $ |
Options | Restricted Stock Units | Total | |||||||||||||||
Outstanding at January 29, 2023 | |||||||||||||||||
Granted | |||||||||||||||||
RSU vestings | n/a | ( | ( | ||||||||||||||
Forfeited | ( | ( | |||||||||||||||
Outstanding at April 30, 2023 | |||||||||||||||||
Remaining unrecognized compensation expense | $ | $ | $ |
Thirteen Weeks Ended April 30, 2023 | Thirteen Weeks Ended May 1, 2022 | ||||||||||||||||||||||
Entertainment revenues | $ | 393.1 | 65.8 | % | $ | 299.2 | 66.3 | % | |||||||||||||||
Food and beverage revenues | 204.2 | 34.2 | % | 151.9 | 33.7 | % | |||||||||||||||||
Total revenues | 597.3 | 100.0 | % | 451.1 | 100.0 | % | |||||||||||||||||
Cost of entertainment (% of entertainment revenues) | 34.3 | 8.7 | % | 26.8 | 9.0 | % | |||||||||||||||||
Cost of food and beverage (% of food and beverage revenues) | 56.0 | 27.4 | % | 43.2 | 28.4 | % | |||||||||||||||||
Total cost of products | 90.3 | 15.1 | % | 70.0 | 15.5 | % | |||||||||||||||||
Operating payroll and benefits | 130.6 | 21.9 | % | 93.4 | 20.7 | % | |||||||||||||||||
Other store operating expenses | 170.0 | 28.5 | % | 124.4 | 27.6 | % | |||||||||||||||||
General and administrative expenses | 31.4 | 5.3 | % | 28.3 | 6.3 | % | |||||||||||||||||
Depreciation and amortization expenses | 48.9 | 8.2 | % | 33.3 | 7.4 | % | |||||||||||||||||
Pre-opening costs | 4.7 | 0.8 | % | 3.0 | 0.7 | % | |||||||||||||||||
Total operating costs | 475.9 | 79.7 | % | 352.4 | 78.1 | % | |||||||||||||||||
Operating income | 121.4 | 20.3 | % | 98.7 | 21.9 | % | |||||||||||||||||
Interest expense, net | 30.7 | 5.1 | % | 11.4 | 2.5 | % | |||||||||||||||||
Income before provision for income taxes | 90.7 | 15.2 | % | 87.3 | 19.4 | % | |||||||||||||||||
Provision for income taxes | 20.6 | 3.4 | % | 20.3 | 4.5 | % | |||||||||||||||||
Net income | $ | 70.1 | 11.7 | % | $ | 67.0 | 14.9 | % | |||||||||||||||
Company-owned stores at end of period | 208 | 145 |
Thirteen Weeks Ended April 30, 2023 | Thirteen Weeks Ended May 1, 2022 | ||||||||||||||||||||||
Net income | $ | 70.1 | 11.7 | % | $ | 67.0 | 14.9 | % | |||||||||||||||
Interest expense, net | 30.7 | 11.4 | |||||||||||||||||||||
Provision for income taxes | 20.6 | 20.3 | |||||||||||||||||||||
Depreciation and amortization expense | 48.9 | 33.3 | |||||||||||||||||||||
EBITDA | 170.3 | 28.5 | % | 132.0 | 29.3 | % | |||||||||||||||||
Loss on asset disposal | 0.7 | 0.2 | |||||||||||||||||||||
Share-based compensation | 6.7 | 3.6 | |||||||||||||||||||||
Transaction and integration costs | 2.6 | 4.4 | |||||||||||||||||||||
Other items, net (1) | 1.8 | 0.1 | |||||||||||||||||||||
Adjusted EBITDA | $ | 182.1 | 30.5 | % | $ | 140.3 | 31.1 | % |
Thirteen Weeks Ended April 30, 2023 | Thirteen Weeks Ended May 1, 2022 | ||||||||||||||||||||||
Operating income | $ | 121.4 | 20.3 | % | $ | 98.7 | 21.9 | % | |||||||||||||||
General and administrative expenses | 31.4 | 28.3 | |||||||||||||||||||||
Depreciation and amortization expense | 48.9 | 33.3 | |||||||||||||||||||||
Pre-opening costs | 4.7 | 3.0 | |||||||||||||||||||||
Store Operating Income Before Depreciation and Amortization | $ | 206.4 | 34.6 | % | $ | 163.3 | 36.2 | % |
Thirteen Weeks Ended April 30, 2023 | Thirteen Weeks Ended May 1, 2022 | ||||||||||
New store and operating initiatives | $ | 39.0 | $ | 35.1 | |||||||
Games | 0.2 | 1.5 | |||||||||
Maintenance capital | 15.4 | 6.3 | |||||||||
Total capital additions | $ | 55.0 | $ | 42.9 | |||||||
Payments from landlords | $ | 2.3 | $ | 0.7 |
Thirteen Weeks Ended | |||||||||||||||||
April 30, 2023 | May 1, 2022 | Change | |||||||||||||||
Total revenues | $ | 597.3 | $ | 451.1 | $ | 146.2 | |||||||||||
Total store operating weeks | 2,690 | 1,876 | 814 | ||||||||||||||
Comparable store revenues | $ | 427.4 | $ | 445.6 | $ | (18.2) | |||||||||||
Comparable store operating weeks | 1,833 | 1,833 | — | ||||||||||||||
Noncomparable store revenues—Dave & Buster’s | $ | 30.9 | $ | 5.1 | $ | 25.8 | |||||||||||
Noncomparable store operating weeks—Dave & Buster’s | 143 | 43 | 100 | ||||||||||||||
Noncomparable store revenues—Main Event | $ | 138.3 | — | $ | 138.3 | ||||||||||||
Noncomparable store operating weeks—Main Event | 714 | — | 714 | ||||||||||||||
Other revenues and deferrals—Dave & Buster’s | $ | 0.7 | $ | 0.4 | $ | 0.3 |
Thirteen Weeks Ended | |||||||||||
April 30, 2023 | May 1, 2022 | ||||||||||
Entertainment revenues | 65.8 | % | 66.3 | % | |||||||
Food revenues | 22.8 | % | 22.5 | % | |||||||
Beverage revenues | 11.4 | % | 11.2 | % |
Thirteen Weeks Ended April 30, 2023 | Trailing Four Quarters Ended April 30, 2023 | ||||||||||
Net income | $70.1 | $140.2 | |||||||||
Add back: | |||||||||||
Interest expense, net | 30.7 | 106.7 | |||||||||
Loss on debt extinguishment / refinancing | — | 1.5 | |||||||||
Provision for income taxes | 20.6 | 36.8 | |||||||||
Depreciation and amortization expense | 48.9 | 184.9 | |||||||||
EBITDA | 170.3 | 470.1 | |||||||||
Add back: | |||||||||||
Loss on asset disposal | 0.7 | 1.3 | |||||||||
Impairment of long-lived assets and lease termination costs | — | 1.8 | |||||||||
Share-based compensation | 6.7 | 23.1 | |||||||||
Merger and integration costs | 2.6 | 23.5 | |||||||||
Pre-opening costs | 4.7 | 16.3 | |||||||||
Entertainment revenue deferrals | 4.7 | 13.1 | |||||||||
Proforma Main Event adjustments (1) | — | 15.0 | |||||||||
Information systems implementation costs and other items | 1.8 | 2.4 | |||||||||
Credit Adjusted EBITDA, a non-GAAP measure | $191.5 | $566.6 |
As Of And For The Trailing Four Quarters Ended April 30, 2023 | |||||
Credit Adjusted EBITDA (a) | $566.6 | ||||
Total debt (1) | $1,229.6 | ||||
Less: Cash and cash equivalents | $(91.5) | ||||
Add: Outstanding letters of credit | $9.8 | ||||
Net debt (b) | $1,147.9 | ||||
