Bowlero (BOWL) - 2025 Q4 - Annual Report

Part I Item 1. Business Lucky Strike Entertainment, formerly Bowlero, is a leading North American location-based entertainment operator with over 360 venues, focusing on growth and diverse offerings - 360+ locations across North America, offering diverse entertainment[16][236][237] - Rebranded from Bowlero to Lucky Strike Entertainment on December 12, 2024, to reflect broader offerings[236] - Strengths include loyal customers, diverse brands (Lucky Strike, Bowlero, AMF, Boomers Parks), and a proven business model[17][18][19][20][21][23][24] - Business model emphasizes organic growth, new locations, and strategic acquisitions, with 10 venues acquired in FY2025 and 75 since FY2022[21][22] Foreign Operations Revenue and Net Assets (Fiscal Years 2025 & 2024) | Metric | Fiscal Year 2025 (in thousands) | Fiscal Year 2024 (in thousands) | | :----- | :------------------------------ | :------------------------------ | | Revenues | $12,530 | $14,003 | | Net Assets | $27,407 | $29,772 | Item 1A. Risk Factors The company faces diverse risks including strategy execution, consumer spending, competition, substantial debt, operational failures, regulatory compliance, and concentrated voting power - Risks include challenges in comparable location sales growth, adapting to consumer preferences, and retaining key management[37][38][40][48] - Substantial indebtedness and restrictive debt covenants could limit liquidity and business plan execution, risking default[49][50][51][53] - IT and cybersecurity risks (system failures, data breaches) could cause operational disruptions, reputational damage, and significant costs[55][58][59][60][61][62][63][64] - Industry risks include staff recruitment/retention, rising labor/insurance costs, and revenue fluctuations from seasonality or external events[65][66][67][69][70][71] - Dual-class stock structure (Class B shares with 10 votes per share) concentrates voting power with Mr. Shannon and Atairos[112][114] Item 1B. Unresolved Staff Comments The company has no unresolved staff comments from the SEC - The company has no unresolved staff comments[120] Item 1C. Cybersecurity The company's cybersecurity program, based on NIST CSF and PCI DSS, is overseen by the Audit Committee, with no material incidents reported - Cybersecurity program leverages NIST CSF and PCI DSS frameworks for risk management[121] - Safeguards include third-party managed detection and response, layered controls, and regular employee training with phishing tests[121][123][130] - The Audit Committee provides primary oversight of the cybersecurity program, receiving regular IT department updates[127] - No material impact from cybersecurity incidents on financial results or operations was reported[126] Item 2. Properties The company operates 365 venues across North America, primarily leased, with recent acquisitions converting 58 properties to owned assets Operating Locations by Country and Ownership (as of June 29, 2025) | Country | Leased | Owned | Total | | :------ | :----- | :---- | :---- | | United States | 345 | 14 | 359 | | Mexico | 1 | 3 | 4 | | Canada | 2 | — | 2 | | Total | 348 | 17 | 365 | - Acquired 58 leased properties for $306 million on July 10, 2025, reducing rent and enhancing flexibility[131][388] - As of June 29, 2025, one location is in development and two are closed[131] Item 3. Legal Proceedings The company is involved in routine legal proceedings, with management expecting no material adverse effect on financial position or operations - Involved in various legal proceedings typical for the retail, restaurant, and entertainment industries[132][351] - Management believes legal matters will not materially adversely affect financial position, results, or cash flows[351] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable to Lucky Strike Entertainment Corporation[134] Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Class A common stock trades on NYSE as 'LUCK'; the company has an active share repurchase program and pays quarterly cash dividends - Class A common stock is listed on the NYSE under the symbol 'LUCK'[136] - As of August 21, 2025, there were 78 holders of Class A common stock and 1 holder of Class B common stock[137] Share Repurchase Program Activity (Fiscal Year Ended June 29, 2025) | Metric | Value (in thousands) | | :------------------------------------------------ | :---- | | Shares repurchased in FY2025 | 6,796,938 | | Total value of repurchases in FY2025 | $72,138 | | Average purchase price per share in FY2025 | $10.61 | | Cumulative total shares repurchased | 40,868,233 | | Cumulative total value of repurchases | $453,913 | | Cumulative average purchase price per share | $11.11 | | Remaining balance in repurchase program (as of June 29, 2025) | $92,223 | - Quarterly cash dividends of $0.055 per share were initiated in Q3 FY2024, with $33.458 million paid in FY2025, and are expected to continue[144][368] Item 6. Reserved This item is reserved and contains no information - Item 6 is reserved and contains no information[147] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Total revenue increased by 4% to $1.2 billion in FY2025, with operating income up 50%, driven by acquisitions and strategic growth, while liquidity remains strong Overview Lucky Strike Entertainment, a premier location-based entertainment operator, drives shareholder value through organic growth, upgrades, new venues, and acquisitions - Premier operator of location-based entertainment, including bowling, arcades, F&B, FECs, and water parks[149] - Strategy focuses on long-term shareholder value via organic growth, location upgrades, new openings, and acquisitions[150] Recent Developments FY2025 saw 4% revenue growth, rebranding, four new Lucky Strike locations, and key acquisitions, with further