UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~November 1, 2020~~October 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM

Commission File

No. 001-35664

Dave & Buster’s Entertainment, Inc.

(Exact name of registrant as specified in its charter)


Delaware		35-2382255
(State of Incorporation)		(I.R.S. Employer ID)

2481 Mañana Drive, Dallas, Texas, 75220		(214) 357-9588
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.01 par value	PLAY	NASDAQ Global Select Market

~~Preferred Stock Purchase Rights~~

~~PLAY~~

~~NASDAQ Global Select Market~~

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by checkmark 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~~

(or for 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

☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in

Rule 12b-2

of the Exchange Act). Yes ☐ No ☒

As of December ~~4, 2020,~~2, 2021, the registrant had ~~47,642,029~~48,422,820 shares of common stock, $0.01 par value per share, outstanding.

DAVE & BUSTER’S ENTERTAINMENT, INC.

FORM

10-Q

FOR QUARTERLY PERIOD ENDED ~~NOVEMBER 1, 2020~~OCTOBER 31, 2021

TABLE OF CONTENTS


				Page

PART I		FINANCIAL INFORMATION
	3
Item 1.			Financial Statements			3
		3
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
		18
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			33
		31
Item 4.			Controls and Procedures			33
		32

PART II		OTHER INFORMATION
	32
Item 1.			Legal Proceedings			33
		32
Item 1A.			Risk Factors			33
		32
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			36
		33
Item 6.			Exhibits			37
		34
		Signatures			38 35

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

November 1,
2020

February 2,
2020


(unaudited)

(audited)

ASSETS

Current assets:

Cash and cash equivalents
   $ 8,341 $ 24,655
Inventories
   26,732 34,477
Prepaid expenses
   12,080 14,269
Income taxes receivable
   44,574 2,331
Other current assets
   665 3,245


Total current assets
   92,392 78,977
Property and equipment (net of $767,510 and $686,824 accumulated depreciation as of November 1, 2020 and February 2, 2020, respectively)
   846,056 900,637
Operating lease right of use assets
   1,050,878 1,011,568
Deferred tax assets
   20,451 7,639
Tradenames
   79,000 79,000
Goodwill
   272,643 272,636
Other assets and deferred charges
   23,641 19,682


Total assets
   $ 2,385,061 $ 2,370,139


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current installments of long-term debt
   $ —   $ 15,000
Accounts payable
   42,849 65,359
Accrued liabilities
   244,163 207,452
Income taxes payable
   415 3,054


Total current liabilities
   287,427 290,865
Deferred income taxes
   13,355 19,102
Operating lease liabilities
   1,277,794 1,222,054
Other liabilities
   37,896 35,779
Long-term debt, net
   561,815 632,689
Commitments and contingencies

Stockholders’ equity:

Common stock, par value $0.01; authorized: 400,000,000 shares; issued: 60,483,730 shares at November 1, 2020 and 43,386,852 shares at February 2, 2020; outstanding: 47,642,029 shares at November 1, 2020 and 30,603,340 shares at February 2, 2020
   605 434
Preferred stock, 50,000,000 authorized; NaN issued
   —   —
Paid-in
capital
   529,523 339,161
Treasury stock, 12,841,701 and 12,783,512 shares as of November 1, 2020 and February 2, 2020, respectively
   (595,957 ) (595,041 )
Accumulated other comprehensive loss
   (10,673 ) (8,369 )
Retained earnings
   283,276 433,465


Total stockholders’ equity
   206,774 169,650


Total liabilities and stockholders’ equity
   $

2,385,061 $

2,370,139


	October 31,			January 31,
	2021			2021
	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	27,005		$	11,891
Inventories		37,256			23,807
Prepaid expenses		12,376			11,878
Income taxes receivable		67,646			70,064
Other current assets		2,101			1,231

Total current assets		146,384			118,871
Property and equipment (net of $891,352 and $798,804 accumulated depreciation as of October 31, 2021 and January 31, 2021, respectively)		779,518			815,027
Operating lease right of use assets		1,038,269			1,037,569
Deferred tax assets		9,467			5,874
Tradenames		79,000			79,000
Goodwill		272,561			272,597
Other assets and deferred charges		25,517			23,886

Total assets	$	2,350,716		$	2,352,824

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	39,295		$	36,400
Accrued liabilities		250,948			234,790
Income taxes payable		435			446

Total current liabilities		290,678			271,636
Deferred income taxes		12,606			13,658
Operating lease liabilities		1,270,929			1,267,791
Other liabilities		45,267			50,119
Long-term debt, net		484,677			596,388
Commitments and contingencies		0			0
Stockholders’ equity:
Common stock, par value $0.01; authorized: 400,000,000 shares; issued: 61,364,015 shares at October 31, 2021 and 60,488,833 shares at January 31, 2021; outstanding: 48,342,301 shares at October 31, 2021 and 47,646,606 shares at January 31, 2021		614			605
Preferred stock, 50,000,000 authorized; NaN issued		0—			0—
Paid-in capital		545,168			531,191
Treasury stock, 13,021,714 and 12,842,227 shares as of October 31, 2021 and January 31, 2021, respectively		(603,745	)		(595,970	)
Accumulated other comprehensive loss		(4,959	)		(9,085	)
Retained earnings		309,481			226,491

Total stockholders’ equity		246,559			153,232

Total liabilities and stockholders’ equity	$	2,350,716		$	2,352,824

See accompanying notes to consolidated financial statements.

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands, except share and per share amounts)

Thirteen Weeks
Ended
November 1, 2020

Thirteen Weeks
Ended
November 3, 2019

Food and beverage revenues
   $ 38,346 $ 124,637
Amusement and other revenues
   70,706 174,715


Total revenues
   109,052 299,352
Cost of food and beverage
   10,664 33,384
Cost of amusement and other
   7,244 18,796


Total cost of products
   17,908 52,180
Operating payroll and benefits
   27,704 76,165
Other store operating expenses
   70,783 110,713
General and administrative expenses
   11,746 16,210
Depreciation and amortization expense
   34,384 33,340
Pre-opening
costs
   2,570 4,245


Total operating costs
   165,095 292,853


Operating income (loss)
   (56,043 ) 6,499
Interest expense, net
   8,213 6,110
Loss on debt refinance
   904 —


Income (loss) before benefit for income taxes
   (65,160 ) 389
Benefit for income taxes
   (17,117 ) (93 )


Net income (loss)
   (48,043 ) 482


Unrealized foreign currency translation gain
   34 59
Unrealized gain (loss) on derivatives, net of tax
   1,370 (1,568 )


Total other comprehensive income (loss)
   1,404 (1,509 )


Total comprehensive loss
   $ (46,639 ) $ (1,027 )


Net income (loss) per share:

Basic
   $ (1.01 ) $ 0.02
Diluted
   $ (1.01 ) $ 0.02
Weighted average shares used in per share calculations:

Basic
   47,613,741 30,980,878
Diluted
   47,613,741 31,515,454


	Thirteen Weeks			Thirteen Weeks
	Ended			Ended
	October 31, 2021			November 1, 2020


Food and beverage revenues	$	107,747		$	38,346
Amusement and other revenues		210,229			70,706

Total revenues		317,976			109,052
Cost of food and beverage		30,082			10,664
Cost of amusement and other		22,531			7,244

Total cost of products		52,613			17,908
Operating payroll and benefits		78,995			27,704
Other store operating expenses		103,322			70,783
General and administrative expenses		22,104			11,746
Depreciation and amortization expense		34,381			34,384
Pre-opening costs		2,092			2,570

Total operating costs		293,507			165,095

Operating income (loss)		24,469			(56,043	)
Interest expense, net		13,423			8,213
Loss on debt extinguishment / refinancing		2,829			904

Income (loss) before benefit for income taxes		8,217			(65,160	)
Benefit for income taxes		(2,368	)		(17,117	)

Net income (loss)		10,585			(48,043	)

Unrealized foreign currency translation gain (loss)		(34	)		34
Unrealized gain on derivatives, net of tax		1,371			1,370

Total other comprehensive income		1,337			1,404

Total comprehensive income (loss)	$	11,922		$	(46,639	)

Net income (loss) per share:
Basic	$	0.22		$	(1.01	)
Diluted	$	0.21		$	(1.01	)
Weighted average shares used in per share calculations:
Basic		48,277,358			47,613,741
Diluted		49,283,503			47,613,741

See accompanying notes to consolidated financial statements.

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands, except share and per share amounts)

Thirty-Nine Weeks
Ended
November 1, 2020

Thirty-Nine Weeks

Ended
November 3, 2019

Food and beverage revenues
   $ 119,268 $ 410,779
Amusement and other revenues
   200,423 596,754


Total revenues
   319,691 1,007,533
Cost of food and beverage
   32,667 109,072
Cost of amusement and other
   21,997 64,456


Total cost of products
   54,664 173,528
Operating payroll and benefits
   85,197 239,965
Other store operating expenses
   229,137 321,334
General and administrative expenses
   35,587 49,047
Depreciation and amortization expense
   104,896 97,226
Pre-opening
costs
   8,781 15,970


Total operating costs
   518,262 897,070


Operating income (loss)
   (198,571 ) 110,463
Interest expense, net
   22,491 14,771
Loss on debt refinance
   904 —


Income (loss) before provision (benefit) for income taxes
   (221,966 ) 95,692
Provision (benefit) for income taxes
   (71,777 ) 20,411


Net income (loss)
   (150,189 ) 75,281


Unrealized foreign currency translation gain (loss)
   (97 ) 2
Unrealized loss on derivatives, net of tax
   (2,207 ) (7,475 )


Total other comprehensive loss
   (2,304 ) (7,473 )


Total comprehensive income (loss)
   $ (152,493 ) $ 67,808


Net income (loss) per share:

Basic
   $ (3.56 ) $ 2.19
Diluted
   $ (3.56 ) $ 2.15
Weighted average shares used in per share calculations:

Basic
   42,185,163 34,405,503
Diluted
   42,185,163 35,042,311


	Thirty-Nine Weeks		Thirty-Nine Weeks
	Ended		Ended
	October 31, 2021		November 1, 2020


Food and beverage revenues	$	316,511	$	119,268
Amusement and other revenues		644,443		200,423

Total revenues		960,954		319,691
Cost of food and beverage		86,366		32,667
Cost of amusement and other		63,729		21,997

Total cost of products		150,095		54,664
Operating payroll and benefits		209,897		85,197
Other store operating expenses		292,883		229,137
General and administrative expenses		57,665		35,587
Depreciation and amortization expense		104,355		104,896
Pre-opening costs		5,427		8,781

Total operating costs		820,322		518,262

Operating income (loss)		140,632		(198,571	)
Interest expense, net		41,971		22,491
Loss on debt extinguishment / refinancing		2,829		904

Income (loss) before provision (benefit) for income taxes		95,832		(221,966	)
Provision (benefit) for income taxes		12,842		(71,777	)

Net income (loss)		82,990		(150,189	)

Unrealized foreign currency translation gain (loss)		12		(97	)
Unrealized gain (loss) on derivatives, net of tax		4,114		(2,207	)

Total other comprehensive income (loss)		4,126		(2,304	)

Total comprehensive income (loss)	$	87,116	$	(152,493	)

Net income (loss) per share:
Basic	$	1.73	$	(3.56	)
Diluted	$	1.68	$	(3.56	)
Weighted average shares used in per share calculations:
Basic		48,050,558		42,185,163
Diluted		49,257,269		42,185,163

See accompanying notes to consolidated financial statements.

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except share amounts)


	Thirteen Weeks Ended October 31, 2021
	Common Stock				Paid-In Capital		Treasury Stock At Cost					Accumulated Other Comprehensive Loss			Retained Earnings		Total
	Shares		Amt.		Paid-In Capital		Shares		Amt.			Accumulated Other Comprehensive Loss			Retained Earnings		Total

Balance August 1, 2021		61,276,473	$	613	$	540,348		13,020,098	$	(603,686	)	$	(6,296	)	$	298,896	$	229,875
Net income		—		—		—		—		—			—			10,585		10,585
Unrealized foreign currency translation loss		—		—		—		—		—			(34	)		—		(34	)
Unrealized gain on derivatives, net of tax		—		—		—		—		—			1,371			—		1,371
Share-based compensation		—		—		3,778		—		—			—			—		3,778
Issuance of common stock		87,542		1		1,042		—		—			—			—		1,043
Repurchase of common stock		—		—		—		1,616		(59	)		—			—		(59	)

Balance October 31, 2021		61,364,015	$	614	$	545,168		13,021,714	$	(603,745	)	$	(4,959	)	$	309,481	$	246,559

Thirteen Weeks Ended November 1, 2020


Common Stock


Paid-In

Capital


Treasury Stock

At Cost

Accumulated

Other

Comprehensive

Loss

Retained
Earnings

Total


Shares


Amt.




Shares


Amt.

Balance August 2, 2020
   60,422,212    $ 604    $ 526,253    12,827,300    $ (595,728 ) $ (12,077 ) $ 331,319 $ 250,371
Net loss
   —      —      —      —      —   —   (48,043 ) (48,043 )
Unrealized foreign currency translation gain
   —      —      —      —      —   34 —   34
Unrealized gain on derivatives, net of tax
   —      —      —      —      —   1,370 —   1,370
Share-based compensation
   —      —      2,999    —      —   —   —   2,999
Issuance of common stock
   61,518    1    271    —      —   —   —   272
Repurchase of common stock
   —      —      —      14,401    (229 ) —   —   (229 )










Balance November 1, 2020
   60,483,730    $ 605    $ 529,523    12,841,701    $ (595,957 ) $ (10,673 ) $ 283,276 $ 206,774

Thirteen Weeks Ended November 3, 2019


Common Stock


Paid-In

Capital


Treasury Stock

At Cost

Accumulated

Other

Comprehensive

Loss

Retained

Earnings

Total


Shares


Amt.




Shares


Amt.

Balance August 4, 2019
   43,337,125    $ 433    $ 335,599    10,358,291    $ (497,862 ) $ (6,647 ) $ 417,779 $ 249,302
Net income
   —      —      —      —      —   —   482 482
Unrealized foreign currency translation gain
   —      —      —      —      —   59 —   59
Unrealized loss on derivatives, net of tax
   —      —      —      —      —   (1,568 ) —   (1,568 )
Share-based compensation
   —      —      1,747    —      —   —   —   1,747
Issuance of common stock
   13,360    1    164    —      —   —   —   165
Repurchase of common stock
   —      —         2,425,221    (97,179 ) —   —   (97,179 )
Dividends declared ($0.16 per share)
   —      —      —      —      —   —   (4,887 ) (4,887 )










Balance November 3, 2019
   43,350,485    $ 434    $ 337,510    12,783,512    $ (595,041 ) $ (8,156 ) $ 413,374 $ 148,121


	Thirteen Weeks Ended November 1, 2020
	Common Stock				Paid-In Capital		Treasury Stock At Cost					Accumulated Other Comprehensive Loss			Retained Earnings			Total
	Shares		Amt.		Paid-In Capital		Shares		Amt.			Accumulated Other Comprehensive Loss			Retained Earnings			Total


Balance August 2, 2020		60,422,212	$	604	$	526,253		12,827,300	$	(595,728	)	$	(12,077	)	$	331,319		$	250,371
Net loss		—		—		—		—		—			—			(48,043	)		(48,043	)
Unrealized foreign currency translation gain		—		—		—		—		—			34			—			34
Unrealized gain on derivatives, net of tax		—		—		—		—		—			1,370			—			1,370
Share-based compensation		—		—		2,999		—		—			—			—			2,999
Issuance of common stock		61,518		1		271		—		—			—			—			272
Repurchase of common stock		—		—				14,401		(229	)		—			—			(229	)

Balance November 1, 2020		60,483,730	$	605	$	529,523		12,841,701	$	(595,957	)	$	(10,673	)	$	283,276		$	206,774

See accompanying notes to consolidated financial statements.

Table of Contents

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except share amounts)


	Thirty-Nine Weeks Ended October 31, 2021
	Common Stock				Paid-In Capital		Treasury Stock At Cost					Accumulated Other Comprehensive Loss			Retained Earnings		Total
	Shares		Amt.		Paid-In Capital		Shares		Amt.			Accumulated Other Comprehensive Loss			Retained Earnings		Total

Balance January 31, 2021		60,488,833	$	605	$	531,191		12,842,227	$	(595,970	)	$	(9,085	)	$	226,491	$	153,232
Net income		—		—		—		—		—			—			82,990		82,990
Unrealized foreign currency translation gain		—		—		—		—		—			12			—		12
Unrealized gain on derivatives, net of tax		—		—		—		—		—			4,114			—		4,114
Share-based compensation		—		—		9,936		—		—			—			—		9,936
Issuance of common stock		875,182		9		4,041		—		—			—			—		4,050
Repurchase of common stock		—		—		—		179,487		(7,775	)		—			—		(7,775	)

Balance October 31, 2021		61,364,015	$	614	$	545,168		13,021,714	$	(603,745	)	$	(4,959	)	$	309,481	$	246,559

Thirty-Nine Weeks Ended November 1, 2020


Common Stock


Paid-In

Capital


Treasury Stock

At Cost

Accumulated
Other
Comprehensive
Loss

Retained

Earnings

Total


Shares


Amt.




Shares


Amt.

Balance February 2, 2020
   43,386,852    $ 434    $ 339,161    12,783,512    $ (595,041 ) $ (8,369 ) $ 433,465 $ 169,650
Net loss
   —      —      —      —      —   —   (150,189 ) (150,189 )
Unrealized foreign currency translation loss
   —      —      —      —      —   (97 ) —   (97 )
Unrealized loss on derivatives, net of tax
   —      —      —      —      —   (2,207 ) —   (2,207 )
Share-based compensation
   —      —      5,344    —      —   —   —   5,344
Issuance of common stock
   17,096,878    171    185,018    —      —   —   —   185,189
Repurchase of common stock
   —      —      —      58,189    (916 ) —   —   (916 )










Balance November 1, 2020
   60,483,730    $ 605    $ 529,523    12,841,701    $ (595,957 ) $ (10,673 ) $ 283,276 $ 206,774

Thirty-Nine Weeks Ended November 3, 2019


Common Stock


Paid-In

Capital


Treasury Stock

At Cost

Accumulated
Other
Comprehensive
Loss

Retained

Earnings

Total


Shares


Amt.




Shares


Amt.

Balance February 3, 2019
   43,177,476    $ 432    $ 331,255    5,655,391    $ (297,129 ) $ (683 ) $

353,962 $ 387,837
Cumulative effect of a change in accounting principle, net of tax
   —      —      —      —      —   —   (145 ) (145 )
Net income
   —      —      —      —      —   —   75,281 75,281
Unrealized foreign currency translation gain
   —      —      —      —      —   2 —   2
Unrealized loss on derivatives, net of tax
   —      —      —      —      —   (7,475 ) —   (7,475 )
Share-based compensation
   —      —      5,479    —      —   —   —   5,479
Issuance of common stock
   173,009    2    776    —      —   —   —   778
Repurchase of common stock
   —      —         7,128,121    (297,912 ) —   —   (297,912 )
Dividends declared ($0.46 per share)
   —      —      —      —      —   —   (15,724 ) (15,724 )










Balance November 3, 2019
   43,350,485    $ 434    $ 337,510    12,783,512    $ (595,041 ) $ (8,156 ) $ 413,374 $ 148,121


	Thirty-Nine Weeks Ended November 1, 2020
	Common Stock				Paid-In Capital		Treasury Stock At Cost					Accumulated Other Comprehensive Loss			Retained Earnings			Total
	Shares		Amt.		Paid-In Capital		Shares		Amt.			Accumulated Other Comprehensive Loss			Retained Earnings			Total

Balance February 2, 2020		43,386,852	$	434	$	339,161		12,783,512	$	(595,041	)	$	(8,369	)	$	433,465		$	169,650
Net loss		—		—		—		—		—			—			(150,189	)		(150,189	)
Unrealized foreign currency translation loss		—		—		—		—		—			(97	)		—			(97	)
Unrealized loss on derivatives, net of tax		—		—		—		—		—			(2,207	)		—			(2,207	)
Share-based compensation		—		—		5,344		—		—			—			—			5,344
Issuance of common stock		17,096,878		171		185,018		—		—			—			—			185,189
Repurchase of common stock		—		—				58,189		(916	)		—			—			(916	)

Balance November 1, 2020		60,483,730	$	605	$	529,523		12,841,701	$	(595,957	)	$	(10,673	)	$	283,276		$	206,774

See accompanying notes to consolidated financial statements.