Net Total Leverage Ratio (b / a) | 2.0 | x |
Period (1) | Total Number of Shares Repurchased (in millions) | Average Price Paid per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plans (2) (in millions) | Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Plans (3) (in millions) | ||||||||||||||||||||||
January 30 to February 26, 2023 | — | $ | — | — | $ | — | ||||||||||||||||||||
February 27 to April 2, 2023 | — | $ | — | — | $ | 100.0 | ||||||||||||||||||||
April 3 to April 30, 2023 | 3.61 | $ | 34.82 | 3.61 | $ | 174.5 |
Exhibit Number | Description | |||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101.INS | Inline XBRL Inline Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH | Inline XBRL Inline Taxonomy Extension Schema Document | |||||||
101.CAL | Inline XBRL Inline Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | Inline XBRL Inline Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | Inline XBRL Inline Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | Inline XBRL Inline Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
DAVE & BUSTER’S ENTERTAINMENT, INC., a Delaware corporation | ||||||||
Date: June 6, 2023 | By: | /s/ Christopher Morris | ||||||
Christopher Morris | ||||||||
Chief Executive Officer | ||||||||
Date: June 6, 2023 | By: | /s/ Michael A. Quartieri | ||||||
Michael A. Quartieri | ||||||||
Chief Financial Officer |
Date: June 6, 2023 | /s/ Christopher Morris | ||||
Christopher Morris | |||||
Chief Executive Officer |
Date: June 6, 2023 | /s/ Michael A. Quartieri | ||||
Michael A. Quartieri | |||||
Chief Financial Officer |
/s/ Christopher Morris | |||||
Christopher Morris | |||||
Chief Executive Officer |
/s/ Michael A. Quartieri | |||||
Michael A. Quartieri | |||||
Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Apr. 30, 2023 |
Jan. 29, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 1,088.8 | $ 1,043.7 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 400,000,000.00 | 400,000,000.00 |
Common stock, shares issued (in shares) | 62,510,000 | 62,420,000 |
Common stock, shares outstanding (in shares) | 44,880,000 | 48,410,000 |
Preferred stock, shares authorized (in shares) | 50,000,000.00 | 50,000,000.00 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Beginning balance treasury stock, shares (in shares) | 17,630,000 | 14,010,000.00 |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 1: Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements include the accounts of Dave & Buster’s Entertainment, Inc. (referred to herein as the “Company”, “we,” “us” and “our”), any predecessor companies and its wholly-owned subsidiaries, Dave & Buster’s Holdings, Inc. (“D&B Holdings”), which owns 100% of the outstanding common stock of Dave & Buster’s, Inc. (“D&B Inc”), the operating company. The Company, headquartered in Coppell, Texas, is a leading operator of high-volume entertainment and dining venues (“stores”) in North America for adults and families. On June 29, 2022 (the “Closing Date”), the Company completed its acquisition (the “Main Event Acquisition” or “the Acquisition”) of 100% of the equity interests of Ardent Leisure US Holding Inc. (“Ardent US”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated April 6, 2022, by and among the Company, Ardent US, Delta Bravo Merger Sub, Inc, the Company’s wholly-owned subsidiary formed for the purpose of completing the transactions set forth in the Merger Agreement, for the limited purposes set forth therein, Ardent Leisure Group Limited (“Ardent”), and, for the limited purposes set forth therein, RB ME LP (“RedBird”) and RB ME Blocker, LLC, REB ME Series 2019 Investor Aggregator LP and RedBird Series 2019 GP Co-Invest, LP. Refer to Note 2, Business Combinations, for further discussion of the Main Event Acquisition. During the thirteen weeks ended April 30, 2023, the Company opened four stores, and as of April 30, 2023, the Company owned and operated 208 stores in 42 states, Puerto Rico and one Canadian province. The Company operates its business as two operating segments based on its major brands, Dave & Buster's and Main Event. The Company has one reportable segment as both brands provide similar products and services to a similar customer base, are managed together by a single management team and share similar economic characteristics. The Company operates on a 52 or 53-week fiscal year that ends on the Sunday after the Saturday closest to January 31. Each quarterly period reported has 13 weeks. Fiscal 2023, which ends on February 4, 2024, has 53 weeks. Fiscal 2022, which ended on January 29, 2023, had 52 weeks. The Company’s financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States for interim financial information as prescribed by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated. Our quarterly financial data should be read in conjunction with the audited financial statements and notes thereto for the year ended January 29, 2023, included in our Annual Report on Form 10-K. Amounts in the consolidated financial statements of this Quarterly Report on Form 10-Q are presented in millions. The amounts in the consolidated financial statements, and the notes thereto, of our Annual Report on Form 10-K were presented in thousands. The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities at the date of the consolidated financial statements and for the period then ended. Actual results could differ from those estimates. Operating results for the thirteen weeks ended April 30, 2023 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending February 4, 2024. Cash and cash equivalents — We consider transaction settlements in process from credit card companies and all highly-liquid investments with original maturities of three months