post-year-end expansion - Total revenue growth of 4% reported for fiscal year 2025[153] - The company rebranded from Bowlero to Lucky Strike Entertainment[153] - Four new Lucky Strike locations were completed and opened[153] - Acquisitions included Boomers Parks, Spectrum Entertainment Complex, Adventure Park, and Shipwreck Island water park[153] - Post-FY2025, acquired 58 leased properties, Wet 'n Wild Emerald Pointe, Castle Park, two Boomers Parks, and agreed to acquire Raging Waters Los Angeles[153] Results of Operations: Fiscal Year Ended June 29, 2025 Compared To the Fiscal Year Ended June 30, 2024 FY2025 total revenues grew 4% to $1.2 billion, operating income surged 50%, and net loss significantly improved due to acquisitions and favorable earnout valuation Consolidated Statements of Operations Summary (Fiscal Years 2025 vs. 2024) | Metric (in thousands) | FY2025 | FY2024 | Change ($) | Change (%) | | :------------------------------------------------- | :----- | :----- | :--------- | :--------- | | Revenues | | | | | | Bowling | $549,895 | $557,962 | $(8,067) | (1)% | | Food & beverage | $424,214 | $401,383 | $22,831 | 6% | | Amusement & other | $227,224 | $195,269 | $31,955 | 16% | | Total revenues | $1,201,333 | $1,154,614 | $46,719 | 4% | | Costs and expenses | | | | | | Location operating costs (excl. D&A) | $375,573 | $328,551 | $47,022 | 14% | | Location payroll and benefit costs | $284,131 | $287,206 | $(3,075) | (1)% | | Location food and beverage costs | $94,553 | $90,752 | $3,801 | 4% | | SG&A (excl. D&A) | $143,173 | $148,007 | $(4,834) | (3)% | | Depreciation and amortization | $156,852 | $145,364 | $11,488 | 8% | | Loss on impairment and disposal of fixed assets, net | $10,905 | $61,433 | $(50,528) | (82)% | | Other operating (income) expense, net | $(1,041) | $1,711 | $(2,752) | * | | Total costs and expenses | $1,064,146 | $1,063,024 | $1,122 | —% | | Operating income | $137,187 | $91,590 | $45,597 | 50% | | Other (income) expenses | | | | | | Interest expense, net | $196,371 | $177,611 | $18,760 | 11% | | Change in fair value of earnout liability | $(101,484) | $25,456 | $(126,940) | * | | Other expense | $817 | $76 | $741 | * | | Total other expense | $95,704 | $203,143 | $(107,439) | (53)% | | Income (loss) before income tax expense (benefit) | $41,483 | $(111,553) | $153,036 | ***** | | Income tax expense (benefit) | $51,505 | $(27,972) | $79,477 | * | | Net loss | $(10,022) | $(83,581) | $73,559 | ***** | Same-Store vs. Other Revenues (Fiscal Years 2025 vs. 2024) | Revenue Category (in thousands) | FY2025 | FY2024 | Change ($) | Change (%) | | :------------------------------ | :----- | :----- | :--------- | :--------- | | Revenues on a same-store basis | $990,678 | $1,029,251 | $(38,573) | (3.7)% | | Revenues for media, new and closed locations | $208,191 | $119,901 | $88,290 | 73.6% | | Service fee revenue | $2,464 | $5,462 | $(2,998) | (54.9)% | | Total revenues | $1,201,333 | $1,154,614 | $46,719 | 4.0% | - Total revenues increased due to acquisitions, partially offset by a 3.7% decline in same-store revenues[156][157] - Location operating costs increased by 14%, driven by acquisitions and a $20.7 million non-cash increase in self-insurance reserves[159] - Location payroll and benefit costs decreased by 1% due to staffing optimization, despite location growth[160] - SG&A expenses decreased by 3%, mainly from a $14.3 million drop in professional fees, partially offset by a $7.8 million rise in share-based compensation[162] - Loss on impairment decreased by 82%, largely due to a non-recurring $52.03 million impairment charge in FY2024 for the Bowlero trade name[163][165] - Net interest expense increased by 11% due to a new financing obligation and a $150 million incremental term loan in FY2025[166] - Favorable $(101.484) million impact from change in fair value of earnout liability in FY2025, driven by stock price decrease[167] Non-GAAP measure: Adjusted EBITDA Adjusted EBITDA, a non-GAAP measure, increased by 1.7% to $367.7 million in FY2025, used to assess core operating performance - Adjusted EBITDA is a non-GAAP measure used by management to analyze core operating performance by excluding non-core items[170] Adjusted EBITDA Reconciliation (Fiscal Years 2025 vs. 2024) | (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Net loss | $(10,022) | $(83,581) | | Interest expense | $196,371 | $185,181 | | Income tax expense (benefit) | $51,505 | $(27,972) | | Depreciation and amortization | $158,527 | $147,362 | | Loss on impairment, disposals, and other charges, net | $28,615 | $62,562 | | Share-based compensation | $21,632 | $13,775 | | Closed location EBITDA | $3,054 | $9,006 | | Transactional and other advisory costs | $17,117 | $21,303 | | Changes in the value of earnouts | $(101,484) | $25,456 | | Other, net | $2,372 | $8,405 | | Adjusted EBITDA | $367,687 | $361,497 | - Adjusted EBITDA increased by $6.19 million, or 1.7%, to $367.687 million in FY2025[173] Liquidity and Capital Resources Liquidity is managed through cash, operating cash flows, and expanded credit facilities, with $59.7 million cash and $150 million incremental term loan in FY2025 - Long-term strategy focuses on growth to improve operating profit margins, with capital expenditures for new locations and upgrades as key cash requirements[175] - As of June 29, 2025, available cash and cash equivalents totaled approximately $59.686 million[184] - In FY2025, a $150 million incremental term loan was obtained, increasing quarterly principal payments[179][334] - Post-FY2025, a $230 million bridge term loan was secured, and the Revolver commitment increased by $50 million to $385 million[180][184][387][389] - As of June 29, 2025, $30 million was drawn on the Revolver, with a $335 million commitment[183][336] Cash Flow Analysis: Fiscal Year