Dave & Buster's Entertainment, Inc 10-K for FY2025
Dave & Buster's Entertainment, Inc. (PLAY)
10-K
2025-04-07
For: 2025-02-04
View Original
Added on
April 12, 2026
About this 10-K
Dave & Buster's Entertainment, Inc filed this 10-K on April 7, 2025, covering the fiscal year ended February 4, 2025 (FY2025).
Headline figures
Fiscal year ended February 4, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.13B
- down 3.3% from $2.21B a year earlier
- Net income
- $58.3M
- down 54.1% from net income of $126.9M a year earlier
- Diluted EPS
- $1.46
- down 49.3% from $2.88 a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
FOR THE FISCAL YEAR ENDED February 04 , 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
FOR THE TRANSITION PERIOD FROM TO
Commission File No. 001-35664
______________________________
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (I.R.S. Employer ID) | ||||
( | |||||
| (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 | ||||||||||||
Securities registered pursuant to Section 12(g) of the Act: None
______________________________
Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x
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 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 x No o
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 x No o
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.
| x | Accelerated filer | o | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging Growth Company | ||||||||||||||
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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes x No o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes o No x
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The aggregate market value of common stock held by non-affiliates, based on the closing price of the last day of the registrant’s most recently completed second fiscal quarter as reported on the NASDAQ Global Select Market was approximately $1.3 billion. The number of shares of the registrant’s Common Stock outstanding as of April 4, 2025 was 34,515,297 .
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the registrant’s 2025 Annual Meeting of Shareholders have been incorporated by reference into Part III of this Annual Report on Form 10-K.
DAVE & BUSTER’S ENTERTAINMENT, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED February 4, 2025
TABLE OF CONTENTS
| Page | ||||||||
1
FORWARD-LOOKING STATEMENTS
Matters discussed in this report and in other public disclosures, both written and oral, include “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “seeks,” or words of similar meaning, or future or conditional verbs, such as “may,” “will,” “should,” “could,” “aims,” “intends,” or “projects,” and similar expressions, whether in the negative or the affirmative. You should not place undue reliance on forward-looking statements, which speak only as of the date of the report. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Given these risks and uncertainties, you should not rely on forward-looking Statements as a prediction of actual results. Any or all forward-looking statements contained in this report and other public statements made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
PART I
ITEM 1. Business
Dave & Buster’s Entertainment, Inc. (“D&B Entertainment”) is the owner and operator of 232 venues in North America that offer premier entertainment and dining experiences for both adults and families under the Dave & Buster's and Main Event brands. As of February 4, 2025, the Company had 171 Dave & Buster’s branded stores in 43 states, Puerto Rico, and Canada and offers guests the opportunity to “Eat Drink Play and Watch,” all in one location. Each store offers a full menu of entrées and appetizers, a complete selection of alcoholic and non-alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. The Company also has 61 Main Event stores in 22 states across the United States. Main Event offers food, drinks and entertainment, including state-of-the-art bowling, laser tag, arcade games and virtual reality, making it the perfect place for families to connect and make memories.
Unless otherwise provided in this report, references to “Dave & Buster’s,” “D&B,” “we,” “us,” “our” or the “Company” refer to D&B Entertainment and its wholly owned subsidiaries and any predecessor entities.
Our fiscal year consists of 52 or 53 weeks ending on the Tuesday after the Monday closest to January 31. During fiscal 2024, we adjusted the year-end day from Sunday to Tuesday to improve labor and operational efficiencies by ending the Company's periods outside of the busier weekend timeframe. Each quarterly period has 13 weeks, except in a 53-week year when the fourth quarter has 14 weeks. Fiscal 2024 contained 52 weeks, fiscal 2023 contained 53 weeks and fiscal 2022 contained 52 weeks. We refer to our fiscal years ended February 4, 2025, February 4, 2024 and January 29, 2023 as “fiscal 2024,” “fiscal 2023,” and “fiscal 2022,” respectively, throughout this report.
Entertainment
Game play is a key aspect of the entertainment experience at each of our stores, which we believe is the core differentiating feature of our brands. The Midway in each of our stores is an area where we offer a wide array of entertainment options, some of which are exclusive to our Dave & Buster's and Main Event brands on a permanent or temporary basis. Our Dave and Buster’s and Main Event stores average more than 80 and 100 redemption and simulation games, respectively, depending on the location footprint and activities which may include bowling, laser tag, billiards and gravity ropes.
Most of our games are activated by game play credits on cards or other RFID devices. A customer purchases a card with game play credits or “chips” at an automated kiosk, through our mobile application, or from one of our team members. Our entertainment revenues accounted for approximately 65.2% of our total revenues during fiscal 2024. Redemption games offer our customers the opportunity to win tickets that are redeemable at a retail-style space in our stores with prizes ranging from branded novelty items to high-end electronics.
2
We believe this “opportunity to win” creates a fun and highly energized social experience that is an important aspect of the in-store experience and cannot be easily replicated at home. Many of our non-redemption games, which include our virtual reality, video, and simulation offerings, can be played by multiple customers simultaneously and include some of the latest high-tech games that are commercially available.
Sports-viewing is another key component of the entertainment experience at Dave & Buster’s. All our stores have multiple large screen televisions and high-quality audio systems providing customers with a venue for watching live sports and other immersive programming. The majority of our Dave & Buster's branded stores have an enhanced viewing experience with huge cutting-edge LED “Wow Walls” that deliver an elevated viewing experience and provide a platform for broader programming and marketing opportunities. Our “Sports Watching” areas offer an immersive viewing environment that provides customers with large, high-definition televisions, where customers may watch national and local sports programming and enjoy our full bar and food menu. We believe that we have created an energetic environment that includes a differentiated and interactive viewing experience for customers, and our goal is to build awareness of Dave & Buster's brand stores as “the best place to watch sports” and the “only place to watch the games and play the games.”
Food and Beverage
We strive to differentiate our food with quality, flavorful offerings guided by an “Inspired American Kitchen” identity at our Dave & Buster’s locations and a “Family Kitchen” at our Main Event locations. These offerings are rooted in enhanced flavors and quality ingredients across a condensed number of menu items that enable our customers to explore new flavors while offering a balanced selection of familiar dishes. In recent years, we have modified our menus to simplify execution and made kitchen enhancements to allow us to deliver dishes to customers faster and drive an improved customer experience. We will continue to evolve our menus to reflect the changing tastes of our broad customer base, with options for full meals and appetizers to share with friends. We deliver high-quality offerings, including a wide variety of starters, one-of-a-kind burgers and handhelds, choice-grade steaks, pasta, and low calorie, vegetarian, and gluten-friendly options. We believe our broad menus offer something for everyone and are appropriate for many different occasions. To ensure that we stay on-trend, we update our menus regularly with new food items or tailored promotions.
Each of our locations also offers full bar service, including a variety of beers, hand-crafted cocktails, and premium spirits. We are focused on maintaining a streamlined beverage menu for ease of execution, while using quality ingredients including fresh juices, purees and house-made mixers. Beverage service is typically available throughout the entire store, allowing for multiple point of sale opportunities. We believe that our high margin beverage offering is complementary to the other offerings at each of our stores.
Competitive Positioning
The out-of-home entertainment market is highly competitive. We compete for customers’ discretionary spend on entertainment with localized attraction facilities such as movie theaters, sporting events, bowling alleys, sports activity centers, arcades and entertainment centers, night clubs and restaurants as well as theme parks. We also face competition from local, regional, and national establishments that offer similar entertainment experiences and restaurants that are highly competitive with respect to price, quality of service, location, ambience and type and quality of food. Some of these establishments may exist in multiple locations, and we may also face competition on a national basis in the future from other similar concepts. We also face competition from increasingly sophisticated home-based forms of entertainment, such as internet and video gaming and home movie streaming.
The key elements that drive our total customer experience and help position us from a competitive standpoint include the following:
High brand awareness with broad customer appeal.
We believe that the customer experience at our stores, supported by our extensive marketing reach, has helped us create widely recognized brands. We have an approximate 90% national brand awareness for Dave and Buster’s as an entertainment and dining venue, and a broad customer appeal across families and young adults. The primary target audience for our Dave & Buster’s locations is young adults and families, while our Main Event stores primarily focus on families with children.
Multi-faceted customer experience highlights our value proposition.
We believe that our combination of interactive games, attractive television viewing areas, high-quality dining, and full-service beverage offerings, delivered in a highly energized atmosphere, provides a multi-faceted customer experience that cannot be easily replicated at home or elsewhere without having to visit multiple destinations. We aim to offer our customers a value proposition comparable or superior to many of the separately available dining and entertainment options. We continuously work with game manufacturers and others to create new games and attractions that include content that is
3
exclusively available at our Dave & Buster’s and Main Event stores on a permanent or temporary basis. Our new games in combination with new food and beverage offerings and focused attention to the customer experience are intended to help us to retain and generate customer traffic. Our value proposition is enhanced by marketing initiatives, including free game play that often features the introduction of our new games, game play dollar volume discounts, and eat and play promotional offers. We believe these initiatives encourage customers to participate more fully across our food, beverage, and entertainment offerings.
Store models generate favorable store economics and strong returns.
We believe our store models offering entertainment, food, and beverage options provide the benefit of historically higher revenue per store, higher gross margins, and higher operating income margins in comparison to traditional restaurant concepts.
Our entertainment offerings have low variable costs, generating a gross margin of 91.5% for fiscal 2024. Since entertainment generated 65.2% of our fiscal 2024 revenues, we have less exposure to increasing food costs and associated restaurant labor than traditional restaurant concepts. As a result, our business model generates strong operating cash flow which we can use to reinvest in the business, pay down debt or return capital to shareholders through share repurchases or dividends.
Our favorable store economics allows us to target favorable new store returns, averaging at least 35% and 25% cash-on-cash returns on one-year and five-year periods, respectively. We define and calculate cash-on-cash returns for an individual store as (a) Adjusted EBITDA (defined in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) at the store level, divided by (b) our net development costs. Net development costs include equipment, building, leaseholds and site costs, net of tenant improvement allowances and other landlord payments, sale-leaseback proceeds, excluding pre-opening costs and capitalized interest.
Commitment to customer satisfaction.
We aim to continuously enhance our entertainment, food, and beverage offerings through our service philosophy of providing a high quality and consistent customer experience through dedicated training and development of our team members, supported by a corporate culture that fosters employee engagement.
Strategy
We have a multi-faceted growth strategy focused on the following key components:
Drive growth in comparable store sales.
We intend to differentiate our brands from other entertainment and dining alternatives and drive growth in our comparable sales through the following strategies:
•Offer the latest entertainment at competitive prices. We believe that our diverse offering of games and amusement activities is the core differentiating feature of our brands. Staying current with the latest offerings promotes trial and provides an exciting environment to enjoy with friends and family, especially with the latest multiplayer games and challenges, as well as social gaming experiences. We plan to continually update our games each year through the development of innovative and proprietary games and the purchase of new games that will resonate with our customers to drive brand relevance due to a variety of factors, including their large scale, eye-catching appearance, association with recognizable brands, ability to be experienced by a group or the fact they cannot be easily replicated at home. We also intend to extend our programming capabilities at our stores by offering more curated content and creating a calendar of ongoing and one-time events leveraging our investments in the best and latest audio-visual technology. We also plan to continuously review and update pricing of our games and amusement activities to provide affordable entertainment while remaining competitive with our peers.
•Offer novel food & drink to bring people together. We aim to offer a wide variety of quality items for our guests at optimized prices. We also strive to improve efficiency by simplifying execution, allowing us to deliver dishes hotter and faster to drive an improved customer experience. We continually update and innovate our offerings based on customer research and optimize our selections to improve execution efficiency.
4
•Drive customer engagement through strategic marketing and loyalty offerings. We will continue to focus on delivering personalized messaging that connects with the customer to drive incremental visitation and will focus our advertising on communicating the values behind our brand promise. In addition, we will continue to leverage our customer relationship management program and our growing loyalty database by delivering more targeted individualized offers, creative content and exclusive offerings. We will also continue to review and optimize our media mix to both drive incremental visits from our existing customer base and increase unique visitors.
•Refresh our existing sites. We continuously update our existing sites through regular maintenance. We will invest in remodels of certain existing stores, as needed, to modernize our layouts, maintain or grow customer traffic and drive efficiency.
•Drive incremental sales volume through advertising and hosting special events. Our dedicated sales team strives to drive incremental special events traffic in each of our stores. We continue to focus on opportunities to grow special events sales including optimized online booking and entertainment offerings geared toward special events. New, elevated banquet menu offerings and dedicated service provide an exceptional guest experience.
•Drive an improved experience and optimize operations through targeted technology investments. We continue to streamline our service model through store-level technology improvements including kiosks and other self-service technology. We also continue to invest in analytics tools and technology upgrades to more efficiently measure and improve performance, drive incremental sales, and continuously monitor costs and profitability.
Invest domestically in our brands.
We believe the Dave & Buster’s and Main Event brands have significant domestic growth opportunities in the United States and Canada. In fiscal 2024, we opened eleven Dave & Buster's stores and three Main Event stores. In fiscal 2025 and beyond, the number of openings will depend on many factors, including our ability to locate appropriate sites, negotiate acceptable purchase or lease terms, generate sufficient operating cash flows or have sufficient financing capacity to construct new stores, obtain necessary local governmental permits, and recruit and train team members.
We base new site selection on an analytical evaluation of a set of drivers we believe increase the probability of successful, high-volume stores, including site quality, visibility, accessibility and traffic volume, population density, competitive presence and trade area demographics. The experience and relationships of our current development team has enabled us to focus our attention on the most relevant network of real estate brokers, which has given us access to a larger pool of qualified potential store sites. In addition, we believe the more contemporary look of our stores has been one of the key drivers in attracting new developers and building our new store pipeline.
Dave & Buster's Stores - Our Dave & Buster's stores vary in size from approximately 16,000 to 70,000 square feet. To optimize sales per square foot and further enhance our store economics, we currently utilize three basic formats when designing new stores. The target size of our future large format stores is expected to be between 30,000 and 45,000 square feet, the target size of our future medium format stores is expected to be between 25,000 and 30,000 square feet while our small format stores are below 25,000 square feet. The stores we opened in fiscal 2024 averaged 26,000 square feet. We believe the smaller store format allows us to reduce capital investment risk per store and enter smaller markets that would not have warranted the investment of a larger box. For the smaller format, we have reduced the back-of-house space and optimized the customer facing area dedicated to video and redemption games. We believe the smaller format maintains the dynamic customer experience that is the foundation of our brand and allows us flexibility in our site selection process.
Main Event Stores - Our Main Event stores vary in size from approximately 37,500 to 78,000 square feet. The target size of our future stores is between approximately 40,000 and 50,000 square feet. The Main Event stores we opened in fiscal 2024 averaged approximately 50,000 square feet. If an existing building is identified in a target location, we could open a future store outside of this range depending on projected store economics, competition and various other factors.
Invest in Foreign Operations
We are expanding the Dave & Buster's brand through international franchise agreements. As of February 4, 2025, we have signed six international franchise partnerships, which will expand the Dave & Buster's brand to locations in the Kingdom of Saudi Arabia, the United Arab Emirates, Egypt, India, Australia, the Dominican Republic, the Philippines and Mexico. Under these partnerships, we plan to open 30 to 40 franchised Dave & Buster's locations. In December 2024, we opened our first franchise location in Bengaluru, the capital and largest city in the southern Indian state of Karnataka. We plan to open at least five additional franchise locations in fiscal 2025.
5
To drive international expansion, we have developed key strategic initiatives that uniquely support global market penetration. The initiatives include a customizable footprint to drive improved economics in each market; focused menu localization with high regional resonance; a proprietary, dynamic pricing model; global marketing programs that are demographically agnostic and locally executable; differentiated entertainment strategies and packages unique to each demographic; localized entertainment, and 3rd party programming.
We also own and operate two stores outside of the United States in the Canadian province of Ontario. The activities of these and future stores outside the United States are subject to various risks of doing business in a foreign country, including currency fluctuations, changes in laws and regulations and economic and political stability. We do not believe there is any dependence or material risk to our domestic business or future international franchises related to the Canadian operations.
Human Capital Management
Our team members are the heart of our Company, and we depend on them to provide great customer service and to maintain consistently strong operations. Our ability to attract and retain an engaged and experienced team is critical to successful execution of our business strategies. While we continue to operate in a competitive labor environment, we believe our culture, policies, and labor practices contribute to strong relations with our team members. (See Item 1A. Risk Factors, “Our success depends upon our ability to recruit and retain qualified store management and operating personnel while also controlling our labor costs.”)
Our Culture
In our stores and at our store support center, we are committed to being fun creators. Our team members share a deep commitment to values that describe the relationships our team members have with our customers and each other. We are devoted to our service philosophy that calls for providing exceptional service to our customers and to each other every day. Our attitude encourages intensity, hard work, and having fun. We firmly believe we are better together, and we encourage teamwork, empathy, and good judgment. Finally, we encourage all team members to embrace innovation, change, and continuous learning and growth.
Our Team
As of February 4, 2025, we employed approximately 23,420 team members across both of our brands, consisting of 89.8% store hourly team members, 8.3% store management, 1.5% store support, and 0.4% dedicated special events sales force.
Our values bind us to a shared commitment to attract, retain, engage, and develop a team that mirrors the community of customers we serve. We strive to provide fun for all, which we believe promotes teamwork to achieve our common goals, helps our team members reach their highest potential at work, enables our team members to make better decisions to serve all our stakeholders, and fuels innovation. At Dave & Buster’s, we are committed to fostering a workplace where every individual is valued and respected, every voice is heard, every experience is valued, and every team member has equal opportunities for growth and advancement. We are proud of our progress, but we remain dedicated to continually advancing our efforts to build a vibrant, respectful, and supportive workplace.
Our Leadership Team
We are led by a strong senior management team with a wealth of experience with national brands spanning casual dining, entertainment, and other consumer-centric industries. We believe our management team’s prior experience, combined with its experience at Dave & Buster’s and Main Event, provides us with insights into our customer base and enables us to create the dynamic environment that is core to our brands.
Our Store Teams
Our typical store team consists of a General Manager supported by an average of six to seven additional management positions per store. Management team members handle various departments within the store including responsibility for hourly team members. Our stores typically employ approximately 100 hourly team members, most of which are part-time.
The General Manager and the management team are responsible for the day-to-day operations of the store, including the hiring, training, and development of team members, as well as financial and operational performance. There is a defined structure of development and progression of job responsibilities within the supporting management positions to ensure that an adequate succession plan exists within each store. Each store is overseen by a Regional Operations Director,
6
Senior Regional Operations Director or Vice President of Operations (collectively, “Regional Management”) who directly or indirectly reports to our Chief Operating Officer. We are proud of our store leadership teams’ experience and carefully monitor store management team retention rates, which for us has consistently tracked in the top quartile of the casual dining industry.
Attracting Talent
We seek to hire experienced leaders and team members and offer competitive wage and benefit programs. We offer performance-based compensation programs to our store management and store support center employees. In addition to salaries, these programs (which vary by employee level) include bonuses, stock awards, and various employee assistance programs. In addition, our salaried and hourly team members are also eligible to participate in a 401(k) plan and medical/dental/vision insurance plans and to receive vacation/paid time off based on tenure.
Developing Talent
We motivate and develop our team members by providing them with opportunities for increased responsibilities and advancement. Throughout the year, we provide numerous training opportunities for our team members, with a focus on continuous learning and development. With hundreds of leadership positions across our stores, we provide a pathway and training for individuals across the organization to advance from entry-level jobs into management roles. In addition, our geographic footprint often allows us to offer our store team members relocation options.
We strive to maintain quality and consistency in each of our venues through the careful training and supervision of our team members and the establishment of, and adherence to, high standards relating to personnel performance, food and beverage preparation, safety protocols, game playability and maintenance. We provide new team members with comprehensive orientation and one-on-one training for their positions to help ensure they meet our high standards. New team members are trained by partnering with a trainer to assure that the training and information they receive is complete and accurate. Team members are certified for their positions by passing a series of tests, including alcohol awareness and responsibility training for service team members.
We require our new store managers to complete an eight-week training program that includes front-of-house service, kitchen, amusements, and management responsibilities. Newly trained managers are then assigned to their home venue, where they receive additional training with their General Manager. The last two weeks of their training includes a comprehensive validation of new skills. We place a high priority on our continuing management development programs to ensure that qualified managers are available for our future openings. We conduct regular evaluations with each manager to discuss prior performance and future performance goals and continuously evaluate our staffing to proactively plan for growth. We hold an Annual Operators Conference in which our General Managers share best practices and receive an operating plan they will execute to drive performance.
When we open a new venue, we provide varying levels of training to team members in each position to ensure its smooth and efficient operation from the first day it opens to the public. Prior to opening a new venue, our dedicated training and opening team travels to the location to deliver an intensive training program for all team members. We believe this additional investment in our new venues is important because it helps us provide our customers with a quality experience from day one. After a location has been opened and is operating smoothly, the store managers supervise the training of new team members.
Corporate Responsibility
Our core values call for each of our team members to care for each other, our customers, and the communities we serve. We will not do business with organizations that employ or condone unfair labor practices. We partner with suppliers who share our commitment to ethical business conduct; fair labor practices; proven environmental, health, and safety practices; and environmental sustainability. We also specifically condemn human trafficking and abuse of child labor. We understand that supporting our communities includes being good environmental stewards and striving to conduct business in a sustainable and environmentally responsible manner.
We strongly encourage team members to give back to the communities we serve. Although our Company invests time and resources in many charitable causes, we have two main causes we focus our efforts to support. The first is our long-standing partnership with the Make-A-Wish Foundation, which we have proudly supported in a national partnership since April 2012. Through fiscal 2024, we have given over $18.5 million to this worthy cause, and we participate in several events throughout the year, both in our venues and at our store support center, to raise money for the Make-A-Wish Foundation. We also volunteer our time and talents.
7
In addition, we invest in helping our own team members during their times of greatest need. The Buster's Legacy Fund is an independent non-profit established to create an employee assistance fund for the benefit of team members who suffer catastrophic events resulting in severe economic hardship. The Buster's Legacy Fund is financed by contributions from our team members, customers, and business partners.
Advertising and Marketing
We leverage advertising and marketing to drive awareness and strengthen brand relevance, in order to achieve constant customer demand. We strategically evolve our marketing strategy and media investment approach to be more data-driven, consumer-centric and experience focused. We continue to align our investments to meet the evolving media consumption trends of our guests.
We offer a range of promotions, daily specials, events, and key holidays and cultural moments, which provide guests with compelling reasons to return to our locations. Popular promotions include Eat & Play Combo®, the All You Can Eat Wings paired with a $10 Power Card, food and beverage specials during popular sporting events, and local offers targeting industry nights, school outreach programs, with additional trivia nights, contests and more at the events.
Our media offerings are diversified, including connected television, select linear television spots, social and digital video marketing, programmatic displays, paid social, and paid search. We conduct various digital marketing initiatives including search engine marketing and optimization, organic social, content marketing, and mobile advertising campaigns.
Additionally, we continue to invest in our mobile application and web platforms, which enhance customer satisfaction, provide exclusive offers and limited-time discounts for loyal guests, and offer a convenient way for customers to purchase and recharge gaming cards. We are now able to track in-store transactions for our customer retention programs, offering promotional messaging based on the guest's in-store spending habits. For example, we are able to cross-sell food purchases to gaming-heavy guests by offering a free appetizer or dessert promotions with the purchase of an entrée.
Our creative strategy is designed to ignite excitement around the in-store experience, constantly showcasing fresh and innovative offerings intended to keep guests eagerly anticipating upcoming offerings. Our strategy helps to ensure our entertainment options appeal to both families and young adults, with seasonal messaging to align with school breaks, sports-watching occasions, and cultural moments like holidays and special events.
Our special event marketing programs continue to support our special events team initiatives through targeted digital, customer relationship management, organic social, partnerships, co-op programs, and print marketing. We have online booking for social parties, providing added convenience and a personalized experience for our customers when booking events.
We work with best-in-class external advertising, digital, media, and public relations agencies to help develop and execute our advertising programs, ensuring our marketing efforts remain at the forefront of innovation and customer engagement.
Technology
We utilize several proprietary and third-party management information systems. These systems are designed to enable our games’ functionality, improve operating efficiencies, provide us with timely access to financial and marketing data and reduce store and corporate administrative time and expense. We believe our management information systems are sufficient to support our business plans. Information systems projects are prioritized based upon strategic, financial, regulatory and other business advantage criteria.
Our managers have daily routines focused on driving consistent execution in entertainment, food and beverage. Our inventory management platform allows us to determine the theoretical food and beverage costs for each store and provides additional tools and reports to help us identify opportunities, including waste management. In addition to our own routines, we leverage a third-party vendor to help ensure quality beverage operations, responsible alcohol service and loss prevention. Our workforce management platform also allows management to quickly add or reduce labor based on real-time business needs and historically assisted our managers in optimizing hourly labor based on anticipated sales volumes. Our enterprise resource planning platform allows us to manage and automate accounting and supply chain processes to improve efficiency, accuracy and decision-making across the organization. Our amusement team uses a proprietary system that is supported by a mobile application that identifies amusement issues and needed repairs to help ensure our games are operational and meeting our ideal playing standard. Complementing this program is our routine preventative maintenance program, designed to prevent game failure and extend the functionality of our games. Consolidated reporting tools for the key drivers of our business are provided to our Regional Management to identify and troubleshoot any systemic issues.
8
Our store systems enable staff to deliver the multi-faceted customer experience including ordering food and games. We have invested in connectivity and data infrastructure to modernize and upgrade the capacity of our store systems. Our customers can also engage with us through customer-facing digital experiences, such as the mobile application and in-store self-service kiosks.
Food Preparation, Quality Control and Purchasing
We strive to maintain the highest food quality standards. To ensure our quality standards are met, we negotiate directly with independent producers of food products. We provide detailed quality and yield specifications to suppliers for our purchases. Our systems are designed to protect the safety and quality of our food supply throughout the procurement and preparation process. Within each venue, the Kitchen Manager is primarily responsible for ensuring the timely and correct preparation of food products per the recipes we specify. We provide each of our venues with various tools and training to facilitate these activities.
Store-Level Quarterly Fluctuations and Seasonality
Our revenues are influenced by seasonal shifts in consumer spending. Typically, we have higher revenues associated with the 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 other quarters.
Suppliers
The principal goods used by us are redemption game prizes and food and beverage products, which are available from a number of suppliers. We are a large buyer of traditional and amusement games and, as a result, we receive discounted pricing arrangements. Wage inflation, tariffs and other macro-economic pressures could result in increasing expenses, as suppliers may seek to pass higher costs on to us. (See Item 1A. Risk Factors, “Our operations are susceptible to the changes in cost and availability of commodities and other products, which could negatively affect our operating results.”)
Intellectual Property
We have registered the trademarks Dave & Buster’s®, Power Card®, Eat & Play Combo®, Eat Drink Play®, Eat Drink Play Watch®, Main Event®, Main Event Entertainment®, and Eat.Bowl.Play® and have registered or applied to register certain additional trademarks with the United States Patent and Trademark Office and in various foreign countries. We consider our tradenames and our logos to be important features of our operations and seek to actively monitor and protect our interest in this property in the various jurisdictions where we operate. We also have certain trade secrets, such as our recipes, processes, proprietary information and certain software programs that we protect by requiring all of our employees to sign a code of ethics, which includes an agreement to keep trade secrets confidential.
Government Regulation
We are subject to a variety of federal, state and local laws affecting our business. For a discussion of the risks and potential impact on our business of a failure by us to comply with applicable laws and regulations, see Item 1A. Risk Factors. Each of our stores is subject to permitting and licensing requirements and regulations by a number of government authorities, which may include, among others, alcoholic beverage control, health and safety, sanitation, environmental, labor and zoning. The development and construction of new stores is subject to compliance with applicable zoning, land use and environmental regulations. We must comply with laws and regulations relating to consumer protection, fair trade practices, and the preparation and sale of food, including regulations regarding product safety, nutritional content and menu labeling. We are also subject to federal, state, and local laws that govern health benefits, employment practices and working conditions, including minimum wage rates, wage and hour practices, gratuities, overtime, various family leave mandates, discrimination and harassment, immigration, workplace safety and other areas. Additionally, and without limitation, we must comply with laws relating to information security, consumer credit protection and fraud, and data privacy laws and standards for the protection of personal and health information.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through our website, at HTTPS://ir.daveandbusters.com, as soon as reasonably practicable after they are electronically filed with or
9
furnished to the Securities and Exchange Commission (“SEC”). Such reports may also be obtained on the SEC’s website at www.sec.gov. Information on our corporate governance principles and practices can also be found on our website.
ITEM 1A. Risk Factors
Various risks and uncertainties could affect our business. In addition to the information contained elsewhere in this report and other filings that we make with the SEC, the risk factors described below could have a material impact on our business, financial condition, results of operation, cash flows or the trading price of our common stock. It is not possible to identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations.
