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Impact of COVID-19 Pandemic | 6 Months Ended
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Jun. 25, 2020
Impact of COVID-19 Pandemic |
Impact of COVID-19 Pandemic | 2. Impact of COVID-19 Pandemic The COVID-19 pandemic has had an unprecedented impact on the world and both of the Company’s business segments. The situation continues to be volatile and the social and economic effects are widespread. As an operator of movie theatres, hotels and resorts, restaurants and bars, each of which consists of spaces where customers and guests gather in close proximity, the Company’s businesses are significantly impacted by protective actions that federal, state and local governments have taken to control the spread of the pandemic. These actions include, among other things, declaring national and state emergencies, encouraging social distancing, restricting freedom of movement and congregation, mandating non-essential business closures, issuing curfews, limiting business capacity, mandating mask-wearing and issuing shelter-in-place, quarantine and stay-at-home orders. As a result of these measures, the Company temporarily closed all of its theatres on March 17, 2020, and it currently is not generating any significant revenues from its theatre operations (other than revenues from six theatres opened on a very limited basis in June 2020, five parking lot cinemas and some limited online and curbside sales of popcorn, pizza and other assorted food and beverage items). The Company also temporarily closed all of its hotel division restaurants and bars at approximately the same time and closed five of its eight company-owned hotels and resorts on March 24, 2020 due to a significant reduction in occupancy at those hotels. The Company closed its remaining three company-owned hotels in early April 2020. The Company re-opened four of its company-owned hotels and several of its restaurants and bars during June 2020. The Company’s four remaining company-owned hotels currently remain substantially closed. Since the COVID-19 crisis began, the Company has been working proactively to preserve cash. In addition to obtaining additional financing and modifying previously existing debt covenants (see Note 5), additional measures the Company has already taken and intends to take in the future to enhance liquidity include:
| ● | Discontinuing all non-essential operating and capital expenditures;
| ● | Temporarily laying off the majority of its hourly theatre and hotel associates, in addition to temporarily reducing property management and corporate office staff levels;
| ● | Temporarily reducing the salary of the Company’s chairman and president and chief executive officer by 50%, as well as reducing the salary of all other executives and remaining divisional/corporate staff;
| ● | Temporarily eliminating all board of directors cash compensation;
| ● | Temporarily suspending quarterly dividend payments;
| ● | Actively working with landlords and major suppliers to modify the timing and terms of certain contractual payments;
| ● | Evaluating the provisions of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) and utilizing the benefits, relief and resources under those provisions as appropriate (See Note 7); and
| ● | Evaluating the provisions of any subsequent federal or state legislation enacted as a response to the COVID-19 pandemic.
​ During the 26 weeks ended June 25, 2020, the Company successfully applied for and received funds under the CARES Act Paycheck Protection Program (PPP) that allowed it to rehire many of its hotel associates for eight weeks during the second quarter of fiscal 2020, as well as fund certain other permitted expenses. The Company's amended credit agreement (see Note 5) also allows the Company to consider additional borrowings from governmental authorities under provisions of the CARES Act or any other subsequent governmental actions that it could avail itself of if it deemed it necessary and appropriate. Although the Company has sought and obtained, and intends to continue to seek, any available potential benefits under the CARES Act, including those described above, it cannot predict the manner in which such benefits will be allocated or administered, and it cannot assure shareholders that it will be able to access such benefits in a timely manner or at all. ​ As of the date of this report, the Company expects the majority of its theatres to reopen in late August based upon the current film slate. State and local governmental restrictions have been lifted in the vast majority of the markets in which the Company operates, allowing movie theatres to reopen. On June 11, 2020, the Company announced a phased reopening plan that began with the opening of six of its theatres on June 19, 2020 in multiple markets, with a primary goal of testing new operating protocols in accordance with local health and safety guidelines designed to prioritize the safety and well-being of its associates and guests. Prior to closing its theatres, the Company had announced a social distancing seating plan that effectively reduced each theatre auditorium’s capacity by 50%. Current expectation is that, when theatres do reopen, they will open to similar capacity limitations. When the Company closed its hotels, it was not because of any governmental requirements to close. The restaurants and bars within the Company’s hotels were required to close, but the hotels themselves were considered “essential businesses” under most definitions. The hotels closed due to a significant drop in demand that made it financially prudent for them to close rather than stay open. As a result, the timing of reopening the Company’s remaining hotels and resorts will be driven by an increase in demand, as individual and business travelers begin to travel more freely once again. ​ The COVID-19 pandemic and the resulting impact on the Company's operating performance has affected, and may continue to affect, the estimates and assumptions made by management. Such estimates and assumptions include, among other things, the Company's goodwill and long-lived asset valuations and the measurement of compensation costs for annual and long-term incentive plans. Events and changes in circumstances arising after June 25, 2020, including those resulting from the impacts of COVID-19, will be reflected in management's estimates for future periods. ​ The Company believes that the actions that have been taken will allow it to have sufficient liquidity to meet its obligations as they come due and to comply with its debt covenants for at least 12 months from the issuance date of these unaudited consolidated financial statements. However, future compliance with the Company's financial debt covenants (see Note 5) could be impacted if the Company is unable to resume its operations as currently expected. Future compliance with debt covenants could also be impacted if the speed of recovery of the Company's theatres and hotels and resorts businesses is slower than currently expected. For example, the Company's current expectation is that its theatre division will significantly underperform during its fiscal 2020 third quarter compared to the prior year, improve during the fiscal 2020 fourth quarter and fiscal 2021 first quarter (but still report results materially below the prior year, excluding the potential favorable impact of the 53rd week in the fiscal 2020 fourth quarter), before returning to closer-to-normal performance during the fiscal 2021 second quarter and second half of fiscal 2021. The Company's current expectations for its hotels and resorts division are that, although each succeeding quarter may show improvement compared to its current state, the Company does not expect to return to pre-COVID-19 occupancy levels during the remainder of fiscal 2020 or fiscal 2021.

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