Ended June 29, 2025 Compared To the Fiscal Year Ended June 30, 2024 Operating cash flow increased 14% to $177.2 million, investing cash flow decreased 43%, and financing cash flow decreased 65% in FY2025 Consolidated Statements of Cash Flows Summary (Fiscal Years 2025 vs. 2024) | (in thousands) | June 29, 2025 | June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :------------ | :------------ | :--------- | :--------- | | Net cash provided by operating activities | $177,221 | $154,830 | $22,391 | 14% | | Net cash used in investing activities | $(220,311) | $(385,656) | $165,345 | 43% | | Net cash provided by financing activities | $35,860 | $102,157 | $(66,297) | (65)% | | Effect of exchange rate changes on cash | $(56) | $8 | $(64) | * | | Net change in cash and cash equivalents | $(7,286) | $(128,661) | $121,375 | (94)% | - Operating activities provided $177.221 million, a 14% increase, driven by higher revenues and lease incentives[186] - Investing activities used $220.311 million, a 43% decrease, due to reduced capital expenditures and acquisition activity[187] - Financing activities provided $35.86 million, a 65% decrease, due to higher dividends and equity settlements, offset by lower buybacks and the incremental term loan[188] Critical Accounting Estimates Critical accounting estimates include asset impairment, earnout valuation, self-insurance reserves, and income taxes, all requiring significant judgment - Critical estimates include impairment of long-lived assets (property, ROU assets) and indefinite-lived intangibles (goodwill, trade names)[192][196] - Earnout liability fair value is determined using a Monte-Carlo simulation, with key inputs like volatility, stock price, and risk-free rate[198] - Self-insurance reserves are based on historical experience and third-party estimates for identified and IBNR claims[199] - Income tax accounting involves estimating deferred tax assets/liabilities, assessing realization with valuation allowances, and recognizing uncertain tax positions[200][201] Recently Issued Accounting Standards Adopted ASU 2023-07 (Segment Reporting) in FY2025 and evaluating ASU 2023-09 (Income Tax) and ASU 2024-03 (Expense Disaggregation) - Adopted ASU 2023-07 (Segment Reporting) in FY2025, requiring enhanced disclosures[299] - Evaluating ASU 2023-09 (Income Taxes), effective for fiscal years beginning after December 15, 2024[300] - Evaluating ASU 2024-03 (Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2026[301][302] Emerging Growth Company Accounting Election As an 'emerging growth company', the company uses an extended transition period for new accounting standards, potentially impacting comparability - As an 'emerging growth company', the company uses an extended transition period for new accounting standards, aligning with private companies[203][204][205][297][298] - This election may hinder comparability of financial statements with other public companies due to differing accounting standards[205][298] - Emerging growth company status continues until March 5, 2026, or reaching $1.235 billion in revenue or $700 million market capitalization[206] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rates, credit, labor, and foreign currency, mitigated by interest rate collars and careful cash management - Exposed to market risks from interest rates, credit, labor costs, and foreign currency exchange rates[207] - Interest rate risk is mitigated by two interest rate collars with a $800 million notional amount, capping SOFR at 5.50% until March 31, 2026[208][340] - Credit risk is managed by placing cash with high-quality financial institutions[209] - Commodity price risk for F&B and supplies is monitored, with purchasing commitments and price adjustments used for mitigation[210][211] Item 8. Financial Statements and Supplementary Data Presents audited consolidated financial statements for FY2025, FY2024, and FY2023, including balance sheets, income statements, cash flows, and detailed explanatory notes Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for FY2025, FY2024, and FY2023, affirming GAAP compliance - Deloitte & Touche LLP provided an unqualified opinion on consolidated financial statements for FY2025, FY2024, and FY2023[214] - Financial statements are presented fairly, in all material respects, in conformity with US GAAP[214] - The company is not required to have an audit of its internal control over financial reporting[216] Consolidated Balance Sheets Total assets increased to $3.16 billion as of June 29, 2025, with liabilities rising to $3.33 billion, and stockholders' deficit reaching $(298.7) million Consolidated Balance Sheets Summary (as of June 29, 2025 and June 30, 2024) | (Amounts in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Assets | | | | Cash and cash equivalents | $59,686 | $66,972 | | Total current assets | $112,550 | $113,962 | | Property and equipment, net | $944,917 | $887,738 | | Operating lease right of use assets | $588,594 | $559,168 | | Finance lease right of use assets, net | $507,701 | $524,392 | | Intangible assets, net | $45,562 | $47,051 | | Goodwill | $844,351 | $833,888 | | Deferred income tax asset | $67,919 | $112,106 | | Other assets | $48,145 | $35,730 | | Total assets | $3,159,739 | $3,114,035 | | Liabilities | | | | Total current liabilities | $194,385 | $182,806 | | Long-term debt, net | $1,300,708 | $1,129,523 | | Long-term obligations of operating lease liabilities | $606,692 | $561,916 | | Long-term obligations of finance lease liabilities | $683,161 | $680,213 | | Long-term financing obligations | $449,215 | $440,875 | | Earnout liability | $36,183 | $137,636 | | Other long-term liabilities | $56,307 | $26,471 | | Deferred income tax liabilities | $4,434 | $4,447 | | Total liabilities | $3,331,085 | $3,163,887 | | Temporary Equity | | | | Series