Risks Related to our Growth and Operating Strategy
If we are unable to successfully design and execute our business strategy plan, including growing comparable store sales, our revenues and profitability may be adversely affected.
Our ability to increase revenues and profitability is dependent on designing and executing effective business strategies. If we are delayed or unsuccessful in executing our strategies or if our strategies do not yield desired results, our business, financial condition and results of operations may suffer. Our ability to meet our business strategy plan is dependent upon, among other things: our ability to increase gross sales and operating profits at existing stores with entertainment, food, and beverage options desired by our customers, evolve our marketing and branding strategies to appeal to our customers, innovate and implement technology initiatives to provide a unique digital customer experience, identify adequate sources of capital to fund and finance strategic initiatives, grow and expand operations, including identifying available, suitable, and economically viable locations for new stores and making strategic acquisitions, and improve the speed and quality of our service.
We may fail to effectively integrate or operate our past or future acquisitions.
In fiscal 2022, we acquired Main Event as part of our expansion effort and may acquire more businesses in the future. If we fail to manage our recent or future acquisitions effectively, our results of operations could be adversely affected by any of the following:
•incorrect assumptions regarding the future results of acquired operations or assets or expected cost reductions or other synergies to be realized from acquiring operations or assets;
•failure to integrate the operations or management of any acquired operations or assets successfully and timely;
•potential loss of key team members and customers of the acquired companies;
•potential lack of experience operating in a geographic market or product line of the acquired business;
•an increase in our expenses, particularly overhead expenses, and working capital requirements;
•the possible inability to achieve the intended objectives of the business combination; and
•the diversion of management’s attention from existing operations or other priorities.
New or improved technologies or changes in consumer behavior facilitated by these technologies could negatively affect our business.
Advances in technologies or certain changes in consumer behavior driven by such technologies could have a negative effect on our business. Technology and consumer offerings continue to develop, and we expect new or enhanced technologies and consumer offerings will be available in the future. As part of our marketing efforts, we use a variety of digital platforms including search engines; mobile, online videos; and social media platforms to attract and retain customers. We also test new technology platforms to improve our level of digital engagement with our customers and team members to help strengthen our marketing and related consumer analytics capabilities. These initiatives may not prove to be successful and may result in expenses incurred without the benefit of higher revenues or increased engagement. Our inability to effectively use and monitor social media could harm our marketing efforts as well as our reputation, which could negatively impact our sales and financial performance.
10
Changes in consumer preferences and buying patterns and changes in economic conditions could negatively affect our results of operations.
The out-of-home entertainment market is highly dependent on consumer discretionary spending levels, which may be negatively affected by economic conditions, such as: fluctuations in disposable income and changes in consumer confidence, the price of fuel and transportation, slow or negative growth, unemployment, credit conditions and availability, volatility in financial markets, inflationary pressures, weakness in the housing market, tariffs and trade barriers, wars or conflict in certain regions, pandemics or public health concerns, and changes in government and central bank monetary policies. When economic conditions negatively affect consumer spending, discretionary spending for visits to out-of-home entertainment venues will be challenged, our guest traffic may deteriorate, and the average amount guests spend in our venues may be reduced. This will negatively impact our results of operations, and could also result in reductions in staff levels, asset impairment charges and potential store closures.
The success of our venues also depends on properties primarily located near high density retail areas such as regional malls, lifestyle centers, big box shopping centers and entertainment centers. We depend on a high volume of visitors at these centers to attract customers to our locations. As demographic and economic patterns change, current locations may or may not continue to be attractive or profitable. A decline in development or closures of businesses in these settings or a decline in visitors to retail areas near our locations could negatively affect our sales. In addition, desirable sites for the relocation of existing stores may not be available at an acceptable cost, due in part to the inability to easily terminate a long-term lease.
Consumers’ health and dietary preferences are continually changing. As a result, we are challenged to evolve our food and beverage menu offerings to appeal to these changing customer preferences, while maintaining the character of our brands and retaining popular menu items. New information or changes in dietary, nutritional, allergen or health guidelines or environmental or sustainability concerns, whether issued by governmental agencies, academic studies, advocacy organizations or similar groups, may cause some groups of consumers to select foods other than those that are offered by our stores.
We may not be able to compete favorably in the entertainment and restaurant markets, which could have a material adverse effect on our business, results of operations or financial condition.
The out-of-home entertainment market is highly competitive. We compete for customers’ discretionary entertainment dollars with providers of out-of-home entertainment, including location-based entertainment facilities such as movie theaters, sporting events, bowling alleys, sports activity centers, arcades and entertainment centers, nightclubs, and restaurants as well as theme parks. Some of the entities operating these businesses are larger and have greater financial resources, have a greater number of stores, have been in business longer, have greater name recognition or are better established in the markets where our stores are located or are planned to be located. As a result, they may be able to invest greater resources than we can in attracting customers and succeed in attracting customers who would otherwise come to our stores. The legalization of casino gambling in geographic areas near any current or future store and the expanded availability of online sports betting could also have a material adverse effect on our business and financial condition. We also face competition from local, regional, and national establishments that offer similar entertainment experiences to ours and restaurants that are highly competitive with respect to price, quality of service, location, ambience and type and quality of food. We also face competition from increasingly sophisticated home-based forms of entertainment, such as internet and video gaming and home movie streaming and delivery. Our failure to compete favorably in the competitive out-of-home and home-based entertainment and restaurant markets could have a material adverse effect on our business, results of operations and financial condition.
Unfavorable publicity or a failure to respond effectively to adverse publicity, could harm our business.
Our brands and our reputation are among our most important assets. Our ability to attract and retain customers depends, in part, upon the external perception of our Company, the quality of our food service and facilities and our integrity. Multi-store businesses such as ours can be adversely affected by unfavorable publicity resulting from poor food quality, food safety concerns, flu or other virus outbreaks and other public health concerns stemming from one or a limited number of our stores. While we dedicate substantial resources and provide training to ensure the safety and quality of the food we serve, these risks cannot be eliminated. Additionally, we rely on our network of suppliers to properly handle, store, and transport our ingredients for delivery to our stores. Any failure by our suppliers, or their suppliers, could cause our ingredients to be contaminated, which could be difficult to detect and put the safety of our food in jeopardy. The risk of food-borne illness also may increase whenever our menu items are served outside of our control, such as by third-party food delivery services or customer take-out.
11
Negative publicity may also result from criminal incidents, data privacy breaches, scandals involving our team members or operational problems at our stores. Regardless of whether the allegations or complaints are valid, unfavorable publicity related to one or more of our stores could affect public perception of the entire brand. Even incidents at similar businesses such as restaurants, our competitors, or in the supply chain generally could result in negative publicity that could indirectly harm our brand. If one or more of our stores were the subject of unfavorable publicity and we are unable to quickly and effectively respond to such reports, our overall brands could be adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.
The use of social media and similar platforms allows individuals access to a broad audience of consumers and other interested persons. Consumers value readily available information concerning goods and services that they have or plan to purchase and may act on such information without further investigation or authentication. Many social media platforms immediately publish the content their subscribers and participants post, usually without filters or checks on accuracy of the content posted. Inaccurate or adverse information concerning our Company may be posted on such platforms at any time and may spread quickly. The harm may be immediate without affording us an opportunity for redress or correction. Such platforms also may be used for dissemination of trade secret information, compromising valuable company assets. In summary, the dissemination of information via social media and similar platforms may harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy. The inappropriate use of social media vehicles by our customers or team members could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation.
Further, if we are not effective in addressing social and environmental responsibility matters or achieving relevant sustainability goals, consumer trust in our brands may suffer. Consumer demand for our products and the value of our brands could diminish significantly if any such incidents or other matters erode consumer confidence in us or our products, which would likely result in lower revenues.
We are subject to risks associated with leasing space subject to long-term, non-cancelable leases, and risks related to renewal.
We typically do not own real property for long periods. Payments under our non-cancelable, long-term operating leases account for a significant portion of our operating expenses and we expect the new stores we open in the future will also be predominantly leased. The leases typically provide for a base rent plus an annual either fixed or Consumer Price Indexed based rent escalator. Certain leases also have additional rent based on a percentage of the revenue generated by the stores on the leased premises once certain thresholds are met. We generally cannot cancel these leases without substantial economic penalty. If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligation under the applicable lease, including, among other things, paying the base rent for the remainder of the lease term. We depend on cash flow from operations to pay our lease obligations. If our business does not generate adequate cash flow from operating activities and sufficient funds are not otherwise available to us from borrowings under our existing credit facility, we may not be able to service our operating lease obligations, grow our business, respond to competitive challenges, or fund other liquidity and capital needs, all of which could have a material adverse effect on us.
In addition, as each of our existing leases expires, we may choose not to renew, or may not be able to renew, if the capital investment required to maintain the stores at the leased locations is not justified by the return required on the investment. If we are not able to renew the leases at rents that allow such stores to remain profitable as their terms expire, the number of such stores may decrease, resulting in lower revenue from operations, or we may relocate a store, which could subject us to construction and other costs and risks, and, in either case, could have a material adverse effect on our business, results of operations and financial condition.
Our financial performance and the ability to successfully implement our strategic direction could be adversely affected if we fail to retain, or effectively respond to a loss of, key management.
Our future success is substantially supported by the contributions and abilities of senior management, including key executives and other leadership team members. Changes in senior management could expose us to significant changes in strategic direction and initiatives. A failure to maintain appropriate organizational capacity and capability to support leadership excellence or a loss of key skill sets could jeopardize our ability to meet our business performance expectations and growth targets. Although we have employment agreements with all members of senior management, we cannot prevent members of senior management from terminating their employment with us. The departure of a member of senior management and/or the failure to ensure an effective transfer of knowledge and a smooth transition upon such departure may be disruptive to the business and could hinder our strategic planning and execution.
12
We face risks related to our substantial indebtedness and limitations on future sources of liquidity.
Our substantial indebtedness could have adverse 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;
•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 some of our borrowings are at variable rates;
•limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, strategic 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.
Covenants in our debt agreements restrict our business and could limit our ability to implement our business plan.
The credit facility contains 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 includes 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 payment 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 our assets.
Events beyond our control may affect our ability to comply with our covenants. If we default under the credit facility due to a covenant breach or otherwise, all outstanding amounts thereunder could become immediately due and payable. We cannot assure that we will be able to comply with our covenants under the credit facility 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 or 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, we may need additional financing 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 that we would have sufficient funds to repay outstanding amounts under the credit facility and any acceleration of amounts due would have a material adverse effect on our liquidity and financial condition.
The success of our longer-term growth strategy depends in part on our ability to open and operate new stores profitably, and on our ability to optimize our existing stores.
Our ability to timely and efficiently open new stores and to operate these stores on a profitable basis is dependent on numerous factors including quality locations, acceptable lease or purchase agreements, zoning, use and other regulations, our liquidity, staffing needs and training, permitting, customer acceptance, impact on existing stores and financial performance targets. The timing of new store openings may result in significant fluctuations in our quarterly performance. We typically incur significant costs prior to opening for pre-opening and construction and increased labor and operating costs for a newly opened store. Due to these substantial upfront financial requirements to open new stores, the investment risk related to any single store is much larger than that associated with many other entertainment or restaurant venues.
Our long-term growth strategy depends, in part, on our ability to remodel existing stores in a manner that achieves appropriate returns on our capital investment. A robust store remodel program will require significant capital investment, based on the condition of each store as well as other factors, including the optimization of the size and layout of our existing stores to ensure maximum space utilization. Pursuing the wrong remodel and any delays, cost increases, disruptions or other uncertainties related to those opportunities could adversely affect our results of operations.
13
Our results can be adversely affected by events, such as adverse weather conditions, natural disasters, climate change, pandemics or other catastrophic events.
Adverse weather conditions, natural disasters, climate change or catastrophic events, such as terrorist acts, can adversely impact our operations. Natural disasters such as earthquakes, hurricanes, fires, and severe adverse weather conditions, climate change and health pandemics can keep customers in the affected area from visiting our stores, adversely affect consumer spending and confidence levels and supply availability and costs, cause damage to, or closure of, our stores and result in lost opportunities for our stores. Our receipt of proceeds under any insurance we maintain with respect to some of these risks may be delayed or the proceeds may be insufficient to cover our losses fully.
We may be subject to impairment losses due to potential declines in the fair value of our assets.
In accordance with generally accepted accounting principles, we are required to annually evaluate our long-lived assets, goodwill and intangible assets for impairment. Significant declines in our stock price, market capitalization, or consumer spending due to increased competition, macroeconomic conditions or other factors could result in an unfavorable fair value evaluation of the carrying amounts of the assets. The resulting impairment charges related to our long-lived assets, goodwill or intangible assets could have a materially adverse effect on our results of operations.
Risks Related to Information Technology and Cybersecurity
Information technology system failures or interruptions may impact our ability to effectively operate our business.
We rely heavily on various information technology systems, including point-of-sale, kiosk and amusement operations systems in our stores, data centers that process transactions, communication systems and various other software applications used throughout our operations. Some of these systems have been internally developed or we rely on third-party providers and platforms for some of these information technology systems and support. Although we have operational safeguards in place, those technology systems and solutions could become vulnerable to damage, disability, or failures due to theft, fire, power outages, telecommunications failure or other catastrophic events. Any failure of these systems could significantly impact our operations. We rely on third-party service providers for certain key elements of our operations including credit card processing, telecommunications, and utilities. Our reliance on systems operated by third parties also presents the risk faced by the third-party’s business, including the operational, cybersecurity, and credit risks of those parties. If those systems were to fail or otherwise be unavailable, and we were unable to timely recover, we could experience an interruption in, or other material adverse effect on, our operations.
Cybersecurity breaches or other privacy or data security incidents that expose confidential customer, personal employee or other material, confidential information that is stored in our information systems or by third parties may adversely impact our business.
Many of our information technology systems (and those of our third-party business partners, whether cloud-based or hosted in proprietary servers), including those used for point-of-sale, web and mobile platforms, mobile payment systems and administrative functions including time and attendance reporting and payroll processing, contain personal, financial, or other information that is entrusted to us by our customers and team members. Many of our information technology systems also contain proprietary and other confidential information related to our business, such as business plans and initiatives. A cybersecurity incident (generally any intentional or unintentional attack that results in unauthorized access resulting in disruption of systems, corruption of data, theft or exposure of confidential information or intellectual property) that compromises the information of our customers or team members could result in widespread negative publicity, damage to our reputation, a loss of customers, additional costs, litigation claims, legal or regulatory proceedings, fines or penalties, legal fees, remediation costs, a negative impact on team member morale, or other impacts to our business.
Although we employ security technologies and practices and have taken other steps to try to prevent a breach, there are no assurances that such measures will prevent or detect cybersecurity breaches, and we may nevertheless not have the resources or technical sophistication to prevent rapidly evolving types of cyberattacks. We maintain a dedicated insurance policy covering cybersecurity risks and such insurance coverage may, subject to policy terms and conditions, cover certain aspects of cyber risks, but this policy is subject to a retention amount and may not be applicable to a particular incident or otherwise may be insufficient to cover all our losses beyond any retention. Based on recent court rulings, there is uncertainty as to whether traditional commercial general liability policies will be construed to cover the expenses related to cyberattacks and breaches if credit and debit card information is stolen.
We have been, and likely will continue to be, the target of cyber and other security threats. If we experience a security breach, we could become subject to ransom demands, or claims, lawsuits or other proceedings for purportedly fraudulent transactions arising out of the theft of credit or debit card information, compromised security and information systems, failure of our team members to comply with applicable laws, the unauthorized acquisition or use of such
14
information by third parties, or other similar claims, and such demands, claims, lawsuits or other proceedings could have a material and adverse effect on our operations, results of operations, and financial condition.
Compliance with cybersecurity, privacy and similar laws may involve significant cost and any failure to comply could adversely affect our business, reputation, and results of operations.
The statutory and regulatory environment surrounding information security, privacy, and other matters involving consumer protection is increasingly demanding, with the frequent imposition of new and constantly changing laws and requirements. Compliance with these laws and requirements can be costly and time-consuming and the costs could adversely impact our results of operations due to necessary system changes and the development of new administrative processes. Security breaches could also result in a violation of applicable privacy and other laws, and subject us to private consumer, business partner or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability. We are required to maintain the highest level of Payment Card Industry Data Security Standards (“PCI DSS”) compliance at our store support center and stores. If we do not maintain the required level of PCI DSS compliance, we could be subject to costly fines or additional fees from the card brands that we accept or lose our ability to accept those payment cards. Additionally, an increasing number of government and industry groups have established laws and standards for the protection of personal and health information.
Risks Related to the Entertainment and Restaurant Industries
Our success depends upon our ability to recruit and retain qualified store management and operating personnel while also controlling our labor costs.
We must continue to attract, retain, and motivate qualified management and operating personnel to maintain consistency in our service, hospitality, quality, and atmosphere of our stores, and also to support future growth. Adequate staffing of qualified personnel is a critical factor impacting our customers’ experience in our stores. Our ability to attract and retain qualified management and operating personnel has become more challenging due to an increasingly competitive job market. If we are unable to attract and retain a satisfactory number of qualified management and operating personnel, labor shortages could delay the planned openings of new stores or adversely impact the operation of our existing stores. Any such delays, material increases in team member turnover rates in existing stores or widespread team dissatisfaction could have a material adverse effect on our business and results of operations.
Low unemployment coupled with increases in minimum wages and minimum tip credit wages, extensions of personal and other leave policies, other governmental regulations affecting labor costs, reduced levels of legal immigration and a diminishing pool of potential team members, which has been exacerbated by potential team members choosing to exit the workforce, in general, and for the hospitality industry in particular, especially in certain localities, have increased and may continue to significantly increase our labor costs and make it more difficult to fully staff our restaurants, any of which could materially adversely affect our financial performance.
The federal minimum wage and tip credit wage are under constant political scrutiny and may be increased or eliminated in favor of significantly more mandated benefits than what is currently required under federal law. Should such increases occur, state and local jurisdictions that have historically mandated higher wages and greater benefits than what is required under federal law may seek to further increase wages and mandated benefits. In addition to increasing the overall wages paid to our minimum wage and tip credit wage earners, these increases create pressure to increase wages and other benefits paid to other team members who, in recognition of their tenure, performance, job responsibilities and other similar considerations, historically received a rate of pay exceeding the applicable minimum wage or minimum tip credit wage. Because we employ a large workforce, any wage increase and/or expansion of benefits mandates will have a particularly significant impact on our labor costs. Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their price for goods, construction and services to offset their increasing labor costs.
Our labor expenses include significant costs related to our self-insured health, pharmacy and dental benefit plans. Health care costs continue to rise and are especially difficult to project given that material increases in costs associated with medical claims, or an increase in the severity or frequency of such claims, may cause health care costs to vary substantially from quarter-to-quarter and year-over-year. Any significant changes to the healthcare insurance system could also impact our health care costs. Material increases in health care costs could materially adversely affect our financial performance.
While we seek to offset labor cost increases through menu and game price increases, more efficient purchasing practices, productivity improvements, greater economies of scale and by offering a variety of health plans to our team members, including lower cost high deductible health plans, there can be no assurance that these efforts will be successful. If we are unable to effectively anticipate and respond to increased labor costs, our financial performance could be materially adversely affected.
15
Also, our team members and others may attempt to unionize our workforce, establish boycotts or picket lines or interrupt our supply chains, which could limit our ability to manage our workforce effectively, cause disruptions to our operations and materially adversely affect our financial performance. Our labor costs may significantly increase if we become unable to effectively manage our workforce and the compensation and benefits we offer to our team members, which also could materially adversely affect our financial performance.
Our revenues and operating results may fluctuate significantly due to various risks and unforeseen circumstances, including increases in costs, seasonality, weather, acts of violence or terrorism and other factors outside our control.
Certain regions in which our stores are located have been, and may in the future be, subject to natural disasters, such as earthquakes, floods, fires, and hurricanes. Depending upon its magnitude, a natural disaster could severely damage our stores, which could adversely affect our business, results of operations or financial condition. Additionally, a natural or man-made disaster at our store support center, game repair facility, data center, or backup data facility could significantly impact our ability to provide services and systems to our stores. We currently maintain property and business interruption insurance through the aggregate property policy for each of our stores.
Any act of violence at or threatened against our stores or the centers in which they are located, including active shooter situations and terrorist activities, may result in restricted access to our stores and/or store closures in the short-term and, in the long term, may cause our customers and team members to avoid visiting our stores. Any such situation could adversely impact cash flows and make it more difficult to fully staff our stores, which could materially adversely affect our business.
Our operating results may fluctuate significantly due to seasonal factors. Typically, our third quarter, which encompasses the back-to-school fall season, has historically had lower revenues compared to other quarters. Revenues associated with the spring and year-end holidays are typically higher. As a result, factors affecting peak seasons could have a disproportionate effect on our results. For example, the number of days between Thanksgiving and New Year’s Day and the days of the week on which Christmas and New Year’s Eve fall affect the volume of business generated during the December holiday season and can affect our results for the full fiscal year. In addition, unfavorable weather conditions during the winter and spring seasons could have a significant adverse impact on our results.
Our operations are susceptible to the changes in cost and availability of commodities and other products, which could negatively affect our operating results.
Our profitability depends in part on our ability to anticipate and react to changes in commodity and other product costs. Various factors beyond our control, including adverse weather conditions, governmental regulation and monetary policy, product availability, recalls of food products, disruption of our supplier manufacturing and distribution processes due to public health crises or pandemics, and seasonality, may affect our commodity costs or cause a disruption in our supply chain. We have multiple short-term supply contracts with a limited number of suppliers. If any of these suppliers do not perform adequately or otherwise fail to distribute products or supplies to our stores, we may be unable to replace the suppliers in a short period of time on acceptable terms or at all, which could increase our costs, cause shortages of food and other items at our stores and cause us to remove certain items from our menu.
Changes in the price or availability of commodities for which we do not have short-term supply contracts could have a material adverse effect on our profitability. Expiring contracts with our food suppliers could also result in unfavorable renewal terms and therefore increase costs associated with these suppliers or may necessitate negotiations with other suppliers. Other than short-term supply contracts for certain food items, we currently do not engage in futures contracts or other financial risk management strategies with respect to potential price fluctuations in the cost of food and other supplies. Also, the unplanned loss of a major distributor could adversely affect our business by disrupting our operations as we seek out and negotiate a new distribution contract. Further, a significant percentage of our inventory is directly or indirectly sourced outside the United States, and volatility in trade policy and tariffs could significantly increase our costs. If we pay higher prices for food or other product costs, our operating costs may increase, and, if we are unable to adjust our purchasing practices or pass any cost increases on to our customers, our operating results could be adversely affected.
Our procurement of new games and entertainment offerings is contingent upon availability, and in some instances, our ability to obtain licensing rights.
Our ability to continue to procure new games and entertainment offerings, and other entertainment-related equipment is important to our business strategy. The number of suppliers from which we can purchase games and other entertainment-related equipment is limited. To the extent the number of suppliers declines, we could be subject to the risk of distribution delays, pricing pressure (including pressure imposed by tariffs), lack of innovation and other associated risks. We may not be able to anticipate and react to changing offerings cost by adjusting purchasing practices or game prices, and a failure to do so could have a material adverse effect on our operating results. In addition, any decrease in
16
availability of new entertainment offerings that appeal to customers could lead to decreases in revenues as customers negatively react to a lack of new game options.
We have successfully developed several proprietary entertainment offerings that are not available to operations outside the Company. Our ability to develop future offerings is dependent on, among other things, obtaining rights to intellectual property and compelling game content and developing new entertainment offerings that are accepted by our customers. There is no guarantee that additional licensing rights will be obtained by us or that our customers will accept the future offerings that we develop. The result could be increased expenses without increased revenues putting downward pressure on our results of operations and financial performance.
We may not be able to operate our stores or obtain/maintain licenses and permits necessary for such operation, in compliance with laws, regulations and other requirements, which could adversely affect our business, results of operations or financial condition.
We are subject to licensing and regulation by state and local authorities relating to the sale of alcoholic beverages, health, sanitation, safety, building and fire codes. Each store is required to obtain a license to sell alcoholic beverages on the premises from a state authority and, in certain locations, county and municipal authorities. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. In some states, the loss of a license for cause with respect to one store may lead to the loss of licenses at all stores in that state and could make it more difficult to obtain additional licenses in that state. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of each store, including minimum age of patrons and team members, hours of operation, advertising, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages.
We generally have not encountered any material difficulties or failures in obtaining and maintaining the required licenses, permits and approvals that could impact the continuing operations of an existing store, or delay or prevent the opening of a new store. Although we do not anticipate any material difficulties occurring in the future, the failure to receive or retain a liquor license, or any other required permit or license, in a particular location, or to continue to qualify for, or renew licenses, could have a material adverse effect on operations and our ability to obtain such a license or permit in other locations.
We are also subject to amusement and game licensing and regulation by the states, counties, and municipalities in which our stores are located, due to operating certain entertainment games and attractions, including skill-based games that offer redemption prizes. These laws and regulations can vary significantly by state, county, and municipality and, in some jurisdictions, may require us to modify our business operations or alter the mix of redemption games and simulators we offer. Moreover, as more states and local communities implement legalized gambling, the laws and corresponding enabling regulations may also be applicable to our redemption games and regulators may create new licensing requirements, taxes or fees, or restrictions on the various types of redemption games we offer. Furthermore, other states, counties and municipalities may make changes to existing laws to further regulate legalized gaming and illegal gambling. Adoption of these laws, or adverse interpretation of existing laws, could require our existing stores in these jurisdictions to alter the mix of games, modify certain games, limit the number of tickets that may be won by a customer from a redemption game, change the mix of prizes that we may offer at our redemption area or terminate the use of specific games, any of which could adversely affect our operations. If we fail to comply with such laws and regulations, we may be subject to various sanctions and/or penalties or fines or may be required to cease operations until we achieve compliance, which could have an adverse effect on our business and our financial results.
We are subject to extensive laws and regulations and failure to comply with existing or new laws and regulations could adversely affect our operational efficiencies, cost structure and talent availability.
We are subject to various federal, state, and local laws and regulations that govern numerous aspects of our business, including, but not limited to, the following:
•the Fair Labor Standards Act; federal, state and local laws and regulations that govern employment practices and working conditions, including minimum wage rates, wage and hour practices, gratuities, overtime, labor practices, various family leave mandates, discrimination and harassment, immigration, workplace safety and other areas;
•the Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas;
•the Patient Protection and Affordable Care Act as amended by the Health Care and Education Affordability Reconciliation Act of 2010 and uncertainties surrounding future changes to or replacement of our health insurance system;
17
•laws and regulations relating to the preparation, sale and labeling of food, including the federal regulations of the Food and Drug Administration, which oversees the safety of the entire food system, including inspection and mandatory food recalls, menu labeling and nutritional content, and additional requirements in certain states and local jurisdictions;
•environmental laws and regulations governing, among other things, discharges of pollutants into the air and water as well as the presence, handling, release and disposal of and exposure to hazardous substances; and
•other environmental matters, such as climate change, the reduction of greenhouse gases, water consumption and animal health and welfare.
Compliance with these laws and regulations and future new laws or changes in laws or regulations that impose additional requirements can be costly. Any failure or perceived failure to comply with these laws or regulations could result in, among other things, revocation of required licenses, administrative enforcement actions, fines, civil and criminal liability, and/or closure of stores. We could also be strictly liable, without regard to fault, for certain environmental conditions at properties we formerly owned or operated as well as at our current properties. Further, more stringent and varied requirements of local and state governmental bodies with respect to zoning, land use, and environmental factors could delay or prevent development of new stores in certain locations.
Moreover, new immigration legislation may contain provisions that could increase our costs in recruiting, training and retaining team members. Additionally, although our hiring practices comply with the requirements of federal law in reviewing the citizenship of our team members or their authority to work in the United States, increased enforcement efforts with respect to existing immigration laws by governmental authorities may disrupt a portion of our workforce or our operations at one or more of our stores, thereby negatively impacting our business.
We face potential liability with our gift cards and game play cards under the property laws of some states.
Our gift cards, which may be used to purchase food, beverages, merchandise, and game play credits in our stores, may be considered stored value cards. Certain states include gift cards under their abandoned and unclaimed property laws and require companies to remit to the state cash in an amount equal to all or a designated portion of the unredeemed balance on the gift cards based on certain card attributes and the length of time that the cards are inactive. To date, we have not remitted any amounts relating to unredeemed gift cards to states based upon our assessment of applicable laws.
The analysis of the potential application of the abandoned and unclaimed property laws to our gift cards is complex, involving an analysis of constitutional and statutory provisions and factual issues. In the event one or more states change their existing abandoned and unclaimed property laws or successfully challenge our position on the application of its abandoned and unclaimed property laws to our gift cards, our liabilities with respect to unredeemed gift cards may be materially higher than the amounts shown in our financial statements. If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed gift cards, our net income could be materially and adversely affected.
