Lucky Strike Entertainment Corporation

08/27/2026 | Press release | Distributed by Public on 08/27/2026 05:35

Annual Report for Fiscal Year Ending June 28, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
This discussion should be read in conjunction with Lucky Strike Entertainment Corporation's audited consolidated financial statements and notes included herein. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under the heading "Risk Factors." Actual results may differ materially from those contained in any forward-looking statements. All period references are to our fiscal periods unless otherwise indicated. Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "we," "us," "our," the "Company," and "Lucky Strike" are intended to mean the business and operations of Lucky Strike Entertainment Corporation and its consolidated subsidiaries. Unless otherwise indicated, all financial information in this section is presented in thousands.
Discussion regarding our financial condition and results of operations for fiscal 2025 compared with fiscal 2024 is included in Item 7 of the Annual Report on Form 10-K for the fiscal period ended June 29, 2025.
Overview
Lucky Strike Entertainment is one of the world's premier operators of location-based entertainment. The Company operates traditional bowling locations under its AMF brand, as well as more upscale entertainment venues under its Lucky Strike and Bowlero brands, featuring lounge seating, arcades, enhanced food and beverage offerings, and elevated customer service for both individuals and group events. The Company also hosts and oversees professional and non-professional bowling tournaments and related broadcasting activities. In addition, the Company operates other forms of location-based entertainment, including family entertainment centers ("FECs") and water parks, under brands including Octane Raceway, Raging Waves, Shipwreck Island, Big Kahuna's, Wet 'n Wild Emerald Pointe, Raging Waters Los Angeles, Castle Park, and Boomers Parks.
The Company remains focused on creating long-term shareholder value through continued organic growth, the conversion and upgrading of existing locations to more upscale entertainment experiences offering a broader range of offerings, the opening of new locations and strategic acquisitions. The Company also routinely evaluates the performance of its location portfolio and may rationalize locations that no longer align with its long-term strategic and financial objectives.
Recent Developments
During the fiscal year ended June 28, 2026, Lucky Strike Entertainment continued to execute on its long-term growth strategy, delivering total revenue growth of 4% and further expanding its three core verticals: bowling, water parks, and FECs. The following summarizes the Company's significant developments during the fiscal year ended June 28, 2026:
•Property Acquisition from Carlyle: The Company acquired 58 existing properties that were previously subject to a master lease agreement with Carlyle for aggregate consideration of $306,000. The acquired portfolio spans 16 states and includes prime locations in California, Illinois, Georgia, Arizona, and Colorado. This transaction reduced annual rent obligations by eliminating the associated lease liabilities, while providing meaningful financial and operational flexibility in support of the Company's long-term growth strategy.
•Water Park and FEC Acquisitions: The Company completed the acquisitions of Wet 'n Wild Emerald Pointe water park, Raging Waters Los Angeles water park, Castle Park, and two additional Boomers Parks locations, further expanding the Company's water park and FEC portfolio.
•New Location Opening: The Company completed construction of and opened a newly built Lucky Strike entertainment location in Southern California.
Index to Financial Statements
•Lucky Strike Rebrand Initiative: The Company continued to make meaningful progress on the Lucky Strike rebrand initiative with 88 locations converted. As of June 28, 2026, we had 132 Lucky Strike locations.
•Debt Refinancing: The Company refinanced its existing term loan with a new $1,200,000 term loan, issued $500,000 aggregate principal amount of 7.25% Senior Secured Notes, and increased its revolving credit facility commitment to $425,000. Management believes this refinancing strengthens the Company's balance sheet and provides enhanced financial flexibility to support ongoing growth initiatives.
•AMF Brand Refresh: Subsequent to June 28, 2026, the Company unveiled the AMF brand refresh along with plans to transition approximately 60 locations to the AMF brand.
Presentation of Results of Operations
The Company reports on a fiscal year with each quarter generally comprised of one 5-week period and two 4-week periods. Our current and prior fiscal years were fifty-two weeks and ended on June 28, 2026 ("fiscal 2026") and June 29, 2025 ("fiscal 2025"), respectively.
All amounts are presented in thousands, unless otherwise noted, except share and per share amounts.