A preferred stock | $127,325 | $127,410 | | Stockholders' Deficit | | | | Total stockholders' deficit | $(298,671) | $(177,262) | - Total assets increased by $45.704 million (1.5%) from FY2024 to FY2025[220] - Net long-term debt increased by $171.185 million (15.2%) to $1.301 billion[220] - Earnout liability significantly decreased by $101.453 million (73.7%) to $36.183 million[220] - Total stockholders' deficit increased by $121.409 million (68.5%) to $(298.671) million[222] Consolidated Statements of Operations FY2025 total revenues grew 4% to $1.2 billion, operating income rose 50%, and net loss improved to $(10.022) million Consolidated Statements of Operations (Fiscal Years 2025, 2024, 2023) | (Amounts in thousands, except share and per share amounts) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :-------------------------------------------------------- | :------------ | :------------ | :----------- | | Revenues | | | | | Bowling | $549,895 | $557,962 | $518,428 | | Food & beverage | $424,214 | $401,383 | $372,607 | | Amusement & other | $227,224 | $195,269 | $167,755 | | Total revenues | $1,201,333 | $1,154,614 | $1,058,790 | | Operating income | $137,187 | $91,590 | $200,800 | | Net (loss) income | $(10,022) | $(83,581) | $82,048 | | Net (loss) income attributable to common stockholders | $(19,070) | $(92,255) | $53,336 | | Net (loss) income per share attributable to Class A and B common stockholders - Basic | $(0.13) | $(0.61) | $0.32 | | Net (loss) income per share attributable to Class A and B common stockholders - Diluted | $(0.13) | $(0.61) | $0.30 | | Weighted-average shares used in computing net (loss) income per share attributable to common stockholders - Basic | 142,401,407 | 151,339,634 | 165,508,879 | | Weighted-average shares used in computing net (loss) income per share attributable to common stockholders - Diluted | 142,401,407 | 151,339,634 | 175,821,396 | - Total revenues increased by $46.719 million (4%) from FY2024 to FY2025[225] - Operating income increased by $45.597 million (50%) from FY2024 to FY2025[225] - Net loss improved by $73.559 million from $(83.581) million in FY2024 to $(10.022) million in FY2025[225] - Basic and diluted net loss per share was $(0.13) in FY2025, an improvement from $(0.61) in FY2024[225] Consolidated Statements of Comprehensive (Loss) Income Total comprehensive loss improved to $(10.722) million in FY2025, driven by better net loss, despite derivative and currency adjustments Consolidated Statements of Comprehensive (Loss) Income (Fiscal Years 2025, 2024, 2023) | (Amounts in thousands) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :------------------------------------------ | :------------ | :------------ | :----------- | | Net (loss) income | $(10,022) | $(83,581) | $82,048 | | Other comprehensive (loss) income, net of income tax: | | | | | Unrealized (loss) gain on derivatives | $(525) | $(2,878) | $3,385 | | Foreign currency translation adjustment | $(175) | $(1,054) | $2,073 | | Other comprehensive (loss) income | $(700) | $(3,932) | $5,458 | | Total comprehensive (loss) income | $(10,722) | $(87,513) | $87,506 | - Total comprehensive loss improved by $76.791 million from $(87.513) million in FY2024 to $(10.722) million in FY2025[227] - Other comprehensive loss was $(0.7) million in FY2025, mainly from unrealized derivative losses and foreign currency adjustments[227] Consolidated Statements of Changes in Temporary Equity and Stockholders' (Deficit) Equity Stockholders' deficit increased to $(298.671) million by June 29, 2025, driven by net loss, cash dividends, and share repurchases Changes in Stockholders' (Deficit) Equity (Fiscal Years 2025 vs. 2024) | (Amounts in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Balance, beginning of period | $(177,262) | $155,221 | | Net loss | $(10,022) | $(83,581) | | Unrealized loss on derivatives | $(525) | $(2,878) | | Foreign currency translation adjustment | $(175) | $(1,054) | | Share-based compensation | $11,925 | $13,436 | | Settlement of equity awards | $(16,244) | — | | Settlement of Series A preferred stock | $3,492 | $16,168 | | Accrual of paid-in-kind dividends on Series A preferred stock | $(3,407) | — | | Cash dividends | $(33,551) | $(24,960) | | Repurchase of Class A common stock into Treasury stock | $(72,902) | $(249,614) | | Balance, end of period | $(298,671) | $(177,262) | - Total stockholders' deficit increased by $121.409 million from $(177.262) million at June 30, 2024, to $(298.671) million at June 29, 2025[229] - Key drivers include a $(10.022) million net loss, $(33.551) million cash dividends, and $(72.902) million Class A share repurchases[229] Consolidated Statements of Cash Flows Operating cash flow increased 14% to $177.2 million, investing cash flow decreased 43%, and financing cash flow decreased 65% in FY2025 Consolidated Statements of Cash Flows (Fiscal Years 2025, 2024, 2023) | (Amounts in thousands) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :------------------------------------------ | :------------ | :------------ | :----------- | | Net cash provided by operating activities | $177,221 | $154,830 | $217,787 | | Net cash used in investing activities | $(220,311) | $(385,656) | $(253,218) | | Net cash provided by financing activities | $35,860 | $102,157 | $98,957 | | Effect of exchange rates on cash | $(56) | $8 | $(129) | | Net change in cash and cash equivalents | $(7,286) | $(128,661) | $63,397 | | Cash and cash equivalents at end of period | $59,686 | $66,972 | $195,633 | - Net cash provided by operating activities increased by $22.391 million (14%) in FY2025 compared to FY2024[232][186] - Net cash used in investing activities decreased by $165.345 million (43%) in FY2025 compared to FY2024[232][187] - Net cash provided by financing activities decreased by $66.297 