Our game play cards may raise similar concerns to gift cards in terms of the applicability of state abandoned and unclaimed property laws. However, based on our analysis of abandoned and unclaimed property laws, we believe they are not stored value cards and such laws do not apply, although there can be no assurance that states will not take a different position, which may have an adverse effect on our results of operations and financial condition.
Litigation, including allegations of illegal, unfair, or inconsistent employment practices, may adversely affect our business, results of operations or financial condition.
Our business may be adversely affected by the risk of legal proceedings brought by or on behalf of our customers, team members, suppliers, shareholders, government agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. In recent years, a number of restaurant companies, including ours, have been subject to lawsuits, including class action lawsuits, alleging violations of federal and state law regarding workplace and employment matters, discrimination and similar matters, and a number of these lawsuits have resulted in the payment of substantial damages by the defendants. We have had from time to time and now have such lawsuits pending against us. In addition, from time to time, customers file complaints or lawsuits against us alleging that we are responsible for some illness or injury they suffered at or after a visit to a store. We are also subject to a variety of other claims in the ordinary course of business, including personal injury, lease, and contract claims.
We are also subject to “dram shop” statutes in certain states in which our stores are located. These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated individual. In many instances litigation of these claims results in significant judgments and settlements under dram shop statutes. Because these cases often seek punitive damages, which may not be covered by insurance, such litigation could have an adverse impact on our business, results of operations or financial
18
condition. Regardless of whether any claims against us are valid, or whether we are liable, claims may be expensive to defend and may divert time and money away from operations and adversely affect our financial performance. A judgment significantly in excess of our insurance coverage or not covered by insurance could have a material adverse effect on our business, results of operations or financial condition. Also, adverse publicity resulting from these allegations, regardless of whether the allegations are valid, or we are ultimately found liable, may materially adversely affect our stores and us.
Failure to adequately protect our intellectual property could harm our business.
We regard our intellectual property as having significant value and being important to our marketing efforts. We use a combination of intellectual property rights, such as trademarks and trade secrets, to protect our brands, including Dave & Buster’s®, Power Card®, Eat & Play Combo®, Eat Drink Play®, Eat Drink Play Watch®, Main Event®, Main Event Entertainment®, and Eat.Bowl.Play®, as well as certain other proprietary processes and information material to our business. The success of our business strategy depends, in part, on our continued ability to use our intellectual property rights to increase brand awareness and further develop our branded products in both existing and new markets. If we fail to protect our intellectual property rights adequately, we may lose an important advantage in the markets in which we compete. If third parties misappropriate or infringe our intellectual property, the value of our image, brands and the goodwill associated therewith may be diminished, our brands may fail to achieve and maintain market recognition, and our competitive position may be harmed, any of which could have a material adverse effect on our business, including our revenues. Policing unauthorized use of our intellectual property is difficult, and we cannot be certain that the steps we have taken will prevent the violation or misappropriation of such intellectual property rights by others. To protect our intellectual property, we may become involved in litigation, which could result in substantial expenses, divert the attention of management, and adversely affect our revenue, financial condition and results of operations.
We cannot be certain that our products and services do not and will not infringe on the intellectual property rights of others. Any such claims, regardless of merit, could be time-consuming and expensive to litigate or settle, divert the attention of management, cause significant delays, materially disrupt the conduct of our business, and have a material adverse effect on our financial condition and results of operations. We could also be required to pay a substantial damage award, take a royalty-bearing license, discontinue the use of third-party products used within our operations and/or rebrand our products and services as a result of any such claims.
Risks Related to Our Corporate Structure, Our Stock Ownership and Our Common Stock
The market price of our common stock is subject to volatility.
The market price of our common stock may be significantly affected by a number of factors, including, but not limited to, actual or anticipated variations in our operating results or those of our competitors as compared to analyst expectations, changes in financial estimates by research analysts with respect to us or others in the entertainment, restaurant or other consumer discretionary industries, announcement of significant transactions (including mergers or acquisitions, divestitures, joint ventures or other strategic initiatives) by us or others in those industries. In addition, the equity markets have experienced price and volume fluctuations triggered by general economic uncertainty or current events that affect the stock price of companies in ways that have been unrelated to an individual company’s operating performance. The price for our common stock may continue to be volatile, based on factors specific to our company and industry, as well as factors related to the equity markets overall.
Provisions in our certificate of incorporation and bylaws may discourage, delay or prevent a change of control of our company or changes in our management and, therefore, may depress the trading price of our stock.
Our certificate of incorporation and bylaws include certain provisions that could have the effect of discouraging, delaying or preventing a change of control of our Company or changes in our management, including: restrictions on the ability of our stockholders to fill a vacancy on the Board of Directors (the “Board”); our ability to issue preferred stock with terms that the Board may determine, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; the inability of our stockholders to call a special meeting of stockholders; requirement that special meetings of our stockholders be called only upon the request of a majority of our Board or our Chief Executive Officer (“CEO”); the absence of cumulative voting in the election of directors, which may limit the ability of minority stockholders to elect directors; and advance notice requirements for stockholder proposals and nominations, which may discourage or deter a potential acquirer from soliciting proxies to elect a particular slate of directors or otherwise attempting to obtain control of us.
These provisions in our certificate of incorporation and our bylaws may discourage, delay, or prevent a transaction involving a change of control of our Company that is in the best interest of our minority stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging future takeover attempts.
19
Unsolicited takeover proposals, governance change proposals, proxy contests and certain proposals/actions by activist investors may create additional risks and uncertainties with respect to the Company’s financial position, operations, strategies and management, and may adversely affect our ability to attract and retain key members of our team. Any perceived uncertainties may affect the market price and volatility of our securities.
Public companies including those in the restaurant industry have been the target of unsolicited takeover proposals in the past. In the event that a third party, such as a competitor, private equity firm or activist investor makes an unsolicited takeover proposal or proposes to change our governance policies or board of directors or makes other proposals concerning the Company’s ownership structure or operations, our review and consideration of such proposals may be a significant distraction for our management and team members and may require us to expend significant time and resources away from our primary operations. Such proposals may create uncertainty for our team members, additional risks and uncertainties with respect to the Company’s financial position, operations, strategies, and management, and may adversely affect our ability to attract and retain key members of our team. Any perceived uncertainties as to our future direction also may adversely affect the market price and volatility of our securities.
Our fourth amended and restated certificate of incorporation designates specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a judicial forum of their choice for disputes with us.
Our fourth amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: any derivative action or proceeding brought on our behalf; any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, team members or stockholders to our company or our stockholders; any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or any action asserting a claim arising pursuant to any provision of our certificate of incorporation or bylaws (in each case, as they may be amended from time to time) or governed by the internal affairs doctrine.
The choice of forum provision in our certificate of incorporation does not waive our compliance with obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or by the Securities Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts with respect to suits brought to enforce a duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain claims under the Securities Act.
General Risk Factors
Changes in tax laws and resulting regulations could result in changes to our tax provisions and subject us to additional tax liabilities that could materially adversely affect our financial performance.
We are subject to income, sales, use and other taxes in the United States and certain foreign jurisdictions. Changes in applicable U.S. or foreign tax laws and regulations, including the Tax Cuts and Jobs Act (“Tax Act”), or in their interpretation and application, including the possibility of retroactive effect and changes to state tax laws that may occur in response to the Tax Act, could affect our effective income tax rate. In addition, the final determination of any tax audits or related litigation could be materially different from our historical tax provisions and accruals. Changes in our tax expense or an increase in our tax liabilities, whether due to changes in applicable laws and regulation, the interpretation or application thereof, or a final determination of tax audits or litigation, could materially adversely affect our financial performance.
20
Failure of our internal control over financial reporting could harm our business, financial results and stock price.
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with generally accepted accounting principles in the United States. There can be no assurance that we will be able to timely remediate material weakness in internal controls (if any) or maintain all of the controls necessary to remain in compliance. Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud, could result in substantial cost to remediate, and could cause a loss of investor confidence and decline in the market price of our stock.
ITEM 1B. Unresolved Staff Comments
Not applicable.
21
ITEM 1C. Cybersecurity
Risk Management and Strategy
The Company has developed and implemented a cybersecurity program (the “Program”) designed to identify, assess, and mitigate material cybersecurity related risks. The Company’s program leverages recognized frameworks and standards, including the National Institute of Standards and Technology, Cyber Security Framework, the Center for Internet Security Critical Security Controls, and the Payment Card Industry Data Security Standards, to assess, organize, and improve our program. This does not imply that we meet any particular technical standards, specifications, or requirements, only that we leverage various security standards, guidelines and best practices to identify, assess, and manage cybersecurity risks relevant to our business.
As part of the Program, the Company maintains various safeguards to help protect the confidentiality, integrity, and availability of its information systems and data, including:
•layered technical controls designed to help detect, prevent, and mitigate cybersecurity threats to Company assets;
•utilization of a third-party managed detection and response service provider to monitor for cybersecurity threats, ingest threat-intelligence, and coordinate incident response efforts;
•policies, procedures, and standards that are utilized to outline the Company’s expectations, guidelines and best practices for managing cybersecurity risks;
•cybersecurity training and education for our employees;
•practices for monitoring cybersecurity risks of key third-party service providers ; and
•incident response plans that provide a framework for the Company’s response to cybersecurity incidents.
From time to time, the Company engages third-party subject matter experts and consultants to conduct evaluations of our program and security controls, whether through penetration testing, assessments, or consulting on best practices to address new challenges. Results are used to identify and assess risks as well as drive priorities and initiatives to improve the overall Program. The Company also engages third-party experts and consultants, when deemed appropriate, to assist with responding to cybersecurity incidents, such as external legal counsel and forensic specialists.
Governance
Our Board considers cybersecurity risk as part of its risk management oversight function. The Audit Committee assists the Board in its oversight of cybersecurity risks and receives regular updates from the CIO and other Company management on cybersecurity matters at least annually. The Audit Committee reports findings and recommendations, as appropriate, to the full Board for consideration. The Audit Committee also receives information about cybersecurity risks as part of the Company’s ERM program and reporting. In addition, any cybersecurity incident assessed as being, or potentially becoming, material is escalated for further assessment and then reported to designated members of our senior management and, if necessary, the Audit Committee.
22
ITEM 2. Properties
We lease an office building in Coppell, Texas for use as our store support center. This lease expires during the second quarter of fiscal 2032, with options to renew through the second quarter of fiscal 2042. We also lease a 43,000 square foot warehouse facility in Dallas, Texas. We have a lease for an office building in Plano, Texas, which expires in April 2029. As of the end of fiscal 2024, we owned the sites for eight future stores in our pipeline and lease all of our 232 operating stores. Our leases typically have initial terms ranging from ten to twenty years and most include options to extend the term for one or more 5-year periods.
Our operating stores were in the following locations as of the end of fiscal 2024:
| Location | Dave & Buster's | Main Event | Total | |||||||||||||||||
| Alabama | 3 | 1 | 4 | |||||||||||||||||
| Alaska | 1 | — | 1 | |||||||||||||||||
| Arizona | 5 | 4 | 9 | |||||||||||||||||
| Arkansas | 2 | 1 | 3 | |||||||||||||||||
| California | 22 | 1 | 23 | |||||||||||||||||
| Colorado | 3 | 4 | 7 | |||||||||||||||||
| Connecticut | 2 | — | 2 | |||||||||||||||||
| Delaware | — | 1 | 1 | |||||||||||||||||
| Florida | 10 | 3 | 13 | |||||||||||||||||
| Georgia | 6 | 3 | 9 | |||||||||||||||||
| Hawaii | 1 | — | 1 | |||||||||||||||||
| Idaho | 1 | — | 1 | |||||||||||||||||
| Illinois | 5 | 2 | 7 | |||||||||||||||||
| Indiana | 3 | — | 3 | |||||||||||||||||
| Iowa | 1 | — | 1 | |||||||||||||||||
| Kansas | 3 | 1 | 4 | |||||||||||||||||
| Kentucky | 2 | 2 | 4 | |||||||||||||||||
| Louisiana | 2 | 1 | 3 | |||||||||||||||||
| Maryland | 5 | 1 | 6 | |||||||||||||||||
| Massachusetts | 3 | — | 3 | |||||||||||||||||
| Michigan | 3 | 1 | 4 | |||||||||||||||||
| Minnesota | 2 | — | 2 | |||||||||||||||||
| Missouri | 1 | 3 | 4 | |||||||||||||||||
| Nebraska | 1 | — | 1 | |||||||||||||||||
| Nevada | 2 | — | 2 | |||||||||||||||||
| New Hampshire | 1 | — | 1 | |||||||||||||||||
| New Jersey | 4 | — | 4 | |||||||||||||||||
| New Mexico | 1 | 1 | 2 | |||||||||||||||||
| New York | 13 | — | 13 | |||||||||||||||||
| North Carolina | 4 | 1 | 5 | |||||||||||||||||
| Ohio | 7 | 2 | 9 | |||||||||||||||||
| Oklahoma | 2 | 2 | 4 | |||||||||||||||||
| Oregon | 1 | — | 1 | |||||||||||||||||
| Pennsylvania | 8 | — | 8 | |||||||||||||||||
| Rhode Island | 1 | — | 1 | |||||||||||||||||
| South Carolina | 3 | 1 | 4 | |||||||||||||||||
| South Dakota | 1 | — | 1 | |||||||||||||||||
| Tennessee | 5 | 3 | 8 | |||||||||||||||||
| Texas | 15 | 22 | 37 | |||||||||||||||||
| Utah | 1 | — | 1 | |||||||||||||||||
| Virginia | 4 | — | 4 | |||||||||||||||||
| Washington | 3 | — | 3 | |||||||||||||||||
| West Virginia | 1 | — | 1 | |||||||||||||||||
| Wisconsin | 3 | — | 3 | |||||||||||||||||
| Puerto Rico | 2 | — | 2 | |||||||||||||||||
| Ontario, Canada | 2 | — | 2 | |||||||||||||||||
| Total | 171 | 61 | 232 | |||||||||||||||||
23
ITEM 3. Legal Proceedings
We are subject to certain legal proceedings and claims that arise in the ordinary course of our business, including intellectual property disputes, miscellaneous premises liability, employment-related claims, vendor disputes, and dram shop claims. In the opinion of management, based upon consultation with legal counsel, the anticipated amount of ultimate liability with respect to, or an adverse outcome in any such legal proceedings or claims, will not materially affect our business, the consolidated results of our operations or our financial condition. Refer to Note 10 of the consolidated financial statements for additional details.
ITEM 4. Mine Safety Disclosures
Not applicable.
PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
The Company’s common stock trades under the symbol PLAY and is listed on the NASDAQ Global Market (“NASDAQ”).
The number of shareholders of record of the Company’s common stock as of April 4, 2025 was 267. This does not include persons whose stock is in nominee or “street name” accounts through brokers.
Dividends and Share Repurchases
There were no dividends declared or paid in fiscal years 2024, 2023 or 2022.
Our Board has approved a share repurchase program and periodically approved increases to the authorized purchase limit under the program. During fiscal 2024, the Company repurchased 4.99 million shares at an average of $34.50 per share. The remaining dollar value of shares that may be repurchased under the program is $128.0 million as of February 4, 2025.
Future decisions to pay cash dividends or repurchase shares continue to be at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board considers relevant.
Issuer Purchases of Equity Securities
Information regarding repurchases of our common stock during the fourth quarter of fiscal 2024:
Period (1) | Total Number of Shares Repurchased (2) (in millions) | Average Price Paid per Share (2) | Total Number of Shares Repurchased as Part of Publicly Announced Plans (2) (3) (in millions) | Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Plans (4) (in millions) | ||||||||||||||||||||||
| November 6 to December 3, 2024 | — | $ | — | — | $ | 212.0 | ||||||||||||||||||||
| December 4, 2024 to January 7, 2025 | 1.97 | $ | 28.59 | — | $ | 155.7 | ||||||||||||||||||||
| January 8 to February 4, 2025 | 0.98 | $ | 28.21 | — | $ | 128.0 | ||||||||||||||||||||
(1)The Company uses a “4-5-4” calendar to determine the months in each quarter. The periods presented represent the 4-week and 5-week periods making up the fourth quarter of fiscal 2024.
(2)Represents shares withheld for tax purposes on behalf of our employees in connection with the vesting of time-based and performance restricted stock units. There were no purchases under repurchase program(s) during the fourth quarter of fiscal 2024.
(3)Our Board approved a share repurchase program in March of 2023, with approved subsequent increases. Under the program, 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 Securities Exchange Act of 1934, as amended. The share repurchase program(s) may be modified, suspended or discontinued at any time.
(4)Represents total cumulative share repurchase authorizations in effect, less cumulative purchases, at the end of each period presented.
24
Performance Graph
The following performance graph depicts the total returns to shareholders of our stock for the past five fiscal years, relative to the performance of the NASDAQ Composite Index, Standard & Poor’s (“S&P”) 600 Small Cap Index and S&P 600 Hotels Restaurants and Leisure Index. All returns assume a base investment of $100 at the beginning of the five fiscal years (February 2, 2020 — the end of our fiscal year 2019) and the reinvestment of dividends paid, if applicable, since that date. The performance shown in the graph is not necessarily indicative of future price performance.
| 2/2/2020 | 1/31/2021 | 1/30/2022 | 1/29/2023 | 2/4/2024 | 2/4/2025 | ||||||||||||||||||||||||||||||
| Dave & Buster's Entertainment, Inc. | $ | 100.00 | $ | 77.31 | $ | 80.24 | $ | 94.53 | $ | 125.41 | $ | 62.22 | |||||||||||||||||||||||
| S&P 600 Small Cap | $ | 100.00 | $ | 121.32 | $ | 129.80 | $ | 127.43 | $ | 129.98 | $ | 147.40 | |||||||||||||||||||||||
S&P 600 Hotels Restaurants & Leisure (1) | $ | 100.00 | $ | 145.84 | $ | 105.33 | $ | 105.27 | $ | 106.20 | $ | 118.90 | |||||||||||||||||||||||
| NASDAQ Composite | $ | 100.00 | $ | 142.83 | $ | 150.48 | $ | 127.00 | $ | 170.79 | $ | 214.78 | |||||||||||||||||||||||
(1) Due to the limited number of publicly traded companies in our industry, we were unable to identify a suitable peer group for comparison to our market performance. In lieu of a peer group, we selected the S&P 600 Hotels Restaurants and Leisure index, of which our stock was a member during fiscal 2024.
ITEM 6. Reserved
Not applicable.
25
ITEM 7. 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 our audited consolidated financial statements and related notes included herein. This discussion may contain forward-looking statements. See Cautionary Statement Regarding Forward-Looking Statements and Risk Factors for a discussion of the uncertainties and risks associated with these statements. 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 consolidated financial statements. All dollar amounts are presented in millions, unless otherwise noted, except per share amounts.
Financial Highlights
•Revenue of $2,132.7 million decreased 3.3% compared with $2,205.3 million in fiscal 2023.
•Comparable store sales decreased 7.2% on a like-for-like calendar basis compared to fiscal 2023. See further discussion of comparable store sales below at Revenues.
•Net income totaled $58.3 million, or $1.46 per diluted share, compared with net income of $126.9 million, or $2.88 per diluted share in fiscal 2023.
•Adjusted EBITDA decreased $49.4 million to $506.2 million, or 23.7% of revenues, compared with Adjusted EBITDA of $555.6 million, or 25.2% of revenues, in fiscal 2023. See further discussion of Adjusted EBITDA, a non-GAAP measure, at Non-GAAP Financial Measures below along with a reconciliation to net income, the most comparable GAAP measure, at Reconciliations of Non-GAAP Financial Measures below.
•The Company’s fiscal year consists of 52 or 53 weeks ending on the Tuesday after the Monday closest to January 31. Fiscal 2024 contained 52 weeks, while Fiscal 2023 contained 53 weeks. The 53rd week of Fiscal 2023 contributed approximately $39.5 million in revenue.
General
We are a leading owner and operator of high-volume venues primarily in North America that combine entertainment and dining for both adults and families under the “Dave & Buster’s” and “Main Event” brands. The core of our concept is to offer our customers various forms of entertainment along with quality dining all in one location. Our entertainment offerings provide an extensive assortment of attractions centered around playing games, bowling, and watching live sports and other televised events. Our brands appeal to a relatively balanced mix of male and female adults, as well as families and teenagers. We believe we appeal to a diverse customer base by providing a highly customizable experience in a dynamic and fun setting.
Our Dave & Buster’s stores average 37,000 square feet and range in size between 16,000 and 70,000 square feet. Our Main Event stores average 53,000 square feet and range in size between 37,500 and 78,000 square feet. Generally, our stores are open seven days a week, with normal hours of operation generally from between 10:00 to 11:30 a.m. until midnight, with stores typically open for extended hours on weekends.
Strategy
Our strategy is built on the following key initiatives:
•Offer the latest entertainment at competitive prices.
•Offer novel food & drink to bring people together.
•Drive customer engagement through strategic marketing and loyalty offerings.
•Optimize our footprint with new venues and refreshed existing locations.
•Drive incremental sales volume through advertising and hosting special events.
•Drive an improved customer experience and optimize operations through targeted technology investments.
For further information about our strategy, refer to “Item 1. Strategy.”
26
Key Measures of Our Performance
We monitor and analyze several key performance measures to manage our business and evaluate financial and operating performance, including:
Comparable store sales. Comparable store sales are a comparison of sales to the same period of prior years for the comparable store base. We historically define the comparable store base to include those stores owned and open for a full 18 months before the beginning of the fiscal year and excluding stores permanently closed during the period. For fiscal 2024, our comparable store base consists of 146 Dave & Buster's branded stores and 49 Main Event branded stores.
New store openings. Our ability to reach new customers is influenced by the opening of additional stores in 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. During fiscal 2024, we opened eleven new Dave & Buster's stores and three Main Event stores.
Non-GAAP Financial Measures
In addition to the results provided in accordance with 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, Credit Adjusted EBITDA and Store Operating Income Before Depreciation and Amortization (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 titled 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 certain other costs that 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 do not directly relate to the ongoing operations of the currently underlying business of our stores and therefore complicate comparison of the underlying business between periods. Nevertheless, because of the limitations described above, management does not view Adjusted EBITDA, Credit 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
We define “Adjusted EBITDA” as net income, plus interest expense, net, loss on debt refinancing, provision for (benefit from) income taxes, depreciation and amortization expense, (gain) loss on property and equipment transactions, impairment of long-lived assets, share-based compensation, currency transaction (gains) losses and other costs.
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.
Credit Adjusted EBITDA
We define “Credit Adjusted EBITDA” as net income plus certain items as defined at Adjusted EBITDA above, as well as certain other adjustments as defined in our Credit Facility (see Liquidity and Capital Resources below for additional discussion and reconciliation). These other adjustments include (i) increases in entertainment revenue deferrals, (ii) the cost of new projects, including store pre-opening costs, and (iii) other costs and adjustments as permitted by the debt agreements. We believe the presentation of Credit Adjusted EBITDA is appropriate as it provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Credit Facility.
27
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, plus depreciation and amortization expense, general and administrative expenses and pre-opening costs. Store Operating Income Before Depreciation and Amortization 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, pre-opening costs and other charges and gains, as well as our interest expense, net, loss on debt refinancing 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
The Company’s fiscal year consists of 52 or 53 weeks ending on the Tuesday after the Monday closest to January 31. Fiscal year 2024, which ended on February 4, 2025, contained 52 weeks. Fiscal year 2023, which ended on February 4, 2024, contained 53 weeks. Fiscal year 2022, which ended on January 29, 2023, contained 52 weeks. Each quarterly period has 13 weeks, except in a 53-week year, when the fourth quarter has 14 weeks.
On May 6, 2024, the first day of the 2nd quarter of fiscal 2024, the Company changed its fiscal year to end on the Tuesday after the Monday closest to January 31st. The change was made to improve labor and operational efficiencies by ending the Company's periods outside of the busier weekend timeframe. As a result of this change, the second quarter and fiscal 2024 have two additional days added to its normal 13-week quarter and 52-week year.
All dollar amounts are presented in millions, unless otherwise noted, except share and per share amounts.
Store-Level Variability, Quarterly Fluctuations, Seasonality and Inflation
We operate stores varying in size and have experienced significant variability among stores in volumes, operating results and net investment costs.
Our new stores typically 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 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 will result in significant fluctuations in quarterly results.
New store operating margins (excluding pre-opening expenses) during the first year of operation historically 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.
Our operating results have historically fluctuated due to seasonal factors. Typically, we have higher revenues associated with the spring and year-end holidays, and sales and customer traffic during these periods are susceptible to the impact of severe, unfavorable or unseasonably mild weather. Our third quarter, which encompasses the back-to-school fall season, has historically had lower revenues as compared to other quarters.
We expect 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. There is no assurance that our cost of products will remain stable or that federal, state, or local minimum wage rates will not increase beyond amounts currently legislated, however, the effects of any supplier price increase or wage rate increases might be partially offset by selective price increases if competitively appropriate.
28
Fiscal 2024 Compared to Fiscal 2023
Results of operations. The following table sets forth selected data, in millions of dollars and as a percentage of total revenues (unless otherwise noted) for the periods indicated. All information is derived from the accompanying Consolidated Statements of Comprehensive Income.
Note that the Company’s fiscal year consists of 52 or 53 weeks ending on the Tuesday after the Monday closest to January 31. Fiscal year 2024 contained 52 weeks while Fiscal year 2023 contained 53 weeks.
| Fiscal Year Ended | |||||||||||||||||||||||
| February 4, 2025 | February 4, 2024 | ||||||||||||||||||||||
| Entertainment revenues | $ | 1,391.0 | 65.2 | % | $ | 1,434.8 | 65.1 | % | |||||||||||||||
| Food and beverage revenues | 741.7 | 34.8 | % | 770.5 | 34.9 | % | |||||||||||||||||
| Total revenues | 2,132.7 | 100.0 | % | 2,205.3 | 100.0 | % | |||||||||||||||||
Cost of entertainment (1) | 118.6 | 8.5 | % | 138.5 | 9.7 | % | |||||||||||||||||
Cost of food and beverage (1) | 195.8 | 26.4 | % | 214.5 | 27.8 | % | |||||||||||||||||
| Total cost of products | 314.4 | 14.7 | % | 353.0 | 16.0 | % | |||||||||||||||||
| Operating payroll and benefits | 523.5 | 24.5 | % | 525.9 | 23.8 | % | |||||||||||||||||
| Other store operating expenses | 690.4 | 32.4 | % | 669.5 | 30.4 | % | |||||||||||||||||
| General and administrative expenses | 99.5 | 4.7 | % | 113.8 | 5.2 | % | |||||||||||||||||
| Depreciation and amortization expense | 238.2 | 11.2 | % | 208.5 | 9.5 | % | |||||||||||||||||
| Pre-opening costs | 18.7 | 0.9 | % | 18.4 | 0.8 | % | |||||||||||||||||
| Other charges and gains | 27.6 | 1.3 | % | 9.6 | 0.4 | % | |||||||||||||||||
| Total operating costs | 1,912.3 | 89.7 | % | 1,898.7 | 86.1 | % | |||||||||||||||||
| Operating income | 220.4 | 10.3 | % | 306.6 | 13.9 | % | |||||||||||||||||
| Interest expense, net | 135.3 | 6.3 | % | 127.4 | 5.8 | % | |||||||||||||||||
| Loss on debt refinancing | 15.2 | 0.7 | % | 16.1 | 0.7 | % | |||||||||||||||||
| Income before provision for income taxes | 69.9 | 3.3 | % | 163.1 | 7.4 | % | |||||||||||||||||
| Provision for income taxes | 11.6 | 0.5 | % | 36.2 | 1.6 | % | |||||||||||||||||
| Net income | $ | 58.3 | 2.7 | % | $ | 126.9 | 5.8 | % | |||||||||||||||
| Company-owned stores at end of period | 232 | 220 | |||||||||||||||||||||
| Comparable stores at end of period | 195 | 141 | |||||||||||||||||||||
(1)All revenues and costs are expressed as a percentage of total revenues for the respective period presented, except cost of entertainment, which is expressed as a percentage of entertainment revenues, and cost of food and beverage, which is expressed as a percentage of food and beverage revenues.
29
Reconciliations of Non-GAAP Financial Measures
Adjusted EBITDA
The following table reconciles Net income to Adjusted EBITDA (in millions of dollars and as a percent of total revenues) for the periods indicated:
| Fiscal Year Ended | |||||||||||||||||||||||
| February 4, 2025 | February 4, 2024 | ||||||||||||||||||||||
Net income (1) | $ | 58.3 | 2.7 | % | $ | 126.9 | 5.8 | % | |||||||||||||||
| Interest expense, net | 135.3 | 127.4 | |||||||||||||||||||||
| Loss on debt refinancing | 15.2 | 16.1 | |||||||||||||||||||||
| Provision for income tax | 11.6 | 36.2 | |||||||||||||||||||||
| Depreciation and amortization expense | 238.2 | 208.5 | |||||||||||||||||||||
Share-based compensation (2) | 4.6 | 16.0 | |||||||||||||||||||||
Transaction and integration costs (3) | 3.4 | 11.1 | |||||||||||||||||||||
System implementation costs (4) | 11.1 | 9.4 | |||||||||||||||||||||
Other costs, net (5) | 28.5 | 4.0 | |||||||||||||||||||||
Adjusted EBITDA, a non-GAAP measure (1) | $ | 506.2 | 23.7 | % | $ | 555.6 | 25.2 | % | |||||||||||||||
(1)All percentages are expressed as a percentage of total revenues for the respective period presented.
