Impact of COVID-19 Pandemic

12 Months Ended

Dec. 30, 2021

Loss Contingency [Abstract]

Impact of COVID-19 Pandemic

2. Impact of COVID-19 Pandemic

The COVID-19 pandemic has had an unprecedented impact on the world and both of the Company’s business segments. The situation continues to be volatile and the social and economic effects are widespread. As an operator of movie theatres, hotels and resorts, restaurants and bars, each of which consists of spaces where customers and guests gather in close proximity, the Company’s businesses are significantly impacted by protective actions that federal, state and local governments have taken to control the spread of the pandemic, and customers’ reactions or responses to such actions. These actions have included, among other things, declaring national and state emergencies, encouraging social distancing, restricting freedom of movement and congregation, mandating non-essential business closures, issuing curfews, limiting business capacity, mandating mask-wearing and/or proof of vaccination, and issuing shelter-in-place, quarantine and stay-at-home orders.

The Company began fiscal 2021 with approximately 52% of its theatres open. As state and local governments eased restrictions in several of the Company’s markets and movie studios released several new films, the Company gradually reopened theatres during the first half of fiscal 2021. The Company ended fiscal 2021 with all of its theatres open. The majority of the reopened theatres operated with reduced operating days (Fridays, Saturdays, Sundays and Tuesdays) and

reduced operating hours during the fiscal 2021 first quarter. By the end of May 2021, the Company had returned the vast majority of its theatres to normal operating days (seven days per week) and operating hours. During fiscal 2021, all of the reopened theatres operated at significantly reduced attendance levels compared to prior pre-COVID-19 pandemic years due to customer concerns related to the COVID-19 pandemic and a reduction in the number of new films released. While still below pre-COVID-19 levels, attendance has gradually improved beginning in June 2021 as the number of vaccinated individuals increased, more films were released, and customer willingness to return to movie theatres increased.

The Company began fiscal 2021 with all eight of its company-owned hotels and all but one of its managed hotels open. The majority of the Company’s restaurants and bars in its hotels and resorts were open during fiscal 2021, operating under applicable state and local restrictions and guidelines, and in some cases, reduced operating hours. The majority of the Company’s hotels and restaurants are generating reduced revenues as compared to prior pre-COVID-19 pandemic years, although hotel occupancy increased throughout the fiscal 2021.

Since the COVID-19 crisis began, the Company has been working proactively to preserve cash and enhance liquidity. In fiscal 2020, the Company obtained additional financing and modified previously existing debt covenants. Additionally, early in the Company’s fiscal 2021 third quarter, in conjunction with an amendment to its revolving credit agreement, the Company paid down a portion of its term loan facility, reducing the balance of its short-term borrowings from approximately $83,500 to $50,000, and modified its previously existing debt covenants. In conjunction with the amendment, the maturity date of the term loan facility was extended to September 22, 2022.

Early in its first quarter of fiscal 2021, the Company received the remaining $5,900 of requested tax refunds from its fiscal 2019 tax return. During the first quarter of fiscal 2021, the Company filed income tax refund claims of $24,200 related to its fiscal 2020 tax return, with the primary benefit derived from net operating loss carrybacks to prior years. The Company received approximately $1,800 of this refund in July 2021. Due to significant delays in processing refunds by the Internal Revenue Service, the remaining $22,300 refund, plus interest, was not received until February 2022. The Company also generated additional income tax loss carryforwards during fiscal 2021 that will benefit future years.

During the fourth quarter of fiscal 2020 and continuing into fiscal 2021, a number of states elected to provide grants to certain businesses most impacted by the COVID-19 pandemic, utilizing funds received by the applicable state under provisions of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) or subsequent federal relief programs. The Company received $4,900 of these prior year grants in January 2021. The Company was awarded and received an additional $1,300 in theatre grants during the first quarter of fiscal 2021 and an additional $1,900 in hotel grants during the third quarter of fiscal 2021. The Company was also awarded an additional $4,500 in theatre grants during the fourth quarter of fiscal 2021, the majority of which was received in January 2022. All of these grants further contributed to the Company’s current liquidity position.

As of December 30, 2021, the Company had a cash balance of $17,658 and $221,449 of availability under its $225,000 revolving credit facility. The Company believes that with its liquidity position, combined with the expected receipt of income tax refunds and proceeds from the sale of surplus real estate, it is positioned to meet its obligations as they come due and to comply with its debt covenants for at least 12 months from the issuance date of these consolidated financial statements. The Company’s estimates and assumptions related to future forecasted results of the Company are subject to inherent risk and uncertainty due to the ongoing impact of the COVID-19 pandemic. The Company cannot assure that the impact of the COVID-19 pandemic will cease to have a material adverse effect on both its theatre and hotels and resorts businesses, results of operations, cash flows, financial condition, and debt covenant compliance.