Dave & Buster's Entertainment, Inc.
Annual Report 2021

Dave & Buster’s Entertainment, Inc.

Annual Report 2021

Dear Fellow Shareholders:

Fiscal 2021 was a demanding year but our store management teams – and all of our team
members rose to the challenge working tirelessly to return our stores to fully operational
status. Throughout the year we have seen a strong sales recovery across our stores even in
markets where vaccine requirements were in place.

Our profitability improved as well as evidenced by the double-digit increase in Adjusted
EBITDA due to our focus on process improvement and lean initiatives across our business.
This Company has significant upside potential and with our continued focus on innovation,
growth and value creation, we are driving toward unlocking that value.

We are optimistic about the future and look forward to sharing our ongoing progress with
everyone. We have an exceptional business model, strong assets, and a talented group of team
members who are delivering outstanding service and experiences to our guests.

Fiscal Year 2021 Highlights

•

•

•

•

Revenue totaled $1.30 billion compared with $436.5 million in fiscal year 2020 and
$1.35 billion in fiscal year 2019

Overall comparable store sales decreased 10.6% compared with the same period in 2019.
As a reminder, 33 of 140 stores were closed at the start of the year, of which 30 reopened
throughout the latter half of the first quarter with the remaining 3 reopening during the
second quarter while other stores had occupancy restrictions. Additionally, most stores
had vaccine mandates for entry for part or all of the fiscal year

Net income totaled $108.6 million, or $2.21 per diluted share, compared with net loss of
$207.0 million, or $(4.75) per share in fiscal year 2020 and net income of $100.3 million,
or $2.94 per diluted share in fiscal year 2019

Adjusted EBITDA totaled a record $351.7 million (a 14.1% increase over 2019), or
27.0% of revenue, compared with Adjusted EBITDA loss of $81.3 million in fiscal year
2020 and Adjusted EBITDA of $308.2 million, or 22.8% of revenue in fiscal year 2019

We have made great progress throughout the year as our 2021 fourth quarter revenue
approached pre-COVID levels while Net Income, EBITDA and Adjusted EBITDA exceeded
pre-COVID results compared to the fourth quarter of 2019. However, we believe there’s much
more opportunity to unlock the potential of this business.

We have a great brand with significant scale, a passionate team, and a fleet of stores in high
traffic, high volume, destination trade areas. We are focused on optimizing our current stores’
full potential, and to accelerate innovation to drive incremental traffic to our brand.

We are accelerating our unit growth in fiscal 2022 and will begin a program to remodel most
of our stores to give them a fresh look that’s more in-line with our new prototypes.

We are broadening our entertainment offering to include a more immersive sports viewing
experience, including improvements to the “Watch” environment and the addition of fantasy
sports and a sports betting option as permitted. We recently announced a partnership with
UFC and WWE to bring all their pay-per-view events to all Dave & Buster’s locations across
North America.

We have established a new cadence of four Food & Beverage Limited Time Offers (LTOs)
per year aimed at driving check and food attachment. Our new beverage menu was designed
to expand both reach and appeal.

Finally, our best-in-class arcade will get even better with our summer of games roll-out
supported by a significant marketing campaign.

We continue our commitment to simplifying store operations, improving our guest experience
and enhancing our food, beverage and entertainment offerings to drive sales and profitability.
Even with headwinds from wage and commodity inflation, we have continued to grow
margins and have offset these impacts through a more efficient labor model enabled by
technology, lean process improvements, proactive price adjustments, and more effective
marketing investments.

We are pleased with the results we delivered in fiscal 2021 despite numerous headwinds. We
are optimizing the return to a more normalized post-COVID environment as the headwinds we
have experienced become tailwinds, driving our business as we move forward. Our fourth
quarter results demonstrated our ability to drive significant improvement in profitability with
relatively flat comp store sales compared with 2019 despite COVID implications.

Looking forward, we are poised for our stores to return to growth benefiting from the removal
of COVID restrictions, the return of Special Events, and the efforts of recent initiatives.

Let me end with these thoughts. We came close to reporting record fourth quarter revenue,
despite being impacted by Omicron. We are starting to see a recovery in our special events
business, which was down by 72% on an annual basis in 2021 compared to 2019. We are
shaping our strategic initiatives and also making great progress improving margins. All of
these actions will begin to write the script for the next couple of years.

We have an exceptional business model, strong assets, and a talented team. Our team is
extremely excited about the prospects for 2022 and 2023 and well beyond. I too am very
excited about the future of this Company. There is meaningful upside potential and we are
laser focused on driving that to reality.

Thank you for your continued support.

Sincerely,

Kevin Sheehan

Board Chair and Interim Chief Executive Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED January 30, 2022

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

Dave & Buster’s Entertainment, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State of Incorporation)

1221 Beltline Rd., Coppell, Texas, 75019
(Address of principal executive offices) (Zip Code)

35-2382255
(I.R.S. Employer ID)

(214) 357-9588
(Registrant’s telephone number)

Title of each class

Securities registered pursuant to Section 12(b) of the Act:
Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock $0.01 par value

PLAY

NASDAQ Global Select Market

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 È No ‘
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 ‘ No È

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 È No ‘

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 È No ‘

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.
È

Large accelerated filer

Accelerated filer
Smaller reporting company ‘

‘

Non-accelerated filer
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. ‘

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 È No ‘

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È

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 $1.6 billion.

The number of shares of Registrant’s Common Stock outstanding as of March 18, 2022 was 48,565,997.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the registrant’s 2022 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 JANUARY 30, 2022
TABLE OF CONTENTS

ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

PART I

PART II

ITEM 5.

Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities

ITEM 6.
ITEM 7.

Reserved
Management’s Discussion and Analysis of Financial Condition and Results of

Operations

ITEM 7A.
ITEM 8.
ITEM 9.

ITEM 9A.
ITEM 9B.
ITEM 9C.

Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants On Accounting and Financial

Disclosure

Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

ITEM 10.
ITEM 11.
ITEM 12.

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters

ITEM 13.
ITEM 14.

Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

ITEM 15.
ITEM 16.

Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures

PART IV

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28
29
30
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31
32

32
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51

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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 risk 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 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.

ITEM 1. Business

PART I

Dave & Buster’s Entertainment, Inc. (“D&B Entertainment”) is a leading owner and operator of high-
volume entertainment and dining venues (“stores”) that operate under the name “Dave & Buster’s.” We offer our
customers the opportunity to “Eat Drink Play and Watch” all in one location. We provide our customers the most
social, shareable fun, with high-quality food and beverages as well as interactive entertainment options for adults
and families to enjoy together. We opened the first Dave & Buster’s store in Dallas, Texas in 1982, and as of
January 30, 2022 (the last day of fiscal 2021), we owned and operated 144 stores located in 40 states, Puerto Rico
and one Canadian province. Unless otherwise provided in this report, references to “Dave & Buster’s,” “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 Sunday after the Saturday closest to January 31.
Each quarterly period has 13 weeks, except in a 53-week year when the fourth quarter has 14 weeks. Fiscal 2021,
2020, and 2019 each contained 52 weeks. We refer to our fiscal years as 2021, 2020, and 2019 throughout this
report.

COVID-19 Pandemic

In March 2020, a novel strain of coronavirus (“COVID-19”) outbreak was declared a global pandemic and a

National Public Health Emergency. Shortly after the national emergency declaration, state and local officials
began placing restrictions on businesses, some of which allowed To-Go or curbside service only while others
limited capacity in the dining room or arcade (“Midway”). By March 20, 2020, all our 137 operating stores were
temporarily closed. On April 30, 2020, our first store re-opened to the public, and by the end of fiscal 2020, 107
of our 140 stores were open and operating in limited capacity. These stores were operating with a combination of
limited menus, reduced dining room seating, reduced game availability in the Midway reduced operating hours
and other restrictions referred to as “limited operations” or “operating in limited capacity.” The Company
re-opened the remaining 33 stores that had been temporarily closed by August 1, 2021, the end of the second

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quarter of fiscal 2021. During the fourth quarter of fiscal 2021, our two Canadian stores temporarily closed due
to the resurgence, and shortly after the end of our fiscal year, these two stores re-opened with limited operations.
These developments have had a material adverse impact on the Company’s revenues, results of operations and
cash flows for fiscal 2020, and during fiscal 2021, continued to have a significant impact on our business and
results of operations. The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer
behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our
stores and disruptions in the supply chain, will impact our operating results and financial position. The impact to
our operations has been most notable during the periods of greatest accelerating COVID-19 case counts. We have
incurred and will continue to incur additional costs to address government regulations and the safety of our team
members and customers. The impacts of the COVID-19 pandemic on our business are discussed in further detail
throughout this Business section, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations” of this report.

Eat Drink Play and Watch - All Under One Roof

We have developed a distinctive brand based on our customer value proposition: “Eat Drink Play and
Watch.” The interaction between dining, enjoying our full-service bar, playing games, and watching sports and
other entertainment is the defining feature of the Dave & Buster’s customer experience. We believe this
combination creates an experience at a single location that cannot be easily replicated elsewhere. Our stores are
also designed to accommodate premium sports viewing events, private parties, business functions and other
corporate-sponsored events. We believe we appeal to a diverse customer base by creating a highly customizable
experience in a dynamic and fun setting.

Eat

We strive to differentiate our food with quality, flavorful offerings guided by an “Inspired American
Kitchen” identity. This identity is rooted in enhanced flavors and quality ingredients across a condensed number
of menu items that enables our customers to explore new flavors while offering a balanced selection of familiar
dishes. Our menu also simplifies execution, and along with recent kitchen enhancements allows us to deliver
dishes to customers hotter and faster to drive an improved customer experience. While our menu appeals to a
broad spectrum of customers, we continue to evolve it to reflect the changing tastes of our customers, with
options for full meals as well as grabbing an appetizer 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 menu offers something for everyone and is
appropriate for many different occasions. To ensure that we stay on-trend, we update our menus regularly with
new food items or limited time offers. Our food revenues, which include non-alcoholic beverages, accounted for
approximately 68% of our food and beverage revenues and approximately 22.7% of our total revenues during
fiscal 2021.

Drink

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 each of the Eat, Play and Watch aspects of our brand. Our alcoholic
beverage revenues accounted for approximately 32% of our total food and beverage revenues and approximately
10.8% of our total revenues during fiscal 2021.

Play

The games in our Midway are a key aspect of the Dave & Buster’s entertainment experience, which we
believe is the core differentiating feature of our brand. The Midway in each of our stores is an area where we

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offer a wide array of amusement and entertainment options, some of which are exclusive to Dave & Buster’s on a
permanent or temporary basis. Each of our stores typically has approximately 145 redemption and simulation
games as well as our proprietary virtual reality platform. Most of our games are activated by game play credits on
cards or other RFID devices (collectively, “Power Cards”). A customer purchases a Power Card with game play
credits or “chips” at an automated kiosk, through our mobile application, or from one of our team members. Our
amusement and other revenues accounted for approximately 66.5% of our total revenues during fiscal 2021.
Redemption games, which represented approximately 72% of our amusement and other revenues in fiscal 2021,
offer our customers the opportunity to win tickets that are redeemable at a retail-style space in our stores that we
have branded WIN! with prizes ranging from branded novelty items to high-end electronics. We believe this
“opportunity to win” creates a fun and highly energized social experience that is an important aspect of the
Dave & Buster’s 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. These games
represented approximately 26% of our amusement and other revenues in fiscal 2021. Other amusements,
including billiards and bowling, represented the remainder of our amusement and other revenues in fiscal 2021.

Watch

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. For 62 of our stores, we have an enhanced Watch
experience with huge cutting-edge LED “Wow Walls”, that differentiates Dave & Buster’s by delivering an
elevated viewing experience and providing a platform for broader programming and marketing opportunities.
Our “D&B Sports” areas offer an immersive viewing environment that provides customers with large, high-
definition televisions, to watch community-focused sports programming and enjoy our full bar and food menu.
We believe that we have created an attractive and comfortable environment that includes a differentiated and
interactive viewing experience for customers, and our goal is to build awareness of D&B Sports as “the best
place to watch sports” and the “only place to watch the games and play the games.”

Competitive Positioning

The out-of-home entertainment market is highly competitive. We compete for customers’ discretionary
entertainment dollars with providers of out-of-home entertainment, including 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
concepts that are similar to our concept. We also face competition from increasingly sophisticated home-based
forms of entertainment, such as internet and video gaming and home movie streaming and delivery.

The key elements that drive our total customer experience and help position us from a competitive

standpoint include the following:

Strong, distinctive brand with broad customer appeal. We believe that the multi-faceted customer

experience of “Eat Drink Play and Watch” at Dave & Buster’s, supported by our extensive marketing reach has
helped us create a widely recognized brand. We have a high degree of awareness of our brand as a dining and
entertainment venue, and a broad customer appeal with an attractive target demographic. Our primary target is
adults 21-39, who make up over 60% of our customers. We focus primarily on the adult social occasion, which
accounts for approximately 58% of our visits. We also appeal to families, who make up the remaining 42% of
our visits.

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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 are continuously working with game manufacturers and others to create new games and attractions that
include content that is exclusively available at Dave & Buster’s on a permanent or temporary basis. Our new
games in combination with new food and beverage offerings and focused attention to the customer experience
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, Power Card dollar volume
discounts, and Half-Price Game Play (every Wednesday, from open to close, we reduce the price of games in the
Midway by one-half). We believe these initiatives encourage customers to participate more fully across our broad
range of food, beverage, and entertainment offerings.

Vibrant, contemporary store design that integrates entertainment and dining. We continue to enhance the

Dave & Buster’s brand through our store design. Our core store design provides a contemporary, engaging
atmosphere for our customers with clearly differentiated spaces designed to convey the components of our
customer value proposition: “Eat Drink Play and Watch.” The oversized graphics and images throughout the
store are intended to communicate our brand personality by being fun, contemporary, and larger-than-life. The
dining room décor includes booth and table seating and colorful artwork, often featuring local landmarks. Our
WIN! area provides a retail-like environment where customers can redeem their tickets for prizes. We believe
our D&B Sports area provides an attractive opportunity to market our broader platform to new and existing
customers through a year-round calendar of programming and promotions tied to popular sporting events and
sport-related activities. The large television screens, comfortable seating, a full menu of food and beverages and
artwork often featuring images of local sports teams and sports icons help create what we believe to be an
exciting environment for watching sports and other programming.

Strong history of growth. We have a proven track record of improving operating results and expanding the
footprint of our brand. While fiscal 2020 and fiscal 2021 were unusual years due to the impact of COVID-19 on
both revenues and margins, from fiscal 2015 to 2019, net income increased by $92.6 million, EBITDA margins
increased by approximately 130 basis points and our Adjusted EBITDA Margins (both defined in Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP
Financial Measures”) increased by approximately 120 basis points. During times of normal operations, we expect
our continued focus on operating performance and leveraging of expenses will positively impact operating
margins and will partially offset pressure from wage inflation and occupancy costs, although there is no
guarantee that our efforts will be successful.

Store model generates favorable store economics and strong returns. We believe our store model offering

entertainment, food, and beverage provides certain benefits in comparison to traditional restaurant concepts,
which is reflected in our historically higher revenue per store, higher comparable store operating income
margins, and higher comparable Store Operating Income Before Depreciation and Amortization Margins
(defined in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Non-GAAP Financial Measures”).

Our entertainment offerings have low variable costs, generating a gross margin of 90.1% for fiscal 2021.
With approximately 66.5% of our revenues from entertainment, we have less exposure than traditional restaurant
concepts to food costs, which represented approximately 7% of our total revenues in fiscal 2021. Our business
model generates strong cash flow that we can use to execute our growth strategy. We believe the combination of
our operating income margins, our Store Operating Income Before Depreciation and Amortization Margins, our
refined new store formats and the fact that our stores typically open with high volumes that drive margins in year
one will help us achieve one-year and five-year cash-on-cash return targets. Historically, our average one-year
and five-year cash-on-cash returns were approximately 35% and 25%, respectively. We define and calculate

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cash-on-cash returns for an individual store as (a) Store Operating Income Before Depreciation and
Amortization, excluding pre-opening expenses, national marketing expense allocation, non-cash charges related
to asset disposals, currency transactions and changes in non-cash deferred amusement revenue, 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, excluding pre-opening costs and capitalized
interest.

Commitment to customer satisfaction. We aim to enhance our combination of food, beverage, and
entertainment offerings through our service philosophy of providing a high quality and consistent customer
experience through dedicated training and development of our team members and a corporate culture that
encourages employee engagement.

Strategy

During the first half of fiscal 2021, we focused on the re-opening of our remaining stores after mandated
shutdowns related to COVID-19 during fiscal 2020, focusing on implementing our strategy to set us up for the
next phase of growth in the latter half of the year. Our current strategy is built on the following key components:

Drive our comparable store sales. We intend to differentiate our brand from other food and entertainment

alternatives and drive our comparable sales, in a competitive landscape, through the following strategies:

• Offer novel food & drink to bring people together. Our current menu offerings are designed to provide
a differentiated food and beverage offering based on an “Inspired American Kitchen” identity. We aim
to improve overall food quality, and to offer a wide variety of items including starters and shareable
items, one-of-a-kind burgers and handhelds, choice-grade steaks, pasta, and low calorie, vegetarian,
and gluten friendly options. We also plan to improve efficiency by simplifying execution, allowing us
to deliver dishes hotter and faster to drive an improved customer experience. For our beverage offering,
we plan to update the offering based on customer research, and plan to streamline the selection to
improve execution efficiency. For both food and beverage, we aim to periodically introduce new items,
and run limited time offers during key periods.

• Offer the latest entertainment to enjoy together. We believe that our Midway games are the core
differentiating feature of the Dave & Buster’s brand and staying current with the latest offerings
promotes trial and provides an exciting environment to enjoy games with friends and family, especially
with the latest multiplayer games and challenges. We plan to continually update our games each year
through development of innovative and proprietary games and the purchase of new games that will
resonate with our customers and drive brand relevance due to a variety of factors, including their large
scale, eye-catching appearance, virtual reality features, association with recognizable brands or the fact
that they cannot be easily replicated at home. We also intend to extend our programming capabilities
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.

• Align team and integrated experience. We intend to consistently drive service excellence, including the

use of technology to improve speed of service and to give our customers more control over their
in-store experience. We will also refresh our commitment to serving customers through an improved
hiring, training and service model, and our team will help create fun and bring our new strategies to
life.

• Drive customer engagement. We will focus on delivering personalized messaging that connects with
the customer to drive incremental visitation and will focus our advertising on communicating the
emotional side of 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 and creative content.

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Invest in both our existing and new stores. Beginning in fiscal 2022, the Company expects to commence a
more robust investment program in targeted existing stores, including stores that have not had a major remodel in
recent years. We also believe that the Dave & Buster’s brand has significant growth opportunities, as internal
studies and third-party research suggests a total store potential in the United States and Canada in excess of 230
stores (including our 144 stores as of the end of fiscal 2021). In fiscal 2021, we opened five new stores, including
one store that was relocated. We will maintain a moderate pace of new store openings in fiscal 2022 as our
business recovers from the impact of COVID-19. Longer term, 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 utilize available cash to finance construction of leasehold improvements and
pre-opening costs, obtain necessary local governmental permits, and recruit and train management and hourly
team members.

Regarding our long-term strategy of new store growth, 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
visibility, accessibility and traffic volume, 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.

We currently operate stores varying in size from 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 30,001 and 45,000 square feet, the
target size of our future medium format stores is expected to be between 25,001 and 30,000 square feet while our
small format stores are below 25,001 square feet. As of January 30, 2022, we operated 112 large format stores,
21 medium format stores and 11 small format stores.

We believe that the smaller store format allows us to reduce capital investment risk per store. 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 that the smaller format maintains the dynamic customer experience that
is the foundation of our brand and allows us flexibility in our site selection process.

Human Capital Management

Our team members are the heart of our Company, and they help us run the fun in our stores every day. We
depend on our team members to provide great service and 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 four culture pillars that describe the relationships our team members have with our
customers and each other. We are devoted to our “You Got It” service philosophy that calls us to provide
exceptional service to our customers and to each other every day. Our “Play Your Heart Out” attitude encourages
intensity, hard work, and having fun. We firmly believe we are “Better Together,” and through this culture pillar
we encourage inclusivity, teamwork, and good judgment. Finally, we encourage all team members to be “Game
Changers” committed to innovation, embracing change, and continuous learning and growth.