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DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


							Thirty-Nine Weeks Ended October 31, 2021			Thirty-Nine Weeks Ended November 1, 2020
	November 1, 2020			November 3, 2019
Cash flows from operating activities:
Net income (loss)	$	(150,189	)	$	75,281		$	82,990		$	(150,189	)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense		104,896			97,226			104,355			104,896
Non-cash interest expense		4,088			0			5,660			4,088
Impairment of long-lived assets		13,727			0			—			13,727
Deferred taxes		(17,730	)		5,309			(6,191	)		(17,730	)
Loss on disposal of fixed assets		541			1,284			634			541
Loss on debt refinance		904			0
Loss on debt extinguishment or refinancing								2,829			904
Share-based compensation		5,344			5,479			9,936			5,344
Other, net		1,292			928			3,250			1,292
Changes in assets and liabilities:
Inventories		7,745			(5,305	)		(13,449	)		7,745
Prepaid expenses		2,761			(615	)		(498	)		2,761
Income tax receivable		(42,243	)		(996	)		2,418			(42,243	)
Other current assets		2,580			6,050			(870	)		2,580
Other assets and deferred charges		(3	)		(1,775	)		(1,859	)		(3	)
Accounts payable		(11,945	)		5,422			(3,419	)		(11,945	)
Accrued liabilities		44,742			37,671			19,069			44,742
Income taxes payable		(2,639	)		(10,079	)		(11	)		(2,639	)
Other liabilities		4,375			1,909			(6,346	)		4,375

Net cash provided by (used in) operating activities		(31,754	)		217,789			198,498			(31,754	)

Cash flows from investing activities:
Capital expenditures		(72,604	)		(172,888	)		(63,559	)		(72,604	)
Proceeds from sales of property and equipment		234			615			550			234

Net cash used in investing activities		(72,370	)		(172,273	)		(63,009	)		(72,370	)

Cash flows from financing activities:
Proceeds from debt		688,000			366,000			37,000			688,000
Payments of debt		(760,250	)		(104,250	)		(152,000	)		(760,250	)
Net proceeds from the issuance of common stock		182,207			0			—			182,207
Proceeds from the exercise of stock options		465			778			4,050			465
Repurchase of common stock under share repurchase program		0			(297,317	)
Dividends paid		(4,891	)		(10,837	)		—			(4,891	)
Debt issuance costs		(16,805	)		0
Repurchases of common stock to satisfy employee withholding tax obligations		(916	)		(595	)		(7,775	)		(16,805	)
Debt issuance costs and prepayment premiums								(1,650	)		(916	)

Net cash provided by (used in) financing activities		87,810			(46,221	)		(120,375	)		87,810

Decrease in cash and cash equivalents		(16,314	)		(705	)
Increase (decrease) in cash and cash equivalents								15,114			(16,314	)
Beginning cash and cash equivalents		24,655			21,585			11,891			24,655

Ending cash and cash equivalents	$	8,341		$	20,880		$	27,005		$	8,341

Supplemental disclosures of cash flow information:
Decrease in fixed asset accounts payable	$	(12,315	)	$	(311	)
Increase (decrease) in fixed asset accounts payable							$	6,314		$	(12,315	)
Cash paid (refund received) for income taxes, net	$	(9,281	)	$	26,086		$	16,043		$	(9,281	)
Cash paid for interest, net	$	17,306		$	13,920		$	43,910		$	17,306
Dividend declared, not paid	$	0		$	4,887

See accompanying notes to consolidated financial statements.

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DAVE & BUSTER’S ENTERTAINMENT, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

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 & Busters, Inc. (“D&B Inc”), the operating company. All intercompany balances and transactions have been eliminated in consolidation. The Company, headquartered in

Dallas, Texas, is a leading operator of high-volume entertainment and dining venues (“stores”) in North America for adults and families under the name “Dave & Buster’s”. The Company operates its business as 1 operating and 1 reportable segment. During the

~~thirty-~~

~~nine~~

thirteen weeks ended ~~November~~October 31, 2021, we opened 1 ~~2020, management made the decision to not~~

~~re-open~~

~~two stores~~new store located in Bellevue, Washington and during the ~~Chicago, Illinois area and Houston,~~

~~Texas area, which are near the end of their respective lease terms, and~~

thirty-nine weeks ended October 31, 2021, we opened ~~two~~three new ~~stores located in Manchester, New Hampshire and Lehigh, Pennsylvania. As of November 1, 2020,~~stores. At October 31, 2021, we owned and operated ~~137~~143 stores located in 40 states, Puerto Rico and 1 Canadian province.

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 ~~2020~~2021 and ~~2019,~~2020, which end on January 30, 2022 and January 31, 2021, ~~and February 2, 2020,~~ respectively, contain 52 ~~weeks.~~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 ~~February 2, 2020,~~January 31, 2021, included in our Annual Report on Form

10-K

as filed with the SEC.

COVID-19

Considerations

— On March 11, 2020, the World Health Organization declared the

COVID-19

outbreak to be a global pandemic and on March 13, 2020, the United States declared a National Public Health Emergency. As a result, several state and local mandates were implemented that encouraged the practice of social distancing, placed restrictions from individuals gathering in groups and, in many areas, placed complete restrictions on

non-essential

movement outside of the home. Shortly after the national emergency declaration, state and local officials began placing restrictions

on businesses,

, some of which allowed

To-Go

or curbside service only while others limited capacity in the dining room or midway. By March 20, 2020, all of our 137 operating stores were temporarily ~~closed (including~~closed. On April 30, 2020, our ~~one new store that opened on March 16).~~

~~During our~~ first ~~quarter, one~~ store

re-opened

to the public, ~~with~~as state and local guidelines began to allow dining rooms and arcades to open at limited ~~food~~capacity and/or limited hours of operation. By the end of fiscal 2020,

107 of our 140 stores were open and ~~beverage offerings and 2 additional~~operating in limited capacity, including five new stores ~~offered~~

~~off-premise~~for which construction had commenced prior to the outbreak of the COVID-19 pandemic. The Company re-opened the remaining

~~dining options. During our second and third quarters, we have progressively~~

~~re-opened~~

~~limited operations in an additional 101 stores and 1 new store in Manchester, New Hampshire and 1 new store in Lehigh Valley, Pennsylvania.~~

~~NaN~~ 34 stores that ~~re-opened during~~had been temporarily

closed by August 1, 2021, the end of the second quarter ~~were re-closed during the third quarter (1~~ of ~~which re-opened on November 14, 2020).~~fiscal 2021.

As ~~of November 1, 2020, 104 of our 137~~ stores were ~~open,~~

re-opened

during fiscal 2020, typically in limited capacity, ~~in 36 states, Puerto Rico~~the Company reduced labor and ~~Canada.~~

~~As of November 1,~~other operating costs. During fiscal 2020, ~~33 of~~ the Company’s stores were closed to in-person guests as a result of local COVID-19 restrictions (31 of which have been closed since March 20, 2020). Subsequent to the third quarter, some local and state governments began to roll back their re-opening plans in light of climbing COVID-19 case counts. As of December 4, 2020, 4

~~stores were closed due to jurisdictional restrictions.~~

~~The~~ Company ~~has been~~

~~ongoing discussions~~also negotiated with landlords and other vendors to negotiate relief from cash payments under existing lease and trade payable ~~obligations. As of November 1, 2020,~~obligations, extending or reducing payment terms with several vendors. Regarding negotiations with landlords, a total of ~~123~~126 initial rent relief agreements related to our operating locations and corporate headquarters were executed during fiscal 2020, which generally ~~provide~~provided for ~~full deferral~~rent deferrals on all or a portion of rent for ~~three months beginning April 2020, with partial deferral continuing for periods of~~ up to six ~~months, at approximately 50%~~months. As the

COVID-19

pandemic continued to impact our business into the fourth quarter, the Company renewed negotiations with the majority of ~~those locations. We have also been successful~~these landlords in ~~negotiating extended and reduced payment~~order to provide additional rent relief, generally seeking to delay or extend the terms ~~with several vendors.~~ of deferral pay back periods and/or provide rent relief beyond the periods in the initial agreements. The second phase of negotiations resulted in 99 additional rent relief agreements, the last of which were executed in the third quarter of fiscal 2021.

In addition to reducing ~~expenses,~~or deferring expenditures, including capital expenditures and

discretionary spending,

, during the first half of fiscal 2020, the Company obtained additional liquidity through the sale of common stock, ~~during our first and second quarters,~~ which resulted in net proceeds of $182,207.

October

27,

2020, D&B Inc ~~a wholly owned subsidiary,~~ completed the private sale of $550,000 in aggregate principal amount of 7.625% senior secured notes due 2025. At the same time,

the

revolving credit commitments under our existing credit facility

were extended

through August 17, 2024,

and the suspension of our financial ratio covenants

was extended

until

the

last

day

the first quarter of fiscal year 2022.

On September 20, 2021, the Company redeemed $55,000 outstanding principal amount of the senior secured notes. See Note 3, Debt,

for more information on these

transactions.

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The measures taken by the Company as well as the

re-opening

of the Company’s stores provide sufficient liquidity to meet estimated cash flow needs and covenant compliance obligations for at least the next twelve months from the issuance of the financial statements. We cannot predict whether, when or the manner in which the conditions surrounding

COVID-19,

particularly as a result of new variants of

COVID-19,

will change, including possible vaccination or mask mandates, capacity restrictions or

re-closures

of our currently open stores and customer engagement with our brand.

~~Table of Contents~~

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 and~~

thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending January ~~31, 2021.~~30, 2022.

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 was 0 book overdraft as of November 1, 2020.~~ A book overdraft of ~~$14,026~~$8,168 is presented in “Accounts payable” in the Consolidated Balance Sheets as of ~~February 2, 2020.~~January 31, 2021. There was no book overdraft as of October 31, 2021. Changes in the book overdraft position are presented within “Net cash provided by (used in)

operating

activities” within the Consolidated Statements of Cash Flows.

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. We believe that the carrying amount of our debt, which was refinanced during the third quarter, approximates its fair value because the interest rates reflect current market conditions. The fair value of the Company’s debt was determined to be a Level Two instrument as defined by GAAP. The fair value of the Company’s interest rate swap is determined based upon Level Two inputs which includes valuation models as reported by our ~~counterparties.~~counterparties and third-party valuation specialists. These valuation models are based on the present value of expected cash flows using forward rate curves.

~~Non-financial~~

~~assets and liabilities recognized or disclosed at~~ The fair value inof borrowings under our revolving credit facility was $62,114 as of January 31, 2021, and the ~~consolidated financial statements~~fair value of our senior secured notes was $527,776 and $576,033 as of October 31, 2021 and January 31, 2021, respectively. The fair value of the Company’s debt is determined based on a ~~nonrecurring basis include such items~~discounted cash flow method, using a sector-specific yield curve based on market-derived, trade price data as of the measurement date, and is classified as a Level Two input within the fair value hierarchy.

The Company also measures certain

non-financial

assets (primarily property and equipment,

right-of-use

(“ROU”) assets, goodwill, tradenames and other ~~assets.~~assets) at fair value on a

non-recurring

basis in connection with its periodic evaluations of such assets for potential impairment.

During the ~~first quarter of fiscal~~thirteen and thirty-nine weeks ended November 1, 2020, the Company recorded an impairment charge for its long-lived assets, including ROU assets, of $0 and $6,746, respectively, primarily driven by the expected impact of the

COVID-19

pandemic on future cash flows of specific stores. During the ~~second and third quarters of fiscal 2020,~~thirty-nine weeks ended October 31, 2021, the Company did not identify ~~additional~~ triggering events which would require a change in management’s estimate regarding the recoverability of store asset values, and 0 ~~additional~~ impairment related to our operating stores was recognized. The Company has determined no events and circumstances existed during the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 that would indicate it is more likely than not that its goodwill or tradename are impaired. The ultimate severity and longevity of the

COVID-19

pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.

Additionally, the Company is continuing discussions to terminate or delay possession on several executed lease contracts that have not yet commenced. The Company has also curtailed several potential new store projects that were in the early stage of development. During the thirteen and thirty-nine weeks ended November 1, 2020, wethe Company recorded an impairment loss and related contract termination costs of $0 and $6,981 ~~respectively,~~ related to ~~these~~ projects in development and discussions to terminate several executed lease contracts that had not yet commenced, which is included in “Other store operating expenses” in the Consolidated Statements of Comprehensive Income (Loss). There were no impairment charges related to our potential future sites during the thirty-nine weeks

ended October 31, 2021.

Interest rate swaps

— Effective February

28, 2019, the Company entered into three interest rate swap agreements to manage our exposure to interest rate movements on our variable rate credit facility. The agreements entitle the Company to receive at specified intervals, a variable rate of interest based on

one-month

LIBOR in exchange for the payment of a fixed rate of interest throughout the life of the agreements. The notional amount of

the

swap agreements, which mature August 17, 2022, ~~total~~totals $

350,000

~~$350,000~~ and the fixed rate of interest for all agreements is ~~2.47%~~

2.47

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The Company initially designated its interest rate swap agreements as a cash flow hedge and accounted for the underlying activity in accordance with hedge accounting. Effective April 14, 2020, the Company amended its existing credit facility agreement to obtain relief from its financial covenants, and as a result, the variable interest rate terms were modified to create an interest rate floor of 1.00%. Accordingly, and as a result of the then current forward interest rate curve, the Company discontinued the hedging relationship as of April 14, 2020

(de-designation

date). Given the continued existence of the hedged interest payments, the Company is

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reclassifying its accumulated other comprehensive loss of $

~~17,609~~

$17,609 as of the

de-designation

date into “Interest expense, net” using a straight-line approach over the remaining life of the originally designated hedging relationship. The amount of

pre-tax

losses in accumulated other comprehensive loss ~~that was~~ reclassified into interest expense subsequent to the

de-designation

date was $

~~1,886~~

$5,660 and $

~~4,088~~

$4,088 for the ~~thirteen and~~ thirty-nine weeks ended October 31, 2021 and November 1, 2020, respectively, and the Company expects to reclassify $

~~7,547~~

$5,975 within the next twelve months. Effective with the

de-designation,

any gain or loss on the derivatives are recognized in earnings in the period in which the change occurs. For the ~~thirteen and~~ thirty-nine weeks ended October 31, 2021 and November 1, 2020, a gain of $

~~218~~

$92 and a

loss of $

~~1,578~~

$1,578, respectively, were recognized, ~~respectively,~~ which are included in “Other store operating expenses” in the Consolidated Statements of Comprehensive Income (Loss).

Prior to the

de-designation,

changes in the fair values of the interest rate swaps were recorded as a component of other comprehensive loss until the interest payments being hedged were recorded as interest expense, at which time the amounts in accumulated other comprehensive loss were reclassified as an adjustment to interest expense. Cash flows related to the interest rate swaps were

included as a component

of interest expense and in operating activities.

Credit risk related to the failure of our counterparties to perform under the terms of the swap agreements is minimized by entering ~~into~~ transactions with carefully selected, credit-worthy parties and the fact that the swap contracts are distributed among several financial institutions to reduce the concentration of credit risk. Our swap agreements with our derivative counterparties contain a provision where if the Company defaults on any of its indebtedness, and repayment of the indebtedness has been accelerated, the Company could also be declared in default on its derivative obligations.

The following derivative instruments were outstanding as of the end of the periods indicated:

Fair Value


Balance Sheet Location


November 1, 2020


February 2, 2020

Interest rate swaps


Accrued liabilities


$
(8,191
)

$
(3,518
)
Interest rate swaps


Other liabilities



(6,479
)


(6,967
)







Total derivatives (1)



$
(14,670
)

$
(10,485
)

~~(1)~~

~~The balance at November 1, 2020 relates to our swap agreements after hedge accounting was discontinued, effective April 14, 2020.~~


			Fair Value
	Balance Sheet Location		October 31, 2021			January 31, 2021

Interest rate swaps		Accrued liabilities	$	(6,384	)	$	(8,350	)
Interest rate swaps		Other liabilities		—			(4,416	)

Total derivatives			$	(6,384	)	$	(12,766	)

The following table summarizes the activity in accumulated other comprehensive loss related to our derivative instruments:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended


November 1,
2020

November 3,
2019

November 1,
2020

November 3,
2019

Amount of loss recorded in accumulated other comprehensive income
   $ 0   2,483 $ 7,602 10,623
Amount of loss reclassified into income (1)
   $ (1,886 ) (326 ) $ (4,566 ) (338 )
Income tax expense (benefit) in accumulated other comprehensive income
   $ 516 (589 ) $ (829 ) (2,810 )


	Thirteen weeks ended						Thirty-nine weeks ended
	October 31, 2021			November 1, 2020			October 31, 2021			November 1, 2020

Loss recorded in accumulated other comprehensive income	$	0		$	0		$	—		$	7,602
Loss reclassified into income (1)	$	(1,886	)	$	(1,886	)	$	(5,660	)	$	(4,566	)
Income tax expense (benefit) in accumulated other comprehensive income	$	515		$	516		$	1,546		$	(829	)

(1)	Amounts reclassified into income are included in “Interest expense, net” in the Consolidated Statements of Comprehensive Income (Loss).

Revenue recognition

— Amusement revenues are primarily recognized upon utilization of game play credits on power cards purchased and

used

by customers to activate video and redemption games. Redemption games allow customers to earn tickets, which may be redeemed for prizes in our WIN! area. We have deferred a portion of amusement revenues for the estimated unfulfilled performance obligations 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 and thirty-nine weeks ended ~~November 1, 2020,~~October 31, 2021, we recognized revenue of approximately ~~$3,300~~$12,900 and ~~$15,400,~~$37,700, respectively, related to the amount in

deferred

amusement revenue as of the end of fiscal ~~2019~~

2020.

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In jurisdictions where we do not have a legal

obligation

to remit unredeemed gift card balances to a legal authority, we recognize revenue on unredeemed gift cards in proportion to the pattern of redemption by the customers. During the thirteen and thirty-nine weeks ended ~~November 1, 2020,~~October 31, 2021, we recognized revenue of approximately ~~$640~~$1,200 and ~~$2,080,~~$3,000, respectively, related to the amount in deferred gift card revenue as of the end of fiscal ~~2019,~~ 2020,

which approximately ~~$380~~$690 and ~~$590~~$930, respectively, was breakage

revenue

~~breakage revenue.~~.

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Stockholders’ equity

— Our Board of Directors has approved a share repurchase program under which the Company may repurchase shares on the open market, through privately negotiated transactions and through trading plans. The total share repurchase authorization is $

~~800,000~~

~~and the share repurchase authorization expires at the end of fiscal 2020.~~

~~During the first quarter of fiscal 2020,~~

~~the Company indefinitely~~

~~suspended all share repurchase activity. As of August 2, 2020, we have approximately $~~

~~172,820~~

~~of share repurchase authorization remaining under the current plan.~~

In our consolidated financial statements, 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. ~~These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase plan.~~ During the thirty-nine weeks ended October 31, 2021 and November 1, 2020, ~~and November 3, 2019,~~ we withheld ~~58,189~~179,487 and ~~11,536~~58,189 shares of common stock to satisfy ~~$916~~$7,775 and ~~$595~~$916 of employees’ tax obligations, respectively. The share activity in the thirty-nine weeks ended November 1, 2020 includes the settlements of $2,517 cash obligations through the issuance of 160,540 shares of common stock.

On April 14, 2020, pursuant to an open market sale agreement, the Company sold 6,149,936 shares of its common stock at a price of $12.20 per share, for proceeds of $75,000, prior to deducting offering expenses related to the offering. During May 2020, the Company entered into an underwriting agreement, pursuant to which it sold an additional 10,593,416 shares of its common stock (including shares under an over-allotment option) at a price of $10.44 per share, for proceeds of $110,600, prior to deducting offering costs.

Effective March 18, 2020, the Board of Directors of the Company adopted a

364-day

duration Shareholder Rights Plan (the “Rights Plan”) and declared a dividend of one preferred share purchase right for each outstanding share of common stock to shareholders of record on March 30, 2020 to purchase from the Company one

one-ten

thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company for an exercise price of $45.00, once the rights become exercisable, subject to adjustment as provided in the related rights agreement. The

Rights Plan expired on March 17, 2021.