million (65%) in FY2025 compared to FY2024[234][188] Notes to Consolidated Financial Statements Detailed notes support financial statements, covering business, accounting policies, acquisitions, assets, leases, debt, taxes, earnouts, equity, and subsequent events Note 1. Description of Business Lucky Strike Entertainment, formerly Bowlero, rebranded on December 12, 2024, operating 365 integrated entertainment venues across North America - Lucky Strike Entertainment (formerly Bowlero) is a premier location-based entertainment operator, rebranded on December 12, 2024[236] - Operates 365 locations across the US, Mexico, and Canada under diverse brands including Bowlero, Lucky Strike, and Boomers Parks[237][238] - All locations are managed as a single, integrated business segment of location-based entertainment[237] Note 2. Significant Accounting Policies Financial statements adhere to GAAP, utilizing estimates for fair value, impairment, and reserves, with specific policies for leases, intangibles, revenue, and self-insurance - Financial statements are prepared in accordance with GAAP, with a fiscal year ending on the Sunday closest to June 30th[239][242][243] - Significant estimates are made for cash flow projections, fair value in acquisitions, derivatives, share-based compensation, and asset impairment[244] - Lease accounting recognizes ROU assets and lease liabilities for fixed payments, using the incremental borrowing rate for present value calculations[258][261][262][263] - Goodwill and indefinite-lived intangibles are tested annually for impairment; finite-lived intangibles are amortized over 1 to 5 years[268][271] - Revenue for bowling, F&B, and most amusement activities is recognized at a point-in-time[284][285] - The company is self-insured for property, general liability, workers' compensation, and health care, establishing reserves for claims[277] - Income taxes use the asset and liability approach, recognizing deferred tax assets/liabilities and assessing their realization with valuation allowances[280] Note 3. Business Combinations and Acquisitions The company actively acquires to expand market share, completing four acquisitions (10 locations) for $80.9 million in FY2025 - Continually evaluates acquisitions to expand market share and leverage fixed costs[303] - In FY2025, four acquisitions (ten locations) were completed for $80.9 million, with three valuations still preliminary[308] - In FY2024, acquired Lucky Strike Entertainment (14 locations) for $89.936 million and seven other locations for $101.207 million[311] - Goodwill represents assembled workforce, future earnings, and synergies; $4.878 million (FY2025) and $74.53 million (FY2024) were tax deductible[305][309] - Key valuation approaches for acquired assets include cost approach (buildings/equipment), market approach (land), and relief-from-royalty method (trade names)[314][315][317] Note 4. Goodwill and Other Intangible Assets Goodwill increased to $844.351 million by June 29, 2025, with finite-lived intangibles at $13.342 million and indefinite-lived at $32.22 million Goodwill Carrying Amount (Fiscal Years 2025 vs. 2024) | Metric (in thousands) | Amount | | :------------------------------------------ | :----- | | Balance as of July 2, 2023 | $753,538 | | Goodwill from FY2024 acquisitions | $80,350 | | Balance as of June 30, 2024 | $833,888 | | Goodwill from FY2025 acquisitions | $10,390 | | Adjustments to preliminary fair values for prior year acquisitions | $73 | | Balance as of June 29, 2025 | $844,351 | Intangible Assets, Net (as of June 29, 2025 and June 30, 2024) | (in thousands) | June 29, 2025 Net Carrying Amount | June 30, 2024 Net Carrying Amount | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Finite-lived intangible assets: | | | | Bowlero trade name | $9,504 | $14,256 | | Other acquisition trade names | $899 | $1,184 | | Customer relationships | $744 | $1,377 | | Management contracts | — | $37 | | Non-compete agreements | $1,411 | $1,969 | | PBA member, sponsor & media relationships | $549 | $661 | | Other intangible assets | $235 | $379 | | Total finite-lived intangible assets | $13,342 | $19,863 | | Indefinite-lived intangible assets: | | | | Liquor licenses | $12,830 | $12,418 | | Lucky Strike trade name | $8,360 | $8,360 | | Other trade names | $11,030 | $6,410 | | Total indefinite-lived intangible assets | $32,220 | $27,188 | | Total Intangible Assets, Net | $45,562 | $47,051 | - Amortization expense for finite-lived intangible assets was $7.284 million in fiscal year 2025[319] - The Bowlero trade name was reclassified to finite-lived in FY2024, leading to a $52.03 million impairment charge[271] Note 5. Property and Equipment Net property and equipment increased to $944.917 million by June 29, 2025, with depreciation expense at $132.122 million in FY2025 Property and Equipment, Net (as of June 29, 2025 and June 30, 2024) | (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Land | $139,389 | $108,442 | | Buildings and leasehold improvements | $754,647 | $663,537 | | Equipment, software, furniture, and fixtures | $645,200 | $630,280 | | Construction in progress | $27,021 | $55,343 | | Total gross property and equipment | $1,566,257 | $1,457,602 | | Accumulated depreciation | $(621,340) | $(569,864) | | Property and equipment, net | $944,917 | $887,738 | - Net property and equipment increased by $57.179 million (6.4%) from FY2024 to FY2025[320] - Depreciation expense for property and equipment was $132.122 million in fiscal year 2025[321] - Land includes 66 acres adjacent to Raging Waves water park, purchased for $9.4 million on December 16, 2024[320] Note 6. Leases Total net lease costs increased to $262.491 million in FY2025, with operating lease ROU assets at $588.594 million and finance lease ROU assets at $507.701 million Components