7

Our Team

At January 30, 2022, we employed 13,783 team members, consisting of 197 store support, 102 dedicated
special events sales force, 1,090 store management, and 12,394 store hourly. Included in our total team members
are 186 store hourly team members on leave while the Company’s two Canadian stores were temporarily closed
at the end of fiscal 2021.

Our Better Together culture pillar binds us to a shared commitment to attract, retain, engage, and develop a

team that mirrors the diversity of the customers we serve. We strive to provide inclusive fun for all, and we
believe our commitment to diversity, equity and inclusion 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. Racial minorities make up over 61% of our U.S.
workforce, and we are proud of our diversity, which is summarized below:

White
Hispanic
Black or African American
Asian/American Indian/Pacific Islander
Two or more races

Total

Male

Female

Total

19.7% 18.7% 38.4%
15.8% 13.3% 29.1%
14.8% 13.0% 27.8%
4.1%
0.6%

2.3% 1.8%
0.4% 0.2%

53.0% 47.0% 100.0%

In fiscal 2021, we strengthened our commitment to diversity, equity, and inclusion. Among other key

accomplishments, we:

•

•

•

•

progressed on our goals to improve representation of women and team members who are black,
indigenous or people of color (BIPOC) in our corporate and field leadership each by 33% before the
end of FY2025;

completed system-wide diversity, equity, and inclusion training;

emphasized our commitment to diversity and belonging throughout the year in internal and external
communications, including social media;

achieved scores for overall engagement, diversity, inclusion, and fair treatment on our semi-annual
Gallup Engagement Survey that exceeded the average for our industry and for all U.S. employers; and

• were named to Forbes’ 2021 lists of America’s Best Large Employer, Best Employers for Diversity,

and Best Employers for Women.

In addition to our focus on improving diversity, equity, and inclusion, the ongoing COVID-19 pandemic
continued to demand heightened focus on health and safety for our team members and our customers throughout
fiscal 2021. Health and safety have always been a top priority for our Company, but in response to the pandemic,
we implemented several changes for the protection of our team members and our customers that have included,
among other precautions, installing multiple sanitation stations in all stores, dedicating staff to cleaning stores,
requiring face masks during surges in case counts, and requiring vaccinations where required by state or local
law. Our cross-functional COVID-19 response team continues to assess the latest guidance from local, state and
federal health agencies, and we update our safety protocols in real time as government mandates change in the
various jurisdictions where we have operations.

We believe our culture, policies, and labor practices contribute to strong engagement with our team

members. In particular, our leaders work to develop and maintain strong communications and relationships with
our team members.

8

Our Leadership Team

We are led by a strong senior management team averaging over 20 years of experience with national brands

spanning casual dining, entertainment, and other consumer-centric industries. We believe that our management
team’s prior experience, combined with its experience at Dave & Buster’s provides us with insights into our
customer base and enables us to create the dynamic environment that is core to our brand.

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. A typical store employs approximately 86 hourly team
members, most of whom work part-time. This is less than our pre-COVID store average of 110 due in part to an
increase in average weekly hours worked by our team members as well as a new but still-evolving labor model
that leverages our technology investments and requires slightly less management and/or hourly positions than
historical levels.

The General Manager and the management team are responsible for the day-to-day operation 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 Manager, Regional Operations Director, Senior Regional Operations
Director or Vice President of Operations (collectively, “Regional Management”) who directly or indirectly report
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 upscale
casual dining industry.

During the COVID-19 pandemic recovery period, to comply with various federal, state and local guidelines
and in response to changing customer levels, our stores operated with reduced hours of operation. Generally, our
stores have returned to pre-pandemic operating hours and are open seven days a week, typically from 11:00 a.m.
to midnight, with some stores open for extended hours on weekends.

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, among other items,
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, medical/dental/vision insurance plans and 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 stores through the careful training and

supervision of our team members and the establishment of, and adherence to, high standards relating to personnel

9

performance, food and beverage preparation, safety protocols, game playability and maintenance of our stores.
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 store, where they receive additional training with their General Manager. Their last two weeks of
training include 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. We
hold an annual General Manager conference in which our General Managers share best practices and receive an
update on our business strategies.

When we open a new store, we provide varying levels of training to team members in each position to
ensure the smooth and efficient operation of the store from the first day it opens to the public. Prior to opening a
new store, our dedicated training and opening team travels to the store to deliver an intensive training program
for all team members. We believe this additional investment in our new stores is important because it helps us
provide our customers with a quality experience from day one. After a store has been opened and is operating
smoothly, the store managers supervise the training of new team members.

Corporate Responsibility

Our core value of “Better Together” calls 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 anywhere in the world. 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.

In addition, 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 Make-A-Wish, which we have proudly supported in a
national partnership since April 2012. To date, we have given over $15.0 million to this worthy cause, and we
participate in several events throughout the year both in our stores and at our store support center to raise money
for Make-A-Wish. We also volunteer our time and talents.

In addition, we invest in helping our own team members during their times of greatest need. The D&B
H.E.A.R.T. (Helping Employees at Rough Times) 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 D&B H.E.A.R.T. Fund is financed by contributions from our employees, customers, and
business partners.

Advertising and Marketing

We use advertising and marketing to build awareness and strengthen our brand relevance. We spent

approximately $32.2 million in marketing efforts in fiscal 2021, $21.1 million in fiscal 2020, and $44.8 million in
fiscal 2019. During fiscal 2020, due to the temporary closures, capacity restrictions and other operating
limitations imposed in response to the COVID-19 pandemic, we substantially curtailed national cable television

10

media, which continues to be the largest portion of our advertising and marketing spend. In the future, we plan to
shift some funding to other forms of media, including investments in social and digital video, and test new types
of programmatic display and digital audio. To enhance our marketing efforts, we also conduct digital initiatives
including search engine marketing and optimization, mobile campaigns, and website improvements. We also
execute periodic promotions, create in-store point-of-purchase materials and execute local marketing plans to
address specific objectives in individual stores or markets. We work with external advertising, digital, media and
design agencies in the development and execution of these programs.

We have recently invested in developing and implementing new technology platforms that will allow us to

digitally engage with our customers and team members and strengthen our marketing and analytics capabilities in
an increasingly connected society. While our investment efforts were significantly curtailed during fiscal 2020
due to the COVID-19 pandemic, our efforts were renewed during the second half of fiscal 2021. Central to this
effort is continued investment in our mobile application platform, which is used to enhance existing customer
satisfaction and attract new customers by providing periodic exclusive offers and discounts and providing a
convenient way to purchase Power Cards. During the fourth quarter of fiscal 2021, we launched an enhanced
loyalty program. The Dave & Buster’s Rewards Program is a customer recognition program that rewards
members primarily for their game chips played. Eligible members have the ability to level-up by playing game
chips, and members are rewarded with free game play or food offers based on their level. We expect that as our
loyalty program grows it will be an important method of maintaining customers’ connection with our brand and
further drive customer satisfaction.

We utilize a number of other initiatives to continually improve our market effectiveness, including refining

our marketing strategy to better reach both young adults and families, creating new advertising campaigns,
investing in menu research and development to differentiate our food offerings from our competition and
improve key product attributes (quality, consistency, value and overall customer satisfaction) and execution,
developing product/promotional strategies to attract new customers and increase spending/length of stay, and
reflecting a consistent brand identity that represents our positioning and commitment to quality.

Our special event marketing programs are managed by our sales department, which provides direction,

training, and support to our special events team consisting of district sales managers and sales managers. Our
special events programs are supported by targeted print and online media plans, as well as promotional incentives
at appropriate times during the year. In addition, we have online booking for social parties to provide additional
convenience in booking events for our customers.

Information Technology and Cyber Security

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 food, beverage, and

amusements. We utilize a customized food and beverage analysis program that determines 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 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

11

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.

During 2019, we invested in connectivity and data infrastructure to modernize and upgrade the capacity of

our store systems, continued work on new, customer-facing digital experiences, such as the launch of our new
mobile application that supports in-store and off premise amusement entertainment, and deployed hand-held
point-of-sale devices to a limited group of stores. Our investment efforts were significantly curtailed during fiscal
2020 due to the impacts of the COVID-19 pandemic, but we renewed our investment in fiscal 2021, deploying
hand-held point-of-sale devices to the remainder of our stores.

We accept electronic payment cards from our customers for payment in our stores. We also receive and
maintain certain personal information about our customers and team members. We have systems and processes in
place that focus on the protection of our customers’ credit card information and other private information we are
required to protect, such as our employees’ personal information. Our existing cyber security policy includes
cyber security techniques, tactics, and procedures, including continuous monitoring and detection programs,
network protections, employee training and awareness and incident response preparedness. In addition, we
periodically scan our environment for any vulnerability, perform penetration testing and engage third parties to
assess effectiveness of our data security practices. We utilize a voluntary tool to help manage privacy risk by
independently benchmarking our cyber security program to the NIST Cybersecurity Framework, using an
independent third party, and we share the results of our annual audit with our Audit Committee.

Food Preparation, Quality Control and Purchasing

We strive to maintain high 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 store, 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 stores with various tools and training to facilitate these activities.

Foreign Operations

We own and operate two stores outside of the United States in the Canadian province of Ontario. These

stores generated revenues of approximately $6.9 million, $2.9 million, and $18.6 million in fiscal 2021, 2020,
and 2019, respectively, representing approximately 0.5%, 0.7%, and 1.4%, respectively, of our consolidated
revenues. During fiscal 2021 and fiscal 2020, our Canadian stores were only able to operate a combined 48 and
39 weeks, respectively. Throughout the COVID-19 pandemic, Canada’s health restrictions have consistently
been more stringent than the United States. These restrictions include closure, capacity limits, vaccination
mandates, and face mask requirements, among others. At January 30, 2022, less than 2.0% of our long-lived
assets were located outside of the United States.

The foreign activities of these stores 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 material risk associated with the Canadian operations or any dependence by the domestic
business upon the Canadian operations.

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.

12

During fiscal 2020 and the first half of fiscal 2021, results also fluctuated due to the timing and frequency of
temporary closures and operating restrictions as a result of state and local guidelines imposed due to the
COVID-19 pandemic.

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 currently purchase a significant amount of our amusement merchandise
through a direct import program, a program in which we purchase WIN! merchandise and certain furniture
directly from offshore manufacturers. We are a large buyer of traditional and amusement games and as a result
believe we receive discounted pricing arrangements. Federal and state health care mandates and mandated
increases in the minimum wage and other macro-economic pressures could have the repercussion of increasing
expenses, as suppliers may be adversely impacted and seek to pass on higher costs to us.

Intellectual Property

We have registered the trademarks Dave & Buster’s®, Power Card®, Eat & Play Combo®, Eat Drink Play®,

and Eat Drink Play Watch®, 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 tradename and our
logo 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. In California, we are subject to the Private Attorneys
General Act, which authorizes employees to file lawsuits to recover civil penalties on behalf of themselves, other
employees, and the State of California for labor code violations. 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 internet website, at www.daveandbusters.com, as soon as reasonably
practicable after they are electronically filed with or 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.

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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

The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, which has had a
material adverse impact on our business, results of operations, liquidity and financial condition and could
continue for an extended period of time. Future outbreaks of contagious diseases or other adverse public
health developments in the United States or worldwide could have similar impacts on our business.

The COVID-19 pandemic had a material adverse impact on our business in fiscal 2020, and, during fiscal

2021, continued to have a significant adverse impact on our business and results of operations. At the peak of the
COVID-19 outbreak, all our stores were closed. As stores re-opened, the Company experienced same-store sales
declines due to modified operating hours, occupancy restrictions, and reduced customer traffic. While nearly all our
stores have now re-opened, we expect that our operations will continue to be impacted by the continuing effects of
COVID-19, including resurgences and variants of the virus. It remains difficult to predict the full impact of the
COVID-19 pandemic on the broader economy and how consumer behavior may change, and whether such change
is temporary or permanent. Social distancing, telecommunicating and reductions in travel may become the new
normal. In addition, the COVID-19 pandemic has required and may continue to require us to make controversial
decisions about precautionary measures, such as vaccinations, showing proof of vaccinations and face coverings,
that could impact our results, including by impacting our brand, our employee retention and satisfaction, and the
willingness of customers to patronize our stores. All these conditions could fundamentally impact the way we work
and the services we provide and could have continuing adverse effects on our results of operations, cash flows and
financial condition. Prolonged volatility or significant disruption of global financial markets due in part to the
COVID-19 pandemic could have a negative impact on our ability to access capital markets and other funding
sources, on acceptable terms or at all, and impede our ability to comply with our recently re-instated debt covenants
or our ability to obtain additional waivers or amendments, if necessary, and the Company could also incur
additional impairment charges of our long-lived assets or impairments of goodwill or other intangibles, which may
have a significant or material impact on our financial results.

The extent to which the current or future outbreaks of disease or similar public health threats materially and
adversely impact our business, results of operations, liquidity and financial condition is highly uncertain and will
depend on future developments. Such developments may include the geographic spread of variants and duration
of the virus, the severity of the disease and the mitigating and remedial actions that may be taken by various
governmental authorities and other third parties in response to the outbreak. In addition, how quickly, and to
what extent, normal economic and operating conditions can be maintained or resumed cannot be predicted, and
the resumption of normal business operations may be delayed or constrained by lingering effects of any
pandemic on us or our suppliers, third-party service providers, and/or customers.

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 food, beverage, game and
entertainment options desired by our customers;

14

•

•

•

•

•

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; and

improve the speed and quality of our service.

Changes in consumer preferences and buying patterns could negatively affect our results of operations.

The success of our stores depends in large part on leased locations. Our locations are 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. E-commerce or online shopping continues to increase and negatively impact consumer traffic at
traditional “brick and mortar” retail sites located in regional malls, lifestyle centers, big box shopping centers and
entertainment centers. 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 our brand character 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. Additionally, it is unclear currently if
the COVID-19 pandemic may have a lasting impact on consumer demand. If we fail to anticipate changing
trends or other consumer preferences, our business, financial condition and results of operations would be
adversely affected.

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
such as Facebook®, Twitter® and Instagram® to attract and retain customers. We also test new technology
platforms to improve our level of digital engagement with our customers and employees 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.

We may not be able to compete favorably in the highly competitive out-of-home and home-based
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 localized attraction facilities such
as movie theatres, sporting events, bowling alleys, sports activity centers, arcades and entertainment centers,
nightclubs, and restaurants as well as theme parks. Many of the entities operating these businesses are larger and
have significantly greater financial resources, have a greater number of stores, have been in business longer, have
greater name recognition and are better established in the markets where our stores are located or are planned to

15

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 brand 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.

Negative publicity may also result from criminal incidents, data privacy breaches, scandals involving our
employees 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 brand
could be adversely affected, which could have a material adverse effect on our business, results of operations and
financial condition.

There has been a significant increase in the use of social media and similar platforms, including weblogs
(blogs), social media websites and other forms of internet-based communications that allow 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, often without filters or checks on accuracy of the content posted. The
opportunity exists for dissemination of information, including inaccurate information, to spread quickly.
Inaccurate or adverse information concerning our Company may be posted on such platforms at any time. 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 employees 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 brand may suffer. Consumer demand for our products and our
brand value 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.

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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 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 leases expires, we may choose not to renew, or may not be able to renew, such
existing leases 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.

We face risks related to our substantial indebtedness and limitations on future sources of liquidity.

Our substantial indebtedness could have important 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, including as a result of disruption caused by the global
COVID-19 pandemic;

•

•

•

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

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•

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 and the indenture governing the senior secured notes contain 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 and the indenture
governing the senior secured notes include 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.

The covenants in the credit facility are generally more restrictive than the covenants in the indenture
governing the senior secured notes and place certain limitations on our ability to: incur additional indebtedness,
make loans or advances to subsidiaries and other entities, pay dividends, acquire other businesses or sell assets.
In addition, after the financial covenant suspension period, our credit facility requires us to comply with a total
leverage ratio that is no greater than the applicable financial covenant level and a fixed charge ratio that is no
greater than 1.25:1.00, which are each tested as of the last day of each fiscal quarter.

Events beyond our control, including the impact of COVID-19, may affect our ability to comply with our
covenants. If we default under the credit facility or the indenture governing the senior secured notes, because of 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 the indenture
governing the senior secured notes 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 or the indenture governing the senior secured notes, 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 or the indenture governing the senior secured notes and any
acceleration of amounts due would have a material adverse effect on our liquidity and financial condition.

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The success of our longer-term growth strategy depends in part on our ability to open and operate new stores
profitability, 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 restaurant or entertainment 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.

Risks Related to Information Technology and Cyber Security

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, cyber security, 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.

Cyber security 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 cyber 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 employees 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, remediation
costs, a negative impact on team member morale, or other impacts to our business.

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Our existing cyber security policy includes cyber security techniques, tactics, and procedures, including
continuous monitoring and detection programs, network protections, annual employee training and awareness
and incident response preparedness. In addition, we periodically scan our environment for any vulnerabilities,
perform penetration testing and engage third parties to assess effectiveness of our security measures. We utilize a
voluntary tool to help manage privacy risk by independently benchmarking our cyber security program to the
NIST Cybersecurity Framework, using an independent third party, and we share the results of our annual audit
with our Audit Committee. 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 cyber security
breaches, and we may nevertheless not have the resources or technical sophistication to prevent rapidly evolving
types of cyberattacks. We maintain a separate 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 in the future,

we experience a security breach, we could become subject to 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 employees to comply with applicable laws, the unauthorized
acquisition or use of such information by third parties, or other similar claims, and such 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 regulatory environment surrounding information security, privacy, and other matters involving
consumer protection is increasingly demanding, with the frequent imposition of new and constantly changing
requirements. Compliance with these 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. The California Consumer Privacy Act of 2018, for example, provides a private right of
action for data breaches and requires companies that process information about California residents to make new
disclosures to consumers about their data collection, use and sharing practices and allow consumers to opt out of
certain data sharing with third parties. 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 (“PCI”) Data Security Standard
compliance at our store support center and stores. If we do not maintain the required level of PCI 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 Restaurant and Entertainment 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 to also 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

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to an increasingly competitive job market and difficult pandemic-related operating demand. 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 employee turnover rates in existing stores or widespread employee dissatisfaction
could have a material adverse effect on our business and results of operations. Increased competition for
qualified employees caused by a shortage in the labor pool exerts upward pressure on wages and benefits paid to
attract and retain such personnel, resulting in higher labor costs, together with greater recruitment and training
expense.

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 of the regions in which our stores are located have been, and may in the future be, subject to natural

disasters, such as earthquakes, floods, 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. Our store support center, company-owned distribution center, game repair facility and our data center,
as well as our backup data facility, are all located in the Dallas, Texas area. A natural or man-made disaster 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. During fiscal 2020, results also fluctuated due to the timing and frequency of
temporary closures and operating restrictions due to state and local guidelines imposed due to the COVID-19
pandemic. We have continued to see similar fluctuations with the impact of each variant of COVID-19, including
the Delta and Omicron variants in fiscal 2021, and may continue to see impact in fiscal 2022 and future fiscal
years due to new, yet unidentified variants.

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-

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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 WIN! merchandise inventory is directly or
indirectly sourced outside the United States and changes in trade policy and tariffs could negatively impact 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 amusement 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, amusement and entertainment offerings, and other

entertainment-related equipment is important to our business strategy. The number of suppliers from which we
can purchase games, amusement offerings 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, lack of
innovation and other associated risks. We may not be able to anticipate and react to changing amusement
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 availability of new amusement 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 amusement 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 compelling game content and developing new amusement 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 employees, 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 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

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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 WIN! 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 and 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.

During fiscal 2020 and fiscal 2021, many of our stores were unable to operate or had limited operations due
to guidelines and restrictions put in place by federal, state, and local governments in response to the COVID-19
pandemic. We have also experienced an adverse impact on our customer frequency due to government masking
and vaccination restrictions in certain jurisdictions.

We are also subject to various federal, state, and local laws and regulations that govern numerous aspects of

our business, including the following:

•

•

•

•

•

•

the Fair Labor Standards Act and other 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 (“PPACA”) and uncertainties surrounding future changes to
or replacement of our health insurance system;

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 license, 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.

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If new immigration legislation is enacted, such laws may contain provisions that could increase our costs in
recruiting, training and retaining employees. Also, although our hiring practices comply with the requirements of
federal law in reviewing employees’ citizenship or 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 believe it is becoming increasing likely that the United States federal government will significantly

increase the federal minimum wage and tip credit wage (or eliminate the tip credit wage) and require
significantly more mandated benefits than what is currently required under federal law. Should this happen, other
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 increases 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. We may not be able to partially
or fully offset cost increases resulting from changes in minimum wage rates by increasing menu or game prices,
improving productivity, or through other adjustments, and our business, results of operations and financial
condition could be adversely affected. Moreover, although none of our employees have been or are now
represented by any unions, labor organizations may seek to represent certain of our employees in the future, and
if they are successful, our payroll expenses and other labor costs may be increased in the course of collective
bargaining, and/or there may be strikes or other work disruptions that may adversely affect our business.