(2)Non-cash share-based compensation expense, net of forfeitures, recorded in “General and administrative expenses” on the Consolidated Statement of Comprehensive Income.
(3)Transaction and integration costs related to the acquisition and integration of Main Event recorded in “General and administrative expenses” on the Consolidated Statement of Comprehensive Income.
(4)System implementation costs represent expenses incurred related to the development of new enterprise resource planning, human capital management and inventory software for our stores and store support teams and staff augmentation for the implementation team at the store support center. These charges are primarily recorded in “Other charges and gains” on the Consolidated Statement of Comprehensive Income.
(5)The amount related to fiscal 2024 primarily consisted of $10.6 million of one-time, third-party consulting fees, $3.9 million of impairment of long-lived assets, and a $12.8 million loss on property and equipment transactions. The amount for the 2023 primarily consisted of one-time, third-party consulting fees. The third-party consulting fees for each period, which are recorded in “Other charges and gains” on the Consolidated Statements of Comprehensive Income, are not part of our ongoing operations and were incurred to execute, discrete, and project-based strategic initiatives aimed at transforming our marketing strategy and transform our supply chain operational efficiency. The transformative nature, narrow scope, and limited duration of these incremental consulting fees are not reflective of the ordinary course expenses incurred to operate our business.
Store Operating Income Before Depreciation and Amortization
The following table reconciles Operating income to Store Operating Income Before Depreciation and Amortization for the periods indicated:
| Fiscal Year Ended | |||||||||||||||||||||||
| February 4, 2025 | February 4, 2024 | ||||||||||||||||||||||
Operating income (1) | $ | 220.4 | 10.3 | % | $ | 306.6 | 13.9 | % | |||||||||||||||
General and administrative expenses (2) | 99.5 | 113.8 | |||||||||||||||||||||
| Depreciation and amortization expense | 238.2 | 208.5 | |||||||||||||||||||||
| Pre-opening costs | 18.7 | 18.4 | |||||||||||||||||||||
Other charges and gains (2) | 27.6 | 9.6 | |||||||||||||||||||||
Store Operating Income Before Depreciation and Amortization, a non-GAAP measure (1)(2) | $ | 604.4 | 28.3 | % | $ | 656.9 | 29.8 | % | |||||||||||||||
(1)All percentages are expressed as a percentage of total revenues for the respective period presented.
(2)Certain fiscal 2023 amounts were reclassified to align with the fiscal 2024 presentation. See Note 1 to the consolidated financial statements for further discussion.
30
Results of Operations
Revenues - Selected revenue data (in millions except for store operating weeks) and store data for the periods indicated are as follows:
| Fiscal Year Ended | |||||||||||||||||
| February 4, 2025 | February 4, 2024 | Change | |||||||||||||||
Comparable store revenues (1)(2) | $ | 1,845.1 | $ | 2,025.1 | $ | (180.0) | |||||||||||
Noncomparable store revenues (1)(2) | 261.3 | 181.8 | 79.5 | ||||||||||||||
Other noncomparable revenues (3) | 26.3 | (1.6) | 27.9 | ||||||||||||||
| Total revenues | $ | 2,132.7 | $ | 2,205.3 | $ | (72.6) | |||||||||||
Comparable store operating weeks (1)(2) | 10,196 | 10,335 | (139) | ||||||||||||||
Noncomparable store operating weeks (1)(2) | 1,574 | 906 | 668 | ||||||||||||||
Total store operating weeks (1)(2) | 11,770 | 11,241 | 529 | ||||||||||||||
(1)During fiscal 2024 we adjusted our period close from Sunday to Tuesday of each week (see further discussion at Note 1 of the consolidated financial statements). This adjustment had the effect of adding 56, 9, and 65 operating weeks for our comparable, noncomparable and total stores, respectively.
(2)In fiscal 2023, comparable store operating weeks, noncomparable store operating weeks and total store operating weeks included an additional 195, 25 and 220 operating weeks, respectively, due to the 53rd week.
(3)Includes changes in deferred entertainment revenues, gift card deferrals and certain other revenues not associated with stores.
The table below represents our revenue mix for the fiscal periods indicated:
| Fiscal Year Ended | |||||||||||||||||||||||
| February 4, 2025 | February 4, 2024 | ||||||||||||||||||||||
| Entertainment revenues | $ | 1,391.0 | 65.2 | % | $ | 1,434.8 | 65.1 | % | |||||||||||||||
| Food revenues | 506.3 | 23.7 | % | 517.1 | 23.4 | % | |||||||||||||||||
| Beverage revenues | 235.4 | 11.1 | % | 253.4 | 11.5 | % | |||||||||||||||||
| Total revenues | $ | 2,132.7 | 100.0 | % | $ | 2,205.3 | 100.0 | % | |||||||||||||||
Total revenues decreased $72.6 million, or 3.3%, to $2,132.7 million in fiscal 2024 compared to $2,205.3 million in fiscal 2023. The decrease in revenue is primarily attributable to the 53rd week of fiscal 2023, a 7.2% decrease in comparable store sales on a like-for-like calendar basis and a decrease in other noncomparable revenues, partially offset by incremental sales from new stores, and changes in deferred entertainment revenue. The decrease in comparable store revenues is due primarily to a reduction in demand relative to a more robust consumer environment in the prior year period. The changes in entertainment revenue deferrals reflect breakage on unredeemed game play credits and tickets corresponding to guest redemption patterns over time. See Revenue Recognition at Note 1 of the consolidated financial statements for discussion of revenue recognition associated with play credits and tickets.
The $180.0 million or 8.9% comparable store revenue decrease presented in the table above is on a fiscal period basis. On a like-for-like calendar basis, comparable store sales decreased 7.2%. Due to the 53rd week in fiscal 2023, the 2024 period had one less operating week than fiscal 2023 and it ended approximately one week earlier than the 2023 period. Additionally, fiscal 2024 included two additional days of revenue, partially offsetting the one-week differential discussed in the footnote to the table above. Comparable store revenues based on a like-for-like calendar basis adjusts for this shift in weeks and compares the period from February 5, 2024 through February 4, 2025 to the period from January 29, 2023 through February 4, 2024.
Cost of products - The total cost of products was $314.4 million for fiscal 2024 and $353.0 million for fiscal 2023. The total cost of products as a percentage of total revenues decreased to 14.7% for fiscal 2024 compared to 16.0% for fiscal 2023.
Cost of entertainment decreased to $118.6 million in fiscal 2024 compared to $138.5 million in fiscal 2023. The cost of entertainment, as a percentage of entertainment revenues, decreased to 8.5% for fiscal 2024 from 9.7% in the fiscal 2023. The decrease was primarily attributable to sales price increases.
Cost of food and beverage products decreased to $195.8 million for fiscal 2024 compared to $214.5 million for fiscal 2023. Cost of food and beverage products, as a percentage of food and beverage revenues, decreased to 26.4% for fiscal 2024 from 27.8% for fiscal 2023. The slight decrease was due to food and beverage menu price increases, and the mix of products sold with our new menu, offset by continued supply chain and ingredient optimization.
31
Operating payroll and benefits - Total operating payroll and benefits decreased to $523.5 million in fiscal 2024 compared to $525.9 million in fiscal 2023. The total cost of operating payroll and benefits as a percentage of total revenues was 24.5% in fiscal 2024 compared to 23.8% in fiscal 2023.
Other store operating expenses - Other store operating expenses increased to $690.4 million in fiscal 2024 compared to $669.5 million in fiscal 2023. Other store operating expense as a percentage of total revenues increased to 32.4% in fiscal 2024 compared to 30.4% in fiscal 2023. This increase in expense as a percentage of total revenues was primarily due to higher occupancy costs for new stores and repairs & maintenance costs.
General and administrative expenses - General and administrative expenses decreased to $99.5 million in fiscal 2024 compared to $113.8 million in fiscal 2023. The decrease in general and administrative expenses was primarily driven by lower share-based and incentive compensation and lower transaction and integration costs in the current year. General and administrative expenses as a percentage of total revenues decreased to 4.7% in fiscal 2024 compared to 5.2% in fiscal 2023.
Depreciation and amortization expense - Depreciation and amortization expense increased to $238.2 million in fiscal 2024 compared to $208.5 million in fiscal 2023, primarily due to new store openings and store remodels.
Pre-opening costs - Pre-opening costs increased to $18.7 million in fiscal 2024 compared to $18.4 million in fiscal 2023 primarily due to the timing of costs in our pipeline of new stores for each period.
Other charges and gains - Other charges and gains increased to $27.6 million in fiscal 2024 compared to $9.6 million in fiscal 2023 primarily due to increased system implementation costs, impairment charges associated with one underperforming store and loss on retirement of assets associated with assets written off related to store remodels.
Interest expense, net - Interest expense, net increased to $135.3 million in fiscal 2024 compared to $127.4 million in fiscal 2023 due primarily due to incremental interest expense associated with sale-leaseback transactions and borrowings outstanding under our Credit Agreement, partially offset by an increase in interest income and a decrease in interest rates on our Credit Facility. See further discussion of the Company's debt activity at Note 6 of the consolidated financial statements. See further discussion of the sale-leaseback transaction at Note 8 of the consolidated financial statements.
Loss on debt refinancing - Loss on debt refinancing was $15.2 million in fiscal 2024 and $16.1 million in fiscal 2023. The amount for fiscal 2024 is related to the January and November debt refinancings. See further discussion of the Company's debt refinancing activity at Note 6 of the consolidated financial statements.
Provision for income taxes - The effective tax rate for fiscal 2024 was 16.5%, compared to 22.2% for fiscal 2023. The effective tax rate decrease for fiscal 2024 in comparison to fiscal 2023 was impacted by a significant reduction in pre-tax book income. As pre-tax income decreases, the effect of certain tax attributes and permanent items, specifically our employment tax credits become more pronounced, which cause fluctuations in the effective tax rate. See further discussion of the Company's Income taxes at Note 7 of the consolidated financial statements.
32
Liquidity and Capital Resources
Debt
Credit Facility
In fiscal 2022, the Company entered into a senior secured credit agreement including a revolving credit facility (the “Revolving Credit Facility”) and a term loan facility (together with the Revolving Credit Facility, the “Credit Facility”). On November 1, 2024, D&B Inc. entered into an amendment with its banking syndicate that amended the Credit Facility (the “Fourth Amendment”). The Credit Facility is unconditionally guaranteed by D&B Holdings and certain of D&B Inc.’s existing and future wholly owned material domestic subsidiaries.
The Fourth Amendment, among other things:
•provided for a new tranche of term loans in an aggregate principal amount of $700.0 million (the “Incremental Term B Loans”) with a maturity date of November 1, 2031, and
•increased the Revolving Credit Facility by $150.0 million to a total $650.0 million and extended the maturity to November 1, 2029.
The proceeds from the Incremental Term B Loans were primarily used to:
•redeem all $440.0 million of outstanding senior secured notes (see 7.625% Senior Secured Notes below), and
•pay down $200.0 million of the term loans outstanding under the Credit Facility immediately prior to the Fourth Amendment (the “Existing Term B Loans”).
Both the Existing Term B Loans and the Incremental Term B Loans bear interest at Term SOFR or ABR (each, as defined in the amended Credit Facility) plus (i) in the case of Term SOFR loans, 3.25% per annum and (ii) in the case of ABR loans, 2.25% per annum. Loans under the Revolving Credit Facility bear interest subject to a pricing grid based on net total leverage, at Term SOFR plus a spread ranging from 2.50% to 3.00% per annum or ABR plus a spread ranging from 1.50% to 2.00% per annum. Unused commitments under the Revolving Credit Facility incur initial commitment fees of 0.30% to 0.50%. Additionally, the interest rate margin applicable to the Existing Term B Loans and loans outstanding under the Revolving Credit Facility are subject to an additional 0.25% step-down if a rating of B1/B+ or higher from Moody’s and S&P is achieved (which will step-up if such rating is subsequently not maintained).
A portion of the Revolving Credit Facility not to exceed $35.0 million is available for the issuance of letters of credit. As of February 4, 2025, we had letters of credit outstanding of $11.5 million and an unused commitment balance of $503.4 million under the Revolving Credit Facility. The Credit Facility may be increased through incremental facilities, by an amount equal to the greater of (i) $400.0 million and (ii) 0.75 times trailing twelve-month Adjusted EBITDA, as defined in the Credit Facility, plus additional amounts subject to compliance with applicable leverage ratio and/or interest coverage ratio requirements.
7.625% Senior Secured Notes
During fiscal 2020, the Company issued $550.0 million aggregate principal amount of 7.625% senior secured notes (the “Notes”). Interest on the Notes is payable in arrears on November 1 and May 1 of each year. The Notes mature on November 1, 2025, unless earlier redeemed, and are subject to the terms and conditions set forth in the related indenture. 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. During fiscal 2021, the Company redeemed a total of $110.0 million outstanding principal amount of the Notes. During fiscal 2024, using the proceeds from the Fourth Amendment to the Credit Facility discussed above, the Company redeemed the remaining $440.0 million outstanding principal amount of the Notes.
Loss on debt refinancing
Term Loans — Immediately prior to the Fourth Amendment, the Company had $35.1 million of unamortized debt issuance discounts and debt issuance costs. In connection with the Fourth Amendment described above, certain lenders exited the syndicate and were replaced by new syndicate members. The term loans, in the aggregate, were increased, a portion of the term loan facility was deemed extinguished, and a portion was determined to be modified. As a result, $4.1 million of unamortized costs were written off and $8.2 million of new fees were expensed on the modified portion resulting in a total charge of $12.3 million included in “Loss on debt refinancing” on the Consolidated Statements of Comprehensive Income. The remaining unamortized issuance discounts and new issuance discount and costs immediately subsequent to the
33
refinancings were deferred and are amortized into interest expense, net over the remaining term of the Existing Term B Loans and the Incremental Term B Loans.
Revolving Credit Facility — Immediately prior to the Fourth Amendment, the Company had $3.8 million of unamortized debt issuance costs. In connection with the Fourth Amendment described above, certain lenders exited the syndicate and were replaced by new syndicate members. The Revolving Credit Facility was increased in size, a portion of the Revolving Credit Facility was deemed extinguished, and a portion was determined to be modified. As a result, $0.6 million of unamortized costs were written off and included in “Loss on debt refinancing” on the Consolidated Statements of Comprehensive Income. The remaining unamortized issuance discounts and new issuance costs immediately subsequent to the refinancings were deferred and are amortized into interest expense, net over the remaining term of the Credit Facility.
The Notes — Immediately prior to paying down the Notes, the Company had $2.3 million of unamortized debt issuance costs. The Notes were deemed fully extinguished, and all such costs were included in “Loss on debt refinancing” on the Consolidated Statements of Comprehensive Income.
Interest expense
The following table sets forth our recorded interest expense, net for the periods presented:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Interest expense on debt | $ | 120.6 | $ | 121.8 | $ | 77.7 | |||||||||||
| Interest associated with swap agreements | — | — | 4.1 | ||||||||||||||
| Amortization of issue discount and issuance cost | 10.6 | 11.8 | 8.5 | ||||||||||||||
Interest expense on sale-leaseback transactions (1) | 8.1 | 1.4 | — | ||||||||||||||
| Interest income | (0.4) | (4.7) | (0.6) | ||||||||||||||
| Capitalized interest | (3.6) | (2.9) | (2.3) | ||||||||||||||
| Total interest expense, net | $ | 135.3 | $ | 127.4 | $ | 87.4 | |||||||||||
(1) See discussion of sale-leaseback transactions at Note 8 of the consolidated financial statements.
Credit Adjusted EBITDA and Net Total Leverage Ratio
Credit Adjusted EBITDA, a non-GAAP measure, represents Adjusted EBITDA plus certain other items as defined in our Credit Facility. Additional adjustments include (i) entertainment revenue deferrals, (ii) the cost of new projects, including store pre-opening costs, (iii) business optimization expenses and other restructuring costs, and (iv) additional costs and adjustments as permitted by the debt agreements. We believe the presentation of Credit Adjusted EBITDA is appropriate as it provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Credit Facility.
34
The following table sets forth a reconciliation of Net income to Credit Adjusted EBITDA for the period shown:
| Fiscal Year Ended February 4, 2025 | |||||
| Net income | $ | 58.3 | |||
| Add back: | |||||
| Interest expense, net | 135.3 | ||||
| Loss on debt refinancing | 15.2 | ||||
| Provision for income taxes | 11.6 | ||||
| Depreciation and amortization expense | 238.2 | ||||
Share-based compensation (1) | 4.6 | ||||
Transaction and integration costs (2) | 3.4 | ||||
System implementation costs (3) | 11.1 | ||||
Other items, net (4) | 28.5 | ||||
Pre-opening costs (5) | 18.7 | ||||
Credit Facility specific items, net (6) | 8.5 | ||||
| Credit Adjusted EBITDA, a non-GAAP measure | $ | 533.4 | |||
(1)See discussion of share-based compensation at Adjusted EBITDA above.
(2)See discussion of transaction and integration costs at Adjusted EBITDA above.
(3)See discussion of system implementation costs at Adjusted EBITDA above.
(4)See discussion of other items, net at Adjusted EBITDA above.
(5)Represents costs incurred, primarily consisting of occupancy and payroll related expenses, associated with the opening of new stores. These costs are considered a "cost of new projects" as defined in our Credit Facility.
(6)Represents other adjustments allowed under our Credit Facility in the determination of Net Total Leverage Ratio including i) amortization of software costs, ii) executive search fees, iii) public company costs and iv) estimated impact of remodels to financial performance.
The following table provides a calculation of Net Total Leverage Ratio, as defined in our Credit Facility, for the latest test period shown:
| Fiscal Year Ended February 4, 2025 | |||||
| Credit Adjusted EBITDA (a) | $ | 533.4 | |||
Total debt (1) | $ | 1,486.1 | |||
| Less: Cash and cash equivalents | (6.9) | ||||
| Add: Outstanding letters of credit | 11.5 | ||||
| Net debt (b) | $ | 1,490.7 | |||
| Net Total Leverage Ratio (b / a) | 2.8 | x | |||
(1) Amount represents the face amount of debt outstanding, net of unamortized debt issuance costs and debt discount.
Dividends and Share Repurchases
There were no dividends declared or paid in fiscal 2024 or fiscal 2023.
On March 27, 2023, our Board approved a share repurchase program with an authorization limit of $100.0 million. Our Board has approved various increases to the repurchase program up to a total authorization limit of $600.0 million. In fiscal 2024, the Company repurchased 4.99 million shares for a total of $171.9 million. The remaining dollar value of shares available for repurchase under the program is $128.0 million as of February 4, 2025.
Future decisions to pay cash dividends or repurchase shares continue to be at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board considers relevant.
35
Cash Flow Summary
The Company ended the year with $510.4 million of liquidity, which included $6.9 million in cash and cash equivalents and $503.5 million available under the $650.0 million revolving credit facility.
The Company can operate with a working capital deficit because cash from sales is usually received before related liabilities for product supplies, labor and services become due. Our operations do not require significant inventory or receivables, and we continually invest in our business through the growth of stores and operating improvement additions, which are reflected as non-current assets and not a part of working capital. Based on our current business plan, we believe our cash and cash equivalents combined with expected cash flows from operations, available borrowings under our revolving credit facility and expected payments from landlords should be sufficient not only for our operating requirements but also to enable us, in the aggregate, to finance our capital allocation strategy, including capital expenditures, through at least the next twelve months.
Operating Activities — Cash flow provided by operations typically supplies 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, team member compensation, operations, occupancy, and other operating costs. Cash 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 used in operating activities decreased to $312.3 million in fiscal 2024 compared to $364.2 million in fiscal 2023 primarily due to a decrease in net income and the timing of changes in working capital.
Investing Activities — Cash flow used in investing activities primarily reflects capital expenditures. The Company spent $530.2 million in fiscal 2024 compared to $330.2 million in fiscal 2023. The increase is primarily due to higher capital expenditures related to store remodels and new store openings.
The following table reflects accrual-based capital additions for the periods presented: Capital additions do not include any reductions for accrual-based leasehold improvement incentives (“Payments from landlords”).
| Fiscal Year Ended | |||||||||||
| February 4, 2025 | February 4, 2024 | ||||||||||
| New stores | $ | 236.6 | $ | 200.4 | |||||||
| Remodels and other initiatives | 238.2 | 71.1 | |||||||||
| Games | 18.0 | 20.8 | |||||||||
| Maintenance capital | 65.0 | 73.1 | |||||||||
| Total capital additions | $ | 557.8 | $ | 365.4 | |||||||
Payments from landlords - tenant improvements (1) | $ | 16.4 | $ | 20.2 | |||||||
Payments from landlords - sale-leasebacks (2) | $ | 184.7 | $ | 84.2 | |||||||
(1) Amounts received from landlords as reimbursements for tenant improvements and included in cash provided by operating activities in the Consolidated Statements of Cash Flows.
(2) Amounts received from landlords in sale-leaseback transactions and included in cash provided by financing activities in the Consolidated Statements of Cash Flows. See Note 8 to the consolidated to the consolidated financial statements for further discussion.
Financing Activities — Cash flow provided by financing activities in fiscal 2024 was $187.1 million primarily consisting of net debt proceeds and proceeds from sale-leaseback transactions, partially offset by transactions under the share repurchase program. Cash used in financing activities in fiscal 2023 was $179.4 million primarily attributable to transactions under the share repurchase program and debt issuance and discount costs incurred, partially offset by net debt proceeds and proceeds from a sale-leaseback transaction.
36
Contractual and Other Commitments
The Company had the following obligations as of February 4, 2025:
•Long-term debt obligations, including scheduled interest payments (See Note 6 of the consolidated financial statements)
•Future minimum lease obligations under non-cancelable leases (Refer to Note 8 of the Notes to the consolidated financial statements)
•Software as a service subscription commitments of approximately $5.8 million to be paid in annual installments of approximately $1.9 million through fiscal 2028.
•Approximately $35.4 million of minimum food purchase commitments through the end of fiscal 2025.
Critical accounting policies and estimates
The above discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. 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. We made certain reclassifications of amounts in the Consolidated Statements of Comprehensive Income for fiscal years ended February 4, 2024 and January 29, 2023 to be consistent with the presentation for the fiscal year ended February 4, 2025. See Note 1 “Accounting Reclassifications”.
Our significant accounting policies are described in Note 1 of Notes to consolidated financial statements. Critical accounting policies are those that we believe are most important to portraying our financial condition and results of operations and require the greatest amount of judgment by management. Judgment or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions. We consider the following policies to be the most critical in understanding the judgment that is involved in preparing the consolidated financial statements.
Accounting for entertainment operations. Entertainment revenues are primarily recognized upon utilization of game play credits on gaming 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 entertainment 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. We estimate the amount of deferred revenue based upon credits and tickets remaining on gaming cards, historic game play credit and ticket utilization patterns and estimates of the standalone selling prices of game play credits and the customer material right. The standalone selling price of the customer material right is estimated using an equivalent chip cost plus margin approach. For purposes of recognizing revenue, the total amount collected from each customer is then allocated between the two performance obligations based on the relative standalone selling price of each obligation.
Accounting for impairment of goodwill and tradenames. We assess the recoverability of goodwill and indefinite-lived tradename assets related to our reporting units on an annual basis or more often if circumstances or events indicate impairment may exist. We may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. In considering the qualitative approach, we evaluate factors including, but not limited to, macro-economic conditions, market and industry conditions, commodity cost fluctuations, competitive environment, share price performance, results of prior impairment tests, operational stability and the overall financial performance of the reporting units.
If the qualitative assessment is not performed or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds the carrying value, the fair value of the reporting unit is calculated. We determine fair value based on a combination of market-based values and discounted projected future operating cash flows of the reporting units using a risk adjusted discount rate that is commensurate with the risk inherent in our current business model. We make assumptions regarding future revenues and cash flows, expected growth rates, terminal values and other factors which could significantly impact the fair value calculations. The carrying value of the reporting unit is compared to its estimated fair value, with any excess of carrying value over fair value deemed to be an indicator of impairment. In the event that these assumptions change in the future, we may be required to record impairment charges related to goodwill.
We consider our Dave & Buster's and Main Event brands to be two reporting units within one operating segment. We performed our annual impairment test in the fourth quarter of fiscal 2024 by utilizing the qualitative approach and determined that there were no events or circumstances to indicate that it was more likely than not that the fair value of our reporting units, or the Dave & Buster's and Main Event tradenames, was less than their carrying values. For fiscal years 2024, 2023 and 2022, there was no
37
Accounting for impairment of long-lived assets. We assess the potential impairment of our long-lived assets related to each store, including property and equipment and right-of-use assets, on an annual basis or whenever events or changes in circumstances indicate that the carrying values of these assets may not be recoverable. In determining the recoverability of the asset value, an analysis is performed at the individual store level, since this is the lowest level of identifiable cash flows and primarily includes an assessment of historical cash flows and other relevant factors and circumstances, including the maturity of the store, changes in the economic environment, unfavorable changes in legal factors or business climate and future operating plans. The more significant inputs used in determining our estimate of the projected undiscounted cash flows include projected sales and projected margins as well as the estimate of the remaining useful life of the assets. If the carrying amount is not recoverable, we record an impairment charge, if any, for the excess of the carrying amount over the fair value, which is estimated based on discounted projected future operating cash flows of the store over the remaining service life using a risk adjusted discount rate that is commensurate with the inherent risk.
Recent accounting pronouncements
Refer to Note 1 to the consolidated financial statements for discussion of new accounting pronouncements.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
Commodity Price Risk
We are exposed to market price fluctuation in food, beverage, supplies and other costs such as energy. 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.
Interest Rate Risk
The Credit Facility, discussed further in Item 7 at Liquidity and Capital Recourses - Debt is based on variable interest rates. As of February 4, 2025, the Company had $135.0 million outstanding on its revolving facility and $1,389.3 million outstanding under the term loan facility. The impact on our annual results of operations of a hypothetical one percentage point interest rate change on the outstanding balance of the credit facility as of February 4, 2025 would be approximately $13.9 million.
Inflation
Increases in inflation could affect the United States or global economies and have an adverse impact on our business, financial condition and results of operation. If several of the various costs in our business experience inflation at the same time, such as commodity price increases beyond our ability to control and increased labor costs, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand.
ITEM 8. Financial Statements and Supplementary Data
The consolidated financial statements required to be filed herein are set forth in Part IV, Item 15 of this report.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such
38
information is accumulated and communicated to management, including the interim CEO and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including the interim CEO and CFO, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities and Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, the interim CEO and CFO have concluded that these disclosure controls and procedures are effective.
Management’s Report on Internal Control over Financial Reporting
Our management, including our interim CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our system of internal control over financial reporting was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with GAAP. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of February 4, 2025, based on the framework in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included documenting, evaluating, and testing the design and operating effectiveness of our internal control over financial reporting. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of February 4, 2025.
Our independent registered public accounting firm, KPMG LLP, audited the effectiveness of our internal control over financial reporting as of February 4, 2025, as stated in their report which is included herein.
Changes in Internal Control over Financial Reporting
In fiscal 2023, we began the implementation of a new enterprise resource planning system (“ERP”) to align processes across the organization, enhance operational efficiency, and provide timely information to the Company’s management team related to the operation of the business.
We substantially completed the implementation of the ERP in fiscal 2024, which also included new financial management, inventory management, payroll and human capital management systems. The implementation of these systems resulted in material changes to our internal controls. The Company updated our internal controls to reflect changes to the financial reporting business processes impacted by the implementation and will continue to monitor the impact of the implementation on our financial reporting business processes.