of Net Lease Cost (Fiscal Years 2025, 2024, 2023) | Lease Costs (in thousands) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :------------------------------------------ | :------------ | :------------ | :----------- | | Total Operating Lease Costs | $91,047 | $84,090 | $70,577 | | Total Finance Lease Costs | $67,099 | $66,358 | $55,121 | | Total Financing Obligation Costs | $40,742 | $28,333 | $223 | | Total Other Costs, Net | $63,603 | $61,485 | $41,179 | | Total Lease Costs, Net | $262,491 | $240,266 | $167,100 | Cash Paid for Lease Liabilities (Fiscal Years 2025 vs. 2024) | Cash Paid (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Operating cash flows paid for operating leases | $65,781 | $65,694 | | Operating cash flows paid for interest portion of finance leases | $47,234 | $45,141 | | Financing cash flows paid for principal portion of finance leases | $1,615 | $6,298 | | Operating cash flows paid for interest portion of financing obligations | $32,402 | $22,644 | | Financing cash flows paid for principal portion of finance obligations | — | $24 | | Total cash amounts paid for lease liabilities | $147,032 | $139,801 | Lease-Related Balance Sheet Information (as of June 29, 2025 and June 30, 2024) | Balance Sheet Item (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Operating lease right of use assets | $588,594 | $559,168 | | Current obligations of operating lease liabilities | $33,103 | $28,460 | | Long-term obligations of operating lease liabilities | $606,692 | $561,916 | | Finance lease right of use assets, net | $507,701 | $524,392 | | Other current liabilities (finance lease) | $780 | $1,954 | | Long-term obligations of finance lease liabilities | $683,161 | $680,213 | | Long-term financing obligations | $449,215 | $440,875 | Weighted Average Lease Terms and Discount Rates (as of June 29, 2025 and June 30, 2024) | Metric | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Weighted average remaining lease terms (years): | | | | Operating leases | 18.26 | 19.12 | | Finance leases | 29.91 | 30.90 | | Financing obligations | 52.91 | 53.90 | | Weighted average discount rate: | | | | Operating leases | 7.50% | 7.62% | | Finance leases | 7.56% | 7.57% | | Financing obligations | 9.53% | 9.53% | Note 7. Supplemental Cash Flow Information FY2025 supplemental cash flow includes $175.106 million interest paid and $2.255 million income taxes paid Supplemental Cash Flow Information (Fiscal Years 2025, 2024, 2023) | (in thousands) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :------------------------------------------ | :------------ | :------------ | :----------- | | Cash paid during the period for: | | | | | Interest | $175,106 | $172,403 | $104,167 | | Income taxes, net of refunds | $2,255 | $3,501 | $6,640 | | Noncash investing and financing transactions: | | | | | Capital expenditures in accounts payable and accrued expenses | $13,571 | $24,798 | $24,937 | | Change in fair value of interest rate swap, net of tax | $(525) | $(2,878) | $3,385 | | Accrual of paid-in-kind dividends on Series A preferred stock | $3,407 | — | $5,665 | | Excise tax liability accrued on stock repurchases | $763 | $2,423 | $1,578 | Note 8. Accounts Payable and Accrued Expenses Total accounts payable and accrued expenses increased to $145.188 million by June 29, 2025 Accounts Payable and Accrued Expenses (as of June 29, 2025 and June 30, 2024) | (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Accounts payable | $33,863 | $50,457 | | Deferred revenue | $17,804 | $15,976 | | Taxes and licenses | $16,622 | $17,840 | | Compensation | $13,677 | $13,768 | | Insurance | $13,288 | $7,401 | | Customer deposits | $12,811 | $14,006 | | Interest | $9,164 | $1,113 | | Utilities | $5,070 | $5,475 | | Professional fees | $4,221 | $4,090 | | Other | $18,668 | $5,658 | | Total accounts payable and accrued expenses | $145,188 | $135,784 | - Total accounts payable and accrued expenses increased by $9.404 million (6.9%) from FY2024 to FY2025[332] Note 9. Debt Total debt was $1.322 billion as of June 29, 2025, primarily a First Lien Term Loan, with the company in compliance with covenants Debt Structure Summary (as of June 29, 2025 and June 30, 2024) | (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | First Lien Credit Facility Term Loan | $1,279,116 | $1,138,500 | | Revolver | $30,000 | — | | Other Equipment Loans | $12,674 | $13,700 | | Total gross debt | $1,321,790 | $1,152,200 | | Less: Unamortized financing costs | $(10,920) | $(13,514) | | Current portion of unamortized financing costs | $3,947 | $3,361 | | Current maturities of long-term debt | $(14,109) | $(12,524) | | Total long-term debt | $1,300,708 | $1,129,523 | - First Lien Credit Facility Term Loan had an outstanding balance of $1.279 billion at 7.83% variable interest as of June 29, 2025[333] - Revolver commitment was $335 million with $30 million drawn as of June 29, 2025[336] - The company was in compliance with all debt covenants as of June 29, 2025[339] - Interest rate collars for $800 million notional amount are in place until March 31, 2026, with a SOFR cap of 5.50%[340] Note 10. Income Taxes FY2025 income tax expense was $51.505 million, impacted by a $65.104 million valuation allowance increase, with $63.485 million net deferred tax assets Income Tax Expense (Benefit) (Fiscal Years 2025, 2024, 2023) | (in thousands) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :------------------------------------------ | :------------ | :------------ | :----------- | | Total current provision | $5,756 | $6,367 | $2,235 | | Total deferred provision | $45,749 | $(34,339) | $(86,478) | | Total income tax benefit | $51,505 | $(27,972) | $(84,243) | - FY2025 effective tax rate impacted by a $65.104 million increase in valuation allowance for Section 163(j) interest limitation