Description of the Business and Summary of Significant Accounting Policies | Note 1: Description of the Business and Summary of Significant Accounting Policies Description of the business The Company is a leading operator of high-volume entertainment and dining venues for adults and families under the name “Dave & Buster’s”. The Company operates its business as one operating and one reportable segment. We opened our first store in Dallas, Texas in 1982 and since then we have expanded our portfolio nationally to 81 stores across 30 states and Canada as of our fiscal year ended January 31, 2016. Subsequent to the end of our fiscal year, we opened a store in Rochester, New York on March 7, 2016. From 1997 to early 2006, we operated as a public company under the leadership of our founders, David “Dave” Corriveau and James “Buster” Corley. In March 2006, Dave & Buster’s Inc. (“D&B Inc”) was acquired by Dave & Buster’s Holdings, Inc. (“D&B Holdings”), a holding company controlled by affiliates of Wellspring Capital Partners III, L.P. (“Wellspring”) and HBK Main Street Investors L.P. (“HBK”). In connection with the acquisition of D&B Inc by Wellspring and HBK, D&B Inc’s common stock was delisted from the New York Stock Exchange. On June 1, 2010, D&B Entertainment, a newly-formed Delaware corporation owned by Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (collectively, the “Oak Hill Funds”) acquired all of the outstanding common stock of D&B Holdings from Wellspring and HBK. In connection therewith, Games Merger Corp., a newly-formed Missouri corporation and an indirect wholly owned subsidiary of D&B Entertainment, merged with and into D&B Holdings’ wholly owned subsidiary, D&B Inc, with D&B Inc being the surviving corporation in the merger. D&B Entertainment has no material assets or operations other than 100% ownership of the outstanding common stock of D&B Holdings, which owns 100% of the outstanding common stock of D&B Inc, the operating company. In October 2014, we amended and restated our certificate of incorporation to increase our authorized share count to 450,000,000 shares of stock, including 400,000,000 shares of common stock and 50,000,000 shares of preferred stock, each with a par value of $0.01 per share and to split our common stock 224.9835679 for 1. Unless otherwise noted herein, historic share data has been adjusted to give effect to the stock split. In October 2014, we completed our initial public offering (“IPO”) of 6,764,705 shares of common stock (including the full exercise of the underwriters’ overallotment option to purchase an additional 882,352 shares) at a price of $16.00 per share. The Company’s common stock trades on the NASDAQ Global Market (“NASDAQ”) under the ticker symbol “PLAY”. During fiscal 2015, we completed three follow-on offerings of our common stock. All shares were offered by our selling shareholders and, in each case, included the full exercise of the underwriters’ overallotment option. The timing and share activity for each of these offerings is summarized below: February 2015 May 2015 September 2015 Total shares offered (including overallotment shares) 7,590,000 9,775,000 6,900,000 Offering price per share $ 29.50 $ 31.50 $ 37.00 Shares provided by option exercise 300,151 853,155 (1) 366,476 Weighted average option exercise price per share $ 4.49 $ 4.46 $ 4.46 Proceeds from option exercises (in thousands) $ 1,346 $ 3,809 $ 1,633 (1) We utilized 248,412 treasury shares in partial satisfaction of the shares provided by option exercise in the May 2015 offering. In December 2015, the Oak Hill Funds sold 2,500,000 shares of common stock to the public. As of January 31, 2016, the Oak Hill Funds beneficially owned approximately 18% of our outstanding stock and certain members of our Board of Directors and our management beneficially owned approximately 1% of our outstanding stock. The remaining 81% was owned by the public. Principles of consolidation Fiscal year Reclassifications Use of estimates Related party transactions Seasonality Cash and cash equivalents Concentration of credit risk Inventories Other current assets Property and equipment Estimated Depreciable Building and building improvements Shorter of 40 or expected Leasehold improvements Shorter of 20 or Furniture, fixtures and equipment 3-10 Games 5-20 Expenditures that substantially increase the useful lives of the property and equipment are capitalized, whereas costs incurred to maintain the appearance and functionality of such assets are charged to repair and maintenance expense. Interest costs and other site specific costs incurred during construction are capitalized and depreciated based on the estimated useful life of the underlying asset. Capitalized computer software and hardware are included in the cost of furniture, fixtures and equipment. Gains and losses related to store property and equipment disposals are recorded in “Other store operating expenses” in the Consolidated Statements of Comprehensive Income. We review our property and equipment annually, on a store-by-store basis to determine whether facts or