There have been no other changes in our internal control over financial reporting that occurred during fiscal 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information
Insider Trading Arrangements
None of our officers or directors, as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, adopted terminated
Amendment to Bylaws
On April 3, 2025, the Board amended and restated the Company’s existing Fourth Amended and Restated Bylaws (as so amended and restated, the “Fifth Amended and Restated Bylaws”), effective immediately. The amendments contained in the Fifth Amended and Restated Bylaws:
•modify the provisions relating to adjournment procedures and lists of stockholders entitled to vote at stockholder meetings, in each case, to reflect amendments to the Delaware General Corporation Law, as amended (the “DGCL”);
•clarify the parameters for proxies in connection with stockholder meetings;
•provide that a white proxy card is reserved for exclusive use of the Board;
39
•clarify that the number of directors a stockholder may nominate for election at an annual or special meeting of stockholders shall not exceed the number of directors to be elected by stockholders generally at such annual or special meeting;
•enhance certain procedural and information requirements with respect to advance notice of stockholder nominations of directors and proposals, including by:
◦expanding the types of agreements, arrangements or understandings that stockholders who are seeking to make nominations or proposals must disclose;
◦requiring that any stockholder submitting a nomination notice include a statement as to whether such stockholder intends to solicit proxies in support of director nominees other than the Company’s nominees in accordance with Rule 14a-19 under the Securities Exchange Act of 1934, as amended (“Rule 14a-19”), and if so, requiring such stockholder to provide reasonable evidence to the Company no later than five business days prior to the applicable meeting that such stockholder has met all applicable requirements of Rule 14a-19; and
◦providing that if a stockholder submitting a nomination pursuant to Rule 14a-19 fails to comply with Rule 14a-19 or fails to provide timely evidence of such compliance, the stockholder’s nomination and all proxies or votes pertaining to such nomination shall be disregarded;
•clarify that a verbal resignation by a member of the Board is not effective until confirmed by such director electronically or in writing to the Company;
•clarify that written consents of the Board may be documented, signed and delivered in any manner permitted by Section 116 of the DGCL;
•provide that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for any claim asserting a cause of action arising out of the Securities Act of 1933, as amended, and that any holder of an interest in the Company shall be deemed to have notice and consent to this exclusive forum provision; and
•make various other minor updates, including conforming and clarifying changes.
The foregoing summary of the Fifth Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Fifth Amended and Restated Bylaws, a copy of which is attached hereto as Exhibit 3.2 and is incorporated herein by reference.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection
None.
40
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 is incorporated herein by reference to the sections entitled “Proposal No. 1—Election of Directors,” “Directors and Corporate Governance,” “Executive Officers” and “Executive Compensation” in the Proxy Statement.
ITEM 11. Executive Compensation
The information required by Item 11 is incorporated herein by reference to the sections entitled “Proposal No. 1—Election of Directors,” “Directors and Corporate Governance” and “Executive Compensation” in the Proxy Statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 is incorporated herein by reference to the sections entitled “Executive Compensation” and “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 is incorporated herein by reference to the sections entitled “Directors and Corporate Governance” and “Transactions with Related Persons” in the Proxy Statement.
ITEM 14. Principal Accountant Fees and Services
The information required by Item 14 is incorporated herein by reference to the section entitled “Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement.
41
PART IV
ITEM 15. Exhibits and Financial Statement Schedules
(1)Financial Statements
See Pages F-1 to F-26 of this report.
(2)Financial Statement Schedules
None.
(3)Exhibits
42
INDEX OF EXHIBITS
| Exhibit Number | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 4.1 | ||||||||
| 4.2 | ||||||||
| 4.3 | ||||||||
| 4.4 | ||||||||
| 10.1 | ||||||||
| 10.2 | ||||||||
| 10.3 | ||||||||
| 10.4 | ||||||||
| 10.5 | ||||||||
| 10.6 | ||||||||
| 10.7 | ||||||||
| 10.8 | ||||||||
43
44
45
| Exhibit Number | Description | |||||||
| 23.1* | ||||||||
| 24.1* | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1* | ||||||||
| 32.2* | ||||||||
| 97 | ||||||||
| 101.INS | XBRL Inline Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
*Filed herein
ITEM 16. Form 10-K Summary
None.
46
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: April 7, 2025 | By: | /s/ Darin Harper | ||||||
| Darin Harper Chief Financial Officer | ||||||||
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and appoints each of Kevin M. Sheehan and Rodolfo Rodriguez, Jr., or either of them, each acting alone, his/her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for such person and in his/her name, place and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming that any such attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, we have signed in our indicated capacities on April 7, 2025.
| By: | /s/ Kevin Sheehan | Interim Chief Executive Officer and Director | |||||||||
| Kevin Sheehan | (Principal Executive Officer) | ||||||||||
| By: | /s/ Darin Harper | Chief Financial Officer | |||||||||
| Darin Harper | (Principal Financial and Accounting Officer) | ||||||||||
| By: | /s/ Michael J. Griffith | Interim Lead Director | |||||||||
| Michael J. Griffith | |||||||||||
| By: | /s/ James Chambers | Director | |||||||||
| James Chambers | |||||||||||
| By: | /s/ Hamish A. Dodds | Director | |||||||||
| Hamish A. Dodds | |||||||||||
| By: | /s/ Gail Mandel | Director | |||||||||
| Gail Mandel | |||||||||||
| By: | /s/ Atish Shah | Director | |||||||||
| Atish Shah | |||||||||||
| By: | /s/ Jennifer Storms | Director | |||||||||
| Jennifer Storms | |||||||||||
| By: | /s/ Scott Ross | Director | |||||||||
| Scott Ross | |||||||||||
47
Index to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (KPMG LLP, Dallas, TX, Auditor Firm ID: | |||||
F-1
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Dave & Buster’s Entertainment, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Dave & Buster’s Entertainment, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of February 4, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 4, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 4, 2025 and 2024, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 4, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated April 7, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Dallas, Texas
April 7, 2025
F-2
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Dave & Buster’s Entertainment, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Dave & Buster’s Entertainment, Inc. and subsidiaries (the Company) as of February 4, 2025 and 2024, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 4, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 4, 2025 and 2024, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February 4, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 4, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 7, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Deferred entertainment revenue for unused game play credits
As discussed in Notes 1 and 5 to the consolidated financial statements, the Company defers a portion of entertainment revenues for the estimated unfulfilled performance obligations related to unused game play credits which they believe their customers will utilize in the future. The Company recorded deferred entertainment revenue of $95.7 million as of February 4, 2025, which is included in accrued liabilities on the consolidated balance sheet and disclosed as deferred entertainment revenue. This balance includes deferred revenue related to unused game play credits. The deferral is based on an estimated rate of future use by customers. The Company applies judgment to determine the estimated rate of future use by customers using information about game play credits outstanding and historical customer utilization patterns.
F-3
We identified the evaluation of the estimated rate of future use assumption used to determine deferred entertainment revenue for unused game play credits as a critical audit matter. Subjective auditor judgment was required to evaluate the effect of historical customer usage patterns on the estimated rate of future use assumption.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s deferred entertainment revenue process, including controls related to the development of the estimated rate of future use assumption. We evaluated historical periods’ game play credit activity for indication of significant changes in customer behavior and to determine whether changes in the historical activity were consistent with changes in the Company’s business that impact the estimated rate of future usage assumption. We compared trends of customers’ historical use patterns to the Company’s estimated rate of future use assumption. We assessed the outstanding game play credit data utilized by the Company to derive the estimated rate of future use assumption by comparing it to relevant underlying documentation.
Deferred entertainment revenue for unredeemed tickets
As discussed in Notes 1 and 5 to the consolidated financial statements, the Company defers a portion of entertainment revenue for the material right provided to customers to redeem tickets in the future for prizes. The Company recorded deferred entertainment revenue of $95.7 million as of February 4, 2025, which is included in accrued liabilities on the consolidated balance sheet and disclosed as deferred entertainment revenue. This balance includes deferred revenue related to the material right to redeem tickets in the future. The deferral is based on an estimated redemption rate of outstanding tickets that will be redeemed in subsequent periods. The Company applies judgment to determine the redemption rate assumption using information about tickets outstanding and historical customer utilization patterns.
We identified the evaluation of the estimated redemption rate assumption used to determine deferred entertainment revenue for unredeemed tickets as a critical audit matter. Subjective auditor judgment was required to evaluate the effect of historical customer usage patterns on the estimated rate of future use assumption.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s deferred entertainment revenue process, including controls related to the development of the redemption rate assumption. We evaluated historical periods’ ticket redemption activity for indication of significant changes in customer behavior and to determine whether changes in the historical activity were consistent with changes in the Company’s business that impact the estimated redemption rate assumption. We compared trends of customers’ historical redemption patterns to the Company’s estimated redemption rate assumption. We assessed the outstanding ticket data utilized by the Company to derive the redemption rate assumption by comparing it to relevant underlying documentation.
/s/ KPMG LLP
We have served as the Company’s auditor since 2010.
April 7, 2025
F-4
DAVE & BUSTER’S ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
| February 4, 2025 | February 4, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Inventories | |||||||||||
| Prepaid expenses | |||||||||||
| Income taxes receivable | |||||||||||
| Accounts receivable | |||||||||||
| Total current assets | |||||||||||
Property and equipment (net of $ | |||||||||||
| Operating lease right of use assets, net | |||||||||||
| Deferred tax assets | |||||||||||
| Tradenames | |||||||||||
| Goodwill | |||||||||||
| Other assets and deferred charges | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current installments of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued liabilities | |||||||||||
| Income taxes payable | |||||||||||
| Total current liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Operating lease liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Long-term debt, net | |||||||||||
Commitments and contingencies (see Note 10) | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, par value $ | |||||||||||
Preferred stock, | |||||||||||
| Paid-in capital | |||||||||||
Treasury stock, | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
F-5
DAVE & BUSTER’S ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, except per share amounts)
| Fiscal Year Ended | |||||||||||||||||
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Entertainment revenues | $ | $ | $ | ||||||||||||||
| Food and beverage revenues | |||||||||||||||||
| Total revenues | |||||||||||||||||
| Cost of entertainment | |||||||||||||||||
| Cost of food and beverage | |||||||||||||||||
| Total cost of products | |||||||||||||||||
| Operating payroll and benefits | |||||||||||||||||
| Other store operating expenses | |||||||||||||||||
| General and administrative expenses | |||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||
| Pre-opening costs | |||||||||||||||||
| Other charges and gains | |||||||||||||||||
| Total operating costs | |||||||||||||||||
| Operating income | |||||||||||||||||
| Interest expense, net | |||||||||||||||||
| Loss on debt refinancing | |||||||||||||||||
| Income before provision for income taxes | |||||||||||||||||
| Provision for income taxes | |||||||||||||||||
| Net income | |||||||||||||||||
| Unrealized foreign currency translation loss | ( | ( | |||||||||||||||
| Unrealized gain on derivatives, net of tax | |||||||||||||||||
| Total other comprehensive gain (loss) | ( | ||||||||||||||||
| Total comprehensive income | $ | $ | $ | ||||||||||||||
| Net income per share: | |||||||||||||||||
| Basic | $ | $ | $ | ||||||||||||||
| Diluted | $ | $ | $ | ||||||||||||||
| Weighted average shares used in per share calculations: | |||||||||||||||||
| Basic | |||||||||||||||||
| Diluted | |||||||||||||||||
See accompanying notes to consolidated financial statements.
F-6
DAVE & BUSTER’S ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
| Common Stock | Paid-In Capital | Treasury Stock At Cost | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Total | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amt. | Shares | Amt. | ||||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 30, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Unrealized foreign currency translation loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized gain on derivatives, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Balance as of January 29, 2023 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Balance as of February 4, 2024 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Unrealized foreign currency translation loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Balance as of February 4, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
F-7
DAVE & BUSTER’S ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
| Fiscal Year Ended | |||||||||||||||||
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Operating activities: | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||
| Non-cash interest expense | |||||||||||||||||
| Deferred income taxes | ( | ||||||||||||||||
| Loss on debt refinancing | |||||||||||||||||
| Share-based compensation | |||||||||||||||||
| Other, net | |||||||||||||||||
| Changes in assets and liabilities, net of assets and liabilities acquired: | |||||||||||||||||
| Inventories | ( | ( | |||||||||||||||
| Prepaid expenses | ( | ( | |||||||||||||||
| Income tax receivable | |||||||||||||||||
| Accounts receivable | ( | ( | |||||||||||||||
| Other assets and deferred charges | ( | ( | |||||||||||||||
| Accounts payable | ( | ( | |||||||||||||||
| Accrued liabilities | ( | ( | |||||||||||||||
| Income taxes payable | ( | ||||||||||||||||
| Other long-term liabilities | ( | ( | |||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||
| Investing activities: | |||||||||||||||||
| Capital expenditures | ( | ( | ( | ||||||||||||||
| Acquisition of a business, net of cash acquired | ( | ||||||||||||||||
| Proceeds from sales of property and equipment | |||||||||||||||||
| Net cash used in investing activities | ( | ( | ( | ||||||||||||||
| Financing activities: | |||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Proceeds from borrowings | |||||||||||||||||
| Payments on borrowings | ( | ( | ( | ||||||||||||||
| Debt issuance costs and prepayment premiums | ( | ( | ( | ||||||||||||||
| Proceeds from sale-leaseback transaction | |||||||||||||||||
| Principal payments on sale-leaseback financing | ( | ||||||||||||||||
| Repurchase of common stock under share repurchase program | ( | ( | ( | ||||||||||||||
| Repurchases of common stock to satisfy employee withholding tax obligations | ( | ( | ( | ||||||||||||||
| Proceeds from the exercise of stock options | |||||||||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||||||||
| Increase (decrease) in cash and cash equivalents | ( | ( | |||||||||||||||
| Beginning cash and cash equivalents | |||||||||||||||||
| Ending cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||||||||
| Increase (decrease) for capital expenditures in accounts payable | $ | $ | $ | ||||||||||||||
| Cash paid (received) for income taxes, net | $ | $ | $ | ( | |||||||||||||
| Cash paid for interest, net | $ | $ | $ | ||||||||||||||
See accompanying notes to consolidated financial statements.
F-8
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Note 1: Description of the Business and Summary of Significant Accounting Policies
Description of the business — Dave & Buster’s Entertainment, Inc. (“D&B Entertainment” or the “Company”) is a Delaware corporation formed in June 2010. References to the “Company,” “we,” “us,” and “our” refers to D&B Entertainment, any predecessor companies, and its wholly-owned subsidiaries, Dave & Buster’s Holdings, Inc. (“D&B Holdings”), a holding company which owns 100 % of the outstanding common stock of Dave & Buster’s, Inc. (“D&B Inc”), the operating company. 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.
The Company operates its business as one reportable operating segment with two reporting units based on its major brands, Dave & Buster's and Main Event. The Company has one reportable operating segment as both brands provide similar products and services to a similar customer base, are managed together by a single management team and share similar economic characteristics. See further discussion of segment considerations at Note 11 to the consolidated financial statements.
During fiscal 2024, we opened fourteen new stores. During fiscal 2023, we opened sixteen new stores. As of February 4, 2025, we owned and operated 232 stores located in 44 states, Puerto Rico and one Canadian province.
Fiscal year — The Company’s fiscal year consists of 52 or 53 weeks ending on the Tuesday after the Monday closest to January 31. Fiscal year 2024, which ended on February 4, 2025, contained 52 weeks. Fiscal year 2023, which ended on February 4, 2024, contained 53 weeks. Fiscal year 2022 which ended on January 29, 2023, contained 52 weeks. Each quarterly period has 13 weeks, except in a 53-week year, when the fourth quarter has 14 weeks.
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 create book overdrafts, which are presented in “Accounts payable” on the Consolidated Balance Sheet. There were no no
Inventories — Inventories consist of food, beverages, amusement merchandise and other supplies and are stated at the lower of cost (first-in, first-out method) or net realizable value. We record inventory reserves for obsolete and slow-moving inventory. See Note 2 for a summary of inventory balances.
Cloud-based computing arrangements — The Company defers application development stage costs for cloud-based computing arrangements and amortizes those costs over the related license subscription term.
F-9
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Long-lived assets — Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed on the straight-line method. Estimated depreciable lives for the categories of property and equipment follows:
| Estimated Depreciable Lives (In Years) | |||||
Building and building improvements (1) | |||||
Leasehold improvements (1) | |||||
| Furniture, fixtures and equipment | |||||
| Games | |||||
(1) Buildings and building improvements and leasehold improvements related to leased properties are depreciated over the lesser of the lease term, inclusive of reasonably certain renewal periods, or the useful life of the asset.
Expenditures that extend the life, increase capacity of or improve the safety or the efficiency 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. Application development stage costs for internally developed software projects are capitalized and amortized as part of furniture, fixtures, and equipment. Interest cost on funds used during the acquisition period of significant capital assets are capitalized as part of the asset and depreciated. Gains and losses related to store property and equipment disposals are recorded in “Other store operating expenses” in the Consolidated Statements of Comprehensive Income.
Goodwill and tradenames — Goodwill and tradenames have indefinite useful lives, are not subject to amortization, and are evaluated for impairment annually or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. We consider our Dave & Buster's and Main Event brands to be two reporting units within one reportable operating segment.
We evaluate goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of the goodwill may not be fully recoverable. We evaluate goodwill for impairment at the reporting unit level, which is the Main Event and Dave and Buster’s brands that has been allocated goodwill. Under ASC Topic 350, Goodwill, Intangibles and Other, we can elect to perform a qualitative or quantitative impairment assessment of our goodwill.
Tradename intangible assets are tested for impairment at least annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. Under ASC Topic 350, we can elect to perform a qualitative or quantitative impairment assessment for our tradename intangible assets. A quantitative tradename impairment assessment includes comparing the carrying values of tradename assets to their estimated fair value.
For fiscal years 2024, 2023 and 2022, there was no
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.
F-10
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate fair value because of their short-term nature.
The fair value of the Company's debt was as follows as of the periods indicated:
| February 4, 2025 | February 4, 2024 | ||||||||||
| Revolving credit facility | $ | $ | |||||||||
| Term loan | |||||||||||
| Senior secured notes | |||||||||||
| Total debt | $ | $ | |||||||||
See Note 6 for further discussion of the Company's debt.
Revenues — Our entertainment revenues primarily consist of attractions including redemption and video games, bowling, laser tag, billiards and gravity ropes. Our food and beverage revenues consist of full meals, appetizers and both alcoholic and non-alcoholic beverages.
The following table presents revenues included in these categories for the periods presented:
| Fiscal Year Ended | |||||||||||||||||
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Entertainment | $ | $ | $ | ||||||||||||||
Other (1) | |||||||||||||||||
| Entertainment revenues | $ | $ | $ | ||||||||||||||
| Food and non-alcoholic beverages | $ | $ | $ | ||||||||||||||
| Alcoholic beverages | |||||||||||||||||
| Food and beverage revenues | $ | $ | $ | ||||||||||||||
(1) Primarily consists of revenue earned from party rentals and gift card breakage (see Revenue recognition below).
Revenue recognition — Entertainment revenues are primarily recognized upon utilization of game play credits on gaming 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 entertainment 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. We estimate the amount of deferred entertainment revenue based upon credits and tickets remaining on gaming cards, historic game play credit and ticket utilization patterns and estimates of the standalone selling prices of game play credits and the customer material right. The standalone selling price of the customer material right is estimated using an equivalent chip cost plus margin approach. For purposes of recognizing revenue, the total amount collected from each customer is then allocated between the two performance obligations based on the relative standalone selling price of each obligation. Historically, select Company promotional programs include multiple performance obligations that are discounted from the standalone selling prices. We allocate the entire discount to the remaining performance obligation.
Total deferred entertainment revenue is included in “Accrued liabilities” in our Consolidated Balance Sheets. During fiscal 2024, we recognized revenue of approximately $79.5 related to the amount in deferred entertainment revenue as of the end of fiscal 2023. During fiscal 2023, we recognized revenue of approximately $69.8 related to the amount in deferred entertainment revenue as of the end of fiscal 2022.
We sell gift cards, which do not have expiration dates, and we do not deduct non-usage fees from outstanding gift card balances. The Company recognizes revenue from gift cards upon redemption by the customer. For unredeemed gift cards the Company expects to be entitled to breakage and for which there is not a legal obligation to remit the unredeemed gift card balances to the relevant jurisdictions, the Company recognizes expected breakage as revenue in proportion to the pattern of redemption by the customers. The determination of the gift card breakage is based on the Company’s specific
F-11
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
historical redemption patterns. Recognized gift card breakage revenue is included in “Entertainment revenues” in the Consolidated Statements of Comprehensive Income. The contract liability related to our gift cards is included in “Accrued liabilities” in our Consolidated Balance Sheets. During fiscal 2024, we recognized revenue of approximately $12.6 related to the amount in deferred gift card revenue as of the end of fiscal 2023. During fiscal 2023, we recognized revenue of approximately $10.2 related to the amount in deferred gift card revenue as of the end of fiscal 2022.
Food and beverage revenues are recognized when payment is tendered at the point of sale as the performance obligation has been satisfied. Beginning in fiscal 2021, we began to offer our customers delivery services, which are fulfilled by third-party service providers. We recognize revenues at the gross amount, and delivery fees are included in “Other store operating expenses” in the Consolidated Statements of Comprehensive Income.
Revenues are reported net of sales-related taxes collected from customers to be remitted to governmental taxing authorities. Sales tax collected is included in “Accrued liabilities” until the taxes are remitted to the appropriate taxing authorities.
Leases — Our operating leases consist of facility leases at our stores and our store support center and certain equipment leases that have a term in excess of one year. At contract inception, we determine whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. We recognize a lease liability representing the present value of lease payments not yet paid and a corresponding right-of-use (“ROU”) asset as of the lease commencement date. Operating lease ROU assets are initially and subsequently measured throughout the lease term at the carrying amount of the lease liability adjusted for lease incentives, initial direct costs, prepayments or accrued lease payments and impairment of ROU assets, if any. We assess lease classification at commencement and reassess lease classification subsequent to commencement upon a change to the expected lease term or modification of the contract. Generally, the Company’s lease contracts do not provide a readily determinable implicit rate, and therefore, the Company uses an estimated incremental borrowing rate as of the commencement date in determining the present value of lease payments. The Company uses judgment in determining its incremental borrowing rate, which includes selecting a yield curve based on a hypothetical credit rating.
Our leases typically have initial terms ranging from to twenty years and most include options to extend the leases for one or more 5-year periods. Generally, the lease term includes the non-cancelable period of the lease inclusive of reasonably certain renewal periods up to a term of twenty years . The Company’s lease agreements generally contain rent holidays and/or escalating rent clauses. Lease cost is recognized on a straight-line basis over the lease term. The Company is generally obligated for the cost of property taxes, insurance, and maintenance of the leased assets, which are often variable lease payments. Our leases typically provide for a fixed base rent plus contingent rent to be determined as a percentage of sales greater than certain specified target amounts. Contingent rental payments, when considered probable, are recognized as variable lease expenses. The Company accounts for the lease components and non-lease components, primarily fixed maintenance, for all leases, as a single lease component for new and modified leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Tenant incentives used to fund leasehold improvements are recognized when earned and reduce our ROU asset related to the lease. Tenant incentives are amortized through the ROU asset as reductions of expense over the lease term. The balance of leasehold improvement incentive receivables is reflected as a reduction of the current portion of operating lease liabilities. We consider the concentration of credit risk for tenant improvement allowance receivables from landlords to be minimal due to the payment histories and general financial condition of our landlords.
F-12
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Self-insurance programs — The Company utilizes a self-insurance plan for health, general liability and workers’ compensation coverage. To limit our exposure to losses, we maintain stop-loss coverage on our health coverage and excess liability policies on our general liability and workers' compensation coverage through third-party insurers. Losses are accrued based on the Company’s historical claims experience and case losses, assisted by independent third-party actuaries. The estimated cost to settle reported claims and incurred but unreported claims is included in “Accrued liabilities” and “Other long-term liabilities” in the Consolidated Balance Sheets.
Pre-opening costs — Pre-opening costs include costs associated with the opening and organizing of new stores, including the cost of pre-opening rent, training, relocation, recruiting and travel costs for team members engaged in such pre-opening activities. All pre-opening costs are expensed as incurred.
Income taxes — Deferred tax assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between the financial statement carrying value of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using current enacted tax rates expected to apply to taxable income in the years in which we expect the temporary differences to reverse. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, we determine that it is more likely than not that some portion of the tax benefit will not be realized.
The calculation of tax liabilities involves judgment and evaluation of uncertainties in the interpretation of federal and state tax regulations. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by the taxing authorities based on the technical merits of the position. For uncertain tax positions that do not meet this threshold, we have established accruals for taxes that may become payable in future years as a result of audits by tax authorities. 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 certain issue.
Foreign currency — Foreign currency translation adjustments represent the unrealized impact of translating the financial statements of our Canadian stores from their respective functional currency (Canadian dollars) to U.S. dollars and are reported as a component of comprehensive income and recorded in “Accumulated other comprehensive loss” on our Consolidated Balance Sheets. Gains and losses from foreign currency transactions are recognized in “Other charges and gains” in the Consolidated Statements of Comprehensive Income.
Earnings per share — Basic net income 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.
Basic weighted average shares outstanding are reconciled to diluted weighted average shares outstanding as follows:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||
| Weighted average dilutive impact of awards | |||||||||||||||||
| Diluted weighted average shares outstanding | |||||||||||||||||
| Weighted average awards excluded as antidilutive | |||||||||||||||||
Recent accounting pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures, which requires public entities, including those with a single reportable segment, to provide all the disclosures required by this standard and all existing segment disclosures required by Segment Reporting (Topic 280) on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment's
F-13
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
profit or loss to assess performance and decide how to allocate resources. The Company adopted ASU 2023-07 effective for the fiscal year ended February 4, 2025. See further discussion at Note 11.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures, which requires, among other things, the following for public business entities: (i) enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as additional information for any of these items meeting certain qualitative and quantitative thresholds; (ii) disclosure of the nature, effect and underlying causes of each individual reconciling item disclosed in the rate reconciliation and the judgment used in categorizing them if not otherwise evident; and (iii) enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. The provisions of ASU 2023-09 are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company expects ASU 2023-09 to require additional disclosures in the notes to our consolidated financial statements and did not early adopt.
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses, which requires expanded disclosures of expense information including the amounts of inventory purchases, employee compensation, depreciation, amortization, depletion and selling expenses within commonly presented expense captions presented on the face of the income statement. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, applied retrospectively. Early adoption is permitted. The Company expects ASU 2024-03 to impact our consolidated financial statements and currently does not plan early adoption.
Accounting reclassifications — We made certain reclassifications of amounts in the Consolidated Statements of Comprehensive Income for fiscal years ended February 4, 2024 and January 29, 2023 to be consistent with the presentation for the fiscal year ended February 4, 2025.
We reclassified certain promotional costs previously reported in “Other store operating expenses” to “Cost of entertainment” and “Cost of food and beverage”. We determined that reclassifying the expenses, which were primarily related to inventory items provided to customers during promotions and events, resulted in a clearer presentation of the cost of goods sold.
Additionally, we reclassified certain other costs and gains from “Operating payroll and benefits”, “Other store operating expenses” and “General and administrative expenses” to “Other charges and gains” for the following reasons:
•System implementation costs - These costs are enterprise wide and not specifically attributable to store operations or general and administrative costs.
F-14
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
A summary of the reclassifications for the fiscal years ended February 4, 2024 and January 29, 2023 is as follows:
| Fiscal Year Ended February 4, 2024 | |||||||||||||||||||||||||||||||||||
| Previously Reported | Promotional Costs | System Implementation | Currency Gain (Loss) | Asset Gain (Loss) | Adjusted | ||||||||||||||||||||||||||||||
| Cost of entertainment | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cost of food and beverage | |||||||||||||||||||||||||||||||||||
| Operating payroll and benefits | ( | ||||||||||||||||||||||||||||||||||
| Other store operating expenses | ( | ( | ( | ||||||||||||||||||||||||||||||||
| General and administrative expenses | ( | ||||||||||||||||||||||||||||||||||
| Other charges and gains | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Fiscal Year Ended January 29, 2023 | |||||||||||||||||||||||||||||||||||
| Previously Reported | Promotional Costs | System Implementation | Currency Gain (Loss) | Asset Gain (Loss) | Adjusted | ||||||||||||||||||||||||||||||
| Cost of entertainment | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cost of food and beverage | |||||||||||||||||||||||||||||||||||
| Operating payroll and benefits | |||||||||||||||||||||||||||||||||||
| Other store operating expenses | ( | ||||||||||||||||||||||||||||||||||
| General and administrative expenses | ( | ( | |||||||||||||||||||||||||||||||||
| Other charges and gains | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Note 2: Inventories
Inventories consisted of the following for the years presented:
| February 4, 2025 | February 4, 2024 | ||||||||||
| Food and beverage | $ | $ | |||||||||
Entertainment (1) | |||||||||||
Other inventory and reserves, net (1) | |||||||||||
| Total inventories | $ | $ | |||||||||
(1) Certain inventory items have been reclassified to align with fiscal 2024 presentation. See Note 1 for additional information.
Entertainment inventory includes electronics, plush toys and small novelty and other items used as redemption prizes for certain games, as well as certain supplies needed for entertainment operations.