We face potential liability with our gift 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 Power 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 that our Power Cards 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.

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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, employees, 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. Recent litigation against restaurant
chains has resulted 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 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 hurt 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 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 brand
and 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, brand and the
goodwill associated therewith may be diminished, our brand 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.

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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
restaurant and other entertainment industries, and announcement of significant transactions (including mergers or
acquisitions, divestitures, joint ventures or other strategic initiatives) by us or others in the restaurant and other
entertainment industries. In addition, the equity markets have experienced price and volume fluctuations 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;

our ability to issue preferred stock with terms that the Board of Directors 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 of Directors or our Chief Executive Officer;

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.

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
employees. Any perceived uncertainties may affect the market price and volatility of our securities.

Public companies 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 employees and may require us to expend
significant time and resources away from our primary operations. Such proposals may create uncertainty for our
employees, 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 employees. Any
perceived uncertainties as to our future direction also may adversely affect the market price and volatility of our
securities.

26

Our fourth amended and restated certificate of incorporation, which was effective June 9, 2017, 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,
employees or stockholders to our company or our stockholders;

any action asserting a claim arising pursuant to any provision of the 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 our
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.

Our actual operating and financial results in any given period may differ from guidance we provide to the
public, including our most recent public guidance.

From time to time, in press relates, SEC filings, public conference calls and other contexts, we have
provided guidance to the public regarding current business conditions and our expectations for our future
financial results. We expect that we will provide guidance periodically in the future. Our guidance is based upon
a number of assumptions, expectations, and estimates that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are beyond our control. In providing
our guidance, we also make various assumptions with respect our future business decisions, some of which will
change. Our actual financial results, therefore, may vary from our guidance due to our inability to meet the
assumptions upon which our guidance is based and the impact on our business of various risks and uncertainties
described in these risk factors and in our public filings with the SEC. Variances between our actual results and
our guidance may be material. To the extent that our actual financial results do not meet or exceed our guidance,
the trading prices of our securities may be materially adversely affected.

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

27

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.

Changes in interest rates could adversely impact the price of our shares or our ability to issue equity or incur
debt for acquisitions or other purposes.

In July 2017, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it planned to

phase out LIBOR by the end of 2021. On March 5, 2021, however, ICE Benchmark Administration, the
administrator of LIBOR, announced its intention to cease the publication of 1-month, 3-month, and 6-month
U.S. Dollar LIBOR after June 30, 2023. The Alternative Reference Rate Committee, a committee convened by
the Federal Reserve that includes major market participants, has proposed an alternative rate to replace
U.S. Dollar LIBOR: Secured Overnight Financing Rate (“SOFR”). Although our borrowing arrangements
provide for alternative base rates, those alternative base rates historically would often have led to increased
interest rates than those we paid based on LIBOR (which currently is subject to a floor of 1.00%) and may
similarly be higher in the future. Therefore, when LIBOR ceases to exist, we will likely need to agree upon a
replacement index with our lenders, and the interest rate thereunder will likely change. Additionally, credit
agencies have, and in the future may, change their credit rating for us, among other things, based on the
performance of our business, our capital strategies, or their overall view of our industry. There can be no
assurance that any rating assigned to our currently outstanding public debt securities will remain in effect for any
given period of time or that any such ratings will not be further lowered, suspended or withdrawn entirely by a
rating agency, if in that agency’s judgment, circumstances so warrant, particularly during the COVID-19
pandemic. Changes in interest rates, either positive or negative, may affect the yield requirements of investors
who invest in our shares, and a rising interest rate environment could have an adverse impact on the price of our
shares, our ability to issue equity or incur debt for acquisitions or other purposes.

Failure of our internal control over financial reporting could harm our business and financial results.

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. Because of its inherent limitations, internal control over financial reporting is not
intended to provide absolute assurance that we would prevent or detect a misstatement of our financial statements
or fraud. Any failure to maintain an effective system of internal control over financial reporting, including such a
failure or inability to provide timely reporting about the effectiveness of their controls of our third-party service
providers on whose controls we rely, could limit our ability to report our financial results accurately and timely
or to detect and prevent fraud. A significant financial reporting failure or material weakness in internal control
over financial reporting 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.

28

ITEM 2.

Properties

We lease a 67,000 square foot 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. Our former corporate office in Dallas, Texas, is no
longer being used, and our plan is to transfer or eliminate inventory in our adjacent warehouse facility by the end of our
third quarter of fiscal 2022, when the lease expires.

As of the end of fiscal 2021, we lease the building or site of all but three of our 144 operating stores, and we own
land related to one future site. Our leases typically have initial terms ranging from ten to twenty years and most include
options to extend the leases for one or more 5-year periods.

The table below shows the locations of our operating stores as of January 30, 2022:

Location

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
Puerto Rico
Ontario, Canada
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29

Total

2
1
4
2
17
2
2
9
4
1
1
4
2
3
2
1
5
3
3
2
1
1
1
1
3
1
12
4
6
2
1
7
1
3
4
13
1
4
2
3
1
2
144

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, and dram
shop claims. In the opinion of management, based upon consultation with legal counsel, the 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 Notes to
Consolidated Financial Statements for a summary of legal proceedings.

ITEM 4. Mine Safety Disclosures

Not applicable.

30

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Market Information and Dividend Policy

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 March 18, 2022 was 413. This

does not include persons whose stock is in nominee or “street name” accounts through brokers.

On December 6, 2021, our Board of Directors approved a share repurchase program with an authorization

limit of $100,000, expiring at the end of fiscal 2022. Future decisions to pay cash dividends or repurchase shares
continue to be at the discretion of the Board of Directors and will be dependent on our operating performance,
financial condition, capital expenditure requirements and other factors that the Board of Directors considers
relevant. There were no dividends declared in fiscal 2021 or fiscal 2020.

Issuer Purchases of Equity Securities

There were no repurchases of our common stock during fiscal 2021 or fiscal 2020.

31

Performance Graph

The following performance graph depicts the total returns to shareholders for the past five fiscal years from

January 29, 2017, through January 30, 2022, relative to the performance of the NASDAQ Composite Index,
Standard & Poor’s (“S&P”) SmallCap 600 Index and S&P SmallCap 600 Consumer Discretionary Index. All
indices shown in the graph have been set at a base of 100 as of January 29, 2017 and assume an investment of
$100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in
the graph is not necessarily indicative of future price performance.

Dave & Buster’s Entertainment, Inc.
S&P 600 Small Cap
S&P 600 Consumer Discretionary
NASDAQ Composite

ITEM 6. Reserved

1/29/2017

2/4/2018

2/3/2019

2/2/2020

1/31/2021

1/30/2022

$ 100.00
100.00
100.00
100.00

$ 87.04
114.08
118.78
127.91

$ 93.69
114.48
121.04
128.32

$ 80.58
122.07
126.46
161.66

$ 62.08
150.36
212.55
230.90

$ 64.43
162.87
203.87
243.26

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. 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 thousands, unless otherwise noted, except
share and per share amounts.

32

COVID-19 Pandemic

In March 2020, a novel strain of coronavirus (“COVID-19”) outbreak was declared a global pandemic and a

National Public Health Emergency. Shortly after the national emergency declaration, state and local officials
began placing restrictions on businesses, some of which allowed To-Go or curbside service only while others
limited capacity in the dining room or Midway. By March 20, 2020, all our 137 operating stores were
temporarily closed. On April 30, 2020, our first store re-opened to the public, and, by the end of fiscal 2020, 107
of our 140 stores were open and operating in limited capacity. The Company re-opened the remaining 33 stores
that had been temporarily closed by August 1, 2021, the end of the second quarter of fiscal 2021. During the
fourth quarter of fiscal 2021, our two Canadian stores temporarily closed due to the resurgence, and shortly after
the end of our fiscal year, these two stores re-opened with limited operations. By the end of March 2022, the
Company expects all types of COVID-19 related restrictions to be lifted in all but three of our stores.

These developments have had a material adverse impact on the Company’s revenues, results of operations

and cash flows for fiscal 2020, and during fiscal 2021, continued to have a significant impact on our business and
results of operations. The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer
behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our
stores and disruptions in the supply chain, will determine the impact to our operating results and financial
position. The impact to our operations has been most notable during the periods of greatest accelerating
COVID-19 case counts. We have incurred and will continue to incur additional costs to address government
regulations and the safety of our team members and customers.

Financial Highlights

• Revenues totaled $1,304,056 compared with $1,354,691 in fiscal 2019. Revenues were unfavorably

impacted in the first half of fiscal 2021 by fewer operating weeks, and primarily in the fourth quarter,
by consumer behavior after masking and vaccination requirements were implemented in a number of
jurisdictions in which we operate as well as by the resurgence of the Omicron variant of COVID-19.
Revenues totaled $436,512 in fiscal 2020, which ended with 107 of our 140 stores open and operating
in limited capacity.

• Overall comparable store sales decreased 10.6% compared with the same period in 2019. Comparable
store sales increased 199.1% compared with the same period in 2020, which ended with 83 of our 113
comparable stores open and operating in limited capacity.

• Net income totaled $108,640, or $2.21 per diluted share, compared with net income of $100,263, or
$2.94 per diluted share in the same period of 2019. Diluted shares increased from approximately
34.1 million at the end of fiscal 2019 to 49.3 million at the end of fiscal 2021, largely due to the sale of
common stock during fiscal 2020 to obtain additional liquidity. In the same period of 2020, we
recorded a net loss of $206,974.

• Adjusted EBITDA totaled $351,725, or 27.0% of revenues, compared with Adjusted EBITDA of

$308,222 or 22.8% of revenues in fiscal 2019. The increase in Adjusted EBITDA over fiscal 2019 is
largely driven by the higher mix of amusements, reductions in hourly labor costs, and reduced
discretionary marketing spend. We recorded an Adjusted EBITDA loss of $81,273 in fiscal 2020.

• The Company ended the fiscal year with $25,910 in cash and $492,495 of liquidity available under our

revolving credit facility.

General

We are a leading owner and operator of high-volume venues in North America that combine dining and
entertainment for both adults and families under the name “Dave & Buster’s”. Founded in 1982, the core of our
concept is to offer our customers the opportunity to “Eat Drink Play and Watch” all in one location. Eat and
Drink are offered through a full menu of entrées and appetizers and a full selection of non-alcoholic and

33

alcoholic beverages. Our Play and Watch offerings provide an extensive assortment of entertainment attractions
centered around playing games and watching live sports and other televised events. Our brand appeals 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 stores average 40,000 square feet and range in size between 16,000 and 70,000 square feet. During the
COVID-19 pandemic recovery period, to comply with various federal, state, and local guidelines and in response
to changing customer levels, our stores operated with reduced hours of operation. Generally, our stores have
returned to pre-pandemic operating hours and are open seven days a week, with normal hours of operation
typically from 11:00 a.m. to midnight, with some stores open for extended hours on weekends.

Strategy

Our strategy is built on four key components, including offering the latest entertainment to enjoy together,

novel food & drink to bring people together, creating an aligned team and integrated experience, and driving
customer engagement. For further information about our strategy, refer to “Item 1. Strategy”.

Key Measures of Our Performance

We monitor and analyze several key performance measures to manage our business and evaluate financial

and operating performance. These measures include:

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 open for a
full 18 months before the beginning of the fiscal year and excluding stores permanently closed during the period.
Due to the limitations of store operations during the COVID-19 pandemic, the comparable store base for fiscal
2021 is defined as stores open for a full 18 months before the beginning of fiscal 2020 and excludes two stores
that the Company elected not to reopen after they were closed in March 2020 due to local operating limitations
and one store in Cary, North Carolina that was closed and relocated during the fourth quarter of fiscal 2021. Our
comparable store base consisted of 113, 114, and 99 stores as of the end of fiscal 2021, 2020 and 2019,
respectively.

New store openings. Our ability to expand our business and reach new customers is influenced by the
opening of additional stores in both 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 2021, we opened five new
stores, including our relocated Cary, North Carolina store. We currently plan to open eight stores in fiscal 2022.

Non-GAAP Financial Measures

In addition to the results provided in accordance with generally accepted accounting principles (“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, Adjusted EBITDA Margin, Store Operating Income Before Depreciation and Amortization and Store
Operating Income Before Depreciation and Amortization Margin (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 entitled
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 pre-opening and other costs which 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 vary from
period to period and do not directly relate to the ongoing operations of the currently underlying business of our

34

stores and therefore complicate comparison of the underlying business between periods. Nevertheless, because of
the limitations described above, management does not view 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 and Adjusted EBITDA Margin. We define “Adjusted EBITDA” as net income (loss),

plus interest expense, net, loss on debt extinguishment or refinancing, provision (benefit) for income taxes,
depreciation and amortization expense, loss on asset disposal, impairment of long-lived assets, share-based
compensation, pre-opening costs, currency transaction (gains) losses and other costs. “Adjusted EBITDA
Margin” is defined as Adjusted EBITDA divided by total revenues.

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.

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 (loss), plus depreciation and amortization expense, general and administrative
expenses and pre-opening costs. “Store Operating Income Before Depreciation and Amortization Margin” is
defined as Store Operating Income Before Depreciation and Amortization divided by total revenues. Store
Operating Income Before Depreciation and Amortization Margin 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 and pre-opening costs, as well as our interest expense, net 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 Sunday after the Saturday closest to
January 31. Each quarterly period has 13 weeks, except in a 53-week year when the fourth quarter has 14 weeks.
Fiscal 2021, 2020 and 2019, which ended on January 30, 2022, January 31, 2021, and February 2, 2020,
respectively, each contained 52 weeks. All dollar amounts are presented in thousands, unless otherwise noted,
except share and per share amounts.

Store-Level Variability, Quarterly Fluctuations, Seasonality and Inflation

We have historically operated 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 10% to 20% lower than our year one targets, and to grow in line with the rest of our comparable store base

35

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.

While fiscal 2020 and fiscal 2021 were unusual years with the impact of COVID-19, historically in the first

year of operation, new store operating margins (excluding pre-opening expenses) typically 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. Furthermore, rents in our new stores are typically higher
than our comparable store base.

Our operating results historically have fluctuated due to seasonal factors. 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.
During fiscal 2020 and fiscal 2021, results also fluctuated due to the timing and frequency of temporary closures
and operating restrictions due to state and local guidelines imposed due to the COVID-19 pandemic.

We expect that 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.
Although 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, the effects of any supplier price
increase or wage rate increases might be partially offset by selected menu price increases if competitively
appropriate. In addition, how quickly and to what extent, normal economic and operating conditions can resume
cannot be predicted, and the resumption of normal business operations may be delayed or constrained by
lingering effects of the COVID-19 pandemic on us or our suppliers, third-party service providers, and/or
customers.

36

Fiscal 2021 Compared to Fiscal 2020

Results of operations. The following table sets forth selected data, in thousands 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 (loss).

Food and beverage revenues
Amusement and other revenues

Total revenues

Cost of food and beverage (as a percent of food and

beverage revenues)

Cost of amusement and other (as a percent of

amusement and other revenues)

Total cost of products
Operating payroll and benefits
Other store operating expenses
General and administrative expenses
Depreciation and amortization expense
Pre-opening costs

Total operating costs

Operating income (loss)

Interest expense, net
Loss on debt extinguishment / refinancing

Income (loss) before provision (benefit) for

income taxes

Provision (benefit) for income taxes

Net income (loss)

Change in comparable store sales
Company-owned stores at end of period (1)
Comparable stores at end of period (1)

Fiscal Year Ended
January 30, 2022

Fiscal Year Ended
January 31, 2021

$ 436,637
867,419

33.5% $
66.5

159,501
277,011

36.5%
63.5

1,304,056

100.0

436,512

100.0

119,123

27.3

45,207

28.3

85,848

204,971
287,263
402,661
75,501
138,329
8,150

1,116,875

187,181
53,910
5,617

9.9

15.7
22.0
30.9
5.8
10.6
0.6

85.6

14.4
4.2
0.4

29,698

74,905
117,475
299,464
47,215
138,789
11,276

10.7

17.2
26.9
68.6
10.8
31.8
2.6

689,124

157.9

(252,612)
36,890
904

(57.9)
8.4
0.2

127,654
19,014
$ 108,640

(290,406)
9.8
1.5
(83,432)
8.3% $(206,974)

199.1%
144
113

(66.5)
(19.1)
(47.4)%

(70.2)%
140
114

(1) As of the end of fiscal 2021, all 144 of our stores were open except for our two comparable stores in

Canada. Our total and comparable store counts as of the end of fiscal 2021 exclude a store in Cary, North
Carolina, which was closed on January 2, 2022, and relocated prior to the end of our fiscal year. As of the
end of fiscal 2020, 107 of our 140 stores were open and 84 of our 114 comparable stores were open. Our
total and comparable store counts as of the end of fiscal 2020 exclude a store in Chicago, Illinois and a store
in Houston, Texas which were at or near the end of their respective lease terms which the Company decided
not to re-open. We opened five new stores during fiscal 2021, including our relocated Cary, North Carolina
store, and we opened six new stores during fiscal 2020.

37

Reconciliations of Non-GAAP Financial Measures

Adjusted EBITDA

The following table reconciles Net income (loss) to Adjusted EBITDA for the periods indicated:

Net income (loss)
Interest expense, net
Loss on debt extinguishment / refinancing
Provision (benefit) for income tax
Depreciation and amortization expense

EBITDA
Loss on asset disposal
Impairment of long-lived assets and lease termination costs
Share-based compensation
Pre-opening costs
Other costs (1)

Fiscal Year Ended
January 30, 2022

Fiscal Year Ended
January 31, 2021

-47.4%

-26.1%

$108,640
53,910
5,617
19,014
138,329

325,510
1,392
912
12,472
8,150
3,289

8.3% $(206,974)
36,890
904
(83,432)
138,789

25.0% (113,823)
577
13,727
6,985
11,276
(15)

Adjusted EBITDA

$351,725

27.0% $ (81,273)

-18.6%

(1)

Primarily represents costs related to currency transaction (gains) or losses. The third quarter of fiscal 2021
includes a $3,230 severance obligation to the Company’s former Chief Executive Officer, who terminated
his service in this position effective September 30, 2021.

Store Operating Income Before Depreciation and Amortization

The following table reconciles Operating income (loss) to Store Operating Income Before Depreciation and

Amortization for the periods indicated:

Operating income (loss)
General and administrative expenses
Depreciation and amortization expense
Pre-opening costs

Store Operating Income Before Depreciation and

Amortization

Capital Additions

Fiscal Year Ended
January 30, 2022

Fiscal Year Ended
January 31, 2021

$187,181
75,501
138,329
8,150

14.4% $(252,612)
47,215
138,789
11,276

-57.9%

$409,161

31.4% $ (55,332)

-12.7%

The following table reflects accrual-based capital additions. Capital additions do not include any reductions

for accrual-based tenant improvement allowances or proceeds from sale-leaseback transactions (collectively,
“Payments from landlords”).

New store and operating initiatives
Games
Maintenance capital

Total capital additions

Payments from landlords

38

Fiscal Year
Ended
January 30,
2022

$ 58,879
14,523
30,602

$104,004

Fiscal Year
Ended
January 31,
2021

$51,572
8,795
3,266

$63,633

$ 16,073

$12,923

Results of Operations

Revenues

In response to the COVID-19 outbreak, which was declared a global pandemic and a National Public Health

Emergency in the United States in March 2020, the Company temporarily closed all our stores. On April 30,
2020, our first store re-opened to the public, and by the end of fiscal 2020, 107 of our 140 stores were open and
operating in limited capacity. Of these 107 open stores, 83 were comparable stores. By the end of our second
quarter of fiscal 2021, all the Company’s stores were open and operating, the majority of which having no
operating restrictions. However, several of the local jurisdictions in which we operate instituted masking and
vaccination restrictions. During the fourth quarter of fiscal 2021, our two Canadian stores temporarily closed due
to the resurgence, and shortly after the end of our fiscal year, re-opened in limited capacity.