Index to Financial Statements
Results of Operations
Fiscal Year Ended June 28, 2026 Compared To the Fiscal Year Ended June 29, 2025
Analysis of Consolidated Statement of Operations. The following table displays certain items from our consolidated statements of operations for the fiscal years ended presented below:
Fiscal Year Ended
June 28,
2026
%(1)
June 29,
2025
%(1)
Change % Change
Revenues
Bowling $ 561,581 45 % $ 549,895 46 % $ 11,686 2 %
Food & beverage 431,066 35 % 424,214 35 % 6,852 2 %
Amusement & other 252,671 20 % 227,224 19 % 25,447 11 %
Total revenues 1,245,318 100 % 1,201,333 100 % 43,985 4 %
Costs and expenses
Location operating costs, excluding depreciation and amortization 401,193 32 % 375,573 31 % 25,620 7 %
Location payroll and benefit costs 310,950 25 % 284,131 24 % 26,819 9 %
Location food and beverage costs 96,557 8 % 94,553 8 % 2,004 2 %
Selling, general and administrative expenses, excluding depreciation and amortization 150,867 12 % 143,173 12 % 7,694 5 %
Depreciation and amortization 129,270 10 % 156,852 13 % (27,582) (18) %
Loss on impairment and disposal of fixed assets, net 22,128 2 % 10,905 1 % 11,223 *
Other operating income, net (2,441) - % (1,041) - % (1,400) *
Total costs and expenses 1,108,524 89 % 1,064,146 89 % 44,378 4 %
Operating income 136,794 11 % 137,187 11 % (393) - %
Other (income) expenses
Interest expense, net 205,342 16 % 196,371 16 % 8,971 5 %
Change in fair value of earnout liability (34,033) (3) % (101,484) (8) % 67,451 *
Other expense 4,939 - % 817 - % 4,122 *
Total other expense 176,248 14 % 95,704 8 % 80,544 84 %
(Loss) income before income tax (benefit) expense (39,454) (3) % 41,483 3 % (80,937) *
Income tax (benefit) expense (3,677) - % 51,505 4 % (55,182) *
Net loss $ (35,777) (3) % $ (10,022) (1) % (25,755) *
___________
(1) Percent calculated as a percentage of revenues and may not total due to rounding.
*Represents a change equal to or in excess of 100% or one that is not meaningful.
Index to Financial Statements
Revenues: For fiscal 2026, revenues totaled $1,245,318 and represented an increase of $43,985 or 4% over the prior fiscal year. The increase in revenues is primarily attributable to revenue from newly acquired or leased locations, with same-store revenues essentially flat year-over-year.
Fiscal Year Ended
(in thousands) June 28, 2026 June 29, 2025 Change % Change
Revenues on a same-store basis (1)
$ 1,115,006 $ 1,117,236 $ (2,230) - %
Revenues for media, new and closed locations 128,222 81,633 46,589 57 %
Service fee revenue (2)
2,090 2,464 (374) (15) %
Total revenues $ 1,245,318 $ 1,201,333 $ 43,985 4 %
___________
(1) Revenues from 347 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed 10-K for the year ended June 29, 2025, revenues from 326 locations were included in the same-store revenue.
(2) Service fee revenue is a mandatory gratuity passed through to the employee, which is a non-contributor to earnings.
Same-store revenues include revenues from locations that are open in periods presented (open in both the current period and the prior period being reported) and excludes revenues from locations that are not open in periods presented such as acquired new locations or locations closed for upgrades, renovations or other such reasons, as well as media revenues. Management believes the flatness in same-store revenues reflects the cumulative impact of the adverse weather conditions experienced during the third quarter of fiscal 2026 and consumer confidence headwinds experienced throughout the second half of fiscal 2026. Partially offsetting these headwinds was walk-in bowling entertainment revenue at same-store locations that remained strong during the year, contributing approximately $8,800 of incremental same-store revenues, as well as strong league bowling revenue of $4,100. This strength was partially offset by combined declines in same-store alcoholic beverage revenues and amusement and other revenues, resulting in overall same-store revenue stability for the year.