or less to be cash equivalents. Our cash management system provides for the daily funding of all major bank disbursement accounts as checks are presented for payment. Under this system, outstanding checks in excess of the cash balances at certain banks creates book overdrafts. There were no book overdrafts as of April 30, 2023 or as of January 29, 2023. Fair value of financial instruments — Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level One inputs are quoted prices available for identical assets or liabilities in active markets; Level Two inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; and Level Three inputs are unobservable and reflect management’s own assumptions. The carrying amounts of cash and cash equivalents, accounts and notes receivable, accounts payable, and other current liabilities approximate fair value because of their short-term nature. The fair value of the Company’s debt is determined based on traded price data as of the measurement date, which we classify as a Level Two input within the fair value hierarchy. The fair value of the Company's debt was as follows as of the periods indicated:
The Company also measures certain non-financial assets (primarily property and equipment, right-of-use assets, goodwill, tradenames, and other assets) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment. During the thirteen weeks ended April 30, 2023, there were no impairments recognized. Revenues — Our entertainment revenues primarily consist of attractions including redemption and simulation games, bowling, laser tag, billiards and gravity ropes. Our food and beverage revenues consist of full meals, appetizers and both alcoholic and nonalcoholic beverages. The Company's revenue for these categories was as follows:
(1) Primarily consists of revenue earned from party rentals and gift card redemptions and breakage (see Revenue recognition below). (2) To better highlight that our entertainment offerings extend beyond gaming, the previously named "Amusements revenues and other" has been changed to "Entertainment revenues.". Revenue recognition — Customers purchase cards with game play credits or “chips” to be used on a variety of redemption and simulation games. Entertainment revenues related to game play are primarily recognized as game play credits are used by customers to activate video and redemption games. Redemption games allow customers to earn tickets, which may be redeemed for prizes. We have deferred a portion of entertainment revenues for the estimated unfulfilled performance obligations related to unredeemed tickets. The deferral is based on an estimated rate of future use by customers of unused game play credits and the material right provided to customers to redeem tickets in the future for prizes. During the thirteen weeks ended April 30, 2023, we recognized revenue of approximately $24.6 related to the amount in deferred entertainment revenues as of the end of fiscal 2022. These revenues are included in Entertainment revenues on the consolidated comprehensive income statement. We recognize revenue on unredeemed gift cards in proportion to the pattern of redemption by the customers. During the thirteen weeks ended April 30, 2023, we recognized revenue of approximately $3.8 related to the amount in deferred gift card revenue as of the end of fiscal 2022. These revenues are included in Entertainment revenues on the consolidated comprehensive income statements. Earnings per share — Basic net income per share is computed by dividing net income available to common shareholders by the basic weighted average number of common shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted net income per share, the basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the diluted net income per share calculation. For the thirteen weeks ended April 30, 2023 and May 1, 2022, the Company excluded anti-dilutive awards from the calculation of approximately 0.52 and 0.10 respectively. Basic weighted average shares outstanding are reconciled to diluted weighted average shares outstanding as follows:
Acquisitions — The Company accounts for acquisitions under the acquisition method of accounting, which requires the acquired assets and liabilities, including contingencies, be recorded at fair value determined on the acquisition date and changes thereafter reflected in income. For significant acquisitions, the Company obtains independent third-party valuation studies for certain of the assets acquired and liabilities assumed to assist the Company in determining fair value. The estimation of the fair values of the assets acquired and liabilities assumed involves a number of estimates and assumptions that could differ materially from the actual amounts realized. The Company provides assumptions, including both quantitative and qualitative information, about the specified asset or liability to the third-party valuation firms so they can assist in determining the fair value of assets and liabilities acquired. The Company then records acquired assets and liabilities at their estimated fair value based on the information provided. The third-party valuation firms are supervised by Company personnel who are knowledgeable about valuations and fair value. The Company evaluates the appropriateness of the assumptions and valuation methodologies utilized by the third-party valuation firms. Recent accounting pronouncements — We reviewed the accounting pronouncements that became effective for fiscal year 2023 and determined that either they were not applicable, or they did not have a material impact on the consolidated financial statements. We also reviewed the recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the consolidated financial statements.