Selected revenue and store data for the periods indicated are as follows:

Total revenues
Total store operating weeks
Comparable store revenues
Comparable store operating weeks
Noncomparable store revenues
Noncomparable store operating weeks
Other revenues and deferrals

Fiscal Year Ended

January 30, 2022

January 31, 2021

Change

$1,304,056
7,161
$1,066,085
5,666
$ 250,297
1,495
$ (12,326)

$436,512
3,922
$356,473
3,134
$ 83,194
788
$ (3,155)

$867,544
3,239
$709,612
2,532
$167,103
707
$ (9,171)

Total revenues increased $867,544, or 198.7%, to $1,304,056 in fiscal 2021 compared to total revenues of
$436,512 in fiscal 2020. The increase in revenue is attributable primarily to more store operating weeks in fiscal
2021 compared to the prior year due to temporary store closures during fiscal 2020, as a result of the COVID-19
pandemic. The table below represents our revenue mix for the fiscal years indicated. The shift in mix from food
and beverage sales to amusement sales of 300 basis points is due, in part, to reduced special events and less
discounting of amusements, offset somewhat by food price increases effective midway through the third quarter
of fiscal 2021.

Fiscal Year Ended
January 30, 2022

Fiscal Year Ended
January 31, 2021

Food sales . . . . . . . . . . . . . . . . . . .
Beverage sales . . . . . . . . . . . . . . . .
Amusement sales . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . .

22.7%
10.8%
66.1%
0.4%

24.1%
12.4%
63.1%
0.4%

Comparable store revenue increased $709,612 or 199.1%, in fiscal 2021 compared to fiscal 2020, due
primarily to an 80.8% increase in comparable store operating weeks. Comparable store sales in fiscal 2021 were
approximately 88.8% of the levels achieved pre-pandemic during fiscal 2019. Our individual comparable stores
generally experienced gradual increases in weekly sales performance as operating weeks increased. Individual
store performance after re-opening was also impacted by changes in local operating restrictions and consumer
reactions to changes in local COVID-19 infection rates.

Food sales at comparable stores increased by $155,171, or 180.5%, to $241,127 in fiscal 2021 from $85,956

in fiscal 2020. Beverage sales at comparable stores increased by $72,108, or 160.6%, to $117,006 in fiscal 2021
from $44,898 in fiscal 2020. Comparable store amusement and other revenues in fiscal 2021 increased by
$482,333, or 213.8%, to $707,952 from $225,619 in fiscal 2020.

Non-comparable store revenue increased $167,103 in fiscal 2021 compared to fiscal 2020, for the same

reasons noted above, including 707 more store operating weeks.

39

Cost of products

The total cost of products was $204,971 for fiscal 2021 and $74,905 for fiscal 2020. The total cost of
products as a percentage of total revenues decreased 150 basis points to 15.7% for fiscal 2021 compared to
17.2% for fiscal 2020.

Cost of food and beverage products increased to $119,123 compared to $45,207 for fiscal 2020. Cost of
food and beverage products, as a percentage of food and beverage revenues, decreased 100 basis points to 27.3%
for fiscal 2021 from 28.3% for fiscal 2020. The impact of year-over-year cost increases in food products,
primarily poultry, were offset by lower closure-related spoilage costs and food price increases effective midway
through the third quarter of fiscal 2021.

Cost of amusement and other increased to $85,848 in fiscal 2021 compared to $29,698 in fiscal 2020. The

costs of amusement and other, as a percentage of amusement and other revenues, decreased 80 basis points to
9.9% for fiscal 2021 from 10.7% in fiscal 2020. This decrease was driven primarily by lower ticket redemption
activity as a percent of tickets issued during the first half of fiscal 2021, partially offset by higher freight costs.

Operating payroll and benefits

Total operating payroll and benefits increased by $169,788, or 144.5%, to $287,263 in fiscal 2021 compared

to $117,475 in fiscal 2020. Nearly all our store workforce, except a small team of essential personnel, were
furloughed in mid-March 2020. Hourly team members began to return as stores re-opened at reduced staffing
levels. The total cost of operating payroll and benefits as a percentage of total revenues was 22.0% in fiscal 2021
compared to 26.9% in 2020. This decrease is primarily due to favorable leveraging on management labor and
benefits and lower labor hours due to labor efficiency initiatives and hourly labor staffing shortages, partially
offset by increases in the hourly labor costs and higher incentive compensation, including referral and retention
incentives implemented during the second quarter of fiscal 2021.

Other store operating expenses

Other store operating expenses increased by $103,197, or 34.5%, to $402,661 in fiscal 2021 compared to
$299,464 in fiscal 2020. The increase is primarily due to the impact of increased store weeks during fiscal 2021 on
costs such as utilities, supplies, maintenance, and other services and an approximate $11,000 increase in marketing
spend. These increases were offset somewhat by a $13,727 charge for impairment of long-lived assets and lease
termination costs incurred during fiscal 2020. Other store operating expense as a percentage of total revenues
decreased to 30.9% in fiscal 2021 compared to 68.6% in fiscal 2020. This decrease was due primarily to favorable
sales leveraging on occupancy costs and utilities and the absence of any impairment charges in fiscal 2021.

General and administrative expenses

General and administrative expenses increased by $28,286, or 59.9%, to $75,501in fiscal 2021 compared to

$47,215 in fiscal 2020. The increase in general and administrative expenses was driven primarily by higher
incentive compensation, salaries and benefits, professional fees, board fees, hiring cost, travel, and share-based
compensation. Fiscal 2021 also includes a $3,230 severance obligation to the Company’s former Chief Executive
Officer, who terminated his service in this position effective September 30, 2021, and a $912 impairment charge
related to the relocation of our store support center and abandonment of our former corporate office lease.
Effective near the end of March 2020, due to the impacts of the COVID-19 pandemic, most of our corporate
team members were furloughed, with reduced pay and benefits for the remaining team members for a twelve-
week period, and board fees were temporarily suspended. Share-based compensation was also lower during that
same time due to changes in performance stock unit expense.

40

Depreciation and amortization expense

Depreciation and amortization expense was relatively flat at $138,329 in fiscal 2021 compared to $138,789

in fiscal 2020. Increased depreciation due to our 2021 and 2020 capital expenditures for new stores, operating
initiatives, games, and maintenance capital, was offset by other assets reaching the end of their depreciable lives.

Pre-opening costs

Pre-opening costs decreased by $3,126 to $8,150 in fiscal 2021 compared to $11,276 in fiscal 2020 due to
delays in construction and a decrease in the number of planned new store openings, as a result of impacts of the
COVID-19 pandemic, which began during the first quarter of fiscal 2020. Specifically, while construction was
put on hold or delayed, pre-opening rent continued to be recorded for stores under construction.

Interest expense, net and Loss on debt extinguishment / refinancing

Interest expense, net increased by $17,020 to $53,910 in fiscal 2021 compared to $36,890 in fiscal 2020 due

primarily to an increase in the weighted average effective interest rate, offset partially by a decrease in average
outstanding debt. In connection with the early extinguishment of a portion of the Notes, the Company recorded a loss
on extinguishment of $5,617 during fiscal 2021. In connection with the debt refinancing in fiscal 2020, the Company
recorded a charge of $904. These events are explained further in Note 5 to the Consolidated Financial Statements.

Provision (benefit) for income taxes

The effective tax rate for fiscal 2021 was 14.9%, compared to a benefit of 28.7% for fiscal 2020. The

current year tax provision includes higher excess tax benefits associated with share-based compensation and
higher tax credits while the prior year was a tax benefit primarily due to the impact of the pre-tax loss and the
impact of the tax provisions within the CARES Act.

41

Fiscal 2020 Compared to Fiscal 2019

Results of operations. The following table sets forth selected data, in thousands 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 (loss).

Food and beverage revenues
Amusement and other revenues

Total revenues

Cost of food and beverage (as a percent of food and

beverage revenues)

Cost of amusement and other (as a percent of

amusement and other revenues)

Total cost of products
Operating payroll and benefits
Other store operating expenses
General and administrative expenses
Depreciation and amortization expense
Pre-opening costs

Total operating costs

Operating income (loss)

Interest expense, net
Loss on debt refinance

Income (loss) before provision (benefit) for

income taxes

Provision (benefit) for income taxes

Fiscal Year Ended
January 31, 2021

Fiscal Year Ended
February 2, 2020

$ 159,501
277,011

36.5% $ 563,576
791,115
63.5

41.6%
58.4

436,512

100.0

1,354,691

100.0

45,207

28.3

148,196

26.3

29,698

74,905
117,475
299,464
47,215
138,789
11,276

10.7

17.2
26.9
68.6
10.8
31.8
2.6

85,115

233,311
322,970
429,431
69,469
132,460
18,971

689,124

157.9

1,206,612

(252,612)
36,890
904

(57.9)
8.4
0.2

148,079
20,937
—

(290,406)
(83,432)

(66.5)
(19.1)

127,142
26,879

10.8

17.2
23.8
31.8
5.1
9.8
1.4

89.1

10.9
1.5
—

9.4
2.0

Net income (loss)

$(206,974)

(47.4)% $ 100,263

7.4%

Change in comparable store sales
Company-owned stores at end of period (1)
Comparable stores at end of period (1)

(70.2)%
140
114

(2.6)%
136
99

(1) As of January 31, 2021, 107 of our 140 stores were open and 84 of our 114 comparable stores were open.

Our total and comparable store counts as of the end of fiscal 2020 exclude a store in Chicago, Illinois and a
store in Houston, Texas which are at or near the end of their respective lease terms which the Company has
decided not to re-open. Our store in Duluth (Atlanta), Georgia permanently closed on March 3, 2019, as we
did not exercise the renewal option and is excluded from fiscal 2019 store counts and comparable store
sales. We opened six new stores during fiscal 2020 and 16 new stores during fiscal 2019.

42

Reconciliations of Non-GAAP Financial Measures

Adjusted EBITDA

The following table reconciles Net income (loss) to Adjusted EBITDA for the periods indicated:

Fiscal Year Ended
January 31, 2021

Fiscal Year Ended
February 2, 2020

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt refinance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (benefit) for income tax . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization expense . . . . . . . . . . . . . . . .

$(206,974)
36,890
904
(83,432)
138,789

-47.4% $100,263
20,937
—
26,879
132,460

7.4%

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on asset disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets and lease termination

costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre-opening costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other costs (1)

(113,823)
577

-26.1% 280,539
1,813

20.7%

13,727
6,985
11,276
(15)

—
6,857
18,971
42

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (81,273)

-18.6% $308,222

22.8%

(1) Primarily represents costs related to currency transaction (gains) or losses.

Store Operating Income Before Depreciation and Amortization

The following table reconciles Operating income (loss) to Store Operating Income Before Depreciation and

Amortization for the periods indicated:

Fiscal Year Ended
January 31, 2021

Fiscal Year Ended
February 2, 2020

Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . .
Depreciation and amortization expense . . . . . . . . . . . . . . . .
Pre-opening costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(252,612)
47,215
138,789
11,276

-57.9% $148,079
69,469
132,460
18,971

10.9%

Store Operating Income Before Depreciation and

Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (55,332)

-12.7% $368,979

27.2%

Capital Additions

The following table reflects accrual-based capital additions. Capital additions do not include any reductions

for Payments from landlords.

Fiscal Year Ended
January 31, 2021

Fiscal Year Ended
February 3, 2020

New store and operating initiatives . . .
Games . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
Maintenance capital

Total capital additions . . . . . . . . . . . . . . . . . .

Payments from landlords . . . . . . . . . . . . . . .

$51,572
8,795
3,266

$63,633

$12,923

$183,897
19,749
27,351

$230,997

$ 33,544

43

Results of Operations

Revenues

In response to the COVID-19 outbreak, which was declared a global pandemic on March 11, 2020, and a

National Public Health Emergency in the United States on March 13, 2020, the Company temporarily closed of
all our 137 stores by March 20, 2020 (including our one new store opening March 16, 2020). On April 30, 2020,
our first store re-opened to the public, as state and local guidelines began to allow dining rooms and arcades to
open at limited capacity and/or limited hours of operation. By the end of fiscal 2020, we had progressively
re-opened an additional 101 stores with limited operations. Many of these stores that were re-opened in limited
capacity were required to temporarily close again in areas more severely impacted by the COVID-19 pandemic,
particularly during the fourth quarter holiday season. The Company also opened five new stores in the second
half of the fiscal year, all of which commenced construction prior to the outbreak of the COVID-19 pandemic.
As of January 31, 2021, 107 of our 140 stores were open and operating in limited capacity. Of these 107 open
stores, 84 are comparable stores.

Selected revenue and store data for the periods indicated are as follows:

Total revenues
Total store operating weeks
Comparable store revenues
Comparable store operating weeks
Noncomparable store revenues
Noncomparable store operating weeks
Other revenues

Fiscal year ended
January 31, 2021

Fiscal year ended
February 2, 2020

$436,512
3,922
$358,395
3,157
$ 81,272
765
$ (3,155)

$1,354,691
6,769
$1,200,983
5,928
162,467
841
(8,759)

$

Change

$(918,179)
(2,847)
$(842,588)
(2,771)
$ (81,195)
(76)
5,604

$

Total revenues decreased $918,179, or 67.8%, to $436,512 in fiscal 2020 compared to total revenues of
$1,354,691 in fiscal 2019. The decline in revenue is attributable to fewer store operating weeks in fiscal 2020 as
a result of temporary store closures, lower customer volumes due to limited food and beverage and amusement
operations and the canceling or postponement of special events as a result of the COVID-19 pandemic. For the
year ended January 31, 2021, we derived 24.1% of our total revenue from food sales, 12.4% from beverage sales,
63.1% from amusement sales and 0.4% from other sources. For the year ended February 2, 2020 we derived
28.3% of our total revenue from food sales, 13.3% from beverage sales, 57.5% from amusement sales and 0.9%
from other sources.

Comparable store revenue decreased $842,588, or 70.2%, in fiscal 2020 compared to fiscal 2019, due
primarily to a 46.7% reduction in comparable store operating weeks and lower customer volumes as stores
re-opened with limited operations. As of March 20, 2020, all the Company’s 114 comparable stores were closed
due to operating restrictions put in place by local jurisdictions in response to the COVID-19 pandemic.
Beginning April 30, 2020, we began re-opening our stores based on changes in operating restrictions in the
various jurisdictions. As of January 31, 2021, 84 of our comparable stores had re-opened under limited operating
conditions. Our individual comparable stores generally experienced gradual increases in weekly sales
performance as operating weeks increased. Individual store performance after re-opening was impacted by
changes in local operating restrictions and consumer reactions to changes in local COVID-19 infection rates.

Comparable walk-in revenues, which accounted for 97.0% of comparable store revenue for fiscal 2020,
decreased 67.8% compared to the similar period in fiscal 2019. Comparable store special events revenues, which
accounted for 3.0% of comparable store revenue for fiscal 2020, decreased 91.1% compared to the similar period
in fiscal 2019 as events were canceled or postponed due to local restrictions on group gathering size and
operating restrictions on our business.

44

Food sales at comparable stores decreased by $252,827, or 74.5%, to $86,382 in fiscal 2020 from $339,209

in fiscal 2019. Beverage sales at comparable stores decreased by $113,917, or 71.6%, to $45,104 in fiscal 2020
from $159,021 in fiscal 2019. Comparable store amusement and other revenues in fiscal 2020 decreased by
$475,844, or 67.7%, to $226,909 from $702,753 in fiscal 2019.

Non-comparable store revenue decreased $81,195 in fiscal 2020 compared to fiscal 2019. During the first

four-week period of fiscal 2020, non-comparable stores contributed an additional $9,668 of revenue and 54
additional operating weeks over the same period of fiscal 2019. During the remainder of the fifty-two weeks
ended January 31, 2021, non-comparable store revenue decreased $90,863 for the same reasons noted above,
including 130 fewer store operating weeks.

Cost of products

The total cost of products was $74,905 for fiscal 2020 and $233,311 for fiscal 2019. The total cost of
products as a percentage of total revenues was 17.2% for both fiscal 2020 and fiscal 2019. For the year ended
January 31, 2021, the cost of food products was 29.9% of food revenue, the cost of beverage products was 25.3%
of beverage revenue, and the amusement and other cost of products was 10.7% of amusement and other
revenues. For the year ended February 2, 2020, the cost of food products was 27.2% of food revenue, the cost of
beverage products was 24.3% of beverage revenue, and the amusement and other cost of products was 10.8% of
amusement and other revenues.

Cost of food and beverage products decreased to $45,207 in fiscal 2020 compared to $148,196 for fiscal
2019. Cost of food and beverage products, as a percentage of food and beverage revenues, increased 200 basis
points to 28.3% for fiscal 2020 from 26.3% for fiscal 2019. Cost of food and beverage products during fiscal
2020 was negatively impacted by food and beverage spoilage of approximately $3,567 associated with store
closures and the upcoming new menu rollout, partially offset by cost reductions resulting from vendor payment
negotiations.

Cost of amusement and other decreased to $29,698 in fiscal 2020 compared to $85,115 in fiscal 2019. The

costs of amusement and other, as a percentage of amusement and other revenues, decreased 10 basis points to
10.7% for fiscal 2020 from 10.8% for fiscal 2019. This decrease was driven by lower freight costs, lower cost per
ticket and higher revenue per game play credit sold as a result of less discounting of amusement revenues,
partially offset by an unfavorable shift in ticket redemption patterns.

Operating payroll and benefits

Total operating payroll and benefits decreased by $205,495, or 63.6%, to $117,475 in fiscal 2020 compared

to $322,970 in fiscal 2019. Nearly all of our store workforce, with the exception of a small team of essential
personnel, were furloughed in mid-March 2020. Hourly team members returned only as stores re-opened and at
reduced staffing levels. The total cost of operating payroll and benefits, as a percentage of total revenues,
increased 310 basis points to 26.9% in fiscal 2020 compared to 23.8% for fiscal 2019. Favorable results in hourly
labor were offset by the deleveraging impact of management labor as a result of the temporary store closures and
continued benefit coverage for furloughed team members. Additionally, late in the third quarter, we recalled a
core group of store managers at unopened stores and then maintained this core group throughout the fourth
quarter to ensure retention of key team members.

Other store operating expenses

Other store operating expenses decreased by $129,967, or 30.3%, to $299,464 in fiscal 2020 compared to
$429,431 in fiscal 2019. Decreased spend on marketing, maintenance, and restaurant services due to temporary
store closures and $1,000 insurance proceeds related to the COVID-19 business disruptions were partially offset
by a net loss on derivatives of $1,729 and special charges of $13,727 (consisting of a charge for impairment of
long-lived assets of $12,248 and lease termination costs of $1,479). We have also incurred additional costs to

45

address government regulations and the safety of our team members and customers. Other store operating
expense as a percent of total revenues increased to 68.6% in fiscal 2020 compared to 31.8% in fiscal 2019. This
increase was primarily due to sales deleveraging of occupancy costs and utilities as a result of the temporary
store closures and the charges for impairment.

General and administrative expenses

General and administrative expenses decreased by $22,254, or 32.0%, to $47,215 in fiscal 2020 compared to
$69,469 in fiscal 2019. The decrease in general and administrative expenses was driven primarily by lower labor
costs due to continued furloughs and elimination of a significant number of positions at our corporate office,
temporarily reducing pay and benefits for team members that were not furloughed for a twelve-week period and
the elimination of the corporate bonus program, lower professional services, and reduced travel expenses.
General and administrative expenses, as a percentage of total revenues, increased 570 basis points to 10.8% in
fiscal 2020 compared to 5.1% in fiscal 2019, due primarily to unfavorable leverage on revenue decreases.

Depreciation and amortization expense

Depreciation and amortization expense increased by $6,329, or 4.8%, to $138,789 in fiscal 2020 compared
to $132,460 in fiscal 2019. Increased depreciation due to our 2020 and 2019 capital expenditures for new stores,
operating initiatives, games and maintenance capital, was partially offset by other assets reaching the end of their
depreciable lives.

Pre-opening costs

Pre-opening costs decreased by $7,695 to $11,276 in fiscal 2020 compared to $18,971 in fiscal 2019 due to

a decrease in the number of new store openings in the current year, as construction was put on hold or delayed
after the disruption of our business from the COVID-19 pandemic, with pre-opening costs being primarily
limited to pre-opening rent expense, including three future sites for which the leases have commenced.

Interest expense, net and Loss on debt refinance

Interest expense, net increased by $15,953 to $36,890 in fiscal 2020 compared to $20,937 in fiscal 2019 due

primarily to an increase in interest rates and partially due to an increase in average outstanding debt. In
connection with the October 27, 2020 debt refinancing, which is explained in Note 5 to the Consolidated
Financial Statements, the Company recorded a charge of $904 during fiscal 2020.