Location operating costs: Location operating costs primarily consist of rent, utilities, insurance, repairs & maintenance, property taxes, supplies, marketing, and other costs associated with Company locations. Location operating costs include both fixed and variable components and therefore do not directly correlate with revenue.
Location operating costs increased $25,620, or 7%. Increases were broad-based across most cost categories, including amusement costs, marketing, rent, property taxes, insurance, and utilities. The overall increase was primarily driven by location count growth and strategic operational initiatives, as further described below. Water park and FEC locations contributed approximately $14,000 to the increase over the prior fiscal year, and new bowling locations contributed to the remainder of the location-driven increase. For our bowling locations, utilities increased approximately $3,400 due to increasing energy rates. In addition, marketing expense increased approximately $11,000 as compared to the prior fiscal year, reflecting management's initiative to align marketing spend more closely with industry benchmarks; management believes the increased marketing investment contributed to growth in retail entertainment revenue during the fiscal year.
The increases noted above were partially offset by a decrease in non-cash impacts related to self-insurance reserve adjustments of approximately $16,900.
Location operating costs as a percent of revenues increased from 31% during fiscal 2025 to 32% during fiscal 2026, mainly due to the aforementioned location count growth and increased fixed costs. Notwithstanding this year-over-year increase, location operating costs as a percentage of revenues improved in the second half of fiscal 2026 relative to the first half, reflecting the Company's ongoing efforts to optimize location-level cost efficiency, which will remain a focus in fiscal 2027.
Location payroll and benefit costs: Location payroll and benefit costs consist of employee costs that directly support location operations. Location payroll and benefit costs increased $26,819, or 9%. The increase is primarily driven by location count growth, additional bonus incentives, and an overall increase in labor hours per location. Water park and FEC locations had a significant impact, contributing approximately $14,800 to the increase compared to the prior fiscal year. The remaining increase reflects higher labor hours and bonus incentive costs across existing same-store locations during the fiscal year. Also contributing to the increase is the absence in fiscal year 2026 of a favorable $3,400 payroll credit recognized in fiscal year 2025, which had reduced location payroll and benefits costs in that period.
Location food & beverage costs: Location food & beverage costs as a percentage of food & beverage revenue remained flat at 22%. Location food & beverage costs increased $2,004, or 2%. The increase in location food & beverage costs is mainly attributable to increased food & beverage revenue as compared to the prior fiscal year.
Index to Financial Statements
Selling, general and administrative expenses ("SG&A"): SG&A expenses increased $7,694 or 5%. The increase is mainly attributable to an increase in SG&A labor of approximately $9,800, reflecting strategic investments in our marketing, water park, and FEC teams. The increase in marketing headcount is directly aligned with our initiative to increase our overall marketing budget, as management believes a larger and more capable marketing team is necessary to effectively deploy the expanded investment. The water park and FEC teams consist primarily of year-round staff who support peak seasonal operations during the summer months. The remaining increase reflects higher travel costs of $2,300 tied to onboarding of new locations, as well as training and development sessions, software costs of $2,900 for expanded technology platforms, and professional fees of $7,600 related to various projects and matters. These increases were partially offset by a $9,100 reduction in share-based compensation.
Depreciation and amortization: Depreciation and amortization decreased $27,582 or 18%. The decrease primarily reflects the impact of a change in the estimated useful lives of certain fixed assets, which resulted in a reduction in depreciation expense of approximately $31,858 compared to the prior fiscal year. See Note 2 - Significant Accounting Policies for more information. This decrease was partially offset by depreciation and amortization associated with capital expenditures and acquired assets in the current year.
Loss on impairment and disposal of fixed assets, net: Loss on impairment and disposal of fixed assets increased $11,223. The increase is mainly attributable to a $14,238 non-cash impairment charge recognized in the fourth quarter of fiscal 2026 related to four underperforming locations whose carrying values were determined not to be recoverable, with the remainder reflecting other disposal and impairment activity in the ordinary course.