F-15
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Note 3: Property and Equipment
Property and equipment consist of the following:
| February 4, 2025 | February 4, 2024 | ||||||||||
| Land | $ | $ | |||||||||
| Buildings and building improvements | |||||||||||
| Leasehold improvements | |||||||||||
| Furniture, fixtures and equipment | |||||||||||
| Games | |||||||||||
| Construction in progress | |||||||||||
| Total cost | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Note 4: Goodwill and Tradename Assets
The changes in the carrying amount of goodwill and tradename assets during fiscal 2024 and fiscal 2023 are as follows:
| Goodwill | Tradename | ||||||||||
| As of January 29, 2023 | $ | $ | |||||||||
Adjustment to Main Event goodwill (1) | ( | ||||||||||
| As of February 4, 2024 | $ | $ | |||||||||
| Currency translation adjustment | |||||||||||
| As of February 4, 2025 | $ | $ | |||||||||
(1) The Company finalized its purchase accounting related to the Main Event Acquisition in the second quarter of fiscal 2023.
Note 5: Accrued Liabilities
Accrued liabilities consist of the following as of the fiscal years ended:
| February 4, 2025 | February 4, 2024 | ||||||||||
| Deferred entertainment revenue | $ | $ | |||||||||
| Compensation and benefits | |||||||||||
| Deferred gift card revenue | |||||||||||
| Sales, use and other taxes | |||||||||||
| Property taxes | |||||||||||
| Customer deposits | |||||||||||
| Accrued interest | |||||||||||
| Utilities | |||||||||||
| Current portion of self-insurance reserves | |||||||||||
| Current portion of deferred occupancy costs | |||||||||||
| Other | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
F-16
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Note 6: Debt
Long-term debt consists of the following:
| February 4, 2025 | February 4, 2024 | ||||||||||
| Credit facility—revolver | $ | $ | |||||||||
| Credit facility—term loan | |||||||||||
| Senior secured notes | |||||||||||
| Total debt outstanding | |||||||||||
| Less current installments of long-term debt | ( | ( | |||||||||
| Less issue discounts and debt issuance costs | ( | ( | |||||||||
| Long-term debt, net | $ | $ | |||||||||
Credit Facility
In fiscal 2022, the Company entered into a senior secured credit agreement (the “Credit Facility”) including a revolving credit facility (the “Revolving Credit Facility”) and a term loan facility (together with the Revolving Credit Facility, the “Credit Facility”). On November 1, 2024, D&B Inc. entered into an amendment with its banking syndicate, which amended the Credit Facility (the “Fourth Amendment”). The Credit Facility is unconditionally guaranteed by D&B Holdings and certain of D&B Inc.’s existing and future wholly owned material domestic subsidiaries.
The Fourth Amendment, among other things:
•provided for a new tranche of term loans in an aggregate principal amount of $700.0 (the “Incremental Term B Loans”) with a maturity date of November 1, 2031, and
•increased the Revolving Credit Facility by $150.0 to a total $650.0 and extended the maturity to November 1, 2029.
The proceeds from the Incremental Term B Loans were primarily used to:
•redeem the $440.0 of outstanding senior secured notes (see 7.625 % Senior Secured Notes below), and
•pay down $200.0 of the term loans outstanding under the Credit Facility immediately prior to the Fourth Amendment (the “Existing Term B Loans”).
Both the Existing Term B Loans and the Incremental Term B Loans bear interest at Term SOFR or ABR (each, as defined in the amended Credit Facility) plus (i) in the case of Term SOFR loans, 3.25 % per annum and (ii) in the case of ABR loans, 2.25 % per annum. Loans under the Revolving Credit Facility bear interest subject to a pricing grid based on net total leverage, at Term SOFR plus a spread ranging from 2.50 % to 3.00 % per annum or ABR plus a spread ranging from 1.50 % to 2.00 % per annum. Unused commitments under the Revolving Credit Facility incur initial commitment fees of 0.30 % to 0.50 %. Additionally, the interest rate margin applicable to the Existing Term B Loans and loans outstanding under the Revolving Credit Facility are subject to an additional 0.25 % step-down if a rating of B1/B+ or higher from Moody’s and S&P is achieved (which will step-up if such rating is subsequently not maintained).
A portion of the Revolving Credit Facility not to exceed $35.0 is available for the issuance of letters of credit. As of February 4, 2025, we had letters of credit outstanding of $11.5 and an unused commitment balance of $503.4 under the Revolving Credit Facility. The Credit Facility may be increased through incremental facilities, by an amount equal to the greater of (i) $400.0 and (ii) 0.75 times trailing twelve-month Adjusted EBITDA, as defined in the Credit Facility, plus additional amounts subject to compliance with applicable leverage ratio and/or interest coverage ratio requirements.
During fiscal 2020, the Company issued $550.0 aggregate principal amount of 7.625 % senior secured notes (the “Notes”). Interest on the Notes is payable in arrears on November 1 and May 1 of each year. The Notes mature on November 1, 2025, unless earlier redeemed, and are subject to the terms and conditions set forth in the related indenture. 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. During fiscal 2021, the Company redeemed a total of $110.0 outstanding principal amount of the Notes. During fiscal 2024, using the proceeds from the Fourth Amendment to
F-17
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
the Credit Facility discussed above, the Company redeemed the remaining $440.0 outstanding principal amount of the Notes.
Loss on debt refinancing
Term Loans — Immediately prior to the Fourth Amendment, the Company had $35.1 of unamortized debt issuance discounts and debt issuance costs. In connection with the Fourth Amendment described above, certain lenders exited the syndicate and were replaced by new syndicate members. The term loans, in the aggregate, were increased, a portion of the term loan facility was deemed extinguished, and a portion was determined to be modified. As a result, $4.1 of unamortized costs were written off and $8.2 of new fees were expensed on the modified portion resulting in a total charge of $12.3 included in “Loss on debt refinancing” on the Consolidated Statements of Comprehensive Income. The remaining unamortized issuance discounts and new issuance discount and costs immediately subsequent to the refinancings were deferred and are amortized into interest expense, net over the remaining term of the Existing Term B Loans and the Incremental Term B Loans.
Revolving Credit Facility — Immediately prior to the Fourth Amendment, the Company had $3.8 of unamortized debt issuance costs. In connection with the Fourth Amendment described above, certain lenders exited the syndicate and were replaced by new syndicate members. The Revolving Credit Facility was increased in size, a portion of the Revolving Credit Facility was deemed extinguished, and a portion was determined to be modified. As a result, $0.6 of unamortized costs were written off and included in “Loss on debt refinancing” on the Consolidated Statements of Comprehensive Income. The remaining unamortized issuance discounts and new issuance costs immediately subsequent to the refinancings were deferred and are amortized into interest expense, net over the remaining term of the Credit Facility.
The Notes — Immediately prior to paying down the Notes, the Company had $2.3 of unamortized debt issuance costs. The Notes were deemed fully extinguished, and all such costs were included in “Loss on debt refinancing” on the Consolidated Statements of Comprehensive Income.
Future debt obligations
Below are our future debt principal payment obligations as of February 4, 2025 by fiscal year:
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Total future payments | $ | ||||
Interest expense and weighted average effective interest
The following table sets forth our recorded interest expense, net for the periods presented:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Interest expense on debt | $ | $ | $ | ||||||||||||||
| Interest associated with swap agreements | |||||||||||||||||
| Amortization of issue discount and issuance cost | |||||||||||||||||
Interest expense on sale-leaseback transactions (1) | |||||||||||||||||
| Interest income | ( | ( | ( | ||||||||||||||
| Capitalized interest | ( | ( | ( | ||||||||||||||
| Total interest expense, net | $ | $ | $ | ||||||||||||||
For fiscal 2024 and fiscal 2023, the Company’s weighted average effective interest rate on our total debt facilities (before capitalized interest amounts and excluding sale-leaseback interest) was 9.7 % and 10.2 %, respectively.
F-18
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Note 7: Income Taxes
The effective tax rate for fiscal 2024 was 16.5 %, compared to 22.2 % for fiscal 2023. The effective tax rate decrease for fiscal 2024 in comparison to fiscal 2023 was impacted by a significant reduction in pre-tax book income. As pre-tax income decreases, the effect of certain tax attributes and permanent items, specifically our employment tax credits become more pronounced, which cause fluctuations in the effective tax rate.
The following table sets forth our income tax provision:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Current provision: | |||||||||||||||||
| Federal | $ | $ | $ | ||||||||||||||
| State and local | |||||||||||||||||
| Foreign | |||||||||||||||||
| Total current provision | |||||||||||||||||
| Deferred provision: | |||||||||||||||||
| Federal | ( | ||||||||||||||||
| State and local | ( | ||||||||||||||||
| Foreign | ( | ( | ( | ||||||||||||||
| Total deferred provision (benefit) | ( | ||||||||||||||||
| Provision for income taxes | $ | $ | $ | ||||||||||||||
The following table reconciles the effective tax rate to the federal income tax rate:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Federal income tax rate | % | % | % | ||||||||||||||
| State and local income taxes, net of federal benefit | % | % | % | ||||||||||||||
| Permanent differences | % | % | % | ||||||||||||||
| Tax credits | ( | % | ( | % | ( | % | |||||||||||
| Share-based compensation | ( | % | ( | % | ( | % | |||||||||||
| Other | % | % | ( | % | |||||||||||||
| Effective tax rate | % | % | % | ||||||||||||||
F-19
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Components of the deferred income tax liability, net consist of the following as of the periods indicated:
| February 4, 2025 | February 4, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Deferred revenue | $ | $ | |||||||||
| Long-term lease obligation | |||||||||||
| Accrued liabilities | |||||||||||
| Workers’ compensation and general liability insurance | |||||||||||
| Share-based compensation | |||||||||||
| Financing obligation | |||||||||||
| Net operating loss carryovers | |||||||||||
| Tax credit carryovers | |||||||||||
| Excess business interest expense | |||||||||||
| Other | |||||||||||
| Subtotal | |||||||||||
| Less: Valuation allowance | ( | ( | |||||||||
| Total deferred tax assets | $ | $ | |||||||||
| Deferred tax liabilities: | |||||||||||
| Trademark/tradename | $ | $ | |||||||||
| Property and equipment | |||||||||||
| Right of use assets | |||||||||||
| Other debt related items | |||||||||||
| Other | |||||||||||
| Total deferred tax liabilities | $ | $ | |||||||||
| Deferred tax liability, net | $ | $ | |||||||||
As of February 4, 2025, we had $60.9 of state net operating loss carryforwards, which will begin to expire in fiscal 2025, and foreign tax credit carryovers of $1.5 , which will begin to expire in 2028.
During fiscal 2024, the decrease in the valuation allowance of $0.1 primarily relates to the use of available net operating loss carryforwards and the release of previously established allowance for certain net operating loss carryforwards due to improved operating performance.
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Balance at beginning of year | $ | $ | $ | ||||||||||||||
| Additions for tax positions of prior years | |||||||||||||||||
| Reductions for tax positions of prior years | ( | ( | |||||||||||||||
| Settlements with tax authorities | ( | ||||||||||||||||
| Additions for tax positions of current year | |||||||||||||||||
| Lapse of statute of limitations | ( | ( | ( | ||||||||||||||
| Balance at end of year | $ | $ | $ | ||||||||||||||
The February 4, 2025 balance of unrecognized tax benefits includes $2.4 , that if recognized, would affect our effective tax rate. At February 4, 2025, and February 4, 2024, we had accrued interest and penalties of $1.0 and $0.6 , respectively. The Company recorded accrued interest related to the unrecognized tax benefits and penalties as a component of the “Provision for income taxes” recognized in the Consolidated Statements of Comprehensive Income.
F-20
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to the resolution of certain tax matters, including payments on those tax matters or due to lapse of the statute of limitations. The Company does not expect any significant changes in unrecognized tax benefits within twelve months of the reporting date.
We file consolidated income tax returns with all our domestic subsidiaries, which are periodically audited by various federal, state and foreign jurisdictions. We are generally no longer subject to federal, state, or foreign income tax examinations for years prior to 2018.
Note 8: Leases
The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and property taxes, are as follows:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Operating lease cost | $ | $ | $ | ||||||||||||||
| Variable lease cost | |||||||||||||||||
Short-term lease cost (1) | |||||||||||||||||
| Total lease cost | $ | $ | $ | ||||||||||||||
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 store support center, in the Consolidated Statements of Comprehensive Income.
Supplemental disclosures of cash flow information related to leases were as follows for years ended:
| February 4, 2025 | February 4, 2024 | January 29, 2023 | |||||||||||||||
| Cash paid for operating lease liabilities | $ | $ | $ | ||||||||||||||
Lease assets obtained in exchange for new operating lease liabilities (1)(2) | $ | $ | $ | ||||||||||||||
| Weighted-average remaining lease term—operating leases | |||||||||||||||||
| Weighted-average discount rate—operating leases | % | % | % | ||||||||||||||
(1)Amounts shown are net of tenant improvement allowances recorded as a reduction of the initial right of use asset.
(2)Assets obtained during the fiscal year ended January 29, 2023 include leases acquired in a business combination.
Minimum future maturities of operating lease liabilities as of February 4, 2025 were as follows:
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total future operating lease liability | $ | ||||
| Less: interest | ( | ||||
| Present value of operating lease liabilities | $ | ||||
F-21
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Operating lease payments above exclude approximately $146.6 of minimum lease payments related to eight facility leases that have been executed but have not yet commenced.
Sale-Leaseback Transactions
The Company has entered into sale and master lease agreements (“sale-leasebacks”) with unrelated third parties. Under these agreements, the Company sold store properties, including land, buildings and certain improvements and then leased the assets back through leaseback transactions.
Based on certain criteria and in accordance with GAAP under ASC 842, Leases, these transactions were accounted for as failed sale-leasebacks. As a result, the store property assets remain on the Consolidated Balance Sheet at their historical net book value and are depreciated over the remaining term of the applicable master lease. Financing liabilities were recognized in the amount of the proceeds received. The Company does not recognize rent expense related to the leased assets. Instead, monthly rent payments under the applicable master lease agreement are recorded as interest expense and a reduction of the outstanding liability.
A summary of the transactions during fiscal 2024 and fiscal 2023 are as follows (there were no such transactions in fiscal 2022):
| Properties | Sale Price | Net Proceeds | Annual Rent (1) | ||||||||||||||||||||
| October 2023 | $ | $ | $ | ||||||||||||||||||||
| July 2024 | $ | $ | $ | ||||||||||||||||||||
| September 2024 | $ | $ | $ | ||||||||||||||||||||
| February 2025 | $ | $ | $ | ||||||||||||||||||||
(1)Represents annual rent for the first year of the master lease agreement. Subsequent years may be subject to rent escalation.
As of February 4, 2025 the long-term outstanding liability of $263.9 was recorded in Other long-term liabilities and the current outstanding liability of $1.0 was recorded in “Accrued liabilities” on the Consolidated Balance Sheets related to the financing liability.
F-22
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Note 9: Stockholders’ Equity
Share issuances and repurchases
On March 27, 2023, our Board approved a share repurchase program with an authorization limit of $100.0 . Subsequently, our board approved additional repurchases in increments of $100.0 , for a total of $600.0 authorized under the program as of February 4, 2025. During fiscal 2024, the Company repurchased 4.99 shares at an average of $34.50 per share.
As of February 4, 2025, the remaining dollar value of shares that may be repurchased under the program is $128.0 . Future decisions to repurchase shares continue to be at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors the Board considers relevant. During fiscal 2023, the Company repurchased 8.49 shares at an average of $35.35 per share under the repurchase program.
The Company treats shares withheld for tax purposes on behalf of our employees in connection with the vesting of 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 were not considered common stock repurchases under the share repurchase plan. During the fiscal years ended 2024, 2023 and 2022, we withheld 0.03 , 0.09 , and 0.17 shares of common stock to satisfy $1.7 , $3.1 , and $8.5 of employees’ tax obligations, respectively.
Cash dividends
The Company did not declare or pay any dividends during fiscal years ended 2024, 2023 or 2022.
Share-based compensation
Prior to October 2024, the Company maintained an equity incentive plan, the Amended and Restated 2014 Omnibus Incentive Plan (the “2014 Plan”), under which it granted awards denominated in the Company’s common stock or units of the Company’s common stock, as well as cash variable compensation awards. The Company’s long-term incentive compensation provided awards to executive and management personnel as well as directors and issued share-based awards under our 2014 Plan. We granted stock options or restricted stock units to executive and management personnel and members of our Board. Options granted to employees generally become exercisable ratably over a three-year period from the grant date. Performance-based restricted stock units and market stock units (“MSUs”) awarded to employees generally either vest ratably over three years or fully vest after three years , subject to the achievement of specified performance or market conditions, as applicable. Time-based restricted stock units have various service periods not exceeding five years . In October 2024, the 2014 Plan expired pursuant to its terms. Subsequently, the Company adopted the 2025 Omnibus Incentive Plan (the “2025 Plan”) on December 4, 2024, subject to stockholder approval.
Options granted terminate on the ten-year anniversary of the grants. Stock option awards generally provide continued vesting, in the event of termination, for employees that either a) reach age 60 or greater and have at least ten years of service or b) reach age 65 . Unvested stock options and restricted stock units are generally forfeited by employees who terminate prior to vesting and are prorated for retired employees.
Each share granted subject to a stock option award or time-based restricted stock unit award reduced the number of shares available under our stock incentive plans by one share. Each share granted subject to a performance restricted stock unit or market stock unit award reduced the number of shares available under our stock incentive plans by a range of one share if the target performance or market condition is achieved, up to a maximum of two shares for performance or market condition achieved above target. The Company satisfies stock option exercises and vesting of restricted stock units with newly issued shares.
F-23
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
The grant date fair value of our stock option awards has been determined using the Black-Scholes option valuation model. The Black-Scholes option valuation model uses assumptions of expected volatility, the expected dividend yield of our stock, the expected term of the awards and the risk-free interest rate, as well as an estimated fair value of our common stock.
A summary of the options, as well as the significant assumptions used in determining the underlying fair value of those options, granted in fiscal 2024 were as follows:
| Volatility | Risk-free Interest Rate | Expected Term | Weighted Average Grant Date Fair Value | Options Granted | |||||||||||||||||||||||||
April 2024 grants (1) | $ | ||||||||||||||||||||||||||||
June 2024 grants (2) | $ | ||||||||||||||||||||||||||||
| Total granted | |||||||||||||||||||||||||||||
(1)Annual grant to certain executives.
(2)Grants to newly hired executive employees.
The following is a summary of stock option award activity during fiscal 2024:
| Number of Options | Weighted Average Exercise Price | ||||||||||
| Outstanding at February 4, 2024 | $ | ||||||||||
| Granted | $ | ||||||||||
| Exercised | ( | $ | |||||||||
| Forfeited and cancelled | ( | $ | |||||||||
| Outstanding at February 4, 2025 | $ | ||||||||||
| Exercisable at February 4, 2025 | $ | ||||||||||
The total intrinsic value of options exercised during fiscal 2024, fiscal 2023, and fiscal 2022 was $3.1 , $1.7 , and $5.1 , respectively. The unrecognized expense related to stock option awards totaled approximately $1.3 as of February 4, 2025 and will be expensed over a weighted average of 3.1 years. As of February 4, 2025, the weighted average remaining contractual life of options outstanding was 5.7 years with an aggregate intrinsic value of zero . As of February 4, 2025, the weighted average remaining contractual life of exercisable options was 4.7 years with an aggregate intrinsic value of zero .
The following is a summary of restricted stock unit awards activity during fiscal 2024:
| Shares | Weighted Avg Grant Date Fair Value | ||||||||||
| Outstanding at February 4, 2024 | $ | ||||||||||
| Granted | $ | ||||||||||
| Performance adjusted units | ( | N/A | |||||||||
| Vested | ( | $ | |||||||||
| Forfeited | ( | $ | |||||||||
| Outstanding at February 4, 2025 | $ | ||||||||||
The weighted average grant-date fair values of restricted stock units granted during fiscal 2024, 2023 and 2022 were $55.38 , $35.94 , and $33.09 , respectively. The total fair value of restricted stock units vested during fiscal 2024, 2023, and 2022 was $4.2 , $7.4 , and $20.6 , respectively. The unrecognized expense related to our restricted stock units was $11.7 as of February 4, 2025, which will be expensed over a weighted average of 2.2 years.
F-24
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Compensation expense related to stock options with only service conditions (time-based) is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award or to the date on which retirement eligibility is achieved, if shorter. Compensation expense for time-based restricted stock units is based on the market price of the shares underlying the awards on the grant date. Compensation expense for performance-based restricted stock units reflects the estimated probability that performance conditions at target or above will be met. Restricted stock units are expensed ratably over the service period. The effect of market conditions is considered in determining the grant date fair value of MSU awards, which is not subsequently revised based on actual performance.
Compensation expense related to stock option plans and time-based restricted stock units, which is included in “General and administrative expenses” on the Consolidated Statements of Comprehensive Income, was as follows for the fiscal years presented:
| 2024 | 2023 | 2022 | |||||||||||||||
| Stock options | $ | $ | $ | ||||||||||||||
| Restricted stock units | |||||||||||||||||
| Total compensation expense | $ | $ | $ | ||||||||||||||
Contingent awards
Note 10: 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 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.
F-25
DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share amounts)
Note 11: Segment Information
The Company provides premier entertainment and dining experiences for adults and families under the Dave & Buster’s and Main Event brands and offers guests the opportunity to “Eat Drink Play and Watch,” all in one location. The Company's Chief Executive Officer, the Company’s chief operating decision maker (“CODM”), reviews the financial information presented on a consolidated basis. The CODM assesses performance and allocates resources based on the Company’s Consolidated Statements of Comprehensive Income, since the Company provides its offerings and key metrics, costs and margins similarly to both business units. The CODM manages and evaluate the results of the business in a consolidated manner to drive synergies and develop uniform strategies. Accordingly, key components and processes of the Company’s operations are centrally managed, including site acquisition and development, customer service, marketing, human resources, finance and accounting, legal and government affairs. Segment asset information is not used by the CODM to allocate resources. Under the described organizational and reporting structure, the Company has one reportable segment.
As a single reportable segment entity, the Company’s segment performance measure is net income attributable to its shareholders. See Note 1 for a description of the Company's disaggregated revenues by offering (entertainment and other revenues and food and beverage revenues). Significant segment expenses are presented in the Company’s Consolidated Statement of Comprehensive Income. Additional disaggregated certain segment expenses on a functional basis, which are not separately presented on the Company’s Consolidated Statements of Operations, are presented below.
| Fiscal Year Ended | ||||||||||||||||||||
| Other store operating expenses | 2024 | 2023 | 2022 | |||||||||||||||||
Store lease expenses (1) | $ | $ | $ | |||||||||||||||||
Advertising and marketing costs (2) | ||||||||||||||||||||
Other costs (3) | ||||||||||||||||||||
| Total other store operating expenses | $ | $ | $ | |||||||||||||||||
(1)Amounts represent minimum and variable lease costs incurred to operate certain of our stores. See Note 8 for further discussion.
(2)Amounts represent costs incurred to market our brands at a local and national level. See Note 1 for further discussion of accounting for these costs.
(3)Remaining amounts include various costs incurred to operate our stores that are not considered individually significant.
| Fiscal Year Ended | ||||||||||||||||||||
| Other charges and gains | 2024 | 2023 | 2022 | |||||||||||||||||
System implementation costs (1) | $ | $ | $ | |||||||||||||||||
| Currency (gain) loss | ( | |||||||||||||||||||
Asset (gains) and losses (2) | ( | ( | ||||||||||||||||||
| Total other charges and gains | $ | $ | $ | |||||||||||||||||
(1)Amounts represent noncapitalizeable costs incurred to implement software at both the store and corporate level.
F-26
Exhibit 3.2
FIFTH AMENDED AND RESTATED BYLAWS OF
DAVE & BUSTER’S ENTERTAINMENT, INC.
Table of Contents
Page | ||||||||
ARTICLE I | STOCKHOLDERS | 1 | ||||||
1.1 | Place of Meetings | 1 | ||||||
1.2 | Annual Meeting | 1 | ||||||
1.3 | Special Meetings | 1 | ||||||
1.4 | Stockholder Action | 1 | ||||||
1.5 | Notice of Meetings | 1 | ||||||
1.6 | Voting List | 2 | ||||||
1.7 | Quorum | 2 | ||||||
1.8 | Adjournments | 2 | ||||||
1.9 | Proxies | 2 | ||||||
1.10 | Action at Meeting | 3 | ||||||
1.11 | Notice of Stockholder Business and Nominations | 3 | ||||||
1.12 | Conduct of Meetings | 10 | ||||||
ARTICLE II | DIRECTORS | 11 | ||||||
2.1 | General Powers | 11 | ||||||
2.2 | Election, Number and Qualification | 11 | ||||||
2.3 | Chairman of the Board; Vice Chairman of the Board | 12 | ||||||
2.4 | Quorum | 12 | ||||||
2.5 | Action at Meeting | 12 | ||||||
2.6 | Removal | 12 | ||||||
2.7 | Vacancies | 12 | ||||||
2.8 | Resignation | 12 | ||||||
2.9 | Regular Meetings | 13 | ||||||
2.10 | Special Meetings | 13 | ||||||
2.11 | Notice of Special Meetings | 13 | ||||||
2.12 | Meetings by Conference Communications Equipment | 13 | ||||||
2.13 | Action by Written Consent | 13 | ||||||
2.14 | Committees | 13 | ||||||
2.15 | Compensation of Directors | 14 | ||||||
ARTICLE III | OFFICERS | 14 | ||||||
3.1 | Titles | 14 | ||||||
3.2 | Election | 14 | ||||||
3.3 | Qualification | 14 | ||||||
3.4 | Tenure | 14 | ||||||
3.5 | Resignation and Removal | 14 | ||||||
3.6 | Vacancies | 14 | ||||||
3.7 | Chief Executive Officer | 14 | ||||||
| 3.8 | President | 15 | ||||||
| 3.9 | Chief Financial Officer | 15 | ||||||
| 3.10 | Vice Presidents | 15 | ||||||
| 3.11 | Secretary and Assistant Secretaries | 15 | ||||||
| 3.12 | Treasurer and Assistant Treasurers | 15 | ||||||
| 3.13 | Delegation of Authority | 15 | ||||||
ARTICLE IV | CAPITAL STOCK | 16 | ||||||
| 4.1 | Issuance of Stock | 16 | ||||||
| 4.2 | Stock Certificates; Uncertificated Shares | 16 | ||||||
| 4.3 | Transfers | 17 | ||||||
| 4.4 | Lost, Stolen or Destroyed Certificates | 16 | ||||||
ARTICLE V | GENERAL PROVISIONS | 17 | ||||||
| 5.1 | Fiscal Year | 17 | ||||||
| 5.2 | Corporate Seal | 17 | ||||||
| 5.3 | Waiver of Notice | 17 | ||||||
| 5.4 | Voting of Securities | 17 | ||||||
| 5.5 | Evidence of Authority | 17 | ||||||
| 5.6 | Certificate of Incorporation | 18 | ||||||
| 5.7 | Severability | 18 | ||||||
| 5.8 | Pronouns | 18 | ||||||
| 5.9 | Electronic Transmission | 18 | ||||||
ARTICLE VI | AMENDMENTS | 18 | ||||||
ARTICLE VII | INDEMNIFICATION AND ADVANCEMENT | 18 | ||||||
| 7.1 | Right to Indemnification | 18 | ||||||
| 7.2 | Prepayment of Expenses | 19 | ||||||
| 7.3 | Authorization of Indemnification | 19 | ||||||
| 7.4 | Good Faith Defined | 19 | ||||||
| 7.5 | Right of Claimant to Bring Suit | 19 | ||||||
| 7.6 | Nonexclusivity of Indemnification and Advancement of Expenses | 20 | ||||||
| 7.7 | Insurance | 20 | ||||||
| 7.8 | Certain Definitions | 20 | ||||||
| 7.9 | Survival of Indemnification and Advancement of Expenses | 21 | ||||||
| 7.10 | Contract Rights | 21 | ||||||
ARTICLE VIII | CHOICE OF FORUM | 21 | ||||||
ARTICLE I STOCKHOLDERS
1.1Place of Meetings. All meetings of stockholders shall be held at such place, if any, as may be designated from time to time by the Board of Directors (the “Board”) of Dave & Buster’s Entertainment, Inc. (the “Corporation”), the Chairman of the Board or the Chief Executive Officer or, if not so designated, at the principal office of the Corporation. The Board may, in its sole discretion, determine that a meeting shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a) of the General Corporation Law of the State of Delaware (the “DGCL”).
1.2Annual Meeting. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board (which date shall not be a legal holiday in the place, if any, where the meeting is to be held). The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.
1.3Special Meetings. Special meetings of stockholders for any purpose or purposes may be called as (and only as) provided in the Certificate of Incorporation. The Board may postpone, reschedule or cancel any previously scheduled special meeting of stockholders. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
1.4Stockholder Action. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such holders; provided, however, that any action required or permitted to be taken by the holders of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by the applicable Preferred Stock Designation.