~~On April 14, 2020, pursuant~~

Earnings per share

— Basic net income (loss) per share is computed by dividing net income (loss) available to ~~an open market sale agreement,~~common shareholders by the ~~Company sold 6,149,936~~basic weighted average number of common shares ~~of its~~outstanding for the reporting period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock ~~at a price~~were exercised or converted into common stock. For the calculation of ~~$12.20~~diluted net income (loss) per share, ~~for proceeds~~the basic weighted average shares outstanding is increased by the dilutive effect of ~~$75,000, prior to deducting offering expenses related to~~stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the ~~offering. On May 4,~~diluted net income (loss) per share calculation. For the thirteen weeks ended October 31, 2021 and November 1, 2020, the Company ~~entered into an underwriting agreement, pursuant to which it sold 9,578,545 shares~~excluded anti-dilutive awards from the calculation of ~~its common stock at a price of $10.44 per share,~~approximately 236,279 and ~~on May 18,~~1,652,925, respectively. For the thirty-nine weeks ended October 31, 2021 and November 1, 2020, the ~~underwriter exercised its over-allotment option for an additional 1,014,871~~Company excluded anti-dilutive awards from the calculation of approximately 161,093 and 1,523,945, respectively. Basic weighted average shares ~~at $10.44 per share, resulting in additional proceeds of $110,600 prior~~outstanding are reconciled to ~~deducting offering costs.~~

diluted weighted average shares outstanding as follows:

~~On June 23, 2020, shareholders approved a proposal to amend our 2014 Omnibus Incentive Plan (“Plan”) to increase the number of shares available for awards under the Plan by 3,000,000 shares.~~


	Thirteen weeks ended				Thirty-nine weeks ended
	October 31, 2021		November 1, 2020		October 31, 2021		November 1, 2020
Basic weighted average shares outstanding		48,277,358		47,613,741		48,050,558		42,185,163
Weighted average dilutive impact of awards (1)		1,006,145		0		1,206,711		0
Diluted weighted average shares outstanding		49,283,503		47,613,741		49,257,269		42,185,163

(1)	Amounts exclude all potential common and common equivalent shares for periods when there is a net loss.

Recently adopted accounting guidance

— In ~~June 2016,~~December 2019, the Financial Accounting Standards Board (“FASB”) issued ~~ASU~~

~~2016-13~~

~~, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~

which requires measurement and recognition of expected versus incurred losses for financial assets held. The guidance primarily relates to our credit card and tenant incentive receivables. The Company adopted this standard as of the beginning of fiscal year 2020, and the adoption did not have a material impact on our consolidated financial statements.

~~In January 2017, the FASB issued ASU~~

~~2017-04~~

~~, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,~~

which eliminates the requirement to calculate the implied fair value of goodwill if the fair value of a reporting unit is less than the carrying amount of the reporting unit. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The Company adopted this standard as of the beginning of fiscal year 2020, and the adoption did not have a material impact on our consolidated financial statements.

~~In August 2018, the FASB issued ASU~~

~~2018-13,~~

~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~

, which eliminates, modifies and adds disclosure requirements for fair value measurements. The Company adopted this standard as of the beginning of fiscal year 2020, and the adoption did not have a material impact on our consolidated financial statements.

~~Recent accounting pronouncements~~

~~— In December 2019, the FASB issued ASU~~Accounting Standards Update (“ASU”)

2019-12,

Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

, which removes certain exceptions related to the approach for intraperiod tax allocations, the calculation of income taxes in interim periods, and the recognition of deferred taxes for taxable goodwill. The ~~guidance is effective for~~Company adopted this standard as of the beginning of fiscal ~~years beginning after December 15, 2020~~year 2021, and ~~for interim periods within those years, with early~~the adoption ~~permitted. The Company is currently assessing the~~did not have a material impact ~~of this new standard~~ on our consolidated

financial

statements.

Recent accounting pronouncements

— In March 2020, the FASB issued ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Reform on Financial Reporting

, which provides temporary optional expedients and exceptions to the current guidance for contract modifications and hedging relationships through December 31, 2022, that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. A contract modification resulting from reference rate reform may be accounted for as a continuation of the existing contract rather than the creation of a new contract. Additionally, changes in the critical terms of hedging relationships, caused by reference rate reform, should not result in the

de-designation

of the instrument, provided certain criteria are met. ~~As of~~Although the ~~end of the third quarter of fiscal 2020, the Company’s exposure to~~Company has swap agreements based on LIBOR rates, ~~included its credit facility and swap agreements. The Company~~the guidance is ~~currently evaluating the~~not expected to have an impact ~~of this new standard~~ on our consolidated financial ~~statements.~~statements due to the

de-designation

of our hedging relationships in fiscal 2020.

Table of Contents

Note 2: Accrued Liabilities

Accrued liabilities consist of the following as of the end of each period:

November 1, 2020

February 2, 2020

Deferred amusement revenue
   $ 79,210    $ 75,113
Current portion of operating lease liabilities, net (1)
   51,850    45,611
Rent payable (
Note

4)
   40,542    —
Variable rent liabilities (
Note
4)
   7,559    1,331
Deferred gift card revenue
   10,330    11,253
Property taxes
   10,285    7,226
Compensation and benefits
   9,914    23,421
Current portion of derivatives
   8,191    3,518
Current portion of long-term insurance
   5,100    6,500
Utilities
   4,111    4,442
Customer deposits
   1,594    4,324
Inventory liabilities
   1,948    2,179
Sales and use taxes
   1,160    4,000
Dividend payable
   —      4,891
Other
   12,369    13,643




Total accrued liabilities
   $ 244,163    $ 207,452


	October 31, 2021		January 31, 2021

Deferred amusement revenue	$	92,909	$	78,852
Current portion of operating lease liabilities, net (1)		51,735		46,471
Compensation and benefits		24,702		13,846
Current portion of deferred occupancy costs		22,564		36,121
Property taxes		10,449		8,149
Deferred gift card revenue		9,564		10,918
Current portion of derivatives		6,384		8,350
Utilities		5,453		4,151
Current portion of long-term insurance		5,100		5,100
Sales and use taxes		4,177		1,385
Customer deposits		4,130		1,373
Accrued interest		256		11,321
Other		13,525		8,753

Total accrued liabilities	$	250,948	$	234,790

(1)	The balance of leasehold incentive receivables of ~~$5,434~~$3,823 and ~~$6,339 at November 1, 2020~~$8,763 as of October 31, 2021 and ~~February 2, 2020,~~January 31, 2021, respectively, is reflected as a reduction of the current portion of operating lease ~~liabilities.~~liabilities .

Note 3: Debt

Long-term debt ~~consists~~consi

ts of the ~~following as of:~~

following:

November 1, 2020

February 2, 2020

Senior Secured Notes
   $ 550,000    $ —
Credit facility - term
   —      266,250
Credit facility - revolver
   26,000    382,000




Total debt outstanding
   576,000    648,250
Current installments
   —      (15,000 )
Debt issuance costs
   (14,185 )    (561 )




Long-term debt, net
   $ 561,815    $ 632,689

Effective April 14, 2020, we amended our existing credit facility, which provided relief from compliance with financial covenants through the third quarter of fiscal 2020. The interest rate increased to LIBOR plus 2.00% with a LIBOR floor of 1.00%.


	October 31, 2021			January 31, 2021

Senior secured notes	$	495,000		$	550,000
Credit facility - revolver		0			60,000

Total debt outstanding		495,000			610,000
Less debt issuance costs		(10,323	)		(13,612	)

Long-term debt, net	$	484,677		$	596,388

On October 27, 2020, the Company issued $550,000 aggregate principal amount of 7.625% senior secured notes (the “Notes”). Interest on the Notes accrues from October 27, 2020 and is payable in arrears on November 1 and May 1 of each year, commencing on May 1, 2021. The Notes mature on November 1, 2025, unless earlier redeemed, and are subject to the terms and conditions set forth in the related indenture. Prior to November 1, 2022, but not more than once during any twelve-month period commencing with the issue date of the Notes, the Company may redeem up to 10% of the original principal amount of the Notes at a redemption price of 103% of the principal amount, plus accrued and unpaid interest, at the redemption date. After November 1, 2022, the Company may redeem the Notes, in whole or in part, at certain specified redemption prices, plus accrued and unpaid interest, at the redemption date. 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, which is substantially the same as the guarantors of the Company’s existing credit facility.

The Company used the proceeds of the Notes offering, along with cash on hand, to repay the $255,000 principal balance of the term loan facility, $463,000

of borrowings under the revolving credit facility, and related accrued interest. The Company incurred debt costs of

$18,300, which are being amortized over the terms of the respective Notes and revolving credit facility. The Company also recorded a loss of $904 related to the unamortized debt costs associated with the term portion of the credit facility.

availability

~~Table of Contents~~

under

the credit facility) of

~~150,000~~

. $150,000. The second amendment

extended

the maturity date of the $

~~500,000~~

$500,000 revolving portion of

the

Table of Contents

facility from August 17, 2022 to

August 17, 2024,

~~, and~~ increased the interest rate spread ~~increased from~~

~~2.00~~

% to

~~4.00~~

% 4.00% during the financial covenant suspension period, ~~with an additional~~

~~1.00~~

%and instituted a 1.00% utilization fee during that same time. The utilization fee is due at maturity. The financial covenant suspension period may end earlier, at the Company’s election, if certain predetermined financial covenant ratios are achieved. After the financial covenant suspension period, the interest rate spread ranges from

~~1.25~~

% 1.25% to

~~3.00~~

% 3.00%. The second amendment terminated the term loan portion of the credit facility, which triggered payment of $

~~1,900~~

$1,900 of lender debt costs associated with the first amendment. The first amendment, effective April 14, 2020, provided initial relief from compliance with financial covenants after the

COVID-19

pandemic and increased the interest rate spread on variable rate debt to 2.00% plus a LIBOR floor of 1.00%.

~~interest. The Company~~

incurred debt costs of $18,200, which are being amortized over the terms of the respective Notes and revolving credit facility. As of November 1, 2020, approximately $3,300 of these debt costs had not been paid. The Company also recorded a loss of $904 related to the unamortized debt costs associated with the term portion of the credit facility.

For the thirty-nine weeks ended November 1, 2020, and November 3, 2019, the Company’s weighted average interest rate on outstanding borrowings was 4.17% and 4.03%, respectively. As of November 1, 2020, we had letters of credit outstanding of $9,686 and an unused commitment balance of $464,314 under

~~the~~

~~revolving credit facility.~~

Our credit facility and Notes 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.

On September 20, 2021, the Company redeemed $55,000 outstanding principal amount of the Notes. In connection with the early redemption of the Notes, the Company paid a prepayment premium of $1,650, plus accrued and unpaid interest to the date of redemption, pursuant to the terms of the indenture governing the Notes. Additionally, the early redemption of the Notes resulted in a

loss on extinguishment of $1,179 related to a proportionate amount of unamortized issuance

costs. Refer to Note 8 regarding additional early redemption in fiscal 2021.

For the thirty-nine weeks ended October 31, 2021 and November 1, 2020, respectively, the Company’s weighted average interest rate on outstanding borrowings was 10.26% and 4.17%, respectively. At October 31, 2021, we had letters of credit outstanding of $10,486 and an unused commitment balance of $489,514 under the revolving credit facility.

Interest expense, net

— The following table sets forth our recorded interest expense, ~~net for the periods indicated:~~net:


													Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	Thirteen Weeks Ended						Thirty-Nine Weeks Ended						October 31, 2021			November 1, 2020			October 31, 2021			November 1, 2020
	November 1, 2020			November 3, 2019			November 1, 2020			November 3, 2019
Interest expense on debt	$	6,092			5,769		$	17,255			14,672		$	10,782		$	6,092		$	33,921		$	17,255
Interest associated with swap agreements		1,886			326			4,566			338			1,886			1,886			5,660			4,566
Amortization of issuance cost		427			198			1,081			594			1,070			427			3,275			1,081
Interest income		—			(24	)		(22	)		(75	)		—			—			—			(22	)
Capitalized interest		(192	)		(159	)		(389	)		(758	)		(315	)		(192	)		(885	)		(389	)

Total interest expense, net	$	8,213		$	6,110		$	22,491		$	14,771		$	13,423		$	8,213		$	41,971		$	22,491

Note 4: Leases

We currently lease most of the ~~building~~buildings or ~~site~~sites for our stores, corporate office, 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 includes 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 corporate office and warehouse, in the Consolidated Statements of Comprehensive Income (Loss).

~~Table of Contents~~

The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and property taxes, are as follows for the fiscal year ended:


									Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	Thirteen Weeks Ended				Thirty-Nine Weeks Ended				October 31, 2021		November 1, 2020		October 31, 2021		November 1, 2020
	November 1, 2020		November 3, 2019		November 1, 2020		November 3, 2019
Operating lease cost	$	33,278		31,489	$	100,162		91,729	$	33,915		33,278	$	100,506		100,162
Variable lease cost		5,351		7,692		18,405		22,335		7,862		5,351		22,492		18,405
Short-term lease cost		102		108		329		324		121		102		431		329

Total	$	38,731	$	39,289	$	118,896	$	114,388	$	41,898	$	38,731	$	123,429	$	118,896

Table of Contents

During ~~the thirty-nine weeks ended November 1,~~fiscal 2020, the Company entered into ~~123~~126 initial rent relief agreements with our

respective landlords on operating locations and our corporate headquarters. Under these agreements, certain rent payments will be abated, deferred or modified without penalty for various periods, generally providing for full deferral for three months beginning April 2020, with partial deferrals continuing for periods of up to six months at approximately 50% of those locations. As the COVID-19 pandemic continued to impact our business into the fourth quarter of fiscal 2020, the Company renewed negotiations with the majority of these landlords in order to provide additional rent relief, generally seeking to delay or extend the terms of deferral pay back periods and/or provide rent relief beyond the periods in the initial agreements. The second phase of negotiations resulted in 99 additional rent relief agreements, the last of which were executed in the third quarter of fiscal 2021. The Company has elected to apply the practical expedient to account for lease concessions and deferrals resulting directly from

COVID-19

as though the enforceable rights and obligations to the deferrals existed in the respective contracts at lease inception and will not account for the concessions as lease modifications unless the concession results in a substantial increase in the Company’s obligations. ~~During the thirty-nine weeks ended November 1, 2020, 113~~A total of 208 of our ~~123~~225 rent relief agreements qualified for this accounting election, and the remaining agreements were treated as lease modifications, primarily due to a significant extension of the lease term. ~~Further, as a result of the~~

~~COVID-19~~

~~pandemic and its impact on our financial condition, the~~The Company has chosen not to pay rent or to pay a portion of operating lease obligations as they become due for eight properties without rent relief agreements as of the end of the third quarter. As of November 1, 2020, we have bifurcated our current operating lease liabilities into the portion that remains subject to accretion and the portion that is accounted for as a deferral of payments or as short payments. The current portion of deferred occupancy costs or short pays is included in “Accrued liabilities” and the balance, or

$12,175 and $16,243 as of October 31, 2021 and January 31, 2021, respectively, is included in “Other liabilities” in the Consolidated Balance Sheets.

Note 5: 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 ~~guest-related~~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.

The Company is ~~currently~~ a defendant in several lawsuits filed in courts in California alleging violations of California Business and Professions Code, industry wage orders,

wage-and-hour

laws and rules and regulations pertaining primarily to the failure to pay proper regular and overtime wages, failure to pay for missed meals and rest periods, pay stub violations, failure to pay all wages due at the time of termination and other employment related claims (the “California Cases”). Some of the California Cases purport or may be determined to be class actions or Private Attorneys General Act representative actions and seek substantial damages and penalties. ~~With respect to~~During fiscal 2020, the Company settled a portion of the ~~California Cases,~~cases at the ~~Company has~~approximate amount estimated and ~~accrued for~~accrued. For the ~~most likely amount of loss. Where~~remaining cases, the Company has determined that a loss is reasonably possible but not probable, the Company is unable to estimate the amount or range of the reasonably possible loss due to the inherent difficulties of predicting the outcome of uncertainties regarding legal proceedings. The Company’s assessments are based on assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions. Management’s assessment of these California Cases,

, as well as other lawsuits,

could change because of future determinations or the discovery of facts that are not presently known. Accordingly, the ultimate costs of resolving these cases may be substantially higher or lower than estimated. The Company iscontinues to aggressively ~~defending these cases.~~

defend the remaining

~~Note 6: Earnings per share~~cases.

Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options (both vested and unvested), unvested time-based restricted stock units (RSU’s) and unvested performance RSU’s to the extent performance measures were attained as of the end of the reporting period, calculated using the treasury-stock method. Potential dilutive shares are excluded from the computation of earnings per share (“EPS”) if their effect is anti-dilutive. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and, accordingly, are excluded from the calculation. The weighted average anti-dilutive options excluded from the calculation of common equivalent shares were 235,368 and 134,450 in the thirteen and thirty-nine weeks ended November 3, 2019.

Table of Contents

~~The following table sets forth the computation of EPS, basic and diluted for the periods indicated:~~

Thirteen Weeks
Ended
November 1, 2020

Thirteen Weeks
Ended
November 3, 2019

Numerator:

Net income (loss)
   $ (48,043 ) $ 482
Denominator:

Weighted average number of common shares
outstanding (basic)
   47,613,741 30,980,878
Weighted average dilutive impact of equity-based
awards (1)
   —   534,576
Weighted average number of common and common equivalent shares outstanding (diluted)
   47,613,741 31,515,454
Net income (loss) per share:

Basic
   $ (1.01 ) $ 0.02
Diluted
   $ (1.01 ) $ 0.02


Thirty-Nine Weeks

Ended

November 1, 2020


Thirty-Nine Weeks

Ended

November 3, 2019

Numerator:




Net income (loss)

$
(150,189
)

$
75,281

Denominator:




Weighted average number of common shares outstanding (basic)


42,185,163



34,405,503

Weighted average dilutive impact of equity-based awards (1)


—



636,808

Weighted average number of common and common equivalent shares outstanding (diluted)


42,185,163



35,042,311

Net income (loss) per share:




Basic

$
(3.56
)

$
2.19

Diluted

$
(3.56
)

$
2.15

~~(1)~~

~~Due to the net loss for the thirteen and thirty-nine weeks ended November 1, 2020, 0 incremental shares are included because the effect would be anti-dilutive.~~

Note 7:6: Share-Based Compensation

Compensation expense related to stock options and restricted stock units ~~(“RSU’s”)~~ is included in

“

~~General~~

“General and

administrative ~~expenses~~

”expenses” in the Consolidated Statements of Comprehensive Income (Loss)

and is as follows:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended


November 1, 2020

November 3, 2019

November 1, 2020

November 3, 2019

Stock options
   $ 269    731    $ 1,099    2,294
RSU’s
   2,730    1,016    4,245    3,185








Share-based compensation expense
   $ 2,999    $ 1,747    $ 5,344    $ 5,479

~~Table of Contents~~


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 31, 2021		November 1, 2020		October 31, 2021		November 1, 2020

Stock options	$	88		269	$	446		1,099
Restricted stock units		3,690		2,730		9,490		4,245

Share-based compensation expense	$	3,778	$	2,999	$	9,936	$	5,344

Transactions related to stock option awards during the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 were as follows:

2014 Stock Incentive Plan

2010 Stock Incentive Plan


Number
of Options

Wtd. Avg.
Exercise Price

Number
of Options

Wtd. Avg.
Exercise Price

Outstanding at February 2, 2020
   1,323,495    $ 36.97    266,900    $ 6.72
Granted
   —      —      —      —
Exercised
   —      —      (90,391 )    5.14
Forfeited
   (84,395 )    38.79    —      —








Outstanding at November 1, 2020
   1,239,100    $ 36.84    176,509    $ 7.54








Exercisable at November 1, 2020
   1,047,124    $ 34.64    176,509    $ 7.54


	2014 Stock Incentive Plan					2010 Stock Incentive Plan
	Number			Wtd. Avg.		Number			Wtd. Avg.
	of Options			Exercise Price		of Options			Exercise Price

Outstanding at January 31, 2021		1,231,601		$	36.77		173,563		$	7.51
Granted		—			—		—			—
Exercised		(203,861	)		16.48		(100,009	)		6.90
Forfeited		(13,167	)		45.75		—			—

Outstanding at October 31, 2021		1,014,573		$	40.73		73,554		$	8.33

Exercisable at October 31, 2021		950,187		$	39.97		73,554		$	8.33

The total intrinsic value of options exercised during the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 was ~~$904.~~$8,756. The unrecognized expense related to our stock option plan totaled approximately ~~$869~~$125 as of ~~November 1, 2020~~October 31, 2021 and will be expensed over a weighted average period of ~~1.2~~0.4 years.