Interest expense, net: Interest expense increased $8,971, or 5%. The higher interest expense is primarily attributable to increases in debt in the current year. Specifically, the Notes, which were issued late in the first quarter of fiscal 2026, contributed approximately $27,900 of interest expense that was not present in the prior fiscal year. In addition to the impact of the Notes, the increase is attributable to the amortization of approximately $3,300 of deferred financing costs associated with the Bridge Term Loan during the first quarter of fiscal 2026. The increase in interest expense was partially offset by an $18,903 decrease in interest expense for finance leases due to the purchase of previously leased assets.
Change in fair value of earnouts: The impact on the statement of operations during fiscal 2026 is due to the decrease in the fair value of the earnouts, driven by the decrease in the Company's stock price and the limited remaining vesting period associated with the earnouts, which reduce the estimated probability of vesting.
Income Taxes: Income tax (benefit) expense and deferred tax assets and liabilities reflect management's assessment of the Company's tax position. The Company recognized an income tax benefit at an effective rate of 9% compared to the 21% federal statutory rate. The benefit was attributed to our net loss, business combinations, and federal income tax credits, which was partially offset by a $13,665 increase in the valuation allowance on the Section 163(j) interest limitation carryforward, along with state and local income taxes and Section 162(m) compensation limitations. Favorable impacts due to the One Big Beautiful Bill Act ("OBBBA") limited the impact to the valuation allowance for the Section 163(j) interest limitation carryforward as compared to the prior year valuation allowance increase of $65,104.
The amount of income taxes the Company pays is subject to audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of our tax positions and accrues estimated amounts for applicable tax positions. Based on these reviews, the results of discussions and resolutions of matters with certain tax authorities and the closure of tax years subject to tax audit, liabilities for applicable tax positions are adjusted as necessary.
Non-GAAP measure
Adjusted EBITDA is a non-GAAP financial measure that is not in accordance with, or an alternative to, measures prepared in accordance with GAAP. The Company believes certain financial measures which meet the definition of non-GAAP financial measures provide important supplemental information. The Company considers Adjusted EBITDA as an important financial measure because it provides a financial measure of the quality of the Company's earnings. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure. Adjusted EBITDA is used by management in addition to and in conjunction with the results presented in accordance with GAAP. We have presented Adjusted EBITDA solely as a supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as Interest, Income Taxes, Depreciation and Amortization, Impairment Charges, Share-based Compensation, EBITDA from Closed Locations, Foreign Currency Exchange Loss (Gain), Asset Disposition Loss (Gain), Transactional and other advisory costs, System modernization costs, Change in the value of earnouts, and Other. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA and trailing twelve month Adjusted EBITDA do not reflect:
Index to Financial Statements
•every expenditure, future requirements for capital expenditures or contractual commitments;
•changes in our working capital needs;
•the interest expense, or the amounts necessary to service interest or principal payments, on our outstanding debt;
•income tax (benefit) expense, and because the payment of taxes is part of our operations, tax expense is a necessary element of our costs and ability to operate;
•non-cash equity compensation, which will remain a key element of our overall equity based compensation package; and
•the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations.
Refer to notes below for additional details concerning the respective items for Adjusted EBITDA.
The following table provides a reconciliation from net loss to Adjusted EBITDA for the fiscal years ended June 28, 2026 and June 29, 2025:
(in thousands) June 28, 2026 June 29, 2025
Net loss
$ (35,777) $ (10,022)
Adjustments:
Interest expense 206,635 196,371
Income tax (benefit) expense (3,677) 51,505
Depreciation and amortization 130,961 158,527
Loss on impairment, disposals, and other charges, net (1)
27,848 28,615
Share-based compensation 12,627 21,632
Closed location EBITDA (2)
3,599 3,054
Transactional and other advisory costs (3)
18,059 17,117
System modernization costs (4)
4,694 -
Changes in the value of earnouts (5)
(34,033) (101,484)
Other, net (6)
2,272 2,372
Adjusted EBITDA $ 333,208 $ 367,687
Adjusted EBITDA represents Net loss before Interest, Income Taxes, Depreciation and Amortization, Impairment Charges, Share-based Compensation, EBITDA from Closed Locations, Foreign Currency Exchange (Gain) Loss, Asset Disposition Loss, Transactional and other advisory costs, System modernization costs, Changes in the value of earnouts and Other. Refer to notes below for additional details concerning the respective items for Adjusted EBITDA.