Provision for income taxes

The effective income tax rate for fiscal 2020 was a benefit of 28.7% compared to a provision of 21.1% in

fiscal 2019, primarily due to the impact of a decrease in operating earnings before income tax as well as the
impact of provisions of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), including
technical amendments to qualified improvement property and the impact of carrying back tax net operating
losses from fiscal years 2020 and 2019 to years with a higher federal corporate income tax rate.

Liquidity and Capital Resources

In response to the business disruption caused by the COVID-19 pandemic which began in the first quarter of

fiscal 2020, the Company took the following actions to enable it to meet its obligations over the next twelve
months:

•

•

sold shares of our common stock, generating gross proceeds of $185,600;

negotiated two amendments with our lenders, resulting in an extension of the maturity date of our
revolving credit facility to August 17, 2024, and relief from certain financial covenants;

46

•

•

issued $550,000 of senior secured notes, maturing November 1, 2025;

negotiated with our landlords, vendors, and other business partners to temporarily reduce our lease and
contract payments and obtain other concessions. During fiscal 2020, a total of 126 initial rent relief
agreements related to our operating locations and former corporate headquarters were executed, and a
second phase of negotiations, generally seeking to delay or extend the terms of deferral pay back
periods and/or provide rent relief beyond the periods in the initial agreements, was substantially
completed by the end of the Company’s second quarter of fiscal 2021, resulting in 99 additional rent
relief agreements; and

• The Company has also taken measures to strengthen its financial position. During fiscal 2021, the

Company redeemed $110,000 outstanding principal amount of the Notes. The early redemptions are
expected to reduce net cash interest on the Notes by approximately $8,400 annually.

The Company had cash and cash equivalents of $25,910 and $492,495 of liquidity available under its
revolving credit facility as of the end of fiscal 2021. Additionally, all the Company’s stores were open and
operating as of the end of fiscal 2021, except for its two Canadian stores. Although uncertainty persists
surrounding future resurgences and variants of COVID-19, what safety measures governments may impose in
response to it, as well as how quickly customers will return to our stores, the Company believes there is sufficient
liquidity to meet estimated cash flow needs and to comply with our credit facility financial covenants for at least
the next twelve months.

Debt and Derivatives

On October 27, 2020, the Company issued $550,000 aggregate principal amount of 7.625% senior secured
notes (the “Notes”). Interest on the Notes accrues from October 27, 2020, payable in arrears on November 1 and
May 1 of each year, commencing on May 1, 2021. The Notes mature on November 1, 2025, unless earlier
redeemed, and are subject to the terms and conditions set forth in the related indenture. Prior to November 1,
2022, but not more than once during any twelve-month period commencing with the issue date of the Notes, the
Company may redeem up to 10% of the original principal amount of the Notes at a redemption price of 103% of
the principal amount, plus accrued and unpaid interest, at the redemption date. After November 1, 2022, the
Company may redeem the Notes, in whole or in part, at certain specified redemption prices, plus accrued and
unpaid interest, at the redemption date. The Notes were issued by Dave & Buster’s, Inc. and are unconditionally
guaranteed by Dave & Buster’s Holdings, Inc. and certain of Dave & Buster’s, Inc. existing and future wholly
owned material domestic subsidiaries, which is substantially the same as the guarantors of the Company’s
existing credit facility.

The first amendment to the existing credit facility, effective April 14, 2020, increased the interest rate
spread on variable rate debt to 2.00% plus a LIBOR floor of 1.00%. Concurrent and subject to the issuance of the
Notes, the Company executed a second amendment, which included relief from testing compliance with certain
financial covenants until the last day of the fiscal quarter ending on May 1, 2022. During the financial covenant
suspension period the Company is required to maintain a minimum liquidity (primarily availability under the
credit facility) of $150,000. During the fourth quarter of fiscal 2021, the Company ended this financial covenant
suspension period. The second amendment extended the maturity of the $500,000 revolving portion of the
facility from August 17, 2022, to August 17, 2024, increased the interest rate spread to 4.00%, and instituted a
1.00% utilization fee due at maturity. After the first quarter of fiscal 2022, when the financial covenant
suspension increased pricing period ends, the interest rate spread ranges from 1.25% to 3.00% and the utilization
fee will cease.

The second amendment also terminated the term loan portion of the credit facility, triggering payment of

$1,900 of lender debt costs, and the Company recorded a loss of $904 related to the unamortized debt costs
associated with the term portion of the credit facility. The Company used the proceeds of the Notes offering,
along with cash on hand, to repay the $255,000 principal balance of the term loan facility, $463,000 of
borrowings under the revolving credit facility, and related accrued interest. The Company incurred debt costs of

47

$18,300 associated with the issuance of the Notes and the second amendment to the credit facility, which are
being amortized over the respective terms.

During fiscal 2021, the Company redeemed a total of $110,000 outstanding principal amount of the Notes in

two separate transactions. In connection with the early redemption of the Notes, the Company paid prepayment
premiums of $3,300, plus accrued and unpaid interest to the date of redemptions, pursuant to the terms of the
indenture governing the Notes. Additionally, the early redemptions of the Notes resulted in a loss on
extinguishment of approximately $2,300 related to a proportionate amount of unamortized issuance costs.

For fiscal 2021 and fiscal 2020, the Company’s weighted average interest rate on outstanding borrowings

was 10.34% and 5.40%, respectively. The rate has increased due to the issuance of the Notes and the second
amendment to the credit facility. As of January 30, 2022, we had letters of credit outstanding of $7,505 and an
unused commitment balance of $492,495 under the revolving credit facility. The Company’s Notes and credit
facility contain restrictive covenants that, among other things, place certain limitations on our ability to incur
additional indebtedness, make loans or advances to subsidiaries and other entities, pay dividends, acquire other
businesses or sell assets. As of January 30, 2022, the Company was in compliance with the financial covenants of
our credit facility and all restrictive covenants of the Notes and credit facility.

During fiscal 2019, we entered into interest rate swap agreements to manage our exposure to fluctuations in
interest rates on our variable rate credit facility. Our swap agreements with our derivative counterparties contain
a provision where if the Company defaults on any of its indebtedness and repayment of the indebtedness has
been accelerated, the Company could also be declared in default on its derivative obligations. Refer to Note 1 of
the Consolidated Financial Statements for further discussion of our swap agreements, which were de-designated
as hedges effective April 14, 2020, the date of the first amendment to our credit facility.

Dividends and Share Repurchases

On December 6, 2021, our Board of Directors approved a share repurchase program with an authorization

limit of $100,000, expiring at the end of fiscal 2022. Future decisions to pay cash dividends or repurchase shares
continue to be at the discretion of the Board of Directors and will be dependent on our operating performance,
financial condition, capital expenditure requirements and other factors that the Board of Directors considers
relevant. There were no dividends declared or share repurchases under the relevant share authorization programs
in either fiscal 2021 or fiscal 2020.

Cash Flow Summary

As of the end of fiscal 2021, we had cash and cash equivalents of $25,910.

Operating Activities— Cash flow from operations typically provides 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, employee compensation, operations, and occupancy 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 from operating activities increased $332,352 in fiscal 2021 compared to fiscal 2020 driven

primarily by the impact of approximately 3,200 more store weeks.

Investing Activities — Cash flow from investing activities primarily reflects capital expenditures.

•

In fiscal 2021, the Company spent approximately $53,000 ($37,000 net of payments from
landlords) for new store construction and operating improvement initiatives, $15,000 for game
refreshment and $24,000 for maintenance capital.

48

•

•

In fiscal 2020, the Company spent approximately $64,000 ($51,000 net of payments from
landlords) for new store construction and operating improvement initiatives, $10,000 for game
refreshment and $9,000 for maintenance capital

In fiscal 2019, the Company spent approximately $187,000 ($153,000 net of payments from
landlords) for new store construction and operating improvement initiatives, $19,000 for game
refreshment and $22,000 for maintenance capital.

Financing Activities — Cash flow from financing activities primarily reflected:

•

•

In fiscal 2021, the Company had net repayments of $60,000 of its revolving credit facility and a
repayment related to the early extinguishment of $110,000 principal of the Notes.

In fiscal 2020, prior to the debt refinancing, the Company drew down substantially all the
available credit under our revolving credit facility, or approximately $100,000, and the Company
received net proceeds of approximately $182,200 from the issuance of shares of our common
stock in April and May 2020. In October 2020, the Company issued $550,000 of senior secured
notes in a private offering and amended the existing credit facility. The proceeds from the
offering, along with cash on hand, were used to pay debt issuance costs, the $255,000 balance of
the term portion of the credit facility, and $463,000 of outstanding borrowings under the revolving
portion of the credit facility. Subsequent to the refinancing, the Company had net borrowings of
$34,000 under the revolver.

•

In fiscal 2019, approximately $297,000 of share repurchases and approximately $16,000 of cash
dividends paid, partially offset by $254,000 of net proceeds from borrowings of debt.

The Company has long-term debt obligations under its senior notes and long-term lease commitments. See Notes
5 and 7 to the Consolidated Financial Statements for further information regarding these commitments.

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. 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 amusement operations. Amusement revenues are primarily recognized upon utilization of

game play credits on Power Cards purchased and used by customers to activate video and redemption games.
Redemption games allow customers to earn tickets, which may be redeemed for prizes in our WIN! area. We
have deferred a portion of amusement revenues for the estimated unfulfilled performance obligations based on an
estimated rate of future use by customers of unused game play credits and the material right provided to
customers to redeem tickets in the future for prizes. We estimate the amount of deferred revenue based upon
credits and tickets remaining on Power 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.

49

Accounting for impairment of long-lived assets. We assess the potential impairment of our long-lived

assets related to each store to be held and used in business, including property and equipment and right-of-use
(“ROU”) 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 included future revenue growth 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 of Consolidated Financial Statements for information regarding 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

Outstanding borrowings on our revolving credit facility are based on variable rates, and we have historically

elected to use LIBOR. Although our borrowing arrangements provide for alternative base rates other than
LIBOR, those rates have historically been higher than those we paid based on LIBOR (which currently is subject
to a floor of 1.00%). When LIBOR ceases to exist, we will likely need to agree upon a replacement index with
our lenders, and the interest rate thereunder will likely change. As of January 30, 2022, there was no balance
outstanding on our revolving credit facility.

Inflation

Severe 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.

50

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 information is accumulated and communicated to management, including the Chief Executive
Officer (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 Chief Executive

Officer and Chief Financial Officer, 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 Chief
Executive Officer and Chief Financial Officer 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 January 30, 2022, 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 January 30, 2022.

Our independent registered public accounting firm, KPMG LLP, audited the effectiveness of our internal

control over financial reporting as of January 30, 2022, as stated in their report which is included herein.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our fourth
fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

ITEM 9B. Other Information

None.

51

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

None.

52

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.

53

ITEM 15. Exhibits and Financial Statement Schedules

PART IV

(1) Financial Statements

See Pages F-1 to F-27 of this report.

(2) Financial Statement Schedules

None.

(3) Exhibits

54

Exhibit
Number

3.1

3.2

3.3

4.1

4.2

4.3

4.4

4.5

10.1

10.2

10.3

10.4

10.5

INDEX OF EXHIBITS

Description

Fourth Amended and Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 to the Current Report filed on Form 8-K by Dave & Buster’s Entertainment,
Inc. on June 12, 2017 (No. 001-35664))

Third Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to
the Current Report filed on Form 8-K by Dave & Buster’s Entertainment, Inc. on June 12, 2017 (No.
001-35664))

Certificate of Designation of Series A Junior Participating Preferred Stock of Registrant
(incorporated by reference to Exhibit 3.1 to the Current Report filed on Form 8-K by Dave &
Buster’s Entertainment, Inc. on March 19, 2020 (No. 001-35664))

Form of Stock Certificate (incorporated by reference to Exhibit 4.1 to the Amendment 1 to the Form
S-1 Registration Statement filed by Dave & Buster’s Entertainment, Inc. on September 24, 2014
(No. 333-198641))

Rights Agreement, dated as of March 18, 2020, between Registrant and Computershare Trust
Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 to the Current Report
filed on Form 8-K by Dave & Buster’s Entertainment, Inc. on March 19, 2020 (No. 001-35664))

Amended and Restated Description of the Registrant’s Securities Registered Pursuant to Section 12
of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.3 to the Quarterly
Report on Form 10-Q filed on June 10, 2021 (No. 001-35664))

Indenture dated as of October 27, 2020, by and among Dave & Buster’s, Inc., the guarantors party
thereto and U.S. Bank, National Association, as trustee and collateral agent (incorporated by
reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed on October 27, 2020
(No. 001-35664))

Form of Note (incorporated by reference to Appendix A of Exhibit 4.1 of the Registrant’s Current
Report on Form 8-K filed on October 27, 2020 (No. 001-35664))

Form of Employee Agreement by and among Dave & Buster’s Management Corporation, Dave &
Buster’s Entertainment, Inc., and the various executive officers of Dave & Buster’s Entertainment,
Inc. (incorporated by reference to Exhibit 10.1 to the Form S-1 Registration Statement filed by
Dave & Buster’s Entertainment, Inc. on September 18, 2015 (No. 333-207031))

Dave & Buster’s Parent, Inc. 2010 Management Incentive Plan (incorporated by reference to Exhibit
10.3 to the Form S-4 Registration Statement filed by Dave & Buster’s, Inc. on August 11, 2010 (No.
333-168759))

Amendment No. 1 to the Dave & Buster’s Parent, Inc. 2010 Management Incentive Plan
(incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q filed by Dave &
Buster’s, Inc. on June 15, 2011) (No. 001-15007)

Amendment No. 2 to the Dave & Buster’s Parent, Inc. 2010 Management Incentive Plan
(incorporated by reference to Exhibit 10.6 to the annual report on Form 10-K filed by Dave &
Buster’s, Inc. on April 16, 2013) (No. 001-15007)

Dave & Buster’s Entertainment, Inc. Amended and Restated 2014 Omnibus Incentive Plan
(incorporated by reference to Appendix A to the Proxy Statement filed by Dave & Buster’s
Entertainment, Inc. on May 13, 2020 (No. 001-35664))

55

Exhibit
Number

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

Description

Form of Nonqualified Stock Option Award Agreement, by and between Dave & Buster’s
Entertainment, Inc. and various Directors of the Company (incorporated by reference to Exhibit 10.7
to the Form S-1 Registration Statement filed by Dave & Buster’s Entertainment, Inc. on
September 18, 2015 (No. 333-207031))

Form of Nonqualified Stock Option Award Agreement, by and between Dave & Buster’s
Entertainment, Inc. and various employees of the Company (incorporated by reference to Exhibit
10.8 to the Form S-1 Registration Statement filed by Dave & Buster’s Entertainment, Inc. on
September 18, 2015 (No. 333-207031))

Form of Restricted Stock Award Agreement, by and between Dave & Buster’s Entertainment, Inc.
and various Directors of the Company (incorporated by reference to Exhibit 10.9 to the Form S-1
Registration Statement filed by Dave & Buster’s Entertainment, Inc. on September 18, 2015 (No.
333-207031))

Form of Restricted Stock Unit and Cash Award Agreement, by and between Dave & Buster’s
Entertainment, Inc. and various employees of the Company (incorporated by reference to Exhibit
10.10 to the Form S-1 Registration Statement filed by Dave & Buster’s Entertainment, Inc. on
September 18, 2015 (No. 333-207031))

Dave & Buster’s Select Executive Retirement Plan as amended and restated by Dave & Buster’s
Management Corporation, Inc., effective as of January 1, 2017, (incorporated by reference to Exhibit
10.1 to the quarterly report on Form 10-Q filed by Dave & Buster’s Entertainment, Inc. on
December 10, 2020 (No. 001-35664))

Form of Indemnification Agreement for directors, executive officers and key employees
(incorporated by reference to Exhibit 10.12 to the Amendment 1 to the Form S-1 Registration
Statement filed by Dave & Buster’s Entertainment, Inc. on September 24, 2014 (No. 333-198641))

Credit Agreement, dated as of August 17, 2017 by and among Dave & Buster’s Holdings, Inc.,
Dave & Buster’s Inc. (“the Borrower”) the direct and indirect Subsidiaries of the Borrower from
time to time party thereto, as guarantors, the several financial institutions from time to time party
thereto, as lenders, Bank of America, N.A., as administrative agent, and Wells Fargo, National
Association, as syndication agent (incorporated by reference to Exhibit 10.1 of the Registrant’s
Current Report on Form 8-K filed on August 23, 2017)

First Amendment to Amended and Restated Credit Agreement among Dave & Buster’s, Inc., various
lenders and Bank of America, N.A., as administrative agent for the lenders (incorporated by
reference to Exhibit 10.2 to the quarterly report on Form 10-Q filed by Dave & Buster’s
Entertainment, Inc. on June 11, 2020 (No. 001-35664))

Second Amendment and Consent and Revolving Credit Commitment Extension Amendment to
Amended and Restated Credit Agreement dated as of October 16, 2020 (incorporated by reference to
Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on October 27, 2020 (No.
001-35664))

Form of Nonqualified Stock Option Award Agreement, by and between Dave & Buster’s
Entertainment, Inc. and various employees of the Company (incorporated by reference to Exhibit
10.1 to the quarterly report on Form 10-Q filed by Dave & Buster’s Entertainment, Inc. on June 11,
2019 (No. 001-35664))

Form of Restricted Stock Unit Award Agreement, by and between Dave & Buster’s Entertainment,
Inc. and various Directors of the Company (incorporated by reference to Exhibit 10.2 to the
quarterly report on Form 10-Q filed by Dave & Buster’s Entertainment, Inc. on June 11, 2019 (No.
001-35664))

56

Exhibit
Number

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

Description

Form of Restricted Stock Unit and Cash Award Agreement, by and between Dave & Buster’s
Entertainment, Inc. and various employees of the Company (incorporated by reference to Exhibit
10.3 to the quarterly report on Form 10-Q filed by Dave & Buster’s Entertainment, Inc. on June 11,
2019 (No. 001-35664))

Form of Restricted Stock Unit Agreement, by and between Dave & Buster’s Entertainment, Inc.
and various employees of the Company (incorporated by reference to Exhibit 10.4 to the quarterly
report on Form 10-Q filed by Dave & Buster’s Entertainment, Inc. on June 11, 2019 (No.
001-35664))

Form of Market Stock Unit Award Agreement by and between Dave & Buster’s Entertainment, Inc.
and various employees of the Company (incorporated by reference to Exhibit 10.1 of the
Registrant’s Current Report on Form 8-K filed on May 4, 2020 (No. 001-35664))

Form of Restricted Stock Unit Agreement, by and between Dave & Buster’s Entertainment, Inc.
and various employees of the Company (incorporated by reference to Exhibit 10.2 of the
Registrant’s Current Report on Form 8-K filed on May 4, 2020 (No. 001-35664))

Transition and Separation Agreement and Release by and between Brian A. Jenkins and Dave &
Buster’s Entertainment, Inc. and Dave & Buster’s Management Corporation (incorporated by
reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on December 7, 2021 (No.
001-35664))

Interim CEO Letter Agreement by and between Kevin Sheehan and Dave & Buster’s
Entertainment, Inc. and Dave & Buster’s Management Corporation (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on December 7, 2021 (No. 001-35664))

Form of Restricted Stock Unit Agreement by and between Kevin Sheehan and Dave & Buster’s
Entertainment, Inc. (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form
10-Q filed on December 7, 2021 (No. 001-35664))

Form of Restricted Stock Unit Agreement by and between Kevin Sheehan and Dave & Buster’s
Entertainment, Inc. (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form
10-Q filed on December 7, 2021 (No. 001-35664))

10.25*

Employment Agreement by and among Dave & Buster’s Management Corporation, Dave &
Buster’s Entertainment, Inc., and Michael Quartieri effective January 1, 2022

21.1*

23.1*

24.1*

31.1*

31.2*

32.1*

32.2*

Subsidiaries of the Registrant

Consent of KPMG LLP, Independent Registered Public Accounting Firm

Power of Attorney (included on signature page)

Certification of Kevin M. Sheehan, Interim Chief Executive Officer of the Registrant, pursuant to
17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a).

Certification of Michael A. Quartieri, Chief Financial Officer of the Registrant, pursuant to 17 CFR
240.13a-14(a) or 17 CFR 240.15d-14(a).

Certification of Kevin M. Sheehan, Interim Chief Executive Officer of the Registrant, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Michael A. Quartieri, Chief Financial Officer of the Registrant, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

57

Exhibit
Number

Description

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.