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Business Combinations |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Note 2: Business Combinations On June 29, 2022, the Company acquired Main Event for approximately $832.5 in net cash and contingent consideration. Main Event is also focused on food, drinks, and entertainment, largely for the demographic target of families with young children. The acquisition is expected to put the Company in a strategic position for accelerated, profitable growth in both brands as well as create cost synergies with our Dave & Buster’s brand. The Main Event Acquisition was made at a price above the determined fair value of the acquired identifiable net assets, resulting in goodwill, primarily due to expectations of the synergies that will be realized by combining the businesses and the benefits that will be gained from the assembled workforce. These synergies include the elimination of redundant facilities, functions, and staffing. None of the goodwill recorded from this business combination is expected to be tax deductible. The acquisition has been accounted for using the acquisition method of accounting with assets acquired and liabilities assumed recorded at fair value, and the results of Main Event have been included in the accompanying financial statements from June 29, 2022, the date of acquisition. The following summarizes the purchase consideration paid, which consisted of cash consideration of $835.0 (adjusted for cash on hand, payment of certain seller liabilities and other normal closing adjustments), resulting in gross cash consideration paid of $853.2. The final cash consideration was subject to normal post-closing adjustments and was settled in the third quarter of 2022. The components of the purchase price and net assets acquired in the Main Event Acquisition are as follows:
(1)The Company has an obligation to pay, in cash, an aggregate amount equal to any “Transaction Tax Benefits,” with respect to any taxable year of the Company after the Closing Date ending on or before December 31, 2028, including the current taxable year. Transaction Tax Benefits is generally defined as any reduction in the Company’s liabilities for U.S. federal and state income taxes due to the use of net operating losses generated prior to the Closing Date. The contingent consideration could range from $0 (if no Transaction Tax Benefits are achieved) to a cap, as defined in the Merger Agreement of approximately $14.6 (undiscounted) and will be paid to the selling shareholders in cash. The contingent consideration was initially valued based on the present value of the maximum amount provided in the Merger Agreement pending completion of the valuation analysis. The preliminary allocation of the purchase price for the Acquisition was based on estimates of the fair value of the net assets acquired and are subject to adjustment for up to one year upon finalization, largely with respect to acquired property and equipment; lease assets and liabilities; deferred taxes; and contingent consideration. Measurements of these items inherently require significant estimates and assumptions considered to be Level Three fair value estimates. During the thirteen weeks ended April 30, 2023, the Company recorded a $2.5 reduction of goodwill and corresponding increase in right-of-use assets, net of deferred tax adjustments. The fair values of property and equipment were determined using a cost approach that utilized the Replacement Cost New and Reproduction Cost New methodologies. Key inputs and assumptions include current cost estimates, inflation rates, historical cost, normal useful life, and functional and economic obsolescence. The fair values of the real estate leases were determined using a market approach that utilized the Above-Below Regression methodology. Key inputs and assumptions include mean rental rates (based on metrics such as rent/revenue and operating cash flow/revenue) and discount rate. The fair value of the Main Event tradename was determined using an income approach that utilized the Relief from Royalty methodology. Key inputs and assumptions include the Company’s projected future revenues, earnings before income tax, royalty rates, discount rate, and long-term growth rate. Taxes – The preliminary allocation of the purchase price consideration is based on preliminary valuations performed to determine the fair value of the net assets as of the Closing Date. The Company has conducted a preliminary assessment of the valuations and has recognized provisional deferred income tax amounts in its preliminary allocation for the identified assets and liabilities. However, the Company is continuing its procedures to identify information pertaining to these matters during the measurement period. If new information is obtained about facts and circumstances that existed at the Closing Date, the Company will either adjust its measurement of provisional deferred income tax amounts or recognize and measure assets and liabilities not previously identified. Unaudited Pro Forma Information To reflect the Acquisition as if it had occurred on January 31, 2022, the unaudited pro forma results include adjustments to reflect, among other things, the interest expense from debt financings obtained to partially fund the cash consideration transferred. Pro forma adjustments were tax effected at the Company’s historical statutory rates in effect for the respective periods. The unaudited pro forma amounts are not necessarily indicative of the combined results of operations that would have been realized had the acquisitions and related financings occurred on the aforementioned dates, nor are they meant to be indicative of any anticipated combined results of operations that the Company will experience after the transaction. In addition, the amounts do not include any adjustments for actions that may be taken following the completion of the transaction, such as expected cost savings, operating synergies, or revenue enhancements that may be realized subsequent to the transaction. The following unaudited pro forma information provides the effect of the Main Event Acquisition as if the acquisition had occurred on January 31, 2022:
The historical consolidated financial information of the Company and Main Event has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the acquisition and related financing arrangements and are factually supportable.
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Goodwill and Tradename Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Tradename Assets | Note 3: Goodwill and Tradename Assets The changes in the carrying amount of goodwill and tradename assets during fiscal 2023 and fiscal 2022 are as follows:
(1) See Note 2 for discussion of the Main Event acquisition. (2) Adjustment to preliminary purchase price recorded during the thirteen weeks ended April 30, 2023. The Company will finalize all purchase accounting related to the Main Event acquisition in the second quarter of fiscal 2023.