Notes to Adjusted EBITDA:
(1)For the fiscal year ended June 29, 2025 reflects a change in estimate in our self-insurance reserves related to claims that occurred prior to the beginning of the fiscal year, which resulted in a non-cash self-insurance reserve adjustment of $17,710. Also includes non-cash expenses related to impairments, disposals, and asset write-offs.
(2)The closed location adjustment is to remove EBITDA for closed locations. Closed locations are those locations that are closed for a variety of reasons, including permanent closure, newly acquired or built locations prior to opening, locations closed for renovation or rebranding and conversion. If a location is not open on the last day of the reporting period, it will be considered closed for that reporting period. If the location is closed on the first day of the reporting period for permanent closure, the location will be considered closed for that reporting period.
(3)The adjustment for transaction costs and other advisory costs is to remove charges incurred in connection with any transaction, including mergers, acquisitions, refinancing, amendment or modification to indebtedness, and dispositions, in each case, regardless of whether consummated.
(4)The adjustment for system modernization costs represents non-capitalizable third-party consulting, professional, and related costs incurred on discrete initiatives to modernize the Company's technology platforms. They are incremental to, and not part of, the Company's normal, recurring operating expenses. The adjustment excludes depreciation and amortization, recurring software subscription and licensing fees, and costs to operate, support, or maintain the platforms after the applicable initiatives are complete. For the fiscal year ended June 28, 2026, these costs related principally to a discrete initiative to modernize the Company's customer relationship management (CRM) platform.
Index to Financial Statements
(5)The adjustment for changes in the value of earnouts is to remove the impact of the revaluation of the earnouts. Changes in the fair value of the earnout liability are recognized in the statement of operations. Decreases in the liability will have a favorable impact on the statement of operations and increases in the liability will have an unfavorable impact.
(6)Other includes the following related to transactions that do not represent ongoing or frequently recurring activities as part of the Company's operations: (i) non-routine expenses, net of recoveries for matters outside the normal course of business, (ii) severance expense, and (iii) other individually de minimis expenses.
Liquidity and Capital Resources
We manage our liquidity through assessing available cash-on-hand, our ability to generate cash and our ability to borrow or otherwise raise capital to fund operating, investing and financing activities.
A core tenet of our long-term strategy is to grow the size and scale of the Company in order to improve our operating profit margins through leveraging our fixed costs. As such, one of the Company's known cash requirements is for capital expenditures related to the construction of new locations and upgrading and converting existing locations. We believe our financial position, generation of cash, available cash on hand, existing credit facility, and access to potentially obtain additional financing from sale-lease-back transactions or other sources will provide sufficient capital resources to fund our operational requirements, capital expenditures, and material short and long-term commitments for the foreseeable future. We also plan to use available cash-on-hand to fund our share repurchase program, which was implemented as a method to return value to our shareholders. However, there are a number of factors that may hinder our ability to access these capital resources, including but not limited to our degree of leverage and potential borrowing restrictions imposed by our lenders. See "Risk Factors" for further information.
On July 10, 2025, the Company entered into a Thirteenth Amendment (the "Thirteenth Amendment") to the First Lien Credit Agreement. The Thirteenth Amendment provided for a $230,000 Bridge Term Loan. The maturity date for the Bridge Term Loan is the date that is 364 days after July 10, 2025. The Bridge Term Loan bears interest at a rate per annum equal to the Adjusted Term SOFR plus 2.50%, which will increase by 0.50% on each of the 90th, 180th and 270th days after July 10, 2025. In connection with the Fifteenth Amendment discussed below, the Bridge Term Loan was repaid in full and no amounts are outstanding.
On July 16, 2025, the Company entered into a Fourteenth Amendment (the "Fourteenth Amendment") to the First Lien Credit Agreement. The Fourteenth Amendment provides for a $50,000 increase of the Revolver commitment to an aggregate amount of $385,000.