58

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.

Date: March 29, 2022

DAVE & BUSTER’S ENTERTAINMENT, INC.,
a Delaware Corporation

By: /s/ Michael A. Quartieri
Michael A. Quartieri
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 Rob W. Edmund, 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 March 29, 2022.

By: /s/ Kevin M. Sheehan
Kevin M. Sheehan

By: /s/ Michael A. Quartieri
Michael A. Quartieri

By: /s/ James Chambers
James Chambers

By: /s/ Hamish A. Dodds
Hamish A. Dodds

By: /s/ Michael J. Griffith
Michael J. Griffith

By: /s/ Patricia H. Mueller
Patricia H. Mueller

By: /s/ Atish Shah
Atish Shah

By: /s/ Jennifer Storms
Jennifer Storms

Interim Chief Executive Officer and Chair of the Board

(Principal Executive Officer)

Chief Financial Officer

(Principal Financial and Accounting Officer)

Director

Director

Director

Director

Director

Director

59

Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm (KPMG LLP, Dallas, TX, Auditor Firm

F-2
ID: 185) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-6
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-7
Consolidated Statements of Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-8
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-9
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10

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 January 30, 2022, 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
January 30, 2022, 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 January 30, 2022 and
January 31, 2021, the related consolidated statements of comprehensive income (loss), stockholders’ equity, and
cash flows for each of the fiscal years in the three-year period ended January 30, 2022, and the related notes
(collectively, the consolidated financial statements), and our report dated March 29, 2022 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.

F-2

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
March 29, 2022

F-3

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 January 30, 2022 and January 31, 2021, the related consolidated statements of
comprehensive income (loss), stockholders’ equity, and cash flows for each of the fiscal years in the three-year
period ended January 30, 2022, 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 January 30, 2022 and January 31, 2021, and the results of its operations and its cash flows for
each of the fiscal years in the three-year period ended January 30, 2022, 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 January 30, 2022, 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 March 29, 2022 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 amusement revenue for unused game play credits

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company defers a portion of
amusement 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
amusement revenue of $93.0 million as of January 30, 2022, which is included in accrued liabilities on the
consolidated balance sheet

F-4

and disclosed as deferred amusement 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.

We identified the evaluation of the estimated rate of future use assumption used to determine deferred
amusement 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, including consideration of the impacts of customer usage patterns during the COVID-19
pandemic on management’s 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
amusement 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,
including changes in customer usage patterns during the COVID-19 pandemic. 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 amusement revenue for unredeemed tickets

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company defers a portion of
amusement revenue for the material right provided to customers to redeem tickets in the future for prizes.
The Company recorded deferred amusement revenue of $93.0 million as of January 30, 2022, which is
included in accrued liabilities on the consolidated balance sheet and disclosed as deferred amusement
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
amusement 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, including consideration of the impacts of customer usage patterns during the COVID-19
pandemic on management’s 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
amusement 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, including
changes in customer redemption patterns during the COVID-19 pandemic. 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.

Dallas, Texas
March 29, 2022

F-5

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

ASSETS

Current assets:

Cash and cash equivalents
Inventories
Prepaid expenses
Income taxes receivable
Other current assets

Total current assets

Property and equipment (net of $908,536 and $798,804 accumulated depreciation as

of January 30, 2022 and January 31, 2021, respectively)

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:

Accounts payable
Accrued liabilities
Income taxes payable

Total current liabilities

Deferred income taxes
Operating lease liabilities
Other liabilities
Long-term debt, net
Commitments and contingencies
Stockholders’ equity:

Common stock, par value $0.01; authorized: 400,000,000 shares; issued:

61,563,613 shares at January 30, 2022 and 60,488,833 shares at January 31,
2021; outstanding: 48,489,935 shares at January 30, 2022 and 47,646,606
shares at January 31, 2021

Preferred stock, 50,000,000 authorized; none issued
Paid-in capital
Treasury stock, 13,073,678 and 12,842,227 shares as of January 30, 2022 and

January 31, 2021, respectively

Accumulated other comprehensive loss
Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

January 30,
2022

January 31,
2021

$

$

25,910
40,319
11,316
64,921
3,105

11,891
23,807
11,878
70,064
1,231

145,571

118,871

778,597
1,037,197
9,961
79,000
272,597
22,867

815,027
1,037,569
5,874
79,000
272,597
23,886

$ 2,345,790

$ 2,352,824

$

62,493
248,493
529

$

36,400
234,790
446

311,515
12,012
1,277,539
37,869
431,395

271,636
13,658
1,267,791
50,119
596,388

616
—
548,776

605
—
531,191

(605,435)
(3,628)
335,131

(595,970)
(9,085)
226,491

275,460

153,232

$ 2,345,790

$ 2,352,824

See accompanying notes to consolidated financial statements.

F-6

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share amounts)

Food and beverage revenues
Amusement and other revenues

Total revenues
Cost of food and beverage
Cost of amusement and other

Total cost of products
Operating payroll and benefits
Other store operating expenses
General and administrative expenses
Depreciation and amortization expense
Pre-opening costs

Total operating costs

Operating income (loss)

Interest expense, net
Loss on debt extinguishment / refinance

Income (loss) before provision (benefit) for income taxes

Provision (benefit) for income taxes

Net income (loss)

Unrealized foreign currency translation gain (loss)
Unrealized gain (loss) on derivatives, net of tax

Total other comprehensive gain (loss)

Total comprehensive income (loss)

Net income (loss) per share:
Basic
Diluted
Weighted average shares used in per share calculations:
Basic
Diluted

Fiscal Year
Ended
January 30,
2022

Fiscal Year
Ended
January 31,
2021

Fiscal Year
Ended
February 2,
2020

$

436,637
867,419

$

1,304,056
119,123
85,848

204,971
287,263
402,661
75,501
138,329
8,150

1,116,875

187,181
53,910
5,617

127,654
19,014

108,640

(28)
5,485

5,457

159,501
277,011

436,512
45,207
29,698

74,905
117,475
299,464
47,215
138,789
11,276

689,124

(252,612)
36,890
904

(290,406)
(83,432)

(206,974)

119
(835)

(716)

$

563,576
791,115

1,354,691
148,196
85,115

233,311
322,970
429,431
69,469
132,460
18,971

1,206,612

148,079
20,937
—

127,142
26,879

100,263

(65)
(7,621)

(7,686)

$

$
$

114,097

$ (207,690) $

92,577

2.26
2.21

$
$

(4.75) $
(4.75) $

3.00
2.94

48,142,090
49,263,720

43,549,887
43,549,887

33,450,217
34,099,378

See accompanying notes to consolidated financial statements.

F-7

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share and per share amounts)

Common Stock

Shares

Amt.

Paid-In
Capital

Treasury Stock
At Cost

Shares

Amt.

Accumulated
Other
Comprehensive
Income (loss)

Retained
Earnings

Total

Balance February 3, 2019 43,177,476 432 331,255 5,655,391 (297,129)
Cumulative effect of a

(683)

353,962

387,837

change in accounting
principle, net of tax . . . .
Net income . . . . . . . . . . . .
Unrealized foreign

currency translation
loss . . . . . . . . . . . . . . . .

Unrealized loss on

derivatives, net of tax . .
Dividends declared ($0.62
. . . . . . . . . . .

per share)
Share-based

compensation . . . . . . . .

Issuance of common

— —
— —

— —

— —

— —

—
—

—

—

—

— —

6,857

stock . . . . . . . . . . . . . . .

209,376

2

1,049

Repurchase of common

—
—

—

—

—

—

—

—
—

—

—

—

—

—

stock . . . . . . . . . . . . . . .

— 7,128,121 (297,912)
— —
Balance February 2, 2020 43,386,852 434 339,161 12,783,512 (595,041)
Net loss . . . . . . . . . . . . . . .
— —
Unrealized foreign

—

—

—

currency translation
gain . . . . . . . . . . . . . . . .

Unrealized loss on

— —

derivatives, net of tax . .

— —

Share-based

—

—

compensation . . . . . . . .

— —

6,985

Issuance of common

stock . . . . . . . . . . . . . . . 17,101,981 171 185,045

Repurchase of common

—

—

—

—

—

—

—

—

stock . . . . . . . . . . . . . . .

(929)
— —
Balance January 31, 2021 60,488,833 605 531,191 12,842,227 (595,970)
Net income . . . . . . . . . . . .
— —
Unrealized foreign

58,715

—

—

—

—

currency translation
loss . . . . . . . . . . . . . . . .

Unrealized gain on

— —

derivatives, net of tax . .

— —

Share-based

—

—

compensation . . . . . . . .

— — 12,472

Issuance of common

stock . . . . . . . . . . . . . . . 1,074,780

11

5,113

—

—

—

—

—

—

—

—

Repurchase of common

stock . . . . . . . . . . . . . . .

— —

—

231,451

(9,465)

—
—

(145)
100,263

(145)
100,263

(65)

(7,621)

—

—

(65)

(7,621)

—

—

—

(20,615)

(20,615)

—

—

6,857

1,051

—
(8,369)
—

— (297,912)
169,650
433,465
(206,974) (206,974)

119

(835)

—

—

—
(9,085)
—

(28)

5,485

—

—

—

—

—

—

119

(835)

6,985

— 185,216

—

226,491
108,640

(929)
153,232
108,640

—

—

—

—

(28)

5,485

12,472

5,124

—

(9,465)
$ 335,131 $ 275,460

Balance January 30, 2022 61,563,613 $616 $548,776 13,073,678 $(605,435) $(3,628)

See accompanying notes to consolidated financial statements.

F-8

DAVE & BUSTER’S ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Cash flows from operating activities:

Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating

$ 108,640

$(206,974)

$ 100,263

Fiscal Year
Ended
January 30,
2022

Fiscal Year
Ended
January 31,
2021

Fiscal Year
Ended
February 2,
2020

activities:

Depreciation and amortization expense
Non-cash interest expense
Impairment of long-lived assets
Deferred taxes
Loss on debt extinguishment or refinancing
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

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Capital expenditures
Proceeds from insurance
Proceeds from sales of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from debt
Payments of debt
Debt issuance costs and prepayment premiums
Net proceeds from the issuance of common stock
Repurchase of common stock under share repurchase program
Repurchases of common stock to satisfy employee withholding tax obligations
Dividends paid
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
Dividends declared, not paid

138,329
7,547
912
(7,795)
5,617
1,392
12,472
4,201

(16,512)
562
5,143
(1,874)
(63)
14,286
20,223
83
(10,035)

283,128

(92,197)
—
729

(91,468)

83,000
(253,000)
(3,300)
—
—
(9,465)
—
5,124

138,789
5,974
12,248
(3,365)
904
577
6,985
2,033

10,670
2,993
(67,733)
2,014
484
(9,576)
56,757
(2,608)
604

(49,224)

(83,016)
595
461

132,460
—
—
6,473
—
1,813
6,857
1,070

(7,162)
(2,162)
(451)
5,320
(1,017)
2,026
47,896
(8,745)
4,305

288,946

(228,091)

—
800

(81,960)

(227,291)

732,000
(770,250)
(20,209)
182,207
—
(929)
(4,891)
492

406,000
(152,000)

—
—

(297,317)
(595)
(15,724)
1,051

(177,641)

118,420

(58,585)

14,019
11,891

(12,764)
24,655

3,070
21,585

$ 25,910

$ 11,891

$ 24,655

$ 11,807
$ 21,549
$ 44,545
—
$

$ (19,383)
$
(9,352)
$ 17,916
—
$

2,906
$
$ 27,245
$ 20,115
4,891
$

See accompanying notes to consolidated financial statements.

F-9

DAVE & BUSTER’S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and 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”) 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 under the
name “Dave & Buster’s”. The Company operates its business as one operating and one reportable segment.

During fiscal 2021, we opened five new stores, including one store in Cary, North Carolina that was closed

and relocated during the fourth quarter. During fiscal 2020, we opened six new stores, and management made the
decision to not re-open two stores located in the Chicago, Illinois area and Houston, Texas area, which were at or
near the end of their respective lease terms. At January 30, 2022, we owned and operated 144 stores located in 40
states, Puerto Rico and one Canadian province.

The Company’s two stores located in the Canadian province of Ontario generated revenues of

approximately $6,858, $2,896, and $18,649 in fiscal 2021, 2020 and 2019, respectively. At January 30, 2022, less
than 2.0% of our long-lived assets were located outside of the United States.

COVID-19 Considerations — In March 2020, a novel strain of coronavirus (“COVID-19”) outbreak was

declared a global pandemic and a National Public Health Emergency. Shortly after the national emergency
declaration, state and local officials began placing restrictions on businesses, some of which allowed To-Go or
curbside service only while others limited capacity in the dining room or Midway. By March 20, 2020, all our
137 operating stores were temporarily closed. On April 30, 2020, our first store re-opened to the public, and by
the end of fiscal 2020, 107 of our 140 stores were open and operating in limited capacity. The Company
re-opened the remaining 33 stores that had been temporarily closed by August 1, 2021, the end of the second
quarter of fiscal 2021. During the fourth quarter of fiscal 2021, our two Canadian stores temporarily closed due
to the resurgence, and shortly after the end of our fiscal year, the two stores re-opened with limited operations.

During fiscal 2020, the Company negotiated with landlords and other vendors to negotiate relief from cash
payments under existing lease and trade payable obligations, extending or reducing payment terms with several
vendors. A total of 126 initial rent relief agreements related to our operating locations and former corporate
headquarters were executed during fiscal 2020, and a second phase of negotiations, generally seeking to delay or
extend the terms of deferral pay back periods and/or provide rent relief beyond the periods in the initial
agreements, was substantially completed by the end of the Company’s second quarter of fiscal 2021 and resulted
in 99 additional rent relief agreements.

The Company obtained additional liquidity during fiscal 2020 through the sale of common stock, which resulted

in net proceeds of $182,207 and completed the private sale of $550,000 in aggregate principal amount of 7.625%
senior secured notes due 2025. In that same year, the revolving credit commitments under our existing credit facility
were extended through August 17, 2024, and the suspension of our financial ratio covenants was extended until the last
day of the first quarter of fiscal year 2022. During fiscal 2021, the Company redeemed $110,000 outstanding principal
amount of the senior secured notes and elected to end the financial covenant suspension period as of the last day of the
third quarter of fiscal 2021. At the end of fiscal 2021, the Company had $492,495 of liquidity available under its
revolving credit facility. See Note 5, Debt, for more information on these transactions.

The measures taken by the Company as well as the re-opening of the Company’s stores provide sufficient

liquidity to meet estimated cash flow needs and covenant compliance obligations for at least the next twelve
months from the issuance of the financial statements. We cannot predict whether, when or the manner in which

F-10

the conditions surrounding COVID-19, particularly as a result of new variants of COVID-19, will change,
including additional vaccination or mask mandates, capacity restrictions or re-closures of our currently open
stores and customer engagement with our brand.

Principles of consolidation — The accompanying consolidated financial statements include the accounts of

D&B Entertainment and its wholly owned subsidiaries and have been prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”). All intercompany accounts and transactions have
been eliminated in consolidation.

Fiscal year — The Company’s fiscal year consists of 52 or 53 weeks ending on the Sunday after the
Saturday closest to January 31. Fiscal years 2021, 2020 and 2019, which ended on January 30, 2022, January 31,
2021, and February 2, 2020, respectively, each contained 52 weeks. Each quarterly period has 13 weeks, except
in a 53-week year when the fourth quarter has 14 weeks.

Use of estimates — The preparation of the consolidated financial statements in conformity with GAAP

requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues, expenses and related disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and for the period then ended. Actual results could differ from those estimates.

Cash and cash equivalents — We consider transaction settlements in process from credit card companies

and all highly-liquid investments with original maturities of three months or less to be cash equivalents. Our cash
management system provides for the daily funding of all major bank disbursement accounts as checks are
presented for payment. Under this system, outstanding checks in excess of the cash balances at certain banks
creates book overdrafts. Book overdrafts of $16,673 and $8,168 are presented in “Accounts payable” in the
Consolidated Balance Sheets as of January 30, 2022, and January 31, 2021, respectively. Changes in the book
overdraft position are presented within “Net cash provided by operating activities” within the Consolidated
Statements of Cash Flows. At the end of fiscal 2021 and fiscal 2020, the Company had no restricted cash.

Cash and cash equivalents are maintained with multiple financial institutions. Generally, these deposits may
be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear
minimal credit risk. The Company maintains cash and cash equivalent balances that exceed federally insured
limits with a number of financial institutions.

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.

Cloud-Based Computing Arrangements — The Company defers application development stage costs for
cloud-based computing arrangements and amortizes those costs over the related service (subscription) agreement.
The unamortized cost is included in “Prepaid expenses” in the Consolidated Balance Sheets.

Property and equipment — Property and equipment are carried at cost less accumulated depreciation.
Depreciation is computed on the straight-line method, based on the shorter of the estimated useful lives or the
terms of the underlying leases of the related assets. Estimated depreciable lives for the categories of property and
equipment follows:

Estimated Depreciable Lives
(In Years)

Building and building improvements
Leasehold improvements
Furniture, fixtures and equipment
Games

5-40
5-20
3-10
3-20

F-11

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 significant 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 (Loss).

We assess the potential impairment of our long-lived assets related to each store to be held and used in

business, including property and equipment and right-of-use (“ROU”) 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 included future
revenue growth 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 equal to 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.

During fiscal 2021, the Company recorded an impairment charge for its ROU assets of $912 related to the

abandonment of its corporate office and adjacent warehouse lease prior to the end of the respective lease
agreement. During fiscal 2020, the Company recorded an impairment charge for its long-lived assets, including
ROU assets, of $6,746, primarily driven by the expected impact of the COVID-19 pandemic on future cash flows
of specific stores. The Company also recorded an impairment loss and related contract termination costs of
$6,981 related to potential new store projects that were in the early stage of development at that same time,
which is included in “Other store operating expenses” in the Consolidated Statements of Comprehensive Income
(Loss). Given the ongoing impacts of COVID-19 to our business, the projected undiscounted cash flows are
subject to greater uncertainty than historically. If in the future we reduce our estimate of cash flow projections,
we could be required to record additional impairment charges. No impairment charges were recognized in fiscal
2019.

Goodwill and tradenames— The carrying amount of goodwill is impacted by foreign currency translation

adjustments. The foreign currency translation adjustment decreased goodwill by $39 during fiscal 2020.
Goodwill and tradenames which have an indefinite useful life, 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. Goodwill and tradenames are evaluated at the level of the Company’s single operating
segment, which also represents the Company’s only reporting unit.

When evaluating goodwill and tradenames for impairment, the Company first performs a qualitative
assessment to determine whether it is more likely than not that its reporting unit or tradenames are impaired. For
fiscal year 2021, 2020 and 2019, there was no impairment to our goodwill or tradenames.

Other assets and deferred charges, net — Other assets and deferred charges, net consist primarily of
intangible assets related to transferable liquor licenses and intellectual property licenses associated with some of
our proprietary amusement offerings, and assets related to various deposits, the employee deferred compensation
plan, and unamortized debt issuance costs on the revolving portion of our credit facility.

The balance of transferable liquor licenses was $5,162 and $5,213 at the end of fiscal 2021 and fiscal 2020,

respectively. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a
limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets and are tested for

F-12

impairment annually by comparing the estimated fair value of each asset with their carrying amount. The
unamortized balance of our intellectual license costs was $1,264 and $1,862 at the end of fiscal 2021 and fiscal
2020, respectively. Intellectual licenses are amortized over the respective term of the license agreements, with a
weighted average term remaining of 2.3 years at the end of fiscal 2021. Amortization of intellectual licenses of
$598, $575 and $507 in fiscal 2021, fiscal 2020 and fiscal 2019, respectively, is included in “Other store
operating expenses” in the Consolidated Statements of Comprehensive Income (Loss).

The Company capitalizes certain costs incurred in connection with borrowings or establishment of credit
facilities, and these costs are amortized as interest expense over the life of the borrowing or life of the related
debt facility. Debt issuance costs on the revolving portion of our credit facility were $3,971 and $5,525 at the end
of fiscal 2021 and fiscal 2020, respectively. Debt issuance costs on the senior secured notes are reported as a
direct reduction from the carrying amount of our debt.

Fair value of financial instruments — Fair value is defined as the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
under current market conditions. In determining fair value, the accounting standards establish a three-level
hierarchy for inputs used in measuring fair value as follows: Level One inputs are quoted prices available for
identical assets or liabilities in active markets; Level Two inputs are observable for the asset or liability, either
directly or indirectly, including quoted prices for similar assets or liabilities in active markets; and Level Three
inputs are unobservable and reflect management’s own assumptions.