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Accrued Liabilities |
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Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Note 4: Accrued Liabilities Accrued liabilities consist of the following as of the end of each period:
(1)The balance of leasehold incentive receivables of $5.4 and $6.0 as of April 30, 2023 and January 29, 2023, respectively, is reflected as a reduction of the current portion of operating lease liabilities.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 5: Leases We currently lease most of the buildings or sites for our stores, store support center, and warehouse space under facility operating leases. These leases typically have initial terms ranging from ten to twenty years and include one or more options to renew. When determining the lease term, we include option periods for which renewal is reasonably certain. Most of the leases require us to pay property taxes, insurance, and maintenance of the leased assets. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating leases also include certain equipment leases that have a term in excess of one year. Certain facility leases also have provisions for additional contingent rentals based on revenues. Operating lease cost, variable lease cost and short-term lease cost related primarily to our facilities is included in “Other store operating expenses” for our operating stores, “Pre-opening costs” for our stores not yet operating, or “General and administrative expenses” for our store support center and warehouse, in the Consolidated Statements of Comprehensive Income. The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and property taxes, are as follows:
Operating lease payments in the table above includes minimum lease payments for future sites for which the leases have commenced. Operating lease payments exclude approximately $244.7 of minimum lease payments for twelve executed facility leases which have not yet commenced.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Note 6: Debt Long-term debt consists of the following:
In connection with the closing of the Main Event Acquisition on June 29, 2022, D&B Inc entered into a senior secured credit agreement, which refinanced the $500.0 existing revolving facility, extended the maturity date to June 29, 2027, and added a new term loan facility in the aggregate principal amount of $850.0, with a maturity date of June 29, 2029 (“Credit Facility”). The proceeds of the term loan, net of an original issue discount of $42.5, were used to pay the consideration for the Acquisition. The revolving credit facility can expire before the stated maturity date if the aggregate outstanding principal amount of the 7.625% senior notes (described below) exceeds $100.0 91 days prior to November 1, 2025. A portion of the revolving facility not to exceed $35.0 is available for the issuance of letters of credit. As of April 30, 2023, we had letters of credit outstanding of $9.8 and an unused commitment balance of $490.2 under the revolving facility. The Credit Facility may be increased through incremental facilities, by an amount equal to the greater of (i) $400.0 and (ii) 0.75 times trailing twelve-month Adjusted EBITDA, as defined, plus additional amounts subject to compliance with applicable leverage ratio and/or interest coverage ratio requirements. The Credit Facility is unconditionally guaranteed by D&B Holdings and certain of D&B Inc’s existing and future wholly owned material domestic subsidiaries. During fiscal 2020, the Company issued $550.0 aggregate principal amount of 7.625% senior secured notes (the “Notes”). Interest on the Notes is payable in arrears on November 1 and May 1 of each year. The Notes mature on November 1, 2025, unless earlier redeemed, and are subject to the terms and conditions set forth in the related indenture. The Notes were issued by D&B Inc and are unconditionally guaranteed by D&B Holdings and certain of D&B Inc’s existing and future wholly owned material domestic subsidiaries. During fiscal 2022, the Company redeemed a total of $110.0 outstanding principal amount of the Notes. As of October 27, 2022, the Company may elect to further redeem the Notes, in whole or in part, at certain specified redemption prices, plus accrued and unpaid interest, at the redemption date. The interest rates per annum applicable to SOFR term loans are based on a defined SOFR rate (with a floor of 0.50%) plus an additional credit spread adjustment of 0.10%, plus a margin of 5.00%. The interest rates per annum applicable to SOFR revolving loans are based on the term loan SOFR rate, plus an additional credit spread adjustment of 0.10%, plus an initial margin of 4.75%. Unused commitments under the revolving facility incur initial commitment fees of 0.50%. The margin for SOFR revolving loans are subject to a pricing grid based on net total leverage, ranging from 4.25% to 4.75%, and commitment fees are subject to a pricing grid based on net total leverage, ranging from 0.30% to 0.50%. Amortization of debt issuance costs and original issue discount, which is included in interest expense, net on the consolidated statements of comprehensive income, was $3.0 for the thirteen weeks ended April 30, 2023 and $1.0 for the thirteen weeks ended May 1, 2022. For the thirteen weeks ended April 30, 2023, and May 1, 2022, the Company’s weighted average effective interest rate on our total debt facilities (before capitalized interest amounts) was 10.3% and 10.9%, respectively. Our debt agreements contain restrictive covenants that, among other things, place certain limitations on our ability to incur additional indebtedness, make loans or advances to subsidiaries and other entities, pay dividends, acquire other businesses or sell assets. The Credit Facility also requires the Company to maintain a maximum net total leverage ratio, as defined, as of the end of each fiscal quarter. We were in compliance with our covenants and the terms of our debt agreements as of April 30, 2023.
