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Summary of Significant Accounting Policies | 6 Months Ended
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Jul. 31, 2022
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Note 1: Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements include the accounts of Dave & Buster’s Entertainment, Inc. (referred to herein as the “Company”, “we,” “us” and “our”), any predecessor companies and its wholly-owned subsidiaries, Dave & Buster’s Holdings, Inc. (“D&B Holdings”), which owns 100 % of the outstanding common stock of Dave & Buster’s, Inc. (“D&B Inc”), the operating company. All intercompany balances and transactions have been eliminated in consolidation. The Company, headquartered in Coppell, Texas, is a leading operator of high-volume entertainment and dining venues (“stores”) in North America for adults and families. On June 29, 2022 (the “Closing Date”), the Company completed its previously announced acquisition (the “Main Event Acquisition” or “the Acquisition”) of 100 % of the equity interests of Ardent Leisure US Holding Inc. (“Ardent US”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated April 6, 2022, by and among the Company, Ardent US, Delta Bravo Merger Sub, Inc, the Company’s wholly-owned subsidiary formed for the purpose of completing the transactions set forth in the Merger Agreement, for the limited purposes set forth therein, Ardent Leisure Group Limited (“Ardent”), and, for the limited purposes set forth therein, RB ME LP (“RedBird”) and RB ME Blocker, LLC, REB ME Series 2019 Investor Aggregator LP and RedBird Series 2019 GP Co-Invest, LP. Refer to Note 2, Business Combinations , for further details. During the first and second quarters of fiscal 2022, the Company opened one Dave & Buster’s store located in Sioux Falls, South Dakota and three Dave & Buster’s stores located in Brooklyn (Atlantic Center), New York, Modesto, California, and Augusta, Georgia, respectively. As of July 31, 2022, the Company owned and operated 148 Dave & Buster’s stores located in 41 states, Puerto Rico and one Canadian province and 49 Main Event and 3 The Summit stores (collectively referred to as “Main Event”), located in 17 states. The Company operates its business as two operating units aggregated into one reportable segment. 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 2022 and 2021, which end on January 29, 2023, and January 30, 2022, respectively, contain 52 weeks. The Company’s financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States for interim financial information as prescribed by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated. Our quarterly financial data should be read in conjunction with the audited financial statements and notes thereto for the year ended January 30, 2022, included in our Annual Report on Form 10-K as filed with the SEC. 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 twenty-six weeks ended July 31, 2022 are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending January 29, 2023. 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. A book overdraft of $16,673 is presented in “Accounts payable” in the Consolidated Balance Sheets as of January 30, 2022. There was no book overdraft as of July 31, 2022. Changes in the book overdraft position are presented within “Net cash provided by 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. 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 and third-party valuation specialists. These valuation models are based on the present value of expected cash flows using forward rate curves. The fair value of our senior secured notes was $445,271 and $456,204 as of July 31, 2022 and January 30, 2022, respectively. The fair value of the Company’s term note was $881,343 as of July 31, 2022. The fair value of the Company’s debt is determined based on a 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) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment. During the second quarter of fiscal 2022, an impairment of $1,841 was recognized related to Main Event’s corporate headquarters lease, which will be abandoned, and was included in “General and administrative expenses” in the Consolidated Statements of Comprehensive Income. During the first quarter of fiscal 2022, there were no impairments recognized. 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 notional amount of the swap agreements, which mature August 17, 2022, totals $350,000 and the fixed rate of interest for all agreements is 2.47%. 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, the Company discontinued the hedging relationship as of April 14, 2020 (de-designation date), and the Company is reclassifying its accumulated other comprehensive loss of $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. Effective June 16, 2022, one of the three interest rate swap agreements was terminated before maturity. As of July 31, 2022, the unamortized balance to be reclassified is $314. 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 twenty-six weeks ended July 31, 2022 and August 1, 2021, a gain of $677 and a loss of $88, respectively, were recognized, which are included in “Other store operating expenses” in the Consolidated Statements of Comprehensive Income. The fair value of outstanding interest rate swap derivatives liability was $30 and $3,823 as of July 31, 2022 and January 30, 2022, respectively, and the balance is included in “Accrued liabilities” in the Consolidated Balance Sheets. The following table summarizes the activity in accumulated other comprehensive loss related to our derivative instruments:
|  | Thirteen weeks ended |  |  | Twenty-six weeks ended |
|  | July 31, 2022 |  |  | August 1, 2021 |  |  | July 31, 2022 |  |  | August 1, 2021 |
Loss reclassified or amortized into interest expense |  | $ | 1,887 |  |  | $ | 1,887 |  |  | $ | 3,774 |  |  | $ | 3,774 |
Income tax effect |  | $ | (515 | ) |  | $ | (515 | ) |  | $ | (1,031 | ) |  | $ | (1,031 | )
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. 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 twenty-six weeks ended July 31, 2022, we recognized revenue of approximately $11,700 and $30,800 , respectively, related to the amount in deferred amusement revenue as of the end of fiscal 2021 (or as of the Closing Date of the Acquisition). 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 twenty-six weeks ended July 31, 2022, we recognized revenue of approximately $1,200 and $3,300 respectively, related to the amount in deferred gift card revenue as of the end of fiscal 2021 (or as of the Closing Date of the Acquisition), of which approximately $140 and $430, respectively, was breakage revenue. Stockholders’ equity — 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. During the twenty-six weeks ended July 31, 2022 and August 1, 2021, respectively, we withheld 148,935 and 177,871 shares of common stock to satisfy $6,759 and $7,716 of employees’ tax obligations, respectively. Earnings per share — Basic net income (loss) per share is computed by dividing net income available to common shareholders by the basic weighted average number of common shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted net income per share, the basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the diluted net income per share calculation. For the thirteen weeks ended July 31, 2022 and August 1, 2021, the Company excluded anti-dilutive awards from the calculation of approximately 291,678 and 164,811 , respectively. For the twenty-six weeks ended July 31, 2022, and August 1, 2021, the Company excluded anti-dilutive awards from the calculation of approximately 177,847 and 134,177 , respectively. Basic weighted average shares outstanding are reconciled to diluted weighted average shares outstanding as follows:
|  | Thirteen weeks ended |  |  | Twenty-six weeks ended |
|  | July 31, 2022 |  |  | August 1, 2021 |  |  | July 31, 2022 |  |  | August 1, 2021 |
Basic weighted average shares outstanding |  |  | 48,831,639 |  |  |  | 48,178,611 |  |  |  | 48,705,956 |  |  |  | 47,937,158 |
Weighted average dilutive impact of awards |  |  | 439,882 |  |  |  | 1,051,206 |  |  |  | 651,095 |  |  |  | 1,335,535 |
Diluted weighted average shares outstanding |  |  | 49,271,521 |  |  |  | 49,229,817 |  |  |  | 49,357,051 |  |  |  | 49,272,693 |
Recent accounting pronouncements — We reviewed the accounting pronouncements that became effective for our fiscal year 2022 and determined that either they were not applicable, or they did not have a material impact on the consolidated financial statements. We also reviewed the recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the consolidated financial statements.

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- Definition The entire disclosure for the general note to the financial statements for the reporting entity which may include, descriptions of the basis of presentation, business description, significant accounting policies, consolidations, reclassifications, new pronouncements not yet adopted and changes in accounting principles. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI https://asc.fasb.org/topic&trid=2197479 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI https://asc.fasb.org/topic&trid=2134479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI https://asc.fasb.org/topic&trid=2122394 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI https://asc.fasb.org/topic&trid=2122369 + Details
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