On September 22, 2025, the Company entered into a Fifteenth Amendment (the "Fifteenth Amendment") to the First Lien Credit Agreement. The Fifteenth Amendment provided for a refinanced $1,200,000 term loan maturing on September 22, 2032 (the "Term Loan"), the proceeds of which, together with proceeds from the Company's issuance of $500,000 aggregate principal amount of 7.25% Senior Secured Notes due October 15, 2032 discussed below, were used to fully repay outstanding borrowings under the First Lien Credit Agreement, including $1,275,861 under the existing term loan, $230,000 under the bridge term loan and all outstanding borrowings under the Revolver. The Term Loan is repaid in quarterly principal payments of $3,000 beginning on March 31, 2026 and bears interest at a rate per annum equal to Adjusted Term SOFR plus 3.25%, subject to a step down to 3.00% per annum at a Total Leverage Ratio level of 2.90:1.00. In connection with the Fifteenth Amendment, the Revolver commitment was increased by $40,000 to an aggregate amount of $425,000. The outstanding balance on the Revolver is due on September 22, 2030. Interest on borrowings under the Revolver is based on the Adjusted Term SOFR.
On September 22, 2025, the Company issued $500,000 aggregate principal amount of 7.25% Senior Secured Notes (the "Notes"). The Notes bear interest at the rate of 7.25% per annum and will mature on October 15, 2032. Interest on the Notes will be payable semi-annually in arrears on April 15 and October 15 of each year, beginning on April 15, 2026.
As of June 28, 2026, $100,000 was drawn on the Revolver.
For more information on our debt, see Note 9 - Debt of the notes to consolidated financial statements of this Annual Report on Form 10-K.
At June 28, 2026, we had approximately $39,360 of available cash and cash equivalents.
Index to Financial Statements
Fiscal Year Ended June 28, 2026 Compared To the Fiscal Year Ended June 29, 2025
The following compares the primary categories of the consolidated statements of cash flows for the years ended June 28, 2026 and June 29, 2025:
Fiscal Year Ended $
Change 		%
Change
(in thousands) June 28, 2026 June 29, 2025
Net cash provided by operating activities $ 103,896 $ 177,221 $ (73,325) (41) %
Net cash used in investing activities (453,265) (220,311) (232,954) *
Net cash provided by financing activities 328,452 35,860 292,592 *
Effect of exchange rate changes on cash 591 (56) 647 *
Net change in cash and cash equivalents $ (20,326) $ (7,286) $ (13,040) *
___________
*Represents a change equal to or in excess of 100% or one that is not meaningful.
Operating activities provided $103,896 as compared to $177,221 during the prior fiscal year. The decrease in cash provided by operating activities is due primarily to unfavorable changes in working capital, together with lower net income.
Investing activities used $453,265 as compared to $220,311 during the prior fiscal year. The increase in cash used in investing activities mainly reflects the purchase of previously leased assets offset by a decrease in purchases of property and equipment.
Financing activities provided $328,452 as compared to $35,860 in the prior year. The increase in cash provided by financing activities primarily reflects the proceeds from the Fifteenth Amendment to the First Lien Credit Agreement and the issuance of Senior Secured Notes. This was partially offset by the repayment of outstanding debt and payment of deferred financing costs.
Our contractual obligations primarily include, but are not limited to, debt service, self-insurance liabilities, and leasing arrangements. The consolidated financial statements included in this Annual Report on Form 10-K provide additional information on the timing and amounts of those contractual obligations. We believe our sources of liquidity, namely available cash on hand, positive operating cash flows, and access to capital markets will continue to be adequate to meet our contractual obligations, as well as fund working capital, planned capital expenditures, location acquisitions, and execute purchases under our share repurchase program.
Critical Accounting Estimates
Our results of operations and financial condition as reflected in the consolidated financial statements included in this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles. Preparation of financial statements requires management to make estimates, judgments, and assumptions affecting the reported amounts of assets, liabilities, revenues, expenses and the disclosures of contingent assets and liabilities. We base these estimates and judgments on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual results, however, may differ from the estimated amounts we have recorded. We regularly evaluate these estimates, judgments and assumptions.
The following discussion provides information on our critical accounting estimates that require management's most difficult, subjective or complex judgments, and which may result in materially different results under different assumptions and conditions.