The carrying amounts of cash and cash equivalents, accounts and notes receivable, accounts payable and

other current liabilities approximate fair value because of their short-term nature. The fair value of the
Company’s interest rate swap is determined based upon Level Two inputs which includes valuation models as
reported by our counterparties and third-party valuation specialists. These valuation models are based on the
present value of expected cash flows using forward rate curves. The fair value of borrowings under our revolving
credit facility was $62,114 as of January 31, 2021, and the fair value of our senior secured notes was $456,204
and $576,033 as of January 30, 2022, and January 31, 2021, respectively. The fair value of the Company’s debt is
determined based on a discounted cash flow method, using a sector-specific yield curve based on market-derived,
traded price data as of the measurement date, which we classify as a Level Two input within the fair value
hierarchy.

Interest rate swaps — Effective February 28, 2019, the Company entered into three interest rate swap

agreements to manage our exposure to interest rate movements on our variable rate credit facility. The
agreements entitle the Company to receive at specified intervals, a variable rate of interest based on one-month
LIBOR in exchange for the payment of a fixed rate of interest throughout the life of the agreements. The notional
amount of the swap agreements, which mature August 17, 2022, totals $350,000 and the fixed rate of interest for
all agreements is 2.47%. The Company initially designated its interest rate swap agreements as a cash flow hedge
and accounted for the underlying activity in accordance with hedge accounting. Prior to April 14, 2020, changes
in the fair values of the interest rate swaps were recorded as a component of other comprehensive loss until the
interest payments being hedged were recorded as interest expense, at which time the amounts in accumulated
other comprehensive loss were reclassified as an adjustment to interest expense. Cash flows related to the interest
rate swaps were included as a component of interest expense and in operating activities.

Effective April 14, 2020, the Company amended its existing credit facility agreement to obtain relief from

its financial covenants, and as a result, the variable interest rate terms were modified to create an interest rate
floor of 1.00%. Accordingly, and as a result of the then current forward interest rate curve, the Company
discontinued the hedging relationship as of April 14, 2020 (de-designation date). Given the continued existence
of the hedged interest payments, the Company is reclassifying its accumulated other comprehensive loss of
$17,609 as of the de-designation date into “Interest expense, net” using a straight-line approach over the
remaining life of the originally designated hedging relationship, and the unamortized balance of $4,088 as of the
end of fiscal 2021 will be fully amortized within the next twelve months. Effective with the de-designation, any

F-13

gain or loss on the derivatives are recognized in earnings in the period in which the change occurs. During fiscal
2021 and fiscal 2020, a gain of $550 and a loss of $1,729, respectively, was recognized, which is included in
“Other store operating expenses” in the Consolidated Statements of Comprehensive Income (Loss).

Credit risk related to the failure of our counterparties to perform under the terms of the swap agreements is
minimized by entering into transactions with carefully selected, credit-worthy parties and the fact that the swap
contracts are distributed among several financial institutions to reduce the concentration of credit risk. Our swap
agreements with our derivative counterparties contain a provision where if the Company defaults on any of its
indebtedness, and repayment of the indebtedness has been accelerated, the Company could also be declared in
default on its derivative obligations.

The following derivative instruments were outstanding for the fiscal years ended:

Balance Sheet
Location

January 30, 2022

January 31, 2021

Fair Value

Derivatives designated as hedging

instruments:
Interest rate swaps
Interest rate swaps

Total derivative liability

Accrued liabilities
Other liabilities

$3,823
—

$3,823

$ 8,350
4,416

$12,766

The following table presents the activity in accumulated other comprehensive loss resulting from our

derivative instruments for the fiscal years ended:

January 30, 2022

January 31, 2021

February 2, 2020

Loss recognized in accumulated other

comprehensive income

Loss reclassified or amortized into

interest expense
Income tax effect

$ —

$(7,602)

$(11,454)

$ 7,547
$(2,062)

$ 6,453
314
$

969
$
$ 2,864

Revenue recognition — 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 2020, 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 (Loss). Amusement revenues are primarily recognized upon utilization of game play
credits on Power Cards purchased and used by customers to activate video and redemption games. Redemption
games allow customers to earn tickets, which may be redeemed for prizes in our WIN! area. We have deferred a
portion of amusement revenues for the estimated unfulfilled performance obligations based on an estimated rate
of future use by customers of unused game play credits and the material right provided to customers to redeem
tickets in the future for prizes. We estimate the amount of deferred revenue based upon credits and tickets
remaining on Power 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.

Total deferred amusement revenue is included in “Accrued liabilities” in our Consolidated Balance Sheets.

During the fiscal year ended January 30, 2022, we recognized revenue of approximately $49,700 related to the
amount in deferred amusement revenue as of the end of fiscal 2020. During the fiscal year ended January 31,
2021, we recognized revenue of approximately $20,100 related to the amount in deferred amusement revenue as
of the end of fiscal 2019.

F-14

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 that 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 historical redemption patterns.
Recognized gift card breakage revenue is included in “Amusements and other revenues” in the Consolidated
Statements of Comprehensive Income (Loss). The contract liability related to our gift cards is included in
“Accrued liabilities” in our Consolidated Balance Sheets. During the fiscal year ended January 30, 2022, we
recognized revenue of approximately $3,900 related to the amount in deferred gift card revenue as of the end of
fiscal 2020, of which approximately $1,390 was gift card breakage revenue. During the fiscal year ended
January 31, 2021, we recognized revenue of approximately $2,330 related to the amount in deferred gift card
revenue as of the end of fiscal 2019, of which approximately $570 was gift card breakage revenue.

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. Historically, certain of our promotional programs include multiple performance
obligations that are discounted from the standalone selling prices. We allocate the entire discount to the
amusement performance obligation.

During the fourth quarter of fiscal 2021, the Company launched an enhanced loyalty program, wherein
eligible customers who enroll in the program generally earn rewards based on the level of chips played. Earned
rewards generally expire one to two months after they are issued. We defer revenue associated with the estimated
selling prices of rewards earned, net of rewards we do not expect to be redeemed.

Advertising costs — Advertising production costs are expensed in the period when the advertising first takes

place. Other advertising costs are expensed as incurred. Advertising costs expensed were $32,184, $21,107, and
$44,834, in fiscal 2021, 2020 and 2019, respectively. Advertising costs are included in “Other store operating
expenses” in the Consolidated Statements of Comprehensive Income (Loss).

Leases — Our material operating leases consist of facility leases at our stores and our store support center.

Operating leases also includes 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 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 ten to twenty years and most include options to extend

the leases for one or more 5-year periods. Generally, the lease term includes the noncancelable 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

F-15

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 the payment histories and general financial condition of
our landlords.

A total of 126 initial rent relief agreements related to our operating locations and former corporate

headquarters were executed during fiscal 2020, and a second phase of negotiations, generally seeking to delay or
extend the terms of deferral pay back periods and/or provide rent relief beyond the periods in the initial
agreements, was substantially completed by the end of the Company’s second quarter of fiscal 2021 and resulted
in 99 additional rent relief agreements. The Company has elected to apply the practical expedient to account for
lease concessions and deferrals resulting directly from COVID-19 as though the enforceable rights and
obligations to the deferrals existed in the respective contracts at lease inception and will not account for the
concessions as lease modifications unless the concession results in a substantial increase in the Company’s
obligations. A total of 208 of our 225 rent relief agreements qualified for this accounting election, and the
remaining agreements were treated as lease modifications, primarily due to a significant extension of the lease
term. The Company has bifurcated our current operating lease liabilities into the portion that remains subject to
accretion and the portion that is accounted for as a deferral of payments or as short payments. The current portion
of deferred occupancy costs or short pays is included in “Accrued liabilities” and the balance, or $8,434 and
$16,243 as of January 30, 2022, and January 31, 2021, respectively, is included in “Other liabilities” in the
Consolidated Balance Sheets.

Operating leases are included within the “Operating lease right of use assets”, “Accrued liabilities” and
“Operating lease liabilities” in the Consolidated Balance Sheets. Operating lease payments are classified as cash
flows from operating activities with ROU asset amortization and the change in the lease liability combined
within “Other liabilities” in the reconciliation of net income to cash flows provided by operating activities in the
Consolidated Statements of Cash Flows.

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 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 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.

F-16

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
store operating expenses” in the Consolidated Statements of Comprehensive Income (Loss).

Earnings per share — Basic net income (loss) per share is computed by dividing net income (loss)
available to common shareholders by the basic weighted average number of common shares outstanding for the
reporting period. Diluted net income (loss) 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 (loss) 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 (loss) per share calculation. For fiscal 2021, 2020 and fiscal
2019, we excluded approximately 170,000, 1,200,000, and 150,000 anti-dilutive awards from the calculation.
Basic weighted average shares outstanding are reconciled to diluted weighted average shares outstanding as
follows

Basic weighted average shares outstanding
Weighted average dilutive impact of

awards (1)

Diluted weighted average shares

outstanding

January 30, 2022

January 31, 2021

February 2, 2020

48,142,090

43,549,887

33,450,217

1,121,630

—

649,161

49,263,720

43,549,887

34,099,378

(1) Amounts exclude all potential common and common equivalent shares for periods when there is a net loss.

Recently adopted accounting guidance — In December 2019, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes, which removes certain exceptions related to the approach for intraperiod tax
allocations, the calculation of income taxes in interim periods, and the recognition of deferred taxes for taxable
goodwill. The Company adopted this standard as of the beginning of fiscal year 2021, and the adoption did not
have a material impact on our consolidated financial statements.

Recent accounting pronouncements — In March 2020, the FASB issued ASU 2020-04, Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Reform on Financial Reporting, which provides
temporary optional expedients and exceptions to the current guidance for contract modifications and hedging
relationships through December 31, 2022, that reference LIBOR or another reference rate expected to be
discontinued because of reference rate reform. A contract modification resulting from reference rate reform may
be accounted for as a continuation of the existing contract rather than the creation of a new contract.
Additionally, changes in the critical terms of hedging relationships, caused by reference rate reform, should not
result in the de-designation of the instrument, provided certain criteria are met. Although the Company has swap
agreements based on LIBOR rates, the guidance is not expected to have an impact on our consolidated financial
statements due to the de-designation of our hedging relationships in fiscal 2020.

F-17

Note 2: Inventories

Inventories consist of the following:

Operating store—food and beverage
Operating store—amusement
Corporate—amusement, supplies and other

January 30, 2022

January 31, 2021

$ 7,281
12,721
20,317

$ 40,319

$ 4,175
8,640
10,992

$ 23,807

Amusement inventory includes electronics, plush toys and small novelty and other items used as redemption

prizes for certain games, as well as supplies needed for Midway operations.

Note 3: Property and Equipment

Property and equipment consist of the following:

Land
Buildings and building improvements
Leasehold improvements
Furniture, fixtures and equipment
Games
Construction in progress

Total cost

Accumulated depreciation

January 30, 2022

January 31, 2021

$

12,302
42,312
830,459
459,713
298,327
44,020

$

12,302
37,417
805,229
430,331
295,170
33,382

1,687,133
(908,536)

1,613,831
(798,804)

Property and equipment, net

$ 778,597

$ 815,027

Depreciation expense totaled $138,329 for fiscal 2021, $138,789 for fiscal 2020, and $132,399 for fiscal

2019.

Note 4: Accrued Liabilities

Accrued liabilities consist of the following as of the fiscal years ended:

Deferred amusement revenue
Current portion of operating lease liabilities,

net (1)

Compensation and benefits
Current portion of deferred occupancy costs
Deferred gift card revenue
Accrued interest
Property taxes
Current portion of long-term insurance
Utilities
Sales and use taxes
Current portion of derivatives
Customer deposits
Other (Note 10)

January 30, 2022

January 31, 2021

$ 92,961

$ 78,852

45,445
27,447
19,164
11,855
8,629
6,450
5,700
5,262
4,465
3,823
3,471
13,821

46,471
13,846
36,121
10,918
11,321
8,149
5,100
4,151
1,385
8,350
1,373
8,753

Total accrued liabilities

$ 248,493

$ 234,790

F-18

(1)

The balance of leasehold incentive receivables of $10,064 and $8,763 as of January 30, 2022. and
January 31, 2021, respectively, is reflected as a reduction of the current portion of operating lease liabilities.

Note 5: Debt

Long-term debt consists of the following:

Credit Facility—revolver
Senior secured notes

Total debt outstanding

Less debt issuance costs

Long-term debt, net

January 30, 2022

January 31, 2021

$

—
440,000

440,000
(8,605)

$ 60,000
550,000

610,000
(13,612)

$ 431,395

$ 596,388

On October 27, 2020, the Company issued $550,000 aggregate principal amount of 7.625% senior secured
notes (the “Notes”). Interest on the Notes accrues from October 27, 2020, payable in arrears on November 1 and
May 1 of each year, commencing on May 1, 2021. The Notes mature on November 1, 2025, unless earlier
redeemed, and are subject to the terms and conditions set forth in the related indenture. Prior to November 1,
2022, but not more than once during any twelve-month period commencing with the issue date of the Notes, the
Company may redeem up to 10% of the original principal amount of the Notes at a redemption price of 103% of
the principal amount, plus accrued and unpaid interest, at the redemption date. After November 1, 2022, the
Company may redeem the Notes, in whole or in part, at certain specified redemption prices, plus accrued and
unpaid interest, at the redemption date. 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,
which is substantially the same as the guarantors of the Company’s existing credit facility.

The first amendment to the existing credit facility, effective April 14, 2020, increased the interest rate
spread on variable rate debt to 2.00% plus a LIBOR floor of 1.00%. Concurrent and subject to the issuance of the
Notes, the Company executed a second amendment, which included relief from testing compliance with certain
financial covenants until the last day of the fiscal quarter ending on May 1, 2022. During the financial covenant
suspension period the Company is required to maintain a minimum liquidity (primarily availability under the
credit facility) of $150,000. During the fourth quarter of fiscal 2021, the Company ended this financial covenant
suspension period. The second amendment extended the maturity of the $500,000 revolving portion of the
facility from August 17, 2022, to August 17, 2024, increased the interest rate spread to 4.00%, and instituted a
1.00% utilization fee due at maturity. After the first quarter of fiscal 2022, when the financial covenant
suspension increased pricing period ends, the interest rate spread ranges from 1.25% to 3.00% and the utilization
fee will cease.

The second amendment also terminated the term loan portion of the credit facility, triggering payment of

$1,900 of lender debt costs, and the Company recorded a loss of $904 related to the unamortized debt costs
associated with the term portion of the credit facility. The Company used the proceeds of the Notes offering,
along with cash on hand, to repay the $255,000 principal balance of the term loan facility, $463,000 of
borrowings under the revolving credit facility, and related accrued interest. The Company incurred debt costs of
$18,300 associated with the issuance of the Notes and the second amendment to the credit facility, which are
being amortized over the respective terms.

During fiscal 2021, the Company redeemed a total of $110,000 outstanding principal amount of the Notes in

two separate transactions. In connection with the early redemption of the Notes, the Company paid prepayment
premiums of $3,300, plus accrued and unpaid interest to the date of redemptions, pursuant to the terms of the
indenture governing the Notes. Additionally, the early redemptions of the Notes resulted in a loss on
extinguishment of approximately $2,300 related to a proportionate amount of unamortized issuance costs.

F-19

For fiscal 2021 and fiscal 2020, the Company’s weighted average interest rate on outstanding borrowings

was 10.34% and 5.40%, respectively. The rate has increased due to the issuance of the Notes and the second
amendment to the credit facility. As of January 30, 2022, we had letters of credit outstanding of $7,505 and an
unused commitment balance of $492,495 under the revolving credit facility. Our credit facility and Notes contain
restrictive covenants that, among other things, place certain limitations on our ability to incur additional
indebtedness, make loans or advances to subsidiaries and other entities, pay dividends, acquire other businesses
or sell assets. As of January 30, 2022, the Company was in compliance with the financial covenants of our credit
facility and all the restrictive covenants of the Notes and credit facility.

Future debt obligations — Below is our future debt principal payment obligations as of January 30, 2022

by fiscal year:

2025

Total future payments

$ 440,000

$ 440,000

Interest expense, net — The following tables set forth our recorded interest expense, net:

January 30, 2022

January 31, 2021

February 2, 2020

Interest expense on debt
Interest associated with swap agreements
Amortization of issuance cost
Interest income
Capitalized interest

Total interest expense, net

$ 43,463
7,547
4,244
—
(1,344)

$ 53,910

$ 29,124
6,453
2,184
(22)
(849)

$ 36,890

$ 20,277
969
792
(119)
(982)

$ 20,937

Note 6: Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed
into law. Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act
includes provisions, among others, allowing for the carryback of net operating losses generated in fiscal 2018,
2019 and 2020 and technical amendments regarding the expensing of qualified improvement property. The
application of the technical amendments made by the CARES Act to qualified improvement property resulted in
additional tax net operating losses which were carried back from fiscal 2020 and fiscal 2019 to years with a
higher federal corporate income tax rate. During the second quarter of fiscal 2021, the Company filed the fiscal
2020 carryback claims for federal tax refunds of approximately $57,400. Due to government delays in processing
these claims, the majority of these funds are expected to be received in fiscal 2022.

Additionally, the CARES Act, in efforts to enhance business’ liquidity, provided for the deferral of the
employer-paid portion of social security taxes during fiscal 2020. The Company elected to defer approximately
$4,800 of employer-paid portion of social security taxes, with 50% remitted in fiscal 2021 and the remainder due
in fiscal 2022.

The following table sets forth our income tax provision:

Current provision:
Federal
State and local
Foreign

Total current provision

January 30, 2022

January 31, 2021

February 2, 2020

$ (78,629)
(1,360)
(78)

(80,067)

$ 11,744
8,562
100

20,406

$ 21,899
4,577
333

26,809

F-20

January 30, 2022

January 31, 2021

February 2, 2020

Deferred provision (benefit):

. . . . . . .
Federal . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . .

(2,354)
(5,441)
—

(5,415)
1,951
99

7,109
(365)
(271)

Total deferred provision

(benefit) . . . . . . . . . . . . . .

(7,795)

Provision for income taxes . . . . . . . . .

$19,014

(3,365)

$(83,432)

6,473

$26,879

The following table reconciles the effective tax rate to the federal income tax rate:

January 30, 2022

January 31, 2021

February 2, 2020

Federal income tax rate
State and local income taxes, net of

federal benefit

Permanent differences
Tax credits
Share-based compensation
Impact of net operating loss carryback
Other

Effective tax rate

21.0%

5.0%
2.0%
(4.9)%
(3.6)%
— %
(4.6)%

14.9%

21.0%

2.7%
(0.2)%
0.7%
(0.2)%
7.5%
(2.8)%

28.7%

21.0%

5.4%
1.5%
(6.4)%
(0.9)%
— %
0.5%

21.1%

Components of the deferred income tax liability, net consist of the following:

Deferred tax assets:
Deferred revenue
Operating lease liability
Accrued liabilities
Workers compensation and general liability insurance
Share-based compensation
Hedging transactions
Net operating loss carryovers
Tax credit carryovers
Indirect benefit of unrecognized tax benefits
Other

Subtotal

Less: valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Trademark/tradename
Property and equipment
Operating lease right of use asset
Other

Total deferred tax liabilities

Deferred tax liability, net

F-21

January 30,
2022

January 31,
2021

$ 27,577
380,145
2,961
4,068
7,614
1,044
8,028
943
529
4,173

$ 24,136
383,378
1,332
3,923
7,236
3,488
10,303
3,054
639
5,549

437,082
(8,501)

443,038
(13,747)

$ 428,581

$ 429,291

$ 21,583
121,516
287,255
278

$ 21,583
127,969
287,030
493

$ 430,632

$ 437,075

$ 2,051

$ 7,784

As of January 30, 2022, we had $99,004 of state net operating loss carryforwards, which will begin to expire

in 2022, foreign operating loss carryforwards of $9,535, which will begin to expire in 2030, and foreign tax
credit carryovers of $922, which will begin to expire in 2028.

During fiscal 2021, the decrease in the valuation allowance of $5,246 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. During fiscal 2020, the increase in the
valuation allowance of $11,127 primarily relates to the increase in net operating loss carryovers.