carryforwards[343][348] Net Deferred Income Tax Assets (Liabilities) (as of June 29, 2025 and June 30, 2024) | (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Total net deferred income tax assets | $458,902 | $482,165 | | Total deferred income tax liabilities | $395,417 | $374,506 | | Net deferred income tax asset (liabilities) | $63,485 | $107,659 | - As of June 29, 2025, the company had $137.445 million in federal NOLs and $12.233 million in tax credit carryforwards[345] - Realization of deferred tax assets depends on future taxable income and is subject to Sections 382 and 383 limitations due to ownership changes[346] Note 11. Commitments and Contingencies The company faces routine legal proceedings, with management expecting no material adverse effect on its financial position or operations - The company is involved in various legal proceedings common to the retail, restaurant, and entertainment industries[351] - Management believes these matters will not materially adversely affect the company's financial position, results, or cash flows[351] Note 12. Earnouts 11.4 million unvested earnout shares are outstanding, vesting if Class A stock exceeds $17.50 by December 15, 2026 - As of June 29, 2025, 11,418,291 unvested earnout shares were outstanding[352] - Earnout shares vest if Class A common stock exceeds $17.50 per share for 10 trading days by December 15, 2026[352] - Most unvested earnout shares are classified as a liability, with fair value changes recognized in operations[353] Note 13. Fair Value of Financial Instruments Fair value of debt was $1.317 billion as of June 29, 2025; earnout liability decreased significantly to $36.183 million due to fair value changes Fair Value and Carrying Value of Debt (as of June 29, 2025 and June 30, 2024) | (in thousands) | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Carrying value | $1,321,790 | $1,152,200 | | Fair value | $1,316,993 | $1,152,200 | Items Measured at Fair Value on a Recurring Basis (as of June 29, 2025 and June 30, 2024) | (in thousands) | June 29, 2025 Total | June 30, 2024 Total | | :------------------------------------------ | :------------------ | :------------------ | | Interest rate collars | $16 | $696 | | Earnout shares | $36,183 | $137,636 | | Total liabilities | $36,199 | $137,636 | Key Inputs for Earnout Shares Valuation (as of June 29, 2025 and June 30, 2024) | Input | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Expected term in years | 1.46 | 2.46 | | Expected volatility | 50% | 50% | | Risk-free interest rate | 3.86% | 4.62% | | Stock price | $9.31 | $14.49 | | Dividend yield | 2.36% | 1.52% | - Earnout liability decreased by $101.484 million in fiscal year 2025, primarily due to fair value changes[357] Note 14. Common Stock, Preferred Stock and Stockholders' Equity The company has Class A (one vote) and Class B (ten votes) common stock, with 81.7 million Class A and 58.5 million Class B shares outstanding - Authorized to issue Class A common stock (1 vote/share), Class B common stock (10 votes/share), and Preferred Stock[360] - As of June 29, 2025, 81,684,310 Class A and 58,519,437 Class B common shares were outstanding[360] - Series A preferred stock has a 5.5% cumulative dividend and is classified as temporary equity due to redemption features[362][367] - $33.458 million in cash dividends were paid on common stock in FY2025[368] - In FY2025, 6,796,938 Class A shares were repurchased for $72.138 million, with $92.223 million remaining in the program[370] Note 15. Share-Based Compensation The company operates three stock plans, with 24.7 million stock options and 1.29 million RSUs outstanding, and $21.632 million share-based compensation expense in FY2025 - The company operates three stock plans: 2017 Stock Incentive, 2021 Omnibus Incentive, and ESPP[371] Stock Options Outstanding (2017 Plan) (as of June 29, 2025 and June 30, 2024) | Metric | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Number of Options Outstanding | 15,883,244 | 19,965,344 | | Weighted Average Exercise Price Per Share | $7.05 | $7.22 | | Weighted Average Remaining Contractual Term (years) | 6.51 | 7.51 | | Aggregate Intrinsic Value | $35,963 | — | Stock Options Outstanding (2021 Plan) (as of June 29, 2025 and June 30, 2024) | Metric | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Number of Options Outstanding | 8,835,672 | 9,153,103 | | Weighted Average Exercise Price Per Share | $13.99 | $13.91 | | Weighted Average Remaining Contractual Term (years) | 6.94 | 7.83 | | Aggregate Intrinsic Value | — | — | RSUs Outstanding (2021 Plan) (as of June 29, 2025 and June 30, 2024) | RSU Type | June 29, 2025 Units | June 30, 2024 Units | | :------------------------------------------ | :------------------ | :------------------ | | Service based RSUs | 697,364 | 676,064 | | Earnout RSUs | 39,920 | 43,465 | | Market and service based RSUs | 550,865 | 243,379 | Total Share-Based Compensation Expense (Fiscal Years 2025, 2024, 2023) | (in thousands) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :------------------------------------------ | :------------ | :------------ | :----------- | | Stock options | $9,486 | $8,702 | $9,708 | | Service based RSUs | $4,478 | $4,062 | $4,267 | | Market and service based RSUs | $1,967 | $482 | $630 | | Earnout RSUs | $48 | $40 | $538 | | Other stock-based awards & settlements | $5,249 | — | — | | ESPP | $404 | $489 | $599 | | Total share-based compensation expense | $21,632 | $13,775 | $15,742 | - Total unrecognized share-based compensation cost was $23.618 million as of June 29, 2025, with a 2.16-year weighted average recognition period[377] - $5.249 million in 'Other stock-based awards & settlements' for FY2025 includes $4.809 million for cash settlement of equity awards for a retiring executive[378] Note 16. Net (Loss) Income Per