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Commitments and Contingencies |
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Apr. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7: Commitments and Contingencies We are subject to certain legal proceedings and claims that arise in the ordinary course of our business, including claims alleging violations of federal and state law regarding workplace and employment matters, discrimination, slip-and-fall and other customer-related incidents and similar matters. In the opinion of management, based upon consultation with legal counsel, the amount of ultimate liability, with respect to such legal proceedings and claims will not materially affect the consolidated results of our operations or our financial condition. Legal costs related to such claims are expensed as incurred. |
Stockholders' Equity and Share-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity and Share-Based Compensation | Note 8: Stockholders' Equity and Share-Based Compensation Share issuances and repurchases The Company treats shares withheld for tax purposes on behalf of our employees in connection with the vesting of time-based and performance restricted stock units as common stock repurchases because they reduce the number of shares that would have been issued upon vesting. During the thirteen weeks ended April 30, 2023 and May 1, 2022, respectively, we withheld 0.02 and 0.03 shares of common stock to satisfy $0.6 and $1.2 of employees’ tax obligations, respectively. On March 27, 2023, our Board of Directors approved a share repurchase program with an authorization limit of $100.0, expiring at the end of fiscal 2023. During the thirteen weeks ended April 30, 2023, the Company repurchased the full amount of $100.0 authorized under this program totaling 2.86 million shares at an average of $34.98 per share. On April 19, 2023, our Board of Directors approved a share repurchase program with an authorization limit of $200.0, expiring at the end of fiscal 2023. During the thirteen weeks ended April 30, 2023, the Company repurchased 0.75 million shares at an average of $34.18 per share. The remaining dollar value of shares that may be repurchased under the plan is $174.5. Share-based compensation Our compensation expense related to share-based compensation was as follows:
Our share-based compensation award activity during the thirteen weeks ended April 30, 2023 was as follows:
The fair value of our time-based and performance-based restricted stock units is based on our closing stock price on the date of grant. The grant date fair value of stock options was determined using the Black-Scholes option valuation model. The grant date fair value of performance-based awards with market conditions was determined using the Monte Carlo valuation model. The unrecognized expense will all be substantially recognized by the end of fiscal 2025. During the thirteen weeks ended April 30, 2023, the Company granted certain options, time-based, performance-based, and market-based restricted stock units to employees and directors of the Company. These grants vest over a range of one year to 5 years. Certain of the market-based restricted stock units can vest earlier if the targets are achieved prior to that time. As a result, the requisite service period for such grants was determined to be less than the explicit service period.During the thirteen weeks ended April 30, 2023 and May 1, 2022, excess tax expense (benefit) of $0.4 and $(0.1), respectively, were recognized in the “Provision for income taxes” in the Consolidated Statement of Comprehensive Income and classified as a source in operating activities in the Consolidated Statement of Cash Flows.
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Income Taxes |
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Apr. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9: Income Taxes The effective tax rate for the thirteen weeks ended April 30, 2023, was 22.7%, compared to 23.3% for the thirteen weeks ended May 1, 2022. The current year tax provision includes a favorable state apportionment impact resulting from the acquisition of Main Event and legal entity restructuring. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law. Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes provisions, among others, allowing for the carryback of net operating losses generated in fiscal 2018, 2019 and 2020. The Company has $24.2 of federal tax refunds remaining from the fiscal 2020 carryback claim filed during fiscal 2021.
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Subsequent Event |
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Apr. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 10: Subsequent Event Between May 1 and May 11, 2023, the Company repurchased 2.09 shares for a total of $74.5, excluding the impact of excise taxes that will be due under the Inflation Reduction Act of 2022. In fiscal 2023, through the filing of this quarterly report on Form 10-Q, the Company has repurchased 5.70 shares representing 11.8% of the shares issued and outstanding as of January 29, 2023.
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Summary of Significant Accounting Policies (Policies) |
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of estimates | The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities at the date of the consolidated financial statements and for the period then ended. Actual results could differ from those estimates. Operating results for the thirteen weeks ended April 30, 2023 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending February 4, 2024. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | Cash and cash equivalents — We consider transaction settlements in process from credit card companies and all highly-liquid investments with original maturities of three months or less to be cash equivalents. Our cash management system provides for the daily funding of all major bank disbursement accounts as checks are presented for payment. Under this system, outstanding checks in excess of the cash balances at certain banks creates book overdrafts. There were no book overdrafts as of April 30, 2023 or as of January 29, 2023. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of financial instruments | Fair value of financial instruments — Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level One inputs are quoted prices available for identical assets or liabilities in active markets; Level Two inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; and Level Three inputs are unobservable and reflect management’s own assumptions. The carrying amounts of cash and cash equivalents, accounts and notes receivable, accounts payable, and other current liabilities approximate fair value because of their short-term nature. The fair value of the Company’s debt is determined based on traded price data as of the measurement date, which we classify as a Level Two input within the fair value hierarchy. The fair value of the Company's debt was as follows as of the periods indicated:
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Revenue | Revenues — Our entertainment revenues primarily consist of attractions including redemption and simulation games, bowling, laser tag, billiards and gravity ropes. Our food and beverage revenues consist of full meals, appetizers and both alcoholic and nonalcoholic beverages. The Company's revenue for these categories was as follows:
(1) Primarily consists of revenue earned from party rentals and gift card redemptions and breakage (see Revenue recognition below). (2) To better highlight that our entertainment offerings extend beyond gaming, the previously named "Amusements revenues and other" has been changed to "Entertainment revenues.". Revenue recognition — Customers purchase cards with game play credits or “chips” to be used on a variety of redemption and simulation games. Entertainment revenues related to game play are primarily recognized as game play credits are used by customers to activate video and redemption games. Redemption games allow customers to earn tickets, which may be redeemed for prizes. We have deferred a portion of entertainment revenues for the estimated unfulfilled performance obligations related to unredeemed tickets. The deferral is based on an estimated rate of future use by customers of unused game play credits and the material right provided to customers to redeem tickets in the future for prizes. During the thirteen weeks ended April 30, 2023, we recognized revenue of approximately $24.6 related to the amount in deferred entertainment revenues as of the end of fiscal 2022. These revenues are included in Entertainment revenues on the consolidated comprehensive income statement. We recognize revenue on unredeemed gift cards in proportion to the pattern of redemption by the customers. During the thirteen weeks ended April 30, 2023, we recognized revenue of approximately $3.8 related to the amount in deferred gift card revenue as of the end of fiscal 2022. These revenues are included in Entertainment revenues on the consolidated comprehensive income statements.