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

Balance at beginning of year

$ 2,564

$ 2,080

$ 2,333

January 30, 2022

January 31, 2021

February 2, 2020

Additions for tax positions of

prior years

Reductions for tax positions of

prior years

Additions for tax positions of

current year

Settlements with taxing

authorities

Lapse of statute of limitations

95

—

757

—
(330)

28

—

660

—
(204)

463

(44)

450

(390)
(732)

Balance at end of year

$ 3,086

$ 2,564

$ 2,080

The January 30, 2022 balance of unrecognized tax benefits includes $2,800, that if recognized, would affect
our effective tax rate. At January 30, 2022, and January 31, 2021, we had accrued interest and penalties of $446
and $412, 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 (Loss).

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.
These resolutions and payments could reduce our unrecognized tax benefits by up to approximately $382.

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 2014.

The Company recorded excess tax expense (benefits) of $(6,994), $437, and ($1,201), in fiscal 2021, fiscal

2020 and fiscal 2019, respectively, to the provision for income taxes in the Consolidated Statements of
Comprehensive Income (Loss).

Note 7: Leases

The components of lease expense, including variable lease costs primarily consisting of common area

maintenance charges and property taxes, are as follows:

January 30, 2022

January 31, 2021

February 2, 2020

Operating lease cost
Variable lease cost
Short-term lease cost (1)

Total lease cost

$ 134,910
30,122
549

$ 165,581

F-22

$ 132,658
25,360
457

$ 158,475

$ 124,065
30,009
435

$ 154,509

(1) We have elected the short-term lease recognition exemption for all applicable classes of underlying assets.

Leases with an initial term of 12 months or less, that do not include a purchase option that we are reasonably
certain to exercise, are not recorded on the Consolidated Balance Sheet.

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 former corporate headquarters and new store support
center, in the Consolidated Statements of Comprehensive Income (Loss).

Supplemental disclosures of cash flow information related to leases were as follows:

January 30, 2022

January 31, 2021

February 2, 2020

Cash paid for operating lease

liabilities . . . . . . . . . . . . . . . . . . . . .

$ 157,197

$ 77,292

$ 123,748

ROU assets obtained in exchange

for new operating lease liabilities (1)

$ 72,559

$ 98,218

$ 220,648

Weighted-average remaining

lease term—operating leases (in years)

14.2

Weighted-average discount rate—

operating leases . . . . . . . . . . . . . . . .

6.02%

14.8

5.94%

15.7

5.90%

(1)

Excludes the transition adjustment at adoption of Topic 842 in fiscal 2019.

Minimum future maturities of operating lease liabilities were as follows as of January 30, 2022, by fiscal year:

2022
2023
2024
2025
2026
Thereafter

Total future operating lease liability
Less: interest

Present value of operating lease liabilities

$

134,011
143,762
143,431
144,305
145,453
1,333,575

$ 2,044,537
(711,489)

$ 1,333,048

Operating lease payments in the table above includes minimum lease payments for four future sites for which the
leases have commenced. Operating lease payments exclude approximately $105,000 of minimum lease payments
for five executed facility leases which have not yet commenced.

Note 8: Stockholders’ Equity

Shareholder rights plan

Effective March 18, 2020, the Board of Directors of the Company adopted a 364-day duration Shareholder

Rights Plan (the “Rights Plan”) and declared a dividend of one preferred share purchase right for each
outstanding share of common stock to shareholders of record on March 30, 2020 to purchase from the Company
one one-ten thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share, of
the Company for an exercise price of $45.00, once the rights become exercisable, subject to adjustment as
provided in the related rights agreement. The Rights Plan expired on March 17, 2021.

Sale of common stock

During fiscal 2020, the Company sold 16,743,352 shares of its common stock at an average price of $11.08

per share, for proceeds of $182,207, net of offering costs.

F-23

Share repurchases and cash dividends

On December 6, 2021, our Board of Directors approved a share repurchase program, under which the
Company may repurchase shares on the private market, through privately negotiated transactions and through
trading plans. The share repurchase program may be modified, suspended, or discontinued at any time. The share
repurchase authorization limit is $100,000 and the authorization expires at the end of fiscal 2022. As a result of
the impacts to our business arising from the COVID-19 pandemic, share purchases and dividend payments were
indefinitely suspended during fiscal 2021 and fiscal 2020, and the previous share repurchase program expired at
the end of fiscal 2020. During fiscal 2019, the Company purchased 7,116,585 shares of stock for $297,317. Our
Board of Directors authorized and declared quarterly cash dividends totaling $0.62 per share of common stock
during fiscal 2019. The fiscal 2019 fourth quarter dividend was paid in the first quarter of fiscal 2020.

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 year ended 2021, 2020 and 2019, we
withheld 231,451, 58,715, and 11,536 shares of common stock to satisfy $9,465, $929, and $595 of employees’
tax obligations, respectively. The share activity in fiscal 2020 includes the settlements of $2,517 cash obligations
through the issuance of 160,540 shares of common stock.

Share-based compensation

The Company maintains an equity incentive plan under which it may grant 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 provides awards to executive and management
personnel as well as directors. Prior to October 2014, we issued share-based awards under our 2010 Stock
Incentive Plan, and all outstanding grants under this plan are fully vested. Share-based awards granted after
October 2014 were issued pursuant to the terms of our 2014 Stock Incentive Plan. We may grant stock option or
restricted stock units to executive and management personnel as well as directors. 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 (“MSU’s) 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.

Options granted under both plans terminate on the ten-year anniversary of the grants. Stock option awards
generally provide continued vesting, in the event of termination, for employees that reach age 60 or greater and
have at least ten years of service or for employees that reach age 65 (“retired employees”). Unvested stock
options, and restricted stock units are generally forfeited by employees who terminate prior to vesting and
prorated for retired employees.

Each share granted subject to a stock option award or time-based restricted stock unit award reduces 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 reduces 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 and a minimum of no shares
if performance or market condition achieved is below a minimum threshold target. On June 23, 2020,
shareholders approved a proposal to amend the 2014 Stock Incentive Plan to increase the number of shares
available for awards to 6,100,000 shares. The number of unissued common shares reserved for future grants
under the 2014 Stock Incentive Plan is approximately 3,600,000 as of January 30, 2022. The Company satisfies
stock option exercises and vesting of restricted stock units with newly issued shares.

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

F-24

estimated fair value of our common stock. Fair value valuation analyses were prepared by an independent third-
party valuation firm, utilizing the market-determined share price. Since our stock had not been publicly traded
prior to our IPO, the expected volatility was based on an average of the historical volatility of certain of our
competitors’ stocks over the expected term of the share-based awards with the calculation placing more weight
on company-specific volatilities each year thereafter. The dividend yield assumption was based on our history.
The simplified method was used to estimate the expected term of share-based awards. This method was used
because the Company does not have enough historical option activity to derive an expected life. The risk-free
interest rate was based on the implied yield on U.S. Treasury zero-coupon issues with a remaining term
equivalent to the expected term. No options were granted during fiscal 2021 or fiscal 2020. The significant
assumptions used in determining the underlying fair value of the weighted-average options granted in fiscal 2019
were as follows:

Volatility
Risk free interest rate
Expected dividend yield
Expected term—in years
Weighted average grant-date fair value

Fiscal
2019

34.2%
2.34%
1.15%
6.0
$ 16.93

Based on the terms and conditions of our MSU awards, the grant date fair value of the MSU’s was determined
using a Monte-Carlo simulation model, which simulated the Company’s stock price over the performance period.
During fiscal 2021, the average volatility assumption was 76.9% and the risk-free interest rate used to discount
the value of the award was 0.24%. During fiscal 2020, the average volatility assumption was 126.2% and the
risk-free interest rate used to discount the value of the award was 0.16%. The dividend yield was zero as the
Company has suspended dividends as a result of the COVID-19 pandemic.

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 related to stock option plans was
$431, $1,318, and $3,010 during the fiscal years ended January 30, 2022, January 31, 2021, and February 2,
2020, respectively.

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. We recorded
compensation expense related to our restricted stock unit awards of $12,041, $5,667, and $3,847 during the fiscal
years ended January 30, 2022, January 31, 2021, and February 2, 2020, respectively.

Compensation expense related to stock options and restricted stock units is included in “General and

administrative expenses” in the Consolidated Statements of Comprehensive Income (Loss). Forfeitures are
recorded as they occur.

F-25

Transactions related to stock option awards during fiscal 2021 were as follows:

Outstanding at January 31, 2021
Exercised
Forfeited

Outstanding at January 30, 2022

Exercisable at January 30, 2022

2014 Stock Incentive Plan

2010 Stock Incentive Plan

Number
of Options

1,231,601
(270,976)
(27,246)

Weighted
Average
Exercise
Price

$ 36.77
16.36
43.78

933,379

42.50

872,895

$ 41.86

Number
of Options

173,563
(100,009)

—

73,554

73,554

Weighted
Average
Exercise
Price

$ 7.51
6.90
—

8.33

$ 8.33

The total intrinsic value of options exercised during fiscal 2021, 2020, and 2019 was $10,358, $963, and
$3,968, respectively. The unrecognized expense related to our stock option plan totaled approximately $64 as of
January 30, 2022 and will be expensed over a weighted average of 0.2 years. For options outstanding as of
January 30, 2022, the weighted average remaining contractual life was 4.8 years and the aggregate intrinsic value
was $3,800. For options exercisable as of January 30, 2022, the weighted average remaining contractual life was
4.6 years and the aggregate intrinsic value was $3,800.

Transactions related to restricted stock unit awards during fiscal 2021 were as follows:

Outstanding at January 31, 2021
Granted
Change in units based on performance
Vested
Forfeited

Outstanding at January 30, 2022

Weighted
Avg
Grant Date
Fair Value

$ 17.32
47.42
15.30
16.23
32.24

$ 24.88

Shares

1,116,341
311,759
362,491
(703,795)
(163,997)

922,799

The weighted average grant-date fair values of restricted stock units granted during fiscal 2021, 2020 and
2019 were $47.42, $12.75, and $51.44, respectively. The total fair value of restricted stock units vested during
fiscal 2021, 2020, and 2019 was approximately $29,260, $1,518, and $5,259, respectively. The unrecognized
expense related to our restricted stock units was approximately $7,976 as of January 30, 2022, which will be
expensed over a weighted average of 1.6 years.

Note 9: Employee Benefit Plans

We maintain voluntary defined contribution plans, both qualified and non-qualified, covering eligible
employees as defined in the plan documents. Participating employees may elect to defer and contribute a portion
of their eligible compensation to the plans up to limits stated in the plan documents, not to exceed the dollar
amounts set by applicable laws. The Company may match a specified percentage of employee contributions, as
approved, up to a maximum of 6% of eligible employee compensation, as defined. As a result of the impacts to
our business arising from the COVID-19 pandemic, the Company suspended matching of employee contributions
during fiscal 2020 and the first half of fiscal 2021. The Company’s match was $714, $0, and $975, for fiscal
2021, 2020, and 2019, respectively, which was expensed as incurred.

F-26

The non-qualified deferred compensation plan assets are invested through a rabbi trust. Assets in the rabbi

trust are invested in certain mutual funds that cover an investment spectrum ranging from equities to money
market instruments and are available to satisfy the claims of our creditors in the event of bankruptcy or
insolvency. These mutual funds have published market prices and are reported at fair value using quoted prices
available on identical assets and liabilities in active markets, representing Level One assets as defined by GAAP.
Deferred compensation plan assets of $10,587 and $10,115, as of January 30, 2022 and January 31, 2021,
respectively, are included in “Other assets and deferred charges” and the offsetting deferred compensation plan
liabilities are included in “Other liabilities” in the accompanying Consolidated Balance Sheets.

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.

The Company is a defendant in several lawsuits filed in courts in California alleging violations of California

Business and Professions Code, industry wage orders, wage-and-hour laws and rules and regulations pertaining
primarily to the failure to pay proper regular and overtime wages, failure to pay for missed meals and rest
periods, pay stub violations, failure to pay all wages due at the time of termination and other employment related
claims (the “California Cases”). Some of the California Cases purport or may be determined to be class actions
or Private Attorneys General Act representative actions and seek substantial damages and penalties. The
Company estimated and accrued for the most likely amount of loss during fiscal 2019 and fiscal 2020. During
fiscal 2020, the Company settled a portion of the cases at the approximate amount estimated. For the remaining
cases, the Company’s assessments are based on assumptions that have been deemed reasonable by management,
but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that
might cause the Company to change those estimates and assumptions. Management’s assessment of these
California Cases, as well as other lawsuits, could change because of future determinations or the discovery of
facts that are not presently known. Accordingly, the ultimate costs of resolving these cases may be substantially
higher or lower than estimated. The Company continues to aggressively defend the remaining cases.

We are subject to the terms of a settlement agreement with the Federal Trade Commission that requires us,
on an ongoing basis, to establish, implement, and maintain a comprehensive information security program that is
reasonably designed to protect the security, confidentiality, and integrity of personal information collected from
or about consumers. The agreement does not require us to pay any fines or other monetary assessments and we
do not believe that the terms of the agreement will have a material adverse effect on our business, operations, or
financial performance.

F-27

SUBSIDIARIES OF THE REGISTRANT

Exhibit 21.1

Name

Dave & Buster’s I, L.P.
Dave & Buster’s, Inc.
Dave & Buster’s Holdings, Inc.
Dave & Buster’s Invesco LLC
Dave & Buster’s Management Corporation, Inc.
Dave & Buster’s ProCo LLC
Dave & Buster’s of Alabama, Inc.
Dave & Buster’s of Alaska, Inc.
Dave & Buster’s of Arkansas, Inc.
Dave & Buster’s of California, Inc.
Dave & Buster’s of Connecticut, Inc.
Dave & Buster’s of Colorado, Inc.
Dave & Buster’s of Florida, LP
Dave & Buster’s of Georgia, Inc.
Dave & Buster’s of Hawaii, Inc.
Dave & Buster’s of Idaho, Inc.
Dave & Buster’s of Illinois, Inc.
Dave & Buster’s of Indiana, Inc.
Dave & Buster’s of Iowa, Inc.
Dave & Buster’s of Kansas, Inc.
Dave & Buster’s of Kentucky, Inc.
Dave & Buster’s of Louisiana, Inc.
Dave & Buster’s of Maryland, Inc.
Dave & Buster’s of Massachusetts, Inc.
Dave & Buster’s of Nebraska, Inc.
Dave & Buster’s of Nevada, Inc.
Dave & Buster’s of New Hampshire, Inc.
Dave & Buster’s of New Jersey, Inc.
Dave & Buster’s of New Mexico, Inc.
Dave & Buster’s of New York, Inc.
Dave & Buster’s of Oklahoma, Inc.
Dave & Buster’s of Oregon, Inc.
Dave & Buster’s of Pennsylvania, Inc.
Dave & Buster’s of Pittsburgh, Inc.
Dave & Buster’s of Puerto Rico, Inc.
Dave & Buster’s of South Carolina, Inc.
Dave & Buster’s of South Dakota, Inc.
Dave & Buster’s of Utah, Inc.
Dave & Buster’s of Virginia, Inc.
Dave & Buster’s of Washington, Inc.
Dave & Buster’s of Wisconsin, Inc.
D&B Delco, LLC
D&B Leasing, Inc.
D&B Marketing Company, LLC
DANDB Texas, Inc.
Tango Acquisition, Inc.
Tango License Corporation
Tango of Arizona, Inc.

State or Other
Jurisdiction of Incorporation
Or Organization

Texas
Missouri
Delaware
Texas
Texas
Texas
Delaware
Delaware
Delaware
California
Delaware
Colorado
Florida
Georgia
Hawaii
Delaware
Illinois
Delaware
Delaware
Kansas
Delaware
Delaware
Maryland
Massachusetts
Nebraska
Delaware
Delaware
Delaware
Delaware
New York
Oklahoma
Oregon
Pennsylvania
Pennsylvania
Delaware
Delaware
South Dakota
Delaware
Virginia
Washington
Delaware
Delaware
Texas
Virginia
Texas
Delaware
Delaware
Delaware

Name

Tango of Arundel, Inc.
Tango of Farmingdale, Inc.
Tango of Franklin, Inc.
Tango of Houston, Inc.
Tango of North Carolina, Inc.
Tango of Tennessee, Inc.
Tango of Westbury, Inc.
6131646 Canada, Inc.

State or Other
Jurisdiction of Incorporation
Or Organization

Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Canada

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 Dave & Buster’s Entertainment, Inc. of our reports dated
March 29, 2022, with respect to the consolidated financial statements of Dave & Buster’s Entertainment, Inc.,
and the effectiveness of internal control over financial reporting which reports appear in the Form 10-K of Dave
& Buster’s Entertainment, Inc. dated March 29, 2022.

Exhibit 23.1

/s/ KPMG LLP

Dallas, Texas
March 29, 2022

CERTIFICATION

Exhibit 31.1

I, Kevin M. 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: March 29, 2022 . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . /s/ Kevin M. Sheehan
Kevin M. Sheehan
Interim Chief Executive Officer
(Principal Executive Officer)

CERTIFICATION

Exhibit 31.2

I, Michael A. Quartieri, 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: March 29, 2022 . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . /s/ Michael A. Quartieri
Michael A. Quartieri
Chief Financial Officer
(Principal Financial and Accounting Officer)

CERTIFICATION

Exhibit 32.1

In connection with the Annual Report of Dave & Buster’s Entertainment, Inc. (the “Company”) on Form
10-K for the period ended January 30, 2022 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Kevin M. 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: March 29, 2022

/s/ Kevin M. Sheehan
Kevin M. Sheehan
Interim Chief Executive Officer
(Principal Executive Officer)

CERTIFICATION

Exhibit 32.2

In connection with the Annual Report of Dave & Buster’s Entertainment, Inc. (the “Company”) on Form
10-K for the period ended January 30, 2022 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Michael A. Quartieri, 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: March 29, 2022

/s/ Michael A. Quartieri
Michael A. Quartieri
Chief Financial Officer
(Principal Financial and Accounting Officer)

BOARD OF DIRECTORS

James P. Chambers
Partner
Hill Path Capital LP
Hamish A. Dodds
Former President and Chief Executive Officer
Hard Rock International
Michael J. Griffith
Retired Executive
Gail Mandel
Managing Director
Focussed Point Ventures, LLC
Patricia H. Mueller
Co-Founder
Mueller Retail Consulting, LLC

Atish Shah
Executive Vice President and CFO
Xenia Hotels & Resorts, Inc.
Kevin M. Sheehan
Chair of the Board and Interim CEO
Dave & Buster’s Entertainment, Inc.
Jennifer Storms
Chief Marketing Officer, Entertainment and Sports
NBCUniversal

EXECUTIVE OFFICERS

Kevin M. Sheehan
Chair of the Board and Interim CEO
Kevin Bachus
Senior Vice President of Game Strategy and
Entertainment
Michael Quartieri
Senior Vice President and Chief Financial Officer
Brandon Coleman, III
Senior Vice President and Chief Marketing Officer
Robert W. Edmund
General Counsel, Secretary and Senior Vice President
of Human Resources

JP Hurtado
Senior Vice President and Chief Technology and
Innovation Officer
Margo L. Manning
Senior Vice President and Chief Operating Officer
Michael J. Metzinger
Vice President of Accounting and Controller
John B. Mulleady
Senior Vice President of Real Estate and Development

Corporate Office
Dave & Buster’s Entertainment, Inc.
1221 S. Belt Line Rd, Suite 500
Coppell, TX 75019
(214) 357-9588
NASDAQ Symbol: PLAY

SHAREHOLDER INFORMATION

Annual Meeting
Tuesday, June 16, 2022 at 8:30 a.m.
www.meetnow.global/MMVDA2Y

Independent Public Accountants
KPMG LLP
2323 Ross Avenue, Suite 1400
Dallas, TX 75201

Stock Transfer Agent and Registrar
Computershare
P.O. Box 505000
Louisville, KY 40233-5000

or
Meidinger Tower
462 S. 4th Street
Louisville, KY 40202
Customer Service (877) 373-6374
TDD for Hearing Impaired (800) 231-5469
Foreign Shareholders (785) 575-2879
You can access your Dave & Buster’s Shareholder
Account online via Investor Centre at
www.computershare.com

10-K Availability
The company will furnish to any shareholder, without
charge, a copy of the company’s annual report filed
with the Securities and Exchange Commission on
Form 10-K for the 2021 fiscal year from our website at:
www.daveandbusters.com or upon written request from
the shareholder.

Please send your written request to:

Secretary/Investor Relations
Dave & Buster’s Entertainment, Inc.
1221 S. Belt Line Rd, Suite 500
Coppell, TX 75019

022CSNCEA0