Transactions related to ~~RSU’s~~restricted stock units during the thirty-nine weeks ended ~~November 1, 2020,~~October 31, 2021, were as follows:

Shares

Wtd. Avg.
Fair Value

Outstanding at February 2, 2020
   216,815    $ 51.58
Granted
   1,063,209    12.74
Change in performance units
   4,352    59.67
Vested
   (102,595 )    38.11
Forfeited
   (50,736 )    27.72




Outstanding at November 1, 2020
   1,131,045    $ 17.39


				Wtd. Avg.
	Shares			Fair Value
Outstanding at January 31, 2021		1,116,341		$	17.32
Granted		301,847			47.82
Performance adjusted units		362,491			15.30
Vested		(571,312	)		15.39
Forfeited		(51,686	)		38.01

Outstanding at October 31, 2021		1,157,681		$	24.67

Fair value of our ~~RSU’s~~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 market stock units was determined using a Monte-Carlo simulation model. The unrecognized expense related to ~~the RSU’s~~restricted stock units was ~~$9,919~~$13,692 as of ~~November 1, 2020~~October 31, 2021 and will be expensed over a weighted average period of ~~2.2~~1.8 years.

During the thirty-nine weeks ended October 31, 2021 and November 1, 2020, ~~and November 3, 2019,~~ excess tax expense (benefit) of ~~$431~~$(6,034) and ~~($912),~~$431, respectively, were recognized ~~as an expense (benefit)~~ in the “Provision (benefit) for income taxes” in the Consolidated Statement of Comprehensive Income (Loss) and classified as a source in operating activities in the Consolidated Statement of Cash Flows.

Note 8:7: Income Taxes

On March 27, 2020, ~~President Trump signed into law~~ 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, ~~addressing~~allowing for the carryback of net operating losses ~~for specific periods, temporary modifications to the limitations placed on the tax deductibility of net interest expenses,~~generated in fiscal 2018, 2019 and 2020 and technical amendments ~~for~~regarding the expensing of qualified improvement

property. ~~Additionally,~~The application of the

technical amendments made by the CARES Act to qualified improvement property resulted in ~~efforts~~additional tax net operating losses which were carried back from fiscal 2020 and fiscal 2019 to ~~enhance business’ liquidity, provides~~years with a higher federal corporate income tax rate. During the second quarter of fiscal 2021, the Company filed the fiscal 2020 carryback claims for ~~the deferral~~federal tax refunds of ~~the employer-paid portion~~approximately $57,400. Due to government delays in processing these claims, we do not expect to receive

majority of social security taxes. As of November 1, 2020, we have elected to defer employer-paid portion of social security taxes of $3,398, which is included in “Other liabilities” in the Consolidated Balance Sheets.these funds until fiscal 2022.

~~The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate~~

The effective tax rate for the ~~full fiscal year~~thirty-nine weeks ended October 31, 2021, was

13.4%, compared to ~~“ordinary” income or loss for the reporting period. Due to the uncertainty created by the events surrounding the~~

~~COVID-19~~

~~pandemic, the actual effective tax rate for the year to date period was used to calculate the income tax~~a benefit of 32.3% for the thirty-nine weeks ended November 1, 2020. The ~~effective~~current year tax ~~rate for~~provision includes higher excess tax benefits associated with share-based compensation while the ~~thirty-nine weeks ended November 1, 2020,~~prior year tax provision was a tax benefit

~~32.3~~

~~%, compared to an~~

~~expense~~

~~21.3~~

~~% for the thirty-nine weeks ended November 3, 2019,~~ primarily due to the impact of ~~a decrease in operating earnings before income tax~~the

pre-tax

loss and the impact of the tax provisions within the CARES Act. As a result of the impact of the technical amendments for qualified improvement property within the CARES Act, the Company generated a taxable loss in 2019, which together with the taxable loss in 2020, can be carried back to prior years when the statutory federal tax rate was

~~approximately~~

~~35.0~~

%. As of November 1, 2020, the Company has recognized a current benefit of $34,090 related to estimated fiscal year 2019 and 2020 tax net operating losses that will be carried back to recover taxes paid inNote 8: Subsequent Event

~~prior periods.~~On November 11, 2021, the Company redeemed an additional

$55,000

outstanding principal amount of the Notes using available cash and funds from its revolving credit facility. In connection with the early redemption of the Notes, the Company paid a prepayment premium of

$1,650

, plus accrued and unpaid interest to the date of redemption, pursuant to the terms of the indenture governing the Notes. The ~~estimated tax benefit from~~early redemption of the ~~net operating losses is included~~Notes resulted in ~~“Income taxes receivable”~~ a loss on extinguishment of approximately

$1,100

related to a proportionate amount of unamortized issuance costs. At November 28, 2021, the Company’s total debt outstanding was $

463,000

, consisting of $

440,000

of Notes and $

23,000

in borrowing under the ~~Consolidated Balance Sheets.~~

revolving

credit facility.

On December 7, 2021, the Company filed notice with the credit facility administrative agent to immediately terminate the covenant suspension period.

~~Item 2.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with the accompanying unaudited consolidated financial statements and the related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our Annual Report on Form

10-K

as filed with the Securities and Exchange Commission (“SEC”) on ~~April 3, 2020.~~March 31, 2021. Unless otherwise specified, the meanings of all defined terms in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are consistent with the meanings of such terms as defined in the Notes to Unaudited Consolidated Financial Statements. This discussion contains statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not ~~guarantees~~a guarantee of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this quarterly report as a result of various factors, including those set forth in the section entitled “Risk Factors” in our Annual Report on Form

10-K

filed with the SEC on ~~April 3, 2020.~~March 31, 2021. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Form

10-Q,

those results or developments may not be indicative of results or developments in subsequent periods.

Recent Developments

On March 11, 2020, the World Health Organization declared the

COVID-19

~~non-essential~~

~~movement outside of the home.~~ Shortly after the national emergency declaration, state and local officials began placing restrictions on businesses, some of which allowed

To-Go

re-opened

to the public, ~~with~~as state and local guidelines began to allow dining rooms and arcades to open at limited ~~food~~capacity and/or limited hours of operation. By the end of fiscal 2020, 107 of our 140 stores were open and ~~beverage offerings and two additional~~operating in limited capacity, including five new stores ~~offered~~for which construction had commenced prior to the outbreak of the

~~off-premise~~COVID-19

~~dining options. During our second and third quarters, we have progressively~~pandemic. The Company

re-opened

~~limited operations in an additional 101~~the remaining 34 stores ~~and one new store in Manchester, New Hampshire and one new store in Lehigh Valley, Pennsylvania. Two stores~~ that

~~re-opened~~

~~during~~ had been temporarily closed by August 1, 2021, the end of the second quarter ~~were~~

~~re-closed~~

~~during the third quarter (one~~ of ~~which~~fiscal 2021.

~~re-opened~~

~~on November 14, 2020). As of November 1, 2020, 104 of our 137 stores were open, in limited capacity, in 36 states, Puerto Rico and Canada. Our current scaled-down operating model includes a limited~~

~~15-item~~

~~menu, reduced dining capacity and suspended use of some games in our midway for social distancing, reduced operating hours and reduced staffing levels designed~~The Company continues to be ~~responsive~~subject to ~~restrictions imposed by various jurisdictions related to~~

~~COVID-19~~

~~re-openings.~~

~~As of November 1, 2020, 33 of the Company’s stores were closed to~~

~~in-person~~

~~guests~~risks and uncertainties as a result of ~~local~~the

COVID-19

~~restrictions (31 of which have been closed since March 20, 2020). Subsequent to the third quarter, some local and state governments began to roll back their~~

~~re-opening~~

~~plans in light of climbing~~

~~COVID-19~~

~~case counts. As of December 4, 2020, 48 stores were closed due to jurisdictional restrictions.~~

Aspandemic, particularly as a result of ~~these developments, the Company is experiencing a significant decrease in traffic~~ new variants of

COVID-19,

which ~~has impacted the Company’s operating results during the thirteen and thirty-nine weeks ended November 1, 2020. We expect our operating results to continue~~appears to be ~~severely impacted until such time~~causing an increase in

COVID-19

cases. Public health officials and medical professionals have warned that ~~state~~a resurgence of

COVID-19

cases may continue, particularly if vaccination rates do not quickly increase or if additional potent variants emerge. It is unclear how long a resurgence may last, how severe it may be, and ~~local restrictions are lifted,~~what safety measures governments may impose in response to it. For instance, a few jurisdictions that our stores operate have recently imposed proof of vaccination requirements for our customers and team members, and many of our ~~dining rooms and midways can~~

~~re-open~~

~~at full capacity.~~stores have face mask requirements. We cannot predict ~~how long the pandemic will last or when the state and local restrictions will be lifted or potentially~~

~~re-imposed.~~

~~In addition, we cannot predict~~with certainty how quickly our ~~guests~~customers will return to our stores once ~~such~~all restrictions have been lifted or the impact this will have on consumer spending habits. Additionally, in connection with the

COVID-19

pandemic, there have been disruptions in various food and amusement supply chains, and we have incurred expenses to recall, hire and retain team members as our operating stores have

re-opened

and the majority of operating hour and capacity restrictions have been lifted.

~~In response to the ongoing pandemic, the Company and its Board of Directors implemented the following measures to enhance financial flexibility:~~

Key Third Quarter 2021 Highlights

~~reduced expenses broadly, including by furloughing all~~

Revenues totaled $317,976 compared with $299,352 in the third quarter of 2019. Revenues totaled $109,052 in the third quarter of 2020, which ended with 104 of our ~~hourly~~137 stores open and operating in limited capacity.

Overall comparable store ~~team members~~sales were relatively flat, decreasing 0.4% compared with the same period in 2019 and ~~approximately 94%~~increased 189.3% compared with the same period in 2020, which ended with 84 of ~~store management personnel, on or about March 19, 2020, while enacting~~our 114 comparable stores open and operating in limited capacity.

~~12-week~~

~~salary reductions for remaining~~

~~managers. In addition, effective March 24, 2020, the Company furloughed all but a small team of essential corporate and administrative staff, enacted~~

~~12-week~~

salary reductions ranging from 10% to 50%, and suspended all cash board fees through the remainder of fiscal 2020. As stores reopen with a reduced workforce a portion of the furloughed personnel at our stores and corporate office have returned to work;

Net income totaled $10,585, or $0.21 per diluted share, compared with net income of $482, or $0.02 per diluted share in the same period of 2019. In the same period of 2020, we recorded a net loss of $48,043.

~~canceled or delayed all~~

~~non-essential~~

~~planned capital spending for the remainder of fiscal 2020;~~

~~halted~~EBITDA totaled $58,850, or ~~delayed planned store openings after our one store opening~~18.5% of revenues, compared with EBITDA of $39,839 or 13.3% of revenues in ~~Chattanooga, TN, on March 16, 2020, with the exception of two new stores that opened during~~ the third quarter of 2019. The increase in EBITDA over fiscal 2019 is largely driven by the higher mix of amusements, reductions in hourly labor costs, and ~~several planned store openings, all~~reduced discretionary marketing spend. We recorded an EBITDA loss of ~~which commenced construction prior to~~$21,659 in the ~~pandemic;~~third quarter of 2020.

~~stopped work on future planned sites~~Ended the quarter with $27,005 in cash and ~~commenced negotiations to terminate related contracts, as applicable;~~

~~suspended our share repurchase program and declaration~~approximately $340,000 of ~~dividends;~~

~~negotiated amendments to our credit facility resulting in an extension of~~liquidity available under the ~~maturity date of our~~Company’s revolving credit facility, ~~to August 17, 2024;~~net of a $150,000 minimum liquidity covenant and $10,486 in letters of credit.

~~issued $550,000 of senior secured notes, maturing November 1, 2025;~~

~~sold shares of our common stock, which generated gross proceeds of approximately $185,600; and~~

negotiated with our landlords, vendors, and other business partners to temporarily reduce our lease and contract payments and obtain other concessions. As of November 1, 2020, a total of 123 rent relief agreements related to our operating locations and corporate headquarters were executed, which generally provide for full deferral for three months beginning April 2020, with partial deferral continuing for periods of up to six months, at approximately 50% of those locations.

~~The~~

~~re-opening~~

~~process has been a gradual one with the safety of our employees and guests as our top priority. All of our~~

~~re-opened~~

stores are operating with streamlined menus, reduced games, new seating and game configurations, reduced operating hours, and reduced staff levels. As dining room and midway restrictions continue to ease and sales begin to improve, some labor inefficiencies and increased cleaning and supply costs are anticipated as stores adjust to improved sales volumes and enhanced health and safety protocols. On an ongoing basis, we will also continue to pursue long-term operating efficiencies and fixed cost restructuring opportunities.

~~Given the level of volatility and uncertainty surrounding the future impact of the pandemic, we have not provided a full year financial outlook for fiscal 2020.~~

General

We are a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families under the name “Dave & Buster’s”. Founded in 1982, the core of our concept is to offer our customers the opportunity to “Eat Drink Play and Watch” all in one location. Eat and Drink are offered through a full menu of entrées and appetizers and a full selection of

non-alcoholic

and alcoholic beverages. Our Play and Watch offerings provide an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. Our brand appeals to a relatively balanced mix of male and female adults, as well as families and ~~teenagers,~~teenagers. We believe we appeal to a diverse customer base by providing a highly customizable experience in ~~low to middle-income households.~~a dynamic and fun setting.

Our stores, which average 40,000 square feet, range in size between 16,000 and 70,000 square ~~feet and~~feet. Our stores are generally open seven days a week, with normal hours of operation typically from 11:30 a.m. to ~~midnight on Sunday through Thursday and 11:30 a.m. to 2:00 a.m. on Friday and Saturday.~~midnight.

Key Measures of Our Performance

We monitor and analyze several key performance measures to manage our business and evaluate financial and operating performance. These measures include:

Comparable store sales.

Comparable store sales are a ~~year-over-year~~ comparison of sales atto the same period of prior years for the comparable store base. We historically define the comparable store base to include those stores open ~~at the end of the period which have been open~~ for ~~at least~~a full 18 months ~~as of~~before the beginning of ~~each of~~ the fiscal ~~years. It~~year and excluding stores permanently closed during the period. Due to the limitations of store operations during the

COVID-19

pandemic, the comparable store base for fiscal 2021 is defined as stores open for a ~~key performance indicator used within~~full 18 months before the ~~industry~~beginning of fiscal 2020 and ~~is indicative of acceptance of our initiatives as well as~~excludes two stores that the Company elected not to reopen after they were closed in March 2020 due to local ~~economic and consumer trends. As of November 1, 2020,~~operating limitations. At October 31, 2021, our comparable store base consisted of 114 ~~stores, of which 30 stores were closed.~~stores.

New store openings.

Our ability to expand our business and reach new customers is influenced by the opening of additional stores in both new and existing markets. The success of our new stores is indicative of our brand appeal and the efficacy of our site selection and operating models. Between November ~~3, 2019~~2, 2020 and ~~November 1, 2020,~~October 31, 2021, we opened ~~five~~six new stores ~~(two~~(three in fiscal ~~2019~~2020 and three in fiscal ~~2020)~~2021).

Non-GAAP

Financial Measures

In addition to the results provided in accordance with generally accepted accounting principles (“GAAP”), we provide

non-GAAP

measures which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include Adjusted EBITDA, Adjusted EBITDA Margin, Store Operating Income Before Depreciation and Amortization and Store Operating Income Before Depreciation and Amortization Margin (defined below). These

non-GAAP

measures do not represent and should not be considered as an alternative to net income or cash flows from operations, as determined in accordance with GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Although we use these

non-GAAP

measures to assess the operating performance of our business, they have significant limitations as an analytical tool because they exclude certain material costs. For example, Adjusted EBITDA does not take into account a number of significant items, including our interest expense and depreciation and amortization expense. In addition, Adjusted EBITDA excludes

pre-opening

and other costs which may be important in analyzing our GAAP results. Because Adjusted EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Our calculations of Adjusted EBITDA adjust for these amounts because they vary from period to period and do not directly relate to the ongoing operations of the currently underlying business of our stores and therefore complicate comparison of underlying business between periods. Nevertheless, because of the limitations described above, management does not view Adjusted EBITDA or Store Operating Income Before Depreciation and Amortization in isolation and also uses other measures, such as revenues, gross margin, operating income and net income, to measure operating performance.

Adjusted EBITDA and Adjusted EBITDA Margin

. We define “Adjusted EBITDA” as net income (loss) plus interest expense, net, loss on debt extinguishment or refinancing, provision (benefit) for income taxes, depreciation and amortization expense, loss on asset disposal, impairment of long-lived assets, share-based compensation,

pre-opening

costs, currency transaction (gains) losses and other costs. “Adjusted EBITDA Margin” is defined as Adjusted EBITDA divided by total revenues.

Adjusted EBITDA is presented because we believe that it provides useful information to investors and analysts regarding our operating performance. By reporting Adjusted EBITDA, we provide a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.

Store Operating Income Before Depreciation and Amortization and Store Operating Income Before Depreciation and Amortization Margin.

We define “Store Operating Income Before Depreciation and Amortization” as operating income (loss) plus depreciation and amortization expense, general and administrative expenses and

pre-opening

costs. “Store Operating Income Before Depreciation and Amortization Margin” is defined as Store Operating Income Before Depreciation and Amortization divided by total revenues. Store Operating Income Before Depreciation and Amortization Margin allows us to evaluate operating performance of each store across stores of varying size and volume.

We believe that Store Operating Income Before Depreciation and Amortization is another useful measure in evaluating our operating performance because it removes the impact of general and administrative expenses, which are not incurred at the store-level, and the costs of opening new stores, which are

non-recurring

at the store-level, and thereby enables the comparability of the operating performance of our stores for the periods presented. We also believe that Store Operating Income Before Depreciation and Amortization is a useful measure in evaluating our operating performance within the entertainment and dining industry because it permits the evaluation of store-level productivity, efficiency and performance, and we use Store Operating Income Before Depreciation and Amortization as a means of evaluating store financial performance compared with our competitors. However, because this measure excludes significant items such as general and administrative expenses and

pre-opening

costs, as well as our interest expense, net and depreciation and amortization expense, which are important in evaluating our consolidated financial performance from period to period, the value of this measure is limited as a measure of our consolidated financial performance.

Presentation of Operating Results

We operate on a 52 or

53-week

fiscal year that ends on the Sunday after the Saturday closest to January 31. Each quarterly period has 13 weeks, except in a

53-week

year when the fourth quarter has 14 weeks. All references to the third quarter of 2021 relate to the

13-week

period ended October 31, 2021. All references to the third quarter of 2020 relate to the

13-week

period ended November 1, 2020. All references to the third quarter of 2019 relate to the

13-week

period ended November 3, 2019. Fiscal 2021, fiscal 2020 and fiscal 2019 consist of 52 weeks. All dollar amounts are presented in thousands, unless otherwise noted, except share and per share amounts.

~~Table of Contents~~

Store-Level Variability, Quarterly Fluctuations, Seasonality and Inflation

We have historically operated stores varying in size and have experienced significant variability among stores in volumes, operating results and net investment costs.

Our new stores historically open with sales volumes in excess of their expected long-term

run-rate

levels, which we refer to as a “honeymoon” effect. We traditionally expect our new store sales volumes in year two to be 10% to 20% lower than our year one targets, and to grow in line with the rest of our comparable store base thereafter. As a result of the substantial revenues associated with each new store, the number and timing of new store openings may result in significant fluctuations in quarterly results.

In the first year of operation new store operating margins (excluding

pre-opening

expenses) typically benefit from honeymoon sales leverage on occupancy, management labor, and other fixed costs. This benefit is partially offset by normal inefficiencies in hourly labor and other costs associated with establishing a new store. In year two, operating margins may decline due to the loss of honeymoon sales leverage on fixed costs which is partially offset by improvements in store operating efficiency. Furthermore, rents in our new stores are typically higher than our comparable store base.