circumstances exist that may indicate the carrying values of these long-lived assets are impaired. We compare store-level undiscounted operating cash flows (which exclude interest, general and administrative and other allocated expenses) to the carrying amount of property and equipment allocated to each store. If the expected future cash flows are less than the asset carrying amount (an indication that the carrying amount may not be recoverable), we may recognize an impairment loss. Any impairment loss recognized equals the amount by which the asset carrying amount exceeds its fair value. No impairment charges were recognized in fiscal 2015, 2014 or 2013. Goodwill and other indefinite-lived assets Step one of the impairment test, or quantitative assessment, is based upon a comparison of the carrying value of the asset to the fair value determined utilizing independent valuations from an outside consultant. The fair value of goodwill is measured using a combination of market earnings multiples and market capitalization methodologies. The fair value of tradenames is determined on the basis of discounted cash flows utilizing a relief from royalty method. Key assumptions used in our testing include future store openings, revenue growth, operating expenses and discount rate. Estimates of revenue growth and operating expenses are based on internal projections considering our past performance and forecasted growth, market economics and the business environment impacting our Company’s performance. Discount rates are determined by using a weighted average cost of capital (“WACC”). The WACC considers market and industry data as well as Company-specific risk factors. These estimates are highly subjective judgments and can be significantly impacted by changes in the business or economic conditions. Our estimates used in the income approach are consistent with the plans and estimates used to manage operations. We evaluate all methods to ensure reasonably consistent results. Based on the completion of the step one test, we determined that goodwill and our tradenames were not impaired. Fair value of financial instruments Our financial instruments consist of cash and cash equivalents, accounts and notes receivable, accounts payable, and our credit facility. The carrying amount of cash and cash equivalents, accounts and notes receivable and accounts payable approximates fair value because of their short maturities. We believe that the carrying amount of our credit facility approximates its fair value because the interest rates are adjusted regularly based on current market conditions. Derivative Debt issuance costs Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended January 31, 2016 February 1, 2015 February 2, 2014 Balance at beginning of period $ 6,186 $ 7,954 $ 10,076 Write off of unamortized debt issuance cost—refinancing & early prepayment (5,861 ) (7,906 ) — Additional debt issuance costs 3,311 8,212 726 Amortization (817 ) (2,074 ) (2,848 ) Balance at end of period $ 2,819 $ 6,186 $ 7,954 Notes receivable Revenue recognition Proceeds from the sale of gift cards is deferred and recognized as revenue when the holder redeems the card or its likelihood of redemption, based on historical redemption patterns, becomes remote. The liability for unredeemed gift cards is included in “Accrued liabilities” in the Consolidated Balance Sheets. Amusements costs of products Advertising costs Rent The fair values of acquired lease contracts having contractual rents higher than fair market rents are amortized on a straight-line basis over the remaining initial lease term. The current and non-current portions of unfavorable leases are included in “Accrued liabilities” and “Deferred occupancy costs”, respectively, in the Consolidated Balance Sheets. Additionally, certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense provided the achievement of that target is considered probable. Self-insurance programs Pre-opening costs Income taxes The calculation of tax liabilities involves significant judgment and evaluation of uncertainties in the interpretation of federal and state tax regulations. As a result, we have established accruals for taxes that may become payable in future years as a result of audits by tax authorities. Tax accruals are reviewed regularly pursuant to accounting guidance for uncertainty in income taxes. Tax accruals are adjusted as events occur that affect the potential liability for taxes such as the expiration of statutes of limitations, conclusion of tax audits, identification of additional exposure based on current calculations, identification of new issues, or the issuance of statutory or administrative guidance or rendering of a court decision affecting a particular issue. Accordingly, we may experience significant changes in tax accruals in the future, if or when such events occur. Equity-based compensation Comprehensive income Recent accounting pronouncements Leases In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements In May 2014, the FASB issued guidance in ASU 2014-09, Revenue from Contracts with Customers |