1.5Notice of Meetings. Except as otherwise provided by the DGCL, notice of each meeting of stockholders, whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. Without limiting the manner by which notice otherwise may be given to stockholders, any notice shall be effective if given by a form of electronic transmission consented to (in a manner consistent with the DGCL) by the stockholder to whom the notice is given. The notices of all meetings shall state the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting). The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If notice is given by mail, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. If notice is given by electronic transmission, such notice shall be deemed given at the time specified in Section 232 of the DGCL.
1 | ||
1.6Voting List. The Secretary shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the Corporation.
1.7Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the holders of a majority in voting power of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote at the meeting, present in person, present by means of remote communication in a manner, if any, authorized by the Board in its sole discretion, or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or classes or series of capital stock is required by law or the Certificate of Incorporation, the holders of a majority in voting power of the shares of such class or classes or series of the capital stock of the Corporation issued and outstanding and entitled to vote on such matter, present in person, present by means of remote communication in a manner, if any, authorized by the Board in its sole discretion, or represented by proxy, shall constitute a quorum entitled to take action with respect to the vote on such matter. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum.
1.8Adjournments. Any meeting of stockholders, annual or special, may be adjourned from time to time to any other time and to any other place at which a meeting of stockholders may be held under these Bylaws by the chairman of the meeting or, if directed to be voted on by the chairman of the meeting, by the stockholders present or represented at the meeting and entitled to vote thereon, although less than a quorum, and notice need not be given of any such adjourned meeting if the time, place, if any, thereof and the means of remote communication, if any, are provided in accordance with applicable law. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting.
1.9Proxies. Each stockholder of record entitled to vote at a meeting of stockholders may vote in person (including by means of remote communication in a manner, if any, authorized by the Board in its sole discretion by which stockholders may be deemed to be present in person and vote at such meeting) or may authorize another person or persons to vote for such stockholder by a proxy executed or transmitted in a manner permitted by applicable law. No such proxy shall be voted upon after three (3) years from the date of its execution, unless the proxy expressly provides for a longer period. The authorization of a person to act as proxy may be documented, signed, and delivered in accordance with Section 116 of the DGCL, provided that such authorization shall set forth, or be delivered with, information enabling the Corporation to determine the identity of the stockholder
granting such authorization. Any stockholder soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board.
1.10Action at Meeting. When a quorum is present at any meeting, any matter to be voted upon by the stockholders at such meeting shall, except as set forth in Section 2.2, be decided by the vote of the holders of shares of stock having a majority in voting power of the votes cast by the holders of all of the shares of stock present or represented at the meeting and voting affirmatively or negatively on such matter (or if there are two (2) or more classes or series of stock entitled to vote as separate classes, then in the case of each such class or series, the holders of shares of stock having a majority in voting power of the votes cast by the holders of all of the shares of stock of that class or series present or represented at the meeting and voting affirmatively or negatively on such matter), except when a different vote is required by applicable law, regulation applicable to the Corporation or its securities, the rules or regulations of any stock exchange applicable to the Corporation, the Certificate of Incorporation or these Bylaws. Voting at meetings of stockholders need not be by written ballot.
1.11Notice of Stockholder Business and Nominations.
(A)Annual Meetings of Stockholders.
(1)Nominations of persons for election to the Board and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (b) by or at the direction of the Board or any committee thereof or (c) by any stockholder of the Corporation who was a stockholder of record of the Corporation at the time the notice provided for in this Section 1.11 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 1.11. For the avoidance of doubt, the procedures set forth in this Section 1.11 shall be the exclusive means for a stockholder to make nominations or submit proposals for other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any successor rule thereto and included in the Corporation’s proxy statement that has been prepared to solicit proxies for such annual meeting) for an annual meeting of stockholders.
(2)For any nominations or any other business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business (other than the nominations of persons for election to the Board) must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day, nor earlier than the close of business on the one hundred and twentieth (120th) day, prior to the first anniversary of the preceding year’s annual meeting (provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than ninety (90) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting and the tenth (10th) day following the day on which public announcement of the date of such annual meeting is first made by the Corporation). In no event shall the adjournment or postponement of an annual meeting (or any public announcement thereof) commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. The number of nominees the stockholder making the nomination may nominate for election at an annual meeting (or in the case of a stockholder giving the notice on behalf of a beneficial
owner, the number of nominees a stockholder may nominate for election at the annual meeting on behalf of the beneficial owner) shall not exceed the number of directors to be elected by stockholders generally at such annual meeting. To be in proper form, such stockholder’s notice (whether given pursuant to this paragraph (A)(2) of Section 1.11 or paragraph (B) of Section 1.11) to the Secretary of the Corporation shall set forth:
(a)as to each person, if any, whom the stockholder proposes to nominate for election or reelection as a director to the Board
(i)all information relating to such person that is required to be disclosed, whether in a proxy statement, other filings required to be made in connection with solicitations of proxies for election of directors in a contested election (even if an election is not contested), or as otherwise required, in each case pursuant to and in accordance with Section 14(a) of the Exchange Act, and the rules and regulations promulgated thereunder;
(ii)such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary of the Corporation upon written request); such person’s written representation and agreement (in the form provided by the Secretary of the Corporation upon written request), (A) that such person is not and will not become party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) that such person is not and will not become a party to any agreement, arrangement, or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director that has not been disclosed to the Corporation, and (C) that, in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, such person would, if elected as a director, comply with all of the Corporation’s corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies and guidelines applicable generally to the Corporation’s directors and, if elected as a director of the Corporation, such person currently would be in compliance with any such policies and guidelines that have been publicly disclosed;
(iii)a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, and their respective affiliates and associates, or any other person or persons (including their names) acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates or associates, or any other person or persons (including their names) acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-
K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in
concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant;
(iv)any information that such person would be required to disclose pursuant to clauses (ii) – (ix) of clause (c) of this paragraph (A)(2) of Section 1.11 if such person were a stockholder purporting to make a nomination or propose business pursuant thereto; and
(v)an undertaking to notify the Corporation in writing of any change in the information called for by clauses (i) – (iv) as of the record date for notice of such meeting, by notice received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than the tenth (10th) day following such record date;
(b)as to any other business that the stockholder proposes to bring before the meeting,
(i)a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the complete text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend any Corporation document, the language of the proposed amendment), the reasons for conducting such business at the annual meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and
(ii)a description of all agreements, arrangements and understandings (written or oral) between such stockholder and beneficial owner, if any, and their respective affiliate and associates, and any other person or persons (including their names) acting in concert therewith in connection with the proposal of such business by such stockholder; and
(c)as to the stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination or proposal for other business is made, any of their respective affiliates or associates (including, if such stockholder or beneficial owner is an entity, as to each director, executive, managing member or control person of such entity), and any others acting in concert with any of the following:
(i)the name and address of such stockholder, as they appear on the Corporation’s books, of such beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing;
(ii)the class or series and number of shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, such beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing;
(iii)a description of any agreement, arrangement or understanding (written or oral) between or among such stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, including, in the case of a nomination, the nominee, with respect to the nomination or
proposal or that will be material in such stockholder’s solicitation of stockholders (including, without limitation, matters of social, labor, environmental and governance policy), regardless of whether such agreement, arrangement or understanding relates specifically to the Corporation;
(iv)a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of capital stock of the Corporation or with a value derived in whole or in part from the value of any class or series of capital stock of the Corporation, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder and such beneficial owners, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Corporation (a “Derivative Instrument”);
(v)a description of any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder and such beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, has the right to vote any shares of any security of the Corporation;
(vi)any short interest of such stockholder and such beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, in any security of the Corporation (for purposes of these Bylaws, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security);
(vii)any rights to dividends on the shares of the Corporation owned beneficially by such stockholder and such beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, that are separated or separable from the underlying shares of capital stock of the Corporation;
(viii)any proportionate interest in shares of capital stock of the Corporation or Derivative Instruments, held, directly or indirectly, by a general or limited partnership or similar entity in which such stockholder or such beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, is the manager, managing member or directly or indirectly beneficially owns an interest in the manager or managing member of a limited liability company or similar entity;
(ix)any performance related fees (other than an asset-based fee) that such stockholder and such beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, is entitled to based on any increase or decrease in the value of shares of capital stock of the Corporation or Derivative Instruments, if any;
(x)a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to propose such business or nomination;
(xi)a statement of whether the stockholder or the beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, intends or is part of a group which intends (a) in the case of a nomination, to solicit proxies or votes in support of such director nominees or nomination in accordance with Rule 14a-19 under the Exchange Act, including but not limited to delivering a proxy statement and/or form of proxy and soliciting at least the percentage of the voting power of all of the shares of the stock of the Corporation required under applicable law to elect the nominee, and in the case of the business proposal, to deliver a proxy statement and/or form of proxy and solicit holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or (b) to otherwise solicit proxies or votes from stockholders in support of such proposal or nomination;
(xii)any other information relating to such stockholder and beneficial owner, if any, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, required to be disclosed under the DGCL or in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal of other business and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder; and
(xiii)an undertaking by the stockholder and beneficial owner, if any, to notify the Corporation in writing of any change in the information called for by clauses (i) – (xii) above as of the record date for such meeting, by notice received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than the tenth (10th) day following such record date.
The Corporation may, as a condition of any such nomination being deemed properly brought before an annual meeting, require any proposed nominee to furnish (i) any information required pursuant to any undertaking delivered pursuant to this paragraph (A)(2) of Section 1.11, and (ii) such other information as the Corporation may require to determine the eligibility of such proposed nominee to serve as a director, or independent director of the Corporation. The foregoing notice requirements of this paragraph (A) of this Section 1.11 shall not apply to business (other than any purported nomination) if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting only pursuant to and in compliance with Rule 14a-8 promulgated under the Exchange Act or any successor rule thereto and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.
(3)Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 1.11 to the contrary, in the event that the number of directors to be elected to the Board at the annual meeting is increased effective after the time period for which nominations would otherwise be due under paragraph (A)(2) of this Section 1.11 and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 1.11 shall also be considered timely, but only with respect to nominees for the additional directorship
positions, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(B)Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the special meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board or any committee thereof or (2) provided that the Board pursuant to Section 1.3 hereof has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (a) is a stockholder of record at the time the notice provided for in this Section 1.11 is delivered to the Secretary of the Corporation and at the time of the special meeting, (b) is entitled to vote at the special meeting and (c) complies with the notice procedures and conditions set forth in this Section 1.11 (including the information requirements in paragraph (A)(2) of Section 1.11) as to such nomination. For the avoidance of doubt, the foregoing clause (2) of this paragraph (B) of Section 1.11 shall be the exclusive means for a stockholder to propose nominations of persons for election to the Board at a special meeting of stockholders at which directors are to be elected. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (A)(2) of this Section 1.11 shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting and the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall the adjournment or postponement of a special meeting as to which notice has been sent to stockholders, or any public announcement with respect thereto, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. The number of nominees the stockholder making the nomination may nominate for election at a special meeting (or in the case of a stockholder giving notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at a special meeting on behalf of the beneficial owner) shall not exceed the number of directors to be elected by stockholders generally at such special meeting.
(C)General. (1) Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such persons who are nominated in accordance with the procedures set forth in this Section 1.11 shall be eligible to be properly elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.11. Except as otherwise provided by law, the Certificate of Incorporation or the Bylaws, the chairman of the meeting shall have the power and duty (a) to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.11 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made, solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (A)(2)(c)(xi) of this Section 1.11) and (b) if any proposed
nomination or business was not made or proposed in compliance with this Section 1.11, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 1.11, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1.11, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder, to act for such stockholder as proxy at the annual or special meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the annual or special meeting of stockholders.
(2)If any stockholder provides notice pursuant to Rule 14a-19 under the Exchange Act, such stockholder shall deliver to the Corporation, no later than five (5) business days prior to the applicable meeting, reasonable evidence that he, she, or it has met all applicable requirements of Rule 14a-19 under the Exchange Act. Without limiting the other provisions and requirements of this Section 1.11, unless otherwise required by law, if any stockholder provides such notice and either (a) fails to comply with the requirements of Rule 14a-19 under the Exchange Act (as determined by the Board or the chairman of the meeting), or (b) fails to timely provide reasonable evidence of such compliance as required by this Section 1.11(C)(2), then such stockholder’s nomination of each such proposed nominee shall be disregarded, notwithstanding that the nominee is included as a nominee in the Corporation’s proxy statement, notice of meeting, or other proxy materials for any meeting (or any supplement thereto), and the Corporation shall disregard any proxies or votes solicited for such stockholder’s nominees.
(3)For purposes of this Section 1.11, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or other national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.
(4)Notwithstanding the foregoing provisions of this Section 1.11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 1.11; provided however, that any references in these Bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 1.11 (including paragraphs (A)(2) and (B) hereof), and compliance with paragraphs (A)(2) and (B) of this Section 1.11 shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the penultimate sentence of (A)(2), business other than nominations brought properly under and in compliance with Rule 14a-8 of the Exchange Act or any successor rule thereto, as may be amended from time to time). Nothing in this Section 1.11 shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals or nominations in the Corporation’s proxy statement pursuant to applicable Rule 14a-8 promulgated under the Exchange Act or (b) of the holders of any series of Preferred Stock to elect directors if and to the extent provided for under any applicable provisions of the Certificate of Incorporation.
(D)Record Date. In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which shall not be more than sixty (60) days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
1.12Conduct of Meetings.
(A)Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the Chairman’s absence by the Vice Chairman of the Board, if any, or in the Vice Chairman’s absence by the Chief Executive Officer, or in the Chief Executive Officer’s absence, by the President, or in the President’s absence by a Vice President, or in the absence of all of the foregoing persons by a chairman designated by the Board. The Secretary shall act as secretary of the meeting, but in the Secretary’s absence the chairman of the meeting may appoint any person to act as secretary of the meeting.
(B)The Board may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the Corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate in its sole discretion regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board, the chairman of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry
to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
(C)The chairman of the meeting shall announce at the meeting the date and time of the opening and closing of the polls for each matter voted upon at the meeting. After the polls close, no ballots, proxies or votes or any revocations or changes thereto may be accepted unless the Court of Chancery of the State of Delaware shall determine otherwise.
(D)In advance of any meeting of stockholders, the Board, the Chairman of the Board, the Chief Executive Officer or the President shall appoint one or more inspectors of election to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is present, ready and willing to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law. Every vote taken by ballots shall be counted by a duly appointed inspector or duly appointed inspectors.
ARTICLE II DIRECTORS
1.1General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board, which may exercise all of the powers of the Corporation except as otherwise provided by law or the Certificate of Incorporation.
1.2Election, Number and Qualification. At each annual meeting, directors shall be elected to hold office until the next annual meeting and until their successors have been duly elected and qualified; except that if any such election shall be not so held, such election shall take place at a stockholders’ meeting called and held in accordance with the DGCL. At any meeting of stockholders at which directors are to be elected, each director shall be elected by a majority of the votes cast with respect to such director; provided, however, that, if there is a contested election, directors shall be elected by the plurality vote of the votes cast by the holders of shares present or represented at the meeting and entitled to vote thereon. An election shall be considered contested if, as of the 10th day before the Corporation mails its notice of meeting for such meeting to stockholders, the number of nominees exceeds the number of directors to be elected. For the purposes of this Section 2.2, a majority of the votes cast means that the number of votes “for” a director exceeds the number of votes “against” the director (with
“abstentions” and “broker non-votes” not counted as votes cast).
In an election that is not contested, any incumbent director who fails to receive a majority of the votes cast shall promptly submit an offer to resign from the Board. The Nominating and Corporate Governance Committee shall recommend to the Board whether to accept or reject the director’s offer to resign, or what other action should be taken. The Board shall act on the offer to resign, taking into account the Nominating and Corporate Governance Committee’s recommendation, within 90 days from
the date of the certification of election results and publicly disclose its decision regarding the offer to resign and, if such offer is not accepted, the rationale behind the decision. Any director who offers to resign shall not participate in the Nominating and Corporate Governance Committee’s recommendation or the Board’s decision.
If the Board accepts a director’s resignation pursuant to this Section 2.2, or if a non-incumbent nominee for director is not elected, then the Board may fill the resulting vacancy pursuant to Section 2.7 of these Bylaws or decrease the size of the Board pursuant to this Section 2.2.
Election of directors need not be by written ballot. Subject to the Certificate of Incorporation, the total number of directors constituting the Board shall be such number as may be fixed from time to time by resolution of the Board. Each director shall be at least 18 years of age. A director need not be a stockholder of the Corporation, a citizen of the United States, or a resident of the State of Delaware.
1.3Chairman of the Board; Vice Chairman of the Board. The Board may appoint from its members a Chairman of the Board and a Vice Chairman of the Board, neither of whom need be an employee or officer of the Corporation. If the Board appoints a Chairman of the Board, such Chairman shall perform such duties and possess such powers as are assigned by the Board and, if the Chairman of the Board is also designated as the Corporation’s Chief Executive Officer, shall have the powers and duties of the Chief Executive Officer prescribed in Section 3.7 of these Bylaws. If the Board appoints a Vice Chairman of the Board, such Vice Chairman shall perform such duties and possess such powers as are assigned by the Board. Unless otherwise provided by the Board, the Chairman of the Board or, in the Chairman’s absence, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board.
1.4Quorum. A majority of the directors at any time in office shall constitute a quorum of the Board. If at any meeting of the Board there shall be less than a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present.
1.5Action at Meeting. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board, unless a greater number is required by law, by the Certificate of Incorporation or these Bylaws.
1.6Removal. Subject to the rights of holders of any series of Preferred Stock, directors of the Corporation may be removed as provided in the Certificate of Incorporation.
1.7Vacancies. Subject to the provisions of the Certificate of Incorporation and the rights of holders of any series of Preferred Stock, any newly created directorship that results from an increase in the number of directors or any vacancy on the Board that results from the death, disability, resignation, disqualification or removal of any director or from any other cause shall be filled solely by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. Any director elected to fill a vacancy shall hold office for the remaining term of his or her predecessor.
1.8Resignation. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at some later time or upon the happening of some later event. A verbal resignation shall not be deemed effective until confirmed by the director in writing or by
electronic transmission to the Corporation.
1.9Regular Meetings. Regular meetings of the Board may be held without notice at such time and place as shall be determined from time to time by the Board; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board may be held without notice immediately after and at the same place as the annual meeting of stockholders.
1.10Special Meetings. Special meetings of the Board may be called by the Chairman of the Board, by the Chief Executive Officer, or by the affirmative vote of a majority of the directors then in office or by one director in the event that there is only a single director in office.
1.11Notice of Special Meetings. Notice of the date, place and time of any special meeting of the Board shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (a) in person or by telephone at least twenty-four (24) hours in advance of the meeting, (b) by sending written notice by reputable overnight courier, telecopy, facsimile or other means of electronic transmission, or delivering written notice by hand, to such director’s last known business, home or means of electronic transmission address at least twenty- four (24) hours in advance of the meeting, or (c) by sending written notice by first-class mail to such director’s last known business or home address at least seventy-two (72) hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board need not specify the purposes of the meeting.
1.12Meetings by Conference Communications Equipment. Directors may participate in meetings of the Board or any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.
1.13Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent to the action in writing or by electronic transmission, and any consent may be documented, signed and delivered in any manner permitted by Section 116 of the DGCL. After the action is taken, the consent or consents relating thereto shall be filed with the minutes of proceedings of the Board or committee thereof. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
1.14Committees. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation with such lawfully delegable powers and duties as the Board thereby confers, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board but subject to the DGCL, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board may from
time to time request. Except as the Board may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the committee or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these Bylaws for the Board. Except as otherwise provided in the Certificate of Incorporation, these Bylaws, or the resolution of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
1.15Compensation of Directors. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board may from time to time determine. No such payment shall preclude any director from serving the Corporation or any of its parent or subsidiary entities in any other capacity and receiving compensation for such service.
ARTICLE III OFFICERS
1.1Titles. The officers of the Corporation may consist of a Chief Executive Officer, a President, a Chief Financial Officer, a Treasurer and a Secretary and such other officers with such other titles as the Board shall from time to time determine. The Board may appoint such other officers, including one or more Vice Presidents and one or more Assistant Treasurers or Assistant Secretaries, as it may deem appropriate from time to time.
1.2Election. The officers of the Corporation shall be elected annually by the Board at its first meeting following the annual meeting of stockholders.
1.3Qualification. No officer need be a stockholder. To the extent permitted by the DGCL, any two or more offices may be held by the same person.
1.4Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws, each officer shall hold office until such officer’s successor is duly elected and qualified, unless a different term is specified in the resolution electing or appointing such officer, or until such officer’s earlier death, resignation, disqualification or removal.
1.5Resignation and Removal. Any officer may resign by delivering a written resignation to the Corporation at its principal office or to the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later event. Any officer may be removed at any time, with or without cause, by the affirmative vote of a majority of the directors then in office.
1.6Vacancies. The Board may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled, for such period as it may determine, any offices. Each such successor shall hold office for the unexpired term of such officer’s predecessor and until a successor is duly elected and qualified, or until such officer’s earlier death, resignation, disqualification or removal.
1.7Chief Executive Officer. The Board of Directors shall select a Chief Executive Officer to serve at the pleasure of the Board of Directors. The Chief Executive Officer shall have general charge and supervision of the business of the Corporation subject to the direction of the Board, and shall perform all duties and have all powers that are commonly incident to the office of chief executive or that
are delegated to such officer by the Board.
1.8President. The President shall perform all duties and have all powers that are commonly incident to the office of president or that are delegated to such officer by the Board or by the Chief Executive Officer.
1.9Chief Financial Officer. The Chief Financial Officer shall perform all duties and have all powers that are commonly incident to the office of chief financial officer or that are delegated to such officer by the Board or by the Chief Executive Officer.
1.10Vice Presidents. Each Vice President shall perform such duties and possess such powers as the Board or the Chief Executive Officer may from time to time prescribe. The Board may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board.
1.11Secretary and Assistant Secretaries. The Secretary shall perform such duties and shall have such powers as the Board or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board, to attend all meetings of stockholders and of the Board and keep a record of the proceedings thereof, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such powers as the Board, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board) shall perform the duties and exercise the powers of the Secretary.
The chairman of any meeting of the Board or of stockholders may designate a temporary secretary to keep a record of any meeting.
1.12Treasurer and Assistant Treasurers. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned by the Board or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these Bylaws, to disburse such funds as ordered by the Board, to make proper accounts of such funds, and to render as required by the Board statements of all such transactions and of the financial condition of the Corporation.
The Assistant Treasurers shall perform such duties and possess such powers as the Board, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board) shall perform the duties and exercise the powers of the Treasurer.
1.13Delegation of Authority. The Board may from time to time delegate the powers or duties
of any officer to any other officer or agent, notwithstanding any provision hereof.
ARTICLE IV CAPITAL STOCK
1.1Issuance of Stock. Subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the Corporation or the whole or any part of any shares of the authorized capital stock of the Corporation held in the Corporation’s treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board in such manner, for such lawful consideration and on such terms as the Board may determine.
1.2Stock Certificates; Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Every holder of stock of the Corporation represented by certificates shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board, representing the number of shares held by such holder registered in certificate form. Each such certificate shall be signed in a manner that complies with Section 158 of the DGCL.
Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, these Bylaws, applicable securities laws or any agreement among any number of stockholders or among such holders and the Corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.
If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of each certificate representing shares of such class or series of stock, provided that in lieu of the foregoing requirements there may be set forth on the face or back of each certificate representing shares of such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL or, with respect to Section 151 of DGCL, a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
1.3Transfers. Shares of stock of the Corporation shall be transferable in the manner prescribed by law, the Certificate of Incorporation and in these Bylaws. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation or by transfer agents designated to transfer shares of stock of the Corporation. Subject to applicable law, shares of stock represented by
certificates shall be transferred only on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these Bylaws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the Corporation in accordance with the requirements of these Bylaws.
1.4Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate or uncertificated shares in place of any previously issued certificate alleged to have been lost, stolen or destroyed, upon such terms and conditions as the Board may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity and posting of such bond as the Board may require for the protection of the Corporation or any transfer agent or registrar.
ARTICLE V GENERAL PROVISIONS
1.1Fiscal Year. Except as from time to time otherwise designated by the Board, the fiscal year of the Corporation shall be a 52- or 53-week period that ends on the Tuesday after the Monday closest to January 31.
1.2Corporate Seal. The corporate seal shall be in such form as shall be approved by the Board.
1.3Waiver of Notice. Whenever notice is required to be given by law, by the Certificate of Incorporation or by these Bylaws, a written waiver signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before, at or after the time of the event for which notice is to be given, shall be deemed equivalent to notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in any such waiver. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
1.4Voting of Securities. Except as the Board may otherwise designate, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer may waive notice, vote, consent, or appoint any person or persons to waive notice, vote or consent, on behalf of the Corporation, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this Corporation (with or without power of substitution), with respect to the securities of any other entity which may be held by this Corporation.
1.5Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the Corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.
1.6Certificate of Incorporation. All references in these Bylaws to the Certificate of Incorporation shall be deemed to refer to the Fourth Amended and Restated Certificate of Incorporation of the Corporation, dated June 9, 2017, as it may be further amended and/or restated and in effect from time to time.
1.7Severability. If any provision or provisions (or any part thereof) of these Bylaws shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provision of these Bylaws (including, without limitation, each portion of any paragraph of these Bylaws containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of these Bylaws (including, without limitation, each such portion of any paragraph of these Bylaws containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service or for the benefit of the Corporation to the fullest extent permitted by law.
1.8Pronouns. All pronouns used in these Bylaws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.
1.9Electronic Transmission. For purposes of these Bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
ARTICLE VI AMENDMENTS
These Bylaws may be altered, amended or repealed, in whole or in part, or new Bylaws may be adopted by the Board or by the affirmative vote of the holders of a majority in voting power of the Corporation’s then outstanding shares entitled to vote thereon, voting together as a single class.
ARTICLE VII INDEMNIFICATION AND ADVANCEMENT
1.1Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation, or has or had agreed to become a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a limited liability company, partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 7.5, the Corporation shall be required to indemnify a Covered Person in
connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board.
1.2Prepayment of Expenses. The Corporation shall, to the fullest extent not prohibited by applicable law, as the same exists or may hereafter be amended, pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by or on behalf of the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article VII or otherwise.
1.3Authorization of Indemnification. Any indemnification under this Article VII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth Section 7.4. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding set forth in Section 7.1 or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.
1.4Good Faith Defined. For purposes of any determination under Section 7.3, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action was based on good faith reliance on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term “another enterprise” as used in this Section 7.4 shall mean any other corporation or any partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 7.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in the DGCL.
1.5Right of Claimant to Bring Suit. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this Article VII is not paid in full within thirty (30) days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such
claim and, if successful in whole or in part, shall be entitled to be paid the expense (including attorneys’ fees) of prosecuting such proceeding. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law. It shall be a defense to any such action brought to enforce a right to indemnification (but not in an action brought to enforce a right to an advancement of expenses) that the claimant has not met the standards of conduct which make it permissible under the DGCL (or other applicable law) for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither a contrary determination in the specific case under Section 7.3 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the claimant has not met any applicable standard of conduct.
1.6Nonexclusivity of Indemnification and Advancement of Expenses. The rights to indemnification and advancement of expenses provided by or granted pursuant to this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, any agreement, or pursuant to any vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that, subject to the last sentence of Section 7.1, indemnification of the persons specified in Section 7.1 shall be made to the fullest extent permitted by law. The provisions of this Article VII shall not be deemed to preclude the indemnification of or advancement of expenses to any person who is not specified in Section 7.1 but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise.
1.7Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VII.
1.8Certain Definitions. For purposes of this Article VII, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VII, references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this
Article VII.
1.9Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.
1.10Contract Rights. The obligations of the Corporation under this Article VII to indemnify, and advance expenses to, a Covered Person shall be considered a contract between the Corporation and such person, and no modification or repeal of any provision of this Article VII shall affect, to the detriment of such person, such obligations of the Corporation in connection with a claim based on any act or failure to act occurring before such modification or repeal.
ARTICLE VIII CHOICE OF FORUM
Unless the Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring or holding any interest in any security of the Corporation shall be deemed to have notice of and consented to the provisions of this Article VIII.
Exhibit 10.34
December 10, 2024
Via Hand Delivery
Mr. Kevin M. Sheehan
Chair, Board of Directors
Dave & Buster’s Entertainment, Inc.
Chair, Board of Directors
Dave & Buster’s Entertainment, Inc.
Re: Appointment as Interim CEO
Dear Kevin:
This letter agreement (this “Agreement”) sets forth our mutual understandings and agreements regarding your appointment, effective December 10, 2024 (the “Effective Date”), as Interim Chief Executive Officer (“Interim CEO”) of Dave & Buster’s Entertainment, Inc., a Delaware corporation (“D&B”), and employment by Dave & Buster’s Management Corporation, LLC (“D&B Management”) in addition to also serving as the Chairman of the Board of Directors of D&B (the “Board”). D&B and D&B Management are collectively referred to herein as the “Company.” D&B, D&B Management and you are collectively referred to below as the “Parties.”