Our operating results fluctuate significantly due to seasonal factors. Typically, we have higher revenues associated with spring and

year-end

holidays which will continue to be susceptible to the impact of severe or unseasonably mild weather on customer traffic and sales during that period. Our third quarter, which encompasses the

back-to-school

fall season, has historically had lower revenues as compared to the other quarters.

We expect that economic and environmental conditions and changes in regulatory legislation will continue to exert pressure on both supplier pricing and consumer spending related to entertainment and dining alternatives. Although there is no assurance that our

Table of Contents

cost of products will remain stable or that federal, state or local minimum wage rates will not increase beyond amounts currently legislated, the effects of any supplier price ~~increases~~increase or wage rate increases might be partially offset by selected menu price increases if competitively appropriate. In addition, how quickly, and to what extent, normal economic and operating conditions can resume cannot be predicted, and the resumption of normal business operations may be delayed or constrained by lingering effects of the

COVID-19

pandemic on us or our suppliers, third-party service providers, and/or customers.

~~Table of Contents~~

Thirteen Weeks Ended ~~November 1, 2020~~October 31, 2021 Compared to Thirteen Weeks Ended November ~~3, 2019~~1, 2020

Results of operations.

The following table sets forth selected data, in thousands of dollars and as a percentage of total revenues (unless otherwise noted) for the periods indicated. All information is derived from the accompanying unaudited consolidated statements of comprehensive income (loss).


											Thirteen Weeks					Thirteen Weeks
											Ended					Ended
	Thirteen Weeks Ended November 1, 2020					Thirteen Weeks Ended November 3, 2019					October 31, 2021					November 1, 2020
Food and beverage revenues	$	38,346		35.2	%	$	124,637		41.6	%	$	107,747		33.9	%	$	38,346		35.2	%
Amusement and other revenues		70,706		64.8			174,715		58.4			210,229		66.1			70,706		64.8

Total revenues		109,052		100.0			299,352		100.0			317,976		100.0			109,052		100.0
Cost of food and beverage (as a percentage of food and beverage revenues)		10,664		27.8			33,384		26.8			30,082		27.9			10,664		27.8
Cost of amusement and other (as a percentage of amusement and other revenues)		7,244		10.2			18,796		10.8			22,531		10.7			7,244		10.2

Total cost of products		17,908		16.4			52,180		17.4			52,613		16.5			17,908		16.4
Operating payroll and benefits		27,704		25.4			76,165		25.4			78,995		24.8			27,704		25.4
Other store operating expenses		70,783		64.9			110,713		37.1			103,322		32.5			70,783		64.9
General and administrative expenses		11,746		10.8			16,210		5.4			22,104		7.0			11,746		10.8
Depreciation and amortization expense		34,384		31.5			33,340		11.1			34,381		10.8			34,384		31.5
Pre-opening costs		2,570		2.4			4,245		1.4			2,092		0.7			2,570		2.4

Total operating costs		165,095		151.4			292,853		97.8			293,507		92.3			165,095		151.4

Operating income (loss)		(56,043	)	(51.4	)		6,499		2.2			24,469		7.7			(56,043	)	(51.4	)
Interest expense, net		8,213		7.6			6,110		2.1			13,423		4.2			8,213		7.6
Loss on debt refinance		904		0.8			—		—
Loss on debt extinguishment / refinancing												2,829		0.9			904		0.8

Income (loss) before benefit for income taxes		(65,160	)	(59.8	)		389		0.1			8,217		2.6			(65,160	)	(59.8	)
Benefit for income taxes		(17,117	)	(15.7	)		(93	)	(0.1	)		(2,368	)	(0.7	)		(17,117	)	(15.7	)

Net income (loss)	$	(48,043	)	(44.1	)%	$	482		0.2	%	$	10,585		3.3	%	$	(48,043	)	(44.1	)%

Change in comparable store sales (1)				(65.6	)%				(4.1	)%				189.3	%				(65.6	)%
Company-owned stores at end of period (1)				137					134					143					137
Comparable stores at end of period (1)				114					99					114					114

(1)

As of the end of the third quarter of fiscal 2020, 104 of our 137 total stores ~~were open~~ and 84 of our 114 comparable stores were ~~open.~~open and operating in limited capacity. Our ~~total and~~ comparable store ~~counts~~count as of the end of the third quarter of fiscal 2020 ~~exclude~~excludes a store in Chicago, Illinois and a store in Houston, Texas, which ~~are~~were at or near the end of their respective lease terms, ~~which~~when the Company ~~has~~ decided not to

re-open.

~~Our store in Duluth (Atlanta), Georgia permanently closed on March 3, 2019 as we did not exercise the renewal option and is excluded from fiscal 2019 store counts and comparable store sales.~~

2221

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Reconciliations of

Non-GAAP

Financial Measures

Adjusted EBITDA

The following table reconciles (in dollars and as a percent of total revenues) Net income (loss) to Adjusted EBITDA for the periods indicated:


											Thirteen Weeks					Thirteen Weeks
											Ended					Ended
	Thirteen Weeks Ended November 1, 2020					Thirteen Weeks Ended November 3, 2019					October 31, 2021					November 1, 2020
Net income (loss)	$	(48,043	)	-44.1	%	$	482		0.2	%	$	10,585		3.3	%	$	(48,043	)	-44.1	%
Interest expense, net		8,213					6,110					13,423					8,213
Loss on debt refinance		904					—
Loss on debt extinguishment / refinancing												2,829					904
Benefit for income taxes		(17,117	)				(93	)				(2,368	)				(17,117	)
Depreciation and amortization expense		34,384					33,340					34,381					34,384

EBITDA		(21,659	)	-19.9	%		39,839		13.3	%		58,850		18.5	%		(21,659	)	-19.9	%
Loss on asset disposal		124					458					377					124
Share-based compensation		2,999					1,747					3,778					2,999
Pre-opening costs		2,570					4,245					2,092					2,570
Other costs (1)		(5	)				1					3,112					(5	)

Adjusted EBITDA	$	(15,971	)	-14.6	%	$	46,290		15.5	%	$	68,209		21.5	%	$	(15,971	)	-14.6	%

(1)	Primarily represents costs related to currency transaction (gains) or losses. The third quarter of fiscal 2021 includes a $3,230 severance obligation to the Company’s former Chief Executive Officer, who terminated his service in this position effective September 30, 2021.

Store Operating Income Before Depreciation and Amortization

The following table reconciles (in dollars and as a percent of total revenues) Operating income (loss) to Store Operating Income Before Depreciation and Amortization for the periods indicated:


										Thirteen Weeks				Thirteen Weeks
										Ended				Ended
	Thirteen Weeks Ended November 1, 2020					Thirteen Weeks Ended November 3, 2019				October 31, 2021				November 1, 2020
Operating income (loss)	$	(56,043	)	-51.4	%	$	6,499	2.2	%	$	24,469	7.7	%	$	(56,043	)	-51.4	%
General and administrative expenses		11,746					16,210				22,104				11,746
Depreciation and amortization expense		34,384					33,340				34,381				34,384
Pre-opening costs		2,570					4,245				2,092				2,570

Store Operating Income Before Depreciation and Amortization	$	(7,343	)	-6.7	%	$	60,294	20.1	%	$	83,046	26.1	%	$	(7,343	)	-6.7	%

Capital Additions

The table below reflects accrual-based capital additions. Capital additions do not include any reductions for accrual-based leasehold improvement incentives or proceeds from sale-leaseback transactions (collectively, “Payments from landlords”).


					Thirteen Weeks		Thirteen Weeks
					Ended		Ended
	Thirteen Weeks Ended November 1, 2020		Thirteen Weeks Ended November 3, 2019		October 31, 2021		November 1, 2020
New store and operating initiatives	$	7,700	$	52,147	$	20,616	$	7,700
Games		361		2,825		195		361
Maintenance capital		1,208		5,831		8,402		1,208

Total capital additions	$	9,269	$	60,803	$	29,213	$	9,269

Payments from landlords	$	4,709	$	7,240	$	5,717	$	4,709

2322

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Results of Operations

Revenues

In response to the

COVID-19

outbreak, which was declared a global pandemic on March 11, 2020 and a National Public Health Emergency in the United States on March 13, 2020, the Company temporarily closed of all of our ~~137~~ stores by March 20, ~~2020 (including our one new store opening March 16).~~2020. On April 30, 2020, ~~the Company~~our first store

re-opened

~~the first store~~ to the public, as state and anlocal guidelines began to allow dining rooms and arcades to open with capacity and other restrictions, with two additional 83 stores ~~were~~offering limited food and beverage for

~~re-opened~~off-premises

~~during~~dining by the ~~second quarter.~~

~~During~~end of our first quarter of fiscal 2020. By the end of the third quarter of fiscal ~~year 2020, the Company~~

~~re-opened~~

~~an additional 20 stores and one new store in Manchester, New Hampshire and one new store in Lehigh Valley, Pennsylvania. Two stores that~~

~~re-opened~~

~~during the second quarter were~~

~~re-closed~~

~~during the third quarter.~~

~~As of November 1,~~ 2020, 104 of our 137 stores were ~~open. Of these 104~~ open ~~stores, 84 are comparable stores. These stores are~~and operating with a combination of limited menus, reduced dining room seating, reduced games in the midway, reduced operating hours and other restrictions referred to as “limited operations”.

Of these 104 open stores, 84 were comparable stores. By the end of our second quarter of the current fiscal year, all of the Company’s stores were open and operating, the majority of which having no operating restrictions.

Selected revenue and store data for the periods indicated are as follows:


										Thirteen Weeks Ended
	Thirteen weeks ended November 1, 2020			Thirteen weeks ended November 3, 2019			Change			October 31, 2021		November 1, 2020			Change
Total revenues	$	109,052		$	299,352		$	(190,300	)	$	317,976	$	109,052		$	208,924
Total store operating weeks		1,221			1,722			(501	)		1,854		1,221			633
Comparable store revenues	$	89,592		$	260,131		$	(170,539	)	$	259,206	$	89,592		$	169,614
Comparable store operating weeks		993			1,482			(489	)		1,482		993			489
Noncomparable store revenues	$	20,092			40,131		$	(20,039	)	$	55,356		20,092		$	35,264
Noncomparable store operating weeks		228			240			(12	)		372		228			144
Other revenues	$	(632	)	$	(910	)	$	278
Other revenues and deferrals										$	3,414	$	(632	)	$	4,046

Total revenues ~~decreased $190,300,~~increased $208,924, or ~~63.6%~~191.6%, to $317,976 in the third quarter of fiscal 2021 compared to total revenues of $109,052 in the third quarter of fiscal ~~2020 compared~~2020. The increase in revenue is attributable primarily to ~~total revenues of $299,352~~more store operating weeks in the third quarter of fiscal ~~2019. The decline in revenue is attributable primarily~~2021 compared to ~~fewer~~the prior year due to temporary store ~~operating weeks in~~closures during the third quarter of fiscal 2020, as a result of ~~temporary store closures, lower customer volumes due to limited food and beverage and amusement operations and the canceling or postponement of special events as a result of~~ the

COVID-19

pandemic. For the thirteen weeks ended October 1, 2021, we derived 22.7% of our total revenue from food sales, 11.2% from beverage sales, 65.5% from amusement sales and 0.6% from other sources. For the thirteen weeks ended November 1, 2020, we derived 23.2% of our total revenue from food sales, 12.0% from beverage sales, 64.4% from amusement sales and less than 0.4% from other sources. ~~For the thirteen weeks ended November 3, 2019, we derived 27.9% of our total revenue~~The shift in mix from food ~~sales, 13.7% from~~and beverage sales ~~57.4% from~~to amusement sales of 109 basis points is due, in part, to reduced special events and ~~1.0% from other sources.~~less discounting of amusements, offset somewhat by food price increases effective midway through the third quarter of fiscal 2021.

Comparable store revenue ~~decreased $170,539~~increased $169,614 or ~~65.6%~~189.3%, in the third quarter of fiscal ~~2020~~2021 compared to the third quarter of fiscal ~~2019,~~2020, due primarily to ~~a 33.0% reduction~~an 49.2% increase in comparable store operating ~~weeks and lower customer volumes as stores~~

~~re-opened~~

~~with limited operations. During~~weeks. Comparable store sales in the third quarter of fiscal ~~2020, the number of comparable stores operating increased from 68 at the beginning~~2021 were approximately 99.6% of the levels achieved

pre-pandemic

during the third quarter ~~to 84 at the end~~ of ~~the quarter.~~fiscal 2019. Our individual comparable stores generally experienced gradual increases in weekly sales performance as operating weeks increased. Individual store performance after

re-opening

was also impacted by changes in local operating restrictions and consumer reactions to changes in local

COVID-19

infection rates.

Food sales at comparable stores ~~decreased~~increased by ~~$51,838,~~$39,049, or ~~71.4%~~187.8%, to $59,842 in the third quarter of fiscal 2021 from $20,793 in the third quarter of fiscal ~~2020 from $72,631~~2020. Beverage sales at comparable stores increased by $19,129, or 176.6%, to $29,959 in the third quarter of fiscal ~~2019. Beverage sales at comparable stores decreased by $24,936, or 69.7%, to~~2021 from $10,830 in the ~~third quarter of fiscal~~ 2020 ~~from $35,766 in the 2019~~ comparison period. Comparable store amusement and other revenues in the third quarter of fiscal ~~2020 decreased~~2021 increased by ~~$93,765,~~$111,436, or ~~61.8%~~192.2%, to ~~$57,969~~$169,405 from ~~$151,734~~$57,969 in the comparable ~~thirteen weeks~~period of fiscal ~~2019. The~~2020.

~~COVID-19~~

Non-comparable

~~pandemic driven reduction in operating hours and product offerings contributed to a shift in our comparable~~ store revenue ~~mix away from food and beverage revenues to amusements and other revenues~~increased $35,264 in the third quarter of ~~approximately 630 basis points when~~fiscal 2021 compared to the third quarter of fiscal ~~2019.~~

~~Non-comparable~~

~~store revenue decreased $20,039 in the third quarter of fiscal~~ 2020, ~~compared to the third quarter of fiscal 2019,~~ for the same reasons noted above, including ~~12 net fewer~~144 more store operating weeks.

~~Table of Contents~~

Cost of products

The total cost of products was $52,613 for the third quarter of fiscal 2021 and $17,908 for the third quarter of fiscal ~~2020 and $52,180 for the third quarter of fiscal 2019.~~2020. The total cost of products as a percentage of total revenues ~~decreased 100~~increased 10 basis points to 16.5% for the third quarter of fiscal 2021 compared to 16.4% for the third quarter of fiscal ~~2020 compared to 17.4% for the third quarter~~2020.

Table of ~~fiscal 2019.~~Contents

Cost of food and beverage products ~~decreased~~increased to ~~$10,664~~$30,082 compared to ~~$33,384~~$10,664 for the third quarter of fiscal ~~2019.~~2020. Cost of food and beverage products, as a percentage of food and beverage revenues, increased ~~100~~10 basis points to 27.9% for the third quarter of fiscal 2021 from 27.8% for the third quarter of fiscal ~~2020 from 26.8% for~~2020. The impact of year-over-year cost increases primarily in meat and poultry products were partially offset by lower closure-related spoilage costs and food price increases effective midway through the third quarter of fiscal ~~2019. Cost of food and beverage products during the third quarter of 2020 was negatively impacted by food and beverage spoilage costs of approximately $550 associated with store closures.~~2021.

Cost of amusement and other ~~decreased~~increased to $22,531 in the third quarter of fiscal 2021 compared to $7,244 in the third quarter of fiscal ~~2020 compared to $18,796 in the third quarter of fiscal 2019.~~2020. The costs of amusement and other, as a percentage of amusement and other revenues, ~~decreased 60~~increased 50 basis points to ~~10.2%~~10.7% for the third quarter of fiscal ~~2020~~2021 from ~~10.8%~~10.2% in the third quarter of fiscal ~~2019.~~2020. This ~~decrease~~increase was driven primarily by ~~lower~~higher freight costs ~~lower~~and higher cost per ticket ~~and higher revenue per game play credit sold as a result of less discounting of amusement revenues, partially offset by an unfavorable shift~~resulting from disruptions in ~~ticket redemption patterns.~~the supply chain.

Operating payroll and benefits

Total operating payroll and benefits ~~decreased~~increased by ~~$48,461,~~$51,291, or ~~63.6%~~185.1%, to $78,995 in the third quarter of fiscal 2021 compared to $27,704 in the third quarter of fiscal ~~2020 compared to $76,165 in the third quarter of fiscal 2019.~~2020. Nearly all of our store workforce, ~~with the exception of~~except a small team of essential personnel, were furloughed in

~~mid-March.~~mid-March

2020. Hourly team members ~~returned only~~began to return as stores

re-opened

~~and~~ at reduced staffing levels. The total cost of operating payroll and benefits as a percentage of total revenues ~~remained unchanged at 25.4%~~was 24.8% in ~~both~~ the third quarter of fiscal ~~2020 and~~2021 compared to 25.4% in the third quarter of fiscal ~~2019. Favorable results in~~2020. This decrease is primarily due to favorable leveraging on management labor and benefits and lower labor hours due to labor efficiency initiatives and hourly labor ~~were~~staffing shortages, partially offset by ~~the deleveraging impact of management labor as a result of the temporary store closures and continued benefit coverage for furloughed employees. Additionally, late~~increases in the ~~third~~hourly labor cost and higher incentive compensation, including referral and retention incentives implemented during the second quarter ~~we recalled a core group~~ of ~~store managers at unopened stores.~~fiscal 2021.

Other store operating expenses

Other store operating expenses ~~decreased~~increased by ~~$39,930,~~$32,539, or ~~36.1%~~46.0%, to $103,322 in the third quarter of fiscal 2021 compared to $70,783 in the third quarter of fiscal ~~2020 compared~~2020. The increase is primarily due to ~~$110,713 in~~the impact of increased store weeks during the third quarter of fiscal ~~2019. The decrease is primarily due to reduced spend~~2021 on ~~marketing,~~costs such as utilities, supplies, maintenance, and other ~~services due to temporary store closures.~~services. Other store operating expense as a percentage of total revenues ~~increased~~decreased to 32.5% in the third quarter of fiscal 2021 compared to 64.9% in the third quarter of fiscal ~~2020 compared~~2020. This decrease was due primarily to ~~37.1%~~favorable sales leveraging on occupancy costs and utilities and reduced marketing spend in the third quarter of fiscal ~~2019. This increase was due primarily to sales deleveraging on occupancy costs and utilities as a result of the temporary store closures.~~2021.

General and administrative expenses

General and administrative expenses ~~decreased~~increased by ~~$4,464,~~$10,358, or ~~27.5%~~88.2%, to $22,104 in the third quarter of fiscal 2021 compared to $11,746 in the third quarter of fiscal ~~2020 compared to $16,210 in the third quarter of fiscal 2019.~~2020. The ~~decrease~~increase in general and administrative expenses was driven primarily ~~driven~~ by ~~lower labor costs due~~higher incentive compensation, professional fees, salaries and benefits, board fees, officer insurance, and share-based compensation. The third quarter of fiscal 2021 also includes a $3,230 severance obligation to the Company’s former Chief Executive Officer, who terminated his service in this position effective September 30, 2021. During the third quarter of fiscal 2020, some corporate team members continued ~~furloughs and elimination of a significant number of positions at our corporate office, lower professional services, reduced travel expenses~~on furlough and board ~~of director fees. These cost reductions were partially offset by increased share-based compensation as a result of new grants issued during the second quarter.~~fees remained suspended.

Depreciation and amortization expense

Depreciation and amortization expense ~~increased by $1,044 or 3.1%,~~was relatively flat at $34,381 in the third quarter of fiscal 2021 compared to $34,384 in the third quarter of fiscal ~~2020 compared to $33,340 in the third quarter of fiscal 2019.~~2020. Increased depreciation due to our ~~2020~~2021 and ~~2019~~2020 capital expenditures for new stores, operating initiatives, games and maintenance capital, was ~~partially~~ offset by other assets reaching the end of their depreciable lives.