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Earnings per share | Earnings per share — Basic net income per share is computed by dividing net income available to common shareholders by the basic weighted average number of common shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted net income per share, the basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the diluted net income per share calculation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions — The Company accounts for acquisitions under the acquisition method of accounting, which requires the acquired assets and liabilities, including contingencies, be recorded at fair value determined on the acquisition date and changes thereafter reflected in income. For significant acquisitions, the Company obtains independent third-party valuation studies for certain of the assets acquired and liabilities assumed to assist the Company in determining fair value. The estimation of the fair values of the assets acquired and liabilities assumed involves a number of estimates and assumptions that could differ materially from the actual amounts realized. The Company provides assumptions, including both quantitative and qualitative information, about the specified asset or liability to the third-party valuation firms so they can assist in determining the fair value of assets and liabilities acquired. The Company then records acquired assets and liabilities at their estimated fair value based on the information provided. The third-party valuation firms are supervised by Company personnel who are knowledgeable about valuations and fair value. The Company evaluates the appropriateness of the assumptions and valuation methodologies utilized by the third-party valuation firms. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent accounting pronouncements | Recent accounting pronouncements — We reviewed the accounting pronouncements that became effective for fiscal year 2023 and determined that either they were not applicable, or they did not have a material impact on the consolidated financial statements. We also reviewed the recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Securities, Available-for-Sale | The fair value of the Company's debt was as follows as of the periods indicated:
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Summary of Revenue from Segments | The Company's revenue for these categories was as follows:
(1) Primarily consists of revenue earned from party rentals and gift card redemptions and breakage (see Revenue recognition below). (2) To better highlight that our entertainment offerings extend beyond gaming, the previously named "Amusements revenues and other" has been changed to "Entertainment revenues.".
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Schedule of Earnings Per Share, Basic and Diluted | Basic weighted average shares outstanding are reconciled to diluted weighted average shares outstanding as follows:
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Business Combinations (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Purchase Price and Net Assets Acquired in the Acquisition | The components of the purchase price and net assets acquired in the Main Event Acquisition are as follows:
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Summary of Unaudited Pro Forma Information Provides the Effect of the Main Event Acquisition | The following unaudited pro forma information provides the effect of the Main Event Acquisition as if the acquisition had occurred on January 31, 2022:
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Goodwill and Tradename Assets (Tables) |
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Amount of Goodwill and Tradename Assets | The changes in the carrying amount of goodwill and tradename assets during fiscal 2023 and fiscal 2022 are as follows:
(1) See Note 2 for discussion of the Main Event acquisition. (2) Adjustment to preliminary purchase price recorded during the thirteen weeks ended April 30, 2023. The Company will finalize all purchase accounting related to the Main Event acquisition in the second quarter of fiscal 2023.
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Accrued Liabilities (Tables) |
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Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued liabilities consist of the following as of the end of each period:
(1)The balance of leasehold incentive receivables of $5.4 and $6.0 as of April 30, 2023 and January 29, 2023, respectively, is reflected as a reduction of the current portion of operating lease liabilities.
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Components of Lease Expense | The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and property taxes, are as follows:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt consists of the following:
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Stockholders' Equity and Share-Based Compensation (Tables) |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Cost for Share-based Payment Arrangement | Our compensation expense related to share-based compensation was as follows:
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Schedule of Transactions Related to Stock Options Awards | Our share-based compensation award activity during the thirteen weeks ended April 30, 2023 was as follows:
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Summary of Significant Accounting Policies - Schedule of Debt Securities, Available-for-Sale (Detail) - USD ($) $ in Millions |
Apr. 30, 2023 |
Jan. 29, 2023 |
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Description Of Business And Basis Of Presentation [Line Items] | ||
Long-term debt, fair value | $ 1,295.9 | $ 1,306.3 |
Credit facility—revolver | ||
Description Of Business And Basis Of Presentation [Line Items] | ||
Long-term debt, fair value | 0.0 | 0.0 |
Term loan | ||
Description Of Business And Basis Of Presentation [Line Items] | ||
Long-term debt, fair value | 846.8 | 864.5 |
Senior secured notes | ||
Description Of Business And Basis Of Presentation [Line Items] | ||
Long-term debt, fair value | $ 449.1 | $ 441.8 |
Summary of Significant Accounting Policies - Revenue (Detail) - USD ($) $ in Millions |
3 Months Ended | |
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Apr. 30, 2023 |
May 01, 2022 |
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Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 597.3 | $ 451.1 |
Entertainment | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 386.1 | 297.1 |
Other Entertainment | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 7.0 | 2.1 |
Entertainment revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 393.1 | 299.2 |
Food and nonalcoholic beverages | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 136.1 | 101.4 |
