Page |
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
3 |
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Item 2. |
18 |
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Item 3. |
31 |
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Item 4. |
31 |
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PART II |
OTHER INFORMATION |
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Item 1. |
32 |
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Item 1A. |
32 |
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Item 2. |
32 |
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Item 6. |
33 |
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34 |
Item 1. |
Financial Statements |
August 2, |
February 2, |
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2020 |
2020 |
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(unaudited) |
(audited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Inventories |
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Prepaid expenses |
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Income taxes receivable |
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Other current assets |
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Total current assets |
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Property and equipment (net of $ |
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Operating lease right of use assets |
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Deferred tax assets |
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Tradenames |
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Goodwill |
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Other assets and deferred charges |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Current installments of long-term debt |
$ | $ | ||||||
Accounts payable |
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Accrued liabilities |
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Income taxes payable |
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Total current liabilities |
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Deferred income taxes |
— | |||||||
Operating lease liabilities |
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Other liabilities |
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Long-term debt, net |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock, par value $ |
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Preferred stock, |
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Paid-in capital |
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Treasury stock, |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Retained earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Thirteen Weeks |
Thirteen Weeks |
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Ended |
Ended |
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August 2, 2020 |
August 4, 2019 |
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Food and beverage revenues |
$ | $ | ||||||
Amusement and other revenues |
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Total revenues |
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Cost of food and beverage |
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Cost of amusement and other |
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Total cost of products |
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Operating payroll and benefits |
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Other store operating expenses |
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General and administrative expenses |
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Depreciation and amortization expense |
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Pre-opening costs |
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Total operating costs |
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Operating income (loss) |
( |
) | ||||||
Interest expense, net |
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Income (loss) before provision (benefit) for income taxes |
( |
) | ||||||
Provision (benefit) for income taxes |
( |
) | ||||||
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Net income (loss) |
( |
) | ||||||
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Unrealized foreign currency translation gain |
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Unrealized gain (loss) on derivatives, net of tax |
( |
) | ||||||
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Total other comprehensive income ( loss) |
( |
) | ||||||
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Total comprehensive income (loss) |
$ | ( |
) | $ | ||||
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Net income (loss) per share: |
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Basic |
$ | ( |
) | $ | ||||
Diluted |
$ | ( |
) | $ | ||||
Weighted average shares used in per share calculations: |
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Basic |
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Diluted |
Twenty-Six Weeks |
Twenty-Six Weeks |
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Ended |
Ended |
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August 2, 2020 |
August 4, 2019 |
|||||||
Food and beverage revenues |
$ | $ | ||||||
Amusement and other revenues |
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Total revenues |
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Cost of food and beverage |
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Cost of amusement and other |
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Total cost of products |
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Operating payroll and benefits |
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Other store operating expenses |
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General and administrative expenses |
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Depreciation and amortization expense |
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Pre-opening costs |
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Total operating costs |
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Operating income (loss) |
( |
) | ||||||
Interest expense, net |
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Income (loss) before provision (benefit) for income taxes |
( |
) | ||||||
Provision (benefit) for income taxes |
( |
) | ||||||
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|
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Net income (loss) |
( |
) | ||||||
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Unrealized foreign currency translation loss |
( |
) | ( |
) | ||||
Unrealized loss on derivatives, net of tax |
( |
) | ( |
) | ||||
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Total other comprehensive loss |
( |
) | ( |
) | ||||
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Total comprehensive income (loss) |
$ | ( |
) | $ | ||||
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Net income (loss) per share: |
||||||||
Basic |
$ | ( |
) | $ | ||||
Diluted |
$ | ( |
) | $ | ||||
Weighted average shares used in per share calculations: |
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Basic |