Impairment of Long-Lived Assets
Long-lived assets other than goodwill and indefinite-lived intangible assets (such as certain trade names), including property and equipment, right-of-use assets and other definite-lived intangibles such as trade names and customer relationships are reviewed for impairment when events or changes in circumstances indicate the carrying value of an asset may not be recoverable.
For long-lived assets, an impairment is indicated when the estimated total undiscounted cash flows associated with the asset or group of assets is less than carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. The impairments primarily relate to long-lived assets for an open location and closed locations. We estimated the fair value of these assets utilizing the business enterprise valuation based on discounted cash flows for the open location, and for the closed
Index to Financial Statements
locations, the market approach using orderly liquidation values or broker quotes for sale of similar properties. We then compared these fair values to the related carrying value of the long-lived assets.
Impairment of Indefinite-Lived Intangible Assets
Management assesses impairment of indefinite-lived intangible assets, including goodwill, brokered liquor licenses on a quota system and certain trade names, on an annual basis during the fourth quarter or more frequently under certain circumstances.
We assessed macroeconomic conditions, industry and market considerations, cost factors that could have a negative impact, overall financial performance including actual results and trends, and other relevant entity-specific events. For fiscal 2026, the Company performed a quantitative impairment test of the Indoor Entertainment reporting unit and a qualitative impairment assessment of the Outdoor Entertainment reporting unit, and concluded that it was not more likely than not that the fair value of either reporting unit was less than its carrying amount. There were no other impairment charges for goodwill or indefinite-lived intangible assets, recorded in fiscal year 2026.
Self-Insurance Reserves
Reserves are established for both identified claims and incurred but not reported ("IBNR") claims and are recorded when claim amounts become probable and estimable. Reserves for identified claims are based upon historical claim experience and third-party estimates of settlement costs. Reserves for IBNR claims are based upon claims data history. Self-insurance reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary.
Income Taxes
The Company utilizes the asset and liability approach in accounting for income taxes. We recognize income taxes in each of the jurisdictions in which we have a presence. For each jurisdiction, we estimate the amount of income taxes currently payable or receivable, as well as deferred income tax assets and liabilities. Deferred tax assets and liabilities are recorded to recognize the expected future tax benefits or costs of events that have been, or will be, reported in different years for financial statement purposes than tax purposes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which these items are expected to reverse. We review our deferred tax assets to determine if it is more-likely-than-not that they will be realized. If we determine it is not more-likely-than-not that a deferred tax asset will be realized, we record a valuation allowance to reverse the previously recognized tax benefit.
The Company recognizes tax benefits related to uncertain tax positions if we believe it is more likely than not the benefit will be realized. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which a change in judgment occurs.
Recently Issued Accounting Standards
See Note 2 - Significant Accounting Policies of the notes to consolidated financial statements of this Annual Report on Form 10-K for information regarding new accounting pronouncements.
Emerging Growth Company and Smaller Reporting Company Status
The Company was an "emerging growth company" ("EGC") as defined in the Securities Act of 1933, as amended (the "Securities Act"), and modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Because the fifth anniversary of the March 2021 initial public offering of Isos Acquisition Corporation - through which the Company became public - occurred during the fiscal year ended June 28, 2026, the Company ceased to be an EGC as of the end of that fiscal year under Section 2(a)(19) of the Securities Act.
As a result, beginning with this Annual Report on Form 10-K, the Company is subject to the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and to the executive compensation and other disclosure requirements applicable to companies that are not EGCs. The Company also may no longer use the extended transition period under Section 102(b)(1) of the JOBS Act for complying with new or revised accounting standards, and must adopt such standards on the effective dates applicable to public business entities that are not EGCs, as reflected under "Recently Issued Accounting Standards."
The Company is a "smaller reporting company" as defined in Rule 12b-2 under the Exchange Act and is eligible to elect certain scaled disclosure accommodations, primarily reduced executive compensation disclosure in its periodic
Index to Financial Statements
reports and proxy statements. Smaller reporting company status is a scaled-disclosure accommodation only and does not affect the recognition, measurement, or presentation of amounts in the Company's consolidated financial statements.
Lucky Strike Entertainment Corporation published this content on August 27, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 27, 2026 at 11:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]