Pre-opening

costs

Pre-opening

costs decreased by ~~$1,675~~$478 to $2,092 in the third quarter of fiscal 2021 compared to $2,570 in the third quarter of fiscal 2020 ~~compared to $4,245 in the third quarter of fiscal 2019~~ due to a decrease in the number of planned new store openings ~~in the current year, as~~after construction was ~~put on hold, with~~

~~pre-opening~~

~~costs being primarily limited to~~

~~pre-opening~~

~~rent expense after the disruption of our business~~reduced as a result of impacts of the

COVID-19

~~pandemic.~~

pandemic which began during the first quarter of fiscal 2020.

~~Table of Contents~~

Interest expense, net &and Loss on debt ~~refinance~~extinguishment / refinancing

Interest expense, net increased by ~~$2,103~~$5,210 to $13,423 in the third quarter of fiscal 2021 compared to $8,213 in the third quarter of fiscal 2020 ~~compared~~due primarily to ~~$6,110 in the third quarter of fiscal 2019 due to an increase in the average outstanding debt and~~ an increase in the weighted average effective interest ~~rate.~~rate, offset slightly by a decrease in average outstanding debt. In connection with the September 20, 2021 early extinguishment of a portion of the Notes, The Company recorded a loss on extinguishment of $2,829 during the third quarter of fiscal 2021. In connection with the October 27, 2020 debt refinancing, ~~which is explained in Note 3 to the Unaudited Consolidated Financial Statements,~~ the Company recorded a charge of $904 during the third quarter of fiscal 2020. These events are explained further in Note 3 to the Unaudited Consolidated Financial Statements.

Table of Contents

Provision (benefit) for income taxes

The effective tax rate for the ~~thirteen weeks ended November 1, 2020,~~third quarter of fiscal 2021 was a benefit of ~~26.3%~~28.8%, compared to ~~24.1% in~~a benefit of 26.3% for the third quarter of fiscal ~~2019,~~2020. The current quarter tax provision includes higher excess tax benefits associated with share-based compensation and the reduction of certain valuation allowances related to our state net operating loss carryovers. The prior quarter tax provision was a tax benefit primarily due to the impact of ~~a decrease in operating earnings before income tax as well as~~ the ~~impact of provisions of the CARES Act, including technical amendments to qualified improvement property~~

pre-tax

loss and the impact of ~~carrying back~~the tax net operating losses from fiscal years 2020 and 2019 to years with a higher federal corporate income tax rate. The prior year effective tax rate was also impacted by lower projected state tax expense andprovisions within the ~~favorable impact of tax credits.~~

CARES Act.

Thirty-Nine Weeks Ended October 31, 2021 Compared to the Thirty-Nine Weeks Ended November 1, 2020 ~~Compared to Thirty-Nine Weeks Ended November 3, 2019~~

Results of operations.


										Thirty-Nine Weeks				Thirty-Nine Weeks
										Ended				Ended
	Thirty-Nine Weeks Ended November 1, 2020					Thirty-Nine Weeks Ended November 3, 2019				October 31, 2021				November 1, 2020
Food and beverage revenues	$	119,268		37.3	%	$	410,779	40.8	%	$	316,511	32.9	%	$	119,268		37.3	%
Amusement and other revenues		200,423		62.7			596,754	59.2			644,443	67.1			200,423		62.7

Total revenues		319,691		100.0			1,007,533	100.0			960,954	100.0			319,691		100.0
Cost of food and beverage (as a percentage of food and beverage revenues)		32,667		27.4			109,072	26.6			86,366	27.3			32,667		27.4
Cost of amusement and other (as a percentage of amusement and other revenues)		21,997		11.0			64,456	10.8			63,729	9.9			21,997		11.0

Total cost of products		54,664		17.1			173,528	17.2			150,095	15.6			54,664		17.1
Operating payroll and benefits		85,197		26.6			239,965	23.8			209,897	21.8			85,197		26.6
Other store operating expenses		229,137		71.8			321,334	31.9			292,883	30.5			229,137		71.8
General and administrative expenses		35,587		11.1			49,047	4.9			57,665	6.0			35,587		11.1
Depreciation and amortization expense		104,896		32.8			97,226	9.6			104,355	10.9			104,896		32.8
Pre-opening costs		8,781		2.7			15,970	1.6			5,427	0.6			8,781		2.7

Total operating costs		518,262		162.1			897,070	89.0			820,322	85.4			518,262		162.1

Operating income (loss)		(198,571	)	(62.1	)		110,463	11.0			140,632	14.6			(198,571	)	(62.1	)
Interest expense, net		22,491		7.0			14,771	1.5			41,971	4.3			22,491		7.0
Loss on debt refinance		904		0.3			—	—
Loss on debt extinguishment / refinancing											2,829	0.3			904		0.3

Income (loss) before provision (benefit) for income taxes		(221,966	)	(69.4	)		95,692	9.5			95,832	10.0			(221,966	)	(69.4	)
Provision (benefit) for income taxes		(71,777	)	(22.4	)		20,411	2.0			12,842	1.4			(71,777	)	(22.4	)

Net income (loss)	$	(150,189	)	(47.0	)	$	75,281	7.5	%	$	82,990	8.6	%	$	(150,189	)	(47.0	)%

Change in comparable store sales (1)				(70.2	)%			(1.9	)%			195.8	%				(70.2	)%
Company-owned stores at end of period (1)				137				134				143					137
Comparable stores at end of period (1)				114				99				114					114

(1)

re-open.

~~Our store in Duluth (Atlanta), Georgia permanently closed on March 3, 2019 as we did not exercise the renewal option and has been excluded from fiscal 2019 store counts and comparable store sales.~~

2625

Table of Contents

Reconciliations of

Non-GAAP

Financial Measures

Adjusted EBITDA

The following table reconciles (in dollars and as a percent of total revenues) Net income (loss) to Adjusted EBITDA for the periods indicated:


										Thirty-Nine Weeks				Thirty-Nine Weeks
										Ended				Ended
	Thirty-Nine Weeks Ended November 1, 2020					Thirty-Nine Weeks Ended November 3, 2019				October 31, 2021				November 1, 2020
Net income (loss)	$	(150,189	)	-47.0	%	$	75,281	7.5	%	$	82,990	8.6	%	$	(150,189	)	-47.0	%
Interest expense, net		22,491					14,771				41,971				22,491
Loss on debt refinance		904					—
Loss on debt extinguishment / refinancing											2,829				904
Provision (benefit) for income taxes		(71,777	)				20,411				12,842				(71,777	)
Depreciation and amortization expense		104,896					97,226				104,355				104,896

EBITDA		(93,675	)	-29.3	%		207,689	20.6	%		244,987	25.5	%		(93,675	)	-29.3	%
Loss on asset disposal		541					1,284				634				541
Impairment of long-lived assets		13,727					—
Impairment of long-lived assets and lease termination costs											—				13,727
Share-based compensation		5,344					5,479				9,936				5,344
Pre-opening costs		8,781					15,970				5,427				8,781
Other costs (1)		54					34				3,082				54

Adjusted EBITDA	$	(65,228	)	-20.4	%	$	230,456	22.9	%	$	264,066	27.5	%	$	(65,228	)	-20.4	%

(1)	Primarily represents costs related to currency transaction (gains) or losses. The third quarter of fiscal 2021 includes a $3,230 severance obligation to the Company’s former Chief Executive Officer, who terminated his service in this position effective September 30, 2021.

Store Operating Income Before Depreciation and Amortization

The following table reconciles (in dollars and as a percent of total revenues) Operating income (loss) to Store Operating Income Before Depreciation and Amortization for the periods indicated:


										Thirty-Nine Weeks				Thirty-Nine Weeks
										Ended				Ended
	Thirty-Nine Weeks Ended November 1, 2020					Thirty-Nine Weeks Ended November 3, 2019				October 31, 2021				November 1, 2020
Operating income (loss)	$	(198,571	)	-62.1	%	$	110,463	11.0	%	$	140,632	14.6	%	$	(198,571	)	-62.1	%
General and administrative expenses		35,587					49,047				57,665				35,587
Depreciation and amortization expense		104,896					97,226				104,355				104,896
Pre-opening costs		8,781					15,970				5,427				8,781

Store Operating Income Before Depreciation and Amortization	$	(49,307	)	-15.4	%	$	272,706	27.1	%	$	308,079	32.1	%	$	(49,307	)	-15.4	%

Capital Additions

The table below reflects accrual-based capital additions. Capital additions do not include any reductions for Payments from landlords.


					Thirty-Nine Weeks		Thirty-Nine Weeks
					Ended		Ended
	Thirty-Nine Weeks Ended November 1, 2020		Thirty-Nine Weeks Ended November 3, 2019		October 31, 2021		November 1, 2020
New store and operating initiatives	$	48,222	$	143,594	$	40,372	$	48,222
Games		9,079		12,667		12,809		9,079
Maintenance capital		2,988		16,316		16,692		2,988

Total capital additions	$	60,289	$	172,577	$	69,873	$	60,289

Payments from landlords	$	8,723	$	28,581	$	7,802	$	8,723

2726

Table of Contents

Results of Operations

Revenues

Selected revenue and store data for the periods indicated are as follows:


										Thirty-Nine Weeks Ended
	Thirty-nine weeks ended November 1, 2020			Thirty-nine weeks ended November 3, 2019			Change			October 31, 2021			November 1, 2020			Change
Total revenues	$	319,691		$	1,007,533		$	(687,842	)	$	960,954		$	319,691		$	641,263
Total store operating weeks		2,682			5,012			(2,330	)		5,304			2,682			2,622
Comparable store revenues	$	268,426		$	901,837		$	(633,411	)	$	794,033		$	268,426		$	525,607
Comparable store operating weeks		2,184			4,446			(2,262	)		4,243			2,184			2,059
Noncomparable store revenues	$	54,763		$	110,231		$	(55,468	)	$	179,603			54,763		$	124,840
Noncomparable store operating weeks		498			566			(68	)		1,061			498			563
Other revenues	$	(3,498	)	$	(4,535	)	$	1,037
Other revenues and deferrals										$	(12,682	)	$	(3,498	)	$	(9,184	)

Total revenues ~~decreased $687,842,~~increased $641,263, or ~~68.3%~~200.6%, to ~~$319,691~~$960,954 in the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 compared to total revenues of ~~$1,007,533~~$319,691 in the comparable period of fiscal 2020. The increase in revenue is attributable primarily to more store operating weeks in the thirty-nine weeks ended ~~November 3, 2019. The decline in revenue is attributable~~October 31, 2021 compared to ~~fewer store operating weeks in fiscal 2020 as a result of~~the prior year which was impacted by more temporary store closures ~~lower customer volumes~~and store capacity limitations due to ~~limited food and beverage and amusement operations and the canceling or postponement of special events as a result of~~ the

COVID-19

pandemic. For the thirty-nine weeks ended October 31, 2021, we derived 22.4% of our total revenue from food sales, 10.5% from beverage sales, 66.7% from amusement sales and 0.4% from other sources. For the thirty-nine weeks ended November 1, 2020, we derived 24.6% of our total revenue from food sales, 12.7% from beverage sales, 62.2% from amusement sales and 0.5% from other sources. ~~For~~The shift in mix from food and beverage sales to amusement sales of 452 basis points is due, in part, to reduced special events, less discounting of amusements, and greater capacity restrictions in our dining area due to the impacts of the

COVID-19

pandemic.

Comparable store revenue increased $525,607 or 195.8%, in the thirty-nine weeks ended October 31, 2021 compared to the comparable period of fiscal 2020, due primarily to a 94.3% increase in comparable store operating weeks. Comparable store sales and comparable store weeks in the thirty-nine weeks ended October 31, 2021 were approximately 88.0% and 95.4%, respectively, of the levels achieved

pre-pandemic

during the thirty-nine weeks ended November 3, ~~2019, we derived 27.9% of our total revenue from food sales, 12.9% from beverage sales, 58.4% from amusement sales and 0.8% from other sources.~~

Comparable store revenue decreased $633,411, or 70.2%, in the thirty-nine weeks ended November 1, 2020 compared to the thirty-nine weeks ended November 3, 2019, due primarily to a 50.9% reduction in comparable store operating weeks and lower customer volumes as stores

~~re-opened~~

~~with limited operations. As of March 20, 2020, all the Company’s 114 comparable stores were closed due to operating restrictions put in place by local jurisdictions in response to the~~

~~COVID-19~~

~~pandemic. Beginning April 30, 2020, we began~~

~~re-opening~~

~~our stores based on changes in operating restrictions in the various jurisdictions. As of November 1, 2020, 84 of our comparable stores had~~

~~re-opened~~

~~under limited operating conditions.~~2019. Our individual comparable stores generally experienced gradual increases in weekly sales performance as operating weeks increased. Individual store performance after

re-opening

was impacted by changes in local operating restrictions and consumer reactions to changes in local

COVID-19

infection rates.

~~Comparable~~

~~walk-in~~

revenues, which accounted for 96.2% of comparable store revenue for the thirty-nine weeks ended November 1, 2020, decreased 68.6% compared to the similar period in fiscal 2019. Comparable store special events revenues, which accounted for 3.8% of comparable store revenue for the thirty-nine weeks ended November 1, 2020, decreased 87.1% compared to the similar period in fiscal 2019 as events were canceled or postponed due to local restrictions on group gathering size and operating restrictions on our business.

Food sales at comparable stores ~~decreased~~increased by ~~$185,463,~~$111,111, or ~~73.9%~~169.3%, to ~~$65,627~~$176,738 in the thirty-nine weeks ended ~~November1, 2020~~October 31, 2021 from ~~$251,090~~$65,627 in the comparable period of fiscal 2020. Beverage sales at comparable stores increased by $49,967, or 145.3%, to $84,348 in the thirty-nine weeks ended ~~November 3, 2019. Beverage sales at comparable stores decreased by $81,691, or 70.4%, to~~October 31, 2021 from $34,381 in the ~~thirty-nine weeks ended November 1,~~ 2020 ~~from $116,072 in the 2019~~ comparison period. Comparable store amusement and other revenues in the thirty-nine weeks ended ~~November 1, 2020 decreased~~October 31, 2021 increased by ~~$366,257,~~$364,529, or ~~68.5%~~216.4%, to ~~$168,418~~$532,947 from ~~$534,675~~$168,418 in the comparable thirty-nine weeks of fiscal ~~2019.~~2020.

Non-comparable

store revenue ~~decreased $55,468~~increased $124,840 in the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 compared to the ~~thirty-nine weeks ended November 3, 2019. During the first four-week~~comparable period of fiscal 2020,

~~non-comparable~~

~~stores contributed an additional $9,668 of revenue and 54 additional operating weeks over the same period of fiscal 2019. During the remainder of the thirty-nine week period ended November 1, 2020,~~

~~non-comparable~~

~~store revenue decreased $65,136~~ for the same reasons noted above, including ~~122 fewer~~563 more store operating weeks.

Cost of products

The total cost of products was ~~$54,664~~$150,095 for the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 and ~~$173,528~~$54,664 for the ~~thirty-nine weeks ended November 3, 2019.~~comparable period of fiscal 2020. The total cost of products as a percentage of total revenues ~~was 17.1% and 17.2%~~decreased 150 basis points to 15.6% for the thirty-nine weeks ~~November 1, 2020 and~~ended October 31, 2021 compared to 17.1% for the ~~thirty-nine weeks ended November 3, 2019, respectively.~~comparable period of fiscal 2020.

~~Table of Contents~~

Cost of food and beverage products ~~decreased~~increased to ~~$32,667 in the thirty-nine weeks ended November 1, 2020 compared to $109,072~~$86,366 for the thirty-nine weeks ended ~~November 3, 2019.~~October 31, 2021 compared to $32,667 for the comparable period of fiscal 2020. Cost of food and beverage products, as a percentage of food and beverage revenues, ~~increased 80~~decreased 10 basis points to ~~27.4%~~27.3% for the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 from ~~26.6%~~27.4% for the ~~thirty-nine weeks ended November 3, 2019. Cost~~comparable period of fiscal 2020. The impact of year-over-year cost increases in food products, including meat and ~~beverage products in the thirty-nine weeks ended November 1, 2020, was negatively impacted~~poultry, were offset by ~~food and beverage~~lower closure-related spoilage ~~costs~~costs.

Table of ~~approximately $1,572 associated with store closures, offset partially by cost reductions resulting from vendor payment negotiations.~~Contents

Cost of amusement and other ~~decreased~~increased to ~~$21,997~~$63,729 in the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 compared to ~~$64,456~~$21,997 in the ~~thirty-nine weeks ended November 3, 2019.~~comparable period of fiscal 2020. The costs of amusement and other, as a percentage of amusement and other revenues, ~~increased 20~~decreased 110 basis points to ~~11.0%~~9.9% for the thirty-nine weeks ended ~~November 1, 2020~~October 31, 2021 from ~~10.8% for~~11.0% in the ~~thirty-nine weeks ended November 3, 2019, due~~comparable period of fiscal 2020. This decrease was driven primarily ~~to a shift in~~by lower ticket redemption ~~patterns.~~activity as a percent of tickets issued during the first half of fiscal 2021, offset somewhat by higher freight costs and higher cost per ticket resulting from disruptions in the supply chain.

Operating payroll and benefits

Total operating payroll and benefits ~~decreased~~increased by ~~$154,768,~~$124,700, or ~~64.5%~~146.4%, to $209,897 in the thirty-nine weeks ended October 31, 2021 compared to $85,197 in the thirty-nine weeks ended November 1, ~~2020 compared to $239,965 in the thirty-nine weeks ended November 3, 2019.~~2020. Nearly all of our store workforce, ~~except~~with the exception of a small team of essential personnel, were furloughed in

~~mid-March.~~mid-March

2020. Hourly team members ~~returned only~~began to return as stores

re-opened

~~and~~ at reduced staffing levels. The total cost of operating payroll and benefits as a percentage of total revenues ~~increased 280 basis points~~was 21.8% in the thirty-nine weeks ended October 31, 2021 compared to 26.6% in the thirty-nine ~~week period~~weeks ended November 1, ~~2020 compared~~2020. This decrease is primarily due to ~~23.8%~~favorable leveraging on management labor and benefits and lower labor hours due to labor efficiency initiatives and hourly labor staffing shortages, partially offset by increases in the ~~thirty-nine week period ended November 3, 2019, due primarily to sales deleveraging~~hourly labor costs and higher incentive compensation, including referral and retention incentives implemented during the second quarter of management labor as a result of the temporary store closures and partially attributable to continued benefit coverage for furloughed employees. Late in the third quarter, we recalled a core group of store managers at unopened stores.fiscal 2021.

Other store operating expenses

Other store operating expenses ~~decreased~~increased by ~~$92,197,~~$63,746, or ~~28.7%~~27.8%, to $292,883 in the thirty-nine weeks ended October 31, 2021 compared to $229,137 in the thirty-nine weeks ended November 1, ~~2020 compared~~2020. The increase is primarily due to ~~$321,334 in~~the impact of increased store weeks during the thirty-nine weeks ended ~~November 3, 2019. Decreased spend~~October 31, 2021 on ~~marketing,~~costs such as utilities, supplies, maintenance, and other ~~services due to temporary store closures and $1,000 insurance proceeds related to the~~

~~COVID-19~~

~~business disruptions~~services. These increases were ~~partially~~ offset somewhat by a $13,727 charge for impairment of long-lived assets and ~~a net loss on derivatives of $1,578.~~lease termination costs incurred during the thirty-nine weeks ended November 1, 2020. Other store operating expense as a percentage of total revenues ~~increased~~decreased to 30.5% in the thirty-nine weeks ended October 31, 2021 compared to 71.8% in the thirty-nine weeks ended November 1, ~~2020 compared to 31.9% in the thirty-nine weeks ended November 3, 2019.~~2020. This ~~increase~~decrease was due primarily to favorable sales ~~deleveraging~~leveraging on occupancy costs and utilities ~~as a result of the temporary store closures~~ and the absence of any impairment charges ~~for impairment.~~in fiscal 2021.