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Diluted |
Thirteen Weeks Ended August 2, 2020 |
||||||||||||||||||||||||||||||||
Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
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Shares |
Amt. |
|
Shares |
Amt. |
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Balance May 3, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Unrealized foreign currency translation gain |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized gain on derivatives, net of tax |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | ||||||||||||||||||||||||||||
Repurchase of common stock |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||
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Balance August 2, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
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Thirteen Weeks Ended August 4, 2019 |
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Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
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Shares |
Amt. |
|
Shares |
Amt. |
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Balance May 5, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized foreign currency translation gain |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized loss on derivatives, net of tax |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | — | |||||||||||||||||||||||||||
Repurchase of common stock |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||
Dividends declared ($ |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance August 4, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
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Twenty-Six Weeks Ended August 2, 2020 |
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Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
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Shares |
Amt. |
|
Shares |
Amt. |
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|
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Balance February 2, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Unrealized foreign currency translation loss |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Unrealized loss on derivatives, net of tax |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | ||||||||||||||||||||||||||||
Repurchase of common stock |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||
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Balance August 2, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
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Twenty-Six Weeks Ended August 4, 2019 |
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Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
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Shares |
Amt. |
|
Shares |
Amt. |
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Balance February 3, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized foreign currency translation loss |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Unrealized loss on derivatives, net of tax |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | ||||||||||||||||||||||||||||
Repurchase of common stock |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||
Dividends declared ($ |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance August 4, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
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Twenty-Six Weeks Ended |
Twenty-Six Weeks Ended |
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August 2, 2020 |
August 4, 2019 |
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Cash flows from operating activities: |
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Net income (loss) |
$ | ( |
) | $ | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization expense |
||||||||
Non-cash interest expense |
— | |||||||
Impairment of long-lived assets |
— | |||||||
Deferred taxes |
( |
) | ||||||
Loss on disposal of fixed assets |
||||||||
Share-based compensation |
||||||||
Other, net |
||||||||
Changes in assets and liabilities: |
||||||||
Inventories |
( |
) | ||||||
Prepaid expenses |
( |
) | ||||||
Income tax receivable |
( |
) | ||||||
Other current assets |
( |
) | ||||||
Other assets and deferred charges |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Accrued liabilities |
||||||||
Income taxes payable |
( |
) | ( |
) | ||||
Other liabilities |
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Net cash provided by (us operating activitiese d in) |
( |
) | ||||||
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Cash flows from investing activities: |
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Capital expenditures |
( |
) | ( |
) | ||||
Proceeds from sales of property and equipment |
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Net cash used in investing activities |
( |
) | ( |
) | ||||
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Cash flows from financing activities: |
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Proceeds from debt |
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Payments of debt |
( |
) | ( |
) | ||||
Net proceeds from the issuance of common stock |
— | |||||||
Proceeds from the exercise of stock options |
||||||||
Repurchase of common stock under share repurchase program |
— | ( |
) | |||||
Dividends paid |
( |
) | ( |
) | ||||
Repurchases of common stock to satisfy employee withholding tax obligations |
( |
) | ( |
) | ||||
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Net cash provided by (used in) financing activities |
( |
) | ||||||
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Increase in cash and cash equivalents |
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Beginning cash and cash equivalents |
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Ending cash and cash equivalents |
$ | $ | ||||||
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Supplemental disclosures of cash flow information: |
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Decrease in fixed asset accounts payable |
$ | ( |
) | $ | ( |
) | ||
Cash paid for income taxes, net |
$ | $ | ||||||
Cash paid for interest, net |
$ | $ |
Fair Value |
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Balance Sheet Location |
August 2, 2020 |
February 2, 2020 |
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Interest rate swaps |
Accrued liabilities | $ | ( |
) | $ | ( |
) | |||||
Interest rate swaps |
Other liabilities | ( |
) | ( |
) | |||||||
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Total derivatives (1) |
$ | ( |
) | $ | ( |
) | ||||||
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(1) |
The balance at August 2, 2020 relates to our swap agreements after hedge accounting was discontinued, effective April 14, 2020. |
Thirteen Weeks Ended |
Twenty-six Weeks Ended |
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August 2, 2020 |
August 4, 2019 |
August 2, 2020 |
August 4, 2019 |
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Amount of loss recorded in accumulated other comprehensive income |
$ | — | $ | |||||||||||||
Amount of loss reclassified into income (1) |
$ | ( |
) | ( |