In consideration of the promises below, the sufficiency of which all Parties acknowledge, the Company and you agree as follows:
1. Title; Duties; Term. You agree to serve as Interim CEO and shall perform those duties that are customarily associated with the position of Interim CEO. This Agreement shall be in effect until the earlier of (i) the appointment of a permanent Chief Executive Officer of the Company or (ii) December 10, 2025, unless earlier terminated as provided below. During the course of your employment, you will devote your full business time and best efforts and abilities to the performance of your duties for the Company. You will comply with all applicable laws and all of the Company’s and its affiliates’ then-current policies and procedures. So long as you comply with the terms and provisions of D&B’s Code of Business Ethics, as the same may be revised from time-to-time and your activities do not interfere with your obligations to the Company, then, during the term of your employment you may: (x) engage in charitable, civic, fraternal and professional activities and (y) manage personal investments; provided that you disclose any conflicts of interest that cause your personal endeavors to be in material conflict with the business of the Company and/or its affiliates. You may not serve on the board of directors of any national charitable, civic or fraternal organization, any privately owned business, or any publicly-traded company without the prior written approval of the Board of Directors of D&B, in its sole discretion, and then only to the extent that any such enterprise does not compete with the Company or its affiliates. Your existing memberships on boards of directors as of the Effective Date as previously disclosed to the Company are deemed approved.
Exhibit 10.34
2. Compensation and Benefits. During the term of this Agreement, in lieu of any compensation that would otherwise be payable to you in your capacity as a member of the Board of Directors of D&B (which shall cease and be suspended during the period in which he serves as Interim CEO, except for continued vesting of previously granted restricted stock units and cash compensation already paid for the current fiscal quarter), you will receive the following compensation and benefits in consideration of your service as Interim CEO:
Base Salary. You will receive a base salary at an annual rate of $850,000. The base salary will be paid weekly on regularly scheduled paydays determined by the Company.
Annual Bonus. You will be eligible to receive an annual bonus as approved by the Board and, if so approved, as determined by the Company based upon the attainment of Company goals during the fiscal year set forth in the bonus plan approved by the Board of Directors of D&B, payable in accordance with such bonus plan. Your individual participation percentage in the bonus plan is equal to 100% of your base salary for the fiscal year. Any earned bonus shall be pro-rated to reflect the elapsed time you served as Interim CEO.
Equity Awards. As of the Effective Date, you shall be awarded under the Company’s 2025 Omnibus Incentive Plan (the “Plan”) special one-time grants of time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) as follows:
(i) RSUs with respect to a number of shares of D&B common stock equal to $2,000,000 divided by the closing price of a share of D&B common stock on the date of execution of this Agreement. Such RSUs shall cliff vest upon the later to occur of (a) Stockholder Approval (as defined below) and (b) the earliest to occur of (x) the first anniversary of the Effective Date, (y) the commencement date of employment of the permanent Chief Executive Officer of the Company (other than you), or (z) the termination of your employment as Interim CEO in connection with a Change in Control (as defined in the Plan).
(ii) PSUs with respect to up to 20,000 shares of D&B common stock. The PSUs will be subject to a one-year performance period and shall be earned upon the achievement of specified stock price levels and vesting terms to be established by the Compensation Committee of the Board of Directors of D&B.
(iii) The RSUs and PSUs shall otherwise be subject to the terms of the Plan and the customary form of award agreement approved by the Committee (as defined in the Plan), with the same terms relating to forfeiture upon resignation, death, disability, for cause termination, and termination for any other reason as were included in the Company’s FY 2024 RSU and PSU Award Agreements.
(iv) Notwithstanding anything to the contrary herein, the RSUs and PSUs are granted subject to and conditioned on approval by the Company stockholders of the Plan (the “Stockholder Approval”), which the Company expects to solicit at the 2025 Annual Meeting of Stockholders, and none of the RSUs or PSUs shall vest or be paid to the Participant prior to the Stockholder Approval. If such Stockholder Approval is not obtained within twelve months of the
Exhibit 10.34
Effective Date, the RSUs and PSUs shall automatically be cancelled and forfeited and become null and void. You expressly acknowledge that the RSUs and PSUs are being granted prior to Stockholder Approval being obtained and are subject to and conditioned on such approval being obtained within twelve months of the Effective Date.
Retirement and Welfare Plans. You shall be eligible to participate in any profit sharing, qualified and nonqualified retirement plans, and any health, life, accident, disability insurance, sick leave, or other benefit plans or programs made available to similarly situated employees of the Company as of the Effective Date, as may be amended, supplemented or modified from time to time as long as they are kept in force by the Company and provided that you meet the eligibility requirements of the respective plans. Nothing contained herein shall limit the right of the Company, in its sole and absolute discretion, to modify, amend or discontinue any of the plans.
Vacation. Subject to the Company’s generally applicable policies relating to vacations, you shall be entitled to paid vacation commensurate with the Company’s policy for senior management and your position and tenure with the Company.
Other Benefits. The Company will reimburse you for your commuting expenses and reasonable housing expenses (either a maximum of three days per week at a hotel mutually agreed with the Company and meals, or a standard corporate apartment lease). The Parties shall use their commercially reasonable efforts to structure the foregoing arrangements on a tax neutral basis to you.
Expenses. The Company shall reimburse you for all reasonable business expenses incurred by you in connection with the performance of your duties under this Agreement, in each case subject to the Company’s then current policies and procedures. Any expenses, including commuting and Other Benefits described in the prior paragraph, over $15,000 in a given month must be pre-approved by the Chair of the Compensation Committee of the Board of Directors of D&B.
3. Nondisclosure of Confidential Information. During the term of this Agreement, D&B, any subsidiary and any successor to any of the foregoing (the “Company Group”) agrees to continue to provide, and you will acquire, certain Confidential Information. As a material incentive for the Company Group to enter into this Agreement, as well as in exchange for the consideration specified herein (including, without limitation, substantial amounts of compensation, benefits and access to the Confidential Information, in each case, as set forth herein), you agree to maintain in strict confidence and shall not disclose to third parties or use in any task, work or business (except on behalf of the Company Group) any proprietary or confidential information regarding the Company Group and/or your work with the Company Group, including, without limitation, trade secrets, current and future business plans, customers, customer lists, customer information, vendors, vendor lists, vendor information, employees, employee information, sales, purchasing, pricing determinations, price points, internal and external cost structures, operations, marketing, financial and other business strategies, positioning of stores, information and plans, products and services, games and amusement, development of games and amusement, food and beverage, financial performance and other financial data and compilations of data, new store development and locations, pipeline, information regarding the Company Group’s processes, computer programs and/or records, software
Exhibit 10.34
programs, intellectual property, business development opportunities, acquisitions, acquisition targets, confidential information developed by consultants and contractors, manuals, memoranda, projections, and minutes (“Confidential Information”), without the express written permission of the Board. Your confidentiality obligations in this paragraph shall include, but not be limited to, any Confidential Information to which you have access, had access, will have access, or which you receive or received in connection with your employment by the Company Group, and any information designated as confidential by the Company Group. Notwithstanding the foregoing, the term Confidential Information shall not include information that (i) is publicly disclosed through no fault of you, either before or after it becomes known to you, (ii) was known to you prior to the date of this Agreement, which knowledge was acquired independently and not from the Company Group or its directors or employees or (iii) became available to you on a non-confidential basis from a source other than the Company Group, provided such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company Group or any other party with respect to such information. The Company Group and you acknowledge and agree that the Confidential Information is continually evolving and changing, and that some new Confidential Information will be needed by you and provided by the Company Group for the first time in the course of the term of this Agreement. You expressly acknowledge the trade secret status of the Confidential Information and agree that your access to such Confidential Information constitutes a protectable business interest of the Company Group. Notwithstanding the foregoing restrictions, you may disclose any Confidential Information (a) to your legal advisors subject to such advisors’ agreement to maintain the information as confidential, (b) to the extent required for your enforcement of your rights hereunder (provided that such information be submitted under seal or otherwise not publicly disclosed), (c) to the extent required by an order of any court or other governmental authority, but in each case only after the Company Group has been so notified in writing and has had five (5) business days to obtain reasonable protection for such information in connection with such disclosure, and (d) if such disclosure is protected under the whistleblower provisions of federal law or regulation.
4. Acknowledgment of the Company Group’s Right In Work Product. During the term of this Agreement, you will create, develop and contribute for consideration certain ideas, plans, calculations, technical specifications, works of authorship, inventions, information, data, formulas, models, reports, processes, photographs, marks, designs, computer code, concepts and/or other proprietary materials to the Company Group related to the operation or promotion of the business of the Company Group (collectively, the “Work”). All the Work is, was and shall hereafter be, a commissioned “work for hire” owned by the Company Group within the meaning of Title 17, Section 101 of the United States Code, as amended. You agree that all Work is created or developed for the sole use of the Company Group, and that you have no right to market in any manner whatsoever any such Work.
5. Noncompete. To protect the Company Group’s interest in its Confidential Information, contacts and relationships and as a material inducement for the Company Group to enter into this Agreement, as well as in exchange for the consideration specified herein (including, without limitation, substantial amounts of compensation, benefits and access to and provision of the Confidential Information, in each case, as set forth herein), and your employment under this Agreement, you agree and covenant that during the term of this Agreement and for a time period equal to the time of
Exhibit 10.34
your service as Interim CEO following your termination for any reason under this Agreement (including, without limitation, your resignation (the “Non-Compete Period”), you shall not directly or indirectly, for yourself or others, within the United States or Canada, own, manage, operate, join, control, or participate in the ownership, management, operation or control of, or engage in any activity, work, business, or investment with any other Competitive Business (or for or on behalf of any other entity or person or any other Competitive Business), including, without limitation, any attempted or actual activity as an employee, officer, director, advisor, agent, equityholder, consultant or independent contractor (whether or not compensated for any of the foregoing); provided, however, that you may own an investment interest of less than 2% in a publicly-traded company. As used in this Agreement, “Competitive Business” shall mean the owners or operators of venues in either the United States or Canada that combine a dining offering with games, entertainment, sports attractions or sports viewing, but shall not include (x) dining establishments that derive less than 20% of their aggregate revenues from games, entertainment and sports attractions and have not highlighted sports viewing as a core offering in their consumer marketing or (y) entertainment concepts that derive less than 20% of their aggregate revenues from dining operations. For the avoidance of doubt, Competitive Business shall include, without limitation, the companies identified in Appendix A to the minutes of the Company’s compensation committee meeting whereby the Company’s standard-form executive employment agreements were approved.
6. Non-Solicitation and Non-Hire. Additionally, during the term of this Agreement and for a period of twelve (12) months from the termination of this Agreement for any reason (the “Non-Solicitation and Non-Hire Period”), you shall not, directly or indirectly, on your own behalf or on behalf of any other person, partnership, entity, association, or corporation, induce or attempt to influence, induce, encourage, any employee of the Company Group at or above the managerial level (including, without limitation, store managers and regional managers), supplier, vendor, licensee, distributor, contractor or other business relation of the Company Group to cease doing business with, adversely alter or interfere with its business relationship with, the Company Group. Further, during the Non-Solicitation and Non-Hire Period, you shall not, on your own behalf or on behalf of any other person, partnership, entity, association, or corporation, (i) solicit or seek to hire any employee of the Company Group at or above the store general manager level for operations employees and the officer level for non-operations employees or in any other manner attempt directly or indirectly to influence, induce, or encourage any employee of the Company Group at or above the store general manager level for operations employees and with a title of “Director” or more senior for non-operations employees to leave their employ (provided, however, that nothing herein shall restrict you from engaging in any general solicitation that is not specifically targeted at such persons), nor shall your use or disclose to any person, partnership, entity, association, or corporation any information concerning the names, addresses or personal telephone numbers of any employees of the Company Group, or (ii), without the Company’s prior written consent, hire, employ or engage as a consultant any employee of the Company Group with a title of “Director” or more senior.
7. Reasonableness of Restrictions; Relief. It is the desire and intent of the Parties to this Agreement that the provisions of the foregoing paragraphs 3, 4, 5 and 6 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. It is expressly understood and agreed that the Company Group and you consider such restrictions to be reasonable and necessary for the purposes of preserving and protecting the
Exhibit 10.34
Confidential Information and other legitimate business interests of the Company Group. Nevertheless, if any of the aforesaid restrictions is found to be unreasonable, over-broad as to geographic area, duration or scope of activity, or otherwise unenforceable, the Company Group and you intend for the restrictions herein set forth to be modified to be reasonable and enforceable and, as so modified, to be fully enforced. The Parties acknowledge that money damages would not be a sufficient remedy for any breach or threatened breach of such restrictions; therefore, notwithstanding the arbitration provisions in this Agreement, you and the Company Group agree that the Company Group may resort to a court to enforce such restrictions by injunctive relief. The Parties agree that the Company Group may enforce this promise without posting a bond and without giving notice to the maximum extent permitted by law. The foregoing remedies are not the exclusive remedies but shall be in addition to all remedies available at law or in equity to the Company Group. You agree that the Non-Solicitation and Non-Hire Period shall be tolled during any period of violation of the restrictions of paragraph 5 by you.
8. Termination. This Agreement shall automatically terminate upon your death or upon your becoming disabled. The determination of your disability shall be made in good faith by a physician reasonably acceptable to the Company. In addition, either the Company or you may terminate this Agreement at any time during the term by giving the other Party no less than thirty (30) days’ prior written notice of the date of termination. The Company may terminate this Agreement without any prior written notice to you if the termination is “for cause.” For purposes of this Agreement “for cause” shall be defined as the willful and continued failure by you to perform the duties assigned by the Board of Directors of D&B, gross insubordination, theft from the Company or its affiliates, habitual absenteeism or tardiness, conviction or plea of a felony, or any other reckless or willful misconduct that is contrary to the best interests of the Company or materially and adversely affects the reputation of the Company. If the Company believes that an event constituting “for cause” under this section has occurred and such event (i) is not a criminal offense and (ii) is readily curable by you, then the Company shall provide written notice to you setting forth: (A) the Company’s intent to terminate your employment for cause, and (B) the reasons for the Company’s intent to terminate your employment for cause. You shall have ten (10) business days following the receipt of such notice to cure the alleged breach. The Company may terminate this Agreement without any further notice to you if such cure has not occurred within such ten (10) business day period. In the event that the Company contends that the event is not readily curable by you, the Company shall provide written notice to you setting forth: (X) the reasons for the Company’s intent to terminate your employment “for cause” and (Y) the basis for the Company’s determination that such event is not readily curable. In the event your employment with the Company under this Agreement is terminated for any reason, the Company’s obligations to provide any payments or benefits to you shall be limited to payment of only that base salary which has been earned through the date of termination payable in accordance with the Company’s normal payroll practice, and such other payments or benefits required to be paid or provided under applicable law. Your RSUs and PSUs shall be treated in accordance with their respective terms upon termination of your employment as Interim CEO.
9. Section 409A. All payments hereunder that are determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) are intended to be exempt from or in compliance with
Exhibit 10.34
Section 409A. If any payment, compensation or other benefit provided to you in connection with your employment termination is and you are a specified employee as defined in Section 409A(a)(2)(B)(i), then no portion of such “nonqualified deferred compensation” shall be paid before the earlier of (i) the day that is six (6) months plus one (1) day after the date of termination or (ii) five (5) days following your death (the “New Payment Date”). The aggregate of any payments that otherwise would have been paid to you during the period between the date of termination and the New Payment Date shall be paid to the Employee in a lump sum on such New Payment Date. Thereafter, any payments that remain outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement. The Company makes no guarantee of any federal, state or local tax consequences with respect to the interpretation of Section 409A and its application to the terms of this Agreement, and the Company shall have no liability for any adverse tax consequences to you, as a result of any violation of Section 409A.
10. Confidential Arbitration. You and the Company hereby agree that any controversy or claim arising out of or relating to this Agreement, including the arbitrability of any controversy or claim, which cannot be settled by mutual agreement will be finally settled by confidential and binding arbitration in accordance with the Federal Arbitration Act. Further, notwithstanding the preceding sentence, in the event disputes arise that relate in any way to and concern this Agreement and also relate in any way to and concern one or more RSUs or PSUs, the Parties agree that such disputes may be joined in a single binding arbitration if doing so would not result in unreasonable delay. All arbitrations shall be administered by a panel of three neutral arbitrators (the “Panel”) admitted to practice law in Texas for at least ten (10) years, in accordance with the American Arbitration Association Rules. Any such arbitration proceeding shall be administered by the American Arbitration Association and all hearings shall take place in Dallas County, Texas. The arbitration proceeding and all related documents will be confidential, unless disclosure is required by law. The Panel will have the authority to award the same remedies, damages, and costs that a court could award, including but not limited to the right to award injunctive relief in accordance with the other provisions of this Agreement. Further, the Parties specifically agree that, in the interest of minimizing expenses and promoting early resolution of claims, the filing of dispositive motions shall be permitted and that prompt resolution of such motions by the Panel shall be encouraged. The Panel shall issue a written reasoned award explaining the decision, the reasons for the decision, and any damages awarded. The Panel’s decision will be final and binding. The judgment on the award rendered by the Panel may be entered in any court having jurisdiction thereof. This provision can be enforced under the Federal Arbitration Act. The Panel shall be permitted to award only those remedies in law or equity that are requested by the Parties, appropriate for the claims and supported by evidence, and each Party shall be required to bear its or your own arbitration costs, attorneys’ fees and expenses. The decision of the arbitrator on the points in dispute will be final, unappealable and binding, and judgment on the award may be entered in any court having jurisdiction thereof. The Parties agree that this provision has been adopted by the Parties to rapidly and inexpensively resolve any disputes between them and that this provision will be grounds for dismissal of any court action commenced by any Party with respect to this Agreement, other than post-arbitration actions seeking to enforce an arbitration award. The Parties will keep confidential, and will not disclose to any person, except as may be required by law, the existence of any controversy under this paragraph, the
Exhibit 10.34
referral of any such controversy to arbitration or the status or resolution thereof. In addition, the confidentiality restrictions set forth in this Agreement shall continue in full force and effect.
As the sole exception to the exclusive and binding nature of the arbitration commitment set forth above, the Parties agree that the Company Group may resort to Texas state courts having equity jurisdiction in and for Dallas County, Texas and the United States District Court for the Northern District of Texas, Dallas Division, at its sole option, to request temporary, preliminary, and/or permanent injunctive or other equitable relief, including, without limitation, specific performance, to enforce the post-employment restrictions and other non-solicitation and confidentiality obligations set forth in this Agreement, without the necessity of proving inadequacy of legal remedies or irreparable harm or posting bond or giving notice, to the maximum extent permitted by law. However, nothing in this paragraph should be construed to constitute a waiver of the Parties’ rights and obligations to arbitrate as set forth in this paragraph.
IN THE EVENT THAT ANY COURT OF COMPETENT JURISDICTION OR ARBITRATOR DETERMINES THAT THE SCOPE OF THE ARBITRATION OR RELATED PROVISIONS OF THIS AGREEMENT ARE TOO BROAD TO BE ENFORCED AS WRITTEN, THE PARTIES INTEND THAT THE COURT REFORM THE PROVISION IN QUESTION TO SUCH NARROWER SCOPE AS IT DETERMINES TO BE REASONABLE AND ENFORCEABLE. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTY HERETO THAT THIS PARAGRAPH CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH IT OR HE IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.
BEFORE ACCEPTING THE TERMS OF THIS AGREEMENT, INCLUDING THE RESTRICTIVE COVENANT TERMS, PLEASE READ AND UNDERSTAND YOUR CONTINUING OBLIGATIONS TO THE COMPANY AND ITS AFFILIATES.
11. Indemnification. The Company shall indemnify you to the fullest extent permitted by Section 145 of the Delaware General Corporation Law against all costs, expenses, liabilities and losses, including but not limited to, attorneys fees, judgments, fines, penalties, taxes and amounts paid in settlement, reasonably incurred by you in conjunction with any action, suit, or proceeding, whether civil, criminal, administrative, or investigative in nature, which you are made or threatened to be made a party or witness by reason of your position as officer, employee or agent of the Company or otherwise due to your association with the Company or due to your position or association with any other entity, at the request of the Company. The Company shall advance to you all reasonable costs and expenses incurred in connection with such action within twenty (20) days after receipt by the Company of your written request. The Company shall be entitled to be reimbursed by you and you agree to reimburse the Company if it is determined that you are not entitled to be indemnified with respect to an action, suit, or proceeding under applicable law. The Company shall not settle any such claim in any manner which would impose liability, including monetary penalties or censure, on you without your prior written consent.
12. Governing Law; Submission to Jurisdiction; Jury Waiver. THIS AGREEMENT SHALL BE EXCLUSIVELY GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
Exhibit 10.34
OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAW DOCTRINE. THE VENUE FOR ANY ENFORCEMENT OF THE ARBITRATION AWARD SHALL BE EXCLUSIVELY IN THE COURTS IN DALLAS, TEXAS, AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION. THE PARTIES WAIVE ANY RIGHT TO A JURY TRIAL.
13. Entire Agreement; Miscellaneous. This Agreement represents the entire agreement relating to employment between the Company and you and supersedes all previous oral and written and all contemporaneous oral negotiations or commitments, writings and other understandings which, at the Effective Date, shall be deemed to be terminated and of no further force or effect. No prior or subsequent promises, representation, or understandings relative to any terms or conditions of employment are to be considered as part of this Agreement or as binding. This Agreement may be amended or modified only in a writing signed by the Parties hereto. The Company shall be entitled to withhold from any amounts to be paid or benefits provided to you hereunder any federal, state, local, or foreign withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel or tax preparer if any question as to the amount or requirement of any such withholding shall arise. This Agreement may be signed in any number of counterparts with the same effect as if the signatures to each counterpart were upon a single instrument, and all such counterparts together shall be deemed an original of this Agreement.
COMPANY:
DAVE & BUSTER’S ENTERTAINMENT, INC.
By: ___/s/ Humera Kassem____________
Name: Humera Kassem
Title: SVP, Chief People Officer
Address: 1221 S. Belt Line Road, #500
Coppell, Texas 75019
DAVE & BUSTER’S MANAGEMENT CORPORATION, LLC
By: ______/s/ Bryan McCrory_________
Name: Bryan McCrory
Title: President
Address: 1221 S. Belt Line Road, #500
Coppell, Texas 75019
INTERIM CEO:
___/s/ Kevin M. Sheehan
Kevin M. Sheehan
Date: December 10, 2024____________
Exhibit 10.34
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
| Name | State or Other Jurisdiction of Incorporation or Organization | |||||||
| Dave & Buster’s I, L.P. | Texas | |||||||
| Dave & Buster’s, Inc. | Missouri | |||||||
| Dave & Buster’s Holdings, Inc. | Delaware | |||||||
| Dave & Buster’s Management Corporation, LLC | Delaware | |||||||
| Dave & Buster’s of Alabama, LLC | Delaware | |||||||
| Dave & Buster’s of Alaska, LLC | Delaware | |||||||
| Dave & Buster’s of Arkansas, LLC | Delaware | |||||||
| Dave & Buster’s of California, Inc. | California | |||||||
| Dave & Buster’s of Colorado, LLC | Colorado | |||||||
| Dave & Buster’s of Connecticut, LLC | Delaware | |||||||
| Dave & Buster’s of Florida, LP | Florida | |||||||
| Dave & Buster’s of Georgia, LLC | Georgia | |||||||
| Dave & Buster’s of Hawaii, LLC | Hawaii | |||||||
| Dave & Buster’s of Idaho, LLC | Delaware | |||||||
| Dave & Buster’s of Illinois, LLC | Illinois | |||||||
| Dave & Buster’s of Indiana, LLC | Indiana | |||||||
| Dave & Buster’s of Iowa, LLC | Delaware | |||||||
| Dave & Buster’s of Kansas, LLC | Kansas | |||||||
| Dave & Buster’s of Kentucky, LLC | Delaware | |||||||
| Dave & Buster’s of Louisiana, Inc. | Delaware | |||||||
| Dave & Buster’s of Maryland, Inc. | Maryland | |||||||
| Dave & Buster’s of Massachusetts, LLC | Massachusetts | |||||||
| Dave & Buster’s of Nebraska, LLC | Nebraska | |||||||
| Dave & Buster’s of Nevada, Inc. | Delaware | |||||||
| Dave & Buster’s of New Hampshire, LLC | Delaware | |||||||
| Dave & Buster’s of New Jersey, LLC | Delaware | |||||||
| Dave & Buster’s of New Mexico, Inc. | Delaware | |||||||
| Dave & Buster’s of New York, Inc. | New York | |||||||
| Dave & Buster’s of Oklahoma, Inc. | Oklahoma | |||||||
| Dave & Buster’s of Oregon, Inc. | Oregon | |||||||
| Dave & Buster’s of Pennsylvania, Inc. | Pennsylvania | |||||||
| Dave & Buster’s of Puerto Rico, Inc. | Delaware | |||||||
| Dave & Buster’s of South Carolina, LLC | Delaware | |||||||
| Dave & Buster’s of South Dakota, LLC | Delaware | |||||||
| Dave & Buster’s of Utah, LLC | Delaware | |||||||
| Dave & Buster’s of Virginia, LLC | Virginia | |||||||
| Dave & Buster’s of Washington, LLC | Washington | |||||||
| Dave & Buster’s of Wisconsin, LLC | Wisconsin | |||||||
| D&B Delco, LLC | Delaware | |||||||
| D&B Marketing Company, LLC | Virginia | |||||||
| DANB Texas, Inc. | Texas | |||||||
| Tango Acquisition, Inc. | Delaware | |||||||
| Tango License Corporation | Delaware | |||||||
| Tango of Arizona, LLC | Delaware | |||||||
| Tango of Arundel, LLC | Delaware | |||||||
| Tango of Farmingdale, Inc. | Delaware | |||||||
| Tango of Franklin, LLC | Delaware | |||||||
| Tango of Houston, Inc. | Delaware | |||||||
| Tango of North Carolina, LLC | Delaware | |||||||
| Tango of Tennessee, LLC | Delaware | |||||||
| Tango of Westbury, Inc. | Delaware | |||||||
| 6131646 Canada, Inc. | Canada | |||||||
| DBE 1982, LLC | ||||||||
| Ardent Leisure US Holding, Inc. | Delaware | |||||||
| ME HoldCo, Inc. | Delaware | |||||||
| Main Event Entertainment, Inc. | Florida | |||||||
| Main Event Florida, LLC | Florida | |||||||
| Main Event Kansas, LLC | Kansas | |||||||
| Main Event Louisiana, LLC | Louisiana | |||||||
| Main Event Maryland, LLC | Maryland | |||||||
| ME Acquisition, Inc. | Delaware | |||||||
| Main Event SE, Inc. | Florida | |||||||
Exhibit 23.1
KPMG LLP
Suite 1400
2323 Ross Avenue
Dallas, TX 75201-2721
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-239590 and 333-199239) on Form S-8 and (No. 333-237664) on Form S-3 of our reports dated April 7, 2025, with respect to the consolidated financial statements of Dave & Buster’s Entertainment, Inc., and the effectiveness of internal control over financial reporting.
/s/ KPMG LLP
Dallas, Texas
April 7, 2025
Exhibit 31.1
CERTIFICATION
I, Kevin Sheehan, Interim Chief Executive Officer of Dave & Buster’s Entertainment, Inc., certify that:
1.I have reviewed this annual report on Form 10-K of Dave & Buster’s Entertainment, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 7, 2025 | /s/ Kevin Sheehan | ||||
Kevin Sheehan | |||||
| Interim Chief Executive Officer (Principal Executive Officer) | |||||
Exhibit 31.2
CERTIFICATION
I, Darin Harper, Chief Financial Officer of Dave & Buster’s Entertainment, Inc., certify that:
1.I have reviewed this annual report on Form 10-K of Dave & Buster’s Entertainment, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 7, 2025 | /s/ Darin Harper | ||||
Darin Harper | |||||
Chief Financial Officer (Principal Financial and Accounting Officer) | |||||
Exhibit 32.1
CERTIFICATION
In connection with the Annual Report of Dave & Buster’s Entertainment, Inc. (the “Company”) on Form 10-K for the period ended February 4, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin Sheehan, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that:
(1)The Report fully complies with the applicable requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 7, 2025 | /s/ Kevin Sheehan | ||||
Kevin Sheehan | |||||
| Interim Chief Executive Officer (Principal Executive Officer) | |||||
Exhibit 32.2
CERTIFICATION
In connection with the Annual Report of Dave & Buster’s Entertainment, Inc. (the “Company”) on Form 10-K for the period ended February 4, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Darin Harper, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that:
(1)The Report fully complies with the applicable requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 7, 2025 | |||||
/s/ Darin Harper | |||||
Darin Harper | |||||
Chief Financial Officer (Principal Financial and Accounting Officer) | |||||