General and administrative expenses

General and administrative expenses ~~decreased~~increased by ~~$13,460,~~$22,078, or ~~27.4%~~62.0%, to $57,665 in the thirty-nine weeks ended October 31, 2021 compared to $35,587 in the thirty-nine weeks ended November 1, ~~2020 compared to $49,047 in the thirty-nine weeks ended November 3, 2019.~~2020. The ~~decrease~~increase in general and administrative expenses was driven primarily by ~~lower labor resulting from continued furloughs~~higher incentive compensation, salaries and ~~elimination~~benefits, professional fees, board fees, officer insurance, and share-based compensation. The third quarter of fiscal 2021 also includes a ~~significant number~~$3,230 severance obligation to the Company’s former Chief Executive Officer, who terminated his service in this position effective September 30, 2021. Effective near the end of ~~positions at~~March 2020, as a result of the impacts of the

COVID-19

pandemic, most of our corporate ~~office, temporarily reducing~~team members were furloughed, with reduced pay and benefits for ~~employees that were not furloughed~~the remaining team members for a twelve-week period, ~~lower professional services costs, and reduced travel expenses~~ and board ~~of director fees.~~

fees were temporarily suspended. Share-based compensation was also lower during that same time due to changes in performance stock unit expense.

Depreciation and amortization expense

Depreciation and amortization expense ~~increased by $7,670 or 7.9%,~~was relatively flat at $104,355 in the thirty-nine weeks ended October 31, 2021 compared to $104,896 in the thirty-nine weeks ended November 1, ~~2020 compared to $97,226 in the thirty-nine weeks ended November 3, 2019.~~2020. Increased depreciation due to our ~~2020~~2021 and ~~2019~~2020 capital expenditures for new stores, operating initiatives, games and maintenance capital, was ~~partially~~ offset by other assets reaching the end of their depreciable lives.

Pre-opening

costs

Pre-opening

costs decreased by ~~$7,189~~$3,354 to $5,427 in the thirty-nine weeks ended October 31, 2021 compared to $8,781 in the thirty-nine weeks ended November 1, 2020 ~~compared to $15,970 in the thirty-nine weeks ended November 3, 2019,~~ due to a decrease in the number of planned new store openings ~~in the current year, as~~after construction was ~~put on hold or delayed, with~~

~~pre-opening~~

~~costs being primarily limited to~~

~~pre-opening~~

~~rent expense after the disruption of our business~~reduced as a result of impacts of the

COVID-19

~~pandemic.~~

pandemic which began during the first quarter of fiscal 2020.

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Interest expense, net and Loss on debt ~~refinance~~extinguishment / refinancing

Interest expense, net increased by ~~$7,720~~$19,480 to $41,971 in the thirty-nine weeks ended October 31, 2021 compared to $22,491 in the thirty-nine weeks ended November 1, 2020 ~~compared to $14,771 in the thirty-nine weeks ended November 3, 2019,~~ due primarily to an increase in ~~average outstanding debt and a slightly higher~~the weighted average effective interest ~~rate.~~rate, offset slightly by a decrease in average outstanding debt. In connection with the September 20, 2021 early extinguishment of a portion of the Notes, the Company recorded a loss on extinguishment of $2,829 during the third quarter of fiscal 2021. In connection with the October 27, 2020 debt refinancing, ~~which is explained in Note 3 of the Unaudited Consolidated Financial Statements,~~ the Company recorded a charge of $904 during the third quarter of fiscal 2020. These events are explained further in Note 3 to the Unaudited Consolidated Financial Statements.

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Provision (benefit) for income taxes

The effective tax rate for the thirty-nine weeks ended ~~November 1, 2020,~~October 31, 2021, was 13.4%, compared to a benefit of 32.3%~~, compared to an expense of 21.3%~~ for the thirty-nine weeks ended November ~~3, 2019,~~1, 2020. The current year tax provision includes higher excess tax benefits associated with share-based compensation while the prior year was a tax benefit primarily due to the impact of ~~a decrease in operating earnings before income tax as well as~~ the ~~impact of provisions of the CARES Act, including technical amendments to qualified improvement property~~

pre-tax

loss and the impact of ~~carrying back~~the tax ~~net operating losses from fiscal years 2020 and 2019 to years with a higher federal corporate income tax rate.~~

provisions within the CARES Act.

Liquidity and Capital Resources

In response to the business disruption caused by the

COVID-19

pandemic which began in the first quarter of fiscal 2020, the Company ~~has taken~~took the following actions to enable it to meet its obligations over the next twelve months:

~~During the first and second quarters of fiscal year 2020, we:~~

~~reduced expenses broadly;~~

~~canceled or delayed all~~

~~non-essential~~

~~planned capital spending for the remainder of fiscal 2020 and halted or delayed all planned store openings;~~

~~suspended our share repurchase program and our dividend;~~

~~drew down substantially all the remaining credit available under our $500,000 revolving credit facility;~~

~~negotiated an amendment with our lenders, which included relief from compliance with financial covenants for the first, second and third quarterly periods of fiscal 2020;~~

sold shares of our common stock, ~~which generated~~generating gross proceeds of $185,600;

~~initiated negotiations~~negotiated two amendments with our lenders, resulting in an extension of the maturity date of our revolving credit facility to August 17, 2024 and relief from testing compliance with certain financial covenants until the last day of the fiscal quarter ending on May 1, 2022;

issued $550,000 of senior secured notes, maturing November 1, 2025; and

negotiated with our landlords, vendors, and other business partners to temporarily reduce our lease and contract payments and obtain other ~~concessions; and~~

submitted a proposal, approved by our shareholders, increasing the number of shares available for incentive awards, which enables management to maintain key talent while preserving the Company’s liquidity by minimizing cash outlays.

~~In addition, during the third quarter of~~concessions. During fiscal ~~2020, we:~~

~~continued discussions with our landlords, vendors and other business partners to reduce our lease and contract payments and obtain concessions. As of November 1,~~ 2020, a total of ~~123~~126 initial rent relief agreements ~~relating~~related to our operating locations and corporate headquarters were initially executed, which generally provide for full deferral for three months beginning April 2020, with partial deferral continuing for periods of up to six months, at approximately 50% of those ~~locations;~~locations. As the

COVID-19

~~negotiated a~~pandemic continued to impact our business into the fourth quarter, the Company renewed negotiations with the majority of these landlords in order to provide additional rent relief, generally seeking to delay or extend the terms of deferral pay back periods and/or provide rent relief beyond the periods in the initial agreements. The second ~~amendment with our lenders, resulting~~phase of negotiations resulted in ~~an extension~~99 additional rent relief agreements, the last of which were executed in the ~~maturity date of our revolving credit facility and extended relief from compliance with financial covenants until the first~~third quarter of fiscal ~~year 2022; and~~

2021.

~~issued $550,000 of senior secured notes, maturing November 1, 2025.~~

Although uncertainty ~~surrounds~~persists surrounding

COVID-19,

particularly as a result of new variants of

COVID-19,

including the ~~timing~~potential that a resurgence of

~~re-opening~~COVID-19

~~of our remaining stores~~cases may continue, how long such a resurgence may last, how severe it may be, and ~~lifting of capacity restrictions and other requirements,~~what safety measures governments may impose in response to it, as well as how quickly customers will return to our stores, ~~due to continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses,~~ the Company has taken measures to provide sufficient liquidity to meet estimated cash flow needs and covenant compliance obligations for at least the next twelve ~~months from~~months. All the ~~issuance~~Company’s stores were open and operating as of the ~~financial statements.~~end of the third quarter of fiscal 2021, and as of October 31, 2021, the Company had cash and cash equivalents of $27,005. We expect to spend between $95,000 and $100,000, net of payments from landlords in capital additions during fiscal 2021. On an ongoing basis, we will continue to pursue long-term operating efficiencies and other cost savings initiatives.

The Company is also taking measures to strengthen its financial position. During the third quarter of fiscal 2021, the Company redeemed $55,000 outstanding principal amount of the Notes, and subsequent to the end of our third quarter, the Company redeemed an additional $55,000 outstanding principal amount of the Notes. The early redemptions are expected to reduce net cash interest on the Notes by approximately $8,400 annually.

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Debt and Derivatives

Effective April 14, 2020, we amended our existing credit facility, ~~which provided~~to provide relief from compliance with financial covenants through the third quarter of fiscal 2020. The interest rate spread increased to ~~LIBOR~~2.00% plus ~~2.00% with~~ a LIBOR floor of 1.00%.

On October 27, 2020, the Company issued $550,000 aggregate principal amount of 7.625% senior secured notes (the “Notes”). Interest on the Notes accrues from October 27, 2020 and is payable in arrears on November 1 and May 1 of each year, commencing on May 1, 2021. The Notes mature on November 1, 2025, unless earlier redeemed, and are subject to the terms and conditions set forth in the related indenture. Prior to November 1, 2022, but not more than once during any twelve-month period commencing with the issue date of the Notes, the Company may redeem up to 10% of the original principal amount of the Notes at a redemption price of 103% of the principal amount, plus accrued and unpaid interest, at the redemption date. After November 1, 2022, the Company may redeem the Notes, in whole or in part, at certain specified redemption prices, plus accrued and unpaid interest, at the redemption date. The Notes were issued by ~~D&B Inc~~Dave & Buster’s, Inc. and are unconditionally guaranteed by ~~D&B~~Dave & Buster’s Holdings, Inc. and certain of ~~D&B Inc’s~~Dave & Buster’s, Inc. existing and future wholly owned material domestic subsidiaries, which is substantially the same as the guarantors of the Company’s existing credit facility.

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The Company used the proceeds of the Notes offering, along with cash on hand, to repay the $255,000 principal balance of the term loan facility, $463,000 of borrowings under the revolving credit facility, and related accrued interest. The Company incurred debt issuance costs of $18,300, which are being amortized over the terms of the respective Notes and revolving credit facility. The Company also recorded a loss of $904 related to the unamortized debt costs associated with the term portion of the credit facility.

Concurrent and subject to the issuance of the Notes, the Company entered into a second amendment to its existing credit facility, which included relief from testing compliance with certain financial covenants until the last day of the fiscal quarter ending on May 1, 2022. During the financial covenant suspension period the Company is required to maintain a minimum liquidity (primarily availability under the credit facility) of $150,000. The second amendment extended the maturity date of the $500,000 revolving portion of the facility from August 17, 2022 to August 17, 2024, ~~and~~increased the interest rate spread ~~increased from 2.00%~~ to 4.00% during the financial covenant suspension period, ~~with an additional~~and instituted a 1.00% utilization fee during that same time. The utilization fee is due at maturity. The financial covenant suspension period may end earlier, at the Company’s election, if certain predetermined financial covenant ratios are achieved. After the financial covenant suspension period, the interest rate spread ranges from 1.25% to 3.00%. The second amendment terminated the term loan portion of the credit facility, which triggered payment of $1,900 of lender debt costs associated with the first amendment.

~~The~~On September 20, 2021, the Company ~~used~~redeemed $55,000 outstanding principal amount of the ~~proceeds~~Notes. In connection with the early redemption of the Notes, ~~offering, along with cash on hand,~~the Company paid a prepayment premium of $1,650, plus accrued and unpaid interest to ~~repay~~ the ~~$255,000 principal balance~~date of ~~the term loan facility, $463,000 of borrowings under the revolving credit facility, and related accrued interest. The Company incurred debt issuance costs of $18,200, which are being amortized over~~redemption, pursuant to the terms of the ~~respective~~indenture governing the Notes. Additionally, the early redemption of the Notes ~~and revolving credit facility. As of November 1, 2020, approximately $3,300 of these debt costs had not been paid. The Company also recorded~~resulted in a loss on extinguishment of ~~$904~~$1,179 related to ~~the~~a proportionate amount of unamortized ~~debt costs associated with the term portion of the credit facility.~~issuance costs.

For the thirty-nine weeks ended October 31, 2021 and November 1, 2020, ~~and November 3, 2019,~~ the Company’s weighted average interest rate on outstanding borrowings was ~~4.17%~~10.26% and ~~4.03%~~4.17%, respectively. ~~We expect this~~The rate has increased due to ~~increase in future quarters as a result of~~ the issuance of the Notes and the second amendment to the credit facility. As of ~~November 1, 2020,~~October 31, 2021, we had letters of credit outstanding of ~~$9,686~~$10,486 and an unused commitment balance of ~~$464,314~~$489,514 under the revolving credit facility.

During fiscal 2019, we entered into interest rate swap agreements to manage our exposure to fluctuations in interest rates on our variable rate credit facility. Our swap agreements with our derivative counterparties contain a provision where if the Company defaults on any of its indebtedness and repayment of the indebtedness has been accelerated, the Company could also be declared in default on its derivative obligations. Refer to Note 1 of the ~~Unaudited~~ Consolidated Financial Statements for further discussion of our swap agreements, which were

de-designated

as hedges effective April 14, 2020, the date of the first amendment to our credit facility.

Dividends and Share Repurchases

The Company had previously established a share repurchase program, under which the Company may repurchase shares on the open market, through privately negotiated transactions, and through trading plans designed to comply with Rule

~~10b5-1~~

of the Exchange Act. At November 1, 2020, we had approximately $172,820 remaining of a total $800,000 share repurchase authorization. The existing share repurchase program expires at the end of fiscal 2020. As a result of the impacts to our business arising from the ~~COVID~~

~~-19~~COVID-19

pandemic, ~~share purchases and~~ dividend payments ~~have been indefinitely suspended.~~are currently suspended, and the previously established share repurchase program was allowed to expire at the end of fiscal 2020.

Cash Flow Summary

~~At November 1, 2020, we~~The Company had cash and cash equivalents of ~~$8,341.~~$27,005 on October 31, 2021.

Operating Activities

— Cash flow ~~generated~~ from operations typically provides us with a significant source of liquidity. Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, employee compensation, operations, and occupancy costs. Cash ~~provided by or used in~~from operating activities is also subject to changes in working capital. Working capital at any specific point in time is subject to many variables, including seasonality, the timing of cash receipts and payments, and vendor payment terms.

Cash flow from operating activities increased $230,252 in the thirty-nine weeks ended October 31, 2021 compared to the thirty-nine weeks ended November 1, 2020 driven primarily by the impact of approximately 2,600 more store weeks.

Investing Activities

— Cash flow from investing activities primarily reflects capital expenditures.

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~~Net cash provided by operating activities decreased $249,543 in~~

During the thirty-nine weeks ended ~~November 1, 2020 compared to~~October 31, 2021, the ~~thirty-nine weeks ended November 3, 2019 driven primarily by the closure~~Company spent approximately $35,700 for new store construction and operating improvement initiatives ($27,900 net of ~~all of our 137 operating stores as of March 20, 2020. Operations ceased until April 30, 2020, when we~~

~~re-opened~~

~~our first store, followed by the progressive~~

~~re-opening~~

~~of 101 additional stores with limited operations through the end of our third quarter. The impact of approximately 2,330 fewer store weeks~~payments from landlords), $12,800 for game refreshment and limited operations was lessened somewhat by reduced income tax payments as well as our efforts to actively manage the Company’s daily cash flows, including deferrals and short payments of rent and other payments to landlords.$15,000 for maintenance capital.

~~Investing Activities~~

~~— Cash used in investing activities primarily reflects capital expenditures.~~

During the thirty-nine weeks ended November 1, 2020, the Company spent approximately $55,800 for new store construction and operating improvement initiatives ($47,100 net of payments from landlords), $9,500 for game refreshment and $7,300 for maintenance capital.

During the thirty-nine weeks ended November 3, 2019, we spent approximately $145,700 ($117,100 net of payments from landlords) for new store construction and operating improvement initiatives, $12,400 for game refreshment and $14,800 for maintenance capital.

Financing Activities

— During the ~~first~~thirty-nine weeks ended October 31, 2021, the Company had net repayments of $60,000 of its revolving credit facility and a repayment related to the early extinguishment of $55,000 principal of the Notes. During the third quarter of fiscal ~~year~~ 2020, ~~the Company drew down substantially all the available credit under our revolving credit facility, or approximately $100,000. During the third quarter,~~ the Company issued $550,000 of ~~senior secured notes~~the Notes in a private offering, ~~and amended~~from which the ~~existing credit facility. The~~ proceeds, ~~from the offering,~~ along with cash on hand, were used to pay debt issuance costs, the $255,000 balance of the term portion of the credit facility, and $463,000 of outstanding borrowings under the revolving portion of the credit facility. ~~Additionally,~~Prior to the offering and primarily during the first and second quarters of fiscal 2020, the Company received $95,750 of net proceeds from borrowings of debt and approximately $182,200 of net proceeds from the issuance of shares of our common stock during the first and second quarter of fiscal year 2020. In the thirty-nine weeks ended November 3, 2019, cash used in financing activities primarily reflected approximately $297,300 of share repurchases and approximately $10,800 of cash dividends paid, partially offset by $261,800 of net proceeds from borrowings.stock.

Contractual Obligations and Commitments

~~Effective October 27, 2020, the Company issued $550,000 of senior secured notes and entered into the second amendment to its existing credit facility, which was first amended on April 14, 2020.~~ There have been no ~~other~~ material changes outside the ordinary course of business to our contractual obligations since ~~February 2, 2020,~~January 31, 2021, as reported on ~~Form~~

~~10-K~~Form10-K

filed with the SEC on ~~April 3, 2020. The following table sets forth the contractual obligations related to the Company’s debt obligations as of November 1, 2020.~~March 31, 2021.

Total

1 Year

2-3 Years

4-5 Years

After 5 Years

Senior Secured Notes
   $ 550,000    $ —      $ —      $ 550,000    $ —
Credit Facility - Revolver (1)
   26,000    —      —      26,000    —
Interest requirements (2)
   225,395    46,328    91,087    87,980    —










Total
   $ 801,395    $ 46,328    $ 91,087    $ 663,980    $ —

~~(1)~~

~~Available commitments under the revolving credit facility were $464,314 as of November 1, 2020, subject to a $150,000 liquidity covenant.~~

~~(2)~~

The cash obligations for the variable portion of the interest requirements on the outstanding balance of the revolving credit facility and the unused commitment are based on an interest rate of 6.00% and 0.50%, respectively, through the end of the first quarter of fiscal year 2022, reduced to 4.00% and 0.40%, respectively, for the remainder of the term of the credit facility. The interest requirement on the Notes is based on a fixed rate of 7.625%.

Accounting policies and estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosures of contingent assets and liabilities. These estimates and assumptions affect amounts of assets, liabilities, revenues and expenses and the disclosure of gain and loss contingencies at the date of the consolidated financial statements. Our current estimates are subject to change if different assumptions as to the outcome of future events were made. We evaluate our estimates and judgments on an ongoing basis, and we adjust our assumptions and judgments when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates we used in preparing the accompanying consolidated financial statements. A complete description of our critical accounting policies and estimates is included in our annual consolidated financial statements and the related notes in our Annual Report on Form

10-K

filed with the SEC on ~~April 3, 2020.~~March 31, 2021.

Recent accounting pronouncements

Refer to Note 1 to the Unaudited Consolidated Financial Statements for information regarding new accounting pronouncements.

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

We are exposed to market price fluctuation in food and beverage product prices. Given the historical volatility of certain of our food product prices, including proteins, seafood, produce, dairy products, and cooking oil, these fluctuations can materially impact our food costs. While our purchasing commitments partially mitigate the risk of such fluctuations, there is no assurance that supply and demand factors such as disease or inclement weather will not cause the prices of the commodities used in our restaurant operations to fluctuate. Additionally, the cost of purchased materials may be influenced by tariffs and other trade regulations which are outside of our control. To the extent that we do not pass along cost increases to our customers, our results of operations may be adversely affected. At this time, we do not use financial instruments to hedge our commodity risk.

Interest Rate Risk

Our variable rate indebtedness under our $500,000 revolving credit facility is based on

one-month

LIBOR, with a LIBOR floor of 1.00%. Our interest rate swap agreements, with a combined notional amount of $350,000, convert ~~the floating portion of the interest rate~~

one-month

LIBOR to a fixed interest rate of approximately 2.47% through August 17, 2022. ~~As of November 1, 2020,~~At October 31, 2021,

one-month

LIBOR is below 1.00%.

Inflation

The primary inflationary factors affecting our operations are food, amusement offerings, labor costs, and energy costs. Many of our leases require us to pay taxes, maintenance, repairs, insurance, and utilities, all of which are generally subject to inflationary increases. Finally, the cost of constructing our stores is subject to inflationary increases in the costs of labor and material.