Alcoholic beverages | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 68.1 | 50.5 |
Food and beverage revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 204.2 | $ 151.9 |
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Detail) - shares shares in Thousands |
3 Months Ended | |
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Apr. 30, 2023 |
May 01, 2022 |
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Accounting Policies [Abstract] | ||
Basic (in shares) | 47,930 | 48,580 |
Weighted average dilutive impact of awards (in shares) | 540 | 870 |
Diluted (in shares) | 48,470 | 49,450 |
Business Combinations - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
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Jun. 29, 2022 |
Apr. 30, 2023 |
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Payments to acquire business gross before adjustments | $ 835.0 | |
Gross cash consideration | 853.2 | |
Goodwill, purchase accounting adjustments | $ 2.5 | |
Main Event | ||
Total consideration paid | 832.5 | |
Gross cash consideration | $ 853.2 |
Business Combinations - Summary of Unaudited Pro Forma Information Provides the Effect of the Acquisition of Main Event (Detail) - Main Event $ in Millions |
3 Months Ended |
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May 01, 2022
USD ($)
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Business Acquisition Proforma Information [Line Items] | |
Revenues | $ 575.5 |
Net income | $ 71.6 |
Goodwill and Tradename Assets (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
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Apr. 30, 2023 |
Jan. 29, 2023 |
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Goodwill [Roll Forward] | ||
Beginning balance | $ 744.5 | $ 272.6 |
Acquisition of Main Event | 471.9 | |
Adjustments to Main Event goodwill | (2.5) | |
Foreign currency translation | 0.1 | |
Ending balance | 742.1 | 744.5 |
Intangible Assets [Roll Forward] | ||
Beginning balance | 178.2 | 79.0 |
Acquisition of Main Event | 99.2 | |
Adjustments to Main Event goodwill | 0.0 | |
Foreign currency translation | 0.0 | |
Ending balance | $ 178.2 | $ 178.2 |
Accrued Liabilities - Accrued Liabilities (Detail) - USD ($) $ in Millions |
Apr. 30, 2023 |
Jan. 29, 2023 |
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Accrued Liabilities, Current [Abstract] | ||
Deferred entertainment revenue | $ 119.9 | $ 114.4 |
Current portion of operating lease liabilities, net | 62.3 | 64.1 |
Compensation and benefits | 32.3 | 60.6 |
Accrued interest | 18.1 | 15.8 |
Deferred gift card revenue | 14.0 | 16.4 |
Customer deposits | 12.8 | 8.7 |
Property taxes | 11.2 | 13.1 |
Sales and use and other taxes | 9.7 | 10.6 |
Occupancy and variable rent costs | 7.7 | 9.4 |
Utilities | 6.9 | 7.2 |
Current portion of long-term insurance | 5.7 | 6.7 |
Other | 31.5 | 15.9 |
Total accrued liabilities | $ 332.1 | $ 342.9 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total accrued liabilities | Total accrued liabilities |
Receivables for tenant improvement allowances | $ 5.4 | $ 6.0 |
Leases - Additional Information (Detail) $ in Millions |
Apr. 30, 2023
USD ($)
|
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Leases [Abstract] | |
Future minimum rent operating leases not yet commenced | $ 244.7 |
Leases - Summary of Components of Lease Expense (Detail) - USD ($) $ in Millions |
3 Months Ended | |
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Apr. 30, 2023 |
May 01, 2022 |
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Leases [Abstract] | ||
Operating lease cost | $ 48.0 | $ 34.8 |
Variable lease cost | 10.7 | 9.8 |
Short-term lease cost | 0.7 | 0.1 |
Total | $ 59.4 | $ 44.7 |
Debt - Long-Term Debt (Detail) - USD ($) $ in Millions |
Apr. 30, 2023 |
Jan. 29, 2023 |
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Debt Instrument [Line Items] | ||
Long-term debt | $ 1,283.6 | $ 1,287.9 |
Less current installments of long-term debt | (8.5) | (8.5) |
Less issue discount on term loan | (37.2) | (38.9) |
Less debt issuance costs | (16.8) | (17.8) |
Long-term debt, net | 1,221.1 | 1,222.7 |
Credit facility—revolver | ||
Debt Instrument [Line Items] | ||
Credit facility | 0.0 | 0.0 |
Credit facility—term loan | ||
Debt Instrument [Line Items] | ||
Credit facility | 843.6 | 847.9 |
Senior secured notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 440.0 | $ 440.0 |
Stockholders' Equity and Share-Based Compensation - Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 30, 2023 |
May 01, 2022 |
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Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation | $ 6.7 | $ 3.6 |
General and administrative expenses | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation | $ 6.7 | $ 3.6 |
Stockholders' Equity and Share-Based Compensation - Schedule of Transactions Related to Stock Option Awards (Detail) - 2014 Stock Incentive Plan shares in Thousands, $ in Millions |
3 Months Ended |
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Apr. 30, 2023
USD ($)
shares
| |
Number of Options | |
Options outstanding, beginning (in shares) | 2,870 |
Granted (in shares) | 340 |
RSU vestings (in shares) | (60) |
Forfeited (in shares) | (20) |
Options outstanding, ending (in shares) | 3,130 |
Remaining unrecognized compensation expense | $ | $ 53.2 |
Options | |
Number of Options | |
Options outstanding, beginning (in shares) | 980 |
Granted (in shares) | 80 |
Forfeited (in shares) | 0 |
Options outstanding, ending (in shares) | 1,060 |
Remaining unrecognized compensation expense | $ | $ 6.6 |
Restricted Stock Units | |
Number of Options | |
Options outstanding, beginning (in shares) | 1,890 |
Granted (in shares) | 260 |
RSU vestings (in shares) | (60) |
Forfeited (in shares) | (20) |
Options outstanding, ending (in shares) | 2,070 |
Remaining unrecognized compensation expense | $ | $ 46.6 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2023 |
May 01, 2022 |
Jan. 30, 2022 |
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Income Tax Disclosure [Abstract] | |||
Effective tax rate | 22.70% | 23.30% | |
Income tax receivable related to CARES Act | $ 24.2 |
Subsequent Event (Details) shares in Thousands, $ in Millions |
3 Months Ended | 16 Months Ended | |||
---|---|---|---|---|---|
May 11, 2023
USD ($)
shares
|
Apr. 30, 2023
USD ($)
|
May 01, 2022
USD ($)
|
Jun. 06, 2023
shares
|
Jan. 29, 2023 |
|
Subsequent Event [Line Items] | |||||
Repurchase of common stock | $ 127.5 | $ 1.2 | |||
Percentage of shares issued and outstanding | 0.118 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Repurchase of common stock (in shares) | shares | 2,090 | 5,700 | |||
Repurchase of common stock | $ 74.5 |
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