) | $ | ( |
) | ( |
) | ||||||
Income tax expense (benefit) in accumulated other comprehensive income |
$ | ( |
) | $ | ( |
) | ( |
) |
(1) |
Amounts reclassified into income are included in “Interest expense, net” in the Consolidated Statements of Comprehensive Income (Loss). |
August 2, 2020 |
February 2, 2020 |
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Deferred amusement revenue |
$ | $ | ||||||
Current portion of operating lease liabilities, net (1) |
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Rent payable (note 4) |
— | |||||||
Variable rent liabilities (note 4) |
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Deferred gift card revenue |
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Property taxes |
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Compensation and benefits |
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Current portion of derivatives |
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Current portion of long-term insurance |
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Utilities |
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Customer deposits |
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Inventory liabilities |
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Sales and use taxes |
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Dividend payable |
— | |||||||
Other |
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|
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Total accrued liabilities |
$ | $ | ||||||
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|
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(1) | The balance of leasehold incentive receivables of $ |
August 2, 2020 |
February 2, 2020 |
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Credit facility — term |
$ | $ | ||||||
Credit facility — revolver |
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Total debt outstanding |
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Current installments — term |
( |
) | ( |
) | ||||
Debt issuance costs — term |
( |
) | ( |
) | ||||
|
|
|
|
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Long-term debt, net |
$ | $ | ||||||
|
|
|
|
Thirteen Weeks Ended |
Twenty-six Weeks Ended |
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August 2, 2020 |
August 4, 2019 |
August 2, 2020 |
August 4, 2019 |
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Interest expense on credit facilities |
$ | $ | ||||||||||||||
Interest associated with swap agreements |
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Amortization of issuance cost |
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Interest income |
( |
) | ( |
) | ( |
) | ||||||||||
Capitalized interest |
( |
) | ( |
) | ( |
) | ||||||||||
|
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|
|||||||||
Total interest expense, net |
$ | $ | $ | $ |
Thirteen Weeks Ended |
Twenty-six Weeks Ended |
|||||||||||||||
August 2, 2020 |
August 4, 2019 |
August 2, 2020 |
August 4, 2019 |
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Operating lease cost |
$ | |
$ | |
||||||||||||
Variable lease cost |
|
|
||||||||||||||
Short-term lease cost |
|
|
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|
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|
|
|
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Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Thirteen Weeks |
Thirteen Weeks |
|||||||
Ended |
Ended |
|||||||
August 2, 2020 |
August 4, 2019 |
|||||||
Numerator: |
||||||||
Net income (loss) |
$ | ( |
) | $ | ||||
Denominator: |
||||||||
Weighted average number of common shares |
||||||||
Weighted average dilutive impact of equity-based |
— | |||||||
Weighted average number of common and common |
||||||||
Net income (loss) per share: |
||||||||
Basic |
$ | ( |
) | $ | ||||
Diluted |
$ | ( |
) | $ |
Twenty-Six Weeks Ended August 2, 2020 |
Twenty-Six Weeks Ended August 4, 2019 |
|||||||
Numerator: |
||||||||
Net income (loss) |
$ | ( |
) | $ | ||||
Denominator: |
||||||||
Weighted average number of common shares outstanding (basic) |
||||||||
Weighted average dilutive impact of equity-based awards (1) |
— | |||||||
Weighted average number of common and common equivalent shares outstanding (diluted) |
||||||||
Net income (loss) per share: |
||||||||
Basic |
$ | ( |
) | $ | ||||
Diluted |
$ | ( |
) | $ |
(1) | Due to the net loss for the thirteen and twenty-six weeks ended August 2, 2020, |
Thirteen Weeks Ended |
Twenty-six Weeks Ended |
|||||||||||||||
August 2, 2020 |
August 4, 2019 |
August 2, 2020 |
August 4, 2019 |
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Stock options |
$ | $ | ||||||||||||||
RSU’s |
||||||||||||||||
Share-based compensation expense |
$ | $ | $ | $ | ||||||||||||
2014 Stock Incentive Plan |
2010 Stock Incentive Plan |
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Number |
Wtd. Avg. |
Number |
Wtd. Avg. |
|||||||||||||
of Options |
Exercise Price |
of Options |
Exercise Price |
|||||||||||||
Outstanding at February 2, 2020 |
$ | $ | ||||||||||||||
Granted |
— | — | — | — | ||||||||||||
Exercised |
— | — | ( |
) | ||||||||||||
Forfeited |
( |
) | — | — | ||||||||||||
Outstanding at August 2, 2020 |
$ | $ | ||||||||||||||
Exercisable at August 2, 2020 |
$ | $ | ||||||||||||||
Wtd. Avg. |
||||||||
|
Shares |
Fair Value |
||||||
Outstanding at February 2, 2020 |
$ | |||||||
Granted |
||||||||
Change in performance units |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
Outstanding at August 2, 2020 |
$ | |||||||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | reduced expenses broadly, including by furloughing all of our hourly store team members and approximately 94% of store management personnel, on or about March 19, 2020, while enacting 12-week salary reductions for remaining managers. In addition, effective March 24, 2020, the Company furloughed all but a small team of essential corporate and administrative staff, enacted 12-week salary reductions ranging from 10% to 50%, and suspended all cash board fees through the remainder of fiscal 2020; |
• | canceled or delayed all non-essential planned capital spending for the remainder of fiscal 2020; |
• | halted or delayed planned store openings after our one store opening in Chattanooga, TN, on March 16, 2020, including delayed construction through the second quarter of fiscal 2020; |
• | stopped work on future planned sites and commenced negotiations to terminate related contracts, as applicable; |
• | suspended our share repurchase program and declaration of dividends; |
• | drew down substantially all the remaining credit available under our $500,000 revolving credit facility; |
• | sold shares of our common stock, which generated gross proceeds of approximately $185,600; and |
• | negotiated with our landlords, vendors, and other business partners to temporarily reduce our lease and contract payments and obtain other concessions. As of August 2, 2020, a total of 92 rent relief agreements related to our operating locations and corporate headquarters were executed, which generally provide for full deferral for three months beginning April 2020, with partial deferral continuing for periods of up to six months, at approximately 50% of those locations. |