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A large portion of our hourly employees are paid wage rates at or based on the applicable federal, state or city minimum wage and increases in the minimum wage will increase our labor costs. Several states and local jurisdictions in which we operate have enacted legislation to increase the minimum wage and/or minimum tipped wage rates by varying amounts, with more planned increases in the future.

In general, we have been able to partially offset cost increases resulting from inflation by increasing ~~menu~~ prices of food and amusement offerings, improving productivity, or other operating changes. We may or may not be able to offset cost increases in the future.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Interim Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules

13a-15

and

15d-15

promulgated under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, the Interim Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in the Exchange Act

Rules 13a-15(f)

and

15d-15(f))

that occurred during our third quarter ended ~~November 1, 2020,~~October 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

Information regarding legal proceedings is incorporated by reference from Note 5 to our Unaudited Consolidated Financial Statements set forth in Part I of this report.

Item 1A.

Risk Factors

The Company is supplementing the Risk Factors previously disclosed in Item 1A of the Annual Report on Form

10-K

for the fiscal year ended ~~February 2, 2020,~~January 31, 2021, (the “Annual Report”). The following risk factor should be read in conjunction with the Risk Factors disclosed in the Annual Report.

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The

~~COVID-19~~

~~pandemic has disrupted~~ Occupational Safety and ~~is expected to continue to disrupt our business, which~~Health Administration vaccine mandate for employers with more than 100 employees could have a material adverse impact on our business, ~~results of operations, liquidity and financial condition for an extended period of time.~~

~~The recent outbreak of~~

~~COVID-19,~~

and any other outbreaks of contagious diseases or other adverse public health developments in the United States or worldwide, could have a material adverse effect on our business, results of operations, liquidity and financial condition. In 2020, the

~~COVID-19~~

pandemic has significantly impacted the economy in general, and our business specifically, and it will continue to negatively affect our business in a number of ways. These effects could include, but are not limited to:

~~the uncertain and unprecedented impact of the coronavirus and the disease it causes~~

~~(COVID-19)~~

~~on our business and operations and the related impact on our liquidity needs;~~

~~our ability to continue as a going concern;~~

our ability to obtain additional waivers or amendments, and thereafter continue to satisfy covenant requirements (even as they may be amended), under our amended credit agreement and derivative contract payables;

~~our ability to access other funding sources;~~

~~the duration of government-mandated and voluntary shutdowns, and the impact of ongoing mitigation restrictions on our operations once our stores can~~

~~re-open;~~

~~the speed with which our stores safely can be~~

~~re-opened~~

~~and the level of customer demand following~~

~~re-opening;~~

~~the economic impact of~~

~~COVID-19~~

~~and related disruptions on the communities we serve; and~~

~~our overall level of indebtedness.~~

~~The extent to which the~~

~~COVID-19~~

pandemic, or other outbreaks of disease or similar public health threats, materially and adversely impacts our business, results of operations, liquidity and financial condition is highly uncertain and will depend on future developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak. In addition, how quickly, and to what extent, normal economic and operating conditions can resume cannot be predicted, and the resumption of normal business operations may be delayed or constrained by lingering effects of the

~~COVID-19~~

~~pandemic on us or our suppliers, third-party service providers, and/or customers.~~

~~We face risks related to our substantial indebtedness and limitations on future sources of liquidity.~~

As of November 1, 2020, we had total borrowings of $576,000, which consisted of $550,000 of secured indebtedness represented by our Notes and $26,000 of senior secured borrowings under our revolving credit facility. Our substantial indebtedness could have important consequences to us, including:

making it more difficult for us to satisfy our obligations with respect to our debt, and any failure to comply with the obligations under our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing our indebtedness increasing our vulnerability to general economic and industry conditions, including as a result of disruption caused by the global

~~COVID-19~~

~~pandemic;~~

requiring a substantial portion of our cash flow from operations to be dedicated to the payment of obligations with respect to our debt, thereby reducing our ability to use our cash flow to fund our operations, lease payments, capital expenditures, selling and marketing efforts, product development, future business opportunities and other purposes;

~~exposing us to the risk of increased interest rates as a substantial portion of our borrowings are at variable rates;~~

~~restricting us from making strategic acquisitions;~~

limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and

~~limiting our ability to plan for, or adjust to, changing market conditions and placing us at a competitive disadvantage compared to our competitors who may be less highly leveraged.~~

~~Any of these risks could materially impact our ability to fund our operations or limit our ability to expand our business, which could have a material adverse effect on our business,~~ financial condition, and results of operations.

On September 9, 2021, President Biden announced plans for the federal Occupational Safety and Health Administration (“OSHA”) to issue an Emergency Temporary Standard (“ETS”) mandating that all employers with more than 100 employees ensure their workers are either fully vaccinated against

COVID-19

or produce, on a weekly basis, a negative COVID test (the “vaccine mandate”). On November 4, 2021, OSHA issued the ETS, which will require covered employers to comply with the vaccine mandate beginning January 4, 2022 or face substantial penalties for

~~Covenants~~non-compliance.

Currently, the implementation of the vaccine mandate has been blocked by a federal appeals court, subject to the resolution of ongoing litigation challenging the constitutionality of the rules. In addition to the vaccine mandate, it is possible that additional mandates may be announced by local jurisdictions that could impact our workforce and operations. Such mandates could result in ~~our debt agreements restrict our business~~increased labor attrition and disruption, as well as difficulty securing future labor needs, and could ~~limit~~adversely impact our results of operations.

Although we cannot predict with certainty the impact that the potential vaccine mandate and any other related measures may have on our workforce and operations, these requirements and any future requirements may require significant managerial time and attention to implement, increase our operating costs, result in attrition, including attrition of key employees, and impede our ability to ~~implement~~recruit and retain our ~~business plan.~~

~~The credit facility and~~workforce. These measures also may further disrupt the indenture governing the Notes contain covenants that may restrict our ability to implement our business plan, finance future operations, respond to changing business and economic conditions, secure additional financing, and engage in opportunistic transactions, such as strategic acquisitions. In addition, if we fail to satisfy the covenants contained in the credit facility, our ability to borrow under the revolving credit loans portion of the credit facility may be restricted. The credit facility and the indenture governing the Notes include covenants restricting, among other things, our ability to do the following under certain circumstances:

~~incur or guarantee additional indebtedness or issue certain disqualified or preferred stock;~~

~~pay dividends or make other distributions on, or redeem or purchase, any equity interests or make other restricted payments;~~

~~make certain acquisitions or investments;~~

~~create or incur liens;~~

~~transfer or sell assets;~~

~~incur restrictions on the payments of dividends or other distributions from our restricted subsidiaries;~~

~~alter the business that we conduct;~~

~~enter into transactions with affiliates; and~~

~~consummate a merger or consolidation or sell, assign, transfer, lease or otherwise dispose of all or substantially all of our assets.~~

The covenants in the credit facility are generally more restrictive than the covenants in the indenture governing the Notes and 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. In addition, other than during the second amendment suspension period, our credit facility requires us to comply with a total leverage ratio that is no greater than the applicable financial covenant level and a fixed charge ratio that is no greater than 1.25:1.00, respectively, which are each tested as of the last day of each fiscal quarter. During the second amendment suspension period, our credit facility requires us to maintain minimum liquidity of $150,000 at all times.

~~Events beyond our control, including the impact of~~

~~COVID-19,~~

~~may affect our ability to comply with our covenants, even after the cessation of the second amendment suspension period.~~

If we default under the credit facility or the indenture governing the Notes, because of a covenant breach or otherwise, all outstanding amounts thereunder could become immediately due and payable. We cannot assure you that we will be able to comply with our covenants under the credit facility, or the indenture governing the Notes or that any covenant violations will be waived in the future. Any violation that is not waived could result in an event of default, permitting our lenders to declare outstanding indebtedness and interest thereon due and payable, and permitting the lenders under the revolving credit loans provided under the credit facility to suspend commitments to make any advance, or require any outstanding letters of credit to be collateralized by an interest bearing cash account, any ornational supply chain, all of which could have a material adverse effect on our business, financial condition, ~~and~~ results of operations. In addition, if we fail to comply with our financial or other covenants under the credit facility or the indenture governing the Notes, we may need additional financing in order to service or extinguish our indebtedness. We may not be able to obtain financing or refinancing on commercially reasonable terms, or at all. We cannot assure you that we would have sufficient funds to repay outstanding amounts under the credit facility or the indenture governing the Notesoperations and ~~any acceleration of amounts due would have a material adverse effect on our liquidity and financial condition.~~

~~Changes in interest rates could adversely impact the price of our shares, our ability to issue equity or incur debt for acquisitions or other purposes.~~

Interest rates on future borrowings, credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly. In addition, LIBOR and other “benchmark” rates are subject to ongoing national and international regulatory scrutiny and reform. On July 27, 2017, the U.K. Financial Conduct Authority announced that it will no longer persuade or compel banks to submit rates for the calculation of the LIBOR rates after 2021 (the “FCA Announcement”). The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate, or “SOFR.” We are unable to predict the effect of the FCA Announcement or other reforms, whether currently enacted or enacted in the future. The outcome of reforms may result in increased interest expense to us. Changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our shares, and a rising interest rate environment could have an adverse impact on the price of our shares, our ability to issue equity or incur debt for acquisitions or other purposes.prospects.

3532

Item 2.

Unregistered Sales of Equity Securities ~~and Use of Proceeds~~

~~There has been no material change in the use of proceeds disclosed in our prospectus supplement to our registration statement on Form~~

~~S-3,~~

~~filed with the SEC on April 14, 2020.~~

There were no repurchases of our common stock under our share repurchase plan during the thirteen weeks ended ~~November 1, 2020.~~October 31, 2021.

3633

Item 6.

Exhibits


Exhibit Number		Description

10.1*		Transition and Separation Agreement and Release by and between Brian A. Jenkins and Dave & Buster’s ~~Select Executive Retirement Plan as amended~~Entertainment, Inc. and ~~restated by~~ Dave & Buster’s Management ~~Corporation, Inc., effective as of January 1, 2017.~~Corporation.

10.2*		Interim CEO Letter Agreement by and between Kevin Sheehan and Dave & Buster’s Entertainment, Inc. and Dave & Buster’s Management Corporation.

10.3*		Form of Restricted Stock Unit Agreement by and between Kevin Sheehan and Dave & Buster’s Entertainment, Inc.

10.4*		Form of Restricted Stock Unit Agreement by and between Kevin Sheehan and Dave & Buster’s Entertainment, Inc.

31.1*		Certification of ~~Brian A. Jenkins,~~Kevin Sheehan, Interim Chief Executive Officer of the Registrant, pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a).

31.2*		Certification of Scott J. Bowman, Chief Financial Officer of the Registrant, pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a).

32.1*		Certification of ~~Brian A. Jenkins,~~Kevin Sheehan, Interim Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Scott J. Bowman, Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101~~101.INS		XBRL Inline Instance Document—the instance document does not appear in the Interactive Data ~~files~~File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		XBRL Inline Taxonomy Extension Schema Document

101.CAL		XBRL Inline Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Inline Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Inline Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Inline Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

*	Filed herein

3734

Table of Contents

Signatures

Pursuant to the requirements of Section 13 or 15(d) 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.


	DAVE & BUSTER’S ENTERTAINMENT, INC., a Delaware corporation

Date: December ~~10, 2020~~7, 2021	By:	/s/ ~~Brian A. Jenkins~~ Kevin Sheehan
	~~Brian A. Jenkins~~	Kevin Sheehan
		Interim Chief Executive Officer

Date: December ~~10, 2020~~7, 2021	By:	/s/ Scott J. Bowman
		Scott J. Bowman
		Chief Financial Officer

3835


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐


Emerging Growth Company	☐


	November 1, 2020			February 2, 2020
	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	8,341		$	24,655
Inventories		26,732			34,477
Prepaid expenses		12,080			14,269
Income taxes receivable		44,574			2,331
Other current assets		665			3,245

Total current assets		92,392			78,977
Property and equipment (net of $767,510 and $686,824 accumulated depreciation as of November 1, 2020 and February 2, 2020, respectively)		846,056			900,637
Operating lease right of use assets		1,050,878			1,011,568
Deferred tax assets		20,451			7,639
Tradenames		79,000			79,000
Goodwill		272,643			272,636
Other assets and deferred charges		23,641			19,682

Total assets	$	2,385,061		$	2,370,139

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	—		$	15,000
Accounts payable		42,849			65,359
Accrued liabilities		244,163			207,452
Income taxes payable		415			3,054

Total current liabilities		287,427			290,865
Deferred income taxes		13,355			19,102
Operating lease liabilities		1,277,794			1,222,054
Other liabilities		37,896			35,779
Long-term debt, net		561,815			632,689
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; authorized: 400,000,000 shares; issued: 60,483,730 shares at November 1, 2020 and 43,386,852 shares at February 2, 2020; outstanding: 47,642,029 shares at November 1, 2020 and 30,603,340 shares at February 2, 2020		605			434
Preferred stock, 50,000,000 authorized; NaN issued		—			—
Paid-in capital		529,523			339,161
Treasury stock, 12,841,701 and 12,783,512 shares as of November 1, 2020 and February 2, 2020, respectively		(595,957	)		(595,041	)
Accumulated other comprehensive loss		(10,673	)		(8,369	)
Retained earnings		283,276			433,465

Total stockholders’ equity		206,774			169,650

Total liabilities and stockholders’ equity	$	2,385,061		$	2,370,139


	Thirteen Weeks Ended November 1, 2020			Thirteen Weeks Ended November 3, 2019
Food and beverage revenues	$	38,346		$	124,637
Amusement and other revenues		70,706			174,715

Total revenues		109,052			299,352
Cost of food and beverage		10,664			33,384
Cost of amusement and other		7,244			18,796

Total cost of products		17,908			52,180
Operating payroll and benefits		27,704			76,165
Other store operating expenses		70,783			110,713
General and administrative expenses		11,746			16,210
Depreciation and amortization expense		34,384			33,340
Pre-opening costs		2,570			4,245

Total operating costs		165,095			292,853

Operating income (loss)		(56,043	)		6,499
Interest expense, net		8,213			6,110
Loss on debt refinance		904			—

Income (loss) before benefit for income taxes		(65,160	)		389
Benefit for income taxes		(17,117	)		(93	)

Net income (loss)		(48,043	)		482

Unrealized foreign currency translation gain		34			59
Unrealized gain (loss) on derivatives, net of tax		1,370			(1,568	)

Total other comprehensive income (loss)		1,404			(1,509	)

Total comprehensive loss	$	(46,639	)	$	(1,027	)

Net income (loss) per share:
Basic	$	(1.01	)	$	0.02
Diluted	$	(1.01	)	$	0.02
Weighted average shares used in per share calculations:
Basic		47,613,741			30,980,878
Diluted		47,613,741			31,515,454


	Thirty-Nine Weeks Ended November 1, 2020			Thirty-Nine Weeks Ended November 3, 2019
Food and beverage revenues	$	119,268		$	410,779
Amusement and other revenues		200,423			596,754

Total revenues		319,691			1,007,533
Cost of food and beverage		32,667			109,072
Cost of amusement and other		21,997			64,456

Total cost of products		54,664			173,528
Operating payroll and benefits		85,197			239,965
Other store operating expenses		229,137			321,334
General and administrative expenses		35,587			49,047
Depreciation and amortization expense		104,896			97,226
Pre-opening costs		8,781			15,970

Total operating costs		518,262			897,070

Operating income (loss)		(198,571	)		110,463
Interest expense, net		22,491			14,771
Loss on debt refinance		904			—

Income (loss) before provision (benefit) for income taxes		(221,966	)		95,692
Provision (benefit) for income taxes		(71,777	)		20,411

Net income (loss)		(150,189	)		75,281

Unrealized foreign currency translation gain (loss)		(97	)		2
Unrealized loss on derivatives, net of tax		(2,207	)		(7,475	)

Total other comprehensive loss		(2,304	)		(7,473	)

Total comprehensive income (loss)	$	(152,493	)	$	67,808

Net income (loss) per share:
Basic	$	(3.56	)	$	2.19
Diluted	$	(3.56	)	$	2.15
Weighted average shares used in per share calculations:
Basic		42,185,163			34,405,503
Diluted		42,185,163			35,042,311



	Thirteen Weeks Ended November 3, 2019
	Common Stock				Paid-In Capital		Treasury Stock At Cost					Accumulated Other Comprehensive Loss			Retained Earnings			Total
	Shares		Amt.				Shares		Amt.

Balance August 4, 2019		43,337,125	$	433	$	335,599		10,358,291	$	(497,862	)	$	(6,647	)	$	417,779		$	249,302
Net income		—		—		—		—		—			—			482			482
Unrealized foreign currency translation gain		—		—		—		—		—			59			—			59
Unrealized loss on derivatives, net of tax		—		—		—		—		—			(1,568	)		—			(1,568	)
Share-based compensation		—		—		1,747		—		—			—			—			1,747
Issuance of common stock		13,360		1		164		—		—			—			—			165
Repurchase of common stock		—		—				2,425,221		(97,179	)		—			—			(97,179	)
Dividends declared ($0.16 per share)		—		—		—		—		—			—			(4,887	)		(4,887	)

Balance November 3, 2019		43,350,485	$	434	$	337,510		12,783,512	$	(595,041	)	$	(8,156	)	$	413,374		$	148,121


	November 1, 2020		February 2, 2020
Deferred amusement revenue	$	79,210	$	75,113
Current portion of operating lease liabilities, net (1)		51,850		45,611
Rent payable ( Note 4)		40,542		—
Variable rent liabilities ( Note 4)		7,559		1,331
Deferred gift card revenue		10,330		11,253
Property taxes		10,285		7,226
Compensation and benefits		9,914		23,421
Current portion of derivatives		8,191		3,518
Current portion of long-term insurance		5,100		6,500
Utilities		4,111		4,442
Customer deposits		1,594		4,324
Inventory liabilities		1,948		2,179
Sales and use taxes		1,160		4,000
Dividend payable		—		4,891
Other		12,369		13,643

Total accrued liabilities	$	244,163	$	207,452


	Thirteen Weeks Ended November 1, 2020			Thirteen Weeks Ended November 3, 2019
Numerator:
Net income (loss)	$	(48,043	)	$	482
Denominator:
Weighted average number of common shares outstanding (basic)		47,613,741			30,980,878
Weighted average dilutive impact of equity-based awards (1)		—			534,576
Weighted average number of common and common equivalent shares outstanding (diluted)		47,613,741			31,515,454
Net income (loss) per share:
Basic	$	(1.01	)	$	0.02
Diluted	$	(1.01	)	$	0.02

	Thirty-Nine Weeks Ended November 1, 2020			Thirty-Nine Weeks Ended November 3, 2019
Numerator:
Net income (loss)	$	(150,189	)	$	75,281
Denominator:
Weighted average number of common shares outstanding (basic)		42,185,163			34,405,503
Weighted average dilutive impact of equity-based awards (1)		—			636,808
Weighted average number of common and common equivalent shares outstanding (diluted)		42,185,163			35,042,311
Net income (loss) per share:
Basic	$	(3.56	)	$	2.19
Diluted	$	(3.56	)	$	2.15


	2014 Stock Incentive Plan					2010 Stock Incentive Plan
	Number of Options			Wtd. Avg. Exercise Price		Number of Options			Wtd. Avg. Exercise Price
Outstanding at February 2, 2020		1,323,495		$	36.97		266,900		$	6.72
Granted		—			—		—			—
Exercised		—			—		(90,391	)		5.14
Forfeited		(84,395	)		38.79		—			—

Outstanding at November 1, 2020		1,239,100		$	36.84		176,509		$	7.54

Exercisable at November 1, 2020		1,047,124		$	34.64		176,509		$	7.54


	Shares			Wtd. Avg. Fair Value
Outstanding at February 2, 2020		216,815		$	51.58
Granted		1,063,209			12.74
Change in performance units		4,352			59.67
Vested		(102,595	)		38.11
Forfeited		(50,736	)		27.72

Outstanding at November 1, 2020		1,131,045		$	17.39


	Total		1 Year		2-3 Years		4-5 Years		After 5 Years
Senior Secured Notes	$	550,000	$	—	$	—	$	550,000	$	—
Credit Facility - Revolver (1)		26,000		—		—		26,000		—
Interest requirements (2)		225,395		46,328		91,087		87,980		—

Total	$	801,395	$	46,328	$	91,087	$	663,980	$	—