Share Basic and diluted net loss per share improved to $(0.13) in FY2025, with potentially dilutive securities excluded due to antidilutive effects Net (Loss) Income Per Share Attributable to Common Stockholders (Fiscal Years 2025, 2024, 2023) | (Amounts in thousands, except share and per share amounts) | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :-------------------------------------------------------- | :------------ | :------------ | :----------- | | Net (loss) income allocated to common stockholders | $(19,070) | $(92,255) | $53,336 | | Weighted average common shares outstanding (Basic) | 142,401,407 | 151,339,634 | 165,508,879 | | Net (loss) income per share, basic | $(0.13) | $(0.61) | $0.32 | | Net (loss) income per share, diluted | $(0.13) | $(0.61) | $0.30 | - Basic and diluted net loss per share was $(0.13) in FY2025, an improvement from $(0.61) in FY2024[381][383] - Potentially dilutive securities were excluded from diluted EPS calculations in net loss periods due to their antidilutive effect[383] Note 17. Segment Reporting The company operates as a single segment (Location-based entertainment), with the CEO as CODM, reviewing consolidated financial performance - The company operates as a single operating segment: Location-based entertainment[385] - The CEO, Thomas Shannon, is the CODM and reviews financial information on a consolidated basis[385] - The CODM assesses performance and allocates resources based on net (loss) income, with centrally managed operational components[386] Note 18. Subsequent Events Post-FY2025, the company secured a $230 million bridge loan, acquired 58 properties for $306 million, and increased its Revolver commitment - On July 10, 2025, a $230 million bridge term loan was secured, maturing in 364 days[387] - On July 10, 2025, 58 leased properties were acquired for $306 million, financed by the bridge loan, revolver, and cash[388] - On July 16, 2025, the Revolver commitment increased by $50 million to an aggregate of $385 million[389] - A regular quarterly cash dividend of $0.055 per share was declared on August 19, 2025, payable September 12, 2025[390] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures No changes in or disagreements with accountants on accounting and financial disclosures - There are no changes or disagreements with accountants on accounting and financial disclosures[391] Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of June 29, 2025 - As of June 29, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective[392] - Management concluded that internal control over financial reporting was effective as of June 29, 2025, based on COSO 2013[394] - The independent auditor is not required to attest to internal control effectiveness due to the company's emerging growth company status[395] - No material changes in internal control over financial reporting occurred during the quarter ended June 29, 2025[396] Item 9B. Other Information CEO Thomas Shannon adopted a Rule 10b5-1(c) trading plan on May 20, 2024, for the potential sale of up to 2.3 million Class A shares - On May 20, 2024, CEO Thomas Shannon adopted a Rule 10b5-1(c) trading plan for up to 2.3 million Class A shares[397] - The trading plan expires by May 20, 2026, or when all shares are sold[397] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection This item is not applicable to the company - Disclosure regarding foreign jurisdictions that prevent inspection is not applicable to the company[398] Part III Item 10. Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement[400] - A Code of Conduct and Ethics applies to all directors, officers, and employees, available on the investor relations website[401] - An Insider Trading Policy prohibits trading on material non-public information by directors, officers, and employees[402] Item 11. Executive Compensation Executive compensation information is incorporated by reference from the 2025 Proxy Statement - Executive compensation information is incorporated by reference from the 2025 Proxy Statement[403] Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters Security ownership and related stockholder matters are incorporated by reference from the 2025 Proxy Statement - Security ownership information is incorporated by reference from the 2025 Proxy Statement[404] Item 13. Certain Relationships and Related Transactions, and Director Independence Related transactions and director independence information is incorporated by reference from the 2025 Proxy Statement - Related transactions and director independence information is incorporated by reference from the 2025 Proxy Statement[405] Item 14. Principal Accounting Fees and Services Principal accounting fees and services information is incorporated by reference from the 2025 Proxy Statement - Principal accounting fees and services information is incorporated by reference from the 2025 Proxy Statement[406] Part IV Item 15. Exhibits, Financial Statement Schedules Lists financial statements and supplementary data, notes omitted schedules, and provides a comprehensive list of required exhibits - Financial statements and supplementary data are referenced to page 31 of the report[408] - Financial statement schedules are omitted as inapplicable or included elsewhere in the consolidated financial statements or notes[409] - A comprehensive list of exhibits required by Item 601 of SEC Regulation S-K is provided, including key agreements and corporate documents[409] Item 16. For 10-K Summary No 10-K summary is provided under this item - No 10-K summary is provided under this item[414] Signatures The report is signed by the Chairman/CEO and CFO/Treasurer, along with other directors, on August 28, 2025 - The report is signed by Thomas F. Shannon (Chairman/CEO) and Robert M. Lavan (CFO/Treasurer) on August 28, 2025[419][420]